Financial Information Technologies, LLC v. iControl Systems, USA, LLC

[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 20-13368
____________________
FINANCIAL INFORMATION TECHNOLOGIES, LLC,
Plaintiff-Appellee -
Cross-Appellant,
versus
ICONTROL SYSTEMS, USA, LLC,
Defendant-Appellant -
Cross-Appellee.
____________________
Appeals from the United States District Court
for the Middle District of Florida
D.C. Docket No. 8:17-cv-00190-SDM-SPF
____________________
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2 Opinion of the Court 20-13368
Before J ORDAN, NEWSOM , Circuit Judges, and B URKE , District
Judge.
NEWSOM , Circuit Judge:
Financial Information Technologies (“Fintech”) and iCon-
trol Systems are competitors. Both companies sell software that
processes alcohol-sales invoices within 24 hours. Fintech operated
in that space alone for several years until iControl entered the mar-
ket and began selling a very similar product at a lower price point.
After losing a number of customers to iControl, Fintech initiated
this lawsuit alleging misappropriation of trade secrets. The jury
found in Fintech’s favor and awarded both compensatory and pu-
nitive damages.
iControl sought a new trial on liability and judgment as a
matter of law on damages, contending with respect to the former
that Fintech’s alleged trade secrets were readily ascertainable—and
thus not “secret”—and with respect to the latter that Fintech hadn’t
proved lost profits because it hadn’t deducted fixed and marginal
costs from its revenue calculations. For its part, Fintech sought a
permanent injunction broadly prohibiting iControl from using ei-
ther company’s software. The district court denied all three mo-
tions, and both parties appealed.
After careful review, we affirm in part, reverse in part, and
remand for further proceedings. In particular, we conclude that
the district court (1) correctly denied iControl’s new-trial motion
on liability, (2) erred in denying iControl’s JMOL motion on
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20-13368 Opinion of the Court 3
damages because Fintech didn’t deduct marginal costs in calculat-
ing lost profits, and (3) correctly refused Fintech’s requested injunc-
tion.
I
Fintech and iControl sell niche computer software that rap-
idly processes electronic payments between retailers and wholesale
distributors of alcoholic beverages. Such software is useful because
many states require retailers to pay cash on delivery (
i.e., forbid
payment by credit) for alcohol shipments. Processing and paying
invoices within 24 hours requires specialized technology. Fintech
spent about 15 years developing software that quickly processes
electronic fund transfers between alcohol retailers and distributors.
For a while, Fintech was the only game in town and charged a cor-
respondingly high price for its software.
In 2013, iControl began selling software similar to Fintech’s
at a lower price. For years before, iControl had been in the busi-
ness of processing invoices and facilitating electronic bank transfers
for other products. As it began servicing the alcohol industry,
iControl hired both (1) Mark Lopez, Fintech’s former VP of Oper-
ations, who had been heavily involved in designing Fintech’s soft-
ware, and (2) Andrew Sanderson, a former Fintech sales repre-
sentative. Both Lopez and Sanderson were bound by nondisclo-
sure agreements with Fintech. Not long after hiring Lopez and
Sanderson, iControl managed to lure away several Fintech custom-
ers.
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4 Opinion of the Court 20-13368
Having lost several customers, Fintech filed this lawsuit in
2017, alleging that iControl violated the Florida Uniform Trade Se-
crets Act by misappropriating seven Fintech trade secrets.1 Fintech
sought both damages and injunctive relief. The district court held
a jury trial on the FUTSA claim, and the jury returned a general
verdict in Fintech’s favor, finding that it had proved by a prepon-
derance of the evidence that iControl misappropriated its trade se-
crets and, further, that iControl acted willfully and maliciously in
doing so. The jury awarded Fintech $2.7 million in actual damages
and $3 million in exemplary damages, and the district court entered
judgment on the jury’s verdict.
iControl filed a motion for a new trial on liability and a re-
newed JMOL motion on damages. For its part, Fintech moved for
a permanent injunction “prohibiting iControl from doing business
in the regulated commerce industry.” The district court denied all
three motions. With respect to iControl’s liability-based new-trial
motion, the court reasoned that “[a] reasonable juror could find
that iControl misappropriated Fintech’s trade secrets”:
Fintech (1) presented evidence showing that iControl
hired Fintech’s former software engineer and rapidly
developed a competing suite of software features that
perform substantially the same function as Fintech’s
1 Fintech initially also alleged violation of the Defend Trade Secrets Act of
2016, tortious interference, violation of the Florida Deceptive & Unfair Trade
Practices Act, misleading advertising, injurious falsehood, and unfair competi-
tion, but only the FUTSA claim went to trial.
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20-13368 Opinion of the Court 5
software features, (2) presented both direct and cir-
cumstantial evidence supporting the inference that
Fintech’s former software engineer divulged the
methods by which Fintech developed the software
features, and (3) presented expert testimony identify-
ing with reasonable particularity the features misap-
propriated by Fintech’s former software engineers.
The court sustained the jury’s willful-and-malicious finding, con-
cluding that the jury reasonably could have inferred that iControl
schemed to hire Lopez to misappropriate Fintech’s software fea-
tures. With respect to damages, the court concluded that Fintech
carried its burden by presenting evidence that its “fixed-cost savings
were trivial due to the relatively few clients lost to iControl . . . and
that [its] marginal costs per lost client were between zero and three
percent of revenues.”
Fintech renewed its motion for a permanent injunction,
which the district court again denied, reasoning that the proposed
injunction was overbroad. Both parties appealed.
Before us, iControl argues that the district court should have
granted a new trial on liability because Fintech’s seven alleged
trade secrets were never actually secret. At minimum, iControl
contends that the jury’s willful-and-malicious finding cannot stand.
iControl further contends that the district court should have
awarded it JMOL on damages because Fintech proved only lost
revenues—not lost
profits, as required—and failed to properly de-
duct its fixed and marginal costs. On cross-appeal, Fintech asserts
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6 Opinion of the Court 20-13368
that the district court should have awarded it a permanent injunc-
tion because, it says, its proposed remedy was reasonably tailored
to restrain iControl’s misappropriation.
We will take up each of the three issues—liability, damages,
and the injunction—in turn.
II
A
Overturning a jury’s liability finding is a difficult task under
any circumstances. iControl faces an especially steep climb for two
reasons.
First, the jury rendered a general verdict—it didn’t specify
which of the seven alleged trade secrets iControl misappropriated.
Accordingly, Fintech needs to show evidence of misappropriation
only as to one.
See Composite Marine Propellers, Inc. v. Van Der
Woude, 962 F.2d 1263, 1265 (7th Cir. 1992) (holding that a general
jury verdict in a trade-secrets case must be affirmed when the evi-
dence supports misappropriation of at least one secret);
cf. also
Griffin v. United States, 502 U.S. 46, 56–57 (1991) (holding that a
general guilty verdict on a multiple-object conspiracy need not be
set aside if the evidence is adequate to support conviction as to one
of the objects).
Second, for whatever reason, iControl didn’t move for
JMOL on liability in the district court. Had it done so, we would
have reviewed the district court’s denial de novo.
See St. Louis
Condo. Ass’n, Inc. v. Rockhill Ins. Co., 5 F.4th 1235, 1242 (11th Cir.
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20-13368 Opinion of the Court 7
2021). As matters stand, iControl is stuck with the more deferential
abuse-of-discretion standard applicable to new-trial motions. Ac-
cordingly, the only question before us is whether the district court
abused its discretion in concluding that “the verdict [was] against
the great weight of the evidence.”
Hercaire Int’l, Inc. v. Argentina,
821 F.2d 559, 562 (11th Cir. 1987). Ordinarily, given that standard,
we “will reverse a decision denying a motion for new trial only
where there is an absolute absence of evidence to support the ver-
dict.”
Id.
1
To prove liability under FUTSA, a plaintiff must show that
“(1) it possessed a ‘trade secret’ and (2) the secret was misappropri-
ated.”
Yellowfin Yachts, Inc. v. Barker Boatworks, LLC, 898 F.3d
1279, 1297 (11th Cir. 2018) (quotation omitted). A “trade secret” is
defined as follows:
information, including a formula, pattern, compila-
tion, program, device, method, technique, or process
that:
(a) Derives independent economic value, actual or
potential, from not being generally known to, and
not
being readily ascertainable by proper means by, other
persons who can obtain economic value from its dis-
closure or use; and
(b) Is the subject of efforts that are reasonable under
the circumstances to maintain its secrecy.
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8 Opinion of the Court 20-13368
Fla. Stat. § 688.002(4) (emphasis added). Misappropriation occurs
when a trade secret is acquired “by someone who knows or has
reason to know that the secret was improperly obtained or who
used improper means to obtain it.”
Yellowfin, 898 F.3d at 1297
(quotation omitted).
By definition, something that is already readily ascertainable
can’t be misappropriated. As a general matter, software source
code is not readily ascertainable and, accordingly, qualifies for
trade-secret protection.
See Warehouse Sols., Inc. v. Integrated Lo-
gistics, LLC, 2014 WL 12647878, at *6 (N.D. Ga. July 7, 2014),
aff’d,
610 F. App’x 881 (11th Cir. 2015). But aspects of computer software
that
are readily ascertainable don’t qualify.
See IDX Sys. Corp. v.
Epic Sys. Corp., 285 F.3d 581, 584 (7th Cir. 2002) (“[T]hings that
any user or passer-by sees at a glance are ‘readily ascertainable by
proper means’ . . . and a trade-secret claim based on readily observ-
able material is a bust.”). iControl contends that each of Fintech’s
seven alleged trade secrets was readily ascertainable. Before we
delve into the secrets’ ascertainability, we will briefly explain
Fintech’s software and the seven trade secrets at issue.2
2 In its briefs to us, iControl asserts that Fintech has consistently failed to allege
its trade secrets with “reasonable particularity.” To be sure, it is important for
a plaintiff to allege trade secrets with particularity at the pleading stage in order
to give the defendant adequate notice of the material that is allegedly subject
to trade-secret protection. But those concerns dissipate when, as here, the al-
leged trade secrets have been litigated and adjudicated in a full-blown trial.
Cf.
Ortiz v. Jordan, 562 U.S. 180, 184 (2011) (holding that a party may not appeal
an order denying summary judgment after a full trial on the merits because
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20-13368 Opinion of the Court 9
The essence of Fintech’s software is what it calls “database
architecture.” Database architecture involves both designing a da-
tabase that can “take alcohol invoices from dozens of different dis-
tributors in different formats and normalize them into a central da-
tabase” and configuring a “hierarchy of data within an invoice” that
enables such normalization. Trial Transcript (Day 3) at 52–54. For
example, many alcohol-sale invoices must make adjustments for
discounts, surcharges, etc. Fintech’s software treats these “SAC”
codes (for service promotions, adjustments, and charges) as line
items rather than header adjustments. Then, to further accelerate
the invoicing process, Fintech’s software utilizes certain “exception
rules,” which investigate each field of every invoice to check for
potential errors or missing information. An in-system editor called
the “invoice fixer” allows distributors to enter the database and
make corrections without delaying the payment cycle.
Fintech’s software groups corrected invoices based on the
originating and receiving banks, aggregates them, and calculates a
single ACH transaction using proprietary rounding calculations.3
To ensure timely payments, Fintech maintains a series of “white
filters” with banks to minimize the risk that any transaction will get
“[o]nce the case proceeds to trial, the full record developed in court super-
sedes” the prior record);
Nolfi v. Ohio Kentucky Oil Corp., 675 F.3d 538, 545
(6th Cir. 2012) (“Though
Ortiz applies specifically to summary judgment, its
logic applies with equal force to questions involving pleadings.”).
3 ACH (Automated Clearing House) is a network used for electronically mov-
ing money between bank accounts across the United States.
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10 Opinion of the Court 20-13368
blocked at the last minute. Finally, Fintech develops and maintains
several system interfaces based on its clients’ particular accounting
needs to convey payment information between distributors and re-
tailers.
In addition to providing invoice-payment services, Fintech
uses invoice data collected over time to conduct business-intelli-
gence analysis, which it makes available to its clients through a
“user portal.” The portal is unique in the industry in that it allows
each client to control which of its employees can access what infor-
mation.
Based on this invoice-payment process, Fintech’s expert wit-
ness identified the following seven “trade secrets”:
(1) database architecture;
(2) the exception rules and the invoice fixer;
(3) calculations for ACH transactions;
(4) methods for maintaining and using white filters;
(5) payment-reconciliation interfaces;
(6) analysis, normalization, and reports generated for
the user portal; and
(7) user-portal design that allowed clients to adminis-
ter their own users within Fintech’s online system.
In light of the governing standard—pursuant to which we
ask only whether “there is an absolute absence of evidence to sup-
port the verdict,”
Hercaire, 821 F.2d at 562—we hold that the proof
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20-13368 Opinion of the Court 11
presented at trial permitted a reasonable jury to find that at least
one of Fintech’s alleged trade secrets was not readily ascertainable
and was instead misappropriated. Fintech showed the jury emails
and iControl documents indicating that Lopez had helped iControl
discover Fintech’s internal processes to aid its software develop-
ment. For instance, when iControl was initially having problems
with SAC adjustments in its invoices, its chief technology officer
asked for Lopez’s help—after which iControl, like Fintech, began
treating the adjustments as line items. Similarly, Fintech submitted
emails in which Lopez advised iControl management about cor-
recting rounding issues that iControl was confronting when calcu-
lating ACH transactions.
So too, with respect to white filters, Fintech submitted a se-
ries of emails between iControl employees and Fifth Third Bank in
which the bank reported that it couldn’t navigate the ACH pay-
ment process despite “doing business for Fintech”—which, in turn,
caused iControl to seek Lopez’s assistance. Those emails suggest—
or certainly could to a reasonable jury—that Fintech had some spe-
cialized method of white-filter maintenance that was not readily
ascertainable to iControl or the bank. Finally, Fintech submitted
an iControl document authored by Lopez and Sanderson that con-
tained screenshots of Fintech’s user portal—which a Fintech wit-
ness testified was password-protected and accessible only to
Fintech customers and employees—and details about how to build
something similar. That evidence could suggest to a reasonable
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12 Opinion of the Court 20-13368
jury that iControl misappropriated information about Fintech’s
user portal rather than develop it independently.
Because the jury returned a general verdict, we needn’t as-
sess each secret individually to determine whether each one was
readily ascertainable. Fintech’s trial evidence suggests that at least
some of its seven alleged trade secrets were
not readily ascertaina-
ble to iControl and were instead improperly obtained through
Lopez’s and Sanderson’s aid. Because there is no “absolute absence
of evidence” of misappropriation, the district court was within its
discretion to deny iControl’s new-trial motion.
2
iControl contends that even if the jury’s baseline liability
finding stands, its exemplary-damages award cannot. FUTSA per-
mits exemplary damages if “willful and malicious misappropriation
exists.” Fla. Stat. § 688.004(2). In
Perdue Farms Inc. v. Hook, a
Florida court concluded that exemplary damages are permissible
under FUTSA when “the defendant acts willfully, or with such
gross negligence as to indicate a wanton disregard of the rights of
others.” 777 So.2d 1047, 1053 (Fla. 2d DCA 2001) (quotation omit-
ted). It is for the jury to determine whether a misappropriation was
willful and malicious.
Id. at 1052.
Given the standard of review applicable to new-trial mo-
tions, we conclude that the jury here reasonably could have in-
ferred from the evidence presented that iControl schemed to hire
Lopez and Sanderson to misappropriate Fintech’s software
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20-13368 Opinion of the Court 13
features. Indeed, iControl acknowledged (internally) the possibil-
ity that Fintech might sue when it hired Sanderson. And testimony
at trial indicated that iControl hired Lopez to help with “strategy,
marketing, product development, product roadmapping, as well as
the delivery of specific technologies,
mainly writing code to sup-
port our regulated commerce.” Trial Transcript (Day 2) at 114
(emphasis added). Again, we simply can’t say that there is an “ab-
solute absence of evidence” that would justify setting aside the
jury’s findings.
B
The damages calculation here presents thornier issues.
iControl filed a JMOL motion on damages, and we review the de-
nial of that motion de novo, viewing the evidence in the light most
favorable to Fintech.
St. Louis Condo. Ass’n, 5 F.4th at 1242. A
JMOL motion should be granted only when there is no legally suf-
ficient evidentiary basis from which a reasonable jury could render
the verdict that this one did.
Id.
In relevant part, FUTSA’s damages provision provides as fol-
lows:
Damages can include both
the actual loss caused by
misappropriation and the unjust enrichment caused
by misappropriation that is not taken into account in
computing actual loss. In lieu of damages measured
by any other methods, the damages caused by misap-
propriation may be measured by imposition of
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14 Opinion of the Court 20-13368
liability for a reasonable royalty for a misappropria-
tor’s unauthorized disclosure or use of a trade secret.
Fla. Stat. § 688.004(1) (emphasis added). The dispute in this case is
about what constitutes “actual loss.” iControl contends that
Fintech can recover only lost profits—that is, the revenue it would
have received from its lost customers
less the costs it would have
incurred servicing those customers. iControl further contends that
Florida law requires that Fintech subtract both fixed and marginal
costs from its revenues to calculate lost profits.4
We understand Fintech to agree that it can recover only lost
profits. Even so, it argues (1) that Florida law doesn’t require de-
duction of fixed costs in trade-secret cases, (2) that its marginal
costs were negligible, and (3) that it can therefore, in essence, re-
cover lost revenue.5 We will address iControl’s fixed- and mar-
ginal-cost arguments in turn.
4 We reject Fintech’s argument that iControl failed to preserve its fixed-cost
argument for appeal. iControl has consistently maintained that Fintech must
deduct
all costs in order to prove lost profits. Even in its initial JMOL motion,
iControl complained that Fintech’s damages witness didn’t calculate “over-
head” (
i.e., fixed) costs.
5 In its pleadings and initial disclosures in the district court, Fintech stated that
its damages were based on “lost revenue.” Fintech belatedly offered a “rebut-
tal” expert report purporting to perform an actual lost-
profits analysis, but the
magistrate judge disallowed the late report. Accordingly, Fintech was forced
to go to trial without a proper damages expert who could explain its costs.
When, at trial, Fintech sought to put on a traditional lost-profits analysis, the
district court disallowed it, but permitted Fintech to proceed on a pseudo-lost-
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20-13368 Opinion of the Court 15
As a preliminary matter, though, a bit of definitional house-
keeping: It’s important to be clear at the outset about what we
mean by “fixed” and “marginal” costs. The most basic way to dis-
tinguish these concepts—as economists do—is this: Fixed costs
don’t (at least directly) vary based on output volume, while mar-
ginal costs measure the change in cost associated with a change in
output.
See N. Gregory Mankiw, PRINCIPLES OF MICROECONOMICS
266–68 (6th ed. 2011).
Fixed costs, that is, are those that remain essentially the
same regardless of the number of a company’s customers or prod-
ucts. These may include rent, utilities, salaries, depreciation, insur-
ance, property taxes, R&D, etc. Of course, a dramatic change in
the volume of business will likely cause some change in fixed-cost
spending. A thriving company, for instance, may need to expand
(or even move) offices and thereby incur higher rent. Even so, rent
remains a “fixed” cost because it is not directly influenced by the
company’s sales or production volume.
Marginal costs, on the other hand, are tied directly to output
volume. They are often defined as the costs associated with pro-
ducing
one more unit of output or servicing
one more customer,
and they are calculated by dividing the change in total cost by the
change in output.
Id. at 268. When calculating marginal costs over
profits theory under the caveat that Fintech’s damages witness would testify
that its costs were “trivial.” The district court characterized this narrow the-
ory as “sort of a crevasse in [the] law.”
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16 Opinion of the Court 20-13368
a change in output volume during which fixed costs remain con-
stant, marginal costs will depend only on the change in variable
costs.
1
First, fixed costs. iControl contends that Florida law re-
quires plaintiffs to apportion their fixed costs across all customers
and deduct these costs from revenues in a lost-profits analysis. For
the following reasons, we disagree.
We start with the text of FUTSA’s damages provision—
which, again, permits damages for “the actual loss caused by mis-
appropriation.” Fla. Stat. § 688.004(1). Here, Fintech lost a num-
ber of customers when iControl entered the market. Although
Fintech lost the revenues associated with those customers, some of
its losses were offset by the elimination of
marginal costs that it no
longer had to incur to service those customers. So its “actual loss”
was lower than its lost revenue. (More on marginal costs shortly.)
Importantly, though, the evidence doesn’t clearly show that
Fintech incurred any reduction in its total
fixed costs. Accordingly,
no fixed-cost savings offset its misappropriation-based losses.
Given that, it’s not clear to us why Fintech should have to deduct
fixed costs that it would have incurred anyway—and that, there-
fore, weren’t at all related to iControl’s conduct or Fintech’s re-
sponse.
Accord Kutner Buick, Inc. v. Am. Motors Corp., 868 F.2d
614, 618 (3d Cir. 1989) (“The effect on net income must be meas-
ured by revenue lost less costs avoided. This translates into lost
revenue less the variable cost of producing this lost revenue. Fixed
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20-13368 Opinion of the Court 17
or unavoidable costs are by definition unrelated to the individual
income producing activity and thus are not relevant . . . .” (footnote
omitted)).
Additionally, FUTSA permits recovery only of those losses
that are “caused by” misappropriation.
See Premier Lab Supply,
Inc. v. Chemplex Indus., Inc., 94 So.3d 640, 644–46 (Fla. 4th DCA
2012) (per curiam). Here, there is no clear causal link because
Fintech’s fixed costs remained unaffected by iControl’s misappro-
priation.
See DXS, Inc. v. Siemens Med. Sys., Inc., 100 F.3d 462,
474 (6th Cir. 1996) (reasoning that deducting fixed costs would im-
permissibly base the lost-profits calculation on “overall economic
performance instead of on the basis of the transactions lost” and
wouldn’t place the plaintiff “in as good a position as it would have
been if the alleged tort had not occurred”). If, as iControl urges,
we were to require Fintech to deduct fixed costs from lost revenues
anyway, we would underestimate the magnitude of Fintech’s loss
“caused by” iControl’s misappropriation.6 That outcome seems
6 To illustrate this point, consider a hypothetical company that services 10 cus-
tomers. The company earns $100 in revenues per customer, and it costs the
company $10 to sign up and service each customer. Thus, the company makes
a profit of $90 per customer, for a total of $900. Separately, the company in-
curs $500 in fixed operating expenses, bringing its net profit to $400. Now,
suppose the company loses two customers but that this loss doesn’t cause any
change in the company’s fixed expenses. The company’s net profit will de-
crease to $220. The change in profits ($180) equals the revenues less marginal
costs per lost customer (($100 - $10) x 2 = $180). If we required the company
to deduct a pro rata share of its fixed costs from its per-customer profit for
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18 Opinion of the Court 20-13368
contrary not only to common sense but also, and more im-
portantly, to FUTSA’s plain text.
iControl resists that conclusion by citing several contract
cases. In the end, though, we think that those cases, properly un-
derstood, only bolster our holding. iControl is correct that in
breach-of-contract situations, Florida law typically requires that
both fixed and marginal costs be deducted from revenues to calcu-
late lost profits. In
RKR Motors, Inc. v. Associated Uniform Rental
& Linen Supply, Inc., 995 So.2d 588 (Fla. 3d DCA 2008), a Florida
court explained the rationale for fixed-cost deductions, and its de-
cision is worth exploring in some detail.
In that case, Associated Uniform agreed to rent and launder
RKR’s employees’ uniforms.
Id. at 590. RKR terminated the agree-
ment, and Associated Uniform sued for breach of contract, seek-
ing—among other remedies—“lost profits.”
Id. At trial, Associated
Uniform’s damages expert “based his calculation,” in part, “on the
actual costs that Associated Uniform did not incur due to RKR Mo-
tors’ termination of the contracts.”
Id. at 592 (emphasis added). By
contrast, “RKR Motors’ expert concluded that all of Associated
Uniform’s
fixed costs related to the contract must be considered
and RKR Motors’ relative portion must be included in the compu-
tation.”
Id. (emphasis added). In comparing the two experts’ testi-
mony, the court evidently differentiated between a calculation of
damages purposes, instead of recovering its actual loss of $180, it would only
recover $80. The company would thus be undercompensated for its losses.
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20-13368 Opinion of the Court 19
“actual costs” and a damages methodology that requires deduction
of “fixed costs.”
Id.
To determine which damages methodology applied, the
court went on to distinguish two Florida cases—
Knight Energy
Services, Inc. v. C.R. International Enterprises, Inc., 616 So.2d 1079
(Fla. 4th DCA 1993) (per curiam), and
Boca Developers, Inc. v. Fine
Decorators, Inc., 862 So.2d 803 (Fla. 4th DCA 2003).
See RKR, 995
So.2d at 592. In
Knight, the court noted that a contracting party
seeking lost profits is entitled to “the contract price less any deduc-
tion for costs and expenses
necessary to fully perform.” 616 So.2d
at 1080 (emphasis added). Ultimately, the court there didn’t re-
quire any cost deduction because the plaintiff unequivocally stated
that “no deductible costs or expenses [were] necessary to fully per-
form this contract.”
Id. In
Boca, however, the court found that
fixed costs had to be allocated across the board because there was
no evidence to suggest that the fixed costs were not involved in the
performance of the contract in question. 862 So.2d at 805–06. Im-
portantly, the breaching party in that case ordinarily apportioned
its fixed costs across other contracts but hadn’t apportioned any to
the contract at issue.
Id. at 804–05. The court thus required deduc-
tion of “fixed costs such as rent and insurance related to those em-
ployees” who worked on the contract.
Id.
Ultimately, the
RKR court concluded that the intuition un-
derlying Florida’s contract cases is that
all costs involved in per-
forming a contract must be deducted from the contract price to en-
sure that the nonbreaching party doesn’t get a windfall: “Requiring
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20 Opinion of the Court 20-13368
a deduction of a share of fixed costs related to the performance of
a contract allows for a true measurement of the amount the non-
breaching party would have earned on the contract had there been
no breach, which is the proper measure of damages.” 995 So.2d at
593;
see also, e.g.,
Indian River Colony Club, Inc. v. Schopke Con-
str. & Eng’g, Inc., 592 So.2d 1185, 1187 (Fla. 5th DCA 1992) (requir-
ing deduction of reasonable value of supervisory services attribut-
able to performing the contract and non-reimbursable operating
expenses);
Fu Sheng Indus. Co. v. T/F Sys., Inc., 690 So.2d 617, 623
(Fla. 4th DCA 1997) (requiring accounting of all costs associated
with the selling of the product for which lost profits were claimed);
Ballard v. Krause, 248 So.2d 233, 234 (Fla. 4th DCA 1971) (requiring
deduction of all costs and expenses necessary to perform the con-
tract);
Physicians Reference Lab., Inc. v. Daniel Seckinger, M.D. &
Assocs., PA., 501 So.2d 107, 109 (Fla. 3d DCA 1987) (requiring de-
duction of fixed and variable costs of performance from the con-
tract price);
James Crystal Licenses, LLC v. Infinity Radio Inc., 43
So.3d 68, 75 (Fla. 4th DCA 2010) (“A percentage of overhead ex-
penses should have been deducted from the projected lost prof-
its.”).
But Florida courts recognize that this contract-based dam-
ages methodology is different from a calculation of “actual costs.”
See RKR, 995 So.2d at 592. As already explained, by its terms,
FUTSA permits damages only for “the
actual loss caused by misap-
propriation.” Fla. Stat. § 688.004(1). Accordingly, Florida’s method
of calculating damages in breach-of-contract disputes does not
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20-13368 Opinion of the Court 21
necessarily carry over into FUTSA cases.
See HCA Health Servs.
of Fla., Inc. v. CyberKnife Ctr. of Treasure Coast, LLC, 204 So.3d
469, 472 (Fla. 4th DCA 2016) (suggesting that the fixed-cost-deduc-
tion method of calculating damages is specific to the contracts con-
text because it best approximates “the benefit of the bargain” or
“expectation interest” (quotation omitted)).
This conclusion is strengthened by
Murray v. Department
of Transportation, 687 So.2d 825 (Fla. 1997). In this
non-contract
business-damages case under another Florida statute, the Florida
Supreme Court held that the calculation of business damages does
not require “one mechanically applied, one-size-fits-all formula
which would not produce proper results.”
Id. at 827. Because
“business damages are inherently fact-intensive” and some costs
“such as insurance . . . will continue to be the same regardless of
the loss” of some customers, the court permitted a damages calcu-
lation that didn’t deduct fixed costs.
Id.
Murray demonstrates
(1) that statutory damages needn’t be determined by the same
method used in contract law and (2) that deduction of business
costs that remain the same regardless of the loss of some customers
isn’t required.
In short, therefore, we agree with the district court that the
jury was not required to deduct Fintech’s fixed costs from its reve-
nues to arrive at a proper “actual loss” measure.
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22 Opinion of the Court 20-13368
2
Marginal-cost deduction presents a different challenge. Both
iControl and Fintech agree that, in theory, a plaintiff must subtract
the costs that it would have had to incur to service its lost custom-
ers from the revenues that it would have received from those cus-
tomers. But Fintech argues that its “business loss was at the mar-
gins” and that it would have incurred only “trivial costs” in servic-
ing the customers it lost to iControl. Br. of Appellee at 73 (quota-
tion marks omitted). Accordingly, Fintech says, it was “up to the
jury” to disregard those costs and award its full lost revenues.
Id.
Alternatively, Fintech argues that because its lost revenues were
$2,721,925, and the jury awarded only $2,700,000, we can infer that
the jury deducted some costs.
We begin with the evidence presented to the jury. At trial,
Fintech’s damages witness testified that adding customers to
Fintech’s platform entails “[m]inimal” costs. He claimed that
Fintech’s “cost of goods sold”7 for all customers is “less than ten
percent” and that “hard costs”8 are “like three percent or less.”
Fintech incurs low marginal costs in adding additional customers
to its platform, he explained, because it is a technology business
and adding new customers to an already-written program doesn’t
7 “Cost of goods sold” encompasses the costs directly involved in producing
the goods sold or the services delivered.
8 The witness defined these as including “banking costs” and payments for
“communication systems to send data back and forth.”
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20-13368 Opinion of the Court 23
translate into many more costs. Importantly, though, Fintech’s
witness provided no accounting of any costs to corroborate his tes-
timony approximating them. He placed Fintech’s lost
revenues at
“$2,721,925.” In his closing statement, Fintech’s lawyer stated—
slightly differently—that “FinTech’s total damage to date [is]
$2.7
million in lost revenue.” Trial Transcript (Day 6) at 40 (emphasis
added). “This is the amount of money,” he said, “that FinTech lost
because iControl misappropriated its trade secrets and
that’s the
amount of money that FinTech asks you, this jury, to award against
iControl.”
Id. (emphasis added). Following that statement, the
jury returned a verdict of $2.7 million.
Missing from the trial record is any evidence that Fintech’s
marginal costs were
actually zero. Had Fintech clearly presented
that evidence, it might have been entitled to an award that didn’t
account for those costs.
See Knight, 616 So.2d at 1080 (permitting
award without cost deduction when the plaintiff unequivocally
stated that no costs were incurred);
DXS, 100 F.3d at 474 (same).
But Fintech presented only evidence that its marginal costs were
“minimal”—and “minimal” doesn’t equal zero. Likewise, “three
percent” and “ten percent” don’t equal zero. Fintech requested
$2.7 million in damages from the jury, and that is what it received.
Although there was a small difference between, on the one hand,
the revenue figure that Fintech presented at trial and, on the other,
the amount that it sought in its closing statement and that the jury
ultimately awarded, we can’t speculate whether the jury deducted
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24 Opinion of the Court 20-13368
any costs from revenues because Fintech never produced any hard-
cost calculations.
Because Fintech didn’t provide any evidence from which a
reasonable jury could conclude that its marginal costs were
zero,
the district court erred in denying iControl’s JMOL motion on
damages.
See Crain Auto. Grp., Inc. v. J&M Graphics, Inc., 427
So.2d 300, 301–02 (Fla. 3d DCA 1983) (rejecting damages evidence
that “did not explain what calculations and deductions” went into
its estimate as “too speculative”). Even reading the evidence in the
light most favorable to Fintech, it would be a bridge too far to con-
clude that the jury could have reasonably found its marginal costs
to be zero when the only benchmark amounts offered at trial were
“minimal,” “three percent,” and “ten percent.”
* * *
The damages calculation in this case presents difficult legal
and factual questions. Although FUTSA’s damages provision
doesn’t require fixed-cost deduction, Fintech was required to de-
duct its marginal costs. Because it didn’t conclusively prove that
its marginal costs were zero, it wasn’t entitled to its full amount of
lost revenues. On remand, the district court should require an ac-
counting of marginal costs to enable a proper lost-profits calcula-
tion.
C
Finally, Fintech’s requested injunction. We review denials
of injunctive relief for abuse of discretion.
Common
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20-13368 Opinion of the Court 25
Cause/Georgia v. Billups, 554 F.3d 1340, 1349 (11th Cir. 2009). As
we have explained before, an injunction must be narrowly tailored
to the proven legal violations and restrain no more conduct than
reasonably necessary.
Keener v. Convergys Corp., 342 F.3d 1264,
1269 (11th Cir. 2003). It must also describe the restrained acts in
reasonable detail such that there is no uncertainty or confusion as
to the conduct proscribed.
LabMD, Inc. v. FTC, 894 F.3d 1221,
1235 (11th Cir. 2018); Fed. R. Civ. P. 65(d)(1)(C).
FUTSA permits injunctive relief in the following terms:
Actual or threatened misappropriation may be en-
joined. Upon application to the court, an injunction
shall be terminated when the trade secret has ceased
to exist, but the injunction may be continued for an
additional reasonable period of time in order to elim-
inate commercial advantage that otherwise would be
derived from the misappropriation.
Fla. Stat. § 688.003(1). As the statute indicates, an injunction under
FUTSA should ordinarily be for a specified period of time, which
may be extended under certain circumstances.
See Premier Lab
Supply, 94 So.3d at 645 (noting that injunctive relief under FUTSA
is time-limited); Restatement (Third) of Unfair Competition § 44,
cmt. f (Am. Law. Inst. 1995) (noting that in the trade-secret context,
an injunction must be time-limited and last “only until the defend-
ant could have acquired the information by proper means”). An
unlimited injunction runs the risk of restraining legitimate compe-
tition.
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26 Opinion of the Court 20-13368
In its first motion, Fintech sought a blanket injunction “pro-
hibiting iControl from doing business in the regulated commerce
industry.” The district court correctly denied the motion on the
ground that FUTSA only “authorizes the injunction of specific,
identifiable trade secrets,” not “blanket restraint of competition.”
See Norton v. Am. LED Tech., Inc., 245 So.3d 968, 969 (Fla. 1st
DCA 2018) (“[F]UTSA may not be used as a vehicle to restrict com-
petition.”). In its renewed motion, Fintech claimed to narrow the
scope of its requested injunction as follows:
iControl’s misappropriation . . . included aspects of
every part of Fintech’s regulated commerce software
system. . . . Accordingly, Fintech seeks a permanent
injunction prohibiting iControl from using Fintech’s
proprietary regulated commerce software[.] . . . Be-
cause Fintech’s trade secrets were incorporated into
iControl’s Harmony software, Fintech further seeks
an injunction prohibiting iControl from using its Har-
mony software[.] . . . Fintech also seeks a permanent
injunction prohibiting iControl from using its Next
Gen Reconciliation software, which misappropriated
Fintech’s method and process for developing and in-
cluding information in its broken case and price dis-
crepancy reports.
The district court denied the revised injunction as well, concluding
that it “sweeps too broadly and promotes confusion about the na-
ture of Fintech’s trade secrets.”
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20-13368 Opinion of the Court 27
As a practical matter, Fintech’s second motion just used
more words to seek fundamentally the same result—namely, to
eliminate iControl from “the regulated commerce industry.”
Fintech’s revised proposal continued to resemble a blanket re-
straint on competition prohibited under FUTSA. Moreover,
Fintech’s proposed injunction wasn’t narrowly tailored and didn’t
identify specific acts to be restrained.9 For one, Fintech sought to
enjoin iControl not only from using Fintech’s software, but also
from using
its own software. A blanket prohibition on using both
software packages fails the requirement that only “specific, identi-
fiable trade secrets” be enjoined and leads to the impermissible con-
clusion that the entirety of Fintech’s software is a trade secret. And
Fintech wanted the injunction to last forever, which violates
FUTSA’s plain terms indicating that an injunction must be termi-
nated when the trade secret has ceased to exist. Indeed, Fintech’s
own expert admitted that iControl “certainly” could have devel-
oped the “specific functionality” he described as Fintech’s trade se-
crets “[g]iven time.” So there are no circumstances in which
9 Fintech claims that its “trade secrets sufficiently identify the conduct [to be]
restrained.” But remember, the jury returned a general verdict, so we don’t
know which trade secrets in particular the jury found iControl had misappro-
priated. Fintech ignores the fact that even if the district court were to issue an
injunction, the court must make its own factual determinations as to which
alleged trade secrets were misappropriated.
See McCarthy v. Fuller, 810 F.3d
456, 460 (7th Cir. 2015). The jury verdict alone does not automatically entitle
Fintech to an injunction.
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28 Opinion of the Court 20-13368
Fintech should be awarded a permanent injunction of unlimited
duration.10
Fintech’s revised proposed injunction swept as broadly as its
first. The district court did not abuse its discretion in denying in-
junctive relief.
III
The district court’s judgment with respect to iControl’s lia-
bility and Fintech’s request for a permanent injunction is affirmed.
We reverse the district court's judgement on damages and remand
for a proper calculation and deduction of marginal costs.
AFFIRMED in part, REVERSED and REMANDED in part.
10 We find unavailing Fintech’s argument that the district court was mistaken
in concluding that “[a]ny misappropriation by iControl occurred more than
five years ago . . . , and nothing offered by Fintech establishes . . . that iControl
could not independently have developed between then and now any trade se-
cret then acquired from Fintech.” Whether the “five years” figure was sup-
ported by the evidence at trial is irrelevant because, in any event, Fintech did
not establish that it should be awarded an injunction of unlimited duration.
And it was Fintech’s—not the district court’s—responsibility to properly time
limit the injunction based on the evidence at trial.
See United States v. W. T.
Grant Co., 345 U.S. 629, 633 (1953) (“[T]he moving party must satisfy the court
that [injunctive] relief is needed. The necessary determination is that there
exists some cognizable danger of recurrent violation . . . .”).
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