The Texas Uniform Trade Secrets Act (TUTSA) serves the purpose of defining trade secrets and providing guidelines and remedies to businesses whose trade secrets are exposed.
What Is a Trade Secret?
Under Section 134A.002(6) of the Texas Uniform Trade Secrets Act, a trade secret is information that has been protected by reasonable measures. The information is valuable because it adds a benefit to the product or service.
Trade secrets can be the ingredients in a recipe, a manufacturing process, or any other information that provides an advantage or key element to a business. The TUTSA states that Texas trade secrets include any business, scientific, technical, economic, or engineering information, as well as any design, prototype, plan, program device, code, or procedure related to a business.
Importance of the Texas Uniform Trade Secret Act
If a trade secret is crucial to the success of your business, it is important to protect that secret. Let’s say you make chocolate cookies and your cookies are better than everyone else’s. This could be because of a special ingredient. It could be because of the ratio of that ingredient to other ingredients. It could be your baking process. All of those things set your cookies apart, and without that “secret” your cookies would be like everyone else’s. So as a successful entrepreneur, you wouldn’t want your cookie secret leaked to your competitors. This is where the TUTSA applies.
Misappropriation of Trade Secrets
The legal cause of action for exposed information is called the “misappropriation of trade secrets.” Misappropriation occurs when a trade secret is improperly acquired, or the trade secret is disclosed or used without consent. Consent to use the secret may be expressed or implied. There are a number of factors that a court may take into consideration when evaluating a claim of misappropriation. Some of these factors may include:
- The scope of the trade secret known outside of the business;
- The degree of knowledge possessed by others involved in the business, including employees;
- The measures taken by the business to keep the information a secret;
- The value of the information to the success of the business;
- The value of the information to competitors of the business;
- Time, money, and effort put into developing the trade secret; and
- How easy or difficult it may be for competitors to acquire or duplicate the protected information.
The trade secret does not actually have to be used in order for you to seek legal remedies.
Legal Remedies for Trade Secret Misappropriation Under the TUTSA
If you believe your company’s trade secrets have been misappropriated, you may be entitled to one or more legal remedies.
Injunctive relief is available if actual or threatened misappropriation takes place. Injunctive relief prevents the potential or continued use of trade secret information. In exceptional circumstances, an injunction may allow royalties to be paid as a condition for future use.
The value of the trade secret and how much it impacts the business determine economic damages. This may include actual loss caused by the use of the information and unjust enrichment. Compensation for royalties from the use of the information may be appropriate. If the defendant’s behavior was malicious, the court may choose to award punitive damages to punish the behavior.
If it hadn’t been for the misappropriation, you would not have had the unexpected cost of attorney fees. The court has the ability to award attorney fees to the prevailing party.
Maintaining Secrecy Under TUTSA
The Texas Uniform Trade Secrets Act states that the information cannot just be deemed a secret by the owner after it has been exposed. The company must show that they took reasonable efforts to protect the trade secret. Reasonableness may vary with the circumstances of the business operations, industry, and importance of the information. Some protective efforts may include:
- Labeling information as confidential;
- Requiring a nondisclosure agreement before employees view the information;
- Stating confidentiality guidelines in an employee handbook;
- Maintaining control over passwords and restrictions;
- Storing information in a way that is not readily available to everyone;
- Keeping records of who accesses the information; and
- Maintaining employee exit protocol to ensure the return of all information.
Efforts made to prevent disclosure of the trade secret help the court determine the importance placed on the information before it was exposed.
Legal Assistance in Protecting Your Trade Secrets
For over 25 years, The Hunnicutt Law Group has been handling sensitive business law needs, including the application of the Texas Uniform Trade Secrets Act.
Preventatively, we can help you protect your trade secret through drafting legally binding contracts for employees and partners along with comprehensive nondisclosure agreements for anyone who may have access to your information. Our experienced attorneys can assist you with copyright applications and pursue litigation to defend your rights.
Contact our commercial litigation team to learn more about how we can help.