Elements of Misappropriation of Trade Secrets in Texas
Do you believe your company’s trade secret was misappropriated? You may be able to file a trade secret lawsuit. Texas recently enacted the Texas Uniform Trade Secrets Act (TUTSA), which is very similar to trade secret acts in other states.
Prior to the implementation of the TUTSA, trade secret cases were governed by common law in Texas. Now that the TUTSA exists, what are the elements of a case concerning the misappropriation of trade secrets in Texas?
What Do I Need to Show in Order to Win My Misappropriation of Trade Secrets Case?
Under the TUTSA, a plaintiff must be able to show prove two elements:
- Plaintiff had a legally recognizable trade secret; and
- Defendant misappropriated the trade secret.
How are each of the elements proven under Texas law?
Understanding the Statutory Elements of Misappropriation
First, to have a valid misappropriation claim, you must be able to show that you have a valid trade secret. There is specific language in the TUTSA that defines a trade secret. In general, the statute makes clear that the trade secret can take many different forms—from formulas to patterns to methods and even to customer lists—but it is, at its root, information. Then, a trade secret must have some key elements:
- It is generally not known to or readily ascertainable by another party that could use it to for economic gain; and
- It is information that has been subject to reasonable efforts to maintain its secrecy.
Second, to have a misappropriation claim, you must be able to show that the valid trade secret was misappropriated. Under the statute, misappropriation of a trade secret can be defined in two different ways:
1. Trade secret was acquired by a person who either knows or has reason to know that the trade secret was acquired by improper means; or
2. Trade secret was disclosed without consent (either express or implied) by someone who:
a. Used improper means to acquire knowledge or the trade secret;
b. Knew or had reason to know, at the time of disclosure, that the trade secret was:
i. Derived from or through a person who had used improper means to acquire it;
ii. Acquired it under circumstances that gave rise to a duty to maintain its secrecy or limits its use; or
iii. Derived from or through a person who owed a duty to maintain the secrecy of or limit the use of the trade secret; or
c. Before a material change of the person’s position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or by mistake.
It is important to note that the TUTSA does not require the plaintiff to prove that the defendant actually used the trade secret. Rather, its misappropriation and threatened use is sufficient to allow for injunctive relief.
Discuss Your Case with a Trade Secrets Lawyer in Texas
Proving the misappropriation of a trade secret can be complicated, and it is important to discuss your case with an experienced trade secrets lawyer in Texas. Do not hesitate to reach out to an advocate at our firm to learn more about how we can assist with your claim.
One of our advocates can answer your questions today. Contact Lindquist Wood Edwards LLP to learn more.