Patrick Keating

Texas Trade Secrets

An Important Conflict in Case Decisions

Conflicting Texas federal district court opinions have been issued on one aspect of the Texas Uniform Trade Secrets Act (“TUTSA”).  The issue in dispute is whether (1) a plaintiff must establish that the defendant originally used improper means to gain access to the trade secret or (2) it is sufficient for the plaintiff to show that the defendant used or disclosed the trade secret in violation of an obligation not to do so.

This is significant when you consider a common fact pattern in trade secret lawsuits.  The plaintiff claims that it voluntarily disclosed its trade secrets to the defendant either because the defendant was the plaintiff’s employee or because the defendant first signed a non-disclosure agreement.  If voluntary disclosure of trade secrets under these circumstances is fatal to the plaintiff’s claim, then much of TUTSA’s bite disappears.  The statute would be left to cover situations of overt theft – such as breaking into a company office to steal a trade secret or bribing an employee to disclose the trade secret.

Although three of the cases discussed below held that the plaintiff must prove that the defendant acquired the trade secret through improper means, those decisions conflict with the text of TUTSA.  Recent opinions reaching the opposite conclusion are also discussed below. Continue reading

May a Defendant be Excluded From the Courtroom?

A recurring procedural dispute arises in theft of trade secrets lawsuits.  How should a trial judge resolve a Plaintiff’s request to exclude a Defendant from the courtroom during the time the plaintiff discloses its trade secrets to the court?  Continue reading

Get Ready for Federal Trade Secret Lawsuits

In a post last Fall, I expressed my view that the United States does not need a federal statute providing civil remedies for theft of trade secrets.  That debate is over.  Whether we need it or not, Congress enacted the Defend Trade Secrets Act (“DTSA”) on April 27, 2016.  I anticipate that President Obama will sign the bill.

Update: President Obama signed the DTSA into law on May 11, 2016.

Continue reading

A Better Encryption Mousetrap?

Some businesses object to the use of cloud storage of electronic data because of a fear that employees of the storage provider (or others) could access the businesses’ data stored in the cloud.  Even if the data is encrypted, this fear can still exist if the cloud storage service holds the key necessary to decrypt the data.  Continue reading

Update on Astros Hacking Story

July 25, 2016 Update: On July 18, 2016 the court sentenced Chris Correa to 46 months imprisonment and to pay $279,038 in restitution.

In a prior post, I discussed the FBI investigation into whether the St. Louis Cardinals hacked into the Houston Astros’ computer network.  At that time, the FBI believed that a Cardinals’ employee was able to do so because the Astros’ General Manager previously worked for the Cardinals and re-used Cardinals’ computer passwords in the Astros’ computer system.

On January 8, 2016, the Cardinals’ former scouting director, Chris Correa, pled guilty to five counts of Unauthorized Access of a Protected Computer.  The maximum penalty is a $250,000 fine for each count and five years in prison. Continue reading

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