Patrick Keating

Texas Trade Secrets

Category: Improper Means

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

Grey Area of Trade Secret Law: Improper Means

One aspect of trade secret law that sometimes surprises business competitors is that there is not always a bright line standard as to what constitutes trade secret misappropriation.  For example, may I hire a plane to fly over my competitor’s factory in public air space and take pictures to discover the factory design?  If a licensee of my competitor is selling my competitor’s product documentation on Ebay, may I conceal my identity and purchase the documentation?  May I pay my competitor’s garbage hauler to allow me to rifle through my competitor’s trash to find customer lists or product design information?  The answer is not always clear at first glance.  Courts that have considered these issues have engaged in analysis of the specific facts of the cases before them, concepts of commercial morality and the reasonableness of the trade secret owner’s precautions against disclosure.

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