Many defendants facing a theft of trade secrets claim in
Texas are about to lose one of the tools in their toolbox. Over the last two years, it has become an
increasingly common defense strategy at the outset of a case to file a motion
to dismiss under the Texas Citizens Participation Act (the “TCPA”).
Five years ago (my how time flies), I wrote about a risk facing those who seek to protect their trade secrets by use of a non-disclosure agreement (“NDA”). Several people asked me whether the passage of time brought new Texas case law or statutes that solved this problem. The answer is no.
Here is the conundrum. On the one hand, a party disclosing a trade secret pursuant to an NDA often desires to make the NDA confidentiality restriction go on forever. The goal in doing so is to avoid the risk of waiving trade secret protection upon expiration of the NDA. On the other hand, Texas law generally provides that when a contract has an indefinite term of existence either party to the contract may terminate the contract at will.
This is an important issue to Texas businesses. Based on the unscientific evidence of what I have seen in business transactions over the past few years, I believe many Texas businesses continue to use NDAs that perpetually restrict the disclosure of trade secrets. I suspect they do so without understanding the risk that the other party to the NDA could someday argue the NDA is terminable at will. If so, the recipient of the trade secret information would then be free to disclose the information to others.
I have not found any relevant Texas court opinions or statutes enacted since my post addressing this problem five years ago. I still believe Texas courts should permit perpetual enforcement of trade secret NDAs as a matter of public policy. However, until the law is settled, you can click this link to my “oldie but a goodie” discussion of strategies for choosing the term of NDAs.
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A lawsuit that I worked on last year involved an interesting issue. May a business plaintiff use a confidentiality agreement to prevent its former salesperson from continuing business relationships with the plaintiff’s customers? Yes, an employer can use a properly crafted non-competition agreement to achieve this goal. But if there is no such agreement, can a plaintiff achieve the same end by relying upon a confidentiality agreement? Continue reading
Many states, including Texas, enacted “anti-SLAPP” statutes to protect a person’s right to speak, petition the government, and freely associate with others. The Texas Citizens Participation Act (“TCPA”) is one such statute. Like other anti-SLAPP statutes, the TCPA provides a defendant who is sued for exercising the First Amendment right to freedom of speech, freedom of association or the right to petition the government the ability to file a motion to dismiss the lawsuit at the outset of the case.
The TCPA clearly applies in lawsuits pending in Texas state court. However, federal courts in Texas issued conflicting opinions about whether the TCPA applies in federal court lawsuits that involve claims arising under Texas state law (as opposed to federal law). Continue reading
In a 2017 blog post, I discussed a Texas appellate court decision that was notable because it applied the Texas Citizens Participation Act (“TCPA”) statute to theft of trade secret lawsuits. The TCPA provides a defendant who is sued for exercising the First Amendment right to freedom of speech, freedom of association or the right to petition the government the ability to file a motion to dismiss the lawsuit at the outset of the case. In addition to a potential expedited dismissal, the TCPA places significant limits on the discovery a plaintiff may obtain before a trial court rules on a TCPA motion to dismiss. The 2017 appellate court decision was the first in Texas to apply the TCPA to a theft of trade secrets claim.
The Dallas Court of Appeals recently issued an opinion in which the TCPA was, once again, applied in a theft of trade secrets claim (the “In re Spex Group” case). While the Dallas court was not asked to determine whether the TCPA applies in such a case, the court did not question the applicability of the statute.
Chalk up In re Spex Group as another case in the column of those supporting application of the TCPA to theft of trade secret claims. Continue reading