My last post discussed the “Catch 22” choice that trade secret owners in Texas face when deciding whether to make non-disclosure agreements (“NDAs”) last forever or expire on a specified date. This post discusses damage control steps that a business can take when its trade secrets were disclosed under NDAs that are now expired.
Texas Trade Secrets
Author: Patrick Keating (Page 9 of 10)
To view a July 8, 2019 update to this post, click this link.
There is an unresolved issue in Texas law that is important to those using non-disclosure agreements (a/k/a confidentiality agreements) to protect trade secrets. For brevity, we’ll call these contracts “NDAs.”
The tension exists between these two items: (i) for NDAs covering trade secrets, the disclosing party often desires to place a perpetual obligation on the recipient to maintain the trade secret in confidence – thereby avoiding the risk of waiving trade secret protection upon expiration of the NDA and (ii) case law holding that parties to a contract with a term of indefinite length may terminate the contract at will. I am unaware of a single court decision answering the question of whether a perpetual NDA governed by Texas law is terminable at will. Continue reading
I have been following the progress of bills in the U.S. House and Senate that would create a federal cause of action for theft of trade secrets. I just don’t see a need for this legislation. Continue reading
An issue that is beginning to work its way through courts across the country is whether a business whose employees use LinkedIn can still protect a customer list as a trade secret. Although this has not yet been addressed in a Texas appellate court decision, I suspect that former employees have already used what I will call the LinkedIn Defense at the trial court level. That could stay under the radar because Texas trial courts don’t publish decisions explaining the basis for their rulings.
This post explains the issue facing employers; provides links to a few case opinions from outside Texas that have addressed LinkedIn in the context of trade secrets; and ends with my thoughts about what employers can do if they want to use LinkedIn and still protect customer lists as trade secrets. Continue reading
In my last post, I discussed whether data maintained in a cloud storage or computing platform can be said to be confidential. This is important because the Texas Uniform Trade Secrets Act requires the owner of a trade secret to undertake reasonable steps to maintain the confidentiality of the trade secret. I am not aware of a reported case opinion analyzing how to satisfy that requirement for data stored in the cloud. Therefore, we do not yet know whether Texas courts will require a user of cloud storage or computing services to take extra precautions to protect the secrecy of their trade secrets. Nevertheless, because encryption is a relatively easy solution to the problem of cloud service providers having the ability to access or disclose their customers data, it strikes me as a smart business practice to take advantage of that solution. Continue reading
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