{"id":646,"date":"2017-05-31T14:28:04","date_gmt":"2017-05-31T20:28:04","guid":{"rendered":"http:\/\/pkeating.com\/?p=646"},"modified":"2017-05-31T14:30:47","modified_gmt":"2017-05-31T20:30:47","slug":"texas-amends-trade-secrets-statute","status":"publish","type":"post","link":"https:\/\/pkeating.com\/?p=646","title":{"rendered":"Texas Amends Trade Secrets Statute"},"content":{"rendered":"

The Texas legislature recently enacted an amendment to the Texas Uniform Trade Secrets Act<\/a>, which becomes effective on September 1, 2017.\u00a0 The substantive changes to the statute fall into three categories.<\/p>\n

<\/p>\n

New and Revised Definitions<\/u><\/p>\n

The amendment adds definitions to clarify the following terms that are used in TUTSA:<\/p>\n

1. the level of proof required to establish \u201cclear and convincing\u201d evidence and \u201cwillful and malicious misappropriation,\u201d which both must be established to obtain exemplary damages; and<\/p>\n

2. who qualifies as an \u201cowner\u201d of a trade secret.<\/p>\n

The amendment also adds to the definition of \u201ctrade secret\u201d multiple examples of types of trade secrets and the manner in which a trade secret may be stored.\u00a0 This change makes it clearer that \u201ctrade secrets\u201d can exist in \u201call forms and types of information\u201d regardless of how the information is stored.<\/p>\n

Threatened Misappropriation Injunctions<\/u><\/p>\n

The original text of TUTSA authorized courts to issue an injunction to prevent both actual and threatened misappropriation of a trade secret.\u00a0 The amendment limits that relief to situations in which \u201cthe order does not prohibit a person from using general knowledge, skill, and experience that person acquired during employment.\u201d<\/p>\n

Excluding a Party of Its Representatives From the Courtroom<\/u><\/p>\n

In May 2016, I wrote a blog post<\/a> discussing the Texas Supreme Court\u2019s decision that month in In re M-I LLC<\/em>.\u00a0 The Supreme Court set out a due-process balancing test for Texas courts to apply when deciding whether a defendant may be excluded from the courtroom during portions of proceedings at which a plaintiff\u2019s trade secrets will be discussed.\u00a0 The reason for excluding the defendant from the courtroom would be to prevent disclosure of the plaintiff\u2019s trade secrets to another party who is typically a competitor.<\/p>\n

The TUTSA amendment that will become effective later this year provides a statutorily defined method for resolving this situation in place of the In re M-I LLC<\/em> opinion.\u00a0 First, the amended version of TUTSA states that a presumption exists that a party will be allowed to participate and assist counsel in the presentation of the party\u2019s case.\u00a0 Next, the amendment sets forth seven factors that the court must consider and balance when determining whether that presumption is overcome such that a party or its representatives (a) will be excluded from the courtroom or (b) have their access to the alleged trade secret of the opponent limited.\u00a0 The seven factors a court must consider are:<\/p>\n

1. the value of an owner \u2019s alleged trade secret;<\/p>\n

2. \u00a0the degree of competitive harm an owner would suffer from the dissemination of the owner \u2019s alleged trade secret to the other party;<\/p>\n

3. \u00a0whether the owner is alleging that the other party is already in possession of the alleged trade secret;<\/p>\n

4. \u00a0whether a party \u2019s representative acts as a competitive decision maker;<\/p>\n

5. the degree to which a party \u2019s defense would be impaired by limiting that party \u2019s access to the alleged trade secret;<\/p>\n

6. \u00a0whether a party or a party \u2019s representative possesses specialized expertise that would not be available to a party \u2019s outside expert; and<\/p>\n

7. the stage of the action.<\/p>\n

photo credit: Thomas Hawk Speak Until the Dust Settles in the Same Specific Place<\/a> via photopin<\/a> (license)<\/a><\/p>\n

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The Texas legislature recently enacted an amendment to the Texas Uniform Trade Secrets Act, which becomes effective on September 1, 2017.\u00a0 The substantive changes to the statute fall into three categories.<\/p>\n","protected":false},"author":1,"featured_media":651,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false},"categories":[20,16,13],"tags":[],"jetpack_featured_media_url":"https:\/\/i2.wp.com\/pkeating.com\/wp-content\/uploads\/2017\/05\/Texas-Capital-at-Night-1.jpg?fit=320%2C320&ssl=1","jetpack_publicize_connections":[],"jetpack_shortlink":"https:\/\/wp.me\/p52Eew-aq","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/pkeating.com\/index.php?rest_route=\/wp\/v2\/posts\/646"}],"collection":[{"href":"https:\/\/pkeating.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/pkeating.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/pkeating.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/pkeating.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=646"}],"version-history":[{"count":2,"href":"https:\/\/pkeating.com\/index.php?rest_route=\/wp\/v2\/posts\/646\/revisions"}],"predecessor-version":[{"id":650,"href":"https:\/\/pkeating.com\/index.php?rest_route=\/wp\/v2\/posts\/646\/revisions\/650"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/pkeating.com\/index.php?rest_route=\/wp\/v2\/media\/651"}],"wp:attachment":[{"href":"https:\/\/pkeating.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/pkeating.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pkeating.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}