The Texas legislature recently approved a modified version of the Uniform Trade Secrets Act, making Texas the 48th state to adopt a version of the uniform act. The Texas Uniform Trade Secrets Act (TUTSA) goes into effect on September 1, 2013.
TUTSA prohibits the unauthorized acquisition, disclosure, and use of a trade secret.
The TUTSA defines a trade secret as:
“information, including a formula, pattern, compilation, program, device, method, technique, process, financial data, or list of actual or potential customers or suppliers, that: (A) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (B) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
The inclusion of financial data and lists of actual or potential customers or suppliers in the definition of trade secrets distinguishes Texas from several other states, including California and Florida. The TUTSA eliminates the common law requirement that information must be in continuous use to be protected as a trade secret. Thus, “negative” information, such as what doesn’t work or has failed, may be protectable as a trade secret under the TUTSA.
While “reverse engineering” is still permitted, the TUTSA expands “improper means” of obtaining a trade secret. In addition to breaches of the duty to maintain secrecy, the TUTSA expands the common law definition of improper means to include “breach or inducement of a breach of a duty to limit use, or to prohibit discovery of a trade secret.” Employers and other owners of trade secrets would be wise to review their company’s confidentiality policies, employees’ duties and responsibilities, and non-disclosure agreements to add these duties in addition to the duty to maintain the secrecy of the trade secrets. Employers should take affirmative actions, like training employees and monitoring employees’ activities, to ensure that any trade secret information obtained from third parties is used only as allowed in a non-disclosure agreement and trade secrets an employee learned from a former employer are not used by the employee.
Under the TUTSA courts are authorized to issue injunctions prohibiting the disclosure or threatened disclosure of trade secrets, and take any other reasonable steps the court deems appropriate to preserve the secrecy of the trade secret.
More on the TUTSA can be found at JD Supra Law News.