Trade Secret Misappropriation in Texas

Texas Wrongful Use of Proprietary Information

Unique practices and proprietary information, sometimes known as trade secrets, help a business stay competitive. When someone wrongly obtains, shares, or uses a trade secret without consent, a business has a right to file a claim for misappropriation of trade secrets. For a business to protect its proprietary information with this claim, the information must fit the legal definition of a trade secret.

Definition of a Trade Secret

A trade secret can be a process, a device, information, a pattern, or a formula that gives a business advantage over competitors. Often it is tied to production, such as a machine or a process that is essential to the operation of the business. Hyde Corp v. Huffines, 158 Tex. 566, 586, 314 S.W.2d 763, 776, 117 U.S.P.Q. Because the trade secret is not known or easily available to others, it provides economic value for the company, and the company actively maintains secrecy around it.

The Elements of Trade Secret Misappropriation

For a plaintiff to file a claim, trade secret misappropriation must include the following four elements: A trade secret must exist; there is a violation of a confidential relationship or the trade secret has been discovered inappropriately; the trade secret is shared or used without authorization or privilege to do so; and the breach results in damage to the plaintiff. See, e.g., Lamont v. Vaquillas Energy Lopeno Ltd., LLP, 421 S.W.3d 198, 210, 183 O.G.R. 818 (Tex. App. San Antonio 2013).

If the secret is obtained but not used, then it is not misappropriation of a trade secret. Determining which information is public and which is secret is also critical to the claim. Trade secrets can involve client information, buyer contacts, market strategies, customer preferences, as well as blueprints and drawings. However, to be labeled as secret, that information must not be general knowledge, publicly disclosed, or easy to access. Another consideration is that the defendant may exercise the freedom of speech or association when sharing information, especially if sharing that secret may also be a matter of public concern. If these situations exist, then misappropriation of trade secrets has not occurred. Tex. Civ. Prac. & Rem. Code Ann. ยง 27.005.

Proving that a defendant has violated a confidence is a challenge, as is determining whether information is public information or proprietary. Grappling with this cause of action requires the guidance of a lawyer able to deal with the intricacies of misappropriation of trade secrets.

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