As an employer, your trade secrets are the heart of your business. Knowing every manner available to protect those trade secrets could make a big difference in future of your business. A claim for misappropriation of trade secrets is one way an employer can protect its interests.
Under Texas law, a misappropriation of trade secrets claim not only can be made for the improper acquisition of trade secrets, but it can also be made for unauthorized use in general.
Section 134A of the Texas Civil Practices and Remedies Code defines misappropriation as follows:
(3) “Misappropriation” means:
- (A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or
- (B) disclosure or use of a trade secret of another without express or implied consent by a person who:
- (i) used improper means to acquire knowledge of the trade secret;
- (ii) at the time of disclosure or use, knew or had reason to known that the person’s knowledge of the trade secret was:
- (a) derived from or through a person who had utilized improper means to acquire it;
- (b) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or
- (c) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or
- (iii) before a material change of the person’s position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.
From the plain reading of the statute, the use of the disjunctive “or” demonstrates that there are six different ways to make a trade secrets misappropriation claim. These six misappropriation definitions can be separated into three categories based on how the trade secret is acquired. The first, and most predominate, involves the acquiring of trade secrets by improper means. This category includes the definitions contained within (3)(A), (3)(B)(i), and (3)(B)(ii)(a). Each of these involve some type of issue with the manner in which the trade secrets were actually acquired.
The second category of misappropriation deals with the acquisition of the trade secret by mistake or accident. Under (3)(B)(iii), it is considered misappropriation if the trade secret was acquired by accident or mistake, the person had reason to know that it was a trade secret, and the person used or disclosed the trade secret without consent.
The third category involves misappropriation stemming from the proper and even invited acquisition of trade secrets. This category contains those definitions within (3)(B)(ii)(b) and (3)(B)(ii)(c). This category includes claims that arise often in the employment context. In the context of their employment, employees often receive varying degrees of confidential and propriety information from their employers. While it is always wise for employers to protect this information through covenants not to compete, non-solicitation agreements, and non-disclosure agreements, this third category provides some degree of protection against the misuse of an employer’s trade secrets by an employee or ex-employee.
Thus, even if an employer’s employees have not signed non-compete or nondisclosure agreements, an employer has various ways under the Texas trade secrets statute to protect itself.
At Lindquist Wood Edwards, LLP, our attorneys have years of experience protecting employers’ confidential information and trade secrets. Whether or not you have a non-compete or nondisclosure agreement in place, we will use all avenues available to protect your interests. Our attorneys can also advise and assist you in drafting non-compete and nondisclosure agreements that will better protect you should any employee ever use your confidential information outside of his employment.