The Uniform Trade Secrets Act defines a trade secret as information not generally known or readily ascertainable that derives independent economic value. The Act has been adopted in Texas, seeks to protect trade secrets, which can be easily misappropriated. The economic value of a trade secret can be either actual or potential, so items that have not yet been produced, such as product blueprints, may have economic value. Trade secrets come in many forms, including:
- Customer lists
Proving a Trade Secret Claim
The government does not monitor trade secrets, so the burden of legal enforcement falls upon private companies. But when trade secrets are intentionally stolen, perpetrators may be subject to criminal penalties. To prove a trade secret claim in court, the following elements must be shown:
- The subject of the claim qualifies as a trade secret.
- Reasonable efforts were made to prevent disclosure of the trade secret – Generally speaking, reasonable efforts to prevent disclosure mean that trade secrets should be distributed on a limited basis to a small number of company insiders, and anyone to whom a secret is disclosed should be required to sign both a nondisclosure agreement and non-compete agreement. All documents or items containing trade secrets should be identified as confidential, and the organization’s policies on trade secrets should be detailed in the company handbook. Other reasonable measures to prevent the disclosure of trade secrets include the use of locks, passwords, and employee access badges.
- The trade secret was misappropriated – Trade secrets can be appropriated through improper acquisition or breach of confidence. Competitors are free to use trade secrets if acquired through independent discovery, accidental disclosure based on the owner’s failure to reasonably guard the secret, or reverse engineering.
Patent or Trade Secret?
Occasionally, trade secrets may also be protected under patent law. But since applying for a patent requires public disclosure of an invention’s method of reproduction, a patent may not be the best option for information that an organization or individual wishes to safeguard. Patent protection is also available only for a specific timeframe, while trade secrets can be protected until public disclosure.
Texas Legal Representation
Ajamie LLP’s experienced Texas attorneys are adept at developing strategies to protect trade secrets. Our employment litigation team routinely identifies types of business information that can be classified as trade secrets, develops trade-secret protection policies, and drafts confidentiality agreements for use with third parties. If our clients’ trade secrets are disclosed or stolen, our lawyers are prepared to pursue appropriate legal action. Please contact us for a consultation.