The Texas Uniform Trade Secrets Act (TUTSA) took effect on Sept. 1, 2013, and applies to the misappropriation of trade secrets. The act is favorable to businesses operating in Texas, as previous laws regarding trade secret protection were somewhat unclear, inconsistent, and overly complicated.
TUTSA is modeled after the Uniform Trade Secrets Act (UTSA), which in some version has been adopted by 47 other states. For Texas-based companies with multistate locations, TUTSA’s enactment alleviates much of the uncertainty over protecting trade secrets under the laws of other states.
TUTSA provides companies with additional legal safeguards and expands available legal remedies. For example, the act provides a broader definition of trade secrets than prior Texas law. Specifically, TUTSA defines trade secrets as information – including a formula, pattern, compilation, program, device, method, technique, process, financial data, or list of actual or potential customers or suppliers – that (1) 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 (2) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Most significantly, TUTSA expands the definition of “trade secrets” to provide clear protection for a company’s financial information, as well as lists of prospective and current customers and suppliers. Such information is often at the center of disputes, but was not always held to be within the definition of trade secrets by Texas courts prior to the enactment of TUTSA. Now, there is no question.
TUTSA also broadens the right to injunctive relief. Historically, Texas courts were hesitant to grant injunctions for “threatened” misappropriation, as opposed to “actual misappropriation.” As a result, prior Texas law sometimes failed to address a vital concern – prevention. TUTSA now specifically authorizes injunctive relief upon proof that a misappropriation of trade secrets is threatened, even if it has not already occurred
Additional benefits for businesses under TUTSA include recovery of attorney’s fees and protective-order protection as to evidentiary presentations of trade secrets during litigation.
To ensure the benefits of TUTSA, however, businesses must still ensure that they take reasonable steps to keep their trade secrets confidential, as this is essential for protection under the act.
Overall, TUTSA eliminates much of the uncertainty regarding what constitutes a trade secret, thereby reducing some of the risk associated with litigating misappropriation cases.