Texas Considers Adopting Uniform Trade Secrets Act

29 March 2013 Labor & Employment Law Perspectives Blog
Authors: Jessica Glatzer Mason

A bill is currently pending before the Texas Legislature to adopt the Uniform Trade Secrets Act.  Currently the law in 47 states, Texas is considering the adoption of S.B. 953, the Texas Uniform Trade Secrets Act (TUTSA) to codify and clarify the common law relating to the protection of trade secrets.  The proposed bill will expand the remedies currently available for misappropriation of trade secrets.  If enacted, TUTSA would go into effect September 1, 2013.

Trade secrets in Texas are currently governed by common law and there is a distinct lack of consistency and uniformity in the protection granted trade secrets and the remedies available to claimants.  TUTSA would resolve many of these conflicts and provide some predictability to those seeking to protect trade secrets.  Importantly, the proposed statute specifically identifies customer lists and potential customer lists as protected trade secrets—items previously evaluated on a case by case basis by Texas courts.

TUTSA authorizes courts to issue injunctive relief to prohibit disclosure or threatened disclosure of trade secrets, as well as to take any other reasonable steps to preserve the secrecy of the confidential information.  Notably, TUTSA empowers courts to compel affirmative action by a party to protect a trade secret in addition to simply preserving the status quo.  The proposed statute also provides for damages in addition to injunctive relief.  Damages may be calculated by analyzing the actual loss or the unjust enrichment resulting from the misappropriation, or by imposition of a reasonable royalty.  In addition, the courts have the discretion to award reasonable attorneys’ fees to a prevailing party. 

We will monitor the progress of this bill through the Texas Legislature, and provide analysis of the practical impact of the final bill if it is enacted.  For more information, please contact Jessica Mason or any of the labor and employment attorneys at Gardere.

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