Trade Secrets Law in Texas

Note: This page covers information specific to Texas. See the Trade Secrets overview for more general information.

Texas has not adopted a version of the Uniform Trade Secrets Act (UTSA), which is discussed in the Basics of a Trade Secret Claim. In fact, Texas does not have a statute governing trade secrets law. Instead, it is based solely on the common law, which is the compilation of prior court decisions in the state. Like the UTSA, however, Texas law creates civil liability for “misappropriation” of someone else’s trade secret(s). In addition, Texas law may impose criminal penalties for stealing trade secrets. See Texas Penal Code § 31.05.

Definitions

Texas courts have largely adopted the definition of trade secret from Section 757 of the Restatement of Torts: “A trade secret consists of a formula, process, device, or compilation which one uses in his business and which gives him an opportunity to obtain an advantage over competitors who do not know or use it.” The Restatement of Torts explains further that a trade secret differs from other secret information in a business in that it is not simply information about single or ephemeral events, but rather a process or device for continuous use in the operation of the business. From a practical perspective, this definition of “trade secret” is similar to that discussed in Basics of a Trade Secret Claim.

Under Texas law, misappropriation consists of use or disclosure of a trade secret that was acquired through a relationship of trust (such as employment), or through fraud or other improper means, such as theft, bribery, or hacking. This definition appears to include publishing a trade secret while knowing that your source obtained it through improper means or in breach of a confidentiality agreement.

Remedies

If a court finds that a defendant has misappropriated a plaintiff’s trade secret(s), it may impose the following remedies:

  • Injunctive Relief: CUTSA empowers a court to order a defendant to stop violating the plaintiff’s rights and to take steps to preserve the secrecy of the plaintiff’s information. Most importantly, this means that a court has the authority, as far as the law of trade secrets goes, to order you to stop publishing someone’s trade secrets if it finds that your publication amounts to misappropriation. The First Amendment to the U.S. Constitution may limit the court’s ability to do so, however. For details, see Publishing Trade Secrets.
  • Damages: A court can make a defendant pay money damages to the plaintiff for the economic harm suffered as a result of a trade secret violation. This may include the plaintiff’s losses resulting from the misappropriation and the defendant’s profits derived from it. If the court determines that the defendant acted willfully or maliciously, it may award the plaintiff punitive damages and attorneys’ fees.

Statute of Limitations

The statute of limitations for a civil trade secret claim in Texas is three years. See Tex. Civ. Prac. & Rem. Code Ann. § 16.010.

Criminal Law

As stated above, Texas also makes it a crime to steal trade secrets. Theft of a trade secret is a felony of the third degree. Third degree felony convictions in Texas carry a punishment of two to ten years in prison and a fine up to $10,000. See Tex. Penal Code Ann. § 12.34.

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