Employment Law Commentary -- Volume 25, Issue 11 -- November 2013: Trade Secret Protection From the Silicon Valley to the Silicon Prairie: Texas adopts the Uniform Trade Secrets Act

For the two million Californians who have left the state in the past decade, Texas has been the most popular destination. Further, 254 California companies moved some or all of their work and jobs out of state— frequently to Texas—in 2011. Of the 225 companies that moved into the Austin area between 2004 and 2011, 63 were from California. What accounts for Texas’s newfound popularity? Texas Governor Rick Perry boasts that his state’s “low taxes, sensible regulations, and fair legal system are just the thing to get your business moving to Texas,” and Texas’s strong university system and focus on commercializing intellectual property also have been touted as a lure for out of state businesses. While California Governor Jerry Brown described a recent campaign by Governor Perry to entice businesses to Texas as “barely a fart,” the estimated $19B Texas spends each year on tax breaks and other incentives to attract companies from other states may have something to do with movement of some businesses from other states to Texas.

Financial incentives may be attractive, but businesses in the Silicon Valley and elsewhere that rely heavily on intellectual property may also consider the ability to protect their IP when deciding whether to move to a new location. Indeed, in more than 90 percent of all trade secret misappropriation cases, the alleged misappropriator previously had been either the trade secret owner’s employee or business partner. California and Texas are the top two venues for state court trade secret litigation with 16% of cases coming from California and 11% from Texas. In light of Texas’s newfound popularity among former Californians, companies in the Silicon Valley and elsewhere have every reason to concern themselves with trade secret law in the Silicon Prairie.

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