Texas Trade Secrets: Protection for Soft IP

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The Corporate Counsel Review published by the Texas State Bar's Section for Corporate Counsel published this article in its November 2012 edition. In it, Alan Bush and Morgan Culbreth wrote:

Trusted employees learn a company’s secret playbook. In the modern workplace, there is no way around it. But what happens when an employee who has some key plays memorized leaves to work for a rival? What if he takes a few pages out of the playbook on his way out the door? It happens all the time. Losing that information can devastate a company’s competitive edge or its element of surprise.

Hard federal IP protections, like patent and copyright, cannot cover all commercially sensitive business and technical information. The remaining soft IP still needs protection. When misappropriated by an employee, soft IP may qualify as trade secrets easier than many think.

Recent trade secret cases have edged Texas a step closer to paperless non-compete agreements. That is particularly true if a departing employee deliberately leaves with his or her company’s trade secrets in hand. Even an ex-employee’s head knowledge alone might justify an injunction. An employee who has left empty-handed might still pose an unacceptable risk of using the trade secrets that he or she can recall. Texas courts seem less hesitant to grant injunctive relief on a homegrown version of the inevitable disclosure doctrine.

We will look first at how employee theft of soft IP poses a threat, then how Texas courts have dealt with the issue. We will also highlight practical steps to take advantage of Texas’ strong trade secret protections, followed by steps to avoid winding up on the wrong end of a trade secret enforcement action when hiring.

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