BREAKING NEWS: Don’t Mess with Texas Trade Secrets: Lone Star State Becomes 48th State to Adopt Uniform Trade Secrets Act

by Orrick - Trade Secrets Group
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In the battle to harmonize trade secret law, Texas was the Alamo—the biggest state to hold out against the rising tide of states adopting the Uniform Trade Secrets Act. But the Lone Star State is an outlier no more. Today Governor Rick Perry signed into law the Texas Uniform Trade Secrets Act, making Texas the 48th State to enact the model statute.

?The measure closely tracks the uniform act that 47 other states have adopted, providing for definitions of “trade secret,” “misappropriation” and “improper means.” The new law makes small tweaks to the uniform act, such as by expressly providing that a “trade secret” can include a “process, financial data, or list of actual or potential customers,” provided other requirements of the statute are met. As in the uniform act, the new law prohibits the unauthorized acquisition, use, and disclosure of trade secrets. It specifies that independent development and authorized reverse engineering are not prohibited. The act also includes the UTSA’s pre-emption clause, expressly providing that it displaces “conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret.” This means that the Texas UTSA will replace the patchwork of common law causes of action that otherwise would govern trade secret claims in Texas — a primary purpose of adopting a uniform act. It also would abolish the “continuous use” requirement of the common law, requiring that a secret has to be continuously used in order for there to be a cause of action. The bill establishes a presumption in favor of granting protective orders to protect trade secrets in litigation, including by limiting access to confidential information to attorneys and their experts. The bill provides for injunctive relief and damages for actual losses and unjust enrichment, or alternatively a reasonable royalty. And if a court finds willful and malicious misappropriation, exemplary damages and attorneys’ fees are available as well.

The law will become effective on September 1, 2013. The change in the law will apply to the misappropriation of trade secrets made on or after that date. Misappropriations that took place before the effective date, or continuing misappropriations, are governed by preexisting law.

?Texas Senate Bill 953 amends Title 6 of the Civil Practice and Remedies Code by adding the UTSA as Chapter 134A. A copy of the enacted bill is here. You can find trade secret laws for all 50 states, the District of Columbia, the U.S. Virgin Islands, as well as relevant federal and international law, on our compilation of trade secrets law.

?Now it’s down to the Yankees: Only Massachusetts and New York have not enacted some version of the uniform act. Not to mention Congress.

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Orrick - Trade Secrets Group
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