Trade Secrets & Non-competes
In 2013, the Texas Uniform Trade Secrets Act ("TUTSA") took effect with a goal of increasing uniformity and predictability in trade secret law. TUTSA allows a trade secret owner to seek injunctive relief to stop actual and threatened misappropriation of trade secrets.
TUTSA defines a “Trade Secret” as information, including formulas, patterns, compilations, programs, devices, methods, techniques, processes, financial data, and lists of actual or potential customers or suppliers.
A Trade Secret must actually be secret, and of value. It also must have actual or potential economic value derived from not being generally known to others and not being readily ascertainable by proper means.
Employers and former employees involved in trade secret litigation often disagree about whether particular information is secret, generally known, or readily discoverable. Employers must make reasonable efforts to maintain secrecy. TUTSA does not define "reasonable efforts." Questions that may be asked in trade secret litigation about an employers efforts include whether the employer:
Covenants not to compete are considered illegal restraints on trade. To be enforceable, a non-compete must meet the requirements of Section 15.50 of the Texas Business & Commerce Code.
The covenant must have an appropriate basis such as protection of the employer's goodwill or trade secrets. The restrictions must be reasonable with respect to time, scope, and geography. And, the restrictions must be reasonable and not impose a greater restraint than is necessary to protect the goodwill and business interests of the employer.
This article provides more information regarding the enforceability of covenants not to compete.