Can I Stop a Former Employee Before They Actually Use My Trade Secrets?

The short answer, expanded

Trade secret law does not make an employer wait for the damage. Both the Texas statute and the federal statute speak of actual or threatened misappropriation, and an injunction against a threat is the remedy they contemplate. The difficulty is in the word threatened. Every departing employee who held confidential information could, in theory, use it. The law requires more than that theoretical possibility, and the difference between a fear and a threat is the difference between a denied application and an order.

This article is about that difference: what Texas and federal courts treat as evidence of a threat, what an order can and cannot say, and how the answer changes when there is a non-compete. How the emergency hearing itself works is covered in getting an emergency injunction to stop trade secret misuse.

What the Texas statute allows

Section 134A.003(a) of the Civil Practice and Remedies Code provides that actual or threatened misappropriation may be enjoined, with one condition written into the sentence: the order may not prohibit a person from using general knowledge, skill and experience that the person acquired during employment. That carve-out, added in 2017, is the statutory expression of a rule Texas courts had long applied. An employee's accumulated competence belongs to the employee, and an injunction that would in effect prevent the person from practicing the trade is beyond the Act.

Subsection (c) adds that in appropriate circumstances affirmative acts to protect a trade secret may be compelled by court order. That is the basis for orders requiring return of files, certification of deletion and submission of devices for forensic examination, which are often the most useful parts of an early order.

What the federal statute allows, and its added limit

The Defend Trade Secrets Act, 18 U.S.C. § 1836(b)(3)(A), likewise authorizes an injunction to prevent any actual or threatened misappropriation on reasonable terms. It then states two limits in the text. The order may not prevent a person from entering into an employment relationship, and any conditions placed on that employment must be based on evidence of threatened misappropriation and not merely on the information the person knows. The order also may not conflict with an applicable state law prohibiting restraints on the practice of a lawful profession, trade or business.

Congress wrote that sentence to reject the broadest form of the inevitable disclosure doctrine, under which some courts elsewhere have enjoined a new job itself on the theory that the employee could not help using what she knows. A federal court in Texas applying the DTSA may restrict what the employee does with the secrets, but the restriction must rest on proof of a threat.

Does Texas follow inevitable disclosure?

Texas does not treat inevitable disclosure as a standalone basis for an injunction. The combined effect of section 134A.003's general-knowledge carve-out and the Texas rule that an injunction must rest on a probable, imminent and irreparable injury is that an employer cannot obtain an order on the argument that the employee's new role makes use of the secrets inevitable. It needs evidence that misappropriation is threatened.

What Texas courts do consider is the same facts the doctrine points to, weighed as evidence of a threat rather than as a presumption: the degree of overlap between the old and new roles, the specificity and shelf life of the information, and the employee's conduct on the way out. An employee moving into an identical role at a direct competitor, who also copied files, presents a threat. An employee moving into an identical role who left cleanly and returned everything presents a harder case.

What counts as evidence of a threat

Courts look for conduct, not job descriptions. The facts that most often carry an application for an injunction against threatened misappropriation are:

• Pre-departure copying. Downloads to personal drives, emails to personal accounts, bulk printing or cloud transfers in the final weeks, shown by access logs and forensic examination.
• Deception about it. A signed exit certification that nothing was retained, contradicted by the logs. Wiping a device the day before returning it.
• Refusal or delay. Ignoring a written request to return or destroy files, or returning some while the logs show more.
• Solicitation that tracks the data. Contacts with the exact customers on a confidential list, in list order, within days of starting.
• The new employer's conduct. Asking the recruit to bring information, or a product roadmap that abruptly matches the former employer's unreleased plans.
• Statements of intent. Messages boasting of what the employee is bringing, or a recruiter's email describing the information as the reason for the hire.

The investigation that produces this evidence, and its limits, is described in investigating a departing employee's devices and accounts. The employer that can walk into court with access logs and an exit certification is in a very different position from the one that can only say the employee knew everything.

What the order can say, and what it cannot

An injunction against threatened misappropriation, properly framed, typically does some or all of the following:

1. prohibits the former employee, and anyone acting with him, from using or disclosing identified categories of the employer's trade secrets;
2. requires return of all company information in any form and certification under oath that none is retained;
3. requires the employee to make devices and accounts available for a neutral forensic examination under a protocol, with deletion of company data under supervision;
4. prohibits soliciting the customers or using the pricing identified in the order, where that information is the secret, for a defined period;
5. preserves evidence.

What it cannot do, absent an enforceable non-compete, is forbid the employee from working for the competitor or from using general skill and experience. Texas Rule of Civil Procedure 683 requires the order to state its reasons and describe in reasonable detail the acts restrained, and a Texas court will not enter an order so broad that the employee cannot tell what is forbidden. Orders that in substance bar a profession are reversed on interlocutory appeal.

The non-compete route is different

If the employee signed a non-compete that meets the requirements of sections 15.50 through 15.52 of the Business and Commerce Code, the employer can seek to enforce the covenant itself, which does restrain the new employment within the agreed scope. That claim does not require proof of threatened misappropriation; it requires an enforceable covenant and a breach. The two claims are often brought together, with the trade secret claim covering the secrets and the covenant covering the competition. Whether the covenant will hold up is the subject of is my non-compete enforceable in Texas, and a customer non-solicitation clause, which Texas treats under the same statute, is discussed in non-solicitation of customers and employees.

Example

Suppose a Dallas industrial supplier's regional sales director resigns on a Friday and starts at a direct competitor the following Monday, in the same role, covering the same territory. He has no non-compete. The company's IT team finds that in his last ten days he exported the full customer database with contract renewal dates and margins to a personal cloud account, then signed an exit form stating he had retained nothing. On Thursday a long-time customer mentions that he called to discuss its renewal, which is three months out.

The company files under TUTSA in Dallas County and applies for a temporary restraining order. It does not ask the court to stop him working for the competitor; it asks for an order barring use or disclosure of the exported data, requiring return and certified deletion, requiring his personal cloud account and devices to be imaged by a neutral examiner, and barring solicitation of the customers in the export for a stated period. The export logs, the false certification and the renewal call are evidence of a threat, not a fear. The court grants the order. The competitor, named as a defendant for its own exposure, agrees to a consent order and places the director on different accounts. Had the director left with nothing and merely taken the same role, the company would have had no comparable evidence and the application would likely have failed.

Deciding whether to file now

Three questions usually settle it. Is there evidence of conduct beyond knowledge? Is the information specific and still valuable, or general and stale? Would the order you can realistically obtain, which restrains use of the secrets rather than the job, protect what you are worried about? Where the answers are yes, early filing is the norm, because the statutory presumption in favor of protective orders and the availability of expedited discovery let the court see the forensic evidence quickly. Where the answers are no, a preservation letter, a reminder of the employee's continuing obligations and a request for written certification often achieve as much at far less cost, and they create the record if the threat later materializes.

Tina Wysk represents Dallas employers and departing employees in trade secret and non-compete matters in state and federal court; the practice is described at trade secret litigation.