Trade Secret Litigation: Stopping Misuse and Defending Against Claims

Any form of business, technical or financial information, including a customer or supplier list, if the owner took reasonable measures under the circumstances to keep it secret and it has independent economic value because it is not generally known or readily ascertainable by proper means (Texas Civil Practice and Remedies Code section 134A.002). The definition is broad, but both conditions must be met. Information that was never protected, or that a competitor could assemble from public sources, usually fails the test.

Texas law allows a court to enjoin threatened misappropriation, not only completed misuse (section 134A.003). The evidence has to show a real threat, such as downloads before departure, retained files or a role at the competitor that cannot be performed without the information. Neither Texas nor federal law allows an order that stops a person from using general knowledge, skill and experience, and the federal statute adds that an injunction may not prevent someone from taking a job.

A temporary restraining order can be obtained within days when the evidence is organized and the request is specific, and it is short-lived by design, followed by a temporary injunction hearing where both sides present evidence. Expedited discovery and a protective order usually accompany the first motion. The speed depends on how quickly the company can show what the secret is, how it was protected and what the other side did with it.

Either can work. The Texas Uniform Trade Secrets Act applies in state court; the federal Defend Trade Secrets Act gives federal jurisdiction when the secret relates to a product or service in interstate commerce, and Texas claims can be joined to it. The remedies are nearly identical, so the choice turns on the parties' locations, the judge's calendar, the availability of an ex parte seizure order under federal law and where the evidence and witnesses are.

Only in defined situations. Under both Texas and federal law, fees may be awarded to the prevailing party when a misappropriation claim was made in bad faith, when a motion to terminate an injunction was made or resisted in bad faith, or when the misappropriation was willful and malicious (section 134A.005; 18 U.S.C. section 1836(b)(3)(D)). Fees are not automatic for winning. A well-drafted NDA or employment agreement may add a contractual fee clause.

Preserve everything, stop any use of the material in question and document that step. Do not delete files or wipe devices, which turns a defensible case into a spoliation problem. Then examine the claim: whether the information meets the legal definition, whether the measures to protect it were reasonable, and what the accused person actually brought and used. Where the claim was made in bad faith, the statute allows a fee award against the claimant.

Three years from the date the misappropriation was discovered or, with reasonable diligence, should have been discovered, under both Texas law (Texas Civil Practice and Remedies Code section 16.010) and the federal act (18 U.S.C. section 1836(d)). A continuing misappropriation is a single claim; the clock does not restart with each new use. Related contract claims under an NDA follow their own limitations period.