On May 19, 2017, Texas Governor Greg Abbott signed into law several amendments to the Texas Uniform Trade Secrets Act (“TUTSA”), located in Chapter 134A of the Texas Civil Practice & Remedies Code. The amendments go into effect on September 1, 2017. In doing so, Texas has aligned its statute more closely with federal law and codified recent judicial interpretations of the law.
Two events precipitated the amendments, one legislative, one judicial. In the first, Congress passed the Defend Trade Secrets Act (“DTSA”) in May 2017, which provides a federal cause of action for trade-secret misappropriation. In the second, the Texas Supreme Court announced in In re M-I L.L.C., 505 S.W.3d 569 (Tex. 2016) that a presumption exists that a party is authorized to participate and assist in the defense of a trade-secret misappropriation claim under TUTSA, which presumption cannot be surmounted unless the trial court considers a seven-factor balancing test. These events resulted in the following key changes to the TUTSA:
Trade SecretThe amended TUTSA expands the definition of “trade secret” to more closely harmonize Texas law with the DTSA’s definition. Specifically, the Texas Legislature added to the definition “all forms and types of information” including, by way of example, “business, scientific, technical, economic, or engineering information,” design, prototype, plan, program device, code, or procedure, “whether tangible or intangible and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing.” There remain, however, several important differences between the amended TUTSA and the DTSA. First, the revised TUTSA definition of trade secrets lists illustrative examples of the form or type of information that can constitute a trade secret, whereas § 1839(3) of the DTSA confines a trade secret as “financial, business, scientific, technical, economic, or engineering information.” Second, in contrast to the DTSA, TUTSA includes a “list of actual or potential customers or suppliers” as an example of trade-secret information. Third, a trade secret under TUTSA, unlike the DTSA, need not be “related to a product or service used in, or intended for use in, interstate or foreign commerce.”
Injunctive ReliefTUTSA generally allows for injunctive relief from actual or threatened misappropriation. The amendment, however, preserves and clarifies the common-law rule that an employee cannot be enjoined...
