Trade Secret
Information, such as a formula, method, process, customer list or financial data, that derives independent economic value from not being generally known or readily ascertainable through proper means, and that its owner has taken reasonable measures to keep secret. Often relied on with, or in place of, a noncompete to protect an employer's confidential information.
A trade secret is information, including a formula, pattern, compilation, program, device, method, technique, process, financial data, or list of actual or potential customers or suppliers, that derives independent economic value from not being generally known or readily ascertainable through proper means, and that its owner has taken reasonable measures under the circumstances to keep secret. Trade secret law is often relied on with, or in place of, a noncompete to protect an employer's confidential information.
Elements of a trade secret
Under § 134A.002(6), the information must (1) derive independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from its disclosure or use, and (2) be information the owner has taken reasonable measures under the circumstances to keep secret.
Reasonable measures to keep information secret
Reasonable measures typically include (1) marking documents confidential; (2) limiting access on a need-to-know basis; (3) requiring employees and contractors to sign confidentiality agreements; (4) using physical and electronic security; (5) training employees on confidentiality obligations; (6) exit interviews emphasizing continuing obligations.
Misappropriation
Misappropriation occurs through (a) acquisition of a trade secret by a person who knows or has reason to know it was acquired by improper means, or (b) disclosure or use without consent by a person who used improper means to acquire it, who knew or had reason to know when disclosing or using it that the knowledge came through improper means or under a duty to keep it secret or limit its use, or who learned it by accident or mistake and knew or had reason to know it was a trade secret before materially changing position. § 134A.002(3). Improper means include theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, and espionage through electronic or other means.
Remedies
Injunctive relief against actual or threatened misappropriation, though an injunction may not prohibit a person from using general knowledge, skill, and experience acquired during employment. Other remedies are damages for actual loss and unjust enrichment (or in lieu, a reasonable royalty); exemplary damages up to twice the damages award if willful and malicious misappropriation is proven by clear and convincing evidence, and, in the court's discretion, attorney's fees to the prevailing party for willful and malicious misappropriation, a bad-faith claim of misappropriation, or a motion to terminate an injunction made or resisted in bad faith.
Trade secret law can complement or substitute for a noncompete, including where a statute limits noncompetes. SB 1318, effective September 1, 2025, requires noncompetes against physicians, dentists, nurses and physician assistants to expire within one year after the contract or employment ends, cover no more than a five-mile radius, and allow a buyout capped at annual salary and wages (Tex. Bus. & Com. Code §§ 15.50(b), 15.501). A TUTSA injunction still cannot bar use of general knowledge, skill, and experience (Tex. Civ. Prac. & Rem. Code § 134A.003(a)).
Practice guide: Cease and Desist Letters