Beware of Arming Yourself With Trade Secrets That Don’t Belong to You

Texas aligned itself with the vast majority of the country by passing the Texas Uniform Trade Secrets Act.  Importantly, this new law provides that a court may enjoin “actual or threatened misappropriation” of Trade Secrets. The act broadly defines Trade Secrets as “[I]nformation, including a formula, pattern, compilation, program, device, method, technique, process, financial data, or list of actual or potential customers or suppliers, that: (A) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (B) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”

Last week, Mahendru, P.C. successfully utilized the new law in obtaining a temporary restraining order on behalf of its client.   The client, a foreign oil and gas exploration company, contracted with a party to obtain some consulting services. As a part of those services, the consultant agreed to maintain confidentiality of the trade secret data and proprietary information belonging to the client.

When the consultant refused to return the data, Mahendru, P.C. sought immediate relief from the courts, asking that the court to prevent further use of the client’s confidential and proprietary trade secret information. Further, Mahendru, P.C. requested the court to order that the consultant’s Gmail account, his computers, his cloud drives, his cell phones, external hard drives, or any other device that could store the client’s data be turned over for forensic examination.

The court agreed and awarded this relief on an emergency basis. In today’s competitive business climate, confidential information can become public and harm a company’s first mover advantage. Or, confidential information can become stale, which was a real risk in this particular circumstance.

The benefit of the Texas Trade Secrets Act is that mere possession of the confidential, proprietary, or trade secret information constitutes “threatened misappropriation.” This allows skilled lawyers to argue that, due to the nature of the information, disclosure is inevitable. When trade secrets are stake, the need for speed at times is absolute, and getting the case on an emergency basis to a court is vital. Mahendru, P.C. handles these emergency cases on a routine basis.

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