Another major hazard that employers in Texas face is ensuring their trade secrets stay protected. Under Texas law, a trade secret is information that the owner takes reasonable measures to keep secret, which is valuable because people do not generally know it and cannot easily find it out. The key is whether the secret is generally known, not whether anyone knows it. Limited disclosures (such as to contractors or business partners) or unintentional leaks (that the employer tries to correct) generally do not destroy trade secret status.
Courts analyze whether information is secret using six factors, which ask three basic questions:
- How many people know the secret?
- How valuable is the secret?
- How hard it would be to develop the secret fairly?
Client lists are typical trade secrets: even a handwritten Christmas card list can qualify as a trade secret if it’s kept secret and used to generate business. Company manuals may also qualify as trade secrets if the information in those manuals is not generally known. On the other hand, if an employer’s customers or prices can be identified by checking publicly-available information, that list will not be protectable as a trade secret.
What “reasonable measures” are needed to maintain secrecy is a case-specific question, but there are a few general trends. Telling an employee that information is secret is not enough – you must actually restrict the employee’s access to the secret. “Reasonable measures” are normally found if all three of the following occur: (1) requiring employees to sign enforceable NDAs, (2) stop[ing employees from using the secret if they don’t need to use it, and (3) not disclosing the secret to the public at large. These restrictions can be enforced electronically (through passwords or encryption) or physically (though closed worksites or locked rooms).
Knowing all this, employers ask: if my key developers, salespeople, or researchers quit and take my secrets with them, how can I stop them? As well as suing for trade secret misappropriation, several laws protect trade secrets: the federal Defend Trade Secrets Act (DTSA), the Texas Uniform Trade Secrets Act (TUTSA), and the Texas Theft Liability Act (TTLA). These statutes all prohibit employees from knowingly taking or using a trade secret – including copying a document or file containing a trade secret – without the employer’s consent. Among many other things, this includes “relying on the trade secret to assist or accelerate research or development, or soliciting customers through the… trade secret.” Employers who notice a sudden new product release or loss of clients shortly after a key employee quits should bear these laws in mind when deciding how to respond.