What is the scope of trade secret protection in business transactions?
The scope of trade secret protection in business transactions in Texas is determined by state statute. Under the Texas Uniform Trade Secrets Act (TUTSA), a company’s trade secrets are broadly defined as information that is “secret” and “has independent economic value” to the company. Trade secrets are protected from unauthorized use or disclosure, and under TUTSA, include any information that can be used in the operation of a business or have actual or potential economic value. In Texas, trade secrets are protected from disclosure or use in business transactions that would be unfair or detrimental to the owner of the trade secret. For example, a company or individual cannot use trade secrets obtained in a business transaction if the transaction was accompanied by fraud or misrepresentation. Additionally, a company cannot use trade secrets for a purpose other than what was specifically agreed to in the business transaction, such as using trade secrets obtained in a joint venture for the benefit of a competitor. Furthermore, the courts in Texas have held that a company must use reasonable efforts to maintain the secrecy of the trade secrets it obtains in a business transaction. This includes taking steps to protect the trade secrets from being used or disclosed without authorization. For example, a company may require employees and contractors to sign non-disclosure agreements or put other measures in place to ensure the secrecy of the trade secret. Overall, Texas law provides trade secret owners with broad protection from unauthorized use or disclosure in business transactions. Companies must take steps to ensure that trade secrets are kept confidential and only used in the manner intended.
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