The Elements of a Trade Secret in Texas: What Are “Reasonable Means” to Protect a Trade Secret?

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Under the Texas Uniform Trade Secrets Act (TUTSA), as well as under the common law, information could be treated as a “trade secret” only if it met two criteria: it wasn’t “generally known” or “readily ascertainable” to those who could benefit from it, and its owner took reasonable efforts, given the circumstances, to protect the secrecy of the information.

The TUTSA applies to misappropriations of trade secrets that occur on or after September 1, 2013. Those that occurred before that date are governed by the common law. While common law on trade secrets in Texas provides several ways to weigh whether or not “reasonable efforts” were made to protect a trade secret, the TUTSA does not provide specific guidance on how to tell when efforts to protect information are “reasonable.”

Under the common law, “reasonable efforts” might include taking steps like:

  • Informing employees that the information is a trade secret, and training them on how to handle it appropriately,
  • Limiting employee access to a trade secret to those who “need to know,” or
  • Controlling plant or office access in order to reduce the number of people who might come into contact with the secret information.

Generally speaking, Texas courts have not held that a trade secret must be kept secret from the entire world. Instead, courts have held that the owners of a trade secret may disclose it to certain other people, as long as steps are taken to maintain boundaries around who may know the secret information. For instance, courts have held that employees, potential partners, and licensees may all be given access to a trade secret without destroying its secrecy.

In many cases, courts found that the fact that the person being “let in” on the secret had an economic or business relationship with the secret’s owner, and that sharing the secret was essential to one or both parties benefiting from the relationship, was relevant. The existence of protective measures like confidentiality or non-disclosure agreements, or disclosure when a fiduciary or confidential relationship already existed, were mentioned in many cases as reasons to continue recognizing the protection of the trade secret.