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Last Modified:  2013-05-31
On May 2, 2013, T exas of ficially signed the T exas Uniform T rade Secret Act (“TUTSA”) into law . The act will replace T exas common law ,
effective September 1, 2013, and apply to all trade secret misappropriation claims filed thereafter .
The T exas legislature amended Section 1, T itle 6 of T exas’ Civil Practice and Remedies code by adding Chapter 134A - T rade Secrets. The
relevant portions of the act are included below:
CHAPTER 134A. TRADE SECRETS
Sec. 134A.001. SHOR T TITLE. This chapter may be cited as  
the T exas Uniform T rade Secrets Act.
Sec. 134A.002. DEFINITIONS. In this chapter:
(1) "Claimant" means a party seeking to recover damages under this chapter , including a plaintif f, counterclaimant, cross-claimant, or third-
party plaintif f. In an action in which a party seeks recovery of damages under this chapter on behalf of another person, "claimant" includes
both that other person and the party seeking recovery of damages.
(2) "Improper means" includes theft, bribery , misrepresentation, breach or inducement of a breach of a duty to maintain secrecy , to limit
use, or to prohibit discovery of a trade  
secret, or espionage through electronic or other means.
(3) "Misappropriation" means:  
(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper
means; or  
(B) disclosure or use of a trade secret of another without express or implied consent by a person who:  
(i) used improper means to acquire knowledge of the trade secret;  
(ii) at the time of disclosure or use, knew or had reason to know that the person's knowledge of the trade secret was:  
(a) derived from or through a person who had utilized improper means to acquire it;  
(b) acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or  
(c) derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or  
(iii) before a material change of the person's position, knew or had reason to know that it was a trade secret and that knowledge of it had
been acquired by accident or  
mistake.
(4) "Proper means" means discovery by independent development, reverse engineering unless prohibited, or any other means that is not
improper .
(5) "Reverse engineering" means the process of studying, analyzing, or disassembling a product or device to discover its design, structure,
construction, or source code  
provided that the product or device was acquired lawfully or from a person having the legal right to convey it.
(6) "Trade secret" means information, including a  
formula, pattern, compilation, program, device, method, technique,  
process, financial data, or list of actual or potential customers  Texas Uniform Trade Secrets ActAbout Recently Filed Cases Recent Decisions Legislative Developments Statutes Search
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 ef forts that are reasonable under the circumstances to maintain its secrecy .
Sec. 134A.003. INJUNCTIVE RELIEF .
(a) Actual or threatened misappropriation may be enjoined. On application to the  
court, an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional
reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.
(b) In exceptional circumstances, an injunction may condition future use upon payment of a reasonable royalty for no longer than the
period of time for which use could have been  
prohibited. Exceptional circumstances include a material and prejudicial change of position before acquiring knowledge or reason to know
of misappropriation that renders a prohibitive injunction inequitable.
(c) In appropriate circumstances, af firmative acts to protect a trade secret may be compelled by court order .
Sec. 134A.004. DAMAGES.
(a) In addition to or in lieu of injunctive relief, a claimant is entitled to recover damages for misappropriation. Damages can include both the
actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing
actual loss. In lieu of damages measured by any other methods, the damages caused by misappropriation may be measured by imposition
of liability for a reasonable royalty for a misappropriator's unauthorized disclosure or use of a trade secret.
(b) If wilful and malicious misappropriation is proven by clear and convincing evidence, the fact finder may award exemplary damages in an
amount not exceeding twice any award made under Subsection (a).
Sec. 134A.005. ATTORNEY'S FEES. The court may award reasonable attorney's fees to the prevailing party if:  
(1) a claim of misappropriation is made in bad faith;  
(2) a motion to terminate an injunction is made or resisted in bad faith; or  
(3) wilful and malicious misappropriation exists.
Sec. 134A.006. PRESER VATION OF SECRECY . In an action under this chapter , a court shall preserve the secrecy of an alleged trade
secret by reasonable means. There is a presumption in favor of granting protective orders to preserve the secrecy of trade secrets.
Protective orders may include provisions limiting access to confidential information to only the attorneys and their experts, holding in
camera hearings, sealing the records of the action, and ordering any person involved in the litigation not to disclose an alleged trade secret
without prior court approval.
Sec. 134A.007. EFFECT ON OTHER LA W.
(a) Except as provided by Subsection (b), this chapter displaces conflicting  
tort, restitutionary , and other law of this state providing civil remedies for misappropriation of a trade secret.
(b) This chapter does not af fect: 
(1) contractual remedies, whether or not based upon misappropriation of a trade secret;  
(2) other civil remedies that are not based upon misappropriation of a trade secret; or  
(3) criminal remedies, whether or not based upon misappropriation of a trade secret.
(c) To the extent that this chapter conflicts with the T exas Rules of Civil Procedure, this chapter controls. Notwithstanding Section 22.004,
Government Code, the supreme court may not amend or adopt rules in conflict with this chapter .
(d) This chapter does not af fect the disclosure of public information by a governmental body under Chapter 552, Government Code.
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The law also includes a section to ensure its uniform application and construction, which defines the term "theft" (as used in Sec. 134A.002
as an example of "improper means") to mean "unlawfully appropriating property or unlawfully obtaining services as described by Section
31.03, 31.04, 31.06, 31.07, 31.1 1, 31.12, 31.13, or 31.14, Penal Code."
Texas became the 48th state to adopt some form of the Uniform T rade Secrets Act, leaving New Y ork and Massachusetts as the only
remaining holdouts. Prior to T exas' adoption of the TUTSA, the state applied First Restatement of T orts §757 to trade secret
misappropriation claims. T exas courts will continue to apply the Restatement to misappropriation claims made either before September 1,2013, or afterwards if the claim alleges a "continuing misappropriation" that began before the TUTSA's ef fective date. §757 of the First
Restatement of T orts reads as follows:
§ 757. Liability For Disclosure Or Use Of Another's T rade Secret—General Principle
One who discloses or uses another's trade secret, without a privilege to do so, is liable to the other if
(a) he discovered the secret by improper means, or  
(b) his disclosure or use constitutes a breach of confidence reposed in him by the other in disclosing the secret to him, or  
(c) he learned the secret from a third person with notice of the facts that it was a secret and that  
the third person discovered it by improper means or that the third person's disclosure of it was otherwise a breach of his duty to the other ,
or 
(d) he learned the secret with notice of the facts that it was a secret and that its disclosure was made to him by mistake.
See Tewari De-Ox Sys., Inc. v . Mountain States/Rosen , LLC, 637 F .3d 604 (5th Cir . 201 1), footnote 2.
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Additionally , Texas had previously passed legislature imposing a statute of limitations for trade secrets claims. The TUTSA does not appear
to explicitly override, nor conflict with, the statute (included below). Barring additional guidance from either the T exas legislature or courts,
the statue should still be good law:
Tex. Civ . Prac. & Rem. Code § 16.010
§ 16.010.  Misappropriation of T rade Secrets
(a) A person must bring suit for misappropriation of trade secrets not later than three years after the misappropriation is discovered or by
the exercise of reasonable diligence should have been discovered.
(b) A misappropriation of trade secrets that continues over time is a single cause of action and the limitations period described by
Subsection (a) begins running without regard to whether the misappropriation is a single or continuing act.
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