The biggest fear I have as an attorney representing businesses is their lack of protecting their trade secrets. Most business owners do not realize the protection provided under the law in most states for those items included in the category of “trade secrets.” For instance, do you realize that your client lists, methods in performing your trade, or even how you conduct the inner workings of your company can all be protected through trade secret law? Yes, it can, and those trade secrets have value especially when it comes to the sale or purchase of your business.
Here in Texas, we utilize common law (court cases) as guiding the use and enforcement of trade secrets. Texas trade secret laws mirror the tenets of the Uniform Trade Secrets Act (“UTSA”), a national guideline. In Texas, we are also guided by the Civil Practice and Remedies Code Title 6, Section 134A, et seq. This provision defines a trade secret as follows:
“ “Trade secret” means all forms and types of information, including business, scientific, technical, economic, or engineering information, and any formula, design, prototype, pattern, plan, compilation, program device, program, code, device, method, technique, process, procedure, financial data, or list of actual or potential customers or suppliers, whether tangible or intangible and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically, or in writing if:
- the owner of the trade secret has taken reasonable measures under the circumstances to keep the information secret; and
- the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.
The statute has many provisions in it that can be very difficult for a layperson to navigate. While the law provides relief for a business owner to enforce these provisions civilly or criminally, the owner of the trade secrets (usually the business itself) must take reasonable steps to protect that information. The easiest way to do this is by using an agreement for all employees, regardless of level in the company. Many variances in agreements can cover trade secrets, but usually, an employment agreement when someone is hired is a very good option to include the protections. If you have been in business for a number of years without any written protections, you do have options available to you to obligate your current employees. Keep in mind that these types of agreements are very specific to each individual business, and merely downloading one from the internet may not offer you the type of protection your business requires. I always like to remind clients that it is much cheaper to utilize your attorney to draft your agreements rather than having to hire us after the problems arise. Feel free to contact us with any questions you may have.