Information is often a business’ most valuable asset. Whether it’s a unique process or targeted customer list, companies go to great lengths to protect this information and maintain their competitive advantage. These trade secrets are incredibly valuable – so valuable, in fact, they are sometimes stolen or improperly shared.
This happens in Texas quite frequently, with one study finding the state was among the top five with the most trade secret litigation. This begs the question, however: What is the difference between a trade secret and simply important information?
The two critical elements of a trade secret
The Texas Uniform Trade Secrets Act (TUTSA) defines the concept of a trade secret in the state. A trade secret can be any type of information and in any form. It might be a written plan, digitally saved code for proprietary software, images of a new design or prototype, customer or supplier lists, or a special formula. There are many possibilities.
However, there are two thresholds this information must meet in order to be considered a trade secret.
- The information derives independent economic value because it is not widely known, and others can not easily learn it through proper means.
- The owner of this information must have taken “reasonable measures” to ensure it remained secret.
The second point is not to be taken lightly. If a court does not believe the owner of the information took steps to ensure it remained private, it might not consider the information a trade secret.
Damages for theft of trade secrets
A business that wins a trade secrets theft case may be able to recover a few types of damages. That includes potentially any financial loss caused by the theft, as well as any unjust enrichment that occurred as a result of the misused trade secret.
If a court finds the misappropriation was “willful and malicious,” it may increase the damages awarded to the claimant. A plaintiff may also be able to recover attorney’s fees.
Proprietary information is at the heart of most businesses. Companies should ensure they’re taking steps to protect these trade secrets while being ready to take legal action should the need arise.