Trade secret misappropriation in Texas — TUTSA, and what it displaces

The Texas Uniform Trade Secrets Act, chapter 134A, is the claim for a departing employee who took the customer list, the competitor who hired them, or anyone who used confidential business information they were not entitled to.

Two features shape the pleading. TUTSA displaces the other tort claims you would file on the same facts — conversion, unjust enrichment, breach of confidence — while leaving contract claims untouched. And the fee award is conditional, available only on findings of bad faith or wilful and malicious misappropriation.

What the claim is

Someone took your confidential business information, or used or disclosed it without permission.

Where the right comes from

Statute — CPRC chapter 134A, effective September 1, 2013, which replaced the common-law misappropriation claim.

What a plaintiff has to prove

1. A trade secret existed within § 134A.002.
2. The defendant acquired it by improper means, or used or disclosed it without consent in circumstances the statute defines as misappropriation.
3. Injury, or the defendant's unjust enrichment.

What counts as a trade secret

The statutory definition is broad — business, scientific, technical, economic or engineering information including formulas, designs, methods, techniques, programs, customer lists and financial data — but it carries two conditions:

• The owner took reasonable measures to keep it secret.
• It derives independent economic value from not being generally known and not being readily ascertainable by proper means.

The first condition is where cases are lost. Information a company never marked, never restricted, and shared without an agreement is not a trade secret however valuable it is.

Improper means

Theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, and espionage. Reverse engineering and independent derivation are proper means and are complete answers to the claim.

How long you have to file

Three years, under CPRC § 16.010(a) — "not later than three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered."

Section 16.010(b) provides that a continuing misappropriation is a single cause of action, and the period begins to run without regard to whether the misappropriation is a single or continuing act. A defendant who keeps using the secret for a decade does not restart the clock.

What has to happen before you file

Nothing. In practice the first filing is often an application for a temporary injunction under § 134A.003, which authorises injunctive relief for actual or threatened misappropriation.

What the claim pays

Actual loss plus unjust enrichment not taken into account in computing the loss, under § 134A.004(a).

A reasonable royalty, in place of other measures, where the court finds them not provable.

Exemplary damages up to twice the award, on clear and convincing proof of wilful and malicious misappropriation — § 134A.004(b).

Attorney's fees under § 134A.005, which are available in three situations and only three:

1. a claim of misappropriation made in bad faith;
2. a motion to terminate an injunction made or resisted in bad faith; or
3. wilful and malicious misappropriation.

The award is discretionary in each case. This is not a general prevailing-party fee provision — a defendant who merely wins does not collect fees, and a plaintiff who merely wins does not either.

What TUTSA displaces

Section 134A.007(a) provides that the chapter "displaces conflicting tort, restitutionary, and other law of this state providing civil remedies for misappropriation of a trade secret."

Displaced: common-law misappropriation, and claims for conversion, unjust enrichment or breach of confidence resting on the same trade secret facts.

Preserved by § 134A.007(b):

1. contractual remedies, whether or not based on misappropriation — non-disclosure agreements and non-competes survive;
2. other civil remedies not based upon misappropriation of a trade secret; and
3. criminal remedies.

Unresolved: whether TUTSA preempts claims about confidential information that does not rise to the level of a trade secret. Federal courts applying Texas law have split, and the Texas Supreme Court has not decided it.

Who can be sued

The person who took or used the information — a former employee, a contractor, a competitor.

A downstream recipient who knew or had reason to know the information was acquired by improper means.

The new employer, on the same knowledge standard, which is why trade secret cases so often name the competitor rather than the individual.

Common defenses

• The information is not a trade secret — no reasonable secrecy measures, or generally known.
• Independent development.
• Reverse engineering.
• No improper means — the information was disclosed voluntarily or acquired legitimately.
• Limitations — three years from discovery, with continuing use treated as one claim.
• The claim is duplicative, where the plaintiff has pleaded conversion or unjust enrichment that TUTSA displaces.

What people get wrong

Confidential is not the same as secret. Without reasonable measures to protect it, information is not a trade secret no matter how sensitive.

Fees are not automatic for the winner. They require bad faith or wilful and malicious conduct.

TUTSA does not kill the contract claim. A non-disclosure agreement or a non-compete survives the displacement provision.

Continuing use does not extend the deadline. The three-year clock starts at discovery of the first misappropriation.

Where it came from

Before 2013 Texas trade secret law was common law, drawn from the Restatement and a line of cases going back to the 1950s. Texas was among the last states to adopt the Uniform Trade Secrets Act.

TUTSA brought three things the common law lacked: a statutory definition of a trade secret, an express injunction remedy including for threatened misappropriation, and the displacement provision that stops the same facts from being pleaded as four different torts. The same session removed trade secret theft from the Texas Theft Liability Act, moving that ground entirely into chapter 134A.

Common questions

How long do I have to sue for trade secret theft in Texas?

Three years from when the misappropriation was discovered or should have been discovered.

What makes something a trade secret?

Information that derives value from not being generally known, and that the owner took reasonable measures to keep secret.

Can I recover attorney's fees?

Only for a claim made in bad faith, a bad-faith motion about an injunction, or wilful and malicious misappropriation — and the award is discretionary.

Can I also sue for conversion?

Generally not on the same facts. TUTSA displaces conflicting tort and restitutionary remedies for trade secret misappropriation.

Does my non-disclosure agreement still work?

Yes. Contractual remedies are expressly preserved.

What if they figured it out themselves?

Independent development and reverse engineering are proper means and defeat the claim.

Where these rules live

• CPRC § 134A.002 — Definitions
• CPRC § 134A.003 — Injunctive relief
• CPRC § 134A.004 — Damages
• CPRC § 134A.005 — Attorney's fees
• CPRC § 134A.007 — Effect on other law
• CPRC § 16.010 — Misappropriation of trade secrets: three years