Back to the Basics: Protecting Trade Secrets

When you hire employees to work for your company, it is essential that you know how to protect trade secrets and to ensure that employees do not use information they learn while working for your company in ways that ultimately could harm your business. One of the first topics of examination in any litigation over non-compete agreements, non-solicitation agreements, or theft of trade secrets is whether or not the employer took appropriate steps to protect its trade secrets.  What do you need to know about protecting trade secrets in your Texas business? You should understand how the law defines a trade secret, the protections that are available to employers under Texas law, and ways of enforcing trade secret protections.

What is a Trade Secret?

According to the Texas Uniform Trade Secrets Act (TUTSA), a trade secret is defined as “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 both of the following things are true:

  • The owner of the trade secret (i.e., the business owner) “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.”

In short, a trade secret is any information that you have made a reasonable effort to protect, that is not generally known, and that would have economic value to another person. If you have a trade secret, you can take steps to protect it and may be able to file a claim if a trade secret is misappropriated.  The existence of a trade secret (and the giving of that trade secret to employees) is also often the centerpiece of any claims against former employees for violation of non-compete and/or non-solicitation agreements.

Methods of Protecting Trade Secrets

What can you do to protect your company’s trade secrets? You should work with an employment lawyer in Dallas on some or all of the following:

  • Require employees to sign a confidentiality and/or non-disclosure agreement (NDA) and develop an NDA that will go into all employment law contracts for future employees;
  • Require independent contractors to sign an NDA as well;
  • If you utilize vendors or suppliers that have access to trade secret information, they should also sign an NDA;
  • Have a company policy in place concerning NDAs and trade secrets and the misappropriation of trade secrets by current or future employees;
  • Take steps to prevent and/or limit access to company trade secrets, such as cyber security systems that prevent employees at certain levels from accessing information and that prevent anyone outside the company from gaining access to trade secrets;
  • Do not ignore violators of your policy (i.e., take appropriate legal action or otherwise against individuals that misappropriate trade secrets and/or violate non-compete agreements and/or non-solicitation agreements); and
  • Conduct employee training concerning trade secrets and the misappropriation of trade secrets.

If an employee violates a non-disclosure agreement or misappropriates trade secrets, you may be able to file a claim under TUTSA.

Seek Advice from a Dallas Employment Law Attorney

If you have questions about protecting your company’s trade secrets, an experienced Texas employment lawyer can speak with you today about your options. Contact Simon Paschal PLLC to learn more about how we can assist you with trade secret protection.

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