USA – TEXAS Trends and Developments Contributed by: Jeff Homrig, Gaby LaHatte and Heather Blacklaws, Weil, Gotshal & Manges LLP
technological advances. For example, patents pro - tect inventions, but they require public disclosure, can take years to secure, and do not cover abstract ideas, business methods, or many software concepts. Copy - rights protect original expression, but not the underly - ing ideas, methods, or systems that often represent a company’s crown jewels. Trade marks protect a com - pany’s brand, but do not cover proprietary processes, formulas, algorithms, or customer information. Trade secrets fill these gaps. They offer immediate protection, require no registration, and can last indefi - nitely so long as they continue to meet the standard for protection: they must be secret, they must be valu - able (in whole or in part) because they are secret, and the owner must take reasonable steps to keep them secret. For companies in fast-moving industries where waiting years for a patent may not be viable, trade secret protection can be the difference between main - taining a competitive edge and losing it. Indeed, trade secrets are not just a useful complement to traditional intellectual property; sometimes they offer the only viable protection. At the same time, employee movement is at an all- time high. When employees leave, they often take with them a deep knowledge of their former employer’s most sensitive information, like client lists, product roadmaps, proprietary methods, and strategic plans. Historically, companies relied on non-compete agree - ments to manage this risk, effectively preventing for - mer employees from taking that knowledge to a com - petitor. But many jurisdictions have significantly limited or outright banned non-competes. For example, Cali - fornia expressly prohibited them with limited excep - tions effective January 2024. Cal. Bus. & Prof. Code § 16600.1. Other states, including Minnesota and Wyo - ming, have followed suit. Minn. Stat. § 181.988; Wyo. Stat. Ann. § 1-23-108. Moreover, the prevalence of remote work in most industries today exposes com - panies in states like Texas, where non-competes are enforceable, to the laws of states where they are not. And while the Federal Trade Commission’s recent effort to ban non-competes nationwide subsided and remains dormant, it could easily and quickly revive with a new administration. The result is that com -
panies can no longer rely on broad non-compete agreements to protect sensitive information when an employee walks out the door. Trade secret law has filled that void by targeting the theft and use of competitively sensitive information. The Defend Trade Secrets Act of 2016 accelerated the increase in litigation by making trade secret mis - appropriation a federal cause of action, opening the doors of federal courts to plaintiffs nationwide. It also dramatically expanded the geographic reach of US trade secret law: an action under the DTSA can target conduct anywhere in the world, so long as there is some genuine tie to interstate commerce in the United States (eg, the misappropriation occurred outside the USA but products arising from it are sold in the USA). The DTSA also gave plaintiffs a powerful new tool: the ex parte seizure order. In exceptional circumstances, a court can authorise law enforcement to seize prop - erty, like devices, servers, and files, before the defend - ant even knows a lawsuit has been filed. Although granted sparingly, this tool can meaningfully impact a case where there is a real risk that evidence will be destroyed or concealed once a defendant receives notice that a case has been filed. Critically, the DTSA does not displace state trade secret law. Plaintiffs can and regularly pursue both DTSA claims and state law claims in the same case, effectively doubling their remedial toolkit and preserv - ing flexibility in how they frame their case. In states like Texas, where the Texas Uniform Trade Secrets Act (TUTSA) provides its own robust protections and remedies, that combination gives plaintiffs consider - able leverage from the moment a complaint is filed. Adding considerably to that leverage is the fact that trade secret damages are among the most robust in intellectual property law. Unlike patent or copyright claims, which are often based on the plaintiff’s own losses, trade secret damages are designed to cap - ture the consequences of misappropriation from both sides of the equation. In other words, plaintiffs can recover their own losses, like lost profits or lost busi - ness opportunities, but also the defendants’ gains. Where a competitor, failed acquiror, or joint venture partner, for example, has used stolen information to build a product, win a contract, or enter a new mar -
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