Trade Secrets and Non-Compete Litigation Attorney in Texas
Protecting Your Competitive Edge: Understanding Trade Secrets in Texas
In Texas, a trade secret is defined under the Texas Uniform Trade Secrets Act (TUTSA), codified in Texas Civil Practice and Remedies Code § 134A.002(6). A trade secret is information that meets specific legal criteria, making it eligible for protection against misappropriation or disclosure.
According to TUTSA, a trade secret includes information such as formulas, patterns, compilations, programs, devices, methods, techniques, processes, financial data, or lists of actual or potential customers or suppliers. The information must derive independent economic value, actual or potential, from not being generally known to, or readily ascertainable by proper means by, other persons who could obtain economic value from its disclosure or use. Also, the information’s owner must have taken precautions to keep the information private.
Common examples of trade secret misappropriation in Texas include:
- An employee selling a company’s trade secret to a competitor.
- An employee or business partner signs a non-disclosure agreement, but shares confidential information, such as a proprietary software algorithm or marketing plan, with a third-party competitor.
- A disgruntled worker or hacker steals company financial data or a product design through unauthorized access to a company’s systems, physical files, or email accounts. For example, downloading a trade secret database before resigning to start a business that competes with the employee’s company.
A skilled trade secrets lawyer in Texas can help your organization identify, document, and protect your most valuable trade secrets. Speak to one of our experienced trade secret attorneys today in a confidential consultation.
Non-Compete Agreements and Their Role in Safeguarding Trade Secrets
Non-compete agreements play a critical role in safeguarding trade secrets in Texas by restricting employees or contractors from engaging in competitive activities that could lead to the misuse or disclosure of proprietary information.
Governed by the Texas Covenants Not to Compete Act and often used in conjunction with the Texas Uniform Trade Secrets Act, non-compete agreements complement trade secret protections by limiting opportunities for people to exploit confidential information at rival firms or in their own ventures. Companies usually use non-compete agreements to protect proprietary business information and confidential data.
Non-compete agreements are used in the following ways to protect trade secrets:
- Preventing Misuse: Non-compete agreements bar former employees from joining competitors or starting rival businesses, reducing the risk of trade secret exploitation.
- Protecting Business Interests: Non-compete agreements safeguard trade secrets, confidential information, and goodwill.
- Complementing NDAs: Non-compete agreement limit competitive roles, while NDAs prevent disclosure, creating layered protection.
- Deterring Misappropriation: Non-compete agreements have the threat of litigation (injunctions, damages) discourages trade secret misuse
Requirements in Texas for enforcing non-compete agreements typically range from one to two years, with longer non-compete agreements requiring a detailed explanation. Non-compete agreements are typically limited to the company’s market, such as a specific city, rather than being statewide. The non-compete agreement must be restricted to aspects that involve trade secrets.
A skilled non-compete agreement lawyer in Texas will ensure that your agreements meet all legal standards and protect your company’s interests.
Legal Tools to Enforce NDAs and Non-Compete Agreements in Texas
Several legal remedies exist for enforcing non-compete agreements:
Breach of Contract Claims
Both NDAs and non-compete agreements are enforceable as contracts under Texas law, provided they meet basic contract requirements (offer, acceptance, consideration, and mutual assent). For NDAs, a breach occurs when confidential information, such as proprietary data or trade secrets, is disclosed or used without authorization.
For non-compete agreements, a breach involves engaging in prohibited activities, such as working for a competitor or soliciting clients within the restricted time and geographic area. Businesses can file a breach of contract lawsuit in Texas state courts, seeking remedies like damages for losses or specific performance to enforce the agreement’s terms.
Injunctive Relief
A primary tool for enforcing NDAs and non-compete agreements is injunctive relief, which courts can grant to stop ongoing or threatened violations. Under TUTSA, injunctions can prevent further disclosure or use of trade secrets protected by an NDA, and § 15.51 allows injunctions to halt competitive activities violating a non-compete.
Temporary restraining orders (TROs) or preliminary injunctions are often sought to maintain the status quo, requiring the plaintiff to show irreparable harm, likelihood of success on the merits, and a balance of equities.
Damages and Monetary Remedies
Texas law allows businesses to recover compensatory damages for breaches of NDAs and non-competes. For NDAs, damages include actual losses or unjust enrichment.
For non-compete agreements, damages may include lost profits or the value of client relationships resulting from the breach. If the breach is willful and malicious, TUTSA allows exemplary damages up to twice actual damages for trade secret misappropriation, and similar principles may apply to egregious non-compete violations.
Settlement and Negotiations
Before or during litigation, businesses can use negotiation to enforce NDAs and non-competes, often resulting in settlements like cease-and-desist agreements, modified restrictions, or monetary payments. Skilled trade secret and non-compete lawyers leverage evidence gathered through discovery or pre-litigation tools to negotiate favorable terms, avoiding costly trials.
Settlements may include confidentiality clauses to further protect trade secrets, aligning with TUTSA’s emphasis on secrecy. This approach is particularly effective when litigation risks expose sensitive information or when swift resolution is preferred.
Legal Fees and Costs
TUTSA and the Covenants Not to Compete Act permit courts to award attorneys’ fees to the prevailing party in cases involving willful or bad-faith breaches, or when claims/defenses are deemed frivolous. This incentivizes compliance and deters baseless litigation. For NDAs, fees are often awarded if the breach involves trade secrets and intentional misconduct. For non-compete agreements, fees may be awarded if the agreement explicitly provides for them or if the breach is willful.
In summary, Texas businesses can enforce NDAs and non-competes using various legal tools, including breach of contract lawsuits, injunctive relief, damages, attorneys’ fees, pre-litigation discovery, reformation, and strategic settlements.
These tools require thorough evidence collection and a strategic approach to prove breaches and protect trade secrets or goodwill. Experienced trade secret lawyers at Vestige Law will support your business with aggressive and strategic legal responses.
Trade Secret Protection Strategies for Texas Employers
How do you protect your company’s most valuable trade secrets? Vestige Law recommends protecting your trade secrets with a robust combination of legal, contractual, and practical strategies customized to the rules outlined in the Texas Uniform Trade Secrets Act. Critical strategies to protect your company’s trade secrets are:
Implement Robust Confidentiality Agreements (NDAs)
Robust non-disclosure agreements are essential for protecting your trade secrets by contractually requiring your employees, contractors, and third parties to maintain confidentiality. NDAs should clearly define the trade secrets or confidential information covered, specify non-disclosure obligations, and outline consequences for breaches.
Under TUTSA, reasonable secrecy measures are necessary, and NDAs serve as evidence of such efforts. Employers should create NDAs to the recipient’s role, ensuring only necessary information is shared, and include provisions for returning or destroying data upon termination. NDAs can be perpetual for trade secrets or time-limited for less sensitive information, aligning with Texas courts’ preference for reasonable terms.
Use Non-Compete and Non-Solicitation Agreements
Non-compete agreements restrict your employees from working for competitors or starting rival businesses, reducing the risk of trade secret misuse. Non-solicitation clauses prevent soliciting clients or employees, further protecting customer lists or goodwill tied to trade secrets.
These agreements must be reasonable in terms of time, typically one to two years, geographic scope, and scope of activity. Employers should document access to trade secrets to justify restrictions because courts may reform overly broad agreements. Pairing non-competes with NDAs creates layered protection, addressing both competitive activity and disclosure risks.
Establish Physical and Digital Security Measures
TUTSA requires reasonable efforts to maintain secrecy, making physical and digital safeguards critical. Employers should limit access to trade secrets by implementing role-based permissions, secure storage, and digital protections such as passwords, encryption, and two-factor authentication.
For example, restricting access to a proprietary database to only essential personnel strengthens trade secret claims. Monitoring tools, such as data access logs or software tracking downloads, can detect unauthorized use. Regular audits of security protocols ensure compliance with TUTSA’s secrecy requirement, reducing the risk of information being deemed non-protectable due to inadequate safeguards.
Employee Training and Policies
Educating your workers about trade secret protection fosters a culture of confidentiality and minimizes unintentional disclosures. Employers should implement clear policies that define trade secrets, outline handling procedures, and emphasize confidentiality obligations.
Regular training sessions, especially for employees with access to sensitive information, reinforce these policies and demonstrate the implementation of reasonable secrecy measures. Your policies should include exit procedures, such as return of company devices and reminders of NDA obligations, to prevent post-employment misuse.
Monitor Compliance, Enforce as Needed
Proactive monitoring and swift enforcement deter trade secret misappropriation. Employers should use technology to track data access or transfers, identifying potential breaches early.
If misappropriation is suspected, your company can use pre-litigation discovery under Texas Rule of Civil Procedure 202 to investigate before filing a lawsuit. In litigation, TUTSA allows remedies such as injunctions, damages, and attorneys’ fees, but your company must act within the three-year statute of limitations.
Hiring digital forensics experts can trace misuse, as seen in cases involving stolen data. Consistent enforcement, including the issuance of cease-and-desist letters or lawsuits, signals a commitment to protecting trade secrets.
You should engage with an experienced Texas trade secrets lawyer to assist you with drafting enforceable protective contracts. Vestige Law recommends reviewing your employment agreements periodically to stay compliant with evolving laws.
Litigation Trends and Market Considerations
Trade secret litigation has increased in Texas and nationally, driven by the increasing value of proprietary information and the clarity provided by TUTSA and DTSA. Nationally, a 2024 study determined that 84% of federal trade secret cases that went to verdict since 2017 favored plaintiffs, encouraging more filings and higher settlement values.
In Texas, cases like Southwest Energy, L.P. v. Berry-Helfand show courts’ willingness to award significant damages when trade secrets, such as proprietary geological data, are misappropriated. This trend encourages companies to pursue litigation to protect trade secrets, particularly in industries such as technology, energy, and healthcare, where Texas is a growing hub of activity.
Texas continues to allow enforceable non-competes under clear guidelines, while states like California are imposing restrictions on their use.
Effects of FTC’s Proposed Non-Compete Ban
On April 23, 2024, the FTC issued a final rule banning most non-compete agreements nationwide, citing their negative impact on wages, innovation, and competition. The rule, set to take effect on September 4, 2024, would have prohibited new non-competes for all workers (including employees and contractors) and voided existing ones, except for senior executives earning over $151,164 annually in policy-making roles. Employers were required to notify workers of non-enforcement.
The FTC’s rule faced immediate legal opposition, with lawsuits filed in Texas, Pennsylvania, and Florida. On August 20, 2024, the U.S. District Court for the Northern District of Texas in Ryan LLC v. FTC vacated the rule nationwide, ruling that the FTC lacked statutory authority and the rule was arbitrary and capricious.
The court cited the major questions doctrine, arguing the rule’s broad economic impact required explicit congressional authorization. The FTC appealed to the Fifth Circuit, but with Andrew Ferguson, a vocal opponent of the rule, appointed FTC Chair in January 2025, the appeals were placed in abeyance until July 2025.
Remember Labor Mobility and Industry Norms
Vestige law recommends that companies consider labor mobility and industry norms when drafting or litigating trade secret agreements. Always remember that trade secret litigation is increasingly influenced by labor market impacts and public policy concerns, particularly as Texas courts balance the protection of proprietary information with the interests of employee mobility and economic fairness.
These vital factors influence how Texas courts assess the validity of trade secrets, the reasonableness of protective measures, and the remedies awarded, especially in the context of non-disclosure agreements and non-compete agreements often tied to trade secret disputes.
Why Choose Vestige Law for Trade Secrets and Non-Compete Litigation
Vestige Law is an excellent choice for managing your trade secrets and non-compete litigation needs. Here’s why:
Specialized Experience in IP Protection
Vestige Law is highly skilled at uncovering evidence of intellectual property theft or violations of non-compete and non-solicitation agreements. Our legal team has a deep understanding of the technical and legal nuances involved in such cases, which is critical for effective litigation and defense.
Comprehensive Litigation and Consulting Services
Trade secrets and non-compete disputes require a blend of proactive counseling and aggressive litigation. Vestige Law offers services such as drafting and reviewing non-compete, non-solicitation, and confidentiality agreements, as well as litigating disputes related to the misappropriation of trade secrets. This dual focus on prevention and enforcement ensures you are protected before and during disputes.
Unfair Competition Experience
Vestige Law is experienced in handling cases involving unfair competition, including trade secret theft and deceptive practices. This is particularly valuable for businesses in competitive industries, such as technology, pharmaceuticals, or manufacturing, where protecting proprietary information is crucial.
Forensic Investigation Capabilities
A key differentiator for Vestige Law is our ability to conduct forensic investigations to prove or disprove allegations of intellectual property theft. This technical skill can be pivotal in litigation, providing concrete evidence to support claims or defenses in court, especially in cases involving complex digital evidence
Vestige Law possesses the expertise and experience in trade secrets and non-compete litigation to ensure that your business receives specialized attention, rather than generic legal services. Consult with our trade secret lawyers in Texas to safeguard your company and enforce your rights.
Frequently Asked QuestionsIntro text
When can a business file a lawsuit for trade secret misappropriation in Texas?
In Texas, a business can file a trade secret misappropriation lawsuit when it believes its confidential business information, qualifying as a trade secret, has been wrongfully acquired, used, or disclosed without authorization. The legal framework governing such claims is primarily the Texas Uniform Trade Secrets Act (TUTSA), effective since September 1, 2013, which aligns closely with the federal Defend Trade Secrets Act (DTSA).
To pursue a lawsuit, specific conditions must be met, and the process involves demonstrating the existence of a trade secret, its misappropriation, and the resulting harm.
Can a former employee in Texas work for a competitor if they signed a non-compete?
In Texas, whether a former employee can work for a competitor after signing a non-compete agreement depends on the enforceability of the agreement under Texas law, specifically the Texas Covenants Not to Compete Act, Non-compete agreements are enforceable in Texas, provided the non-compete agreement meets strict statutory requirements regarding reasonableness in scope, duration, and geographic area, and if they protect legitimate business interests.
What remedies are available for the theft of trade secrets in Texas?
In Texas, remedies for trade secret misappropriation under the Texas Uniform Trade Secrets Act (TUTSA) and, where applicable, the federal Defend Trade Secrets Act (DTSA) are designed to address the harm caused by the theft and prevent further misuse. These remedies aim to compensate the victim, deter the wrongdoer, and protect the confidentiality of the trade secret.
Can an employer sue an independent contractor for violating a non-compete in Texas?
Yes, in Texas, an employer can sue an independent contractor for violating a non-compete agreement, provided the agreement meets specific legal requirements under Texas law. Non-compete agreements, also known as covenants not to compete, are governed by the Texas Covenants Not to Compete Act (Texas Business and Commerce Code § 15.50 et seq.).
These agreements are enforceable against independent contractors just as they are against employees; however, strict conditions must be met, and Texas courts scrutinize them closely due to the state’s policy of favoring economic freedom and mobility.
What’s the difference between a confidentiality agreement and a non-compete agreement in Texas?
In Texas, confidentiality agreements (also known as non-disclosure agreements or NDAs) and non-compete agreements serve distinct purposes in protecting business interests, although they may overlap in certain contexts. Both are governed by Texas law, with non-competes specifically regulated under the Texas Covenants Not to Compete Act.
Can a company stop a former employee from soliciting clients in Texas?
Yes, in Texas, a company can stop a former employee from soliciting clients through a properly drafted and enforceable non-solicitation agreement or a non-compete agreement that includes non-solicitation provisions, provided it meets the requirements of the Texas Covenants Not to Compete Act. Non-solicitation agreements are a subset of restrictive covenants that specifically prohibit a former employee from contacting or soliciting the company’s clients, customers, or employees after leaving employment.
How long do non-compete agreements last in Texas, and can they be challenged?
In Texas, the duration of non-compete agreements and their enforceability are governed by the Texas Covenants Not to Compete Act. Texas law requires that non-compete agreements have a reasonable duration to be enforceable. While there is no fixed statutory limit, courts typically uphold durations of 1–2 years after the end of employment or engagement as reasonable, depending on the industry and the nature of the protected interests.
What should I do if I’ve been accused of misappropriating trade secrets in Texas?
If you’ve been accused of misappropriating trade secrets in Texas, you need to act quickly and strategically to protect your interests, as such claims can lead to serious legal and financial consequences. That’s why hou should retain a trade secrets lawyer texas immediately. To respond effectively, you need to know the specifics of the claim. Under TUTSA, misappropriation involves (1) acquiring a trade secret through improper means or (2) using/disclosing it without authorization, knowing it was improperly obtained.
How can a business in Texas protect its proprietary information from competitors?
In Texas, protecting proprietary information from competitors requires a proactive, multi-faceted approach that combines legal, contractual, and practical measures. Under the Texas Uniform Trade Secrets Act (TUTSA) and other relevant laws, businesses can safeguard trade secrets, confidential information, and other proprietary data by implementing robust strategies to prevent misappropriation and ensure enforceability in court.
Do Texas courts enforce non-compete agreements against low-level employees?
Courts may enforce non-compete agreements against low-level employees, but they do so less often, as governed by the Texas Covenants Not to Compete Act. Enforcement against low-level employees, who have limited access to sensitive information or client relationships, is less likely than against high-level employees or executives, as courts balance the employer’s legitimate business interests with the employee’s right to earn a living.
