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November 1, 2013Joseph F. Cleveland, Jr., J. Heath Coffman

The Texas Uniform Trade Secrets Act

In this past legislative session, the Texas Legislature enacted the Texas Uniform Trade Secrets Act (“TUTSA”). On September 1, 2013, Texas will join 46 other states that are currently governed by some form of the Uniform Trade Secrets Act. Before enactment of TUTSA, Texas had no central law governing trade secrets. Instead,Texas law on trade secrets was cobbled together from Texas common law, the Restatement of Torts, the Restatement (Third) of Unfair Competition, and the Texas Theft Liability Act. Much of this law was outdated (the Restatement of Torts was drafted in 1939) and was simply not designed for the technological developments of the modern era. As a result, Texas businesses and those businesses looking to expand to Texas were left to guess as to what proprietary information Texas law would and would not protect. TUTSA codifies and modernizes Texas law on misappropriation of trade secrets by providing a simple legislative framework for litigating trade secret cases. Among other things, TUTSA provides an unambiguous and updated definition of trade secrets, a simplified means for obtaining injunctive relief and sealing court records, and an attorneys’ fees provision for recovering fees from those parties who engage in willful and malicious activity.What follows is a section by section analysis of TUTSA. Section 134A.002 of TUTSA contains a list of six new definitions, including definitions for “trade secret,”“misappropriation,” “improper means,” “proper means,” and “reverse engineering.”

Trade Secrets and Non-Competes: A Texas Sized Problem

The paper provides an overview of the Texas Uniform Trade Secret Act ("TUTSA") for non-specialists, recent legislative amendments to TUTSA, pattern jury charges for trade secret litigation, TUTSA business forms and other recent developments in trade secret law. The author also includes an employee termination return of property checklist, an employee handbook provision relating to confidentiality and trade secrets, a template termination letter and a template non-competition, non-solicitation and non-competition agreement.

Shareholder Agreements: Litigation Perspectives

It has been almost five years since the Texas Supreme Court declined to recognize a common law cause of action for shareholder oppression. Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014). Although it restricted shareholder common law rights, Ritchie did not put an end to shareholder litigation. As highlighted further below, recent cases show that shareholders continue to seek available judicial remedies, including through derivative actions and the various statutory and common law causes of action and remedies outlined by the Court in Ritchie. These cases provide insight into the types of claims practitioners should be cognizant of when advising their clients and drafting organizational documents. Through its repeated emphasis on the use of shareholder agreements, the Court in Ritchie for many situations left it to shareholders and corporations to protect their respective rights and interests and govern themselves by contract. Id. at 871. Thus, five years after Ritchie, the importance of well-drafted shareholder agreements cannot be understated. Accordingly, this article also discusses some of the potential provisions that practitioners should strongly consider including in their organizational documents, including shareholder agreements.