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Difficulty in Dealing with Trade Secrets

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Employers and employees easily get into disputes about trade secrets when a high level employee departs the company. The employer is suspicious of the employee’s future plans, and the former employee is worried that the employer is planning to stop the employee from working in the future.

Fundamental to trade secret law is that it must be secret. An easy way to defeat a claim for trade secret protection is to show the information was not kept as a secret within the company. Just because someone contends the information offers a competitive advantage and it would be damaging to get into the hands of a competitor doesn’t give the company a pass on ensuring the information is treated as a trade secret. Texas courts routinely reject trade secret claims because the company failed to secure the information in a manner consistent with keeping it secret.

A former employee is permitted to use his general knowledge, skills, and experience acquired during prior employment, even to compete with the former employer and do business with the employer’s customers. This is a gray area because the employee may not be a party to a noncompete agreement but still has a duty to maintain the employer’s information as confidential. This duty can arise from contract or by common law. If the former employee has experience, skill, and knowledge obtained prior to the employment relationship, then the employee has a clearer path to contending the time spent with the most recent former employer cannot give rise to a claim for stealing any trade secrets.

Once the trade secret is established as being a secret, the employer then has the burden of showing actual use or improper disclosure of the trade secret to succeed on the claim. Texas courts tend to look at the commercial use of the trade secret where profit is generated. Trade secret law can be challenging to navigate, and it is important to have an experienced attorney represent your interests–whether you are an employer or a former employee.

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