85R11430 SCL-F

By: Elkins H.B. No. 1995

A BILL TO BE ENTITLED

AN ACT

relating to the Texas Uniform Trade Secrets Act.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 134A.002, Civil Practice and Remedies Code, is amended by adding Subdivisions (1-a), (3-a), and (7) and amending Subdivisions (3), (4), and (6) to read as follows:

(1-a) "Clear and convincing" means the measure or degree of proof that will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established.

(3) "Misappropriation" means:

(A) acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or

(B) disclosure or use of a trade secret of another without express or implied consent by a person who:

(i) used improper means to acquire knowledge of the trade secret;

(ii) at the time of disclosure or use, knew or had reason to know that the person's knowledge of the trade secret was:

(a) derived from or through a person who used [had utilized] improper means to acquire the trade secret [it];

(b) acquired under circumstances giving rise to a duty to maintain the [its] secrecy of or limit the [its] use of the trade secret; or

(c) derived from or through a person who owed a duty to the person seeking relief to maintain the [its] secrecy of or limit the [its] use of the trade secret; or

(iii) before a material change of the position of the person [person's position], knew or had reason to know that the trade secret [it] was a trade secret and that knowledge of the trade secret [it] had been acquired by accident or mistake.

(3-a) "Owner" means, with respect to a trade secret, the person or entity in whom or in which rightful, legal, or equitable title to, or the right to enforce rights in, the trade secret is reposed.

(4) "Proper means" means discovery by independent development, reverse engineering unless prohibited, or any other means that is not improper means.

(6) "Trade secret" means all forms and types of information, including business, scientific, technical, economic, or engineering information, and any [a] 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 [that]:

(A) the owner of the trade secret has taken reasonable measures under the circumstances to keep the information secret; and

(B) the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through [by] proper means by, another person [other persons] who can obtain economic value from the [its] disclosure or use of the information [; and

[(B) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy].

(7) "Willful and malicious misappropriation" means intentional misappropriation resulting from the conscious disregard of the rights of the owner of the trade secret.

SECTION 2. Section 134A.003, Civil Practice and Remedies Code, is amended by amending Subsection (a) and adding Subsection (a-1) to read as follows:

(a) Actual or threatened misappropriation may be enjoined if the order does not prohibit a person from using general knowledge, skill, and experience that person acquired during employment.

(a-1) On application to the court, an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.

SECTION 3. Section 134A.004(b), Civil Practice and Remedies Code, is amended to read as follows:

(b) If willful [wilful] and malicious misappropriation is proven by clear and convincing evidence, the fact finder may award exemplary damages in an amount not exceeding twice any award made under Subsection (a).

SECTION 4. Section 134A.005, Civil Practice and Remedies Code, is amended to read as follows:

Sec. 134A.005. ATTORNEY'S FEES. The court may award reasonable attorney's fees to the prevailing party if:

(1) a claim of misappropriation is made in bad faith;

(2) a motion to terminate an injunction is made or resisted in bad faith; or

(3) willful [wilful] and malicious misappropriation exists.

SECTION 5. Section 134A.006, Civil Practice and Remedies Code, is amended to read as follows:

Sec. 134A.006. PRESERVATION OF SECRECY. (a) In an action under this chapter, a court shall preserve the secrecy of an alleged trade secret by reasonable means. Notwithstanding any other law, including Rule 76a, Texas Rules of Civil Procedure, the court may seal court records. There is a presumption in favor of granting protective orders to preserve the secrecy of trade secrets. Protective orders may include provisions limiting access to confidential information to only the attorneys and their experts, holding in camera hearings, sealing the records of the action, and ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval.

(b) In an action under this chapter, a presumption exists that a party is allowed to participate and assist counsel in the presentation of the party's case. At any stage of the action, the court may exclude a party and the party's representative or limit a party's access to the alleged trade secret of another party if other countervailing interests overcome the presumption. In making this determination, the court must conduct a balancing test that considers:

(1) the value of an owner's alleged trade secret;

(2) the degree of competitive harm an owner would suffer from the dissemination of the owner's alleged trade secret to the other party;

(3) whether the owner is alleging that the other party is already in possession of the alleged trade secret;

(4) whether a party's representative acts as a competitive decision maker;

(5) the degree to which a party's defense would be impaired by limiting that party's access to the alleged trade secret;

(6) whether a party or a party's representative possesses specialized expertise that would not be available to a party's outside expert; and

(7) the stage of the action.

SECTION 6. Chapter 134A, Civil Practice and Remedies Code, as amended by this Act, applies only to an action that commences on or after the effective date of this Act. An action that commences before the effective date of this Act is governed by the law applicable to the action immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 7. This Act takes effect September 1, 2017.