law-trade-secret
WHAT IS A TRADE SECRET?
A trade secret is any formula, pattern, device or compilation of information which is used in one's business
and presents an opportunity to obtain an advantage over competitors who do not know or use it. In re
Bass, 113 S.W.3d 735, 739 (Tex.2003); Sharma v. Vinmar Intern., Ltd., 231 S.W.3d 405, 424 (Tex.
App.-Hous. (14 Dist.) 2007, no pet.). Customer lists, pricing information, client information,
customer preferences, buyer contacts, blueprints, market strategies, and drawings have all been
recognized as trade secrets. T-N-T Motorsports v. Hennessey Motorsports, 965 S.W.2d 18 at 22
(Tex. App.-Houston [1st Dist.] 1998, pet. dism'd). To determine whether information constitutes
a trade secret, a court considers the following six factors: (1) the extent to which the information is
known outside the claimant's business; (2) the extent to which the information is known by
employees and others involved in the claimant's business; (3) the extent of the measures taken by
the claimant to guard the secrecy of the information; (4) the value of the information to the claimant
and to its competitors; (5) the amount of effort or money expended by the claimant in developing the
information; and (6) the ease or difficulty with which the information could be properly acquired or
duplicated by others. Bass, 113 S.W.3d at 739. The party claiming a trade secret need not satisfy
all six factors because trade secrets do not fit neatly into each factor every time. Id. at 740.
The mere fact that knowledge of a product or process may be acquired through inspection,
experimentation, and analysis does not preclude protection from those who would secure that
knowledge by unfair means. K & G Oil Tool & Serv. Co. v. G & G Fishing Tool Serv., 158 Tex.
594, 314 S.W.2d 782, 788 (1958). A trade secret must nevertheless be a secret. “Secrecy” in this
sense is not limited solely to confidentiality, but also requires that the information “is not generally
known or readily ascertainable by independent investigation.” Trilogy Software, Inc. v. Callidus
Software, Inc., 143 S.W.3d 452, 467 (Tex. App. 2004, pet. denied)
That no discrete formula is claimed also raises a problem in determining whether Aspen or Atchley
actually used the trade secret. Actual use or disclosure of the trade secret is a required element of
the tort. Use of the trade secret means commercial use by which the offending party seeks to profit
from the use of the secret. See Metallurgical Indus. Inc. v. Fourtek, Inc., 790 F.2d 1195, 1205 (5th
Cir.1986); Atlantic Richfield Co. v. Misty Products, Inc., 820 S.W.2d 414, 422 (Tex.App.-Hous. (14
Dist.) 1991, writ denied). Evidence of a similar product may give rise to an inference of actual use
under certain circumstances. See Leggett & Platt, Inc. v. Hickory Springs Mfg. Co., 285 F.3d
1353, 1361 (Fed. Cir. 2002).
Source:
08-0247 GLOBAL WATER GROUP, INC. v. ASPEN WATER, INC. AND ROBERT ATCHLEY; from Dallas
County; 5th district (05-06-00709-CV, 244 SW3d 924, 02-14-08, pet. denied)(claims for misappropriation
of trade secrets and conspiracy, confidentiality agreement, breach of a shareholder agreement,
JNOV)