law-trade-secrets | protective order | misappropriation of trade secret | noncompete nonsolicitation clauses
Trade Secrets and Discovery: Mandamus relief sought and granted
“[W]hen trade secret privilege is asserted as the basis for resisting production, the trial court must determine
[(1)] whether the requested production constitutes a trade secret; [(2)] if so, the court must require the party
seeking production to show reasonable necessity for the requested materials.” In re Bass, 113 S.W.3d 735,
738 (Tex. 2003). If the information is a trade secret and the requesting parties do not need it, an order that
requires disclosure is a clear abuse of discretion. Id. at 745.
To determine whether a trade secret exists, we weigh the six factors set forth in the Restatement of Torts in
the context of the surrounding circumstances: (1) the extent to which the information is known outside of the
business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent
of measures taken to guard the secrecy of the information; (4) the value of the information to the business
and to its competitors; (5) the amount of effort or money expended in developing the information; (6) the
ease or difficulty with which the information could be properly acquired or duplicated by others. Bass, 113 S.
W.3d at 739 (citing Restatement of Torts § 757 cmt. b. (1939); Restatement (Third) of Unfair Competition §
39 reporter’s note cmt. d. (1995)).
In Re Union Pacific Railroad Co. No. 08-0740 (Tex. Sep. 25, 2009)(per curiam)
(discovery mandamus granted to protect company pricing information) (protection of trade secrets)
IN RE UNION PACIFIC RAILROAD COMPANY; from Bexar County;
4th district (04-08-00388-CV, ___ SW3d ___, 08-20-08)
Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Texas Supreme
Court conditionally grants the petition for writ of mandamus.
Per Curiam Opinion
The manner and method that Union Pacific employs to calculate and arrive at shipping rates . . . is
confidential, proprietary and a trade secret of Union Pacific. The information is not generally known or readily
available to Union Pacific’s competitors or its customers or other businesses. The information is not even
generally known throughout the company. Rather, the information is known only to a limited number of Union
Pacific employees and certain management employees.
Claim for Misappropriation of Trade Secrets
The elements of a statutory claim and a common law claim of misappropriation are not
exactly the same, we conclude the same evidence supports both causes of action. Under a
statutory claim, "[a] person commits an offense if, without the owner's effective consent, he
knowingly: (1) steals a trade secret." Tex. Penal Code Ann. §31.05(b)(1); see Tex. Civ. Prac. &
Rem. Code Ann. §134.002(2). "Steals" is defined as "[acquiring] property or services by theft," and
"theft" is defined as "unlawfully [appropriating] property with intent to deprive the owner of property."
Tex. Penal Code Ann. §§ 31.01(7), 31.03(a) (Vernon 2003). We find Space Place's evidence,
explained in detail in this section, supports a reasonable inference that Midtown knowingly stole
Space Place's trade secrets, as defined in the Penal Code. See id. § §31.01(7), 31.03(a) - (b),
31.05(b)(1); Tex. Civ. Prac & Rem. Code Ann. § 134.002(2).
Under the Texas Theft Liability Act, "trade secret" is defined as "the whole or any part of any
scientific or technical information, design, process, procedure, formula, or improvement that has
value and that the owner has taken measures to prevent from becoming available to persons other
than those selected by the owner to have access for limited purposes." Tex. Penal Code Ann. §
31.05(a)(4) (Vernon 2003); See Tex. Civ. Prac. & Rem. Code Ann. § 134.002(2) (incorporating
definitions from the Penal Code). We conclude the statutory definition of trade secret is consistent
with the common law definition; therefore we will conduct only one analysis. See Klumpe, 101 S.W.
3d at 472 ("The statutory definition of trade secret comports with the definition used when tort and
contract trade secret law is considered.").
SP MIDTOWN, LTD. D/B/A SPACE PLACE MIDTOWN v. URBAN STORAGE, L.P. AND MIDTOWN STORAGE,
L.L.C.; from Harris County; 14th district (14‑07‑00717‑CV, ___ SW3d ___, 05-08-08)
SP Midtown Ltd. v. Urban Storage, LLC (Tex.App.- Houston [14th Dist.] May 8, 2008)(Anderson)
(trade secrets, tortious interference, civil conspiracy)
HB TURBO, L.P. v. TURBONETICS ENGINEERING & SERVICES, INC.; from Nueces County; 13th district (13-
06-00083-CV, ___ SW3d ___, 06-07-07, pet. denied April 2008)
By two issues, HB contends the trial court erred in granting Turbonetics' no-evidence motion for summary
judgment because more than a scintilla of evidence exists as to its causes of action for trade secret
misappropriation and non-trade secret misappropriation (more appropriately referred to as unfair
competition). (1) By a third issue, HB contends the trial court erred in granting Turbonetics' traditional motion
for summary judgment because material fact questions exist as to its non-trade secret misappropriation
claim. We affirm.
ELEMENTS OF CAUSE OF ACTION FOR MISAPPROPRIATION OF TRADE SECRETS
Under Texas law, a plaintiff can recover for misappropriation of a trade secret by establishing that (1) a
trade secret existed, (2) the trade secret was acquired through a breach of a confidential relationship or was
discovered by improper means, (3) the defendant used the trade secret without the plaintiff's authorization,
and (4) the plaintiff suffered damages as a result. IAC, Ltd. v. Bell Helicopter Textron, Inc., 160 S.W.3d 191,
197 (Tex. App.-Fort Worth 2005, no pet.); Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452,
463 (Tex. App.-Austin 2004, pet. denied).