Amendments to Texas UTSA Bring it Closer in Line with DTSA, but Differences Remain

American and Texas state flags flying on the dome of the Texas State Capitol building in Austin Amendments to Texas UTSA Bring it Closer in Line with DTSA, but Differences Remain

(Editors’ note: Thanks to Orrick summer associate, Ruben Sindahl, for his help with this blog post.)

Just four years after the Lone Star State ended its holdout by becoming the 48th State to adopt the Uniform Trade Secrets Act, Texas passed a bill to amend its enactment. The bill was signed by Texas Governor Greg Abbott on May 19, 2017, and will take effect on September 1, 2017.

The amended Texas UTSA provides definitions of several key terms. It defines “willful and malicious misappropriation” and clarifies that the standard for proving such misappropriation is by clear and convincing evidence. The amended law also defines the term “owner” in connection with trade secrets: the holder of legal or equitable title or someone with a right to enforce an interest in a trade secret. Finally, the law codifies a broader definition “trade secret”: any form or type of information whether tangible or intangible, and stored in any way.

The amendment appears to part ways with the federal Defend Trade Secrets Act passed last year in one important respect. While arguably, the DTSA does away with the inevitable disclosure doctrine, it appears that the latest enactment of the Texas UTSA does not.  The Texas act clarifies that injunctive relief for actual and threatened misappropriation is limited to situations where a person is not merely using general knowledge, skill, and experience acquired during prior employment.

In general, however, the amendment aligns Texas law more closely with the DTSA, but still retains some important differences, like in the definition of a “trade secret”. It will be interesting to see how the courts will interpret the changes. We will be sure to keep you updated.