If you have been following my blog, you know that the Texas Legislature is considering proposed legislation to amend the Texas Uniform Trade Secret Act (TUTSA). One of the purposes of these amendments is to conform parts of TUTSA to the Defend Trade Secrets Act (DTSA), a new law that creates a federal civil cause of action for misappropriation of trade secrets. The proposed new definition of “trade secret” under TUTSA is a great example of the effort to merge the two laws. The new TUTSA definition incorporates several of the illustrative examples of trade secret contained in DTSA. The new or changed language is italicized:
(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:
(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 proper means by, another person who can obtain economic value from the [its] disclosure or use of the information.
TUTSA’s revised definition, however, has one important difference from DTSA’s. DTSA limits a trade secret to “financial, business, scientific, technical, economic, or engineering information.” In contrast, TUTSA’s revised definition states that a trade secret can be any form or type of information and lists “business, scientific, technical, economic, or engineering information” as illustrative examples. Therefore, TUTSA’s definition of trade secret remains broader than DTSA’s.
The legislation also changes the hierarchical order of sections (A) and (B) to rank the taking of “reasonable measures under the circumstances to keep the information secret” as the first requirement for a trade secret. This non-substantive change emphasizes that if an owner fails to keep the information a secret, the trade secret is lost.