In my March 26, 2017 post, I argued that under the Texas Uniform Trade Secret Act (TUTSA), an applicant for injunctive relief was not required to establish the common law element of a “probable, imminent, and irreparable injury.” Instead, the applicant only had to prove “actual or threatened misappropriation.” The applicant in Baxter & Associates, L.L.C. v. D & D Elevators, No. 05-16-00330-CV, 2017 WL 604043 (Tex. App.—Dallas Feb. 15, 2017, no pet. h.), made the same argument, but before the Fifth Court of Appeals could decide the issue, it found that the applicant had failed to prove its customer list was a trade secret under TUTSA.
In Baxter & Associates, Baxter Elevators argued that it was entitled to injunctive relief because its two former employees had misappropriated its customer lists. The trial court denied the relief because Baxter Elevator had an adequate legal remedy for the misappropriation, and Baxter Elevators appealed, arguing that it was not required to prove that it did not have an adequate remedy at law. The Fifth Court of Appeals, however, never reached this analysis because there was legally and factual sufficient evidence to support an implied finding that the alleged customer lists were not within the definition of a “trade secret” under TUTSA. First, the Court cited the following evidence that demonstrated that the customer lists did not derive independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use:
- Defendant could not recall ever seeing a Baxter Elevator customer list while working there;
- Defendant found work by driving around “high-end” neighborhoods, contacting builders, and architects, and advertising; and
- Defendant obtained information about the four allegedly misappropriated customers by pulling their elevator permits.
Second, the Court cited the following evidence that demonstrated that the customer lists were not the subject of efforts that were reasonable under the circumstances to maintain their secrecy:
- Defendant worked for Baxter Elevators for six years before he was asked to sign any confidentiality agreement;
- Defendant representatives continued to work for Baxter Elevators after refusing to sign the confidentiality agreement;
- Baxter Elevators’ customer information data was not password protected, was not encrypted, and was not labeled confidential or proprietarty.
Overall, Baxter & Associates provides an excellent analysis of what does not constitute a trade secret under TUTSA.