Trade Secret Law in Texas

What qualifies as a trade secret.

Both the federal and Texas statutes define trade secrets in the same essential terms: information (including formulas, patterns, compilations, programs, devices, methods, techniques, and processes) that derives independent economic value from not being generally known or readily ascertainable by others who could profit from it, and that is subject to reasonable measures to keep it secret.

The definition has two main elements. Economic value from secrecy means the information gives its owner an advantage precisely because competitors do not have it: a process that cuts costs, a dataset that took years to compile, a formula that defines the product. Reasonable measures means the owner treated it as a secret: limited access, marked it confidential, bound people by agreement, and enforced the boundaries. Courts evaluate both elements after the fact, once a dispute has arisen, so the measures need to exist beforehand.

Two statutes.

The Texas Uniform Trade Secrets Act (TUTSA), codified at Chapter 134A of the Texas Civil Practice and Remedies Code, has governed trade secret claims in Texas courts since 2013. It provides injunctions against actual or threatened misappropriation, damages for actual loss and unjust enrichment, exemplary damages up to twice the underlying damages award for willful and malicious misappropriation proved by clear and convincing evidence, and attorney's fees in specified circumstances.

The Defend Trade Secrets Act of 2016 (DTSA) creates a federal civil claim for misappropriation of a trade secret related to a product or service used in, or intended for use in, interstate or foreign commerce. It provides a federal forum and statutory remedies, including an extraordinary civil-seizure procedure subject to demanding conditions. Ordinary questions of personal jurisdiction, service and venue still require separate analysis.

Plaintiffs in Texas often assert both: a TUTSA claim in state court or alongside a federal claim, and a DTSA claim for federal jurisdiction and its remedies. The definitions are similar enough that the same facts usually support both, but the procedural differences can matter.

Reasonable measures in practice.

Reasonable measures are a required element of a trade secret claim. Courts look at the owner's overall practices, and inconsistent measures can undermine a claim.

• Identifying and classifying: Owners name their secrets and rank them by sensitivity. A company that cannot say what its trade secrets are will struggle to prove it protected them.
• Limiting access: Physical controls (locked areas, badge access), digital controls (permissions, encryption, monitoring), and need-to-know restrictions. Information available to the whole company without restriction is difficult to defend as a trade secret.
• Agreements: Confidentiality agreements for employees, contractors, and counterparties that are consistent, signed, and specific about what is confidential.
• Marking and tracking: Confidential markings on documents and data, access logs, and records of who received what. These records show that the program existed before the dispute.
• Enforcement: Investigating departures, sending preservation demands, and pursuing misappropriation when boundaries are crossed. Selective enforcement undermines the claim that the information mattered.

What counts as misappropriation.

Misappropriation means acquiring a trade secret by improper means, or disclosing or using it in breach of a duty to maintain secrecy. Improper means include theft, bribery, misrepresentation, and breach of duty, but not reverse engineering or independent derivation, which are generally lawful. An employee who memorizes a trade secret and rebuilds it at a competitor may have misappropriated, depending on the facts, including the duties that bound the employee and how the information was used; a competitor who buys the product and figures it out generally has not.

Remedies.

• Injunctions: against actual or threatened misappropriation, including orders barring a former employee from working with the secret for a protective period. Under the DTSA, an injunction may not prevent a person from entering an employment relationship, and any conditions on employment must be based on evidence of threatened misappropriation rather than merely on what the person knows (18 U.S.C. § 1836(b)(3)(A)(i)).
• Actual damages: the owner's losses, the misappropriator's unjust enrichment, or a reasonable royalty for the unauthorized use.
• Exemplary damages: under TUTSA, up to twice the underlying damages award for willful and malicious misappropriation proved by clear and convincing evidence. The DTSA similarly allows exemplary damages up to twice the compensatory award for willful and malicious misappropriation.
• Attorney's fees: available to the prevailing party in specified circumstances under both statutes, including bad-faith claims and willful misappropriation.
• Seizure (DTSA): in extraordinary circumstances, a court may order ex parte civil seizure of property to prevent dissemination. Courts grant it rarely.

The DTSA notice requirement.

Employers must include a notice of whistleblower immunity in employee confidentiality agreements entered into or updated after May 11, 2016. An employer that fails to give the notice cannot recover exemplary damages or attorney's fees under the DTSA against an employee who was not notified (18 U.S.C. § 1833(b)). For this purpose, the DTSA treats contractors and consultants as employees (18 U.S.C. § 1833(b)(4)).

Employee mobility in Texas.

Most Texas employment is at will, and Texas has its own statute governing noncompetes. Trade secret law applies whether or not a noncompete exists. Even without any restrictive covenant, a departing employee generally may not take or use the former employer's trade secrets, and a new employer that knew or should have known of the misuse may face misappropriation liability. Employers hiring from competitors commonly screen candidates, instruct them not to bring prior-employer information, and document clean-room onboarding. Employers commonly conduct exit interviews, revoke access promptly, and remind the departing employee, in writing, of continuing confidentiality obligations. (See the DTSA's limits on employment-related injunctions under Remedies above.) (On recent statutory limits to health-care noncompetes, see SB 1318 After One Year: Health-Care Noncompetes and Trade Secrets.)

Common misunderstandings.

"Our handbook says everything is confidential, so everything is a trade secret."

Blanket designations do not satisfy the definition. Courts distinguish genuine secrets, information with economic value from secrecy, from ordinary business information swept up in boilerplate.

"We don't need measures; everyone knows it's secret."

Reasonable measures are a legal element, not a formality. Unmarked, unrestricted, unenforced information may not qualify for protection, however confidential it was treated informally.

"Texas non-compete law means we can't stop departures."

Trade secret protections apply with or without a non-compete. Misappropriation is unlawful even where a non-compete would be unenforceable.

"The DTSA replaced Texas law."

It supplemented it. TUTSA and DTSA claims are often pleaded together, and each has procedural features the other lacks.

Sources.

• 18 U.S.C. § 1836 (Defend Trade Secrets Act of 2016): federal civil action for trade secret misappropriation; ex parte seizure in extraordinary circumstances (§ 1836(b)(2)); actual loss and unjust enrichment (§ 1836(b)(3)(B)); employment-injunction limits (§ 1836(b)(3)(A)(i)). law.cornell.edu (retrieved September 30, 2026).
• 18 U.S.C. § 1833(b): whistleblower-immunity notice in employee confidentiality agreements entered into or updated after May 11, 2016; no exemplary damages or attorney's fees against an employee who was not notified. law.cornell.edu (retrieved September 30, 2026).
• Tex. Civ. Prac. & Rem. Code ch. 134A: Texas Uniform Trade Secrets Act: definitions (§ 134A.002); injunctions (§ 134A.003); damages including exemplary damages up to twice the underlying award for willful and malicious misappropriation proved by clear and convincing evidence (§ 134A.004); attorney's fees (§ 134A.005). statutes.capitol.texas.gov (retrieved September 30, 2026).

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This guide is general information, not legal advice. Law checked through September 30, 2026. See the Disclaimer.