law-trade-secret | trade secret privilege | noncompete agreements | confidentiality agreements | covenant not
to compete | theft of trade secrets and conversion |
Theft of trade secrets and confidential information
WHAT IS A TRADE SECRET?
A trade secret is any formula, pattern, or compilation of data used in one's business
which presents an opportunity to obtain an advantage over a competitor who does not
know or use it. In re Bass, 113 S.W.3d 735, 739 (Tex. 2003). To determine whether
information shall be considered a trade secret, we analyze the following six factors:
(1) the extent to which the information is known outside the claimant's business;
(2) the extent to which the information is known by employees and others involved in the claimant's business;
(3) the extent of the measures taken by the claimant to guard the secrecy of the information;
(4) the value of the information to the claimant and to its competitors;
(5) the amount of effort or money expended by claimant in developing the information; and
(6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
The burden of proving secrecy status falls on the party claiming secrecy status. Stewart & Stevenson Servs.,
Inc. v. Serv-Tech., 879 S.W.2d 89, 99 (Tex. App.- Houston [14th Dist.] 1994, writ denied).
Bluebonnet Petroleum, Inc. v. Kolkhorst Petroleum (Tex.App.- Houston [14th Dist.] Oct. 9, 2008)(Substitute
opinion by Brown) (SJ, admissible evidence, no theft of theft of trade secrets, breach a fiduciary duty, tortious
AFFIRMED: Opinion by Justice Brown
Before Chief Justice Hedges, Justices Brown and Boyce
14-07-00380-CV Bluebonnet Petroleum, Inc. v. Kolkhorst Petroleum Company, Inc.
Appeal from 335th District Court of Washington County
Trial Court Judge: Terry Flenniken
Bluebonnet's first claim is for the theft of trade secrets and confidential information. An employee may
use general skills and knowledge obtained through previous employment to compete with the former
employer. Sharma v. Vinmar Intern., Ltd., 231 S.W.3d 405, 424 (Tex. App.- Houston [14th Dist.] 2007, pet.
dism'd). However, the conduct of a former employee in competing with his former employer is not unlimited. A
former employee may not use confidential or proprietary information acquired during the employment
relationship in a manner adverse to his former employer. T-N-T Motorsports, Inc. v. Hennessey Motorsports,
Inc., 965 S.W.2d 18, 22 (Tex. App.- Houston [1st Dist.] 1998, no pet.). Further, a former employee may not:
“(1) appropriate the company's trade secrets; (2) solicit his employer's customers while still working for his
employer; (3) solicit the departure of other employees while still working for his employer[;] or (4) carry away
confidential information, such as customer lists.” Abetter Trucking Co. v. Arizpe, 113 S.W.3d 503, 512 (Tex.
App.- Houston [14th Dist.] 2003, no pet.).
There is no cause of action for misappropriation of information that is not either secret, or at least
substantially secret. SP Midtown, Ltd. v. Urban Storage, L.P., No. 14-07-00717-CV, 2008 WL 1991747, at *5
n. 5 (Tex. App.-Houston [14th Dist.] May 8, 2008, pet. denied) (mem. op.) (citing Stewart & Stevenson Servs.,
Inc., 879 S.W.2d at 99).
SP Midtown Ltd. v. Urban Storage, LLC (Tex.App.- Houston [14th Dist.] May 8, 2008)(Anderson) (summary
judgment, trade secrets, tortious interference)
AFFIRMED IN PART; REVERSED & REMANDED IN PART: Opinion by Justice Anderson
Before Chief Justice Hedges, Justices Anderson and Boyce
14-07-00717-CV SP Midtown Ltd. d/b/a Space Place Midtown v. Urban Storage, L.P. d/b/a Midtown Mini
Storage and d/b/a Midtown Mini Warehouse and d/b/a Midtown Self Storage, Midtown Storage, L.L.C. and The
Jenkins Organization, Inc.
Appeal from 80th District Court of Harris County
Trial Court Judge: Lynn M. Bradshaw-Hull
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