Texas has long been considered a fiercely independent state, but Law360 is reporting that the Lone Star State is considering joining the other 47 states that have adopted the Uniform Trade Secrets Act (UTSA).  Dallas State Senator John Carona recently introduced S.B. 953, which Law360 states “would codify and modernize existing Texas common law relating to misappropriation of trade secrets, while enhancing available remedies to aggrieved businesses.”  If Texas adopts the UTSA, that would leave Massachusetts and New York as the only two remaining states that have not adopted some variation of the UTSA (New Jersey enacted the UTSA in 2011).  A link to the proposed statute can be found here.

There are some interesting features to this potential Texas version of the UTSA.  It would create a “presumption in favor of granting protective orders to preserve the secrecy of trade secrets,” a feature that could be at odds with general principles favoring open court proceedings (New Jersey’s version of the UTSA initially offered similar protections but it was eventually amended to remove that presumption).

In addition, S.B. 953 would dispense with the requirement that a trade secret must be in “continuous use” in order to be protected.  The Law360 article quotes Texas lawyer Val Perkins of Gardere Wynne Sewell LLP as noting that Texas common law “currently bars from protection trade secrets that are not actively used in business operations either because they have not yet been deployed or were abandoned.”  Naturally, this change would expand the categories of information available for trade secret protection.

The Texas bill proposes customary provisions under the UTSA, such as preemption (i.e., barring common law claims arising out of the same factual circumstances and providing the UTSA as the sole remedy), attorneys fees for bad faith or malicious conduct, injunctive relief, and the imposition of royalties as a potential remedy for the misappropriation of trade secrets in “exceptional” circumstances.  The Texas bill also tracks some of the noteworthy features of California’s version of the UTSA, which has language essentially permitting the “reverse engineering” of a trade secret provided no improper means are used (Ohio, for example, does not have that language in its version of the UTSA).

This is a very positive step as greater uniformity in the law throughout the country will benefit businesses and employees alike.  I will keep my eye on any further developments and keep everyone posted.