For many Texas businesses, the most valuable assets are not physical property. Instead, confidential information such as client lists, formulas or strategic plans holds the true value. Protecting this information gives you a competitive edge. To prevent IP theft, company leaders must understand what constitutes a trade secret and implement strong protections.
What qualifies as a trade secret in Texas?
Under the Texas Uniform Trade Secrets Act, a trade secret is any information that holds value because the public does not know it. You must maintain its secrecy. This broad rule covers everything from a manufacturing process to market research. The law looks at the following factors when considering if something can be a trade secret:
- Is it information that provides a competitive edge for your company?
- Is it only known to a select few within your company and not known publicly?
- Did your company take reasonable steps to guard its secrecy?
A trade secret can also be a combination of information, that could even be known publicly as separate entities, but when taken together, is unknown to the public as a combined entity that could be useful and provide competitive edge.
Common risks of misappropriation
Misappropriation occurs when employees leave to join a competitor or start their own business and take sensitive files with them. Third-party vendors with access to your private systems pose another risk. Hackers also breach digital networks to steal data. To build a strong defense, you must spot weak points and use active strategies to protect your trade secrets.
Implementing protections for proprietary data
Protecting your data requires more than trust. Many companies combine legal, physical and digital tools to secure their systems. You should use clear non-disclosure agreements and enforceable non-compete agreements for your employees and contractors. You must set strict rules for handling data, lock sensitive files, and run cybersecurity software to prevent data breaches. You must enforce these rules consistently and constantly review and update your security procedures from time to time.
Ongoing protection for valuable assets
Securing private information requires a daily commitment. The defense tools you use today shape the result of any future legal fight. Because the law sets strict standards, you should review your strategies with experienced attorneys who are well-versed in business law. They can help you spot hidden weak points in your business contracts and agreements. Assessing your safety rules helps keep your assets secure.