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Click here for the full text of this decision FACTS:In 1979, General Universal Systems Inc. developed a software program called CHAMPION PACKER for Jose Lopez. CHAMPION PACKER was written in BASIC 4 computer programming language. Later, Lopez created a program based on CHAMPION PACKER but written in COBOL computer programming language instead of BASIC 4; Lopez called the new derivative program LOPEZ COBOL and began selling and leasing the program to clients through his company World Trade Systems Inc. One of those clients was Superior Packing Inc., a company owned by Herrin. In 1988, Lopez leased a computer to Superior Packing and licensed Superior Packing to use LOPEZ COBOL. At that time, Superior Packing also had a license from GUS to use CHAMPION PACKER; the GUS license originated in 1985. Both license agreements restricted the use and distribution of the relevant computer programs. In 1992, Joseph Herrin and Ernest Allen Parkin agreed to work with Lopez to develop and market a new software program to succeed LOPEZ COBOL. The three intended to form a corporation, HAL Inc., to develop and market the software and then split the shares and profits amongst each other. The program was to be based in large part on LOPEZ COBOL. They began working on the design of the program, called MEPAW, in the summer of 1992. Beginning in December 1992, Lopez spent seven months incarcerated in a Mexican prison. In a letter of March 22, 1993, Herrin notified Lopez that he and Parkin agreed to oust Lopez from their agreement, because Lopez’s incarceration prevented him from fulfilling his duties. Through HAL, Herrin and Parkin continued the development of MEPAW until August or September 1993, when they began marketing MEPAW to potential clients. Just before the ousting of Lopez, Herrin in February 1993 sent Lopez a letter stating that Superior Packing was terminating its license agreement with World Trade Systems for the use of LOPEZ COBOL. In March 1993, Lopez’s son went to Superior Packing to pick up World Trade Systems’ computer, which contained the LOPEZ COBOL software, but was told that Superior Packing was not finished with the program. Lopez claims that his son then entered an oral agreement to allow Superior Packing to use the computer and software until July 1993, and he produced a receipt showing that Superior Packing paid a license fee to World Trade Systems in July 1993. Although HAL began demonstrating MEPAW in the fall of 1993, it did not license the software to any customers until October 1994; the first licensee was Panalpina Inc. By then, Lopez and World Trade Systems assigned all their rights in LOPEZ COBOL to GUS. In November 1994, GUS put Panalpina on notice that MEPAW was improperly derived from its packing software. HAL continued to license MEPAW to other customers as well: Fritz Companies Inc.; United States Crating Inc.; and Transworld Logistics Inc. GUS asserted that all of the customer defendants were on notice. GUS filed suit against the HAL defendants (HAL INC., Herrin and Parkin) and the customer defendants in May 1995. In that complaint, GUS raised numerous claims, both state and federal, most of which lost on summary judgment. On appeal, the 5th Circuit affirmed the magistrate judge’s ruling on all claims, except the misappropriation of trade secrets claim, on which the 5th Circuit reversed and remanded. Following the remand, the magistrate judge granted summary judgment to the defendants, finding that Texas’ two-year statute of limitations barred the trade secrets misappropriation claim against the HAL defendants and that the related claim against the customer defendants was outside the scope of the court’s remand. HOLDING:Affirmed. The parties agreed that the claim was subject to a two-year statute of limitations. The court first looked at the magistrate judge’s determination that GUS was time barred from raising its trade secret misappropriation claim against the HAL Defendants on May 23, 1995, the date GUS initially filed its complaint. A cause of action, the court stated, accrues when a wrongful act causes some legal injury, even if the fact of injury is not discovered until later and even if all resulting damages have not yet occurred. Three elements, the court continued, are needed to establish the injury of trade secret misappropriation: 1. a trade secret exists; 2. a defendant acquired the trade secret by breach of a confidential relationship or other improper means; and 3. a defendant used the trade secret without authorization. The magistrate judge applied the ousting of Lopez from HAL as the date on which the relevant confidential relationship would have been dissolved; therefore, the magistrate judge treated any use of LOPEZ COBOL after the ousting as the date on which the action accrued. The court found that Herrin and Parkin relied on LOPEZ COBOL, and therefore allegedly relied on CHAMPION PACKER, to develop MEPAW for HAL. Because these actions were outside the scope of GUS’s and World Trade System’s respective licensing agreements with Superior Packing, the HAL Defendants’ lacked proper licenses to develop MEPAW. The court found that the magistrate judge properly focused on the agreement between Lopez, Herrin, and Parkin as the only possible basis for a breached confidential relationship supporting the claim of trade secret misappropriation. Because Lopez was ousted from the HAL group in March 1993, any use of LOPEZ COBOL by the HAL defendants after March 1993 would mark the accrual of Lopez’s claim of trade secret misappropriation. GUS also challenged the magistrate judge’s definition of “use” with respect to the third element of trade secret misappropriation. The magistrate judge held that the HAL defendants used LOPEZ COBOL when they refused to return World Trade Systems’ computer containing LOPEZ COBOL in March 1993. A cause of action for misappropriation of trade secrets accrues when the trade secret is actually used, the court stated. Marketing goods that embody the trade secret, employing the trade secret in manufacturing or production, relying on the trade secret to assist or accelerate research or development, or soliciting customers through the use of information that is a trade secret all constitute “use.” Based on these definitions, the court stated that it was clear the HAL defendants used LOPEZ COBOL by continuing to rely on LOPEZ COBOL, either directly or those portions incorporated into MEPAW, to accelerate the development and marketability of MEPAW, as GUS alleged. This continued use of LOPEZ COBOL certainly represented an exploitation of LOPEZ COBOL that was likely to result in injury to Lopez and enrichment to the HAL defendants, and it occurred both after the ousting of Lopez and before May 23, 1993, two years prior to GUS filing the complaint. GUS further argued that trade secret misappropriation is a continuing tort. Based on the weight of caselaw, however, the court declined to apply the concept of a continuing tort to the Texas common law claim of trade secret misappropriation. As a result, the court found that the magistrate judge properly treated GUS’s claim of trade secret misappropriation against the HAL defendants as time barred. OPINION:Garza, J.; Reavley, Garza and Dennis, JJ.

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