Senate Bill 953, also called the Uniform Trade Secrets Act, replaces Texas common law with a statute that’s similar to laws in 47 other states, says Andrews Kurth partner Greg Porter of Houston.
"This will provide more uniformity, more certainty, more predictability," says Porter, one of three lawyers who initiated the idea, got the Texas Business Law Foundation involved, and helped lead a large working group of attorneys that drafted the bill.
Effective Sept. 1, the new law defines "trade secret" and the actions that constitute misappropriation.
It provides for injunctive relief for misappropriation, and in some circumstances, allows "payment of a reasonable royalty" or "affirmative acts to protect a trade secret."
The bill allows claimants to recover damages for "actual loss" and "unjust enrichment," and in some circumstances, exemplary damages and attorney fees.
Porter says transactional lawyers may find the new law makes it easier to negotiate business contracts involving confidentiality agreements. In the past, businesses "would refuse to employ Texas law" because the trade-secrets common law, "wasn’t efficient and it provided additional uncertainty." But SB 953′s uniformity with other states’ laws "will hopefully eliminate their reluctance to use Texas law in confidentiality agreements and other agreements that involve technology."
Commercial litigators who represent clients in trade-secrets litigation should also take note of SB 953, says Porter, because it provides for awards of attorney fees in certain circumstances. Sometimes attorney fees can "get into the six and seven figures," he notes.
Also, SB 953′s clear definition of the things that constitute a "trade secret" could "lead to earlier settlements, because there will be less uncertainty in the law as to what is protectable," Porter says.
One other outcome, he adds, is that "businesses will re-examine what potential information that they have that can be considered a trade secret under the new act, and ensure they are taking reasonable steps to keep it confidential and protected."
Gov. Rick Perry signed the new law on May 2.