In my previous posts, I have discussed the House and Senate bills to amend the Texas Uniform Trade Secret Act (TUTSA).  On Thursday, April 20, my colleague Joe Cleveland testified before the Senate State Affairs committee in support of the proposed TUTSA amendments.  His prepared remarks are below:

Good morning Madam Chair and distinguished members of this Committee. My name is Joe Cleveland. I am an intellectual property lawyer with the firm of Brackett & Ellis in Fort Worth, Texas and past-chair of the Trade Secrets Committee of the Intellectual Property Law Section of the State Bar of Texas.

It is my honor and privilege to be here today to testify in support of SB 1945. I also want to thank Senator Hughes for sponsoring this bill.  As many of you may recall, in 2013, SB 953, authored by Senator John Corona, wasunanimously approved by the Senate, received all but one vote in the House and was signed into law by the Governor.

Since September 1, 2013, the Texas Uniform Trade Secrets Act (“TUTSA”) has been the governing law in Texas for misappropriation of trade secret claims.  The Uniform Act, previously adopted by virtually all other states, modernized the lawregarding misappropriation of trade secrets and greatly enhanced the ability of businesses and lawyers to understand and fairly litigate trade-secret cases by providing clear and easy-tounderstand
definitions and procedures.

Since its enactment, TUTSA has received nation-wide recognition and has been the subject of numerous scholarly legal articles and court decisions by both state and federal courts.  I am pleased to report that TUTSA has received wide-spread acclaim and extremely positive reviews by businesses and lawyers alike.

Two significant events have happened since TUTSA’s enactment in 2013. First, in May2016, the United States Congress enacted the Federal Defend Trade Secrets Act (“DTSA”). DTSA is a federal law that creates a federal cause of action for misappropriation of trade secrets. Like TUTSA, DTSA is largely based on the Uniform Act, but some provisions are slightly different. These differences between TUTSA and DTSA will result in non-uniform application of trade secret law in Texas.

SB 1945 amends TUTSA by conforming TUTSA with some of DTSA’s provisions in order to eliminate confusion and the possibility of forum shopping between state and federal courts. In particular, SB 1945 aligns TUTSA’s definitions of “trade secret” and “owner” withthose contained in DTSA. These changes do not significantly alter the scope of TUTSA and are more in the nature of clarifying changes.

SB 1945 also preserves the common law rule in actions under TUTSA and clarifies thatan employee cannot be enjoined from using the general knowledge, skill and experience he or she acquired during their employment. The bill does not change existing law in this regard but simply codifies what was already decisional law in Texas.

The second significant event since TUTSA’s adoption was the Texas Supreme Court’s decision in the In re: M-I, LLC case. In that case, the Supreme Court held that there is a presumption that a party is allowed to participate and assist counsel in the defense of a trade secret case and that this presumption can only be overcome if the court balances several factors.

SB 1945 codifies the Supreme Court’s holding so that TUTSA is a ready statutory reference for litigants proceeding under TUTSA. The bill also includes a number of nonsubstantive “house-keeping” type amendments.

SB 1945 has been widely publicized to members of the Intellectual Property Section of the State Bar of Texas and other members of the Bar. As currently amended in the committee substitute, I know of no interest group, business or lawyers, who have voiced any opposition to
the bill.

Because the court’s discretion to seal court records under TUTSA is already established law, the reference to sealing of court records has been removed in the committee substitute to both SB 1945 and HB 1995.

I would respectfully request that this Committee approve SB 1945 as amended and would be happy to answer any questions.