In Thoroughbred Ventures, LLC v. Disman, No. 4:18-CV-00318, 2018 WL 3752852 (E.D. Tex. Aug. 8, 2018), plaintiff Thoroughbred Ventures sued its former manager Disman, alleging that Disman breached his employment agreement, which provided that all client contact and background information belonged to Thoroughbred and constituted “Confidential Information” and a trade secret of Thoroughbred.
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Eagle Oil & Gas Co. v. Shale Exploration, LLC, 549 S.W.3d 256 (Tex. App.—Houston [1st Dist.] 2018, pet., pet. dismissed) involves the familiar situation where a plaintiff sues for both breach of a confidentiality agreement and for misappropriation of trade secrets. Defendant asserted that plaintiff was limited to a breach of contract claim because the misappropriation claim was barred by the economic loss rule, which bars a recovery in tort for economic losses caused by a breach of contract if the losses are due to the failure to fulfill a contractual obligation.
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When the Texas Uniform Trade Secrets Act (TUTSA) was enacted, it removed trade secret theft as a possible basis for asserting a Texas Theft Liability Act (TTLA) claim. One of the biggest impacts of this change was the recovery of attorneys’ fees for trade secrets cases. Under the TTLA, attorneys’ fees were available to prevailing parties. Under TUTSA, attorney’ fees were only available to a prevailing party if (1) the claim for misappropriation was made in bad faith; (2) a motion to terminate an injunction is made or resisted in bad faith; or (3) willful and malicious misappropriation exists. Thus, with the enactment of TUTSA, attorneys’ fees became much more difficult to recover.
Importantly, though, litigants must remember that the TTLA still applies to misappropriations that took place before TUTSA’s September 1, 2013 enactment date. The Fifth Circuit case of Automation Support, Inc. v. Humble Design, LLC, No. 17-10433, 2018 WL 1474937 (5th Cir. Mar. 26, 2018) provides a good reminder of this.
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When a business severs ties with one of its affiliates, it can be difficult to retrieve and erase all the trade secret information provided to the affiliate. That problem was on display in the franchise context in Stockade Companies, LLC v. Kelly Restaurant Group., LLC, No. 1:17-CV-143-RP, 2017 WL 4640443 (W.D. Tex. Oct. 16, 2017), which involved a franchisor accusing its former franchisee of misappropriating its “buffet system” in its restaurants.
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Generally, there are three primary types of damages of damages in a trade secrets case: (1) lost profits, (2) defendant’s profits, and (3) a reasonable royalty. The Federal Circuit in Texas Advanced Optoelectronic Sols., Inc. v. Renesas Elecs. Am., Inc., No. 2016-2121, 2018 WL 2011463 (Fed. Cir. May 1, 2018) explores who—the judge or the jury—can award defendant’s profits.
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In one of my earlier blog posts, I explained the how Texas’s anti-SLAAP statute, the Texas Citizens Participation Act (TCPA), is used as a defense to a misappropriation of trade secrets claim. Craig v. Tejas Promotions, LLC, No. 03-16-00611-CV, 2018 WL 2050213 (Tex. App.—Austin May 3, 2018, no pet. h.) provides another example of this defense.
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O’Connor’s Texas Causes of Action is one of the preeminent sources for information on Texas causes of action and defenses. In the latest edition’s chapter on Trade Secret–Statutory Misappropriation, the authors of Texas Causes of Action cite two articles written by Brackett & Ellis attorneys Joe Cleveland and Heath Coffman. The articles, which help explain the elements and defenses for a trade secret misappropriation claim under the Texas Uniform Trade Secret Act (TUTSA), are:
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Under Texas law, the one-satisfaction rule states that a plaintiff is entitled to only one recovery for any damages suffered because of a particular injury. In TMRJ Holdings, Inc. v. Inhance Techs., LLC, No. 01-16-00849-CV, 2018 WL 326421 (Tex. App.—Houston [1st Dist.] Jan. 9, 2018, no pet. h.), a misappropriation of trade secrets case, defendant argued that plaintiff’s judgment against it for a $4 million reasonable royalty and a permanent injunction violated the one satisfaction rule because the calculation of a reasonable royalty contemplated the future of the misappropriated technology.
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In my previous posts, I have discussed the varying standards for injunctive relief under the Texas Uniform Trade Secret Act (TUTSA). Some courts have required showings of irreparable harm. The Southern District of Texas, however, does not.
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In my earlier posts, I discussed the developing standards for injunctive relief under the Texas Uniform Trade Secret Act (TUTSA). Under the Northern District of Texas’s analysis, proof of irreparable harm is required but that irreparable harm can be established with a showing that the “defendant possesses the trade secrets and is in a position to use them.”
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