By: Hughes S.B. No. 1945
(In the Senate - Filed March 10, 2017; March 27, 2017, read
first time and referred to Committee on State Affairs;
April 26, 2017, reported adversely, with favorable Committee
Substitute by the following vote: Yeas 9, Nays 0; April 26, 2017,
sent to printer.)
Click here to see the committee vote
COMMITTEE SUBSTITUTE FOR S.B. No. 1945 By: Zaffirini
A BILL TO BE ENTITLED
AN ACT
relating to the Texas Uniform Trade Secrets Act.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 134A.002, Civil Practice and Remedies
Code, is amended by adding Subdivisions (1-a), (3-a), and (7) and
amending Subdivisions (3), (4), and (6) to read as follows:
(1-a) "Clear and convincing" means the measure or
degree of proof that will produce in the mind of the trier of fact a
firm belief or conviction as to the truth of the allegations sought
to be established.
(3) "Misappropriation" means:
(A) acquisition of a trade secret of another by a
person who knows or has reason to know that the trade secret was
acquired by improper means; or
(B) disclosure or use of a trade secret of
another without express or implied consent by a person who:
(i) used improper means to acquire
knowledge of the trade secret;
(ii) at the time of disclosure or use, knew
or had reason to know that the person's knowledge of the trade
secret was:
(a) derived from or through a person
who used [had utilized] improper means to acquire the trade secret
[it];
(b) acquired under circumstances
giving rise to a duty to maintain the [its] secrecy of or limit the
[its] use of the trade secret; or
(c) derived from or through a person
who owed a duty to the person seeking relief to maintain the [its]
secrecy of or limit the [its] use of the trade secret; or
(iii) before a material change of the
position of the person [person's position], knew or had reason to
know that the trade secret [it] was a trade secret and that
knowledge of the trade secret [it] had been acquired by accident or
mistake.
(3-a) "Owner" means, with respect to a trade secret,
the person or entity in whom or in which rightful, legal, or
equitable title to, or the right to enforce rights in, the trade
secret is reposed.
(4) "Proper means" means discovery by independent
development, reverse engineering unless prohibited, or any other
means that is not improper means.
(6) "Trade secret" means all forms and types of
information, including business, scientific, technical, economic,
or engineering information, and any [a] formula, design, prototype,
pattern, plan, compilation, program device, program, code, device,
method, technique, process, procedure, financial data, or list of
actual or potential customers or suppliers, whether tangible or
intangible and whether or how stored, compiled, or memorialized
physically, electronically, graphically, photographically, or in
writing if [that]:
(A) the owner of the trade secret has taken
reasonable measures under the circumstances to keep the information
secret; and
(B) the information derives independent economic
value, actual or potential, from not being generally known to, and
not being readily ascertainable through [by] proper means by,
another person [other persons] who can obtain economic value from
the [its] disclosure or use of the information [; and
[(B) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy].
(7) "Willful and malicious misappropriation" means
intentional misappropriation resulting from the conscious
disregard of the rights of the owner of the trade secret.
SECTION 2. Section 134A.003, Civil Practice and Remedies
Code, is amended by amending Subsection (a) and adding Subsection
(a-1) to read as follows:
(a) Actual or threatened misappropriation may be enjoined
if the order does not prohibit a person from using general
knowledge, skill, and experience that person acquired during
employment.
(a-1) On application to the court, an injunction shall be
terminated when the trade secret has ceased to exist, but the
injunction may be continued for an additional reasonable period of
time in order to eliminate commercial advantage that otherwise
would be derived from the misappropriation.
SECTION 3. Section 134A.004(b), Civil Practice and Remedies
Code, is amended to read as follows:
(b) If willful [wilful] and malicious misappropriation is
proven by clear and convincing evidence, the fact finder may award
exemplary damages in an amount not exceeding twice any award made
under Subsection (a).
SECTION 4. Section 134A.005, Civil Practice and Remedies
Code, is amended to read as follows:
Sec. 134A.005. ATTORNEY'S FEES. The court may award
reasonable attorney's fees to the prevailing party if:
(1) a claim of misappropriation is made in bad faith;
(2) a motion to terminate an injunction is made or
resisted in bad faith; or
(3) willful [wilful] and malicious misappropriation
exists.
SECTION 5. Section 134A.006, Civil Practice and Remedies
Code, is amended to read as follows:
Sec. 134A.006. PRESERVATION OF SECRECY. (a) In an action
under this chapter, a court shall preserve the secrecy of an alleged
trade secret by reasonable means. There is a presumption in favor
of granting protective orders to preserve the secrecy of trade
secrets. Protective orders may include provisions limiting access
to confidential information to only the attorneys and their
experts, holding in camera hearings, sealing the records of the
action, and ordering any person involved in the litigation not to
disclose an alleged trade secret without prior court approval.
(b) In an action under this chapter, a presumption exists
that a party is allowed to participate and assist counsel in the
presentation of the party's case. At any stage of the action, the
court may exclude a party and the party's representative or limit a
party's access to the alleged trade secret of another party if other
countervailing interests overcome the presumption. In making this
determination, the court must conduct a balancing test that
considers:
(1) the value of an owner's alleged trade secret;
(2) the degree of competitive harm an owner would
suffer from the dissemination of the owner's alleged trade secret
to the other party;
(3) whether the owner is alleging that the other party
is already in possession of the alleged trade secret;
(4) whether a party's representative acts as a
competitive decision maker;
(5) the degree to which a party's defense would be
impaired by limiting that party's access to the alleged trade
secret;
(6) whether a party or a party's representative
possesses specialized expertise that would not be available to a
party's outside expert; and
(7) the stage of the action.
SECTION 6. Chapter 134A, Civil Practice and Remedies Code,
as amended by this Act, applies only to an action that commences on
or after the effective date of this Act. An action that commences
before the effective date of this Act is governed by the law
applicable to the action immediately before the effective date of
this Act, and that law is continued in effect for that purpose.
SECTION 7. This Act takes effect September 1, 2017.
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