Even absent an enforceable noncompete agreement, a Texas employer may be able to prevent, or recover damages for, certain forms of unfair competition. For example, an employer may have a claim against a former employee for taking, using or disclosing and wrongfully using the employer's confidential or proprietary information.
In Texas, a claim for misappropriation of trade secrets involves the following elements: (1) the existence of a trade secret; (2) a breach of a confidential relationship or improper discovery of the trade secret; and (3) use of the trade secret without authorization. A trade secret is "any formula, pattern, device, or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." Although employers are entitled not to have their trade secrets misappropriated, former employees are allowed to use the general knowledge, skills, and experience acquired during employment to compete with a former employer.
Texas courts examine the following criteria in determining whether information is entitled to trade secret protection: (1) the extent to which the information is known outside the employer's business; (2) the extent to which it is known by employees and others involved in the employer's business; (3) the measures taken by the employer to guard the secrecy of the information; (4) the value of the information to the employer and its competitors; (5) the amount of effort or money expended by the employer in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others.
A frequently-litigated issue involves whether a customer list, or information about a customer, is a trade secret. There is no easy answer to this question, and the particular facts of each case must be examined. One thing Texas cases are clear about is that, for something to be treated as a trade secret, it must actually be secret. Texas cases routinely consider these factors when determining whether a customer list is a trade secret: (1) what steps, if any, an employer has taken to maintain the confidentiality of a customer list; (2) whether a departing employee acknowledges that the customer list is confidential; and (3) whether the content of the list is readily ascertainable. The last factor is heavily litigated, as employees often contend that the identities of customers can be found in public sources, such as telephone books.
Regarding the second element-breach of a confidential relationship or improper discovery of the trade secret-a person is liable for disclosure or use of trade secrets if he either (1) discovers the secret by improper means or (2) after properly acquiring knowledge of the secret, he breaches a confidence reposed in him.
If an employer proves that its trade secrets have been misappropriated, it may seek damages and injunctive relief. Obtaining injunctive relief requires proving that, absent the relief, irreparable harm will occur. However, courts have held that the threatened disclosure of trade secrets constitutes irreparable injury as a matter of law.
