What Counts as a Trade Secret Under Texas Law?

A sales manager gives notice on a Friday. On Monday you learn that the customer pricing spreadsheet was emailed to a personal account the week before. Your first question is whether that spreadsheet is a trade secret. Under Texas law, the answer depends less on what the information is and more on how you treated it before it walked out the door.

Texas protects trade secrets through the Texas Uniform Trade Secrets Act, found in Chapter 134A of the Civil Practice and Remedies Code. The Act took effect September 1, 2013, and was amended in 2017 and again in 2025. Here is how it works, what it requires of a business, and what remedies it provides when confidential information is taken.

The Two-Part Test for a Texas Trade Secret

Section 134A.002(6) defines a trade secret broadly. It covers “all forms and types of information,” including business, scientific, technical, economic, or engineering information, and it names specific examples: formulas, designs, prototypes, patterns, plans, compilations, programs, code, methods, techniques, processes, procedures, financial data, and “list[s] of actual or potential customers or suppliers.” It does not matter whether the information is stored on paper, on a server, or in a photograph.

Breadth of subject matter is only the starting point. Information qualifies as a trade secret only if two conditions are met:

1. Reasonable measures. The owner “has taken reasonable measures under the circumstances to keep the information secret.”
2. Independent economic value from secrecy. The information “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by,” another person who could obtain economic value from it.

Both parts matter. Valuable information that you shared freely is not protected. Carefully guarded information that anyone could look up is not protected either.

What Counts as Reasonable Measures

The statute does not list required steps. It asks what was reasonable “under the circumstances,” which means a court will look at your business, the information, and what you actually did. For most North Texas companies, a practical protection program includes some combination of the following:

• Written agreements. Confidentiality or nondisclosure agreements with employees, contractors, vendors, and prospective buyers or investors who see sensitive information.
• Access controls. Limiting sensitive files to the people who need them, with individual logins rather than shared passwords.
• Labeling. Marking truly confidential documents as confidential, and not marking everything, which dilutes the label.
• Written policies. A handbook or policy that defines confidential information and explains how it may be used and stored.
• Device and account practices. Rules about personal email, cloud storage, and USB drives, plus the ability to audit downloads and forwarding.
• Offboarding. Collecting devices, disabling access on the last day, and reminding departing employees in writing of their continuing obligations.

No single step is decisive, and no company does all of them perfectly. The goal is a record that shows you treated the information as secret long before anyone took it.

Is a Customer List a Trade Secret in Texas?

It can be. The statute expressly includes lists of actual or potential customers or suppliers. Whether a particular list qualifies depends on the two-part test.

A list of names that anyone could assemble from a directory or a trade association roster may be readily ascertainable through proper means, which works against protection. A compilation that took years to build and includes contacts, buying history, pricing, contract terms, and renewal dates is a stronger candidate, provided it was actually kept confidential. The same logic applies to pricing models, bid histories, and vendor terms. The more the information reflects your own effort and the harder it would be to reconstruct, the stronger the claim, assuming the secrecy side is also satisfied.

What Is Misappropriation?

Owning a trade secret is only half of a claim. The owner must also show misappropriation. Section 134A.002(3) defines it in two main ways:

• Acquisition of a trade secret by a person who knows or has reason to know it was acquired by improper means.
• Disclosure or use of a trade secret without consent by a person who used improper means to acquire it, or who knew or had reason to know that it came from someone who used improper means, or that it was acquired under circumstances creating a duty to keep it secret or limit its use.

“Improper means” include theft, bribery, misrepresentation, espionage, and “breach or inducement of a breach of a duty to maintain secrecy, to limit use, or to prohibit discovery of a trade secret.” That last category is why confidentiality agreements matter so much. They create the duty whose breach can become the improper means.

The statute also identifies “proper means,” which are not misappropriation: independent development, reverse engineering unless it is prohibited, and any other means that is not improper. A competitor that builds the same process on its own has not taken anything from you.

Misappropriation also reaches third parties. A new employer that knows or has reason to know that a recruit brought a former employer’s secrets can face exposure for using them.

Remedies Under the Texas Uniform Trade Secrets Act

When misappropriation is proven, the Act provides several remedies.

Injunctions. Under Section 134A.003, “actual or threatened misappropriation may be enjoined.” An injunction can stop use or disclosure and, in appropriate circumstances, compel affirmative steps to protect the secret. There is an important limit: an injunction may not prohibit a person “from using general knowledge, skill, and experience that person acquired during employment.” A departing employee can take what they learned. They cannot take your confidential information.

Damages. Under Section 134A.004(a), a claimant may recover actual loss caused by the misappropriation plus any unjust enrichment not already counted, or instead a reasonable royalty for the unauthorized use or disclosure.

Exemplary damages. If “willful and malicious misappropriation” is proven by clear and convincing evidence, the fact finder may award exemplary damages of up to twice the damages award. The statute defines willful and malicious misappropriation as “intentional misappropriation resulting from the conscious disregard of the rights of the owner.”

Attorney’s fees. Under Section 134A.005, a court may award reasonable attorney’s fees to the prevailing party if willful and malicious misappropriation exists, or if a misappropriation claim, or a motion to terminate an injunction, is made or resisted in bad faith. That cuts both ways. A business that files a trade secret claim in bad faith to hobble a former employee or competitor can end up paying the other side’s fees.

Keeping Your Secrets Secret in Court

Many owners hesitate to sue because they fear that litigation will expose the very information they are trying to protect. The Act addresses that concern directly.

Section 134A.006 requires a court to “preserve the secrecy of an alleged trade secret by reasonable means” and creates a presumption in favor of protective orders. Those orders can limit access to attorneys and experts, allow hearings in camera, seal records, and bar disclosure without court approval.

In 2025 the Legislature went further. House Bill 4081, signed on June 20, 2025 and effective September 1, 2025, added Section 134A.0065, which sets out a specific procedure for sealing documents that contain alleged trade secrets in a case under the Act. In general terms:

• A party filing a document containing its own alleged trade secret files a notice of sealing and an affidavit describing the type of information and the factual basis for treating it as a trade secret, delivers the document to the court in a sealed envelope, and serves the other parties.
• A party filing a document that it knows someone else claims contains a trade secret files a notice and statement, and the person claiming the secret then has 14 days after receiving notice to file its own supporting affidavit.
• Anyone may later move to unseal. The court must unseal the document, in whole or in part, if the person claiming the secret fails to show by a preponderance of the evidence that it contains a trade secret.

The new procedure applies only to documents filed on or after September 1, 2025.

Deadlines and How the Act Fits With Other Claims

Three years. Under Section 16.010 of the Civil Practice and Remedies Code, suit for misappropriation of trade secrets must be brought within three years after the misappropriation is discovered or, with reasonable diligence, should have been discovered. A continuing misappropriation is treated as a single cause of action, so the clock does not restart each time the information is used.

Displacement of other state remedies. Section 134A.007 provides that the Act displaces conflicting tort, restitutionary, and other Texas law providing civil remedies for misappropriation of a trade secret. It does not affect contractual remedies, civil remedies that are not based on misappropriation, or criminal remedies. In practice, that means a well-drafted confidentiality agreement or non-compete gives a business a contract claim alongside the statutory one. Our article on what makes a non-compete enforceable under Texas law covers that side of the equation.

Federal law. The federal Defend Trade Secrets Act, 18 U.S.C. Section 1836, gives trade secret owners a separate civil action in federal court when the trade secret relates to a product or service used in, or intended for use in, interstate or foreign commerce. It also allows a court, on an ex parte application and “only in extraordinary circumstances,” to order seizure of property needed to prevent the secret from spreading. Its limitations period is also three years from actual or reasonable discovery.

What to Do When You Suspect Misappropriation

Trade secret cases are often won or lost in the first few weeks. If you believe confidential information has left the building:

1. Preserve the evidence. Do not wipe or reissue the departing employee’s laptop or phone. Keep email, file-access, and download logs intact.
2. Cut off access. Disable accounts, shared drive permissions, and any remote access tools.
3. Pull the paperwork. Gather the employee’s confidentiality, non-compete, and invention agreements, along with the policies they acknowledged.
4. Document your protection measures. Assemble proof of the reasonable measures you took, because you will need to prove them.
5. Get advice before you send a demand letter. A letter sent too early, or one that overstates the claim, can create problems of its own, including exposure to fees if a claim is later found to be made in bad faith.

And if you are on the other side, as a new employer or a departing employee, the same statute applies. Knowing what you can use and what you cannot is far cheaper before the first day than after the first lawsuit.

Protect Your Confidential Information

The best time to shore up trade secret protection is before anyone leaves: tighten your agreements, limit access, and document what you do. When information has already walked out the door, speed matters. Visit our Litigation page to learn more and to reach our team.