Businesses that take measures to ensure that their employees understand the kinds of information that are protected as trade secrets, that they follow confidentiality policies are more likely to succeed in protecting their trade secrets in Court. In Texas, and in many other jurisdictions, Courts apply the six-factor test adopted in the Restatement of Torts to assess the existence of trade secrets. The factors include:

• the extent to which the information is known outside of his business;
• the extent to which it is known by employees and others involved in his business;
• the extent of the measures taken by him to guard the secrecy of the information;
• the value of the information to him and to his competitors;
• the amount of effort or money expended by him in developing the information; and
• the ease or difficulty with which the information could be properly acquired or duplicated by others.

In re Bass, 113, S.W.3d 735, 739 (Tex. 2003). Texas Federal Courts examining the existence of a trade secrets have looked to Texas Supreme Court decisions for guidance. See Utex Indus., Inc. v. Wiegand, No. H-18-1254, 2020 WL 873985, at *8 (S.D. Tex. Feb. 21, 2020) (Lake, J.); Silverthorne Seismic, LLC v. Sterling Seismic Svcs., Ltd., H-20-2543 (S.D.T.X. Jun. 1, 2021); NuPulseCV, Inc. v. DesignPlex Biomedical, LLC 2024 WL 4101786 (N.D.T.X. Jul. 29, 2024).
Though precise identification is not required, an inability of the business articulate trade secrets and to distinguish them from "general knowledge" is problematic. As part of a general effort to align IP protection efforts with the strategy of the business, a trade secret audit can be an effective way to identify the types of information likely to contain trade secrets, and to ensure that the businesses processes and procedures will not be found inadequate when enforcement actions are necessary. Back to Insights