PJC Business 2024

PJC 111.2

M ISAPPROPRIATION OF T RADE S ECRETS

To the extent prior Texas common law regarding trade secrets has not been dis placed, the Texas Supreme Court discussed the cause of action for misappropriation of trade secrets in Hyde Corp. v. Huffines , 314 S.W.2d 763, 769–70 (Tex. 1958) (relying on Restatement (First) of Torts § 757 (1939)). Note that while the Act displaces con flicting tort and other laws, contractual remedies are not affected by the Act. Tex. Civ. Prac. & Rem. Code § 134A.007(b). Violation of duty imposed by confidential or contractual relationship. Confidential relationships imposing duties relating to a trade secret can exist in vari ous situations. See, e.g. , Tex. Civ. Prac. & Rem. Code §134A.002(3) (describing cir cumstances in which duties concerning trade secrets arise under statute); H.E. Butt Grocery Co. v. Moody’s Quality Meats, Inc. , 951 S.W.2d 33, 36 (Tex. App.—Corpus Christi–Edinburg 1997, writ denied) (finding negotiations during sale of business cre ated confidential relationship); American Derringer Corp. v. Bond , 924 S.W.2d 773, 777 (Tex. App.—Waco 1996, no writ) (finding that former employee is prohibited from using confidential information or trade secrets acquired during his employment); Crutcher-Rolfs-Cummings, Inc. v. Ballard , 540 S.W.2d 380, 387 (Tex. App.—Corpus Christi–Edinburg 1976, writ ref’d n.r.e.) (finding confidential relationship because plaintiff and defendant were licensor and licensee and also joint adventurers). If the court determines that, as a matter of law, there was a contractual or confiden tial relationship giving rise to a duty to maintain the trade secret’s secrecy or limit its use, an instruction to that effect may be necessary. A party involved in a confidential relationship is under a duty not to use or disclose trade secret information obtained during the course of the relationship. See American Derringer Corp. , 924 S.W.2d at 777. In Hyde Corp. , the Court articulated the rule—as provided by section 757 of the Restatement (First) of Torts —concerning confidential relationships: a party is liable “if his disclosure or use of another’s trade secret is a breach of the confidence reposed in him by the other in disclosing the secret to him.” Hyde Corp. , 314 S.W.2d at 769; see also American Derringer Corp. , 924 S.W.2d at 777. Improper means, proper means, and reverse engineering. In cases in which PJC 111.1 is not submitted, the definitions from that question of “proper means” and “reverse engineering” (if applicable) should be submitted with PJC 111.2. The definition of “improper means” is taken from section 134A.002(2) of the Act. The definition does not contain an exclusive list of improper means. Only those means raised by the evidence should be submitted. Title Source, Inc. , 612 S.W.3d at 531 (TUTSA language pertaining to potentially viable theories (e.g., bribery and espio nage) should not be submitted and should be omitted). Commercial use. The Act does not define “use.” However, Texas courts, both before and after the enactment of the Act, have defined trade secret “use” at common law to mean “commercial use by which the offending party seeks to profit from the

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