Companies doing business in Texas should familiarize themselves with how Texas law defines trade secrets. In Texas, courts apply a six-factor test to determine whether a trade secret exists. The factors, however are not dispositive because it is impossible to set out precise criteria for a trade secret. Astoria Industries of Iowa, Inc. v. SNF, Inc., 2007 WL 937533, *10 (Tex.App.-Fort Worth, n.p.h.).
The six factors that will be considered by Texas courts to determine whether a trade secret exists are:
• The extent to which the information is known outside of the business;
• The extent to which the information was known to employees and others involved in the business;
• The extent of the measures taken by the business to protect the secrecy of the information;
• The value of the information to the business and its competitors;
• The amount of effort or money expended by the business in developing the information;
• 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). These six factors are to be weighed in determining whether the information is a trade secret, but all six factors do not have to be present for the information to be considered a trade secret in Texas. Id. at 740.
Of course, the more of these factors that the information meets, the more likely the information will be considered a trade secret. For instance, Texas businesses should be sure that the information is not widely known outside of the business; the information is only known by employees who have a direct need to know the information; the business should take great measures to protect the privacy of the information; the information should be valuable information; the business should expend significant resources in developing the information; and the business should make it difficult for others to acquire the information. Taking these six steps to protect the trade secrets of your business will also help the Texas courts identify that the protected information is in fact a trade secret worthy of protection from misappropriation.