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Legal Memorandum: Misappropriation of Trade Secrets in TX

Issue: Under Texas law, is there civil liability under the criminal theft laws for misappropriation of trade secrets?

Area of Law: Business Organizations & Contracts, Criminal Law, Intellectual Property Law
Keywords: Misappropriation of trade secrets; Civil liability; Criminal theft laws
Jurisdiction: Texas
Cited Cases: None
Cited Statutes: Tex. Civ. Prac. & Rem. Code Ann. §§ 134.001-.005; Tex. Penal Code Ann. § 31.05(b)(3); Tex. Civ. Prac. & Rem. Code § 134.002(2), § 134.005(a)(1)
Date: 10/01/2004

In addition to civil liability based on common-law tort principles for trade secret misappropriation, there is a basis for civil recovery under the Texas Theft Liability Act, Tex. Civ. Prac. & Rem. Code Ann. §§ 134.001-.005 (1997), for a violation of the Theft of Trade Secrets Act, Tex. Penal Code Ann. § 31.05(b)(3) (2003).  This penal statute provides:  “A person commits an offense if, without the owner’s effective consent, he knowingly: . . . (3) communicates or transmits a trade secret.”  In turn, the Texas Theft Liability Act expressly defines “theft” as “unlawfully appropriating property . . . as described by Section . . . 31.05 . . . Penal Code.”  Tex. Civ. Prac. & Rem. Code § 134.002(2).  It permits “a person who has sustained damages resulting from a theft”—including unauthorized communication of trade secrets—to recover, inter alia, “the amount of actual damages found by the trier of fact.”  Id. § 134.005(a)(1); see IBP, Inc. v. Klumpe, 101 S.W.3d 461, 472-73 (Tex. App.—Amarillo 2001, pet. denied).

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