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Will litigation lead to my trade secrets being revealed?

| Feb 6, 2020 | Dallas Business Law Blog |

One crucial characteristic of any trade secret is that it remains secret. It is right there in the name. In fact, the owner of this type of valuable information must take “reasonable measures” to ensure it remains classified – otherwise the law may not consider it a trade secret.

So what happens during trade secret litigation, a process that plays out in the courts? Might someone be forced to reveal their prized trade secrets?

Preservation of secrecy

The Texas Uniform Trade Secrets Act addresses this tension between the secretive nature of trade secrets and the openness of litigation. The law requires the courts to preserve the secrecy of the trade secret in question “by reasonable means.” That might mean:

  • Sealing court records
  • Limiting who can access the information
  • Ordering those involved in the litigation to not disclose the trade secret
  • Holding in camera hearings
  • Excluding a party (or their representation) from access to the trade secret during the case

Trade secrets displayed at trial

A recent high-profile trade secrets case between the companies HouseCanary and Title Source offers something of a lesson. Weeks after the trial ended, HouseCanary asked the courts to seal documents that had been put on display in court. The district court assented and sealed the records.

In the fall of 2019 however, the Texas Fourth Court of Appeals overturned that order, Bloomberg Law explains. According to the ruling, even though the information had been considered a trade secret, openly displaying it at trial meant it became part of the public domain – and therefore, the public had a right to view it.

For the owner of a trade secret involved in litigation, this can be concerning. It underscores the need for caution. It may be necessary for you and your attorney to take proactive steps with the court to ensure your trade secret information remains as sheltered as possible.

It’s clear not doing so may have long-term consequences.

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