“Sting! Der Stingelhopper. Makin’ copies! The McStingsterrrr.”
Those of you above a certain age will remember this classic Saturday Night Live bit. It was silly and pointless, but funny and memorable.
More about copy machines later.
The Price Undercutting Theory
As we start the year 2026, I’m wondering if the tide is turning against the “price undercutting” theory in trade secrets litigation. It’s a common theory that companies assert when an employee leaves and joins a competitor.
The idea is that the former employee knows the company’s super-secret prices and shares them with his new employer, allowing the new employer to set its prices just below the former employer’s prices, thus “undercutting” the former employer’s prices and stealing its customers. I covered this years ago in The Price Undercutting Theory in Texas Trade Secrets Litigation.
Since that time, the price undercutting theory continues to be a staple of trade secrets lawsuits.
It’s a convenient theory that coincides with Wolfe’s First Law of Trade Secrets Litigation: whatever documents an employee takes from his former employer will be the alleged “trade secrets” in the former employer’s trade secrets lawsuit.
It’s convenient because when a former employee keeps company documents (and they almost always do), those documents are likely to contain pricing information. And it’s common for the new employer to get work from the former employer’s customers, sometimes charging a price a little lower than the former employee charged. The complaint practically writes itself.
Courts Recognize the Obvious Flaw
But there’s an obvious flaw with the price undercutting theory: if your competitor can just call up your customer and ask what you’re charging, and if the customer is free to spill the beans, how can you say your prices are secret? Keep in mind that “readily ascertainable” information is not a trade secret.
Texas courts are finally starting to recognize this fundamental flaw. Here’s an example from a recent “trade secrets” lawsuit in federal court in Texas, where my firm defends noncompete and trade secret litigation.
In Total Quality Logistics, LLC v. Medellin, No. SA-23-CV-00333-XR, 2025 3771435 (W.D. Tex. Sept. 30, 2025), plaintiff TQL was a commercial shipping broker that arranged transportation of freight by third-party motor carriers. It employed three employees who helped it handle shipments between the US and Mexico, including shipments for one customer so secret it could only be referenced as “the Key Customer.” See id. at *1.
The employees left TQL and went to work for competitor PGL. TQL sued PGL and the employees, claiming the employees misappropriated TQL’s trade secrets by taking them to PGL and using them to get business from the Key Customer. Id. at *2-3.
TQL identified several categories of information as alleged trade secrets: “its rate information, contact and key decision maker information for motor carriers, terms of TQL’s agreements with motor carriers, terms of TQL’s agreements with motor carriers, terms of TQL’s agreements with motor carriers, and how it qualifies motor carriers for specific lanes.” Id. at *6.
The court found that TQL had enough evidence to raise a fact issue on whether some of these categories were trade secrets. Id. at *7.
But as to prices, the court was not impressed. The court held that the prices TQL charged the Key Customer and the requirements the Key Customer had imposed on TQL were not trade secrets. “TQL has provided no evidence that the Key Customer could not freely share this information with PGL,” the court reasoned, “[s]o this information is not a protected trade secret.” Id. at *8.
In support, the court cited El Paso Disposal LP v. Ecube Labs Co., 766 F. Supp. 3d 692, 712 (W.D. Tex. 2025), for the general proposition that “[i]nformation that can be freely shared by customers generally does not constitute a trade secret.”
Some other Texas courts have reached similar conclusions. See, e.g., Citizens, Inc. v. Riley, No. 03-19-00560-CV, 2020 WL 5507281 (Tex. App.—Austin Aug. 31, 2020) (premium rates were not trade secrets where they were shared with customers and available online).
This reasoning is sound, and other courts should embrace it. It just doesn’t make sense to say that prices are trade secrets if the customers are free to share the prices with competitors.
The Usual Pushback from Trade Secrets Plaintiffs
But wait. There’s an obvious rebuttal from the plaintiff’s lawyer in a price undercutting case.
“Ok, Mr. Competitor CEO, you say prices in this industry aren’t trade secrets. So if my client asked you for your internal pricing documents you would just hand them over?” The CEO is going to have to say no, I wouldn’t. “And that’s because your prices are confidential, right?”
Checkmate!
I’ve heard this kind of exchange many times in my practice.
My response? That gets us back to the copy machine. Let’s say your competitor comes to your office and says “hey, I’m working on a proposal to one of your customers, do you mind if I come in and use your copy machine to make some extra copies of the proposal?”
Obviously, the answer is no. Yes, your competitor could easily just go make copies at his own office. But no, you’re not going to do anything to help your competiton get business from your customers.
That doesn’t mean your copy machine is a trade secret.
As one of my clients wisely said in his deposition, “it’s not my job to make it easy for you.”
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Zach Wolfe (zach@zachwolfelaw.com) is a Texas trial lawyer who defends noncompete and “trade secret” lawsuits at Zach Wolfe Law Firm (zachwolfelaw.com). Thomson Reuters has named him a Texas “Super Lawyer”® for Business Litigation every year since 2020.
These are his opinions, not the opinions of his firm or clients. Reasonable people can disagree. Every case is different, so don’t rely on this post as legal advice for your case.
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