Survey Says? Buc-ee’s Trademark Case Goes to Trial

Survey Says? Buc-ee’s Trademark Case Goes to Trial

TexasBarToday_TopTen_Badge_VectorGraphicThis week on Five Minute Law we have a survey. First take a look at the following photos taken at a store on the side of a Texas highway:

Choke Canyon SnacksChoke Canyon Jars and Drink StationChoke Canyon T-shirtsChoke Canyon CoolersChoke Canyon IceChoke Canyon Logo

And here’s the question: Who do you think owns this store?

If this were a real trademark survey, the question would be open-ended. But to make it more interesting I’m going to make it multiple choice. Pick the answer that comes closest to capturing your reaction:

A. Buc-ee’s, or a company affiliated with Buc-ee’s.

B. A company unaffiliated with Buc-ee’s that is imitating the Buc-ee’s concept.

C. I’m not from Texas. I have no idea what “Buc-ee’s” is.

Answer A would suggest that the owner of this store is infringing on the Buc-ee’s trademarks and trade dress. Infringement occurs when the use of similar marks causes a likelihood of confusion concerning the source, sponsorship, approval, or affiliation of the products or services.

But I’m guessing that most of you–at least the ones from Texas–answered B. I know this because I already did my own little pilot survey. More about that later.

The actual answer is Shepherd Retail, Inc.–and two other corporations you haven’t heard of that operate similar “Choke Canyon” stores. Those companies are defendants in a jury trial pending in federal court in Houston. (The images above are from the First Amended Complaint in that case.)

Buc-ee’s claims the defendants are unlawfully infringing and diluting Buc-ee’s distinctive beaver trademark and distinctive trade dress. As Gabrielle Banks reported in the Houston Chronicle, lawyers made opening statements in the case last Tuesday.

Likelihood of Confusion and Trademark Surveys

So do trademark law experts agree that Choke Canyon is infringing Buc-ee’s trademarks?

That would be interesting to know, but it really doesn’t matter. You see, trademark law is different from other kinds of intellectual property law in that it is almost entirely subjective.

I don’t mean subjective in the sense that there are no fixed governing standards. I mean that it doesn’t matter what some hypothetical reasonable person would think. What matters is whether actual consumers are likely to be confused about the source of a product or service, regardless of whether some smarter person thinks they should be confused.

Contrast that with patent law. The question there would be, for example, does some feature of the Samsung Galaxy phone infringe on a patent for smartphone technology owned by Apple? Even if experts disagree about the answer, that question is entirely objective. You look at the features of the product and compare them with the “claims” set forth in black and white in the patent. If the product does the things disclosed in one or more of the claims, it infringes. It doesn’t matter whether consumers think it infringes.

But in trademark law, what consumers think is everything. For that reason, consumer surveys are usually regarded as the most probative form of evidence.

If you know anything about litigation, you can see where this is heading: a cottage industry of high-priced Ph.Ds who design and supervise the surveys, and a “battle of experts” when there are enough dollars at stake.

My Pilot Survey

The amount of money in play is important because a properly designed and implemented trademark survey is very expensive (if you have to ask, you can’t afford it). So, companies will sometimes have an expert do a smaller–and cheaper–“pilot” survey to get a preliminary indication.

But even a pilot survey by an expert would be an extravagant expense to support a single blog post. So for this post I did my own pilot survey of three consumers: my wife and two kids.

They fit the target demographic: Texas residents who often drive between Houston, Austin, Dallas, and San Antonio. And all three of them are very familiar with Buc-ee’s. We stop there just about any time we are driving to another city in Texas.

So what would they say when I asked them if the products and marks from Choke Canyon were from Buc-ee’s?

Not so fast! You can’t ask the survey question in a way that suggests what the answer is. In a trademark survey, methodology is everything. The way the questions are phrased can have a huge impact on the results.

The classic survey methodology in trademark cases is the Eveready method. A typical Eveready survey would show a consumer a photo of the defendant’s product and ask “who makes this product?” The idea is to avoid bias by making the question open-ended and never even mentioning the name of the plaintiff.

So, to comply with Eveready and to avoid a Daubert challenge, I showed my subjects the images above from the Choke Canyon stores and asked two questions: (1) who do you think puts out the products shown here (or owns the store shown here)? (2) do you think the company that makes this product (or owns this store) is connected with or affiliated with some other company?

Survey Results

Let’s start with my son Eric (nine years old). When he saw the images that do not include the words “Choke Canyon” and I asked who puts out the products, he initially said the “alligator place” but eventually said “I wouldn’t know.” When he saw the images that do include the words “Choke Canyon,” he answered “Choke Canyon.” Why? “Because it says Choke Canyon on it.”

Did he think Choke Canyon was connected with or affiliated with some other company? No.

One thing I learned from questioning Eric is that it can make a difference whether the person taking the survey knows it is ok to say “I don’t know.” I think it’s human nature to want to come up with some answer, rather than admitting you just don’t know.

My daughter Hailey (17 years old) had pretty similar answers. She said “I don’t know” when asked about who puts out the products and owns the store, but in a couple cases she added “I would assume it was some tourist location in Florida” and “I would assume some kind of small local business.” For the products that say “Choke Canyon,” she said Choke Canyon Travel Center was the source “because it says it right on the center of the label.”

Did she think Choke Canyon was connected with or affiliated with some other company? No.

I decided to press a little. “Why don’t you think it’s affiliated with Buc-ee’s?”

“It looks like Buc-ee’s,” she said, “but with an alligator,” so “I don’t think it’s affiliated with Buc-ee’s.” She added, “it’s a completely different logo, obviously a different company.”

When I told her Buc-ee’s is suing Choke Canyon for trademark infringement she simply said, “that’s stupid.” (Folks, I just report the survey results.)

“Buc-ee’s is a beaver. This is an alligator.”

Finally, I surveyed my wife Rebecca. (Caveat: she was a legal assistant and is a really smart cookie, so maybe not representative of consumers generally.)

“Who do you think puts out the products shown here?” I asked. “Choke Canyon Travel,” she said, “but the products look just like stuff from Buc-ee’s.”

Don’t jump ahead!

“Do you think the company that sells this is connected with or affiliated with some other company?” I asked. “Probably not,” she said, but then we got sidetracked talking about what it meant that the trademark had that little (R) symbol next to it.

Stop over-analyzing!

When we got back on track, I showed her the images without the words “Choke Canyon,” and she said “I have no idea” and there was “no possible way” to know who put the products out or owned the store.

“Do you think the company that owns this store is affiliated with or connected with some other company?” No, she said. “I have no reason to think that.”

But why didn’t she think the Choke Canyon store was affiliated with Buc-ee’s? “Buc-ee’s is a beaver, this is an alligator.” Then, unprompted, she asked, “is Buc-ee’s suing them?” Yes, I told her. “That’s the stupidest thing I’ve ever heard.” (She doesn’t mince words.)

My wife then pulled out her phone and showed me a photo she had taken in some gas station. It was something like “Oma’s Choice Texas Quail’s Eggs” in an old-timey mason jar. It had the same kind of “country” look and feel as the jarred products from Choke Canyon and Buc-ee’s, and she said that gas station had the same products like “nuggets” that Buc-ee’s is known for.

Ah, third-party use. A further complication.

I tried to steer back to the issue at hand. “But don’t you agree that Choke Canyon is copying the Buc-ee’s concept?” I asked.

“Yes,” she said, “but you can’t trademark a concept.”

Like I said. A smart cookie.

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IMG_4571Zach Wolfe (zwolfe@fleckman.com) is a Texas trial lawyer who handles non-compete and trade secret litigation at his firm Fleckman & McGlynn, PLLC. He didn’t have space here to explain “trade dress,” but you can check out this video at 2:29.

These are not the opinions of his firm or clients (as noted, they are not even his opinions), so don’t cite part of this post against him in an actual case. Every case is different, so don’t rely on this post as legal advice for your case.

 

 

 

 

 

Wolfe’s First Law of Texas Non-Compete Litigation

Wolfe’s First Law of Texas Non-Compete Litigation

It’s my anniversary. Two years ago today I launched this blog with What a Litigator Looks For in the Typical Texas Non-Compete. I thought it best to start with a topic I know. I outlined the five things I look for to determine if a non-compete is enforceable under Texas law.

That post has held up pretty well. Since then, I’ve seen plenty more non-competes. Texas non-compete law hasn’t fundamentally changed, and I still look for those five things. So, if you want an intro to Texas non-compete law, that post is still a good place to start. Or you can watch a video version here.

But two more years have taught me there is a simpler question to ask when a client brings me a non-compete. As a general rule, you can boil down the practical effect of Texas non-compete law to just seven words: you can’t take your customers with you.

What do I mean? If you’re a sales person who has a non-compete and relationships with customers—the most common situation—it is likely a judge will order you not to do business with your customers from your previous company. But the judge shouldn’t completely bar you from working for a competitor.

In other words, you can compete for new customers, but you can’t take your old customers with you. I call this Wolfe’s First Law of Texas Non-Compete Litigation.

It’s really more of a general rule, but I like the sound of “First Law” more than “First General Rule.”

It’s just a rule of thumb because like most legal rules, it has exceptions, and the whole truth is more complicated. Still, experience has taught me that nine times out of ten, my First Law will hold true.

This means if you’re an employer trying to stop an employee from violating a non-compete, you can probably prevent the employee from taking her customers with her, but you probably can’t do more than that.

If that’s all you need to know, you can stop here. If you want to understand why, read on.

The reasoning behind Wolfe’s First Law of Texas Non-Compete Litigation

Here’s how I get there. The Texas non-compete statute has two requirements: (1) a non-compete must be “ancillary to an otherwise enforceable agreement,” and (2) it must be reasonable.

Employers usually meet the first requirement by (a) expressly stating in the non-compete that they will give the employee confidential information, and (b) actually giving the employee confidential information. A Texas Supreme Court case called Sheshunoff clarified that this will do the trick.

This is where the first big exception comes in. You will sometimes run across a non-compete that does not expressly promise to give the employee confidential information. Usually when you see that it’s either a really old non-compete, or a non-compete drafted for a multi-state company without Texas in mind.

If there is no express promise, you have to look at whether there was an implied promise to provide confidential information. A case called Mann Frankfort said the promise is implied if the nature of the employee’s work necessarily involves providing confidential information. That can be a fact-intensive issue.

Most employers avoid this detour by including an express promise to provide confidential information in the non-compete. Then the second big exception comes into play: did the employer actually provide confidential information to the employee?

I have had cases where there was a genuine dispute about whether the information was really confidential. You are more likely to see this in situations where an employee already had a book of business when he joined the company, or where sales people are entirely responsible for generating their own leads and customers. If the employer didn’t provide confidential information, the non-compete is unenforceable.

But most of the time, it’s pretty easy for the company to show that it provided some confidential information to the employee.

Now that we’ve cleared those possible exceptions out of the way, it’s time to turn to reasonableness.

Let’s be reasonable

Like most states, Texas requires a non-compete to be reasonable in time period, geographic area, and scope of activity restrained.

The good news for employees is that there is almost always at least a decent argument that some aspect of the non-compete is unreasonably broad. Especially the “scope of activity” part. While most Texas lawyers are pretty good about including a reasonable time period and geographic limitation, Texas non-competes are often too broad in the scope of activity they restrict.

Maybe this is because the scope of activity limitation is largely defined by the case law, so a lawyer who only reads the statute won’t get the whole picture. The case law says that an “industry-wide exclusion”—a restriction that prevents the employee for working in the same industry in any way—is too broad.

That’s because a non-compete should be limited to protecting the employer’s goodwill, i.e. its relationships with existing customers. The simplest way to do this is to say–usually in one really long sentence with fancier words–that the employee can’t take her customers with her. That’s a reasonable scope (generally). On the other hand, a non-compete that bars the employee from working for a competitor in any way is usually too broad and therefore unenforceable as written.

But employees shouldn’t get too excited. There is also good news for the employer.

First, note I said unenforceable “as written.” The non-compete statute says that if the non-compete is too broad, the judge must reform it—i.e., rewrite it—to the extent necessary to make it reasonable.

Second, even if the non-compete is too broad, as a practical matter a judge can still issue a temporary injunction to enforce the non-compete to a reasonable extent.[1] (A temporary injunction is an order that applies while the lawsuit is pending.)

Now you can see Wolfe’s First Law coming into focus. When you put all this together, you get two likely scenarios. If the non-compete is reasonable in scope because it is limited to preventing the employee from taking her customers with her, then the judge is likely to grant a temporary injunction that enforces the non-compete as written. If the non-compete is unreasonable in scope because it is not so limited, the judge is likely to limit the injunction to a reasonable scope, i.e. preventing the employee from taking her customers with her.

In either case, the effect is the same. And Wolfe’s First Law of Texas Non-Compete Litigation holds true.

Caveat Five-or

Again, there are exceptions. For example, some judges take the “irreparable injury” rule seriously. That rule says that a court should not grant an injunction if damages would be adequate to compensate the company for the employee’s violation of the non-compete.

My personal view—perhaps a post for another day—is that courts should apply this requirement more strictly. In most cases damages would be adequate to compensate the employer for any lost customers.

But most judges are not so fastidious about the irreparable injury rule. If the judge thinks the employee is violating the non-compete by steering competitors to the employee’s new company, a temporary injunction is likely.

Of course, a temporary injunction is not the end of the story. It is temporary, after all.

Still, in most cases a temporary injunction enforcing the non-compete might as well be a permanent injunction. Why? Remember that a non-compete must be reasonably limited in time. Time periods of three years or longer have sometimes been held reasonable, but most non-competes are limited to one or two years.

How long do you think it usually takes for a case to get to trial? (Hint: at least one or two years.) That means that in many cases, the non-compete will expire before the case goes to trial, or around that time. That’s why I say a temporary injunction might as well be a permanent injunction.

So maybe we should modify Wolfe’s First Law to say this: you can’t take your customers with you, until a year or two after you leave.

But that just doesn’t have the same ring to it.

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IMG_4571Zach Wolfe (zwolfe@fleckman.com) is a Texas trial lawyer who handles non-compete and trade secret litigation at his firm Fleckman & McGlynn, PLLC. Someday he will come up with a “Wolfe’s Second Law” for something.

These are his opinions, not the opinions of his firm or clients, so don’t cite part of this post against him in an actual case. Every case is different, so don’t rely on this post as legal advice for your case.

[1] Reformation is a remedy that typically would not be granted until a final judgment after trial. There is some legal question about whether the judge at a temporary injunction hearing should (1) reform the non-compete as a temporary remedy and enter a temporary injunction enforcing the reformed non-compete, or (2) simply enter a temporary injunction that only partially enforces the non-compete to a reasonable extent. The distinction seems largely academic.

The Problem With the “Elevator Speech”

The Problem With the “Elevator Speech”

TexasBarToday_TopTen_Badge_VectorGraphicFlashback to when I had a solo law practice: A recruiter calls me looking for candidates to join a large law firm. I wasn’t really looking to make a move, but I asked about the position because I was curious. “How much portable business are they looking for?” I asked. “At least a million,” she said (meaning dollars per year).

It took some restraint not to bust out laughing. Or to respond with a sarcastic, “a million, is that all?”

And in all seriousness, I wanted to ask, “if I had a million dollars in portable business, why would I need to join another firm?” or “if I had that much business, would I select a firm based on some random cold call from a recruiter?”

But I’m too nice for any of that, so I just said thanks, not interested.[1]

Then I got to thinking, maybe I would have more business if I had a better elevator speech, or honestly, any elevator speech at all.

The Elevator Speech

An elevator speech is a short pre-set summary of what you do that you can share with new contacts you meet. The idea is to briefly promote your professional services in the time it takes for a typical elevator ride (around 30 seconds).

But some business development coaches will tell you it’s not enough to just describe your job. Ideally, you would identify the potential client’s need, explain how you address that need, and convey the value you would add to their business.

So instead of saying “I’m a lawyer, I do business litigation,” I’m supposed to say something like, “I help businesses resolve disputes efficiently and effectively.”

Rather than adding, “a lot of my practice is non-compete and trade secret litigation,” I would say: “Do you worry about your employees running off to competitors with your trade secrets? Well, I help companies like yours protect their goodwill and confidential information.”

You see advice like this a lot. And it strikes me as wrong, for at least three reasons.

Abstract expressionism: good for French art, bad for an elevator speech

First, I’m not big on abstract descriptions of what you do that leave people guessing.

Have you noticed that companies today have a hard time telling people exactly what they do?

When someone contacts me about a dispute or lawsuit, I’ll Google the names of the companies involved and look at their websites. It’s amazing how often the homepage won’t tell me in simple, concrete terms what the business actually does. When I click on “About Us,” it will say something vague like “we provide our clients with cutting-edge solutions for their data management needs” or “we help your business grow and connect with customers.”

Ok, I think, so you’re a software company? Or you do management consulting?

They must teach this in marketing school. But why can’t companies just come right out and say what they do? “We’re a construction company. We build things at refineries and other industrial sites.” There, that wasn’t so hard.

I think the simple and direct approach is better for the elevator speech too. Don’t make the person you’re talking to work too hard to figure out what it is you do. That’s annoying.

But even when your elevator speech is clear and concrete, it’s still a speech. That leads me to the second problem with the elevator speech.

Rehearsal: good for bands, not so good for networking

The second problem with the elevator speech is that it sounds like a speech.

When you meet someone for the first time, do you want to hear a rehearsed presentation about what kind of work they do? Of course not. You want to know some basic things about them and have a conversation (unless you are a misanthrope, in which case you don’t want to talk to them at all).

That’s because effective networking is not about presenting, it’s about connecting.

Wow, that sounded like something from a cheesy motivational speaker. But it’s true. You want to connect with people in a genuine way, because that leads to real relationships. You don’t want to sound like you’re just giving a practiced sales pitch.

Which leads me to the third problem with the elevator speech.

Good pitching: effective for the world-champion Houston Astros, not so much for relationships

The third problem with your elevator speech is that it’s all about you. If you spend your time giving someone a sales pitch, I predict in the future they are more likely to avoid you than to seek you out.

Think about it. If you’re a lawyer, you probably get contacted by various vendors who provide services to lawyers. Do you love hearing their sales pitches?

When legal vendors want to connect with me, I try to accommodate them. I figure they’re people just like me, trying to make a living, and I might need their services sometime. So I will hear them out when I can. But if all they do is ask me to send them my business, it’s not very effective.

For one thing, I usually don’t have a project right that second that I need their help on. But if I actually get to know the person, that’s probably who I will think of later when I have a real need.

For example, I’ve got a friend who works with an e-discovery company. I don’t think he has ever asked me for business, but when my firm needed help managing thousands of documents in a big litigation matter, I thought of him first.

Surely, people who may need a lawyer–or any kind of professional–are no different.

An analogy fraught with peril

Let’s analogize to dating. You’re single and you meet someone you find attractive. Are you going to give that person a little rehearsed speech? Like, “you should know, the ladies [or gentlemen] find me very attractive, I’m smart, highly successful in my career, and people say I have a great sense of humor.”

That’s like what Donald Trump said to Stormy Daniels (allegedly), prompting her to say “does this usually work for you?”

I’m no dating expert (I’ve been happily married almost 20 years now), but I’m pretty sure that telling someone how great you are is not the optimal strategy.

Similarly, business development experts like Karen Kaplowitz will tell you “pitching” is not always the best approach (see her guest blog post here).

So instead of saying, “I’m a lawyer, I handle cases that . . . blah, blah, blah,” how about saying “I’m a lawyer, I do business litigation, what do you do?” And then listen. And then ask more questions.

You might even want to do some reading about “active listening.” See, for example, What Great Listeners Actually Do. I don’t think there is any better way to get to know a person than really listening.

On the other hand, I don’t have a million dollars in portable business, so what do I know?

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IMG_4571

Zach Wolfe (zwolfe@fleckman.com) is a Texas trial lawyer who handles non-compete and trade secret litigation at his firm Fleckman & McGlynn, PLLC.

After writing this post he realized it has way too many rhetorical questions, but hey, what are you gonna do?

[1] I’m not good, I’m just nice. See Stephen Sondheim, Into the Woods; Allan Bloom, The Closing of the American Mind, Part One, “Relationships.”

A Series of Unfortunate Trade Secrets

A Series of Unfortunate Trade Secrets

Prologue: Look Away

If you are interested in stories with happy endings, then you would be better off somewhere else. My name is Zach Wolfe, and it is my solemn duty to bring you the sordid tale of the Flaubert orphans, three children who inherited the old Real Cheap Windows factory when their parents died in a mysterious mansion fire.

As minors, the children had to rely on Mr. Edgar, the company’s lawyer, to guide them. “I have bad news for you,” Mr. Edgar said in his first meeting with the children. “Just before your parents perished, Real Cheap Windows hired Dawn Davis, the star salesperson for our most ruthless competitor, Paula Payne Windows.”

“Did Dawn have a non-compete?” young Rose Flaubert asked. “Oh, it’s worse than that,” Mr. Edgar replied as he coughed into his handkerchief. “Much, much worse.”

“You see, before leaving Paula Payne Windows, Dawn downloaded ­7,500 confidential company documents to a portable hard drive,” Mr. Edgar said. “Paula Payne has now sued us,” he explained, “claiming those files contained its most closely guarded trade secrets.”

“A trade secret,” he continued, “is information that derives independent economic value from not being known or . . .”

“We know what a trade secret is,” Karl Flaubert interrupted. “But I’ve spent hours reading an award-winning legal blog by a very handsome young lawyer,” Karl said, “and it says that companies often claim that things like ordinary lists of customers are trade secrets, even when that information is readily ascertainable.”

Karl continued. “If we think the trade secrets claim is contrived, can’t we just make Paula Payne Windows specifically identify what the alleged trade secrets are?” he asked. “Otherwise, we’re just flying blind.”

Here, “flying blind” is an expression that means engaging in some action with little or no knowledge of the facts of the situation, such that you are likely to crash or collide with a metaphorical obstacle because you lack knowledge of certain crucial information.

Karl was right. If you had to defend a trade secrets claim without knowing specifically what the alleged trade secrets are, you would be flying blind. But I am sorry to say the rest of this story is rife with misfortune and despair. You should probably stop reading now.

Chapter One: The Pleadings

That night, Rose and Karl read the pleadings. Paula Payne Windows had filed a Complaint in federal court claiming that Dawn Davis violated the federal Defend Trade Secrets Act by transferring the files to the portable hard drive.

But the Complaint was quite vague about what the alleged trade secrets were: “confidential company information, including without limitation customer lists, vendor information, prices, information about business plans, and methods of doing business.”

Here, “vague” is a word used to refer to allegations that are “fuzzy,” or not sufficiently definite. Vague should not be confused with “ambiguous,” which means a statement that can be reasonably interpreted to have two or more distinctly different meanings.

Karl also reviewed the Federal Rules of Civil Procedure, which provide that a defendant can file a “Motion for More Definite Statement” when the plaintiff’s pleading is “so vague or ambiguous that the party cannot reasonably prepare a response.” Fed. R. Civ. P. 12(e). “That’s it,” Rose said, “we’ll tell Mr. Edgar to file a motion for more definite statement.”

But Mr. Edgar laughed when the children came to him with the idea. “Flauberts, nobody really files a motion for more definite statement,” he said. “Now, children, if we were in state court we could file ‘special exceptions,’ which are kind of the same thing, and still popular with some older lawyers.”

“But even then,” Mr. Edgar said after another fit of coughing, “the judge would probably just say ‘serve some interrogatories instead—that’s what discovery is for.'”

Sweety Flaubert, the youngest of the children, responded with baby talk that was incomprehensible to Mr. Edgar. But her siblings understood: “Shouldn’t a litigant be required to state sufficiently specific allegations to give the opposing party fair notice, before the powerful engine of discovery is invoked?”

Interrogatories are written questions that can be served in the discovery process in civil litigation. The party receiving the interrogatories must serve signed answers within 30 days, but the responding party also has the right to make objections. I can assure you that the Flaubert children were about to discover just how frustrating the responding party’s interrogatory answers can be.

Chapter Two: Interrogatories

At the urging of the Flaubert children, Mr. Edgar sent an interrogatory to the lawyer for Paula Payne Windows, asking him to “identify each alleged trade secret with reasonable particularity.” After 30 days, Paula Payne Windows responded by objecting and saying: “Subject to the objections, see the 7,500 files Dawn Davis downloaded to a portable hard drive on or about September 1, 2017.”

“Those documents are 170,000 pages long,” Rose fumed. Tying her hair back, she banged out a “Motion to Compel” on an old typewriter she found. She then presented the Motion to Compel to Mr. Edgar.

“Flauberts, I’m sorry,” Mr. Edgar said, “but we can’t just haul off and file a Motion to Compel.” He explained that under Rule 26 of the Federal Rules of Civil Procedure, first he would have to “confer” with opposing counsel about the Motion. “So confer,” Karl said. “But it’s not that simple,” Mr. Edgar responded, “and I don’t like confrontation.”

Mr. Edgar went on to explain that there were also Local Rules and “Standing Orders” designed to discourage motions to compel. “The judge’s standing order says the lead lawyers must confer in person, [cough] so first we have to confer about the location of the conference.”

I know what you’re thinking. “Confer about where to confer? What a sorry state of affairs.” But I can assure you I have seen this very thing happen. Literally.

Sixty days later, Mr. Edgar filed the Motion to Compel, which the judge denied at a hearing five months later. “There must be something we can do to make them tell us what the trade secrets are,” Rose protested. “I mean, they’re the ones trying to get our fortune by claiming our company stole trade secrets.”

Chapter Three: Mandamus

“Well, there is one thing,” Mr. Edgar said, his voice trailing off. “But it will never work,” he said. “We could try filing a petition for writ of mandamus in the Court of Appeals.”

“Mandamus” is a Latin word that means “throw a Hail Mary.” The term “Hail Mary” refers to a prayer traditionally recited in the Roman Catholic church, or a football play where the quarterback throws the ball as hard as he can into the end zone in a last-second effort to win the game. The phrase now figuratively refers to any last-ditch strategy for victory that has a low chance of success.

“We understand the risk,” Karl said, “but we’re willing to try it.” Karl spent that night in the library researching case law on identification of trade secrets. “Rose, I think I’ve found something!” “It’s a Petition for Mandamus to the Texas Supreme Court in a similar case called In re Terra Energy Partners, LLC.”

The Terra Energy petition was a goldmine of helpful case law. Here, “goldmine” is used figuratively. A literal goldmine is an underground cavern where underpaid workers dig up a precious metal used in wedding bands. A figurative goldmine is a source of abundant helpful information.

“It turns out that many federal district courts across the nation have required plaintiffs to disclose the alleged trade secrets with specificity even before discovery starts,” Karl told Rose. He rattled off several examples cited in the Terra Energy Petition:

  • United Serv. Auto. Ass’n v. Mitek Sys., Inc., 289 F.R.D. 244, 248 (W.D. Tex. 2013)
  • StoneEagle Servs., Inc. v. Valentine, No. 12-1687, 2013 WL 9554563, at *5 (N.D. Tex. June 5, 2013)
  • Big Vision Private, Ltd. v. E.I. duPont de Nemours & Co., 1 F. Supp. 3d 224, 258-59 (S.D.N.Y. 2014)
  • Zenimax Media, Inc. v. Oculus Vr, Inc., No. 3:14-CV-1849-P (BF), 2015 WL 11120582, at *3 (N.D. Tex. Feb. 13, 2015)

“If we can just cite these cases, the judge will have to order Paula Payne Windows to identify the trade secrets,” Karl said.

If this were an ordinary children’s story with a happy ending, I would report to you that Karl provided these cases to Mr. Edgar, who triumphantly cited them to the judge and obtained an order requiring specific identification of the trade secrets. But this story has no happy ending. You may want to avert your eyes as the rest of the tale unfolds.

The Flaubert children soon learned that the Petition for Writ of Mandamus in the Terra Energy case was denied, not once, but twice. First by the Houston Court of Appeals, second by the Texas Supreme Court.

“You see, Flauberts,” Mr. Edgar explained, “the very reasoning of the cases you found shows why mandamus won’t work.” “These cases reason that the trial court judge has broad discretion to order the plaintiff to identify the alleged trade secrets,” he said. “But obtaining a writ of mandamus requires showing the judge abused her discretion. It’s not enough to say the judge made the wrong decision.”

Chapter Four: The Corporate Rep Deposition

Now Rose was really angry. “Can’t we turn this around on Paula Payne Windows?” she asked. “If they’re going to claim that there are 170,000 pages of trade secrets, haven’t they opened the door to extensive discovery on all of those pages?” “You’re right,” Karl said. “And while I was researching mandamus, I saw something about Federal Rule of Civil Procedure 30(b)(6).”

“Yes, we call that a ‘corporate rep’ deposition,” Mr. Edgar said. He reluctantly agreed to serve a Rule 30(b)(6) notice of deposition requiring a representative of Paula Payne Windows to testify regarding all 170,000 pages of documents containing the alleged trade secrets.

A “corporate rep” deposition is a common discovery procedure used when one of the parties is a business such as a corporation or LLC. The party taking the deposition identifies the topics, and the responding company must prepare a representative to testify,. The procedure is designed to prevent a company from hiding the ball about relevant information and who knows it. Here, “hiding the ball” is an expression that means . . . well, you get the idea.

Paula Payne Windows designated Mr. Sir as its representative. Through my investigation I have obtained this portion of the deposition transcript:

Screen Shot 2018-04-15 at 9.40.49 PM

“A lot of good that deposition did us for $37,000 in legal fees,” Rose said later. “I guess we’ll never find out what the trade secrets are. We’re doomed to be surprised at trial.”

Chapter Five: Motion for Summary Judgment

Sweety Flaubert then gurgled something Mr. Edgar could not understand, but Rose and Karl could: “Just force the issue by filing a motion for summary judgment on the ground that there is no evidence that the information is a trade secret.”

A motion for summary judgment asks the judge to rule on an issue as a matter of law. In this context, it would say that the trade secrets claim should be dismissed because there is no evidence that the information is actually a trade secret, and therefore no factual dispute for the jury to decide. In Texas state court procedure, the technical term for this kind of motion is a “no evidence” motion.

The Flaubert children asked Mr. Edgar about filing a motion for summary judgment to force the issue. “In theory, that could work,” he said. “Sometimes a no evidence motion for summary judgment is useful to force the opposing party to put his cards on the table.”

“Put his cards on the table” is an expression that . . . Ok, I know. You’re getting sick of this.

“The problem with that kind of motion,” Mr. Edgar continued, “is that you’re not supposed to file it until the plaintiff has had an adequate time for discovery.” “If we file it now, Paula Payne Windows will just say it needs more time for discovery.”

The Flauberts were crestfallen. “Litigation really is a conundrum of esoterica,” Karl said.

___________________________________________________________________

IMG_4571Zach Wolfe (zwolfe@fleckman.com) is a Texas trial lawyer who handles non-compete and trade secret litigation at his firm Fleckman & McGlynn, PLLC. He really doesn’t watch that much TV.

These are his opinions, not the opinions of his firm or clients, so don’t cite part of this post against him in an actual case. Every case is different, so don’t rely on this post as legal advice for your case.

 

Guest Post by Business Development Expert Maria Granovsky

Guest Post by Business Development Expert Maria Granovsky

This week we’re thrilled to have a guest post from Maria Granovsky, who works with lawyers to help them generate business. She provides some great insight on not missing the “gold bricks” that are sometimes right at our feet. – Five Minute Law

Are you stumbling on gold bricks in your search for copper deposits?

“No one is litigating!” My friend, Emma, declared during a recent coffee chat I had with her. “I’m so sick of marketing, and networking, and keeping in touch, and being top-of-mind.  All people want is compliance training.”

“Are you going to offer them compliance training?” I asked.

Emma harrumphed in irritation. “Maria. I. Am. A. Li-ti-ga-tor,” she enunciated each syllable.

“I know you’re a litigator,” I responded, fighting the urge to mimic her. “But I also know that, for most of your potential clients, litigation is a rare event. Which means that, if you’re going to stay wedded to being a pure litigator, you do have to keep marketing and doing all these other things you don’t much like in order to catch them at the precise moment when your services will be needed.”

I could see I had her attention now, so I continued. “Your potential clients are offering you an alternative – a way to get paid and become a trusted advisor at the same time. If you offer compliance training, you’ll showcase your expertise in this area, and you’ll be able to sprinkle your training with references to your litigation successes, all while getting paid! And it’s almost always easier to expand your service offerings for an existing client than acquiring a new client.”

Emma said nothing for a while. She squinted in concentration, and I could imagine the cogs whirring in her brain as she considered this new angle.

“You’re right!” she said at last. “This could be a very lucrative opportunity, and I’ve been throwing it away for months now.”

***

Emma is a good example of a blindness we all experience from time to time. It’s not a visual blindness, but rather it’s our inability to perceive new ideas or opportunities because they don’t fit with what we’re concentrating on at that moment.

If we’re prone to this perception deficit, we can miss what our market is telling us, to our business’s detriment.

An easy way to overcome this perception deficit is to practice asking open-ended questions and listening to the answers. For example, if you know that new regulations will soon be imposed on the industry you serve, ask industry people what challenges they think they’ll be facing in implementing these new regs.

As an experienced professional, you probably already know some of the challenges that industry will be facing, but the people in the trenches may have a very different view of that pain that’s coming their way – a view that may afford you an opportunity to provide a service you didn’t know was needed.

There’s an added bonus to this strategy: by asking and being genuinely interested, you’ll leave your conversation partners knowing that they were heard and understood. And in today’s shouty world, where many of us feel like no one is listening, that’s a surefire way to make a lasting impression and keep yourself top-of-mind.

********

Maria Granovsky, Ph.D., J.D., helps lawyers generate new business and get more clients with innovative business development strategies and high-impact copywriting.

In her work, she relies on her background as a scientist, a lawyer, a writing teacher, and an author. She has a Ph.D. in medical and molecular genetics from the University of Toronto and a law degree from Georgetown. While at Georgetown, she taught legal research and writing to J.D. and foreign L.L.M. students. A decade-long patent-litigation practice followed.

Maria has written scientific papers and book chapters, law review articles, and general interest articles (which appeared in HuffPo, Ladders, and Fast Company). She has written the copy for the websites of several law firms, and has advised many lawyers on content development. And she wrote and published a legal thriller.

Download her free guide, titled The One Thing That Will Transform Your Legal News Alerts Into New-Business Magnets here.

All the Legal News You Need

All the Legal News You Need

Wish you had more time to read the latest in the legal press? I have the solution. Read these five stories now, and they will cover 90% of the legal industry news that will come out the rest of the year.

What can I say, except “you’re welcome.”

1. Lateral Partner Moves

BigLaw Partner Frank Whitebread Leaves Smith, Jones & Davis to Join Jones & Smith

WorldLaw 100 firm Jones & Smith announced this week that Frank Whitebread is joining the firm as a shareholder. Whitebread, a well-known transactional lawyer who does M&A deals in the energy industry, was formerly the head of the Corporate section at the AmLaw 500 firm Smith, Jones & Davis.

Whitebread expressed enthusiasm for the new opportunity. “This move to Jones & Smith will give my team the platform to provide even better service to our multinational corporate clients everywhere they do business.” He noted that Jones & Smith has offices in 35 cities throughout the world. “Plus,” he said, “I’m going to make a shitload of money.”

Whitebread got the idea for the move after meeting Bruce Whiteshoe, the head of Jones & Smith’s local office, at their sons’ lacrosse game. That led to spending a week with their families together at Whiteshoe’s ski lodge in Vail, where Whitebread says he was impressed by Jones & Smith’s commitment to pro bono causes and diversity.

Two junior partners and three associates who work with Whitebread will make the move with him. One of those associates, Elizabeth Hailey, expressed excitement about the change. “Jones & Smith is known for matching Cravath’s associate bonus scale,” she said, “and their new quality of life initiative reduces their billables requirement to 2300 hours.”

Fred Rogers, managing partner at Whitebread’s current firm, Smith, Jones & Davis, says the parting will be amicable. “Honestly, I don’t know why Frank was hanging around here so long,” he said. “This place sucks.”

2. Law Firm Mergers

Jones & Smith Announces Merger with Smith, Jones & Davis

The international law firm Jones & Smith announced this week that it will merge with Smith, Jones & Davis, currently the third largest Texas-based firm.

The new firm will be known as Jones Smith | Smith Jones. Attempts to brand the new global juggernaut as “Smith Jones Squared” failed when the Business Development director couldn’t get Microsoft Word to make that “squared” symbol that looks like a little 2.

Jones & Smith’s worldwide managing partner Nigel Kennsington-St. James praised the deal. “Joining forces with our American friends at Smith, Jones will create a synergy that will serve our international clients well,” he said. “I mean, I’m talking a lot of synergy, it’s going to be really synergistic, you’ve never seen so much synergy.”

Some of the partners at Smith, Jones & Davis will not be making the move. Jim Bob Bowie, head of the firm’s venerable Insurance Defense section, said the higher rates and overhead at the London-based Jones & Smith did not make sense for his group. Instead, he said they will spin off to form a small firm that will office “behind that dental practice by the IHOP near my house.”

The merger comes just six months after rainmaker Frank Whitebread jumped ship at Smith, Jones & Davis to move to Jones & Smith. Asked for his comment on the new mega-firm, Whitebread said “I’m looking forward to rejoining some old colleagues, like . . . oh, who was that balding guy on 47 who does estate planning . . . well actually, never mind.”

3. Appellate Rulings

Court of Appeals Reverses Questionable Jury Verdict Against Big Company

Today the Court of Appeals of a big city ruled in favor of a large corporation, reversing a small-town jury’s verdict awarding many millions of dollars in damages to the blue-collar family of a man who was killed in a really horrible industrial accident. The court based its ruling on a technical legal issue.

In a 2-1 decision, two justices from one political party voted to reverse the judgment, while the dissenting justice from the other political party voted to affirm it. The majority’s painstaking opinion cited at least eleven prior court cases, sometimes even citing to specific page numbers.

The dissent was scathing. “Today the majority picks one of two reasonable interpretations of the case law to reach the result the majority considers fair,” the dissenting justice wrote. “I dissent,” he concluded, pointedly leaving out “respectfully.”

The corporation’s lead lawyer was pleased with the decision. “We’re very pleased with the decision,” she said.

The plaintiff’s lawyer was not so happy. “We worked hard to get the jury to ignore the lack of evidence of causation, and to focus on sympathy for the victims,” he said. “We’re not giving up now.” He vowed to make campaign contributions to the Tea Party-backed candidates challenging the two majority justices in their upcoming primaries.

A professor at a local law school who followed the case said the result was not unexpected. “This continues a trend of the Court of Appeals reversing judgments that it finds are not supported by the evidence,” she said. “I expect we will see more cases like this,” she added. “More and more big companies are hiring expensive lawyers to try to overturn judgments that order them to pay large amounts of money.”

4. End of the Billable Hour

Speaker Touts Alternative Billing Arrangements at Legal Conference

While traditional lawyers took family vacations or worked quietly at their offices during Spring Break, the legal industry’s boldest and brightest flocked to Austin for the 7th annual Legal Disrupterz Conference, held in conjunction with SXSW. And RazorWire’s correspondent was there to witness the sparks flying.

Keynote speaker Dallas Houston kicked off the conference at the W Hotel with his provocative presentation “Shattering the Billable Hour Paradigm.” He advocated alternative billing arrangements such as “value-based billing.” And for the fourth year in a row, Houston predicted that billing by the hour would be obsolete by the time of next year’s conference.

RazorWire caught up with Houston as he got into his Tesla in the hip 2nd Street District. “I’m so turnt to be here again during South By,” he said. “Did you notice I called it South By, not South By Southwest?” he added. “That’s how you can tell I’ve been here a lot.”

Still, Houston said, his dad told him Austin just hasn’t been the same since the Armadillo closed.

Organizers said they were pleased to have the conference sponsored by e-™. That’s not a typo. The name of the company is “e-”.

VP of Business Development Austin Travis explained that “e- delivers cutting-edge deliverables for its stakeholders in the digital space.” Asked to explain what that means, Travis said “we host cloud-based solutions for law firms looking for best practices.” “So you’re an e-discovery vendor?” the reporter pressed. “Ok, yeah, we’re an e-discovery vendor,” Travis replied sheepishly.

He added that e- still bills by the hour.

5. Bar Association Charitable Events

Local Bar Association Raises Money for the Poor at Exclusive Country Club

Heard that joke about the greedy lawyer? Well raising money for a good cause is no joke for the Springfield Bar Association. Last month, the SBA’s Community Affairs, Youth, Mental Health, Elderly Support, and Antitrust Litigation Committee (CAYMHESALC) held its annual “Bakin’ and Eggs” breakfast and baked goods silent auction to raise money for a great cause: the Springfield Heights Association for Disadvantaged Youth.

The event was held at the prestigious Shady Oaks Country Club. Known for its progressive stance on social issues, the club sparked controversy when it opened its membership to women and minorities in 2009.

“We thought it was important to partner with a venue that shares our commitment to helping the disadvantaged,” committee co-chair Buffy Van Pelt said. “Also, they make the strongest mimosas you’ve ever had, so that’s a plus.”

At the breakfast, Van Pelt and the committee’s nine other co-chairs received the President’s Chalice for excellence in bar leadership. They welcomed County commissioner Rick Gordon as the featured speaker. “We had to do some negotiating with Commissioner Gordon’s office,” Van Pelt said, “but once we agreed that his name and photo would appear on the front and back cover of the program, he was behind us 100%.”

And the best part: it was all for a good cause. Sponsors chose from three different levels: Baconator ($100), Ham Hock ($500), and Whole Hog ($1,000). With so many local firms sponsoring tables, Van Pelt said the event brought in over $65,000. “After paying for valet parking, the rental fee, and $37 per plate for breakfast,” she added, “we netted $478, and 100% of that goes to charity!”

Keeping with tradition, the committee invited three disadvantaged youth from J. Danforth Quayle Middle School to attend the breakfast. “This place is sick,” 8th grader Bobby Garza said approvingly. “I mean, I can’t afford to play golf, and the guard wouldn’t let my mom through the gate in her beat-up Corolla, but once I got in, it was cool.” His favorite part? “Those mimosas!”

___________________________________________________________________

IMG_4571 Zach Wolfe (zwolfe@fleckman.com) is a Texas trial lawyer who handles non-compete and trade secret litigation at his firm Fleckman & McGlynn, PLLC.

Any opinions expressed are his own, not the opinions of his firm or clients. This is a work of fiction. Any resemblance to any actual person, living or dead, is purely coincidental.

 

The Matrix: Making Sense of the Patchwork of Employee Confidentiality Duties

The Matrix: Making Sense of the Patchwork of Employee Confidentiality Duties

What if I told you that to understand an employee’s confidentiality duties, you need to understand there are three kinds of confidential information covered by at least four different areas of law?

You see, employers have three kinds of confidential information:

  1. Trade secrets
  2. Confidential information that is not a trade secret
  3. “Confidential” information that is not actually confidential

A trade secret is confidential information that has “independent economic value” and is “not readily ascertainable” by competitors. Secret technology, secret business plans, the literal secret sauce—these are obvious trade secrets. Less obvious things like customer lists and company prices can be trade secrets if they have independent economic value and are not readily ascertainable. In other words, you can tell that information is a trade secret if obtaining the information gives a company a competitive advantage.[1]

A typical employer is going to have a lot of confidential information that is not a trade secret. For example, a social security number or other personal identifying information of an employee is highly confidential. Same for an employee’s personal healthcare history. But information like that is typically not going to give the company any competitive advantage.

Of course, employees learn all kinds of information about the company that is not confidential at all. People outside the company may not know how to get to the company cafeteria, but that information isn’t really confidential. (Think Tom Cruise pointing out that the location of the mess hall is not in the Marine manual in A Few Good Men.)

So why do I include non-confidential information in the list of types of confidential information? Because many companies define virtually all company information as “confidential” in their employment agreements or employee policies. I’ve seen a lot of employment agreements like this, and you’ve probably seen the same thing.

So what does the law say about an employee using these three types of confidential information after leaving the company? There are four key areas of law that govern an employee’s duties concerning confidential information.[2]

Four areas of law. Three types of information. I feel a matrix coming.

And here it is. This chart shows which areas of law cover which types of information:

Screen Shot 2018-03-25 at 9.11.57 PM

Don’t worry, I’ll explain.

Trade Secrets Law

Most states, like Texas where I practice, have some version of the Uniform Trade Secrets Act, affectionately known as UTSA. Then there is a federal statutory overlay called the Defend Trade Secrets Act (DTSA). These statutes provide civil remedies for “misappropriation” of trade secrets, including injunctions, actual damages, and, in some cases, punitive damages and attorneys’ fees. See Trade Secrets 101.

But the trade secrets statutes do not apply to misappropriation of confidential information that is not a trade secret. And whether the information at issue is actually a trade secret is often a major point of contention. So employers don’t want to limit themselves to protecting trade secrets.

Confidentiality Agreements

Enter the confidentiality agreement. Almost every employment agreement is going to have some kind of confidentiality clause. And while the definitions of confidential information vary, the tendency is to define confidential information very broadly. As a result, most confidentiality agreements are not limited to trade secrets.

Heck, most confidentiality agreements are not even limited to confidential information. And thus the question mark in the “Non-Confidential Information” column above. Is it really a breach if the employee uses or discloses information that is not actually confidential?

To make this less abstract, let’s say while working for Paula Payne Windows, Dawn Davis learns the name and phone number of the right person to contact at a window manufacturer to check prices and place orders. Dawn quits and goes to work for Real Cheap Windows. Does she violate her agreement if she uses her knowledge to place a call to the guy she knows at the window manufacturer?

This may be a technical breach, but it is unlikely to give Paula Payne a solid claim for damages, for at least two reasons.

First, it would be hard for Paula Payne to prove that the breach caused damages, especially if Dawn Davis could have found the same person simply by calling up the manufacturer and asking who to talk to. (It would become more complicated if the agreement also has a liquidated damages clause, which to the delight of Contracts professors has been in the news lately.)

Second, defining confidential information to include virtually everything is arguably an illegal restraint of trade or commerce. It is a restraint of trade because, if applied literally, it would effectively prevent an employee from doing anything in the same industry after leaving the company.

So, disclosure of non-confidential information probably isn’t an actionable breach of a confidentiality agreement. But it’s still a question mark.

Fiduciary Duty Lite

Fiduciary Duty Lite is the term I use for the limited kind of “fiduciary” duty that employees owe employers. An employee’s Fiduciary Duty Lite includes a duty not to use the employer’s confidential information or trade secrets in competition with the employer.

So why no check mark for Fiduciary Duty Lite under the Trade Secrets column? In a word: preemption. The Texas Uniform Trade Secrets Act expressly states that it displaces any conflicting law providing civil remedies for misappropriation of a trade secret.[3] Texas courts have interpreted this to mean that TUTSA preempts a breach of fiduciary duty claim that is based on alleged misappropriation of a trade secret.[4] Thus, no check mark.

But what about a breach of fiduciary duty claim that is based on an employee’s use of confidential information that is not a trade secret? Does the trade secrets statute displace that claim?

Courts are split on this question. The “majority” rule seems to be that the trade secrets statute preempts this type of claim, even though the claim does not require proof of a trade secret.[5]

This rule should bother advocates of textualism. The plain language of the trade secrets statute says it displaces “conflicting” law providing civil remedies for misappropriation of a trade secret. A claim for breach of Fiduciary Duty Lite that is based on information that is not a trade secret does not conflict with the statute.

But I get it. The rationale is that allowing an employer to characterize what is really a trade secrets claim as a claim for breach of fiduciary duty would conflict with the preemptive purpose of the trade secrets statute.

Anti-Hacking Statutes

The relevant statutes are not limited to trade secrets. Consider also the federal anti-hacking statute, the Computer Fraud and Abuse Act (CFAA).[6] The Texas version is the Breach of Computer Security and Harmful Access by Computer Act (BCS).[7]

College football fans know that BCS also stands for Bowl Championship Series, but that is probably just a coincidence.

I would summarize these statutes, but I really can’t improve on the article here by Texas lawyer and cybersecurity expert Shawn Tuma. Bottom line: these statutes prohibit “unauthorized access” to computers and provide civil remedies for knowing and intentional violations.

I will use the BCS as an example. If a company hacks into a competitor’s server and steals confidential information, that is an obvious violation. But the BCS is not limited to hacking by outsiders. An insider who accesses the company computer system for an improper purpose or exceeds the scope of his authorized access can also violate the statute, because the statute prohibits access without the company’s “effective consent.”

The picture gets fuzzier when an employee’s access was authorized at the time. Let’s take the typical departing employee scenario where an employee legitimately obtains confidential information from the employer’s computer system in the course of employment for a legitimate purpose, but the employee later misuses the information for the improper purpose of competing with the employer. Whether that conduct violates the statute is a more difficult question.

Another tricky question is whether the employer could have a claim under the anti-hacking statute for an employee obtaining non-confidential information from the company’s computer system. The BCS is not limited to confidential information, but it does require proof of “damages as a result” of the unauthorized access, i.e. causation. As with confidentiality agreements, it may be difficult to prove a violation caused damages if the accessed information was not really confidential.

Oh, one more thing just to add another layer of complexity. As with fiduciary duty, a claim under the anti-hacking statute that is based on misappropriation of trade secrets is preempted by the trade secrets statute.[8]

Are we clear?

___________________________________________________________________

IMG_4571Zach Wolfe (zwolfe@fleckman.com) is a Texas trial lawyer who handles non-compete and trade secret litigation at his firm Fleckman & McGlynn, PLLC. He has watched A Few Good Men multiple times but has actually never seen The Matrix.

These are his opinions, not the opinions of his firm or clients, so don’t cite part of this post against him in an actual case. Every case is different, so don’t rely on this post as legal advice for your case.

[1] The words “competitive advantage” don’t appear in the statutes that now define trade secrets in most states and under federal law, but you see the phrase in the common-law case law, e.g. In re Bass, 113 S.W.3d 735, 739 (Tex. 2003), and it is useful for understanding what is and is not a trade secret.

[2] I can’t wait for one of my Fivers to point out I have left out some crucial additional source of employee confidentiality duties, like HIPPA.

[3] Tex. Civ. Prac. & Rem. Code § 134A.007(a). But note the statute does not preempt a breach of contract claim.

[4] E.g. Super Starr Int’l, LLC v. Fresh Tex Produce, LLC, 531 S.W.3d 829, 843 (Tex. App.—Corpus Christi 2017, no pet.).

[5] See discussion in Embarcadero Technologies, Inc. v. Redgate Software, Inc., No. 1:17-cv-444-RP, 2018 WL 315753, at *2-4 (W.D. Tex. Jan. 5, 2018).

[6] 18 U.S.C. § 1030. USC also stands for University of Southern California, a traditional college football power. Noticing a pattern here?

[7] Tex. Penal Code § 33.02; Tex. Civ. Prac. & Rem. Code § 143.001.

[8] Embarcadero, 2018 WL 315753 at *5.