What Is a Trade Secret in Texas?

 A former employee took our customer list, our pricing, and some internal process documents to a competitor. Is that information a “trade secret” under Texas law?

This is the question every trade-secret case starts with, and it’s the one this blog first addressed in 2013. The law has changed since then — Texas adopted a trade-secret statute later that year and expanded it in 2017 — so this post replaces the earlier one.

The statute. Since September 1, 2013, trade secrets in Texas have been governed by the Texas Uniform Trade Secrets Act, found in Chapter 134A of the Civil Practice and Remedies Code. Before that, the rules came from court decisions. The statute largely tracks those decisions but puts the definition in one place.

As amended in 2017, the Act defines a trade secret as “all forms and types of information, including business, scientific, technical, economic, or engineering information, and any formula, design, prototype, pattern, plan, compilation, program device, program, code, device, method, technique, process, procedure, financial data, or list of actual or potential customers or suppliers,” regardless of how it is stored, provided two things are true:

• the owner “has taken reasonable measures under the circumstances to keep the information secret,” and
• the information “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information.”

Tex. Civ. Prac. & Rem. Code § 134A.002(6).

Breaking that down. The definition is broad on what kind of information qualifies — business and financial information count, not just technical formulas — and the 2017 amendment made that explicit by adding “business, scientific, technical, economic, or engineering information” and the phrase “list of actual or potential customers or suppliers.” What narrows it are the two conditions.

Reasonable secrecy measures. The owner has to have treated the information as secret. Courts look at things like whether access was limited, whether employees and vendors signed confidentiality agreements, whether documents were marked, and whether the information was kept off public channels. Absolute secrecy isn’t required; the standard is reasonableness “under the circumstances.” A company that posts its pricing on its website, or emails its customer list to anyone who asks, is unlikely to meet it.

Independent economic value from secrecy. The information has to be valuable because competitors don’t have it and can’t easily get it through legitimate means. Information that a competitor could assemble from public sources, or figure out by reverse-engineering a product that is sold on the open market, generally won’t qualify.

The six factors. Before the statute, Texas courts weighed six factors to decide whether information was a trade secret: how widely the information was known outside the business; how widely it was known inside the business; what measures were taken to guard it; its value to the business and to competitors; the effort or money spent developing it; and how easily it could be properly acquired or duplicated by others. In re Bass, 113 S.W.3d 735, 739 (Tex. 2003). The statute doesn’t list those factors, but courts applying it continue to consult them, and they map fairly closely onto the two statutory conditions.

Some examples. Information that Texas courts have treated as a trade secret, depending on the facts, includes customer lists that were compiled with effort and kept confidential; pricing and margin data; manufacturing processes; formulas; software source code; and compilations of otherwise-public information arranged in a way that isn’t public. Information that generally does not qualify includes anything already public, an employee’s general knowledge and skill, and information the company itself didn’t bother to protect. A unique combination of known components can be a trade secret even if each piece is public on its own.

What the statute does with a trade secret. The Act defines “misappropriation” — acquiring a trade secret by improper means, or using or disclosing it when you knew or should have known it was obtained improperly or under a duty of confidence — and “improper means,” which include theft, bribery, misrepresentation, breach of a confidentiality duty, and espionage. § 134A.002(2)–(3). It provides for injunctions, damages, and in some cases attorney’s fees, and it includes a presumption in favor of protective orders during litigation. §§ 134A.003–.006. One limit worth noting: an injunction under the Act may not prohibit a person from using the “general knowledge, skill, and experience” acquired during employment. § 134A.003(a).

The federal overlay. Since 2016 there has also been a federal statute, the Defend Trade Secrets Act, 18 U.S.C. § 1836 et seq., with a definition that closely resembles the Texas one. It gives trade-secret owners the option of suing in federal court and, in narrow circumstances, obtaining an order for seizure of the misappropriated material. The two statutes coexist; many Texas trade-secret cases are filed under both.

A note on the 2013 post. The original version of this post described the common-law six-factor test as the governing standard. That was accurate when written. The statute now controls, and the earlier post has been retired in favor of this one.

For related topics, see our earlier posts on customer lists as trade secrets, remedies for misappropriation, the statute of limitations, and unique combinations of known components.

Independent Contractors and Open-and-Obvious Dangers: JMI Contractors, LLC v. Medellin

A worker hired as an independent contractor was seriously hurt on a construction site because of a hazard that was plain to see. Can the general contractor be held responsible?

The Supreme Court of Texas took up that question this summer in JMI Contractors, LLC v. Medellin, 738 S.W.3d 775 (Tex. 2026).

What happened. JMI was the general contractor on an apartment project in San Antonio. It hired a roofing company, which brought in Jose Medellin — an experienced roofer working as an independent contractor — to help. Medellin and other workers were pulling a roll of roofing membrane across the roof. He lost track of the edge, stepped off, and fell about thirty feet. A jury found JMI responsible on two theories and awarded more than $3.3 million in damages plus $1 million in punitive damages. The court of appeals in San Antonio upheld the verdict. The Supreme Court reversed it and ruled that Medellin takes nothing. Id. at 778–80.

Two kinds of claims. To follow the decision, it helps to know that Texas treats injuries on someone else’s property as one of two kinds of claims, and the difference matters.

A negligent-activity claim says you were hurt by something the other side was doing at the time — a worker swinging a beam into you, for example.

A premises-liability claim says you were hurt by a condition of the property — a hole, a wet floor, an unguarded edge — that the owner or whoever controlled the site failed to fix or warn you about.

The Court has said for years that a single injury is one or the other, not both. United Scaffolding, Inc. v. Levine, 537 S.W.3d 463, 471 (Tex. 2017). Each claim has its own rules, and some defenses apply to one but not the other.

This was a premises case. The Court decided Medellin’s injury came from a condition — the unguarded roof edge — not from anything JMI was actively doing. The instruction to “pull the roll” came from another independent contractor, not from a JMI employee. And although the jury found JMI had “some control” over fall-protection measures on the site, the Court said that wasn’t enough. For a general contractor to be liable for a contractor’s work, there has to be a specific finding that it controlled the details of the work that caused the injury. Not putting a safety measure in place, the Court said, “is not actual control.” 738 S.W.3d at 784, 787–88.

The open-and-obvious rule. Once the claim was a premises claim, the key question became whether the danger was obvious. Under Texas law, a property owner generally doesn’t have to warn about or fix a hazard that’s open and obvious — the idea being that if you can see the danger, you already have the information a warning would give you. Austin v. Kroger Tex., L.P., 465 S.W.3d 193, 203 (Tex. 2015).

There’s a long-recognized exception. If you have to go through the obvious danger to use the property for its intended purpose, and you can’t reasonably avoid it, the owner may still have a duty. That’s called the “necessary-use” exception, and it goes back to a 1978 case about a woman who had to walk down an unlit stairway to leave a building. Parker v. Highland Park, Inc., 565 S.W.2d 512 (Tex. 1978). The court of appeals had applied that exception to Medellin: he had to be on the roof to do the job.

The exception doesn’t apply to independent contractors. That’s the new part. The Court held that someone hired as an independent contractor can’t use the necessary-use exception. Its reasoning: a contractor is expected to size up the job and account for obvious hazards in deciding how to do it; contractors are often hired precisely to deal with dangerous conditions; they bring their own know-how and equipment, manage their own safety, and can turn down a job they think is unsafe. The woman on the stairway in Parker was none of those things. The Court had already held in Austin v. Kroger that an employee sent to clean up a hazard couldn’t use the exception against the employer, and it saw no reason to give contractors — who “pick and choose their work” — a break that employees don’t get. 738 S.W.3d at 792–93.

Applied to Medellin, that ended the case. He had about three years of roofing experience, testified that he was “keenly aware” of the risk of working at a roof edge without fall protection, brought his own equipment to the site, and hadn’t brought a harness — though other workers said they routinely did. Id. at 793.

In the Court’s words: “an independent contractor may not avail himself of the necessary-use exception to pursue a premises-liability claim.” Id. at 792. The decision was unanimous. Justice Busby joined it and added a short concurrence making one point: a general contractor can still owe a separate duty if it actually takes control of how a contractor does the work — that duty comes from the control, not from owning or occupying the site, and the Court’s opinion leaves it in place. Id. at 793–94 (Busby, J., concurring).

What it appears to mean. For an injured independent contractor, the decision seems to narrow the path to recovery against a general contractor or property owner. If the hazard was obvious, a premises claim won’t work, and the necessary-use exception is no longer a way around that. What’s left, on the Court’s framing, is a negligent-activity claim built on proof that the defendant actually controlled the details of the work — not just that it had general authority over site safety — or a premises claim based on a hazard that wasn’t obvious. The opinion doesn’t say whether the result would be different for a less experienced worker, or for one who had been told that fall protection was in place.

See also our post on shipper liability for motor-carrier accidents, the first in this series on recent injury decisions.

Shipper Liability for Motor-Carrier Accidents: In re Home Depot U.S.A., Inc.

A family member was killed when a commercial truck ran a red light. The truck was hauling goods for a large retailer. Can the retailer be held responsible along with the trucking company?

The Supreme Court of Texas addressed that question in In re Home Depot U.S.A., Inc., 735 S.W.3d 719 (Tex. 2026) (orig. proceeding). A motorcyclist died in Harris County when a tractor-trailer operated by Werner Enterprises allegedly accelerated through a yellow light and ran a red one. The truck was carrying Home Depot merchandise between stores under a commercial shipping arrangement. The motorcyclist’s parents and estate sued Werner, its driver, and Home Depot, alleging that Home Depot had negligently selected Werner as a carrier despite a safety record that included more than 850 reportable collisions in the preceding two years and various federal violations. Home Depot moved to dismiss under Rule 91a on the ground that, as a shipper, it owed no duty to the motoring public. The trial court denied the motion and the court of appeals denied mandamus. The Supreme Court conditionally granted mandamus and directed the trial court to dismiss the claims against Home Depot.

The Court began from two settled rules. First, “one generally has no duty to control the conduct of another,” absent a special relationship, control over the actor or instrumentality, or conduct by the defendant that creates or increases the risk. Id. at 723. Second, one who hires an independent contractor is generally not liable for the contractor’s torts, subject to narrow exceptions for retained control, nondelegable duties, and inherently dangerous work. Id. The plaintiffs did not plead facts fitting any exception: Home Depot did not own or operate the truck, employ or supervise the driver, direct the route, or supply any instrumentality, and nothing about the cargo was alleged to be unusual, hazardous, or improperly loaded. Id. at 722–23.

The plaintiffs framed their claim as one of “direct” negligence — negligent selection of an incompetent carrier — rather than vicarious liability. The Court noted that it has never definitively recognized a claim for negligent hiring of an independent contractor, and that even if such a claim exists, it is derivative: it requires both the hiring party’s negligence and the contractor’s subsequent negligent act. Id. at 724. The theory here went a step further — that Home Depot negligently hired Werner, which negligently hired a negligent driver — which the Court described as “liability twice removed.” Id. Even assuming the theory’s validity, the Court concluded Home Depot had no duty to investigate Werner’s competence, because the shipment presented no unusual risk and Home Depot neither controlled the actors nor created the risk that materialized. Id.

Two further considerations informed the analysis. On foreseeability, the Court observed that the risk to the motoring public “existed independently of Home Depot’s shipment and arose only from Werner’s conduct as a motor carrier”: Werner’s trucks would have been on the road regardless, “carrying Home Depot’s goods, other cargo, or nothing at all.” Id. at 724–25. And on the regulatory setting, the Court pointed to the Federal Motor Carrier Safety Administration’s oversight of operating authority, insurance, driver qualification, hours of service, and safety compliance, reasoning that where cargo poses no inherent risk, “private parties should not be required to duplicate that comprehensive federal safety regime or qualitatively evaluate and rank the safety fitness of more than a million regulated carriers before engaging in routine commerce.” Id. at 725. A shipper of ordinary goods, the Court said, “should ordinarily be entitled to rely on the carrier to conduct business lawfully and to utilize proper equipment.” Id.

The Court was careful to distinguish United Rentals North America, Inc. v. Evans, 668 S.W.3d 627 (Tex. 2023), in which a shipper was held to owe a duty to motorists after its own employees loaded oversized equipment onto an incompatible trailer without the required permit and failed to tell the carrier. That case involved “affirmative acts that create a danger on a public highway.” 735 S.W.3d at 726. Here, by contrast, Home Depot’s goods “were but a passenger: onboard but uninvolved in the accident.” Id.

The opinion appears to leave several questions open. It addresses a “passive shipper of unremarkable goods” moving under a federally licensed carrier’s own authority, and says nothing about brokers or other intermediaries, about cargo that is hazardous or oversized, or about a shipper that directs the route, loading, or manner of operation. It also does not decide whether Texas recognizes a freestanding negligent-hiring claim against one who engages an independent contractor — a question the Court has now flagged more than once without resolving.

For the families of people killed or seriously injured in commercial-vehicle collisions, the decision suggests that the responsible parties in the ordinary case will be the driver and the motor carrier, and that a retailer or manufacturer whose freight happened to be on the truck will not be a defendant unless its own conduct contributed to the risk. Where the facts involve a broker that selected the carrier, a shipper that controlled the loading or the route, or cargo that was itself dangerous, the analysis may be different, and early investigation of who arranged the shipment and on what terms may matter a great deal.

Related: our practice page on severe and catastrophic injury.

Texas Non-Compete Agreements After the 2025 Amendments

One of our employees is leaving for a competitor. Our agreement with her has a non-compete. Is it still enforceable in Texas?

Short answer: probably, if it was drafted properly — but the rules changed in 2025 for anyone in health care, and a lot of what people heard in 2024 about a federal “ban” never came to pass. Here’s where things stand.

The basics haven’t changed. Texas has a statute for this, the Covenants Not to Compete Act (Tex. Bus. & Com. Code §§ 15.50–.52). It says a non-compete is enforceable if two things are true. First, it has to be part of some other valid agreement — in practice, that usually means the employer gave the employee something in exchange, like confidential information or specialized training, that the non-compete is designed to protect. Second, its limits on time, geography, and the kind of work restricted have to be reasonable and no broader than needed to protect the employer’s goodwill or business interests. The Supreme Court of Texas has applied that test in cases like Alex Sheshunoff Management Services v. Johnson (2006) and Marsh USA v. Cook (2011), and those cases still control.

One feature of Texas law surprises people: if a non-compete is too broad, it isn’t thrown out. The statute tells the court to rewrite it down to reasonable limits. The catch is that an employer who needs the court to do that rewriting may lose the right to collect damages for anything that happened before the fix (§ 15.51(c)). So a carefully drafted covenant is worth more than an aggressive one.

The federal ban that never happened. In April 2024 the Federal Trade Commission adopted a rule that would have wiped out nearly every employment non-compete in the country. If you heard that non-competes were “going away,” that’s what it was about. It never took effect. A federal court in Dallas set it aside before its start date, holding the FTC didn’t have the authority to issue it (Ryan, LLC v. FTC, N.D. Tex. 2024). The FTC appealed, then gave up the appeal in September 2025, and in February 2026 it formally removed the rule from the books. The agency says it may still go after particular non-competes one at a time, and it has done so at least once. But there is no federal rule overriding Texas law. If you’re asking whether a Texas non-compete is enforceable, the answer comes from the Texas statute.

What did change: health care. The real news is a Texas law, Senate Bill 1318, which took effect September 1, 2025. Texas has long had special rules for physician non-competes — a doctor had to be able to buy out of the covenant at a “reasonable price,” keep access to patient records, and continue treating patients mid-course. SB 1318 kept those and added hard limits. For a physician non-compete signed or renewed on or after September 1, 2025:

•           It can’t last more than one year after the contract or employment ends.

•           It can’t cover more than a five-mile radius from where the physician primarily practiced.

•           The buyout can’t cost more than the physician’s total annual salary and wages at the time of termination — no more arguing over what a “reasonable price” is.

•           The terms have to be clearly and conspicuously stated in writing.

And if a physician is let go without “good cause” — meaning a reasonable basis tied to the physician’s own conduct or performance — the non-compete is void.

The same one-year, five-mile, and salary-cap limits now apply to dentists, licensed nurses, and physician assistants under a new section of the statute (§ 15.501). Agreements signed before September 1, 2025 are still governed by the old rules until they’re renewed.

So what does this mean? A few observations, with the usual caveat that every agreement turns on its own language:

For most businesses, the picture looks about like it did a few years ago. If your non-compete is tied to real consideration and its limits are reasonable, Texas courts will generally enforce it, and will trim it rather than toss it if it reaches too far. The two 2013 posts on this blog still describe that framework accurately.

For medical practices, hospitals, dental offices, and anyone employing nurses or PAs, the 2025 limits appear to be ceilings the parties can’t contract around. A two-year term or a ten-mile radius in an agreement signed this year would seem to exceed what the statute allows. What counts as a “renewal,” and how courts will apply the “good cause” standard, are questions that will get worked out in litigation.

And for employers who stopped enforcing non-competes in 2024, or rewrote them, because the FTC rule looked imminent — it may be time to take another look.

This post updates our March 2013 posts, “Texas’s Covenant Not to Compete Statute” and “Covenants Not to Compete Must be Reasonable.”

Attorney’s Fees in Texas Contract Cases: The 2021 Amendment to Chapter 38

 

We won a breach-of-contract case against a limited liability company. Can we recover the attorney’s fees we spent doing it?

In 2016 this blog noted that Texas follows the “American Rule”: each side pays its own lawyers unless a statute or a contract provides otherwise. Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 310–11 (Tex. 2006); Epps v. Fowler, 351 S.W.3d 862, 865 (Tex. 2011). The most commonly invoked statute is Chapter 38 of the Civil Practice and Remedies Code, which permits a prevailing party to recover reasonable attorney’s fees on a claim for, among other things, breach of an oral or written contract. Tex. Civ. Prac. & Rem. Code § 38.001. That much has not changed. What has changed, and what the 2016 post did not address, is who can be made to pay.

For most of its history, § 38.001 allowed recovery “from an individual or corporation.” Beginning in the 2010s, Texas courts of appeals read those words literally and held that fees could not be recovered from entities that were neither — limited liability companies, limited partnerships, and limited liability partnerships among them. Fleming & Assocs., L.L.P. v. Barton, 425 S.W.3d 560, 574–76 (Tex. App.—Houston [14th Dist.] 2014, pet. denied); Alta Mesa Holdings, L.P. v. Ives, 488 S.W.3d 438, 452–55 (Tex. App.—Houston [14th Dist.] 2016, pet. denied); Choice! Power, L.P. v. Feeley, 501 S.W.3d 199, 213–14 (Tex. App.—Houston [1st Dist.] 2016, no pet.); First Cash, Ltd. v. JQ-Parkdale, LLC, 538 S.W.3d 189, 199–200 (Tex. App.—Corpus Christi–Edinburg 2018, no pet.). Because a large share of commercial defendants are organized as LLCs or partnerships, the practical effect was that a business could win its contract case outright and still absorb the entire cost of the litigation. The Supreme Court of Texas never took up the question, and the intermediate courts’ reading became the working rule.

The Legislature closed the gap in 2021. House Bill 1578, signed June 15, 2021, and effective September 1, 2021, amended § 38.001 so that a person may recover reasonable attorney’s fees “from an individual or organization.” Act of May 26, 2021, 87th Leg., R.S., ch. 665 (H.B. 1578). “Organization” carries the definition in § 1.002 of the Business Organizations Code, which includes corporations, limited liability companies, limited partnerships, limited liability partnerships, and most other business entities. The amended statute excludes a “quasi-governmental entity authorized to perform a function by state law,” a religious organization, a charitable organization, and a charitable trust. Tex. Civ. Prac. & Rem. Code § 38.001(a)–(b). The change applies to actions commenced on or after September 1, 2021; suits filed earlier remain governed by the prior text.

Two other features of Chapter 38 remain as they were and are worth restating. First, the statute requires presentment: the claim must be presented to the opposing party, and payment must not have been tendered within thirty days, before fees may be recovered. Id. § 38.002. Second, Chapter 38 authorizes fees only for a party that both prevails on a claim the statute covers and recovers damages on it. Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997); MBM Fin. Corp. v. Woodlands Operating Co., 292 S.W.3d 660, 666 (Tex. 2009). The Supreme Court applied that requirement in June of this year in Champion Food Service, Inc. v. ProAlamo Foods, L.L.C., No. 25-0297 (Tex. June 19, 2026), where a fee award fell with the quantum meruit recovery on which it depended.

For a business considering suit on a contract, the 2021 amendment appears to remove what had been a significant asymmetry: a plaintiff suing an LLC or partnership on a contract filed after September 1, 2021, may now seek fees on the same footing as one suing a corporation. Whether fees are ultimately awarded will still depend on presentment, on prevailing, on recovering damages, and on proof that the amount sought is reasonable and necessary.

This post updates our April 2016 post, “When are attorney’s fees recoverable as part of a lawsuit.” See also our post on Champion Food Service v. ProAlamo Foods.