4-6 ADDITIONAL CAUSES OF ACTION OFTEN ASSOCIATED WITH TRADE SECRET CLAIMS

• Jurisdiction: United States

4-6 Additional Causes of Action often Associated with Trade Secret Claims

The trade secret plaintiff, whether in state or federal court, typically brings a number of additional causes of action alongside its claim for trade secret misappropriation. The following are some of the more common claims that arise in the trade secret context.

4-6:1 Breach of Contract

Often a departing employee will have had an agreement with his or her former employer, including an agreement addressing the confidentiality of company information. The confidentiality portion of the contract likely goes to the heart of the misappropriation claim, outlining the employee's confidentiality obligations along with procedures that must be followed in the event the employee leaves the company.³⁰ Further, as discussed in Chapter 3, the breach of an employment agreement can be used to show that "improper means" were used in acquiring the trade secret.³¹ For this reason, trade secret plaintiffs often bring a breach of contract claim alongside one for misappropriation. The same method has been used in common law misappropriation claims, where some parties have even stipulated that a finding of liability on a misappropriation claim would lead to liability on a breach of contract claim.³²

4-6:2 Breach of Fiduciary Duty

Departing officers or directors of a potential trade secret plaintiff will almost certainly have a fiduciary duty to act in the best interests of their former employer. In fact, Texas courts have identified fiduciary relationships as a basis for granting injunctive relief against the wrongdoer in misappropriation cases.³³ These courts have emphasized that "[t]he scope of the injunctive relief 'must, of necessity, be full and complete so that those who have acted wrongfully and have breached their fiduciary relationship, as well as those who willfully and knowingly aided them in doing so, will be effectively denied the benefits and profits flowing from the wrongdoing.'"³⁴ This means that the former employee's new employer can also be held responsible under this standard, but only to the extent the new employer knowingly participated in such a breach.³⁵

4-6:3 Texas Theft Liability Act

Prior to TUTSA's enactment, claims under the Texas Theft Liability Act (TTLA) often accompanied common law trade secret claims because the TTLA provided a separate civil cause of action under the Texas Penal Code criminalizing trade secret theft.³⁶ The TTLA capped additional recovery (i.e., recovery beyond actual damages) to $1,000, but it did provide for recovery of attorneys' fees. After TUTSA went into effect, the TTLA could only be used in connection with common law state claims since TUTSA specifically displaces the TTLA in the provision addressing TUTSA's effect on other laws.³⁷

4-6:4 Computer Fraud and Abuse Act

Congress enacted the Computer Fraud and Abuse Act (CFAA) in 1986 as an amendment to the Counterfeit Access Device and Abuse Act.³⁸ The CFAA is a cyber security law that outlaws certain conduct targeting computer systems, such as computer trespassing or damaging a government computer. It has, however, been the subject of much notoriety (and controversy) for its broad application to all sorts of activities that occur as a matter of routine in the modern internet age.³⁹ Because of the CFAA's broad application, many trade secret plaintiffs seeking to ensure federal jurisdiction bring such claims along with a claim for misappropriation of trade secrets. In Absolute Energy Solutions, LLC v. Trosclair, the court noted that a CFAA claim and a TUTSA claim act in harmony because the two claims arose "from the same set of circumstances."⁴⁰ The federal court then used the CFAA claim to exercise supplemental jurisdiction over the state law trade secret claim.

A CFAA plaintiff must plead both that the defendant violated one of the CFAA's substantive provisions and that the defendant's conduct caused a particular type of damages.⁴¹ The CFAA's substantive provisions proscribe a defendant from (1) intentionally accessing a computer, without authorization or exceeding authorized access, and obtaining information from any protected computer⁴²; (2) knowingly causing the transmission of information and intentionally causing damage without authorization to a protected computer⁴³; and (3) intentionally accessing a protected computer without authorization and recklessly causing damage or causing damage...