Trade Secrets suits may lead to revealing the trade secrets itself

Trade Secrets suits may lead to revealing the trade secrets itself

Suing an ex employee is the quickest remedy in a situation where one’s trade secrets have been revealed by him to a competitor. The ex employer can file an injunction claim against the ex employee as well as the current employer of that employee to whom the trade secret is revealed. However, the concern before filing such a lawsuit is whether the suit would result in letting out the information relating to the trade secrets.

This has been addressed recently in a case between National Oilwell Varco LP (NOV) and M-I SWACO (M-I), wherein M-I filed an action against a former employee and his new employer claiming that the former employee stole and revealed his trade secrets to NOV. During the preliminary injunction hearing, M-I requested the representative for NOV to leave the courtroom when M-I was about to reveal his trade secret. The request was denied by the judge and the representative was asked to neither disclose nor use the M-I trade secret. M-I also filed a petition for writ of mandamus for the same reason, but in vain. In re M-I L.L.C., No. 14-14-00705-CV, 2014 Tex. App. LEXIS 12024.

M-I then appealed to the highest court of Texas stating that the judge gave the company a free choice providing just one option, which could have been refused to. The choice was therefore between taking the option or not. The Supreme Court thus, imposing the Hobson’s choice, forced M-I to either disclose its trade secrets to a competitor to prevent its future use or choose not to enforce its rights and keep its trade secrets as a secret itself.

Here emerges a new hurdle for the employers, where employers need to carefully disclose their trade secrets in order to establish that they are aware of the trade secrets they are trying to protect.