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Texas Theft Liability Act – Providing Civil Remedies for Criminal Theft of Trade Secrets

The Texas Theft Liability Act (TTLA) was enacted in 1989. See Tex. Civ. Prac. & Rem. Code § 134.001. The TTLA was introduced because, although theft was criminalized under the Penal Code, there were no provisions for civil liability of theft. Committee Report on S.B. 269 p.2.; Cooper v. Sony Music Entertainment, Inc., 2002 U.S. Dist. Lexis 3832, *16 (S.D. Tex. February 22, 2002) (“[T]he Texas Penal Code does not provide a private right of action.”); Aguilar v. Chastain, 923 S.W.2d 740, 745 (Tex. App. Tyler 1996) (writ denied) (“[T]he Penal Code does not create private causes of action, and a victim “does not have standing to participate as a party in a criminal proceeding.”) This was particularly true for trade secrets, even though trade secrets are generally considered to be rights in the nature of property rights. The only way a party could seek to enforce those rights prior to the passage of the TTLA was through tort or contract principles. IBP, Inc. v. Klumpe, 07-00-0221-CV, 2001 WL 1456173, 7 (Tex. App. Amarillo 2001). Thus, the legislature sought to provide statutory civil liability for, among other offenses, unlawful appropriation of intellectual property – trade secrets. In support of passage of the act, State Senator McFarland noted in committee that, “statutory civil liability [will] allow for monetary recovery by the victim against the offender, and thus supplement the criminal sanctions.” Id.

Under the TTLA, “a person who commits theft is liable for the damages resulting from the theft.” Tex. Civ. Prac. & Rem. Code § 134.003(a). In addition, “a parent or other person who has the duty of control and reasonable discipline of a child is liable for theft committed by the child.” Id. at § 134.003(b). Theft under the TTLA is defined as the “unlawfully appropriating property or unlawfully obtaining services as described… ” in Sections 31.1-7, 11-14 of the Texas Penal Code. Id. at § 134.002(2) includes Sections 31.03, 31.04, 31.05, 31.06, 31.07, 31.11, 31.12, 31.13, or 31.14 of the Penal Code as covered types of theft. These sections define several different actions that constitute theft, including the theft of trade secrets in Section 31.05.

Under Texas Penal Code § 31.05(a), a trade secret is “the whole or any part of any scientific or technical information, design, process, procedure, formula, or improvement that has value and that the owner has taken measures to prevent from becoming available to persons other than those selected by the owner to have access for limited purposes.” Id. at § 31.05(a)(4).

A person is guilty of stealing a trade secret when he “knowingly (1) steals a trade secret, (2) makes a copy of an article representing a trade secret, or (3) communicates or transmits a trade secret.” Id. at § 31.05(b). In order for a defendant to be liable under § 31.05, he must have taken trade secrets “without the owner’s effective consent.” Id. This is defined in § 31.01(3) as:

“Effective consent” includes consent by a person legally authorized to act for the owner. Consent is not effective if: 대여계좌

(A) induced by deception or coercion;

(B) given by a person the actor knows is not legally authorized to act for the owner;

(C) given by a person who by reason of youth, mental disease or defect, or intoxication is known by the actor to be unable to make reasonable property dispositions;

(D) given solely to detect the commission of an offense; or

(E) given by a person who by reason of advanced age is known by the actor to have a diminished capacity to make informed and rational decisions about the reasonable disposition of property.

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