Responding to a Trade Secret Claim or Demand Letter

Common situations.

• A company receives a letter saying its new hire took a former employer's confidential files.
• A departing employee is served with a temporary restraining order.
• A competitor is sued after a product launch that the plaintiff says used its know-how.

Ten steps.

1. Read the letter or petition closely. Note any deadlines, hearing dates, the claims asserted, and what the sender demands: return of information, certifications, a forensic exam, or that the employee stop working.
2. Preserve everything. Suspend routine deletion and issue a written litigation hold covering email, chat, cloud storage, phones, and personal devices or accounts used for work. Destroying relevant evidence after a duty to preserve arises can lead to sanctions, including an instruction allowing the jury to presume the evidence was harmful (Brookshire Bros., Ltd. v. Aldridge, 438 S.W.3d 9 (Tex. 2014); Fed. R. Civ. P. 37(e)).
3. Do not look at the information. If the new hire may have brought another company's files, no one should open, copy, or use them. Have counsel arrange for a neutral forensic examiner to collect them.
4. Find out what was taken. A forensic review of devices and accounts usually answers what left the old employer, when, and whether it reached the new employer's systems. Interview the employee through counsel.
5. Wall off the employee if needed. Temporarily assigning the employee to work that does not overlap with the former employer's business, and documenting that step, shows good faith and can make emergency relief unnecessary.
6. Review the agreements. Look at the employee's confidentiality, noncompete, and nonsolicitation agreements, including choice-of-law, forum, and arbitration clauses. A Texas noncompete is enforceable only if it meets § 15.50 of the Business and Commerce Code; health care practitioners have additional protections (§§ 15.50, 15.501).
7. Check the immunity notice. If the former employer's agreements omit the required DTSA whistleblower-immunity notice, it cannot recover exemplary damages or attorney's fees under the DTSA against that employee (18 U.S.C. § 1833(b)(3)).
8. Notify insurers and check indemnities. Some employment-practices and general liability policies respond to these claims. Offer letters sometimes contain indemnities in one direction or the other.
9. Respond in writing, through counsel. A measured response that describes the steps taken (preservation, forensic collection, return or destruction of information under an agreed protocol, and limits on the employee's role) often resolves the dispute or narrows it. Avoid admissions about what the information is or whether it qualifies as a trade secret.
10. Prepare for a hearing. If suit is filed, a temporary injunction hearing may come within weeks. Early motions may include a Rule 91a motion to dismiss baseless claims in state court and, in some cases, a motion under the Texas Citizens Participation Act, which does not apply to employment-related trade secret and noncompete claims (Tex. Civ. Prac. & Rem. Code § 27.010(a)(5)) or in federal court.

Defenses to evaluate early.

• The information is generally known or readily ascertainable.
• The owner did not take reasonable measures to protect it.
• The information was developed independently or obtained by reverse engineering of a lawfully acquired product, neither of which is improper means (§ 134A.002, definitions of "improper means" and "proper means"; 18 U.S.C. § 1839(6)(B)).
• What the employee used is general knowledge, skill, and experience.
• The claim is untimely under the three-year limitations period (§ 16.010).
• See Defenses and Early Dismissal.

Sources.

• Tex. Civ. Prac. & Rem. Code §§ 16.010, 27.010(a)(5), 134A.002.
• 18 U.S.C. §§ 1833(b), 1839(6).
• Tex. Bus. & Com. Code §§ 15.50, 15.501.
• Tex. R. Civ. P. 91a; Fed. R. Civ. P. 37(e).
• Brookshire Bros., Ltd. v. Aldridge, 438 S.W.3d 9 (Tex. 2014).

This guide is general information, not legal advice. Law checked through October 20, 2026. See the Disclaimer.