Shots Across the Bow: Using Texas Rule 202 in Trade Secrets Disputes

Originally published by Kenny Sumner.

Sugar Land Business Law Attorneys Assisting Businesses with Trade Secret Liltigation

When management of a business enterprise has solid evidence that a former employee has begun to take inappropriate advantage of business trade secrets or perhaps has failed to live up to the terms of a noncompete agreement, it often would like to fire a warning shot across the bow of the former employee to let that former employee know that his or her activities are not to be tolerated. In most states, there are no tools short of actual litigation – e.g., a suit for injunctive relief.

Texas businesses, however, have an underutilized strategy that can sometime prove effective in stopping the inappropriate activity before any significant damage is done. Texas attorneys know it as Rule 202 of the Texas Rules of Civil Procedure. Under Rule 202, a Texas business may be able to investigate possible trade secrets claims before it files a lawsuit. Under the right circumstances, Rule 202 can save time and money.

Texas Rule 202

Where improper use of trade secrets is expected, yet still before filing an actual lawsuit, a business enterprise’s attorney may petition the court for an order authorizing the taking of an oral deposition or the submission of written questions to:

• Perpetuate or obtain a person’s testimony for use in an anticipated suit, or
• Investigate a potential claim or suit.

The petition must be verified (i.e., sworn) and it must state the subject matter of the anticipated action and the requesting party’s interest therein. The court must grant the request or petition, provided it finds that either:

• Allowing the requesting party to take the requested deposition may prevent a failure or delay of justice in an anticipated suit; or
• The likely benefit of allowing the petitioner to take the requested deposition to investigate a potential claim outweighs the burden or expense of the procedure.

Recent Texas Appellate Decision is Instructive

A recent Texas appellate decision added clarity as to the type of evidence a petitioning business should show in order to get a judicial order requiring the deposition of the former employee [In re Pickrell, No. 10-17-00091-CV (Tex. App. 10th Dist. 4/19/17). The court ruled that a verified petition, coupled with the attorney’s arguments in court, were insufficient to support a Rule 202 petition. The petitioning business, through its counsel, should be prepared to present witness testimony at the Rule 202 hearing. The 10th District Court also indicated the rule covers depositions; it does not allow for orders requiring the production of documents or other written evidence. Such production need not be required until the business enterprise has filed a civil action against the former employee.

Rule 202 is not Appropriate in Every Trade Secrets Dispute

In many situations, businesses have been successful in getting the attention of a former employee (and his or her new employer) with a Rule 202 request for pre-litigation deposition. The former employee can often be made to understand the seriousness of the allegations and that the former employer is not going to stand by and watch its secrets be used or acquiesce in a breach of a noncompete agreement by the former employee. Following the Rule 202 hearing, or perhaps after the actual deposition itself, the parties may be able to negotiate some compromise that saves the costs of further litigation.

The Rule 202 process, if handled correctly, can sometimes provide an enterprise with security without the business disruption and expense of a full-fledged civil action.

Romano & Sumner: Attorneys Who Think Outside the Box

Paul Romano & Kenny Sumner have more than 20 years of combined experience in litigation and transactional law. They know exactly how to handle tough legal situations, including the steps that should be taken to protect your trade secrets or to prevent employees from acting outside appropriate bounds. They have aggressively gone to court, when necessary, in order to protect and promote the rights of clients.

The law firm of Romano & Sumner is committed to providing legal services to you or your business in a timely manner. Our business law lawyers answer questions in a language that you can understand. We provide individualized attention to your situation; we don’t have a cookie cutter approach. We respond promptly to phone calls and email communications. Call us at 281-242-0995 or complete our online contact form.

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