Texas theft of trade secrets — Penal Code § 31.05

Theft of trade secrets is a third-degree felony under Texas Penal Code § 31.05 — two to ten years in prison and a fine of up to $10,000, regardless of the secret's dollar value. Below: the statute's exact elements, how DFW prosecutors build these cases, the defenses that work, and county-by-county practice notes.

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The controlling statute

Texas Penal Code § 31.05 reaches a trade secret taken in any of three ways. A person commits the offense if, "without the owner's effective consent," 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. Each conduct mode stands on its own; the State can convict on the copy alone, the transmission alone, or the physical taking alone, and indictments around DFW routinely plead more than one.

The statute is old. The 63rd Legislature enacted § 31.05 effective January 1, 1974, and the text has been amended exactly once since — effective September 1, 1994. That vintage shows: the definitions still speak of blueprints, specimens, and photographs, and Texas courts have had to stretch 1970s language across source-code repositories, USB drives, and cloud sync. The Court of Criminal Appeals settled the largest of those questions in Schalk v. State, 823 S.W.2d 633 (Tex. Crim. App. 1991), holding that computer programs are proper subjects of trade-secret prosecution under Texas criminal law.

Because § 31.05(b)(2) criminalizes making a copy, the offense is complete the moment a qualifying file is duplicated without effective consent. The original never leaves the owner's server, nothing is "missing," and the company may not notice for months — yet the felony is already finished. That single feature drives most modern § 31.05 filings in Collin, Dallas, Denton, and Tarrant Counties, which overwhelmingly involve departing employees and forensically recovered copy events rather than briefcase-style theft.

What counts as a "trade secret" under § 31.05?

Section 31.05(a)(4) defines a trade secret as "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." Three components carry the weight, and the defense tests every one:

• Scientific or technical character. The criminal statute reaches scientific or technical material — designs, processes, procedures, formulas, improvements. It does not say "business information."
• Value. The information must have value, but because the grade is flat, the State never has to fix a dollar figure the way it must in an ordinary theft case.
• Secrecy measures. The owner must have actually taken measures to restrict access to a selected circle, for limited purposes.

A structural trap hides in that definition: the criminal net is narrower than the civil one. The Texas Uniform Trade Secrets Act (Civ. Prac. & Rem. Code ch. 134A), which governs civil misappropriation suits, expressly sweeps in business information — financial data and lists of actual or potential customers or suppliers. Section 31.05 never adopted that language. A customer list or pricing model can support a TUTSA injunction yet sit outside the criminal definition's scientific-or-technical core, and that mismatch is one of the first things we examine when an indictment recites generic business records. Picture a hypothetical sales director who downloads her regional account list the week before resigning: the civil exposure is real, but the § 31.05 fit is genuinely contested because an account list is business data, not a design, process, procedure, formula, or improvement.

On secrecy, the case law hands both sides a checklist. In Schalk, the Court of Criminal Appeals observed that § 31.05 sets no standards for the degree or sufficiency of the "measures" taken, and it upheld convictions where Texas Instruments protected speech-research software through a combination of nondisclosure agreements signed at hiring, exit interviews stressing confidentiality, badge-controlled buildings with guards and cameras, a physically separated lab open to only a small group, and password-gated computer directories. Schalk, 823 S.W.2d at 636–37. Absolute secrecy is not required: the court held that limited, controlled disclosures — published articles, seminar papers, data shared with government agencies — did not destroy secrecy where the underlying algorithms stayed locked down. Schalk, 823 S.W.2d at 640. The flip side helps the defense: an employer that never used NDAs, never restricted folder permissions, and left the files on an open network share has a genuine proof problem on the measures element.

What are the penalties for theft of trade secrets in Texas?

One flat grade. Theft of trade secrets is a third-degree felony under § 31.05(c) — two to ten years in the Texas Department of Criminal Justice and a fine of up to $10,000 under Penal Code § 12.34. Ordinary theft under § 31.03 ladders from a Class C misdemeanor to a first-degree felony based on dollar value; § 31.05 has no ladder at all. Copying a single process drawing and exfiltrating a nine-figure formula carry the same statutory range.

Community supervision stays on the table. Section 31.05 is not on the article 42A.054 list of excluded offenses, so judge-ordered probation is available, juries may recommend it for eligible defendants, and deferred adjudication is available on a guilty plea. The attempt route deserves attention in plea talks: because an attempt drops one category under § 15.01(d), an attempt plea converts the third-degree felony to a state jail felony, and § 12.44(a) then lets the court punish a state jail felony with Class A misdemeanor punishment. That two-step appears in negotiated dispositions when the State's secrecy-measures proof looks shaky.

Elements the State must prove

To convict under § 31.05, the State must prove each element beyond a reasonable doubt:

1. Without the owner's effective consent

"Effective consent" under § 31.01(3) includes consent by a person legally authorized to act for the owner, and consent is not effective if induced by deception or coercion. Day-to-day access for assigned work is not consent to copy for a new employer — § 31.05(a)(4) itself describes access granted only "for limited purposes."

2. Knowingly

The culpable mental state is knowledge — awareness of the nature of the conduct under § 6.03(b). What the State does not have to prove is intent to deprive: the element that defines ordinary theft is simply absent from § 31.05. McClain v. State, 269 S.W.3d 191, 195 (Tex. App.—Texarkana 2008).

3. A prohibited act — steal, copy, or communicate

Any one of the three conduct modes in § 31.05(b) completes the offense. "Copy" is defined broadly in § 31.05(a)(2) to include a facsimile, replica, photograph, or other reproduction — and even a note or sketch made from the article.

4. A trade secret as defined by § 31.05(a)(4)

Scientific or technical information, design, process, procedure, formula, or improvement; value; and owner-imposed secrecy measures. This is the contested element in nearly every trial, and it is where most acquittals and dismissals are won.

How do prosecutors prove a § 31.05 case?

Almost every DFW prosecution starts as a civil dispute. The employer's forensic vendor images the departing employee's laptop, pulls USB-insertion histories, cloud-sync logs, and personal-email forwards, and packages a report that goes two places at once: into a TUTSA lawsuit and across the street to law enforcement. By the time a detective calls, the complainant has usually spent months building the timeline.

The State's trial proof then tracks the statute. Digital forensics supply the conduct element — copy events, timestamps, device serial numbers. Human-resources exhibits supply the secrecy measures: signed NDAs, handbook acknowledgments, access-control policies, the same categories the Court of Criminal Appeals credited in Schalk (nondisclosure agreements, exit interviews, plant security, restricted access, computer passwords). An executive testifies the material had value and that the defendant's access was limited to assigned work. And because McClain confirms there is no intent-to-deprive element, the prosecutor never has to show the company lost the use of anything — a materially lighter burden than ordinary theft.

A hypothetical that tracks the standard fact pattern: an engineer at a Plano firmware company accepts a competitor's offer, and on his final Friday drags a project directory onto a personal flash drive "to keep samples of my own work." The originals never move. Six weeks later the company's forensic vendor finds the USB event, the general counsel files a TUTSA petition, and a Collin County detective opens a parallel criminal file. Under § 31.05(b)(2), the copy that Friday afternoon was already a completed third-degree felony — before he ever opened a single file at the new job.

What defenses work against a trade secret theft charge?

Defense strategy on a § 31.05 case concentrates on the statutory definition and the consent element, in roughly this order:

• The material is not scientific or technical. Customer lists, pricing sheets, margin reports, and org charts are business records. They may be confidential, and they may support a civil claim, but § 31.05(a)(4) requires scientific or technical information, a design, process, procedure, formula, or improvement.
• The information was public or general industry knowledge. Matters of general knowledge in an industry cannot be appropriated as a secret, and material released into the public domain stays there. In McClain v. State, 269 S.W.3d 191 (Tex. App.—Texarkana 2008), the court rendered an acquittal where the circuit sheets at issue had circulated publicly for decades — even though they were hard to find and the company kept its own copies under lock.
• The owner's secrecy measures were not real. No NDA, no marking, files on an open share, vendors given copies without restriction — the measures element collapses. Schalk tells juries what genuine measures look like; the absence of that checklist is reasonable doubt.
• Effective consent or authorized scope. IT tickets approving a home-office sync, a manager's email telling the employee to "take your project files," or a BYOD policy that pushed company data onto personal devices automatically can each defeat the without-consent element.
• Ownership and the employed-to-invent rule. An invention conceived by an employee does not automatically belong to the employer. Absent an express assignment, ownership turns on whether the employee was hired to invent that very thing, and an employer may hold only a nonexclusive "shop right" that cannot stop the employee-inventor from using his own improvements. McClain rested its acquittal in part on exactly this ground.
• No knowing conduct. Auto-sync artifacts, backup software, and cross-contaminated personal devices copy files without anyone choosing to. The State must prove the defendant knowingly made the copy, not that a daemon did.
• Indictment specificity. The charging instrument has to identify the property claimed as a trade secret with enough particularity to bar re-prosecution and let the defense prepare. Vague recitals like "proprietary engineering data" draw motions to quash.

Can a theft of trade secrets charge be dismissed or expunged?

Dismissals in this corner of the docket usually come from element failure — the State cannot establish that the material is statutorily a trade secret, or the measures proof crumbles — or from the civil case resolving in a way that takes the complainant's energy out of the prosecution. A settlement and release in the TUTSA suit does not bind the district attorney, and Texas disciplinary rules bar lawyers from threatening criminal charges solely to gain leverage in a civil matter, but as a practical matter prosecutors weigh complainant cooperation when they decide what a case is worth.

If the case ends in acquittal or dismissal, expunction under Code of Criminal Procedure chapter 55A erases the arrest record. A deferred adjudication completed successfully supports a petition for nondisclosure under Government Code § 411.0725 after a five-year waiting period for felonies. A final conviction forecloses both — one more reason charge-stage lawyering matters more here than in most felony files. See our guide to expunction versus nondisclosure for the full decision tree.

Departing-employee prosecutions: how these cases actually start

The accused in a § 31.05 case is rarely a stranger. It is the engineer, developer, lab tech, or operations lead who resigned two weeks ago. Employers now run exit forensics almost as routinely as exit interviews, and the standard review window — the last 30 to 60 days of employment — surfaces the same artifacts every time: personal-email forwards, USB insertions, bulk downloads from the document-management system, cloud-share links created at odd hours.

Three practical rules for anyone in that window. First, do not wipe anything: deleting files after learning of an investigation converts a defensible copying case into a tampering-with-evidence problem under Penal Code § 37.09. Second, preserve your own authorization evidence — IT tickets, manager emails, the employment agreement and its assignment clauses — because consent and ownership defenses live in those documents. Third, route every communication with the former employer through counsel; the civil lawyers across the table are building the criminal referral while they talk to you.

The charging dynamic is also worth understanding. Civil counsel for the company files first and refers second, and the criminal case then rides on evidence the complainant paid to develop. A defense lawyer who engages early — before indictment — can sometimes put the definitional problems (business data versus technical data, public-domain material, shop rights) in front of the prosecutor while the charging decision is still open.

What happens after a trade secret theft arrest in Texas?

1. Investigation and warrant. These cases build slowly; months of forensic work usually precede any arrest, and counsel can often arrange a walk-through surrender instead of a workplace arrest.
2. Magistration. Within roughly 48 hours, a magistrate gives statutory warnings and sets bond under Code of Criminal Procedure article 15.17.
3. Bond and conditions. First-time defendants typically receive personal-recognizance or modest surety bonds, but conditions often bar contact with the complainant company and its employees and can restrict access to devices or accounts.
4. Indictment. A felony prosecution requires a grand-jury indictment unless waived. Specificity matters here: the indictment must identify the trade secret it accuses the defendant of taking.
5. Discovery. Under article 39.14, the defense receives the State's file — including the forensic images. Courts routinely enter protective orders controlling who may view the alleged secret itself during the case.
6. Pretrial motions. Motions to quash for failure to identify the property, motions to suppress device seizures, and expert challenges to the forensic timeline shape most outcomes before any jury is seated.
7. Resolution. Dismissal, reduction (often through the attempt-plus-12.44(a) route), deferred adjudication, probation, or trial.

County-by-county practice notes

Collin County. Felony cases are tried in the district courts at the Collin County Courthouse, 2100 Bloomdale Road in McKinney. The Frisco–Plano technology corridor produces a steady stream of departing-employee referrals, and the same companies generating the civil docket generate the criminal one. Our office sits fifteen minutes from the courthouse, and we appear there weekly.

Dallas County. Felony dockets run out of the Frank Crowley Courts Building on Riverfront Boulevard. Dallas County's volume means economic-offense cases compete with violent-crime dockets for grand-jury and trial time, which tends to lengthen the indictment timeline — a window the defense can use to brief definitional problems to the prosecutor before presentment.

Denton County. Cases are heard at the Denton County Courts Building in Denton. Lewisville's and Flower Mound's distribution and logistics employers supply a different flavor of case — process documentation and vendor specifications rather than source code.

Tarrant County. Felony cases proceed at the Tim Curry Criminal Justice Center in downtown Fort Worth. Aerospace and defense-sector complainants appear here more than anywhere else in the region, and those cases carry a real risk of federal referral because of the interstate-commerce hook in 18 U.S.C. § 1832.

Collateral consequences beyond the sentence

A § 31.05 conviction is a felony conviction, with everything that follows. Firearm rights: Penal Code § 46.04 bars possession until five years after release from confinement or supervision (and then only at home), while federal law, 18 U.S.C. § 922(g)(1), imposes its own prohibition. Professional licenses — engineering, CPA, law, medical — face fitness review under the Occupations Code chapter 53 framework, and security clearances and defense-contractor badges rarely survive an indictment, let alone a conviction. For non-citizens, a theft-type conviction can carry immigration consequences, and a sentence of a year or more can be classified as an aggravated felony for removal purposes.

The civil tail is just as long. The parallel TUTSA suit continues regardless of the criminal outcome, with injunctions, damages, and exemplary damages of up to twice actual damages for willful and malicious misappropriation — plus attorney's fees. Restitution can also be ordered as a condition of community supervision in the criminal case itself.

How § 31.05 compares with related offenses

Charging overlap is common. When the copying ran through a network login the employee no longer had authority to use, prosecutors add a breach-of-computer-security count under § 33.02; when the material moved across state lines or the complainant is a defense contractor, the file can migrate to the U.S. Attorney's Office under the Economic Espionage Act — see our federal charges practice for how those prosecutions differ. The Texas statute's lighter intent requirements cut the other way: conduct that cannot satisfy § 1832's economic-benefit and injury-knowledge elements can still be indicted in state court, which is exactly where most DFW cases stay. For the broader landscape of property offenses, start with our theft charges hub and the white collar & fraud defense practice.