Texas trade secret theft defense

What is theft of trade secrets under § 31.05?

Theft of trade secrets is its own crime, separate from ordinary theft. Under Penal Code § 31.05(b), a person commits the offense if, without the owner’s effective consent, he knowingly steals, copies, or communicates a trade secret. It is a third-degree felony at any value — 2 to 10 years and a $10,000 fine.

A trade secret — § 31.05(a)(4)

The whole or part of any scientific or technical information, design, process, procedure, formula, or improvement that has value and that the owner has taken measures to keep from people outside a limited circle. Because the statute reaches scientific or technical subject matter, it has always fit over software and engineering data — in Schalk v. State, 823 S.W.2d 633 (Tex. Crim. App. 1991), the Court confirmed that computer programs are proper subjects for trade-secret prosecution, a holding that today covers source code, CAD files, algorithms, and manufacturing set-up sheets.

A prohibited act — steal, copy, or transmit (§ 31.05(b))

The actus reus is satisfied where the accused (1) steals a trade secret, (2) makes a copy of an article representing a trade secret, or (3) communicates or transmits a trade secret. Copying is the most common theory because it leaves a forensic trail, and § 31.05(b)(2) makes the unauthorized copy a completed offense on its own — there is no requirement that the accused ever opened the file again, sold it, or made a dollar from it.

Without the owner’s effective consent

The owner did not authorize the act. Routine access granted during employment, a permissive BYOD policy, or files an employee created himself can all cloud whether consent was truly absent. The statute supplies its own vocabulary: an article is any object or copy that holds the information; a copy is any reproduction of that article; and representing means describing, depicting, containing, or recording.

A culpable mental state — knowingly

The accused acted knowingly. Automatic cloud backup, a sync that swept a personal folder, or a good-faith belief in a right to the work all undercut the knowing element. Notably absent from the statute is any “intent to deprive” — McClain v. State, No. 06-07-00057-CR (Tex. App.—Texarkana Oct. 17, 2008), confirms theft of trade secrets does not require proof of intent to deprive the owner, so the secrecy and consent elements do the real work.

Two features of the definition drive almost every § 31.05 case. First, the act is complete the moment an unauthorized copy is made. Second, the information has to actually be a secret — if it is general industry knowledge, or it has slipped into the public domain, it is not a trade secret no matter how the employer labels it. Those two pressure points, the consent question and the secrecy question, are where a defense is built. What the criminal statute does not obviously cover is the broader civil category: the Texas Uniform Trade Secrets Act expressly sweeps in financial data, customer lists, and supplier lists, while § 31.05 uses the narrower “scientific or technical” language.

That gap is one of the first things we examine, because a case the employer frames as “he took our customer list” may be a civil claim wearing a criminal costume. The structural simplicity of § 31.05 — one mental state, three possible acts, one consent element — masks the analytical depth of most contested prosecutions, where the State must prove genuine secrecy measures and a knowing, unauthorized act, and where any failure of proof on the secrecy or consent element can end the case before trial.

Elements the State must prove

To convict, the State must prove beyond a reasonable doubt that a genuine trade secret existed, that the accused stole, copied, or transmitted an article representing it, that the act was without the owner’s effective consent, and that the accused acted knowingly. Every element is a place to push back.

To convict, the State must prove each element beyond a reasonable doubt. A trade secret existed — the information was scientific or technical, had value, and was the subject of real secrecy measures; if the State cannot prove the material was genuinely secret, this element collapses and so does the case. A prohibited act — the accused stole the trade secret, made a copy of an article representing it, or communicated or transmitted it; copying is the most common theory because it leaves a forensic trail. Without the owner’s effective consent — routine access granted during employment, a permissive device policy, or files an employee created himself can all cloud whether consent was truly absent. A culpable mental state — the accused acted knowingly; automatic cloud backup, a sync that swept a personal folder, or a good-faith belief in a right to the work all undercut the knowing element.

Notably absent from that list is any “intent to deprive.” Ordinary theft under § 31.03 requires the State to prove the defendant meant to deprive the owner of property; the trade-secret statute does not. As the Texarkana Court of Appeals explained, “Unlike the general theft statute, theft of trade secrets does not require the State to prove intent to deprive the owner of the trade secret.” McClain v. State, No. 06-07-00057-CR (Tex. App.—Texarkana Oct. 17, 2008). That makes the secrecy and consent elements carry even more weight, because they are the elements doing the real work.

What are the penalties for trade secret theft in Texas?

The punishment is fixed and serious. Theft of trade secrets is a third-degree felony under § 31.05(d) — 2 to 10 years in TDCJ and a fine up to $10,000 — regardless of how valuable the information is. There is no misdemeanor tier and no value ladder.

The punishment is fixed and it is serious. Theft of trade secrets is a third-degree felony under § 31.05(d), regardless of how valuable the information is or how little the accused stood to gain. There is no misdemeanor tier and no value ladder — a copied file worth a few thousand dollars and a stolen formula worth millions both sit in the same punishment box.

A third-degree felony also carries an enhancement risk most clients do not expect: a single prior felony conviction lifts the range to that of a second-degree felony (2 to 20 years) under the habitual-offender provisions in § 12.42, and two sequential prior felonies can push it higher still. That is why a first conversation about a § 31.05 charge is also a conversation about a person’s entire record — the exposure on paper can be much larger than the base range suggests. Community supervision and deferred adjudication remain available in qualifying cases, and an attempt plea under § 15.01(d) drops the offense one category to a state jail felony, with § 12.44(a) then authorizing Class A misdemeanor punishment in an appropriate case.

How these cases start: the departing employee

The typical § 31.05 prosecution does not begin with a detective — it begins with a resignation. An employer audits a departing employee’s laptop or cloud logs, finds files copied to a thumb drive or personal account, and walks the matter across to the district attorney to create leverage in a parallel civil suit.

The typical § 31.05 prosecution does not begin with a detective. It begins with a resignation. An employee gives notice, the employer audits the laptop or the cloud logs, and someone finds that a folder of CAD files, a code repository, or a set of engineering drawings was copied to a thumb drive or a personal account in the final weeks. The company’s civil lawyers send a cease-and-desist letter, and — increasingly — they also walk the file across the street to the district attorney’s office, because a criminal referral creates leverage in the parallel civil suit. Understanding that origin story matters, because it shapes both the evidence and the pressure points.

Two recurring fact patterns deserve special attention. The first is the employee who copied material he built himself. Texas law does not assume the employer owns everything an employee makes. Absent an express assignment agreement, ownership of an invention turns on whether the worker was “employed to invent or devise” that very improvement; if he was not, he owns it, and the employer may hold, at most, a nonexclusive “shop right” — a right to keep using the work that does not let the employer stop the employee from using his own creation. McClain v. State, No. 06-07-00057-CR (Tex. App.—Texarkana Oct. 17, 2008). When the “stolen” files are the departing employee’s own work product, the consent and ownership questions can dismantle the State’s theory before trial.

The second pattern is the employee who took nothing but skill. Matters of general knowledge in an industry cannot be appropriated by anyone as a trade secret, and the efficiency and skills a worker develops on the job belong to the worker, not the former employer — even when that expertise was gained doing the job. Hallmark Personnel of Tex., Inc. v. Franks, 562 S.W.2d 933, 936 (Tex. App.—Beaumont 1978, no writ). A salesperson who remembers how an industry prices its work, or an engineer who carries general technique in his head, has not stolen a secret. Drawing the line between protected know-how and a genuine trade secret is often the whole ballgame.

How do prosecutors prove a § 31.05 case?

Because the offense usually turns on copying, the State’s case is built on forensics — USB-insertion logs, cloud-sync histories, email-send records, and file metadata. The harder problem for prosecutors is proving the information was secret in the first place, and that the indictment identifies the specific property with precision.

Because the offense usually turns on copying, the State’s case is built on forensics. Investigators pull USB-insertion logs, cloud-sync histories, email-send records, badge and VPN access data, and the “last accessed” metadata on the disputed files. They will try to show that the accused reached protected data outside the scope of his job and moved it somewhere the company could not control. A defense lawyer reads the same data with a different eye: automatic backups copy folders without a human deciding to; a sync client can sweep a personal directory that happened to sit inside a work folder; shared drives blur who actually “accessed” what; and a “last modified” timestamp can reflect a software process, not a person.

The harder problem for prosecutors is proving the information was secret in the first place. The secrecy element is not satisfied by an employer simply declaring something confidential. The Court of Criminal Appeals has held that while “absolute secrecy is not required,” a “substantial element of secrecy must exist,” and the owner must have taken real measures to protect it. Schalk, 823 S.W.2d at 640. In Schalk the State carried that burden by stacking layers — signed nondisclosure agreements, plant security with badges and guards, password-restricted computer access, and a consistent practice of not disclosing the specific programs. Where those layers are missing — no NDA, code emailed around freely, files left on an open shared drive, the “secret” demonstrated at trade shows — the secrecy element wobbles, and a factual-sufficiency challenge becomes available.

There is also a charging-precision requirement that has sunk cases for decades. An indictment must identify the specific property said to be the trade secret; a vague description does not give the accused notice and is fatally defective. That principle traces back to Atkins v. State, 667 S.W.2d 540 (Tex. App.—Dallas 1983, no pet.), where an indictment describing “architectural plans” without identifying them failed, and the Court of Criminal Appeals reaffirmed the point in Schalk. We read the charging instrument early and hard, because a defect there can end the case on a motion to quash.

Texas § 31.05 vs. the federal EEA and DTSA

Trade-secret conduct can be charged in state court, federal court, or pursued purely as a civil dispute. The federal Economic Espionage Act, 18 U.S.C. § 1832, is harder for the government to prove than § 31.05 because it adds interstate-commerce and intent elements that the Texas statute does not require.

Trade-secret conduct can be charged in state court, federal court, or pursued purely as a civil dispute, and the differences matter to strategy. The federal criminal statute — the Economic Espionage Act, 18 U.S.C. § 1832 — is harder for the government to prove than § 31.05. It requires that the secret be related to a product or service used in or intended for interstate or foreign commerce, and that the defendant intended to convert the secret to the economic benefit of someone other than the owner, knowing the offense would injure the owner. Texas § 31.05 carries none of those added requirements. That asymmetry is one reason many DFW disputes resolve in state court or civil litigation rather than as federal indictments.

On the civil side, the federal Defend Trade Secrets Act of 2016 (18 U.S.C. § 1836) and the Texas Uniform Trade Secrets Act give employers private causes of action that run in parallel with any criminal case. The practical danger for an accused is the interplay between the two tracks: a statement made to settle the civil suit, or testimony given in a civil deposition, can be handed to prosecutors and used in the criminal matter. Coordinating the criminal defense with whatever civil exposure exists — and protecting the client’s Fifth Amendment rights across both — is part of handling these cases properly. If your matter does carry federal exposure, our federal criminal defense practice handles EEA and related charges in the Northern and Eastern Districts of Texas.

Penalty and collateral consequences

For the engineers, developers, and executives who make up most § 31.05 defendants, the conviction itself is often less frightening than what follows it — a felony can end a professional license, trigger termination clauses, strip firearm rights, and surface on every future background check.

For the engineers, developers, and executives who make up most § 31.05 defendants, the conviction itself is often less frightening than what follows it. A felony conviction can end a professional engineering or other state license, trigger termination-for-cause clauses, and surface on every future employment background check in an industry where security clearances and trust are currency. Many technology and defense employers will not hire someone with a felony theft conviction at all.

The fallout reaches further. A felony conviction strips the right to possess a firearm under Texas Penal Code § 46.04 and federal law at 18 U.S.C. § 922(g). For non-citizens, a theft offense can be treated as a crime involving moral turpitude with immigration consequences that a plea must be structured to avoid. And a parallel civil judgment under the Texas Uniform Trade Secrets Act can add damages and an injunction on top of the criminal penalty. A defense that ignores these downstream effects is only half a defense.

As for clearing the record, the rules track the outcome. If the case ends in acquittal or a qualifying dismissal, expunction under Code of Criminal Procedure chapter 55A wipes the arrest. A completed deferred adjudication supports a petition for an order of nondisclosure under Government Code § 411.0725 after the statutory waiting period, which seals the record from most private background checks. A final felony conviction, by contrast, can be neither expunged nor sealed — which is the strongest practical reason to fight the charge before it becomes a conviction.

When to retain counsel

Retain counsel at the first sign of an investigation — the detective’s call, the grand-jury referral, or the cease-and-desist letter — before any statement to law enforcement and before the parallel civil case can generate testimony that prosecutors will use.

The right time to retain counsel in a theft-of-trade-secrets case is at the first sign of an investigation — the detective’s call, the grand-jury referral, or the employer’s cease-and-desist letter — before any custodial interview and before any statement to law enforcement. Early retention produces three substantial advantages. First, the defense can invoke the right to counsel and the Fifth Amendment privilege at the earliest opportunity, preventing the kinds of statements that supply the State with admissions about what was taken or why. Second, the defense can preserve the forensic record — device images, cloud-account logs, employment policies, and any assignment agreements — at a stage when the evidence remains available and the narrative is not yet fixed. Third, the defense can develop the case theory — secrecy challenge, ownership and consent, knowing-act, charging-precision — at a stage when it can shape the grand-jury presentation and every subsequent decision.

The grand-jury window is uniquely important in these cases. A felony must be presented to a grand jury for indictment, and a well-prepared defense packet — showing the information was not secret, that the client owned it, or that the “copy” was an automated backup — can persuade prosecutors not to indict or can reshape the charge. Some defendants approach a § 31.05 matter as a private dispute that will resolve itself; the consequences of under-resourced representation are often a felony conviction that ends a career. The case is a third-degree felony with fixed, serious exposure, and it demands serious defense work from the first contact.

L and L Law Group represents clients facing § 31.05 theft-of-trade-secrets charges across Collin, Dallas, Denton, and Tarrant counties. Co-founding partners Reggie London and Njeri London handle both the criminal-defense and parallel-civil components of these cases — defending the criminal charge through plea or trial, coordinating with whatever civil exposure exists, protecting the client’s Fifth Amendment rights across both tracks, and structuring deferred adjudication and record-sealing outcomes where appropriate. Free initial consultations are available; contact the firm at (972) 370-5060 or info@landllawgroup.com to schedule.