Conversion of Business Assets & Trade Secrets

Safeguard Your Critical Business Assets and Intellectual Property

Most business owners understand the need to protect their physical assets, but fewer appreciate the risks of “conversion”—the unauthorized taking or misuse of valuable business property or trade secrets. Conversion involves more than just theft; it covers a range of scenarios from improperly retaining client databases to the unauthorized use of proprietary designs. These wrongful acts, whether committed intentionally or inadvertently, can severely compromise operational stability, competitive advantages, and long-term profitability.

Because conversion can be subtle, many companies fail to realize they’ve been victimized until substantial damage has already occurred. This can include competitive disadvantages, loss of market share, reputational damage, and significant financial loss. Business owners and executives must proactively understand what constitutes conversion, how it occurs, and how to respond swiftly and effectively.

At Hopkins Centrich, we emphasize meticulous asset management, clear documentation, and proactive legal strategies to safeguard your business assets against conversion and quickly address violations should they occur.

Understanding Conversion Under Texas Law

Conversion under Texas law occurs when someone exercises unauthorized control or use of property belonging to another party, depriving the rightful owner of its proper use. This includes tangible and intangible business assets, ranging from intellectual property and client lists to equipment and financial accounts.

Real-world scenarios demonstrating conversion can clarify how easily and significantly these issues can impact your business. For instance, departing employees frequently copy confidential customer databases to leverage relationships at new companies. Similarly, competitors have been known to acquire proprietary product designs or trade secrets illicitly, resulting in unfair market advantages. Moreover, internal conversion cases often involve trusted insiders diverting company funds, assets, or resources without authorization, severely damaging organizational trust and operational capacity.

Additional examples of conversion include:

• Unauthorized sharing of proprietary software or business methodologies.
• Improper retention of business equipment or vehicles post-employment.
• Secretly copying or distributing confidential financial or strategic documents.

The breadth of potential conversion issues means businesses must maintain robust asset tracking, documentation, and protection strategies. Vigilance and swift action are essential in preventing and addressing asset conversion effectively.

What Texas Courts Look for in Conversion Claims

Successfully pursuing conversion claims requires demonstrating clear ownership, evidence of unauthorized control or misuse, and measurable harm or loss. Texas courts are detail-oriented and emphasize robust documentation and careful presentation of evidence to clearly illustrate the circumstances and consequences of conversion.

Critical forms of evidence considered by courts include:

• Documentation of Ownership: Clearly documented proof of ownership or rightful control of the asset is essential.
• Unauthorized Use: Evidence demonstrating that the defendant used or controlled the asset without authorization.
• Economic Harm: Financial documentation clearly establishing the monetary loss resulting from the unauthorized use.
• Digital Forensics and Communication Records: Digital records such as emails, data logs, or text messages proving intentional unauthorized control or use.
• Employment and Confidentiality Agreements: Contracts demonstrating clear restrictions and obligations regarding asset use and confidentiality.

Courts closely evaluate these factors, underscoring the importance of meticulous record-keeping, proactive asset management, and immediate responses to suspected conversion.

Legal Remedies and Preventive Strategies for Conversion

Texas law provides powerful remedies for businesses harmed by asset conversion. Remedies are designed to halt the unauthorized use immediately, recover losses, and prevent future occurrences.

Common remedies include:

• Recovery and Return of Misappropriated Assets: Courts can mandate immediate return or restitution for converted assets.
• Monetary Damages: Companies can recover damages to fully compensate for losses resulting from conversion, including lost profits and market advantages.
• Injunctions: Legal injunctions immediately prohibit continued misuse or distribution of proprietary information and assets.
• Punitive Damages: Awarded in cases involving particularly egregious or intentional misconduct to deter future offenses.

Beyond remedies, preventive strategies are critical and should include confidentiality agreements, rigorous access controls, detailed employment policies, and ongoing staff training. Preventive measures significantly reduce conversion risks by clearly communicating boundaries and enforcing strict compliance.

Things You Think You Know About Conversion (But Are Wrong)

Misconceptions around conversion are common and can significantly impair your ability to protect your assets. Clarifying these myths can help businesses proactively manage risks:

• Misconception: Conversion only applies to physical property.

  Reality: Conversion broadly includes intangible assets like trade secrets, customer databases, and intellectual property.

• Misconception: Conversion claims require proving intent to harm.

  Reality: Conversion claims focus on unauthorized control or use, not necessarily malicious intent.

• Misconception: Employees can freely use company-developed contacts or data after leaving the company.

  Reality: Without explicit permission, using proprietary contacts or information post-employment often constitutes conversion.

• Misconception: Minor misuse of company resources isn’t conversion.

  Reality: Even minor misuse can qualify as conversion if unauthorized and harmful to the business.

Immediate Steps if You Suspect Conversion

Acting swiftly if you suspect conversion is critical. Early action maximizes the likelihood of successful asset recovery and minimizes potential damages:

• Document Everything Immediately: Gather and secure all relevant documents, emails, digital records, and financial data that may evidence unauthorized use.
• Limit Internal Exposure: Restrict discussions and investigations to a trusted, controlled group to preserve confidentiality and investigation integrity.
• Engage Expert Legal Counsel Quickly: Immediately contact attorneys experienced in asset conversion and intellectual property protection to develop a strategic response.

Timely intervention sends a clear message about your seriousness and significantly reduces the potential damage from unauthorized asset use.

Why Choose Hopkins Centrich?

At Hopkins Centrich, our attorneys have extensive experience handling complex business conversion cases. Our team combines legal expertise with practical business knowledge, providing effective strategies for asset protection, rapid response to unauthorized asset use, and comprehensive damage recovery.

We don’t merely react to conversion—we proactively help businesses develop and enforce asset protection strategies, minimizing conversion risks from the outset. Our meticulous, detail-oriented approach ensures your business assets and competitive advantages remain secure.

If you suspect conversion or need to enhance your asset protection strategies, Contact Hopkins Centrich immediately. We provide the guidance, advocacy, and legal solutions your business needs to thrive and remain protected.