Seismic Trade Secret Decision in Texas

On September 25, 2013, in Trade Secrets, by Brian A. Hall

UnIntellectual Property (UnIP): Trade Secret for Seismic Map of a Gas Prospect

The Court of Appeals of Texas, in San Antonio, has affirmed a trial court’s judgment, following a jury trial, that a seismic map of a gas prospect constitutes a trade secret under Texas common law.  It is important to note that this decision was not decided under the newly-minted Texas Uniform Trade Secrets Act (TUTSA).  Although, based upon the elements of common law and facts, the decision likely would have resulted the same.

Texas law requires that the following elements of a claim for misappropriation of a trade secret be met: (1) the trade secret existed; (2) the trade secret was acquired through breach of a confidential relationship or was discovered by improper means; (3) the defendant used the trade secret without authorization; and (4) [the plaintiff suffered damages as a result.

In this case, plaintiffs/Appellees, had discovered a gas well, and in the course of negotiations regarding its use with defendants/Appellants, had emailed the “Treasure Map” to them.  The parties agreed the extensive amount of work and the over $1 million invested in analyzing and developing the Lopeno Prospect Treasure Map elevated the seismic map to a trade secret. Appellants, however, argue the trade secret status of the Treasure Map was destroyed by Ricochet, who shared the Treasure Map during negotiations. The question before this court is whether the map lost its trade secret status in light of Ricochet’s failure to require confidentiality agreements and by showing the map to potential investors.

The Court recognized the long tradition of Texas law forbidding employees “from using trade secret information acquired during the employment relationship in a manner adverse to [their] employer, and this obligation survives the termination of employment.”  Thus, even after the employee resigned his position at plaintiffs, his obligations remained and he did not have authority to destroy the trade secret status of the Treasure Map, even after his resignation became effective.  Moreover, the showing of the Treasure Map to potential investors did not destroy its trade secret status.  The Court adhered to precedent that secrecy is not destroyed by limited communication in furtherance of the trade secret owner’s economic interests.

This appeal, which questioned the legal and factual sufficiency of the jury’s verdict, provides multiple lessons to any trade secret owner.  First, be sure that, even when exploring opportunities, your trade secrets are marked as such, subject to an NDA or other confidentiality agreement, and other security measures.  This case may have been much easier for the plaintiff had those items been taken care of.  In addition, even if there is limited communication regarding one’s trade secret to third parties, the trade secret is not necessarily destroyed so long as it is in furtherance of the trade secret owner’s economic interests (e.g. prospecting a sale).

Lamont v. Vaquillas Energy Lopeno Ltd., LLP, 04-12-00219-CV, 2013 WL 5228500 (Tex. App. Sept. 18, 2013).


 

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