679 S.W.3d 788
Tex. App.2023Background
- FMC sued former employee Richard Murphy and competitor Dril‑Quip under the Texas Uniform Trade Secrets Act (TUTSA), alleging misappropriation of an "orientation‑free" subsea tree design (the ITW system) and related internal files. The asserted trade secret was a combination of four features: an orientation‑free mechanism, flat‑to‑flat lock ring, annulus fluid path through the production stab, and an automatic space‑out mechanism.
- FMC alleged Murphy copied and emailed FMC files (including an unpublished patent application) to a former FMC colleague at Dril‑Quip, then joined Dril‑Quip and helped produce the competing VXTe system.
- Dril‑Quip presented evidence it independently developed the VXTe design beginning in 2017, had prototypes and a patent application before Murphy joined in 2019, and that the individual features had prior public or industry disclosure.
- FMC offered experts on trade‑secret protection and technical similarity; Dril‑Quip offered experts disputing misappropriation and opining the combination and components were readily ascertainable or publicly known.
- The jury found FMC did not own the asserted trade secrets and returned verdict for appellees; FMC appealed, raising three primary complaints: (1) admission of Dril‑Quip’s trade‑secret expert (James Pooley), (2) jury charge language allowing combination trade‑secret protection, and (3) factual insufficiency of the evidence supporting the jury’s adverse findings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of Pooley’s expert testimony on whether FMC took reasonable measures to keep secrets | FMC: Pooley impermissibly testified about legal conclusions, used unreliable/untested methodology, and lacked technical credentials | Dril‑Quip: Pooley is qualified by extensive trade‑secret policy and consulting experience; his risk‑management opinion is admissible and factual | Court: Overruled; Pooley was qualified, his testimony was relevant and reliable, and FMC had presented its own expert on same issue (invited‑error) |
| Jury charge instruction on combination trade secrets (requirement that combination add value beyond components) | FMC: Instruction was erroneous and prejudicial; trial court amended charge improperly during reading | Appellees: Instruction correctly reflects TUTSA and UTSA jurisprudence that a combination can be a trade secret only if it has independent value beyond publicly known parts | Court: Overruled; instruction legally correct and consistent with TUTSA and precedent; no preserved harm from the court’s clerical charge mistake |
| Factual sufficiency of evidence that FMC owned trade secrets (i.e., that asserted combination and other files were secret and not readily ascertainable) | FMC: Its unpublished drawings, patent application, and internal files were trade secrets and sufficient to win | Appellees: Prior Dril‑Quip patents, designs, prototypes, public disclosures, and experts showed the components—and their combination—were readily ascertainable or publicly known; some files (Mathcad templates) were non‑secret | Court: Overruled FMC’s challenge; evidence (including FMC’s own expert) supported jury finding that the combination and other files were readily ascertainable and not protected trade secrets |
Key Cases Cited
- E.I. du Pont de Nemours & Co. v. Robinson, 923 S.W.2d 549 (Tex. 1995) (Robinson factors guide reliability inquiry for expert testimony)
- TXI Transportation Co. v. Hughes, 306 S.W.3d 230 (Tex. 2010) (court examines reliability of expert analysis, not correctness of conclusions)
- Whirlpool Corp. v. Camacho, 298 S.W.3d 631 (Tex. 2009) (standard of review for evidentiary rulings)
- City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005) (jury is sole judge of credibility; factual‑sufficiency review limits)
- HouseCanary, Inc. v. Title Source, Inc., 622 S.W.3d 254 (Tex. 2021) (trade‑secret element: reasonable measures to keep information secret need not be absolute)
- Penalty Kick Management Ltd. v. Coca‑Cola Co., 318 F.3d 1284 (11th Cir. 2003) (a unique combination of public information can qualify as a trade secret only if it adds independent value)
- Metallurgical Indus., Inc. v. Fourtek, Inc., 790 F.2d 1195 (5th Cir. 1986) (combination of public information may be protectable as trade secret only if it provides competitive advantage)
- Eagle Oil & Gas Co. v. Shale Exploration, 549 S.W.3d 256 (Tex. App.—Houston [1st Dist.] 2018) (compilation/combination trade‑secret principles under UTSA)