Southwestern Energy Prod. Co. v. Berry-Helfand

Returning materials containing trade secrets is sufficient to avoid statutory theft of a trade secret.

Opinion (Bass): Toby Berry-Helfand (“Helfand”) and Gery Muncey (“Muncey”) researched areas that were likely to produce natural gas. In 2003, after Muncey ceased work with Helfand, Helfand met Leon Wells and formed “Team Works.” By 2004, they had identified two promising locations where leases were available and began leasing with the object of selling a drill-ready prospect. Team Works presented to Southwest Energy Production Company (“Sepco”), but asked Sepco to sign a confidentiality agreement which obligated Sepco (1) to use the confidential information provided by Team Works solely for evaluation of the prospects, (2) not to disclose the information to third parties, and (3) not to acquire any leases within the prospective areas unless it acquired them through Team Works. Sepco returned the materials and declined. In 2006, Sepco bought a large block of leases, nearly all of them in Helfand’s identified "sweet spots." Helfand filed suit in 2006, alleging fraud and misappropriation of her trade secret. The jury found that Helfand and Muncey’s study constituted a trade secret and found against Sepco on several liability theories, including common law trade secret misappropriation and statutory theft of a trade secret. The trial court granted judgment totaling approximately $40 million. Sepco contended the evidence did not support the jury’s findings of misappropriation of a trade secret. A trade secret misappropriation under Texas law requires: (1) the existence of a trade secret, (2) a breach of a confidential relationship or improper discovery, (3) use of the trade secret, and (4) damages. The court found the evidence both legally and factually sufficient to support the jury’s finding of trade secret misappropriation Sepco maintained there was no evidence to support the finding of trade secret theft. A person commits theft of a trade secret if, without the owner’s 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. The court found no evidence that Sepco committed theft of Helfand’s trade secret. Accordingly, the court REVERSED the trial court's award, because it was based in part on the trial court jury's determination that the trade secrets had been stolen. The court AFFIRMED damages for misappropriation of a trade secret. Further, the case was remanded to the trial court of the determination of attorney’s fees. In all other respects, the judgment was AFFIRMED.