Core Labs LP v. Spectrum Tracer Servs.

When selecting applicable law following a transfer of proceedings, the law applied is the law of the original venue. In Texas, threatened disclosure of trade secrets is irreparable injury as a matter of law.

Opinion (Newman): Core Laboratories LP ("Core") provides chemical and radioactive tracer services for hydraulic fracturing ("fracking") operations. Steve Faurot and Kelly Bryson are former Core employees who formed Spectrum Tracer Services ("Spectrum") in 2010. In 2011, Core filed suit against Spectrum alleging misappropriation of trade secrets, unfair competition, and copyright infringement. The case was transferred at Spectrum’s request from the US District Court for the Western District of Texas to The US District Court for the Western District of Oklahoma. After the transfer, Core filed an amended complaint which added two patent infringement claims and requested a preliminary injunction. The district court, reasoning that monetary damages could sufficiently compensate Core for any harm done, denied the request for an injunction and stayed all proceedings until the validity of Core’s patents were reviewed by the PTO. Core appealed. As a preliminary matter, the Circuit court determined that Texas law applied to all substantive issues. Texas law states that threatened discloser or use of trade secrets constitutes irreparable injury as a matter of law. The Circuit court ruled that the district court committed a clear error in finding that Core had failed to show irreparable harm. The Circuit court went on to find that: Core would likely succeed at trial in showing that 1) a trade secret exists; 2) Spectrum acquired the trade secret by breach of a confidential relationship; and that 3) Spectrum used the trade secret without authorization. The circuit court therefor REVERSED the district court’s denial of the preliminary injunction and REMANDED to the district court the question of the severance of issues and continued stay.