A state jury in Houston is currently deliberating over whether Houston-based Dril-Quip and one of its engineers misappropriated trade secrets for a subsea drilling system owned by a hometown competitor, TechnipFMC, whether they did so maliciously, and whether FMC should be awarded tens-of-millions of dollars as a result.
As defense lawyers for Dril-Quip and ex-FMC/current Dril-Quip engineer Rick Murphy delivered closing arguments midday on Tuesday, they left jurors with lots of technical information to consider packaged in a couple of food analogies about burgers and soda that may have caused jurors’ stomachs to rumble as they retired to the jury room to eat lunch and begin deliberations.
FMC accuses Murphy, its former chief engineer, of stealing proprietary and confidential information in 2019 on his way out the door to join Dril-Quip and build a competing system for an orientation-free subsea tree system that would extract oil from the ocean floor in a more cost-efficient manner. Among the proprietary information, FMC alleges, were trade secrets entailing drawings of FMC’s designs that were included in a confidential, unpublished patent application.
FMC’s entire case will likely boil down to how jurors answer the first question of the jury charge, which asks whether FMC owns any trade secrets. If the jury decides “yes” for No. 1, that opens the door for them to determine whether Dril-Quip and Murphy, an individual defendant in the case, misappropriated FMC’s trade secrets and potentially award the $35 million FMC is asking for — which doesn’t include exemplary damages jurors could add if they find the alleged misappropriation was willful and deliberate.
As a result, both the plaintiff and defendants spent a large chunk of time Tuesday explaining to the jury what constitutes a trade secret under Texas law.
Murphy’s lead lawyer, Barrett Reasoner, told jurors that FMC has “cherry-picked” four components of Dril-Quip’s VXTe Subsea Tree System that match features in its own product designs to argue they are stolen trade secrets when the reality is they are well-known concepts that are “readily ascertainable” and therefore not trade secrets as defined under Texas law. Moreover, they were just four parts out of 4,000 that comprise the whole VXTe system.
He showed jurors a picture of the Impossible Burger and Beyond Meat products sitting side-by-side, comparing both companies’ innovation — a meatless patty that resembles the taste of a real burger — to the innovation at issue that Dril-Quip and FMC are both developing: an orientation-free subsea tree system.
“I talked to you during opening statements about simultaneous inventions and how they happen all the time,” Reasoner, a partner at the Houston law firm Gibbs & Bruns, told jurors.
He told jurors the four figures that FMC says are trade secrets are akin to the toppings of a burger — the lettuce, tomatoes, cheese and bun — which would be used on a Beyond Meat patty, Impossible patty or traditional meat patty.
“Of course they’re looking to pair the same toppings with the innovative meatless patties, it’s what the law calls readily ascertainable,” Reasoner said.
Danny David, one of Dril-Quip’s lead lawyers, told jurors during his closing argument that there are no trade secrets in this case because FMC did not take reasonable measures to protect them.
One of the strongest examples of this, David said, was the evidence jurors saw that hundreds of FMC employees “with no need” for the trade secret information at issue in the case had access to it through a company platform called Teamcenter.
“Do you really think hundreds of engineers have access to the [secret] Coca-Cola [recipe]? Of course not,” said David, a partner at Baker Botts. “FMC had no control over their information.
“We’ve shown you five different ways why this is not a trade secret,” David said. “Once you answer ‘no’ to Questions [1a and 1b], you don’t need to answer any more.”
But FMC attorney Joe Ahmad of Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing reminded jurors that it was “only engineers who had access to the documents, and every single one knew they were confidential.”
Ahmad’s law partner, Todd Mensing, told jurors about the many precautions FMC has in place to protect its proprietary information. He said FMC employees are trained “not to send out assembly drawings” and FMC has to obtain nondisclosure agreements with customers before sharing any of its information.
“There’s a system that protects the drawings in this case,” said Mensing. “You can’t get in without a password, it has to recognize your laptop and you have to put a VPN in.”
Mensing said additional security measures include FMC’s legal department having sole access to the company’s patent applications as well as security on company systems that includes global encryption, double-layered authentication and anti-phishing. Plus, FMC provides “extensive training” to its employees on what’s confidential — Murphy included. He said Murphy understood.
“Lastly, the campus is secure,” Mensing said. “Restricted printing, no photos or videos. Reasonable measures.
“The trade secret is the drawings,” Mensing said. “They’ve been trying to make the case about something else the whole time. No one else had these, it’s obvious. [Murphy] opened up and used all of these [drawings] to help them (Dril-Quip) make decisions. It’s not OK.
“Not a single person said they didn’t understand that the drawings are confidential.”
The jury got the case at 1:30 p.m. Tuesday and deliberated through all of Wednesday. They continued their deliberations Thursday morning.