Over the next four weeks, a trial that began Thursday between Houston-based competitors TechnipFMC and Dril-Quip will take 12 jurors into the underwater world of ocean floor oil extraction equipment and the trade secrets that either were or were not stolen from one company to the other.
The case also pits premier Houston legal talent against one another, including AZA’s Todd Mensing and Joe Ahmad for the plaintiffs and Baker Botts’ Paul Morico and Danny David and Gibbs & Bruns’ Barrett Reasoner for the defense.
During opening statements Thursday in Harris County District Judge R.K. Sandill’s court, FMC’s lawyers told jurors that ex-chief engineer Rick Murphy, an individual defendant, stole trade secrets worth tens-of-millions related to FMC’s subsea tree system before he left for Dril-Quip in 2019 to help design a competing system after getting frustrated with FMC’s pace of pursuing the project.
The trade secrets included proprietary information that Murphy took on personal external devices and cloud drives and even FMC’s unpublished, highly-confidential patent application, FMC said.
“You should do your own work and not steal from others,” Mensing, who delivered opening statements on behalf of FMC, told the jurors. “Something we all learned when we were young is what this case boils down to. It’s about Dril-Quip, which didn’t do it the right way.”
But lawyers for the defendants told jurors that Dril-Quip developed the product at issue first, that the “trade secrets” FMC alleges in the case are not really trade secrets and that the evidence shows Murphy protected FMC’s confidential information even after he departed.
“The evidence will show that Dril-Quip was the first to develop, the first to prototype, the first to patent and the first to sell,” Morico said during his opening statement. “And we did that all on our own. For the first time, FMC feels threatened in the marketplace, and that’s why we’re here.”
“The big question is whether [Mr. Murphy] provided trade secrets to Dril-Quip, and did Dril-Quip implement those into its products?” Reasoner, Murphy’s lead attorney, said during his opening. “FMC flat-out does not have evidence of that. They’re asking you to make assumptions. And that’s big for Mr. Murphy. What they’re asking you to do is to take away his livelihood based on assumptions. I urge you not to do that.”
FMC sued Dril-Quip and Murphy in October 2020, three months after learning of Dril-Quip’s VXTe Subsea Tree system at the Offshore Technology Conference. FMC says it noticed that diagrams of the VXTes system were virtually identical to FMC’s technical diagrams included in its confidential patent application.
The diagrams in the patent application laid out designs for what’s called an orientation-free system, which the lawyers explained to jurors as a technological advance that allows a subsea tree system to properly align itself instead of the traditional manual orientation, which requires expensive equipment and longer installation times that drive up costs by $3 million to $4 million per wellhead.
The case may weigh on the credibility of Murphy and the truth behind a series of events documented by emails.
Murphy sent Dril-Quip Chief Technology Officer Chris Bartlett FMC’s confidential patent application May 13, 2019, just a week before Dril-Quip offered Murphy a job and a few weeks before he began working at Dril-Quip. Mensing said Murphy sent the email to try to secure a job at Dril-Quip and show “he’s got the goods” DrilQuip needs to “win the race”of bringing the technology to market.
But Morico said Murphy sent FMC’s patent application to tell Dril-Quip that “you beat us to the punch” because he had just seen Dril-Quip’s patent application for its orientation-free system. Morico said Murphy thought that FMC’s patent application had already been published when he sent the email.
Before emailing Bartlett, Murphy sent an email to in-house FMC lawyers conveying his anger over the Dril-Quip patent application.
Mensing said the email to the lawyers served as a “cover-up” and “makes no sense” — particularly because he forwarded this email to Bartlett after.
But Morico said those actions don’t add up for an individual intending to steal trade secrets. Moreover, as soon as Murphy found out FMC’s patent application had not yet been published, he asked Bartlett to delete the email and show it to no one, which he obliged to.
Mensing cautioned jurors that Murphy is going to have an excuse for everything in this case.
“You will hear one mishap… one story after another to explain what you’re going to see,” he said.
Reasoner sided with Morico’s account of the email threads, emphasizing that Murphy “corrected the issue immediately.
“There is zero evidence he created any harm for the plaintiffs in the case,” Reasoner told jurors. “People make mistakes, but Mr. Murphy handled it the way you’d want someone to handle it in that situation.”
FMC’s lawyers immediately put Murphy’s credibility to the test Thursday afternoon when they called him up as the first witness in the case.
Murphy disagreed with Ahmad’s pointed question that FMC’s unpublished patent application from the May 13 email was a trade secret.
“I remember you testifying differently,” Ahmad responded.
The parties selected the jury on Tuesday at NRG Stadium, which allowed the jury pool and lawyers to properly spread out to address Covid-19 safety concerns. During voir dire, someone from the jury pool expressed concerns about being able to properly assess witnesses’ credibility while wearing masks. Each lawyer and witness with a speaking part wore a face shield with no mask during Tuesday and Thursday’s proceedings.
According to one of the lawyers, the jury includes engineers, an employee of an insurance company, a pilot, a chemical plant manager, a delivery person, a stylist, a golf specialist, a supply chain management worker and a welder.
Due to Covid-19 concerns, Judge Sandill is broadcasting the trial for anyone who wants to observe the trial virtually.