In Cajun Services Unlimited, LLC v. Benton Energy Service Company, the U.S. District Court for the Eastern District of Louisiana denied a motion for summary judgment and held that material in a patent application can remain an actionable trade secret until publication. The plaintiffs brought claims alleging, among other things, a violation of the Defend Trade Secrets Act. Under the DTSA, a plaintiff must prove (1) the existence of a trade secret; (2) the misappropriation of a trade secret by another (3) and the trade secret’s relation to a good or service used or intended for use in interstate or foreign commerce. Additionally, the owner must take reasonable measures to keep the trade secret a secret.
Both the plaintiffs and the defendant operate in the oil and gas industry, and the dispute arose over an elevator roller insert system (ERIS) used in oil drilling. The named plaintiff, Cajun Services Unlimited, filed a patent for technology used in the development of ERIS. Before the patent issued in June 2018, Cajun tested ERIS at facilities, used it in well operations, and transported ERIS between its facility, the defendant’s facility and various other drilling rigs, all while ERIS was open to view. Cajun never required third parties to sign nondisclosure agreements.
In 2016, Cajun claimed that the defendant reverse engineered the ERIS tools to create its own ERIS system. The plaintiffs and the defendant filed a series of lawsuits that the district court consolidated into this action. The defendant’s motion for summary judgment claimed that Cajun’s DTSA claim failed because its actions before the patent issued suggested that it did not take reasonable efforts to maintain the secrecy of their trade secrets. The defendant further claimed that Cajun forfeited its trade secret claims by filing a public patent application.
The district court ruled against the defendant on both grounds and denied summary judgment. The district court held that the publication of the trade secrets in the patent application did not deprive the plaintiffs of a cause of action for misappropriation of trade secrets before the patent application. It chose not to discuss whether the plaintiff’s actions constituted reasonable measures to maintain the secrecy of its trade secrets, and instead relied on the fact that there were disputed issues of material fact.
This case serves as an important reminder that trade secrets can exist at one point in time, and the fact that they later become public does not deprive an owner of the trade secrets claim for the earlier timeframe. This means that while the owners of trade secrets must take reasonable measures to maintain secrecy, this is simply a time-based consideration.
A party that filed a patent application still has possibility of prevailing on a DTSA claim as long as the behavior at issue occurred before the patent issued. Similar reasoning applies when a product (like a smartphone) is released. The release of a product does not mean that a party necessarily gives up its rights to the pre-release trade secrets that it possessed. As the trade secret owner, the party can still pursue legal action against someone who misappropriated trade secrets during the pre-release period of the product.