Case: Core Labs. LP v. Spectrum Tracer Servs., LLC, No. 2013-1363 (Fed. Cir. Aug. 7, 2013) (non-precedential). On appeal from W.D. Okla. Before Newman, Lourie, and Taranto.
Procedural Posture: Plaintiff appealed the denial of a preliminary injunction against the defendants’ use of trade secret and proprietary information and the denial of a lifting of the stay as to the non-patent counts of the complaint. CAFC reversed and remanded.
- Subject Matter Jurisdiction: The district court heard this case only by virtue of its diversity jurisdiction. State law applies to misappropriation of trade secrets and proprietary information. A federal court sitting in diversity applies the procedural law of the forum, and upon transfer of venue pursuant to 28 U.S.C. § 1404(a) the substantive law of the transferor state continues to apply, for a transfer for convenience of the defendant does not change the law governing the plaintiff’s state law claims. Because the case was originally brought in Texas, Texas state law governs the trade secret misappropriation and proprietary information count.
- Injunctions: The grant or denial of a preliminary injunction is reviewed on the standard of abuse of discretion. The district court clearly erred in its application of the law relating to wrongful possession and use of trade secret and proprietary information, and thus abused its discretion in declining to enjoin such use. First, the facts support the likelihood that plaintiff will succeed at trial. Second, the plaintiff would suffer irreparable injury. Under Texas law, when a defendant possesses trade secrets and is in a position to use them, harm to the trade secret owner is presumed. Last, both the balance of harms as between the parties, and also the public interest considerations, were in the plaintiff’s favor.