Owners of oil and gas trade secrets can find comfort in a 2013 Texas appellate decision, Lamont v. Vaquillas Energy Lopeno Ltd., LLC, No. 04-12-00219-CV, 2013 WL 5228500 (Tex. App.—San Antonio Dec. 11, 2013, pet. filed), which upheld the rights of such owners who were victims of improper disclosures.
Hamblin and Lamont were directors and equal co-owners of Ricochet Energy, Inc. Ricochet entered into a series of agreements with third parties to identify and develop oil and gas prospects. Ricochet struck pay dirt in late 2004 when its geologist identified the Lopeno Prospect, a South Texas gas field with estimated reserves worth between $40 and $60 million. A confidential map (the "Treasure Map") identified the prospect's location across the adjacent Worley and El Milagro properties. But Ricochet leased only the Worley property because the El Milagro property was then embroiled in litigation.
Lamont decided to leave Ricochet in mid-2006. He and Hamblin signed severance agreements to that effect in February 2007 and, at Lamont's insistence, made them retroactive to December 31, 2006. Lamont retained a 29 percent working-interest in a joint operating agreement for the Lopeno Prospect after severance. Lamont subsequently found a new partner, Carranco, to whom he showed the Treasure Map with Hamblin's knowledge and consent. The goal was to entice Carranco to invest in the Lopeno Prospect. But Lamont and Carranco subsequently secretly leased the El Milagro property and drained the gas field within six months, stymying Ricochet's parallel efforts to lease and exploit El Milagro. Hamblin had sent Lamont a copy of the Treasure Map after the effective date of Lamont's resignation, and neither Lamont nor Carranco signed confidentiality agreements before seeing the map.
Third-parties in interest, including Vaquillas, sued Lamont and Carranco for trade secret misappropriation, among other claims. A jury awarded the plaintiffs $4.9 million in damages.
On appeal, Lamont challenged the confidentiality of the Treasure Map. Lamont argued that the Treasure Map lost its trade secret protection when Hamlin gave Lamont a copy of the map after the effective date of Lamont's resignation. The Court of Appeals held that Lamont's duty to protect Ricochet's trade secrets survived his resignation under the common law, even in the absence of a confidentiality agreement. The court also held that the Treasure Map's disclosure to potential working-interest investors did not vitiate the map's confidentiality, citing Restatement (third) of Unfair Competition § 41 cmt. b (1995), and upheld the trial court's judgment.
Lamont, if left undisturbed by the Texas Supreme Court, will be important because it reaffirms that the common law can protect trade secret owners under certain conditions, even in the absence of a confidentiality agreement. Of course, it is easier to argue for trade secret protection when the defendant signed a confidentiality agreement, and Lamont should not lead anyone to conclude that these agreements have no value. Conversely, every victim of trade secret theft contemplating litigation should consider whether claims exist under breach of contract (because the parties signed a confidentiality agreement), and under the common law (in Texas, the Texas Uniform Trade Secrets Act applies to a trade secret misappropriation after September 1, 2013).
Two other recent cases involving oil and gas or mineral trade secrets also upheld trade secret protection. In Bishop v. Miller, the Houston Court of Appeals held that process calculations and technology devised to mine potash in situ were protected trade secrets. 412 S.W.3d 758 (Tex. App.—Houston [14th Dist.] 2013, no. pet. h.). In Sw. Energy Prod. Co. v. Berry-Helfand, the Tyler Court of Appeals held that geological analyses based on "raw data… drawn from public or semi-public sources" were protected trade secrets. 411 S.W.3d 581 (Tex. App.—Tyler 2013, pet. filed). In Lamont, Bishop, and Berry- Helfand, the Courts of Appeals upheld the juries' trade secret findings by contrasting the plaintiffs' detailed evidentiary records in support of their trade secret claims with the defendants' own meager evidence. These holdings highlight the important role that supporting documentation plays in establishing any trade secret claim.