Core Labs v. Spectrum Tracer Services (Fed. Cir. 2013)
This case is about stopping former employees from becoming marketplace competitors. Two of Core Labs employees left the company and started a competing firm (Spectrum) servicing the hydraulic fracturing (fracking) industry. Core sued alleging trade secret misappropriation (under Texas Law), copyright infringement and patent infringement. During the lawsuit, Cole received the following email from a new Spectrum employee/whistleblower:
I recently have been contracting with Spectrum. . . . Not long ago I was handed some documents that have your company logos and such on them and had them ask me to recreate the same functionality in other documents and programs for them. From what I have been able to learn I believe you have been in a law suit with my company, and I am not very happy with trying to re-create someone else’s work. I have provided one of the worksheets I have been provided with and have others I can provide if they would be of any assistance. I am not sure if you gave my company permission or not to use these, but it is my intention to learn what the truth of the matter is.
The documents were in fact a copy of Core’s particular Microsoft Excel template file that it used to for its fracking services. In addition to making calculations, the file also includes some customer and price lists. And, the whistleblower had been asked to “incorporate field work functions” into the Spectrum software he was developing.
Despite this evidence, the district court rejected Core’s plea for a preliminary injunction based on the company’s failure to show irreparable harm due to ongoing infringement. On appeal, however, the Federal Circuit has reversed and ordered that the preliminary injunction be instituted.
Patent plaintiffs have been having some difficulty proving irreparable harm at the preliminary injunction stage. Here, however, the Core Labs requested the PI as a mechanism to support its Texas state law trade secret rights. Under Texas state law, a defendant’s possession of a plaintiffs’ trade secret rights is sufficient to create a presumption of irreparable harm. In general, irreparable harm tends to be easier to show in trade secret cases as compared with patent cases since information secrecy is so difficult regain once it is lost. The U.S. Supreme Court wrote on this point in a 1984 Monsanto case: “The economic value of [a trade secret] lies in the competitive advantage over others that [the trade secret holder] enjoys by virtue of its exclusive access to the data, and disclosure or use by others of the data would destroy that competitive edge.”
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In most cases, parties must wait until to appeal until a district court makes its final decision concluding the case. However, the appellate jurisdiction statute provides for interlocutory appeals based on a district court’s grant or denial of injunctive relief. 28 U.S.C. 1292. One interesting aspect of this case is the fact that the Federal Circuit has jurisdiction (rather than the 10th Circuit Court of Appeals since the District Court is located in Oklahoma). The Federal Circuit has jurisdiction over patent cases, but the original complaint (filed in Texas in March 2011) did not include a patent claim. The Texas District court granted defendants’ motion to transfer the case to Oklahoma (10/2011). The plaintiff (Core) later added the patent infringement claim alleging infringement of U.S. Patent No. 6,659,175. Spectrum then filed an inter partes reexamination request and the district court litigation stayed pending resolution of that USPTO procedure. What is unclear to me is how (under old §1295) is how this case “arises under” the patent laws.
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Section 101 issue? The claims of the ‘175 patent are interesting because they look very similar to those invalidated by the Supreme Court in Mayo v. Prometheus. In the fracking process, liquid is injected into the well to create small fractures in the subsurface in order to allow better access to the valuable hydrocarbons. For environmental reasons, it is important to recover as much of the injected liquid as possible (it basically squirts back out under pressure). Thus, it is important for the process to measure amount of fluid recovered. The proposed method here is to add a “chemical tracer” to the injected liquid and then use the concentration of chemical tracer recovered as a basis for measuring the amount recovered.
1. A method for determining the extent of recovery of materials injected into a oil well comprising the steps of:
a) preparing a material to be injected into an oil well;
b) admixing therewith a chemical tracer compound at a predetermined concentration;
c) injecting the admixture into an oil well;
d) recovering from the oil well a production fluid;
e) analyzing the production fluid for the concentration of the chemical tracer present in the production fluid; and
f) calculating the amount of admixture recovered from the oil well using the concentration of the chemical tracer present in the production fluid as a basis for the calculation.
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As per its usual, the Federal Circuit did not enter into a debate on the benefit/detriment of invention in question – here fracking.