News

Southern District of Texas Denies Summary Judgment In Part for Trade Secrets Claim

Article by Heath Coffman

Southern District of Texas Denies Summary Judgment In Part for Trade Secrets Claim | The Fort Worth Business & Employment Law Reporter

In M-I L.L.C. v. Q’Max Sols., Inc., No. CV H-18-1099, 2019 WL 3565104 (S.D. Tex. Aug. 6, 2019) involves the familiar fact of an employee leaving his employer and taking the employer’s trade secrets with him.  After the employer conducted a forensic investigation and discovered that the departing employee had downloaded the employer’s confidential documents before he departed, the employer sued the employee for various causes of action, including violations of the Defend Trade Secrets Act (DTSA), violations of the Texas Uniform Trade Secret (TUTSA), and breach of his non-disclosure agreement.

The employer then moved for summary judgment on these claims.  Under the Court’s analysis, the employer M-I “presented strong circumstantial evidence of misappropriation” but not enough to entitle it to summary judgment on its DTSA and TUTSA claims:

“[Departing employee] Roy downloaded confidential documents during his time at M-I and kept those documents while working for M-I’s competitors. M-I documents were found on Roy’s [new employer] Q’Max computer and forensic analysis shows that Roy accessed M-I’s confidential documents. Roy e-mailed [Q’Max employee] Brignac instructing him to “keep playing around” with Q’Max’s software because it was too similar to “you know what,” likely referring to VH [M-I’s proprietary software]. VH and MAXSITE also have a similar look and similar features.  To be entitled to summary judgment, however, M-I would need to demonstrate the absence of a genuine dispute of material fact as to whether Q’Max and Roy actually used M-I’s documents to develop MAXSITE [competitor’s software application]. While similarities between VH and MAXSITE may be sufficient to raise an inference that Defendants used M-I’s trade secrets . . . , such an inference is insufficient to entitle M-I to summary judgment.

The lesson here is that the misappropriation of trade secrets claims often involve fact issues.  However, since M-I did not have to prove use of the trade secrets for its breach of non-disclosure agreement claim, the trial court did grant summary judgment on that claim.