Core Laboratories v. Spectrum Tracer Services LLC et al

Filing 137

ORDER denying 132 paintiffs motion to sever, to lift stay, and for preliminary injunction and finding as moot 131 plaintiff's motion for leave to submit documents for in camera inspection (as more fully set out in order). Signed by Honorable Vicki Miles-LaGrange on 3/13/2013. (ks)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
CORE LABORATORIES, LP,

)
)
Plaintiff,
)
)
vs.
)
)
SPECTRUM TRACER SERVICES, L.L.C., )
STEVE FAUROT AND KELLY BRYSON, )
)
Defendants.
)

Case No. CIV-11-1157-M

ORDER
Before the Court is Plaintiff’s Emergency Motion to Sever, to Lift Stay, and for Preliminary
Injunction, filed February 15, 2013. Defendants’ response was filed on February 27, 2013. Based
upon the parties’ submissions, the Court makes its determination.
I.

Background
Plaintiff Core Laboratories, LP (“Core”) is a Delaware limited partnership with its principal

place of business in Houston, Texas. Core is a provider of proprietary and patented reservoir
description, production enhancement, and reservoir management services.

One of the services

provided by Core is a chemical tracer service which enables owners of oil wells to determine how
much of a given material is left in an oil well after a drilling, or any other operation requiring the
injection of material into an oil well.

Defendants Steve Faurot (“Faurot”) and Kelly Bryson

(“Bryson”) were employed by Core for 15 and 9 years respectively. During the course of their
employment with Core, Faurot and Bryson both signed an “Employee Agreement - Inventions and
Confidential Information”.

The agreements required that for a period of two years after

employment, Faurot and Bryson were not to solicit or hire employees of Core. Faurot resigned his

1

position with Core in 2008 and Bryson resigned in 2010, and both are now employed by defendant
Spectrum Tracer Services LLC, (“STS”).
STS is an Oklahoma Limited Liability Company formed in 2010 with its principal place of
business in Tulsa, Oklahoma. STS provides “tracing” services to the oil and gas exploration
industry. The “tracing industry” is a support industry which provides diagnostic services to the oil
exploration industry by using “frac-ing” which is the process of using hydraulic pressure to force
cracks, or fractures, into oil and gas bearing rock formation, with the goal of increasing the
commercial viability of the reserve potential for oil and gas drilling sites. Core and STS both
provide this tracing service.
Core is the owner of U.S. Patent No. 6, 659,175 (“patent 175”) issued December 9, 2003,
and U.S. Patent No. 7,032,662 (“ patent 662”), issued April 25, 2006. Faurot and Bryson worked
for Core during the times that Core developed and created patents 175 and 662. This case was
originally filed in March 2011, in the Western District of Texas, Waco Division. The original
complaint, First Amended Complaint, and the Second Amended Complaint, all filed in the Western
District of Texas, alleged misappropriation of trade secrets, violation of the Texas Theft Liability
Act, unfair competition, copyright infringement, and breach of contract. Core’s Third Amended
Complaint now alleges claims of patent infringement, misappropriation of trade secrets and
copyright infringement.
On January 19, 2012, Core’s first Motion for Preliminary Injunction was filed to enjoin
defendants from the unlawful use of its confidential and proprietary information causing it
irreparably injury. After a hearing on Core’s first motion for preliminary injunction, the Court
denied said motion because Core failed to meet its burden of showing irreparable harm if the

2

injunction were denied.
On February 8, 2013, the Court granted defendants’ motion to stay this litigation pending
reexamination in the United States Patent and Trademark Office (“USPTO”). On March 3, 2013,
the parties jointly filed notice of their completion of briefing before the USPTO.
Core now moves the Court a second time to enjoin defendants, to sever claims and to lift the
stay in this case. Again, Core contends the Court should grant the requested relief because it will
suffer irreparable injury if the requested injunction is denied.
II.

Discussion
Core contends it recently received information from a “whistleblower” that defendant STS

continues to use its confidential and proprietary information. Specifically, Core contends the
“whistleblower” has informed them that defendants are now using a software application to infringe
upon its tracing services’ trade secrets. Core contends the severance of its non-patent claims is
necessary in this case in order to serve the ends of justice. Specifically, Core asserts it must be
given an opportunity to investigate and verify the “whistleblower” evidence that defendants continue
to posses and use its confidential information and trade secrets. Core contends it is unjust to allow
this situation to continue while waiting on the outcome of the USPTO reexamination considering
the non-patent claims present different questions of law and fact.
Defendants argue the Court has previously ruled upon Core’s motion to sever all non-patent
related claims. Specifically, defendants point out that in response to their motion to stay, Core
argued the stay should not be granted because there are non-patent related claims that should not be
stayed. Defendants contend the only difference now is that Core has based its motion upon a
secretly-recorded conversation with a purported “whistleblower” who is an employee of STS.

3

Defendants also contend there is no new danger of irreparable harm warranting a preliminary
injunction and that Core’s claims are the same as in its first, second and third amended complaint
as well as its response to defendant’s motion to stay.
In support of its motion, Core cites Rule 21 of the Federal Rules of Civil Procedure. Rule
21 states:
Misjoinder and Nonjoinder of Parties
Misjoinder of parties is not a ground for dismissing an action. On
motion or on its own, the court may at any time, on just terms, add or
drop a party. The court may also sever any claim against a party.
Fed. R. Civ. P. 21.
Upon review of the parties’ submissions and the file in this case, it appears the Court has
previously addressed Core’s request to sever certain claims. In Core’s response in opposition to
defendants’ motion to stay, Core argues certain patent and non patent claims will likely survive even
after reexamination and will require adjudication. On February 8, 2013, the Court stayed and
administratively closed this case pending the USPTO’s reexamination. The Court held that the
resolution of the validity issue as to the relevant patents would simplify the issues in this case and
facilitate any trial that subsequently occurred. Additionally, the Court decided Core had failed to
establish how in fact it would be unduly prejudiced by the granting of the stay.
As to Core’s Emergency Motion to Sever, to Lift Stay and for Preliminary Injunction, the
Court finds that Core’s reliance on Rule 21 in support of said motion is misplaced. Specifically,
Core now seeks an order from the Court lifting its February 8, 2013 stay as to certain claims
presented in this lawsuit and the issuance of a preliminary injunction prohibiting the alleged
unlawful use of its confidential and proprietary information. Rule 21 does not provide for such

4

relief.
On November 18, 2011, in its Third Amended Complaint, Core alleges this is an action for
“patent infringement, misappropriation of trade secrets and copyright infringement” and that if a
preliminary injunction is not issued Core will suffer irreparable harm. See Third Amended
Complaint, page 1and pages 17-18. On January 19, 2012, Core’s first Motion for Preliminary
Injunction was filed. On March 27, 2012, the Court denied Core’s first Motion for Preliminary
Injunction finding Core did not meet its burden of showing irreparable injury.
A movant seeking a preliminary injunction must show: (1) a substantial likelihood of success
on the merits; (2) irreparable injury to the movant if the injunction is denied; (3) the threatened
injury to the movant outweighs the injury to the party opposing the preliminary injunction; and (4)
the injunction would not be adverse to the public interest. See Dominion Video Satellite, Inc. v.
Echostar Satellite Corp., 269 F.3d 1149, 1154 (10th Cir. 2001). “Because a preliminary injunction
is an extraordinary remedy, the movant’s right to relief must be clear and unequivocal.” Id. (internal
citation omitted). Whether to grant a preliminary injunction rests within the sound discretion of the
trial court. See United States v. Power Eng’g Co., 191 F.3d 1224, 1230 (10th Cir. 1999).1
In the instant motion for preliminary injunction, Core makes the same arguments based on
the same facts but now submits it has new evidence which proves its confidential trademark is also
being unlawfully used. Based upon the submissions of the parties and the court file in this case, the
Court finds that Core has failed to submit any new bases for its claim that it will suffer irreparable
injury if its second motion for preliminary injunction is denied. The Court finds the only new or

1

Because all four requirements for a preliminary injunction must be satisfied, and because
the Court ruled Core had failed to satisfy the irreparable injury requirement, the Court declined
to address the remaining three requirements.
5

different evidence presented in support of Core’s second motion for preliminary injunction is the
alleged method by which defendants are allegedly misappropriating its patents, trade secrets and
copyrighted material. Based upon the evidence presented, the Court finds Core has not met its
burden of showing irreparable injury if the instant preliminary injunction is denied. Specifically,
the Court finds that any harm Core has suffered or may suffer as a result of defendants’ unlawful
use of the proprietary and confidential information can be adequately remedied through an award
of monetary damages.
The Court, therefore, finds that Plaintiff’s Emergency Motion to Sever, to Lift Stay, and for
Preliminary Injunction [docket no. 132] is DENIED. In light of the Court’s Order, the Court further
finds Plaintiff’s Motion for Leave to Submit Documents for In Camera Inspection [docket no. 131]
is MOOT.
IT IS SO ORDERED this 13th day of March, 2013.

6