Core Laboratories v. Spectrum Tracer Services LLC et al

Filing 202

ORDER granting 155 Plaintiff's Renewed Motion to Sever and Lift Stay, vacating the Court's February 8, 2013 Order as to the non-patent claims in this case, and granting in part and denying in part Defendants' Opposed Motion to Stay L itigation Pending Reexamination in U.S. Patent and Trademark Office 117 as follows: The Court will reopen this case as to the non-patent claims and the patent claims currently before the U.S. Patent and Trademark Office will remain stayed (as more fully set out). Signed by Honorable Vicki Miles-LaGrange on 12/18/2014. (ks)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
CORE LABORATORIES, LP,
Plaintiff,
v.
SPECTRUM TRACER SERVICES, L.L.C.,
STEVE FAUROT and KELLY BRYSON,
Defendants.

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Case No. CIV-11-1157-M

ORDER
Before the Court is Plaintiff’s Renewed Motion to Sever and Lift Stay (“Mot.”), filed
September 27, 2013. On October 18, 2013, defendants Spectrum Tracer Services, L.L.C. and
Steve Faurot responded1, and on October 25, 2013, plaintiff replied. Based on 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

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The Court granted defendant Kelly Bryson, who is currently pro se in this litigation,
until November 25, 2013, to respond to plaintiff’s motion. A review of the record reveals no
response has been filed on behalf of Mr. Bryson.

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 position with Core in 2008, and Bryson resigned in 2010. At the
commencement of this litigation, both Faurot and Bryson were employed by defendant Spectrum
Tracer Services, L.L.C. (“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

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irreparable 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
injunction were denied.
On November 28, 2012, STS filed its motion to stay the litigation before this Court until
completion of the United States Patent and Trademark Office’s (“USPTO”) reexaminations.
STS’s motion was granted by the Court on February 8, 2013. On March 3, 2013, the parties
jointly filed notice of their completion of briefing before the USPTO.
On February 16, 2013, Core filed an emergency motion to sever, to lift stay, and for
preliminary injunction. Core stated that it had recently received a communication from a STS
employee establishing that STS improperly and unlawfully possessed confidential, trade secret,
and proprietary software systems developed by Core and that STS was taking steps to copy and
implement the Software Application for itself.

On March 13, 2013, after reviewing the

submissions of the parties, the Court denied Core’s emergency motion, denying the requested
preliminary injunction and declining to lift the stay. On March 20, 2013, Core’s notice of appeal
from the Court’s March 13, 2013 Order denying Core’s Emergency Motion to Sever, to Lift
Stay, and for Preliminary Injunction was filed.
On August 7, 2013, the United States Court of Appeals for the Federal Circuit issued its
Order reversing the denial of the emergency request for preliminary injunction as to Core’s trade
secret and proprietary information and remanding with instructions to grant the motion forthwith.
On August 13, 2013, the Court granted Core’s Emergency Motion for Preliminary Injunction and
enjoined defendants from copying, implementing, or otherwise using Core’s Software
Application, a trade secret belonging to Core, as well as any other confidential and trade secret
information within the Software Application, including Core’s price lists and customer lists.

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Now, Core renews its motion to sever this lawsuit, lift the stay currently in place, and
allow discovery and trial of the non-patent claims in this case. Specifically, Core asserts that
“[i]n light of the Federal Circuit’s finding that Spectrum’s possession and use of Core’s trade
secrets constitute irreparable injury as a matter of law, this Court should exercise its discretion to
lift the stay so that the case may proceed.” Core’s Mot. at 6 (citing Core Lab. LP v. Spectrum
Tracer Serv., L.L.C., et al., No. 2013-1263, at 9-11 (Fed. Cir. Aug. 7, 2013)). Defendants assert
that there is no basis for this Court to lift the stay and sever the patent and non-patent claims.
Having carefully reviewed the parties’ submissions, and in light of the Federal Circuit’s
findings, in Core Lab. LP v. Spectrum Tracer Serv., L.L.C., et al., No. 2013-1263 (Fed. Cir. Aug.
7, 2013) that: (1) Core did establish irreparable harm as a matter of law and (2) “the
circumstances are sufficiently changed that review of the severance and stay may be warranted”
(Id. at 13), the Court finds the current stay in this case as to the non-patent claims should be
lifted. Accordingly, the Court GRANTS Plaintiff’s Renewed Motion to Sever and Lift Stay
[docket no. 155], VACATES the Court’s February 8, 2013 Order as to the non-patent claims in
this case, and GRANTS IN PART and DENIES IN PART Defendants’ Opposed Motion to Stay
Litigation Pending Reexamination in U.S. Patent and Trademark Office [docket no 117] as
follows: The Court will REOPEN this case as to the non-patent claims and the patent claims
currently before the U.S. Patent and Trademark Office will remain STAYED.
IT IS SO ORDERED this 18th day of December, 2014.

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