Bohnsack v. Varco, L.P.
January 23, 2012
United States Court of Appeals for the Fifth Circuit
In Bohnsack v. Varco, L.P. the Fifth Circuit revisited the meaning of “use” of a trade secret in a claim of misappropriation. The court concluded that the jury had sufficient evidence to find that Varco. L.P. (“Varco”) misappropriated and used information that Clyde H. Bohnsack, a drilling fluids engineer, developed for the “Pit Bull,” a device that increased the efficiency of the process for drilling fluid cleaning. Varco and Bohnsack entered into negotiations in 2003 to manufacture and market the Pit Bull but the deal broke down. Varco then sought a declaratory judgment holding that it did nothing wrong in its dealings with Bohnsack, who counterclaimed that Varco had misappropriated trade secrets relating to the Pit Bull.
In a de novo review, the court defined “use” as “any exploitation of the trade secret that is likely to result in injury to the trade secret owner or enrichment to the defendant.” The jury therefore properly found that Varco “used” Bohnsack’s trade secrets because Varco’s actions would have 1) lowered the market value of the Pit Bull and 2) ensured that Bohnsack would be unable to find another manufacturer to compete with Varco. For example, Varco produced devices that could have competed with the Pit Bull for market share, if the Pit Bull was manufactured for sale. It also filed a patent application to the Pit Bull that would result in injury to Bohnsack by lowering the market value of Bohnsack’s invention.
Clyde H. Bohnsack