Schlumberger Ltd. v. Rutherford

2014-13621
Federal Court
Texas
127th Judicial District Court

The 127th Judicial District Court of Harris County, Texas might have raised the stakes of bringing Trade Secrets litigation in Texas by allowing for the grant of attorney’s fees and sanctions in such cases under the Texas Citizens’ Participation Act (“TCPA”).

Schumberger originally sued Charlotte Rutherford, former Schumberger chief intellectual property attorney, for Rutherford’s use of the company’s confidential information to help Acacia launch two patent infringement suits. Schumberger filed claims of misappropriation of trade secrets, conversion, breach of fiduciary duties, violations of the Texas Theft Liability Act and breach of contract.

Rutherford denied the claims and filed a motion to dismiss the suit under the TCPA. To survive the TCPA motion, Schumberger had to produce “clear and specific” evidence that the Rutherford had used the company’s trade secrets against it. Judge Sandill ruled that the company did not meet this burden and dismissed all causes of action save for the breach of contract claim, ordering Schlumberger to pay $350,000 in attorney’s fees and $250,000 sanction fees.

The TCPA is a statute passed to curb lawsuits threatening free speech. Various sources have voiced concern over the expansive reading of the TCPA that led to this hefty penalty against the Plaintiff and the resultant heightened burden of proof that the Plaintiff must meet to survive a TCPA motion to dismiss.

R. K. Sandill
Schlumberger Ltd.
Rutherford
Common Law (Restatement)