Protecting proprietary information is a key concern for many businesses, and issues can arise when employees transition between competitors. While confidentiality agreements can play an important role in protecting trade secrets, companies sometimes face challenges in demonstrating whether they are sufficient, alone, to safeguard sensitive data. One recent case, involving surveying maps in the oil and gas industry, brings attention to the importance of having clear policies and procedures in place.
In this recent trade secret case, Frank Surveying Co., Inc. (FSC) accused its former employee, M. Dillion Harp, and his new employer, Manhard Consulting Limited, of misappropriating proprietary surveying maps. The case, heard in the Northern District of Texas, highlights the challenges some companies face in protecting their confidential information, even when employees sign confidentiality agreements.
The dispute centered around sensitive Base Map Files, which contained survey data and boundary information collected by FSC.
Harp, a licensed surveyor, had signed a confidentiality agreement prohibiting him from sharing FSC's confidential information. However, FSC alleged that when Harp joined Manhard in November 2022, he took these sensitive files with him. The situation was further complicated by the fact that the files had been sent to a client while Harp was still employed at FSC and were later shared with Manhard for a project.
FSC filed suit against Harp, Manhard, and other FSC employees, claiming violations of the Defense Against Trade Secrets Act (DTSA) and breach of contract. The company moved for partial summary judgment on its DTSA claim against Harp and Manhard, as well as on the breach of contract claim against Harp. However, the court denied FSC's motion on both counts, citing several unresolved issues of material fact.
In evaluating the DTSA claim, the court considered six factors to determine whether the Base Map Files constituted trade secrets. While the files were not generally known outside FSC, the court found that many employees had access to them within the company. More critically, FSC's efforts to protect the secrecy of the information were deemed insufficient. The company had not labeled the files as confidential or trade secrets, nor had they trained employees to treat the information as particularly sensitive. Additionally, FSC regularly shared these files with clients upon request, without implementing additional safeguards.
The court also noted that FSC failed to provide sufficient evidence regarding the value of the Base Map Files to the company or its competitors, or the cost and effort involved in developing them. There was some indication that portions of the information in the files might be publicly available through state government websites, further complicating the trade secret status.
Regarding the breach of contract claim, the court identified two key issues. First, the court determined that FSC failed to prove that the confidentiality agreement was enforceable after Harp's employment ended. This was particularly relevant as FSC's main contention was that Harp breached the agreement by using the Base Map Files at Manhard after the company obtained them from the client. Second, there was insufficient evidence to conclusively determine whether Harp had actually shared the files with Manhard, either directly or indirectly.
This case underscores the importance of implementing multi-faceted measures to protect proprietary information, which may in some cases go beyond relying solely on confidentiality agreements. Companies should evaluate the sufficiency of labeling of sensitive documents, sufficiency of their access controls, training for employees, and company procedures for sharing sensitive data with third parties. Additionally, businesses should evaluate whether their confidentiality agreements specify the duration of the obligations, including whether they extend beyond the term of employment.
As many businesses increasingly rely on proprietary information for competitive advantage, this case serves as a reminder of the complexities involved in safeguarding trade secrets in the modern workplace.
