M-I L.L.C. v. Stelly et al, No. 4:2009cv01552 - Document 376 (S.D. Tex. 2010)
Court Description: MEMORANDUM AND ORDER denying 300 Joint MOTION (Expedited) for Protection from Discovery of Proprietary Trade Secret InformationJoint MOTION (Expedited) for Protection from Discovery of Proprietary Trade Secret Information; granting in part and deny ing in part 91 Joint MOTION to Dismiss 82 Amended Complaint/Counterclaim/Crossclaim etc. for Plaintiff's Failure to Statement a ClaimJoint MOTION to Dismiss 82 Amended Complaint/Counterclaim/Crossclaim etc. for Plaintiff's Failure to Statement a Claim; granting in part and denying in part 181 MOTION for Partial Summary Judgment As a Matter of Law. M-I must file an amended complaint within twenty (20) days of the date of this Order that reflect the rulings herein.(Signed by Judge Keith P Ellison) Parties notified.(kstrouse, )
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111111III111I t .j-.J II.L.NAZCII IIIlt1 t Uj Ijt. xl(I ..1 .t1 JIl . UN ITED STA TES D ISTRIC T C O U RT SO UT H ERN D ISTR ICT O F TEX A S H O USTO N D IV ISION M -l LLC, Plaintiff, C IVIL A CT IO N N O .4:09-cv-1552 V. CH A D LEE ST ELLY ET A L ., D efendants. M EM O M ND U M A N D O RD ER Pending beforethe Courtare Defendants'JointM otion to Dism iss forPlaintiffs Failureto State aClaim (Doc.No.91);DefendantsBenton T.Knobloch and W ellbore Energy Solutions,LLC'S M otion for Partial Sum m ary Judpnent as a M atter of Law (Doc.No.181);Defendants'JointExpedited M otion forProtection from Discovery of Proprietary Trade Secretlnformation (Doc.No.300). After considering the parties' filings, a11 responses and replies thereto,and the applicable law,the Courtfinds that Defendants'motion to dismiss should be granted in pa14 and denied in part,Defendants' motion forpartialsummaryjudgmentshould bevanted in partand denied in part,and Defendants'jointexpeditedmotionforprotectionshouldbedenied. 1. BA C K G R O U N D This suitinvolves the alleged m isappropriation oftrade secretsand violation of M-I L.L.C. v. Stelly et al Doc. 376 non-compete ap eementsby formeremployeesofPlaintiffM -lLLC (ûiM -l''),including Chad Stelly,Stephen Squyres,and Benton T.Knobloch,three ofthe Defendantsin this Case.1 'Unlessotherwisenoted, thebackground factsofthiscaseare notin dispute. 1 Dockets.Justia.com œ 1 . -t111l111q4t11, . 1 ), l. 11-1.--1 tJ.) ;JllLIIIIII St, J-.tt..J., . ... M -lLLC CtM -1'')isan oilfield contractorthatprovidestçproductsand servicesto oilfeld drillers and operators who are involved in successful completion of downhole operations and the cleanoutofwellbores.'' (Second Am.Compl.,Doc.No.355,IJ8.) DefendantsChad Stelly CûStelly'')and Stephen Squyrestslsquyres''lwere employeesof M -IatitsHouston offices.Both employeessigned trade secretagreementsand covenants notto competeduring theirem ploym entatM -I. Pursuantto these and otheragreem ents, Stelly and Squyres ar eed to m aintain contidential a1l of M -l's trade secrets and proprietary inform ation both during em plom entand afterward,and also ap eed notto competeagainstM -Iforaperiodoftwo yearsafterterminationofemployment.@d.!9.) ln their em ploym ent capacity, Stelly and Squyres specialized in rental and technical support of wellbore cleanout equipm ent. Stelly and Squyres prom oted tools to M -I custom erstluoughoutthe GulfofM exico,Texas,Louisiana,and Alabam a. M -lalleges thatitçlprovided and entrusted''to Stelly and Squyres extensive trade secret and other proprietary infonnation,includingtooldrawings,desir s,and specifications. (1d.!g ! 10- DefendantBenton T.Knobloch (dçKnobloch'')wasan employeewith Specialised Petroleum Services International, lnc. f/k/a Global Completion Services, Inc. (IISPS/GCS'') which was a subsidiary of SPS Petroleum Services Group Limited (ç$SPS''). M -lacquired SPS and SPS/GCS on August2,2006,and received assignment of a1lcontractual rights. (1d.lr18.) Knobloch sir ed ameements promising notto disclose any confidential inform ation, solicit SPS/G CS'S custom ers, interfere with SPS/GCS'Scustom errelationships,orcom petewith SPS/GCS. M -IaversthatSPS/GCS and M -l gave Knobloch access to confidential inform ation, including tool draw ings, 2 designs,and specifications. On August21,2006,Knobloch resir ed hisposition with M -l,and wasthereaûer term inated. Knobloch was M anagerofSales forthe Americas when hisem ploym entwith M -1ended. M -laversthat,within one month ofleaving his job atM -l,Knobloch formed a new company,DefendantW ellbore Energy Solutions, LLC (çtW ES'') andbegan servingasW ES'Spresident.(f#.!(24.) ARer Knobloch formed W ES,M -l alleges thathe began tlraiding''em ployees from M -I,ultimately hiring atotalofthirteen employeesfrom M -I. SquyresjoinedW ES in 2008,and Stellyjoined in 2009. M -IassertsthatDefendantshaveboth stolen M -l's trade secrets and otherconfidentialinform ation,and violated theirrespective covenants notto compete. (Id.!5 15-16.) M-lbelievesthatW ES designed twelve ofitswellbore toolsby relying on M -l'strade secrets. Based on these averm ents,M -lbrings fourteen counts against Stelly,Squyres, Knobloch, and W ES. Those counts include: breaches of various employment agreem ents, including trade secret am eem ents, covenants not to com pete, and confidentiality contracts; com mon 1aw m isappropriation of trade secrets' , tortious interference w ith M -l's custom er contracts, prospective business relations, and employmentcontracts;breach offiduciary duty;violations ofthe Texas TheftLiability Act, TEX. CIV. PRAC. & REM. CODE ANN. jj 134.001-134.005 (Vernon 2005); conspiracy;unfair competition by m isappropriation;violations of the Computer Fraud andAbuseAct,18U.S.C.j1030, .and conversion. D efendants have filed a m otion to dism iss M -l's claim s,arguing thatthey failto state a claim upon which relief can be granted. They have also filed a m otion for summary judgment, arguing that M -l's state tort claims are preempted by federal copyrightlaw,and thatKnobloch's covenantsnotto compete areunenforceablebecause they are unreasonable restraints of trade. Last, Defendants have filed a m otion for protection,arguing that M -l has not m ade the requisite showing of necessity to obtain tradesecretmaterialsin discovery. The Courttakesup each oftheargum entsinturn. II. M O TIO N TO D ISM ISS Defendantshavefiled ajointmotion todismissforfailureto stateaclaim .They argue that M -l's com plaint fails to com ply w ith Rule 8 under the Suprem e Court's Twombly and Iqbaldecisions. (Defs.'JointM ot.to DismissforP1.'s Failure to State Claim,Doc.No.91,! 14.) Specifically,Defendants arguethatthe complaintdoesnot contain sufticientallegationsto stateaclaim form isappropriation oftrade secrets,failsto state facts in supportofM -l's three tortious interference claim s,and fails to state m ore than legalconclusionsfortheremaining ten claims. (f#.15 15-19.) M -Irespondsthat Defendants'motion isuntimely,andin anycase,thattheirpleading meetsRule 12(b)(6) standards. A . LegalStandard A courtm ay dism iss a complaintfor ûtfailure to state a claim upon which relief can be ranted.'' FED.R.CIV.P. 12(b)(6). il' l-o sunive a Rule 12(b)(6)motion to dism iss,a complaint tdoes notneed detailed factualallegationss'butm ustprovide the plaintiffs grounds for entitlem ent to relief- including factual allegations that when assum ed to be true çraise a right to relief above the speculative 1evel.''' Cuvillier v. Taylor,503 F.3d 397,401(5th Cir.2007)(citing#c//Atl.Corp.v.Twombly,550 U.S. 544,555 (2007)). Thatis,11a complaintmustcontain sufficientfactualmatter,accepted astrue,to çstate a claim to reliefthatisplausibleon itsface.''' Ashcro? v.Iqbal,556 4 #d' .uM% l$..t ' U.S.---,129 S.Ct.1937,1949 (2009)(quoting Twombly,550U.S.at570).A claim has facialplausibility ilwhen the plaintiffpleads factualcontentthatallow s the courtto draw the reasonable inference thatthe defendant is liable for the m isconduct alleged.'' 1d. (citing Twombly,550U.S.at556).Theplausibility standardisnotakinto atiprobability requirem ent,''but asks for more than a sheer possibility that a defendant has acted unlawfully. 1d. A pleading need notcontain detailed factualallegations,butm ustset forth m ore than lçlabels and conclusions,and a form ulaic recitation ofthe elem entsof a causeofactionwillnotdo.''Twombly,550U.S.at555(citationomitted). W hen considering a Rule 12(b)(6)motion to dismiss,a courtmusttûacceptthe complaint's well-pleaded facts astrue and view them in the lightmostfavorable to the plaintiff'' Johnson v.Johnson,385 F.3d 503,529 (5th Cir.2004), *see also Sonnierv. StateFarm MutualAuto.Ins.Co.,509 F.3d673,675(5thCir.2007).A districtcourtcan consider the contents of the pleadings, including attachm ents thereto, as well as documentsattached to the motion,ifthey are referenced in the plaintiffs complaintand arecentraltotheclaims.Collinsv.M organStanleyDean Witter,224 F.3d496,499(5th Cir.2000). Furthermore,aCourtmay referto mattersofpublicrecordwhen deciding a motion to dismiss. Chauhan v.Formosa Plastics Corp.,212 F.3d 595,595 (5th Cir. 2000). Ultim ately,the question forthe courtto decide is whether the com plaintstates a valid claim when viewed in the light most favorable to the plaintiff. The court m ust accept w ell-pleaded facts as true, but legal conclusions are not entitled to the sam e assumptionoftruth.Iqbal,129S.Ct.at1950(citationomitted).Butthecourtshouldnot Allstrain to tind inferencesfavorableto theplaintiffs'''or'saccepticonclusory allegations, unw arranted deductions,or legal conclusions.''' R2 Investm ents LD C v. Phillips,401 F.3d 638,642 (5th Cir.2005)(quoting Southland Sec.Corp.v.Inspire Ins.Solutions, Inc.,365 F.3d 353,362 (5th Cir.2004)). lmportantly,thecourtshould notevaluatethe meritsofthe allegation,butmustsatisfy itselfonly thatplaintiffhas adequately pled a legally cor izable claim . United States cx rel.Riley v.St.Luke's EpiscopalH osp.,355 F.3d370,376(5th Cir.2004). B . A nalysis The Courtnotes,atthe outset,thatsubsequentto Defendants'm otion to dism iss, M -1 am ended its complaint. The live pleading is M -l's Second Am ended Com plaint (Doc.No.355).TheCourtwillapplythemotiontodismisstothelivepleading. 1. W aiver The CourttirstconsiderswhetherDefendantshave waived theirRule 12(b)(6) arguments by filing responsive pleadings before moving to dism iss. Defendants answered M-l's originalcomplaint. (See Doc.Nos.7,9,& 28.) They now move to dism iss M -l's am ended complaint. M -Iargues thatDefendants have waived theirRule 12(b)(6) arguments, because the rule Stexpressly mandates'' that a motion brought pursuantto the rule tllshallbemadebeforepleading.''' (P1.M -1LLC'SResp.to Defs.' M ot.toDismissforFailuretoStateaClaim PursuanttoFRCP 12(b)(6)& M ot.forLeave to FileAm.Compl.,Doc.No.113,at2 (quoting FED.R.CIV.P.12(b)(6).) Because Defendants already filed responsive pleadings to M -l's originalcomplaint,M -Iargues that they m ay not now oppose an am ended com plaint. D efendants respond that their m otion istim ely and notwaived.They arguethat,because Defendantsare allowed to file a responsive pleading to M -l's am ended complaint,they are also allowed to çlchallenge thatcomplaint'svalidityunderRule12(b)(6).''(Defs.'ReplytoP1.'sResp.toTheirJoint Mot.toDismissforFailuretoStateaClaim,Doc.No.180,!(2.) DefendantsrelyonBromheld v.McBurney in arguingthattheirmotion to dismiss is tim ely. In that case,the defendants m oved to dism iss plaintiff s original com plaint. Tht courtsubsequently ordered plaintiff to tile an amended complaint curing certain deficiencies. The plaintiff did so,and defendants tiled a second motion to dismiss. Plaintiff responded that the defendants motion should be denied, because only one 12(b)(6) motion could be filed. The courtrejected thatargument,noting thatRule 12(b)(6)ttmerely providesthata motion asserting a defense forfailure to state aclaim upon which reliefcan be granted,orany ofthe otherspecitic defenses setforth therein, fmustbem adebeforepleading ifaresponsivepleading isallowed.''' 2008 W L 2746289, at*1(W .D.W as.July8,2008)(quotingFed.R.Civ.P.12(b)).Becausetheplaintiffhad filed an am ended complaint,the courtheld thatthedefendantswere once again entitled to challengeitsvalidityunderRule12(b)(6). Though Bromfeld supports Defendants' general argument that an amended complaint grants defendants the opportunity to challenge its validity anew under Rule 12(b)(6),thecircumstancesofthecasesaredifferent.ThedefendantsinBromheldnever answered theoriginalcomplaint. Instead,they challenged both the originaland am ended complainton Rule 12(b)(6)grounds.Inthiscase,bycontrast,each Defendantanswered M -l'soriginalcomplaint,and urged thisCourtto dismisson 12(b)(6)groundsonly aher the am ended com plainthad been filed. The Courtdoes nothave to decide thatquestion,however,because Defendants prevailforanotherreason. Each Defendantraised the defense offailure to state a claim uponwhich reliefcanbegrantedin theiranswers. (SeeChad Stelly'sAm.Answer,Doc. No.7,!89(EtstellyaffinnativelyassertsthatM -l'sclaimsarebarred,inwholeorinpart, because M -Ihasfailed to state a claim upon which reliefmay be granted''l;Stephen Squyres'Am.Answer,Doc.No.9,!(89 (same);Defs.Benton Knobloch & W ellbore Energy Solutions, LLC'S Original Answer and Counterclaim, Doc. No. 28, !95 (ttKnobloch and (W ES)plead failureto state ac1aim'').) Rule 12(b)providesthatçtlnjo defenseorobjectioniswaivedbyjoiningitwithoneormoreotherdefensesorobjections in aresponsivepleading.'' Rule 12(i)providesthatVûliqfaparty so moves,any defense listedin Rule 12(b)(1)-(7)- whethermadein apleadingorbymotion ...mustbeheard and decided before trialunless the courtorders a deferraluntiltrial.'' FED.R.CIV.P. 12(i). Because the Defendants'motion to dismiss isbased on a defense they raised originally in their answ ers,M -l's w aiver argum entfails. See D esperado M otor Racing tt M otorcycles,Inc.v.Robinson,2010W L 2757523,at*3(S.D.Tex.July 13,2010). M isappropriation oftrade secrets Defendants aver that M -l has failed to plead adequately its m isappropriation of trade secrets claim . U nder Texas law ,the elem ents of m isappropriation oftrade secrets are:(1)a tradesecretexisted,(2)the trade secretwas acquired through a breach ofa confidentialrelationship ordiscoveredbyimpropermeans,and (3)thedefendantusedthe tradesecretwithoutauthorization from theplaintiff CQ,Inc.v.TXU M ining Co.,565 F.3d 268,273 (5th Cir.2009)(quoting Gaia Techs.Inc.v.Recycled Prods.Corp.,175 F.3d 365,376 (5th Cir.1999)).A trade secretisdetined asak'iformula,pattem ,device or com pilation ofinform ation used in abusiness,which givesthe owneran opportunity to obtain an advantage overhis competitors who do notknow or use it.''' Tri ple Tee Go% Inc.v.Nike,Inc.,285F.3d253,261(5th Cir.2007)(quoting Taco Cabana Int1v. FwoPesos,Inc.,932 F.2d 1113,1123(5thCir.1991:. M -l's Second Am ended Com plaintalleges thatStelly,Squyres,and K nobloch had accessto iûnonconform ance reports,tooldrawings,tooldesir s,tech units,toolutility reports,scrap reports,jobproposalsandprocedures,salesforecasts,jobtracker,customer preferences, tool research and developments and project information,'' and other contidentialinformation.(Doc.No.355,! 11;seealsoid.!(19.) M -lfurtherallegesthat Defendantsinduced Stelly to misappropriateM -l'stechnology and trade secretsforusein W ES'Sbusinessoperations,and that: ln the daysbefore he notitied M -Ithathe wasquitting,Stelly connected extem al m em ory devices to his M -I laptop and transferred files to these devices from the laptop. A forensic analysis of Stelly's Extem alHard Drive and USB Drive revealed thatM -l's fileswere on these devices and that som e of these files had been transferred from Stelly's laptop. In addition,on M arch 8,2009,Stelly began downloading M -l's tiles on to his M -llaptop im mediately after ending a cellphone conversation with Knobloch. Sim ilarly,on M arch 6,2009,Stelly called Knobloch minutes before he plugged in an extem alm em ory device to his laptop. Because this com puter activity occurred aher Stelly accepted em ploym ent with W ES and in closeproxim ity to phone callswith Knobloch,M -lhasreason to believe that Stelly w as accessing M -l's Confidential Infonnation and filesforhisand forW ES'Suse. (Doc.No.355,5 15.)2 Finally, M -lmaintains thatKnobloch resir ed from M -land immediately formed W ES. (1d.! 24.) M -1provides a listof fourteen specific tools whosedesir sandtechnologieswereallegedlyusedbyW ES.(f#.!(21.) 2The Courtis aware thatthere is considerable controversy over this allegation, because M -Iinitially submitted,and subsequently withdrew,evidencesupporting itsclaimsthatStelly haddownloaded material from his M -Ilaptop onto an externalhard drive. (See Aff.in Supp.ofM -ILLC'SEm ergency M ot.for Prelim.Inj..Doc.No.14.!!I12-13;M-1LLC'SNoticeofW ithdrawalofPortionsofKeith Pope'sAff., Doc.No.81.) AsDefendantsacknowledge,however,itistheCourt'staskatthisstageto consideronlythe pleadingsin its12(b)(6)determination.Thus.itmustignoreb0thfavorableand detrimentalevidencethat existoutside thepleadings,and focuson the factualallegationsin M -l'scomplaintonly. M-Icontinuesto assertthatStelly downloaded sensitiveM -lmaterialbeforeleavinghisjob,and forthepumosesofthis m otion,theCourtisboundto accepttheseallegationsastrue. N evertheless,D efendants argue thatM -Ihas failed to allege facts to supportits claim because there are no factsshowing whattrade secretwasm isappropriated,thatM - l'strade secretswere actually used ordisclosed by Defendants,and whatinjury was suffered by M -l. The Courtdisap ees. O n the contrary,M -Ihas alleged thatits designs and technologies related to fourteen tools constim te trade secrets,that D efendants took the inform ation in violation oftheirconfidentiality agreem ents,and haveused itto build itsown tools. M ile,ofcourse,itistrue thatatleastsom e ofM -l'sallegations reston circum stantialfactualsupport the Courtbelieves that,tlzrough discovery,M -lm ay be able to collect evidence of the allegedly unlawful behavior to m ore fully supportits claim s. O fcourse,in the finalcalculus,itm ay notbe able to prove its allegations and the casecould verywellbe dismissed on afuturemotion forsummaryjudgmentorattrial. % atism aterialatthisstage,however,isthatM -Ihasalleged factsthatûûûraisea rightto relief above the speculative 1evel,'''thereby sufficiently stating its claim .Cuvillier v. Taylor,503 F.3d 397,401(5th Cir.2007)(citing#c//Atl.Corp.v.Twombly,550 U.S. 544, 555(2007)).TheCourtfindsthatM -Ihasdoneso. 3 3. Tortious interference w ith custom er contracts Count Four alleges tortious interference w ith M -l's custom er contracts. A plaintiffm ustestablish the following elem entsto succeed on a tortiousinterferencewith contractclaim ;(1)the existence ofa contractsubjectto interference,(2)willfuland intentionalinterference,(3)thatproximately causesdamage,and (4)actualdamage or 3D efendantsalso arguethatM -Ipleadsthe inapplicableltinevitable disclosure''doctrine in supportofits trade secretm isappropriations claim s. Defendants claim that the doctrine has notbeen recognized or adoptedby any Texascourt,and thatthisCourtexpressly held thedoctrineinapplicable asamatterof1aw intheearlierinjunctionproceedings.(SeeMem.& Order,Doc.No.75,at12-13.) BecausetheCourthas found thatM -Isucceedsin setting forth sufticientallegationsthatStelly actually downloaded tradesecrets before he leftM -I,ithasno need to consider now whetherpleading the Sûinevitable disclosure''doctrine meetsRule12(b)(6)requirements. 10 loss. Specialtiestp /M cx.Inc.v.Mastedbods USA,2010W L 2488031,at*9 (S.D.Tex. June 14,2010)(citingA11Am.Te1.,lnc.v.USLD Commc' ns,Inc.,291S.W .3d 518,531 (Tex.App.- FortW orth 2009,pet.deniedl). Defendantsargue thatthere are tçno facts identifying the contracts allegedly interfered with, how the alleged interference proximately caused injurytoM -1,...theidentityofthe...third-person interfered with, oractualdamageorlossincurred.''(Doc.No.91,! 18.) The Courtagrees w ith Defendants. A her com bing tlzrough M -l's com plaint,the Courtcan discern only two passagesthateven tangentially putforth facts relating to M I's tortiousinterference with custom ercontracts claim . First,M -1alleges; Stelly and Squyres are . . . soliciting M -l's customers based on the relationships they form ed and furtherdeveloped while atM -I. Stelly has solicited and/or is soliciting and renting com peting tools to:BP p.l.c., Chevron Com oration, D evon Energy Com oration, Exxon M obil Corporation,W alterOiland GasCorporation,M arathon Oi1Com oration, and EniS.P.A . Squyres is soliciting and renting W ES toolsprim arily to BP p.l.c.justashedidwhileatM-I. (Doc.No.355,lg13.) Second,M -Iasserts: The D efendants'm isappropriation,breaches of contract,and interference hascaused M -lsubstantialharm . M -Ihas leanwd thatitlostatleastone wellto W ES when BP awardedtheThunderHorseProject778//2 W ellto W ES instead ofM -lbecause ofSquyres'ssalesefforts. M -lhasprovided W ellbore cleanouttools and services to BP forotherThunderHorse wells, and expected to provide the same for778 #2. Defendants have unfairly competed and continue to unfairly compete with M-Ion other projects using M -l's form eremployeesand M -l'sConfidentialInform ation. W ES w asawarded theThunderllorse778 #2 becauseofSquyres'sbreach ofhis contractswith M -l,W ES'Sinterferencewith thosecontracts,the inevitable use and disclosure of and continued use of M -l's Confidential Inform ation,and the use ofM -l's tooldesigns. (f#.!29.) The Courtfindsthatthesepleadingsfailfortwo reasons. First,whileM -l avers that it ûthad valid contracts w ith certain custom ers,'' it fails entirely to allege or designate a specific contractthatisthe subjectofinterference. From the factsrecited above,the reader m ight gather that M -l had business relationships w ith at least seven differentbusinesses that have since been solicited by,or entered into ap eements for services with,W ES. Sim ilarly,a reader may sunnise thatM -lhas provided wellbore cleanout tools to BP and m aintained som e sortof expectation to do the sam e on the Thunderilorseproject. Noneofthese contentions,however,allegesthe existenceofa contract betw een M -l and any of these businesses that obligated them to use M -l's wellbore cleanoutservices. W ithoutidentifying an existing contractthatis subjectto interference,M -lhasfailed to plead adequately thefirstelem entofatortiousinterference w ith contractclaim . Second,the Courtfinds that M -lhas failed to adequately plead the proxim ate cause elem entofthiscause ofaction. To show proximatecause,:<a plaintiffmustallege thatûthe defendanttook an activepartin persuading aparty to a contractto breach it.''' HambricSportsMgmt.,LLC v.Team AK,Inc.,2010W L 2605243,at*9(N.D.Tex.June 29,2010)(citingAmigo Broad.,LP v.SpanishBroad.Sys.,Inc.,521F.3d 472,489 (5th Cir.2008)). 'ttM erely entering into a contractwith aparty with theknowledge ofthat party's contractualobligations to som eone else is notthe sam e as inducing a breach.''' 1d. tûsltis necessary thatthere be som e actofinterference orof persuading a party to breach, for example by offering better term s or other incentives, for tort liability to arise.''' f#.(quotingDavisv.Hydpro,Inc.,839 S.W .2d 137,139 (Tex.App. Eastland 1992,writdeniedl). Here,itisalleged in M -l's complaintthatStelly and Squyres,in their capacity as salesm en at W ES,are soliciting M -l custom ers for w ellbore cleanout projects. Nowhere does M -I set forth facts that allege any kind of interference or persuasion of a party to breach any existing contracts with M -1. There are no facts suggesting thatany Defendanthas offered better tenns or other incentives in order to induce com panies to breach their contracts. M -l has therefore failed to plead adequately thatDefendantsare theproxim atecauseofany lossofexisting contractualrelationswith com panies. Thus,the CourtfindsthatM -Ihasnotsetforth sufficientfactualmatterthatstates aplausible daim forrelief Iqbal,129 S.Ct.at1949. The Court,however,willallow M Ito amend itscom plaint. GreatPlains TrustCo.v.M organ Stanley Dean X //cr tf Co., 313 F.3d 305,329 (5th Cir.2002)(ûlgDlistrictcourtsohen afford plaintiffsatleastone opportunity to cure pleading deficienciesbefore dism issing a case,unless itisclearthat the defects are incurable of the plaintiffs advise the courtthat they are unwilling or unable to amend in a manner thatwillavoid dismissal.'') The Courtbelieves that additionalallegations could cure the existing deficiencies. 4. Tortious interference w ith prospective business relations CountFive alleges tortious interference with prospective business relations. In orderto establish thisclaim,aplaintiffmustprove:(1)areasonableprobabilitythatthe plaintiffwould haveenteredintoabusinessrelationship;(2)an independentlytortiousor unlawfulactby the defendantthatprevented the relationship from occurring;(3)the defendantdid such actwith a consciousdesire to preventtherelationship from occuning orthe defendantknew the interference wascertain or substantially certain to occurasa resultoftheconduct' ,and (4)theplaintiffsuffered actualharm ordamagesasaresultof the defendant'sinterference. Specialties of M ex.Inc.v.M asteyoods USA,2010 W L 2488031,at*10 (S.D.Tex.June 14,2010). Defendants argue thatM -l's claim fails because M -l failsto setforth facts showing ûsthe reasonable probability thatM -lwould 13 have entered into a business relationship w ith third persons, independently tortious or unlawful conduct,the identity of the prospective business relationship . . . ,or actual dnmageorlossincurred.''(Doc.No.91,! 18.) Defendantsfurtherallegethatthefactsin support of M -l's tortious interference claim are threadbare recitals of the elem ents of each cause of action,supported by conclusory statem ents,and thereby nm afoul of Twombly andIqbal'spleading standard. M -I counters that itçthas produced docum ents''during discovery Gçshow ing thatit had a relationship with BP and thatitsubmitted aquote''on the BP ThunderHorse W ell project.(Doc.No.113,!at10.)TheCourtmaynotlooktodocumentsnotreferencedor includedin thepleadingswhen considering aRule12(b)(6)motiontodismiss. Collinsv. M organStanleyDean Witter,224F.3d496,499 (5th Cir.2000).Accordingly,itisofno m omentthatM -Iwasable to provide factualsupportforits claim outside thepleadings. The pum ose of a motion to dism iss for failure to state a claim is to ensure that D efendants have notice ofthe precise claim s againstthem . Providing piecem ealfactual supportthroughoutthelifeofthecase isnotan acceptablesubstituteforRule 12(b)(6)'s requirementthataplaintiffspleading contain factualm atterthatstatesa Stlclaim to relief thatisplausible on itsface.''' Iqbal,129 S.Ct.at1949 (2009)(quoting Twombly,550 U.S.at570).TheCourtwillthereforerefertothepleadingsinconsideringwhetherM -I hasfailed to statea claim uponwhich reliefm aybe granted. Aherexam ining the pleading,the Courtconcludes thatthis tortious interference claim falls shortof the Rule 12(b)(6)pleading standard. M -l fails to set forth any allegationsestablishing a reasonable probability thatitw ould have entered into a business relationship. The closest it comes is its averment that it lshas provided (wlellbore 14 cleanouttools and services to BP forotherThunderH orse w ells,and expected to provide the samefor778 //2,''butinstead losttheprojectto W ES. (Doc.No.355,!(29.) This statem ent,however,doesnotplead areasonable probability thatM -land BP would have entered into acontractualrelationship fortheThunderHorseproject. Furthermore,M -l failstopleadanyotherbusinessrelationshipsthatarethesubjectofthisclaim. TheCourtalso findsthatM -Ihasfailed to adequately plead thethird claim ,which requiresaplaintiffto establish thatthe defendantcom mitted an independently tortiousact with a conscious desire to prevent the relationship from occurring, or knew the interference wascertain orsubstantially certain to occuras a resultofthe conduct. M -l hasnotpled thatDefendantscomm itted misappropdation and/orbreach offiduciary duty w ith a consciousdesire to cause,orw ith the certain know ledge that,itw as preventing M - l's specific business relationship from fonning. For these reasons, M -l's tortious interferencewith prospectivebusinessrelationsclaim isdism issed. M -1m ay replead. 5. Tortiousinterference w ith M -l's em ploym ent contracts Count Six alleges tortious interference w ith M -l's em ploym ent contracts. The elementsofatortiousinterferencewith contractclaim are:(1)theexistenceofacontract subject to interference,(2) willful and intentional interference,(3) that proximately causesdamage,and (4)actualdamageorloss. Specialties ofMex.Inc.v.M astefoods USA,2010 W L 2488031,at*9 (S.D.Tex.June 14,2010)(citing AllAm.Tel.,Inc.v. USLD Commc' ns, lnc, 291 S.W .3d 518, 531 (Tex.App.- Fort W orth 2009,pet. deniedl). The Courtis uncertain aboutDefendants'specitic objectionsto thisCount. MostofDefendants'objections appearto targetM -l'sothertwo tortious interference claims,discussed above. ln any event,the Courtconsiderswhetherthis claim hasbeen 15 adequately pled pursuant to D efendants' argum ent that a11 tortious interference claim s oughtto bedism issed. M -Iidentifiesseveralcontractsasthesubjectofthisinterferenceclaim,including the M -lTrade SecretA m eem entand CovenantN otto Com pete,M -IEm ployee lnvention and Confidential Inform ation Av eem ent, GCS and SPS Confidentiality Av eem ents, and/orat-willemplom entagreements. (Doc.No.355,!59.) 'I'heCourttindsthatthe firstelem entissatisfied. N ext,as to a show ing of willful and intentionalinterference,M -I pleads,IûW ES and itsagents,including Knobloch and Squyres,knew orhad reason to know ofthose of gtheqcontracts,specifically the employmentagreementl,)and Trade SecretAceement and CovenantNotto Com pete,because Squyres and other W ES agents had essentially thesameaveementswith M-landW ES.''(Doc.No.355,!(60.) M -lallegesfurtherthat anumberofitsemployeesleftM -ItojoinW ES.(f#.!r !24-28.) Finally,M -Ialleges: On M arch 3, 2009, Knobloch induced Stelly to breach his em ployee agreem entwith M -I. Before he quit,Stelly told W ES and Knobloch that Stelly had a noncompete ap eem ent with M -l. W ES and Knobloch willfully disregarded that M -l contractjust as it had disregarded the previously raided em ployees'contracts w ith M -land as ithas continued to disregard them . (1d.!(27.) M-Iprovidesenough factualallegationsto supportthe second elementofits tortiousinterference claim . Third,in order to prove proxim ate dam age,M -lhas pled that ççKnobloch and W ES induced each of aforem entioned em ployees and possibly others to quit M -l for increased com pensation and/or otherbenefits or a totalincreased em ploym entpackage.'' (Doc.No.355,lr28.) Finally,M -1pleadsactualdamagein theform oflostemployees and the costofretraining new em ployees. A ccordingly,the Courtfinds thatM -lhas alleged and provided factualsupportfor each elem entofitstortiousinterferencewith employm entcontractsclaim ,thereby stating aplausibleclaim forrelief Iqbal,556 129 S.Ct.at1949.The CourtdeniesDefendants' m otion to dism isson thisclaim . 6. The rem aining argum ents Defendants do not provide specific argum ents for dism issal of each of the rem aining claim s,butinstead aver generally thatçithe rem aining 10 claim s are no m ore than conclusions,which are notentitled to the assumption oftnzth and are unsupported by factualallegations.'' (Doc.No.91,! 19.) Defendantsthen lista seriesofarguments aimed atvariouscausesofaction.TheCourtconsiderseach argum entin turn; a. T exas TheftLiability Act D efendants argue that there are no allegations in support of an unlaw ful appropriationoftradesecretsunderTexasPenalCodej31.05,which isrequiredinorder to supportM -l's Texas TheftLiability A ct claim . Section 31.05 provides that a person comm its an offense if,withoutthe owner's consent,he knowingly steals a trade secret, makes a copy ofan article representing a trade secret,or com municates ortransm its a trade secret. TEX.PENAL CODE ANN.j31.05 (Vernon 2003). As stated above,M -I allegesthat,in the days before Stelly notified M -l he was quitting,he transferred files onto an externalmemory device.(Doc.No.355,! 15.) TheCourtfindsthatthisfactual allegation is sufficient to supporta claim of theh of trade secrets underthe Texas Penal Code,w hich in turn supportsM -l's Texas TheftLiability A ctclaim . The Courtoverrules Defendants'objectionsonthispoint. b. Unfair com petition CountTen allegesunfaircom petition bym isappropriation againsta11Defendants. Defendants insistthatthere are no facts in supportofunfair competition. Specitically, Defendants aver thatGlthe com plaintis silent on factsto show the creation of M -l'strade secretinfonnation through extensive time,labor,skilland m oney,thatDefendantsused M -l'stradesecretsincompetitionwithM -1orcommercialdamagewith M -l.''(Doc.No. 91,! 19.) In order to show unfair com petition by misappropriation, a plaintiff m ust establish:(1)the creation by plaintiffofaproducttluoug,h extensive time,labor,skill, andmoney;(2)theuseofthatproductbydefendantincompetitionwithplaintiftlthereby givingthedefendanta specialcom petitive advantagebecausehew asburdened with little or none of the expense incurred by plaintiffin the creation of the product;and (3) commercialdam age to plaintiff Cable Elecs.,Inc.v.N Am.Cable Equip.,Inc.,2010 W L 1541504,at*3 (N.D.Tex.2010)(citingAlcatelUSA,Inc.v.DGITechs.,166 F.3d 772,788(5th Cir.1999)). M -lemphasizesitseffortsin creating wellborecleanoutproductsin severalplaces in the com plaint. For example,M -1 avers,iûM -Ispentconsiderable am ounts to create information (including tool drawings, designs, sales forecasts, tool research and development,marketstrategies,etc.j Thisinformation isM -l'sinstimtionalknowledge and history ofits wellbore cleanouttoolbusiness. Itis the productof many years of experienceadozensofskilled employees'labor,and millionsofdollarsspentin research, testingand application.''(Doc.No.355,!(12.) W ith infonnation thatM -Iacquired inits asset purchase ap eement with SPS/GCS, M -l states, 'ûSPS/GCS spent considerable amounts of tim e and m oney to create this inform ation and develop it. M -l spent a substantialamountofm oney to obtain therightsto thisinformation. Thisinform ation is SPS/GCS'S and M -l's institutional know ledge and history of its w ellbore cleanout tool business. It is the product of m any years of experience,dozens of skilled em ployees' labor,andmillionsofdollarsspent.''(1d.! 19.) W ithrespecttoM -l'stooldesigns,M -l pleads,tûM -lspentconsiderable amountsoftim eand money to research and develop this information and keep it secret. M -l em ploys engineers and designers to research and develop these tool designs. These desir ers and engineers take years to research and develop a tool,and ittakessubstantialadditionaltim eand m oney to testand m arketthese tools.'' (1d.!22.) The Courtfinds thatthese averments are sufticientto plead the elem ent of expended tim e,labor,skill,and money. Though M -l's allegations are not pm icularly detailed atthispoint,the Fifth Circuithas instructed thatthey need notbe. W hatmatters,instead,isthatM -lsets forth facts thatiçlraise a rightto reliefabove the speculative1eve1.''' Cuvillier,503 F.3d 397,401 (5th Cir.2007)(citing Twombly,550 U.S.at555).TheCourtconcludesthat,astothiselement,M -lhasdoneso. Sim ilarly,the CourtfindsthatM -lhaspled thatW ES isusing M -l'stradesecrets in competition with M -1,and thatM -Ihassuffered comm ercialdamage. M -Ihas listed twelveW ES toolsthatitclaimsarebeing used in competition with itsown tools. (Doc. No.355,521.) Further,ithas alleged thatithas lostatleast one project,the BP ThunderHorsewell,resulting in commercialdamage. (f#.!j29.) TheCourtfindsthat, through itsallegations,M -lhassetforth a plausible basisforrecovery undera theory of unfaircompetition bymisappropriation. TheCourtoverrulesDefendants'objectionson thispoint. c. C om puter fraud and abuse Count Eleven alleges violations under the Com puter Fraud and Abuse Act (::CFAA''), 18 U.S.C. j 1030. The CFAA prohibits, among other conduct, the unauthorized accessto a tlûprotected com puter'forthepum osesofobtaining infonnation, causing damage,orpem etrating fraud.'' Quantlab Techs.Ltd.(BVI) v.Godlevsky,--F.Supp.2d ---,2010 W L 2593669,at*5 (S.D.Tex.June 23,2010). A Slprotected com puter''is a tûcom puter ...w hich isused in oraffecting interstate orforeir com m erce orcommunication.'' 18U.S.C.j 1030(e)(2)(B). In itscom plaint,M -lhastwo passagesthatrelatetothisdaim . First,M -Iallegesthat: Stelly colmected external m em ory devices to his M -l laptop and transferred files to these devices from the laptop. . . . In addition, on M arch 8,2009,Stelly began downloading M -ltlles on to his M -Ilaptop imm ediately after ending a cell phone conversation with Knobloch. Sim ilarly, on M arch 6, 2009, Stelly called K nobloch m inutes before he plugged in an externalm em ory deviceto hislaptop. (Doc.No.355,! 15.) Second,M -1asserts: Defendantsknowingly and with intentto defraud,accessed and used the computerts) assir ed to by M -I,withoutauthorization orin a manger exceeding any authorization they m ay claim that they had. By m eans of such conduct,D efendants furthered the intended fraud. M -1believes that, because of Stelly's activities in M arch 2009, Defendants used M -l's com puter to m isappropriate, use, and share M -l's trade secrets and proprietary Confidentiallnform ation withoutauthorization. (1d.!f!80-81-) The CFAA is a crim inal statute, but civil actions are authorized for som e violations ofits substantive provisions. Fiber s' ys'.Int'l,Inc.v.Roehrs,470 F.3d 1150, 1156(5th Cir.2006).Section 1030(g)provides: Any person who suffers dam age orlossby reason ofa violation ofthis section m ay m aintain a civil action against the violator to obtain compensatory damages and injunctiverelieforotherequitablerelietl A civil action for a violation of this section m ay be brought only if the 20 conductinvolves1ofthefactorssetforthin subclauses(1),(11),(111),(IV), or(V)ofsubsection(c)(4)(A)(i). Theonlysubclausepotentially applicablehereissubclause(1),whichcoversttlossto 1or more persons during any l-year period ...aggregating atleast$5,000 in value.''4 18 U.S.C.j1030(c)(4)(A)(i)(1).TheCFAA definesttloss''asfollows: (T)heterm çsloss''meansanyreasonablecostto any victim,including the costof responding to an offense,conducting a dnm age assessm ent,and restoring thedata,pror am,system ,orinform ation toitscondition priorto the offense,and any revenue lost,cost incurred,or other consequential damagesincurred because ofintem zption ofservice. 18 U.S.C.j 1030(e)(11). GûDamage''isdefined asilany impairmentto theintegrity or availabilityofdata,apropam,asystem,orinformation.''Id.j1030(e)(8). The Courtfinds thatM -lfails to plead loss as itis defined in the CCPA . They have notalleged thatany lossm eetsthe statutory monetary sum of$5,000. In addition, case law has consistently intem reted the loss provision to encom pass only the costs incurred as a resultofinvestigating orrem edying dam age to a com puter,orcosts incurred because the com puter's service was intem zpted. See,e.g.,Nexans I 'Krc. ç S.A.v.Sark- USA,Inc.,319 F.Supp.2d 468,475 (S.D.N.Y.2004),affd,166 F.App'x 559,562-62 (2d Cir.2006). M -Isimply allegesdamageststo itsbusinessin the form oflostprofits, lossofcustomersand lossoffuturebusinessopportunities.''(Doc.No.355,! 82.) M-I asserts no dam ages whatsoever relating to their investigation of com puter dam age,or costsincurred because any com puterservice w as intenupted. ln sum ,M -l's CCPA claim failsbecause M -Idoes notallege any facts show ing at least$5,000 ofloss,or any lossas a resultof investigation orintem zption ofcomputer service. M -l'scurrentCCPA pleadingsthusnm afoulofRule 12(b)(6)requirements, 4Theotherfactorsinvolvem edicalcare, physi calinjury,publichealthandsafety,anddamageaffectinga governmentcomputer,noneofwhichareallegedhere.See18U.S.C.j 1030(c)(4)(A)(i)(II)-(V). 21 because they do not put forth facts that allow the Court to m ake an inference that Defendants are liable for any misconductunder the CCPA . Iqbal, 129 S.Ct.at 1949 (quoting Twombly,550 U.S.at570). The CourtaffordsM -Ione opportunity to replead thisclaim . 111. M O TIO N FO R SU M M A RY JU D G M EN T Defendants Knobloch and W ES move for partial summary judgment on two grounds. First,they argue that M -l's tort claim s based on wrongful copying of tool designs are preempted by federalcopyright law. Second,they argue thatKnobloch's covenants notto compete are unenforceable as a matter of law. (Defs.Benton T. Knobloch & W ellboreEnergy Solutions,LLC'S M ot.forPartialSumm .J.asa M atterof Law,Doc.No.181,at1.) A . LegalStandard A motion for summary judm entunderFederal Rule of CivilProcedure 56 requiresthe Courtto determine whetherthe moving party isentitled to judgmentasa matter of law based on the evidence thus far presented. See FED.R.CIV.P.56(c). Summary judpnentisproperttifthe pleadings,depositions,answersto interrogatories, and adm issionson file,togetherwith the affidavits,ifany,show thatthere isno genuine issueasto anymaterialfactand thatthemovingpartyisentitledtojudgmentasamatter oflaw.''Keev.City ofRowlett,247 F.3d206,210 (5th Cir.2001)(quotationsomitted). A genuine issue ofmaterialfactexistsifareasonablejury could enteraverdictforthe non-moving party. Crawford v.Formosa Plastics Corp.,234 F.3d 899,902 (5th Cir. 2000). ThisCourtmustview a11evidencein thelightmostfavorableto thenon-moving party and draw a11reasonable inferences in thatparty's favor. The Courtm ay not make credibility determ inations orweigh the evidence. Reeves v.Sanderson Plumbing Prods.,Inc.,530 U.S.133,l50 (2000). (t' l'hecourtshould givecredencetotheevidence favoring the nonm ovant as w ell as that ûevidence supporting the m oving party that is uncontradicted and unimpeached,at leastto the extentthatthat evidence com es from disinterested w itnesses.''' 1d. at 151. H earsay,conclusory allegations,unsubstantiated assertions,and unsupported speculation arenotcompetentsummaryjudgmentevidence. FED.R.CIV.P.56(e)(1);seealsoLittlev.LiquidAirCorp.,37F.3d 1069,1075(5th Cir. 1994)(notingthatanon-movant'sburdenisûtnotsatisfiedwith tsomemetaphysicaldoubt astothematerialfacts''')(citingM atsushita Elec.Indus.Co.v.ZenithRadio Corp.,475 U.S.574,586(1986)). B . A nalysis 1. C opyrightpreem ption Knobloch and W ES m ove to dism iss ûtM -l's tort claim s based on wrongful copying oftooldesignsbecausethe claim sarepreempted''by theU.S.CopyrightAct,17 U.S.C.jj 101-1332.(Doc.No.181,!j7.) W hetherafederalstatutepreemptsstate1aw is a question of1aw forthisCourt. Franka Inv.Co.v.Union Pac.R.R.Co.,593 F.3d 404, 407 (5th Cir.2010)(citingFriberg v.Kan.fR/y S.Ry.Co.,267 F.3d 439,442 (5th Cir. 2001)). Section 301(a)ofthe CopyrightActStaccomplishesthegeneralfederalpolicyof creating a unifonn m ethod for protecting and enforcing certain rights in intellectual property by preem pting other claim s.'' Daboub v.Gibbons,42 F. 3d 285,288 (5th Cir. 1995).Itprovides: On and aher January 1, 1978, a1l legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in w orks of authorship thatare fixed in atangiblemedium ofexpression and comewithin thesubjectmatterof copyright as specified by sections 102 and 103,whether created before or aAer that date and whether published or unpublished, are governed exclusivelyby thistitle. Thereafter,no person isentitled to any such right orequivalentrightin any such work underthe comm on 1aw orstatutesof any State. 17 U.S.C.j301(a). The Fifth Circuithas established a two-parttest to determine whether a state law claim is preem pted. First, the cause of action is ûtexnm ined to determinewhetheritfallstwithinthesubjectmatterofcopyright.'''Daboub,42 F.3d at 289. Second,the cause of action is ttexmnined to detennine if itprotects rights that are ûequivalent'to any ofthe exclusive rights ofa federalcopyright,as provided in 17 U .S.C . j106.55 f#.(citationsomitted). Section 106,foritspart,grantstheûtexclusive rightto reproduce,distribute,perform, and display the copyrighted work''to the holder of a copyright.f#. The frststep requiresthe Courtto determine whetherthe claim fallswithin the subjectmatterofcopyright.Knobloch andW ESarguethatthiscase'stlimplicationofthe copyright laws relates to the drawings,desir s,technical m anuals,specifications and plansofM-l'stoolswhich M -Iallegesitownsand Defendantscopied.'' (Doc.No.181, ! 12.) They urgethatthoseitemsfallwithin the subjectmatterofcopyright. M -1does notdispute thatitstooldrawingsand otherm aterialare copyrightable,butinstead argues thatthe claim sin thissuitare based on élreplicating toolsusing tradesecretinformation, notcopyingcopyright-protected drawings.'' (P1.M -lLLC'SRequestforRelief& Resp. to D efs.Benton K nobloch & W ellbore Energy Solutions,LLC'S M ot.for PartialSum m . as a M atter of Law,Doc.No.195,!(7)(emphasis in original). Focusing on tool 24 copying rather than tool draw ing copying is im portant, M -I argues,because tools are usefularticlesthatdonotqualifyforcopyrightprotection undertheCopyrightAct. N either party, however, disputes the other's argum ent regarding what is copyrightablem atter. Thatis,M -Idoesnotdispute thatitsdrawings,desir s,technical manuals,specifications,and plansfallunderthesubjectmatterofcopyright. TheCourt agrees. Section 102 oftheCopyrightActextendscopyrightprotection to 4toriginalworks ofauthorship fixed in any tangiblemedium ofexpression,now known orlaterdeveloped, from which they can be perceived, reproduced, or otherwise com municated, either directly orwith the aid ofa m achine ordevice.'' ltthen providesa listofcategoriesof works ofauthorship thatincludes tipictorial,graphic,and sculpturalworks.'' 17 U.S.C. j102.Section 101,inturn,definesatçpictorial,graphic,and sculpturalwork''to include tltwo-dim ensional and tllree-dimensional works of fine, paphic, and applied art, photov aphs,prints and art reproductions,m aps,globes,charts, diap am s, m odels,and technical drawings, including architecmral plans.'' Several courts have found that technicaldrawingsand desir s fallwithin thesubjectmatterofcopyright. Taquino v. TeledyneM onarchRubber,893F.2d 1488,1490,1501(5th Cir.1990)(affirmingopinion thattreats engineering drawings as within the subjectmatter ofcopyright);Seiler v. Lucashlm,Ltd.,808F.2d 1316,1320 (9th Cir.1986)(notingthatbluepdnts,engineedng drawings,and architecturaldesignsarea11capable ofcopyright);Jedson Eng' g,Inc.v. SpiritConstr.Senw,Inc,2010W L 2541619,at*1-8 (S.D.OhioJune18,2010)(treating draw ings of tissue m anufacturing plant design and construction as copyrightable material);Guillot-vogtAssocs.,Inc.v.Holly (f Smith,848 F.Supp.682,686 (E.D.La. 1994) (noting thatboth architecturaland engineering drawings fallwithin the subject 25 matterofcopyright)(quotingSchuchart& Assocs.v.Solos' czw Cor#.,540F.Supp.928, 943 (W .D.Tex.1982)). M -l'stooldesir s,drawings,and specificationsfallwithin the subjectmatterofcopyright. Sim ilarly,Knobloch and W ES do notdispute thatthe tools them selves do not qualify for copyrightprotection. The definition ofa pictorial,graphic,or sculpturalw ork undertheCopyrightActissubjecttoalluseftzlarticle''exception' . (Tlhe desir of a useful article, as defined in this section, shall be consideredapictorial,graphic,orsculpturalwork onlyitland only to the extent that, such design incorporates pictorial, F aphic, or sculptural featuresthatcan beidentified separately from ,and arecapable ofexisting independentlyof,theutilitarian aspectsofthe article. 17U.S.C.j 101. A ûtusefularticle''isûtan articlehaving anintrinsicutilitarian function thatisnotm erely to portray the appearance ofthe article orto convey inform ation.'' 1d. M -Iasserts,and Knobloch and W ES do notdispute,thatthe tools in question are useful articleswhose aesthetic elem ents,ifany,cannotbe identified separately from ,and exist independently of,theutilitarian aspectsofthetool. Giventhatthepartiesagreethatthedrawingsofthetoolsaresubjecttocopyright, butthetoolsthem selvesare not,thequestion forthisCourtto decide iswhetherthe claim in question concerns the drawings or tools. After a review of the Second Amended Complaint(Doc.No.355),thelivepleading inthiscase,theCourtconcludesthatM -l's claim srelate to tooldrawings and sim ilarinfonnation,and thus fallwithin the scope of copyright. In the relevantcounts,M -1focuses on the theû of tooldrawings and other inform ation. M -l asserts,for example,that Knobloch, Stelly,and Squyres ttreceived access to M -l's tooldesir and technology,and draw ings and specifications,especially theSPS and GCS toolswhich wereacquired by M -lin200659(Doc.No.355,!(47);that 26 1çM -l's tool desir s and technology are proprietary information used by M -I in its business''(id.!(49);thatir efendantshave unlawfully obtained,used,and taken M-l's Confidentiallnformation in violation ofapeementsand Texaslaw''(1* #.!(69);and that çtD efendants have taken and/or used,w ithoutperm ission,inform ation and otherproperty from M -1''(id.!84).Takenasawhole,themavamenofM -l'scomplaintfocusesalmost exclusively on Stelly,Squyres,and Knobloch's alleged theftoftooldrawings,designs, and otherconfidentialinformation from W ES. The Courtfindsthattheclaim sfallunder thesubjectmatterofcopyright.Thetirstprongofthetestismet. Next,the Courtm ustconsiderwhetherthe claim protectsrightsequivalentto any ofthe exclusive rightsofafederalcopyright. A state1aw claim protectsrightsequivalent to federalcopyrightclaim where the core of the state 1aw theory ofrecovery speaks to wrongful copying. Daboub v. Gibbons,42 F.3d 285,289 (5th Cir. 1995). This examination requires a tteomparison ofthe nature ofthe rights protected under federal copyright1aw with the nature ofthe state rights''asserted by a claim ant. AlcatelUSA, Inc.v.DG1Techs.,Inc,166F.3d772,787(5thCir.1999). ltthesetwosetsofrightsare ûtdetermined to be çequivalent,'then the state 1aw cause ofaction ispreem pted.'' Id. A state-law created rightis equivalentto copyrightlawsétéifthe mere actofreproduction, distribution,ordisplay infringesit.'''RecursionSoftwareInc.v.InteractiveIntelligence, Inc,425F.Supp.2d756,764(N.D.Tex.2006). TheFilh Circuitttevaluatelsqtheequivalency ofrightsunderwhatiscommonly referred to as the textra elem ent'test.'' A lcatel, 166 F.3d at 772. U nder this test,ifthe actsofDefendantsaboutwhich M -lcomplainswould violate both thestate 1aw cause of action and copyrightlaw ,then the state rightisconsidered equivalentto copyright. Id. 27 ltlflhowever,oneormorequalitatively differentelementsarerequired to constitutethe state-created cause of action being asserted,then the right r anted under state 1aw does not1ie iwithin the generalscope ofcopyright,'and preem ption doesnotoccur.''Id. W ES and Knobloch assertthatM -l'sstatetortclaim sare equivalentto copyright claim s. The claim s include com mon 1aw m isappropriation of trade secrets,tortious interference w ith M -l's custom er contracts, tortious interference w ith prospective business relations, tortious interference with M -l's employm ent contract, breach of tiduciary duty,violationsoftheTexasTheû Liability Act,conspiracy,unfaircom petition bym isappropriation,and conversion. W ES and Knobloch argue thatthe ûlcore theory''of M -l's state 1aw tortclaim s is that Defendants wrongfully copied M -l's tool designs through its drawings,desir s, teclmicalm anuals,specifications,and plans. Knobloch and W ES assertthat M -I has stated throughoutthiscase,including in answersto interrogatoriesand in hearingsbefore the Court,thatW ES has copied its engineering drawings,specifications,and technical units. M -l argues that its state tort claim s are not equivalentto copyright law claim s, because each cause of action ûûrequires at least one additional elem ent not found in copyrightlaw.'' (Doc.No.195,! 10.) Specifcally,M -lassertsthatitsclaimsoftrade secretsandteclmologymisappropriationincludestheadditionalelementsof(a)useofM l's trade secrets to create competing tools,(b) in directviolation oftheircontractual obligations and fiduciary duty to M -I. M -l believes that its allegations that certain defendantsdownloaded contidentialinformation and took itto anew com pany is simply aprologueto itsm ain allegation ofthe Defendants'wrongfuluse ofthe misappropriated docum ents. Knobloch and W ES counter that M -I has drawn a distinction without a 28 difference, arguing that to çsmake a tool from a desir is to reproduce the design,'' becausethedesir itselfmustbecopiedin orderto beused. (Defs.BentonT.Knobloch & W ellbore Energy Solutions,LLC'S Reply to P1.M -lLLC'SResp.to Defs.'M ot.for PartialSumm.J.asaM atterofLaw,Doc.No.211,!J4.) The Courtdoesnotbelievethatthe elem entofuse ofthecopyrighted drawingsto make tools constitutes qualitatively differentbehavior from the elements foran action under copyright law. M -1 cites G.S.Rasmussen tfrAssociates lnc. v. Kalitta Flying Senice in supportofits argum ent. ln thatcase,the plaintiffhad obtained a certificate from the governm entto show theailw orthinessofhisaircrah design. He lateroffered to license it to defendant so they could use the same design for their own aircrah. Defendantdeclined to licensethecertificate from plaintif: and instead copied plaintiffs flightmanualand used itto obtain itsown ailw orthiness certificate. Plaintiffthen sued defendantforconversionandunjustenrichment,anddefendantarguedthatcopyright1aw preem pted these state claim s. The courtdisagreed,stating' . W ere gplaintifq claiming an exclusive right to copy the manual,the drawings and plansorthe gcertificate)itself,hisclaim would surely be preempted by the Copyright Act. (Plaintiffj claims a much different interest,however:Therightto usethe(certificate)asabasisforobtaining an airworthinesscertificate foran airplane thatism odified in a particular way. (Plaintiffl thus complains not aboutthe actual copying of the docum entss but of their use as a shortcut in obtaining a valuable governm entprivilege- the lightto m odify an airplane in a particularw ay withoutgoing to the trouble and expense ofproving thatthe modification m eetsFAA standards. 958 F.2d 896,904 (9th Cir.1992). Theplaintiffin thatcasewasnotcomplaining about the actual copying of its draw ings,but instead an unlikely use of that copied m aterial: obtaining a valuable govelmm entprivilege. The Courttinds the case inapposite to the factspresented here. ln the instantcase,dow nloading the draw ings alone does constitute 29 the m isappropriation,because M -l ow ns the exclusive rights to its technical draw ings. TheCourtbelievesthatthiscaseismuch closerto Gemcra? Homes,discussed above, than Rasmussen. There,the defendants stole architecturalplans,which fallwithin the subjectmatterofcopyright,and used them to makeabuilding,which thecourtfoundto be uncopyrightable. Despite the factthatthe plaintiffalso alleged use ofthe plans,the courtfound thatplaintiffhad framed its state claims so thatthe m ere actofcopying the plansconstituted the violation. 688 F.Supp.at295. The Courtbelieves M -Ihas done the sam e thing here. D efendants alleged downloading,copying,or transferring of work filesconstitutesunauthorized copying,and thusfallsunderfederalcopyrightlaws. M any othercasesthathave found federalcopyrightpreemption did so in the contextofuse of the products. In othercases,both the copying and the useoftheproductwere bound up in the very sam e act- forexample,recording and releasing a non-originalsong without authorization. See,e.g.,Daboub v.Gibbons,42 F.3d 285,287 (5th Cir.1995). The Court is not convinced that W ES'S alleged use of M -l's tool drawings supplies a qualitatively differentelem entundertheFihh Circuit'sextra elem enttest. Based on itsreview ofthe case 1aw discussing federalcopyrightpreem ption,the Courtconcludes thatsom e ofM -l'sstate tortclaim s are equivalentto federalcopyright legalrights,and are therefore atleastpartially preem pted. A tleastsom e ofthe claim s,at their core,allege thatDefendantscopied and used tooldesir s,technologies,drawings, and specifications. The Courtbelievesthatthetortelem entsforsom eofM -l'sclaim sdo not include qualitatively different elem ents than the elem ents for an action under the CopyrightAct. Thenarrative thatM -1hasinvariably constructed forthisCourtrecounts the story ofM -l's former employees downloading and taking with them tooldrawings, 30 which W ES then used to create,manufacture,and selltools. lndeed,the overarching them e of the allegations contained in the com plaint is one of the theft of M -l's tool drawings. In thatw ay,this case is sim ilar to Gem cra.p Homesv.Sumurdy. In thatcase,the court analyzed a similar preemption question and determined that copyright 1aw preem pted plaintiffs conversion and tortious interference claim s. There, two of the plaintiffsem ployees leR theiremploym entassales counselors to starta new company. They had previously entered into em ploym entagreem ents with the employer,prom ising that they would not take or use plaintiff s documents. Plaintiff sued its former employees,accusing them ofstealing,copying,andplagiarizing building plans,andusing them tobuildttçidenticallyvirtual'''floorplans.688F.Supp.289,291(E.D.Tex.1988). The court found that plaintiffs conversion claim was preem pted by copyright law, because as plaintiff had fram ed its conversion claim , the m ere act of copying the architecmralplanswould infringethestate1aw right.1d.at295.Asto plaintiffstortious interference claim ,the courtfound itpreempted to the extentthatthe claim com plained that plaintiff had lllost benefits flowing from its exclusive rights to the architectural plans-''Id. TheCourtfindsinstructiveGemcra? Homes'factsandreasoning. Given thatthe basisofliability form any ofM -l'sstate tortclaim sis the theh ofitstrade drawings,and littleelse,the Courtfindsthem tobepreem pted. The Courtnow turnsto M -l'sindividual tortclaim sto determ ine whetherthe rightstherein are equivalentto,and thuspreem pted by,federalcopyrightlaw . a. C om m on law m isappropriation oftrade secrets 31 Count3 of the Second A m ended Com plaintaccuses K nobloch,W ES,Stelly,and Squyres of comm on 1aw misappropriation of trade secrets. çl'ro prevail on a misappropriation claim underTexaslaw,ça plaintiffmustshow that(1) atrade secret existed,(2)thetrade secretwasacquired through abreach ofaconfidentialrelationship ordiscovered by impropermeans,and (3)the defendantused the trade secretwithout authorization from theplaintiff.'''CQ,Inc.v.TXU M ining Co.,565F.3d 268,273 (5th Cir.2009)(quoting Gaia Techs.lnc.v.Recycled Prods.Corp.,175 F.3d 365,376 (5th Cir.1999:. By contrast,to establish a claim forcopyrightinfringement,çûûa plaintiff mustprovethat:(1)heownsa valid copyrightand (2)thedefendantcopied constituent elem entsofthe plaintiffswork thatare original.''' Amazing Spaces,Inc.v.M etro M ini Storage,680 F.3d 225,251 (5th Cir.2010)(quoting PositiveBlack Talk Inc.v.Cash MoneyRecordsInc.,394 F.3d357,367 (5thCir.2004)). Texas's m isappropriation claim is typical of trade secrets claim s nationwide, which tçloften are v ounded upon a defendant'sbreach ofduty oftrustorconfdence to the plaintiffthrough improperdisclosure ofconfidentialm aterial.''' Stromback v.New LineCinema,384 F.3d283,303(6th Cir.2004)(quoting ComputerAssocs.Int1v.Altai, Inc., 982 F.2d 693,717 (2d Cir. 1992)). M-I has properly pled the breach of a confidentialrelationship orimproperdiscovery. (See Doc.No.355,!43 (ç$Ste1ly and Squyres had a confidential relationship with M -lwhich gave rise to certain fiduciary obligations.'l;id.!24 (noting thatKnobloch maintained a Contidentiality Agreement with SPS/GCSI.) The Courtconcludes thatthe additionalelem entin trade secretm isappropriation, which requires either a breach of contidentialrelationship or discovely by im proper m eans,liregulates conductqualitatively differentfrom thatregulated by federalcopyright law.'' DSC Commc'ns Corp.v.Pulse Commc' ns,Inc.,170 F.3d 1354,1365 (4th Cir. 1999). TheCourtisguided tothisconclusion by Fifth Circuitcase law,aswellasitsown prior decisions. In Computer M anagementAssistance Co. v.RobertF.D ecastro,Inc., the plaintifffiled suit againstdefendants,alleging copyright infringement,trade secret misappropriation, unfair and deceptive trade practices and breach of contract. Defendants alleged that the unfair trade practices claim was preem pted by federal copyright law. The FiAh Circuit dism issed the defendants' argum ent,holding that, ûtgbjecause a cause ofaction underthe Louisiana UnfairTrade PracticesActrequires proof of fraud, m isrepresentation or other unethical conduct, w e find that the relief it provides is not tequivalent'to thatprovided in the CopyrightActand,thus,it is not preempted.'' 220 F.3d396,404-05 (5th Cir.2000).Theelementin questionhereisnot fraud or m isrepresentation,but instead the breach of a confidentialrelationship. The Courttinds,nonetheless,thatbreach ofa conidentialrelationship providesthe sam ekind ofadditionalelem entas fraud ormisrepresentation. Both elements introduce a layerof unfair competitive conductthatis qualitatively different from the simple unauthorized copying addressed by federal copyright law. See 1 M ELVILLE B.N IMMER & DAVID NIMMER, NIMMER ON COPYRIGHT j 1.01(Bq(11gh) CtActions for disclosure and exploitation oftrade secretsrequire a statusofsecrecy,notrequired for copyright,and hence,arenotpreempted.'') This Court's own precedent also establishes that the breach of a confidential relationship provides the necessary additional elem ent that m akes a state tort claim qualitatively different from a federal copyright claim . See, e.g.,Baisden v.1'm Ready Prod.,Inc,2008 W L 2118170,at*9 (S.D.Tex.M ay 16,2008)CW lthough plaintiff argues that his unfair competition claim seeks to vindicate gdefendants'q unlawful attempts to obtain access and derive profits from his currentand prospective business relationships,he has neither alleged in his complaint that(defendants) breached a confidentialrelationship or othem ise engaged in fraudulentor unethicalconduct,nor argued that proof of his state 1aw claim for unfair competition requires proof of an additionalelementnotrequired to provehis federalcopyrightc1aim.''), 'Keane v.Fox Television Stations,Inc,297 F.Supp.2d 921,945 (S.D.Tex.2004) (11The way that gplaintifq claimsto havedisseminated hisidea defeatshisabilityto circumventfederal copyright preemption because he cannot establish that his idea was conveyed in confidenceaspartofacommercialrelationship ....'').Courtsnationwidehavereached the sam e conclusion. See,e.g.,Stromback v.New Line Cinema,384 F.3d 283,303-04 (6th Cir. 2004) (noting that 1$a considerable number of cases have held that m isappropriation oftrade secrets claims are notpreem pted because they require proofof a confidential relationship, which provides the extra element required to survive preemption,''and holding the same);Dun & BradstreetSoftware Servs.,Inc.v.Grace Consulting,Inc.,307 F.3d 197,218 (3d Cir.2002)(1t(l)fan employeeof(plaintiftlwho, by virtueofa confidentialposition,had accessto thesourcecode,m isappropriated it,and used it to prom ote his ow n interests,such breach of confidentiality w ould be the extra elem entto a copyrightinfringem entclaim . The claim ,therefore,w ould notbe preem pted by the act.'')(citationsomitted);Bateman v.Mnemonics,Inc,79 F.3d 1532,1549 (11th Cir.1996)(%$Asageneralmatter,state1aw tradesecretstatueshavebeen deemed notto be preem pted because the plaintiffm ustprove the existence and breach ofa contidential relationship in orderto prevail....W ehaveno doubtthattheFloridatrade secretstatute at issue satisfies the textra elem ent' test generally employed by courts in perfonning copyrightpreemption analysis.''l;Data Gen.Corp.v.GrummanSystemsSupportCorp., 36 F.3d 1147,1165 (1stCir.1994)(ltl-frade secrets)claimsarenotpreempted because participation in thebreach ofaduty ofconfidentiality- an elem entthatformsno partofa copyright infringement claim- represents unfair competitive conduct qualitatively different from mere unauthorized copying.''),abrogated on other grounds by Reed Elsevier,Inc.v.Muchnick, ---U.S.---,130 S.Ct.1237(2010), *TrandesCorp.v.GuyF. Atldnson,996F.2d655,660(4th Cir.1993)(t:ltistheemploymentofimpropermeansto procure the trade secret, rather than the mere copying or use,which is the basis of gliability)....Because(plaintiffs)clam fortradesecretmisappropriationrequiresproof ofabreach oftrustorconfidence,gcopyrightlawjdoesnotpreemptthec1aim.'');Gates Rubber Co.v.Bando Chem.Indus.,Ltd.,9 F.3d 823,848 (10th Cir.1993)(tiBecause gplaintiffsjclaim fortrade secretmisappropriation underthe Colorado Uniform Trade Secrets Actrequiresproofofabreach oftrustorconfidence- proofthatisnotrequired under the CopyrightAct- lplaintiffs) state 1aw claims are notpreempted by federal law.'');ComputerAssocs.1nt'l,Inc.v.Altai,Inc.,982F.2d693,717(2dCir.1992)(tThe defendant'sbreach ofduty is the gravam en of...trade secretclaim s,and suppliesthe ttextra elem ent''that qualitatively distinguishes such trade secret causes of action from claimsforcopyrightinfringementthatare based solely upon copying.''l;S.O.S.,Inc.v. Payday,886 F.2d 1081,1090 n.13 (9th Cir.1989)(çlsincetheCalifomia gtradesecrets) statute pleaded in this case does notinvolve a legalor equitable rightequivalentto an 35 exclusive rightof a copyrightow ner under the CopyrightA ct,but only prohibits certain m eans ofobtaining confidentialinform ation,its application here w ould notconflictw ith federalcopyright1aw.'')(citationsomitted). W ES and Knobloch'scitations to the contrary do notsway this Court's opinion. First,W ES and Knobloch do notanalyze each state tol4 claim elem entby element,but instead aver generally that the ûicore theory'' of all of M -l's state tort claim s is that Defendants comm itted wrongful copying. Defendants fail to proffer any argum ent regarding the confidentialrelationship elem ent discussed above. Second,Defendants' citations to case 1aw refer the Court to cases that either do not actually decide the questionofpreemption ofatradesecretsclaim,see UltrafoCorp.v.Pelican TankParts, Inc.,2008 W L 5141029,at *5 (S.D.Tex.Dec.8,2008) (noting that çûgdlefendants presumably could have made argum ents for complete preemption under the Copyright Act,''but concluding that llgwqhether those arguments would have been persuasive ...need ...notbe decided,''because defendants failed to remove the case properly to federalcourt),do notconsidertrade secretsclaims,Daboub v.Gibbons,42 F.3d 285,289 (5th Cir.1995),or,the Courtrespedfully submits,failto undertakethe proper inquiry in their equivalency analysis,Butler v.ContinentalAirlines,31 S.W .3d 642,651(Tex.App. Houston (1stDist.)2000,pet.denied);M icrosource v.Superior Signs,Inc.,1998W L 119537,at*2@ .D .Tex.M ar.9,1998).5 5Both ButlerandM icrosource focuson theconductalleged to supporta misappropriation oftrade secrets claim,ratherthantheelementsrequiredtoprovetheclaim.However,ûtgtlodetenninewhetheraparticular causeofaction involvesrightsequivalenttothosesetforthin(Sectionj106,theelementsofthecausesof action should be compared,notthe factspled to prove them.'' Trandes Corp.v.Guy F.Atkinson Co.,996 F.2d 655,659 (4th Cir.1996). W herethetûstate 1aw claim itselffurnishesthe extraelementneeded to avoid equivalency,acourtshould comparetheelementsofthestateclaim and copyrightclaim.Stromback v.NewLine Cinema,384F.3d 283,304 (6th Cir.2004). tGWhethertheplaintiffhasactually allegedthe properelementsofthe claim goesto thequestion ofwhethertheclaim could survive aRule 12(b)(6) motion to dismiss,notwhetherthe claim is preempted.'' 1d.(citations omitted). Nonetheless,in some Therefore,the Courtseesno need to disturb thebalance ofcase law,which holds thatthe breach of a confidentialrelationship establishes an elem entthatisqualitatively differentfrom a copyrightinfringementclaim . M -l's misappropriation oftrade secrets claim survivespreem ption. b. T ortious interference with M -l's custom er contracts CountFourofthe Second Am ended Complaintalleges tortiousinterference with M -l's custom er contracts. lsTexas 1aw protects existing contracts from interference by third parties.'' Specialtl-esofMex.Inc.v.Mastelfoods USA,20l0 W L 2488031,at*9 (S.D.Tex.June 14,2010). A plaintiffmustestablish thefollowing elementsto succeed on atortiousinterferencewith contractclaim:(1)the existence ofa contractsubjectto interference,(2)willfuland intentionalinterference,(3)thatproximatelycausesdamage, and(4)actualdamageorloss.1d.(citingAllAm.Tel.,Inc.v.USLD Commc'ns,Inc.,291 S.W .3d 518, 531 (Tex.App.- Forth W orth 2009,pet.deniedl). As stated above, copyright infringem ent requires copyright ow nership and copying. The tw o claim s appear to target very different conduct. N evertheless, m any courts tind tortious interference claim s to be preem pted where the defendant has allegedly destroyed the exclusiverightofaplaintiffto exerciseand enjoy thebenefitsofacopyrighted work.ln a widely cited case, the Second Circuit held that a plaintiffs claim for tortious interferencewaspreem pted whereitwasbased on the unauthorized publication ofawork thatwasprotected by the CopyrightAct.ltnoted: cases,acourtmaybe required toreview thefactspledbyaplaintiffûtinorderto determinewhethertheacts givingriseto thestate1aw claim are merely actsofcopyrightinfringement.'' 1d.(citationsomitted). A conversion claim,for example,willsunive where the plaintiff pleads conversion of tangible physical property. See Carson v.Dynegy 344 F.3d 446,456-57 (5thCir.2003). W here plaintiffhaspled only the unlawfulretention ofits intellectualproperty rights,however,a conversion claim willbe preempted by federalcopyrightlaw. 1d. In itsanalysis,the Courthasfocused itsinquiry on whethertheelementsofa state cause ofaction incom orate requirementsbeyond those necessary to prove copyrightinfringement, unlesscaselaw foraspecitictortclaim directstheCourttodo otherwise. ln both cases,itis the actofunauthorized publication which causes the violation. Theenjoymentofbenefitsfrom derivativeuseisso intimately bound up with the right itself that it could not possibly be deem ed a separateelement. See 1Nimmeron Copyrightj 1.01(B),atn.46 (1983). As the trialcourtnoted,the factthatcross-appellantspleaded additional elem entsofawarenessand intentionalinterference,notpartofa copyright infringem ent claim ,goes m erely to the scope of the right;it does not establish qualitatively differentconducton thepartoftheinfringing party, nor a fundam entalnonequivalence between the state and federalrights implicated. Harper& Aow Publishers,Inc.v.Nation Enters.,723 F.2d 195,201 (1983)rev'd on othergrounds,471U.S.539 (1985). Since thatdecision,many courtsconsidering the snm e question have held that a tortious interference claim does notrequire an extra elem ent that establishes qualitatively different conduct than that of copyright infringem ent. lnstead,the additional intent elem ents required in tortious interference claim s go lim erely to the scope of the right,''and do not tûehange the nature of the action.'' Warren Sign Co.v.PirosSigns,Inc,2010 W L 2802023,at*3 (E.D.M o.July l5,2010), .see also Data Gen.Corp.v.Grumman s' yw.SupportCorp.,36 F.3d 1147, 1l64-65(1stCir.1994),abrogatedon othergroundsbyReedElsevier,Inc.v.M uchnick, --- U.S.---,130 S.Ct.1237(2010). ,ProgressiveCorp.v.IntegonP&C Corp.,1991W L 218010,at*6 (4th Cir.Oct.29,1991);Tegg Corp.v.BecH trom Elec.Co.,650 F.Supp. 2d413,431(W .D.Pa.2008);Huclçshold v.HSSL,LLC,344F.Supp.2d 203,1208(E.D. M o.2004)(noting thatawarenessorintentdo notconstituteextraelementsthatmakea state 1aw claim qualitatively differentform a copyrightinfringem entclaim ,butinstead lim it the scope of the copyright infdngem ent claim without altering its fundam ental nature);Gemcra.ftHomes,Inc.v.Sumurdy,688 F.Supp.289,295 (E.D.Tex.1988) (preempting plaintiffs tortious interference claim and noting that ûtgtlhe fact that intentional interference with contract requires elements of knowledge of the existing contractand intentionalintedkrence with the contract,in addition to copying the plans m erely m eans that the tortious interference claim is narrow er than a copylight infringementclaim'')(citationsomitted). Based on this case law, the Court holds that, to the extent M -l's tortious interference claim s are based on M -llosing benetits flowing from its exclusive rightto tooldrawings,desir s,and other copyrightable m aterial,its claim s are preem pted. To the extent the tortious interference claim s relate to other than the benefits lost from exclusiveenjoymentoftooldrawingsandothercopyrightablematerial,however,theyare notpreem pted.6 The Courtdoes notbelieve that the presence of a contidential relationship is m aterial to M -l's tortious interference claim s. A breach of duty or trust does not constimte a necessary elem ent for tortious interference, and courts have found such claim sto be preem pted in the contextoftheA oftradesecrets.H uckahold v.HSSL,LLC, 344 F.Supp.2d 1203,1208-10 (E.D.M o.2004)(preemptingtortiousinterferenceclaim butnotmisappropriation oftradesecretsclaim).TheCourtfollowssuit,andfindsM-l's claimsto bepreempted asto copyrightabletradesecrets. c. T ortious interference w ith prospective business relations CountFive alleges thatDefendants tortiously interfered with M -l's prospective business relations. In addition to protecting existing contracts from interference,Gl-rexas 1aw also protects contractsthatare notyetform ed,buthave a reasonable probability of 6TheCourtisunclearon thebasisforM -l'stortiousinterferenceclaims. Iftheyrelateto anym attersother than M -l's rightto the tool drawings and other copyrightable m aterial,they are not preempted. For exam ple,Count Five alleges that D efendants used both the know ledge and position of M -l's form er employees,aswellasthe trade secretinformation,to encourage clients to diverttheirbusiness to W ES. M atters falling within the çlknow ledge and position''ofform erM -lem ployees,forexam ple,contacting formercustom ersto solicittheirbusiness,would notfallwithin copyrightlaw preemption.N eitherwould thetheftanduseofconfidentialinfonnationthatisnotsubjecttocopyright. 39 being form ed,from wrongfulinterference.'' ln order to establish tortious interference with prospective businessrelations,aplaintiffmustprove:(1)areasonableprobability thattheplaintiffwould have entered into a businessrelationship;(2)an independently tortiousor unlawfulactby the defendantthatprevented the relationship from occurring; (3)thedefendantdid such actwith a consciousdesire to preventtherelationship from occuning orthe defendantknew the interference was certain orsubstantially certain to occurasaresultoftheconduct;and (4)theplaintiffsufferedactualhanu ordamagesasa resultofthedefendant'sinterference. SpecialtiesofMex.Inc.v.M asteéoodsUSA,2010 W L 2488031,at*10(S.D.Tex.June14,2010)(citing Smithv.RoyalSeating,Ltd.,2009 W L 3682644,*3 (Tex.App.- Austin Nov.6,2009)). The Courtseesno reason to deviate from itsanalysis regarding M -l'stortiousinterference with contractsclaim . The independent unlawful act,from the Court's reading ofthe complaint,is the unlawful copying ofM -l's originaltooldrawings and designs. CountFive is preem pted to the extentitisbased on M -llosing prospective businessthatwould otherwise flow from its exclusive use oftooldrawings,designs,and othercopyrightablem aterial. To the extent theclaim relatestootherthantheprospedivebusinesslostfrom exclusiveenjoymentof tooldrawingsand othercopyrightablem aterial,however,itisnotpreempted. d. Tortious interference w ith M -l's em ploym ent contracts CountSix accusesKnobloch,W ES,and Squyresoftortiously interfering with M employment contracts. The elem ents of tortious interference with contract are outlined supra PM I1I(B)(1)(b). The Courtholds thatCountSix ispreempted to the extent it alleges that D efendants induced one another, and Stelly, to steal, copy, download,orotherwise reproduce M -l'stooldrawings,designs,and othercopyrightable 40 material. The Court tinds that this claim fails the extra elem ent test and thus is preempted.A1lotherallegationsunderthiscauseofaction sunive. e. Breach offiduciary duty CountSeven asserts breach oftiduciary duty claims againstStelly,Squyres,and Knobloch. The Fihh Circuitis clear thatsuch a claim suw ives copyrightpreemption. See Daboub v. Gibbons, 42 F.3d 285, 290-91 (5th Cir. 1995) (finding copyright preemption whereplaintiffiûfailed to allegeorproduceevidence oflany elem ent,such as an invasion ofpersonalrightsorabreach offiduciaryduty,which render(theirclaims) differentin kind from copyrightinfringement.''')(quoting#.f.ILS.Filmsv.Laconis,588 F.Supp.1383 (E.D.M ich.1984));see alsoRandolph v.DimensionFilms,630F.Supp. 2d 741,750 (S.D.Tex.2009)Clllowever,iftheplaintiffhasallegedfactscorresponding to an textra elem ent,'such as a breach of fiduciary duty thatwould render his claim s tdifferentin kind from a copyrightinfringem entclaim ,'then his state law claim s are not preempted.'')(quotingSejtonv.Jew,201F.Supp.2d 730,745(W .D.Tex.2001)).M -l's breach offiduciary duty claim survives. f. Texas TheftLiability Act Count Eight alleges violations under the Texas Theft Liability Act,TEX.CIV. Pn c.& REM.CODEANN.jj 134.001-134.005 (Vernon 2005). UndertheTexasTheh LiabilityAct,tlga)personwho commitstheh isliableforthedamagesresultingfrom the theh.''1d.j 134.003. Thefk in turn,isdetined asçûunlawfully appropriatingpropertyor unlawfully obtaining servicesasdescribed by''certain sectionsoftheTexasPenalCode. f#.j134.00242). M -lassertstheftunderSection 31.05ofthePenalCode,which states that a iûperson commits an offense if, without the owner's effective consent, he 41 knowingly:(1)stealsatrade secret;(2)makesacopyofan article representing atrade secret;or(3)communicatesortransmitsatradesecret.''TEX.PENALCODEANN.j31.05 (Vernon 2003). The only potentialextra elementin theA liability isthe téknowingly'' requirement;however,asdiscussed supra PartlIl(B)(1)(b),elementsofknowledge do not establish an elem ent that is qualitatively different from a copyright infringem ent claim . Therefore,the CourtfindsthatCountEightispreempted asto the theh oftrade secretsthatfallwithinthesubjectmatterofcopyright.ltisnotpreempted astomaterials notfallingwithinthesubjectmatterofcopyright. g. C onspiracy CountNine allegescivilconspiracy againsta11Defendants. The elem entsofcivil conspiraey in Texasare:(1)acombination oftwo ormorepersons;(2)an objectto be accomplished (an unlawfulpumose or a lawfulpumose by unlawful means);(3) a meeting ofthemindson theobjectorcourse ofaction;(4)oneormoreunlawful,overt acts;and (5)damagesastheproximateresult.FinservCas.Corp.v.SettlementFunding, LLC,2010 W L 2757536,at*10 (S.D.Tex.July 13,2010)(citing Ins.Co.ofN Am.v. Morris,981S.W .2d 667,675 (Tex.1998)). Much likethetortiousinterferenceclaims, theconspiracy claim requiresan elementofknowledge and planning,butfailsto add any qualitatively differentconductto the claim . Warren Sign Co.,Inc.v.Piros Signs,Inc, 2010 W L 2802023,at*4 (E.D.Mo.July 15,2010)CllBecause copyright1aw already recognizes the concepts of contributory infringem ent and vicarious copyright infringementconcepts,which extendjointand severalliabilitytothosewhopm icipatein the copydght infringem ent, a civil conspiracy claim does not add substantively to the underlying federalcopyrightclaim and should thereforebepreempted.''')(quotingIrwin 42 v.ZDF Enterprises Gmblli2006 W L 374960,at*4 (S.D.N.Y.Feb.16,2006:. This Court,like others,concludes thatthe intentelementof the conspiracy claim does not constitute qualitatively different conductwhere the elem ent of intent only goes to an intent to form an aveem ent to copy and use M -l's copyrightable trade secrets and confdentialinform ation. See Tegg Corp.v.Bech trom Elec.Co.,650 F.Supp.2d 413, 427(W .D.Pa.2008).Totheextenttheallegedconspiracy speakstoan agreementother than to stealM -1'scopyrightablematerial, however,itisnotpreempted.? h. Unfair com petition by m isappropriation Count Ten brings an unfair competition by misappropriation claim against a11 Defendants.Theelementsofunfaircompetitionbymisappropriationare:(1)thecreation by plaintiffofa productthrough extensivetime,labor,skill,and money;(2)the useof thatproductby defendantin competition with plaintiff,thereby giving the defendant a specialcompetitive advantagebecausehe wasburdenedwith little ornoneoftheexpense incurred by plaintiff in the creation of the product;and (3) commercialdamage to plaintiff.CableElecs.,Inc.v.N Am.CableEquljz,Inc.,2010W L 1541504,at*3(N.D. Tex.2010)(citingAlcatelUSA,Inc.v.DG1 Techs.,166F.3d 772,788(5th Cir.1999)). Ailn contrastto federal copyright law ,which focuses on the value of creativity,state m isappropriation law is specifically designed to protectthe labor- the so-called çsweat equity' thatgoes into creating a work.'' Alcatel USA, 166 F.3d 772,788 (5th Cir. 1999). Nevertheless,theFihh Circuithasfound thattherightsprotected underthelaws can be equivalent. 1d. ln Alcatel, the basis of plaintiff s unfair com petition by 1Again,itisunclearfrom M -l'sconspiracy claim , aspl ed,whattheobjectoftheconspiracy is. So,for example,this Cotmt is notpreempted to the extent it claims thatDefendants conspired to stealnoncopyrightable information,to solicitM -l'scustomers,orto commitotheracts relating to materialsother thanM -l'scopyrightable inform ation. 43 misappropdation claim wasthatdefendantreproduced itsfirm ware and otherm aterials, used these m aterials to prepare derivative w orks, and distributed these works in competition with plaintiff. Defendantargued thatplaintiffs unfair competition claim waspreem pted by copyrightlaw. The Fihh Circuitagreed. 166 F.3d at789. ltfound thatthe plaintiff had tlfailed to dem onstrate the presence of any elem ent that renders differentin kind itsrightsunderstateand federallaw.''Id. Specifically,theAlcatelcourt found thatneitherthe elem entrequiring the investm entoftlextensive tim e,labor,skill, and m oney''nor the requirement that defendant use the product in com petition with plaintiffestablished the necessary qualitatively differentelem ent. f#. This Courtcomes to the sam e conclusion,and tindsM -l'sunfaircompetition by misappropriation claim to be preem pted by federalcopyright 1aw to the extent the claim is based on M -l's tool designs. From the Court's reading ofM -l's complaint,Defendants'use of M -l's tool desir s appearsto form the bulk ofthisCount. N evertheless,the claim survives to the extent M -I alleges that Defendants have engaged in unfair competition by m isappropriation ofnon-copyrightablem aterial. i. Conver:ion M -l's last tort claim alleges that Defendants have comm itted conversion. The elementsofconversionunderTexaslaw areasfollows:(1)theplaintiffowned,hadlegal possession of,orwasentitled to possession oftheproperty;(2)the defendantassumed and exercised dominion and controloverthe property in an unlawfuland unauthorized manner,to the exclusion of and inconsistentwith the plaintiffs rights;and (3) the defendantrefused the plaintiffs dem and for the return of the property. City Bank v. CompassBank,---F.Supp.2d ---,2010W L 195808,at*10 (W .D.Tex.M ay 12,2010) 44 (citing Huffmeyerv.Mann,49 S.W .3d 554,558 (Tex.App.- corpusChristi2001,no pet.).lnCarson v.Dynegy theFifthCircuitexplainedthattheelementsofconversionof physicalproperty are qualitatively differentthan those ofcopyrightinfringem entwhere the allegationsconcern tangible property. Accordingly,itfound thata state conversion claim,based on the conversion ofa tangible worksheet,survived preemption. The Fifth Circuitcited with approvalsources which noted thatpreem ption does occur where the plaintiffallegesonly thetûçunlawfulretention ofitsintellectualproperty rightsand notthe unlawfulretention ofthe tangibleobjectembodying itswork.''' 344 F.3d 446,456-57 (5th Cir.2003)(quotingPritikin v.LiberationPubl'ns,Inc.,83F.Supp.2d 920,923n.1 (N.D.Ill1999)). Here,the property allegedly converted by Defendantswasintangible. M -Im akesno allegation thatDefendantsconverted tangible docum ents. The conversion claim is therefore preempted to the extent it covers tool drawings,desir s,and other not preem pted as to non-copyrightable matter subject to copyrightprotection. m aterial. 2. C ovenantnotto com pete enforceability Asitssecondbasisforpartialsummaryjudgment,W ES and Knobloch arguethat the covenantnotto compete in Knobloch'sConfidentiality Agreem entand Employment Agreem ent are unenforceable under Texas law. W ES and Knobloch assert that the covenantnotto compete in Knobloch'sconfidentiality agreementisinvalid due to a lack of lim itation on geop aphic area or scope of activity lim itation. N ext, they aver that a separate covenant, contained in Knobloch's employm ent agreem ent,is unenforceable because itoperates as an industrpwide exclusion,is overbroad as to custom er contact, and containsno reasonablegeographic limitation.Finally,W ES and Knobloch arguethat 45 the covenantnotto com pete in the employmentagreem entis unenforceable on itsown term s. M -ldisputeseach ofthese argum ents. The Texas Business and Comm erce Code govem s the enforceability of covenantsnOtto com pete. ltprovides: (A)covenantnotto competeisenforceableifitisancillaryto orpartofan othem ise enforceable agreem entatthe tim e the agreem entis madeto the extentthatitcontainslimitations asto tim e,geographicalarea,and scope ofactivity to be restrained thatarereasonable and do notimpose a greater restraintthan isnecessary to protectthe goodw illorotherbusiness interest ofthe prom isee. TEX.BUS.& COM.CODE j 15.50(a)(Vernon 2005). The1aw relatingtocovenantsnotto compete adopted the Texas comm on law in m any respects.John R.Ray tt Sons,Inc.v. Stroman,923 S.W .2d 80,84 (Tex.App.- Houston (14th Dist.j1996,writdenied). This Courtm ay therefore look to casespriorto the statute's enactm entfor guidance. f#.at8485. W hethera covenantnotto com pete is an unreasonable restraintoftrade isa question of law for this Court. Gallagher H ealthcare Ins.x% rv.ç.v. Vogelsang,--- S.W .3d ---, 2009W L 2633304,at*4 (Tex.App.- l-louston(1stDist.jAug21,2009). Courtsgenerally disfavorcovenantsnotto com pete tsbecauseofthepublicpolicy againstrestraints oftrade and the hardships resulting from interference with a person's meansoflivelihood.'' Zep Mfg.Co.v.Harthcock,824 S.W .2d 654,658 (Tex.App.Dallas 1992,no writ)(citingMartinv.finen sy '-ç.forHosps.,Inc.,671S.W .2d 706,706 (Tex.App.- llouston (1st Dist.) 1984,no writll.CûA covenant notto compete is a restraint of trade and unenforceable as a m atter of public policy unless it meets a reasonablenessstandard.''Stroman,923S.W .2d at85(citationsomitted).Covenantsnot to com pete are unreasonable ifthey are ltbroader than necessary to proteetthe legitim ate interestsofthe em ployer.'' Stroman,923 S.W .2d at85;seealso Desantis v.Wackenhut 46 Corp.,793 S.W .2d 670,681-82 (Tex.1990);Henshaw v.Kroenecke,656 S.W .2d 416, 418(Tex.1983). Knobloch appearsto have signed two covenantsnotto compete during histenure with M -I. The firstiscontained in hisConfidentiality Ap eement,and the second in his Enaploynnentytgreenaent. W ES and Knobloch ask this Courtto tind the Confidentiality Agreement's covenantto be unenforceable. 'I' he Courtseesno need to take this action, however,because M -lhasnotsued Knobloch forviolation ofthiscovenant. Instead,M -I pleads: Knobloch hasbreached and continuesto breach thesecontracts. Knobloch breached and continues to breach the contracts by using and disclosing SPS/GCS'SConfidentiallnform ation. Further,Knobloch hasbreached the Employm entAgreem entby fonning and operating W ES,competing and soliciting SPS/GCS employees and custom ers within six m onths ofhis term ination atM -1. (Doc.No.355,!(88.) Upon itsreading ofM -l'spleading,the CourtbelievesthatM -I alleges only that Knobloch has breached the covenant notto compete located in the Employm entAgreem ent. In its briefing,M -l affirm s this,arguing that they have not plead anon-competeclaim undertheConfidentialityAgreement. (Doc.No.195,at29.) The Courtaccepts and binds M -Ito this representation;it is therefore unnecessary to considertheenforceability ofthe ConfidentialityAgreement'scovenantnotto compete. The Courtnow turnsto the covenantnotto compete located in the Emplom ent Agreem ent. M -l'spleading,reproduced above,clearly brings a cause ofaction forthat covenant. The Em ploym entA greem entprovides: Noncompete' .W orking for Competitor:ln consideration of Em ployee's em ploym ent by Em ployer, the specialized training and access to contidentialinformation prom ised by and given to Employeeby Em ployer and other good and valuable consideration provided to Employee by Em ployer, Em ployee w ill not, at any tim e during the term of this 47 Ameementoratanytimeforsix(6)monthssubsequenttothetennination ofEmployee'semploymentforanyreason (exceptasprovidedin Section 5uponterminationwithoutcause),directlyorindirectly,individuallyoras an agent,employee,owner,manager,consultantor representative ofany entity, in any geographic area where Employer does business or is authorized todo business: a. solicit, influence or attempt to influence any Custom er, Potential Custom er,or supplier of Employer to stop doing business with Em ployer or to do business with any of Employer's competitors in the area of the Restricted Business. For purposes of this Section 8(a),ttcustomer'' m eansany naturalperson orany entity thatconductsbusiness with Employer or has an account with Em ployer, and any parent, affiliates or subsidiaries of such persons or entities. Also,forpumosesofthisSection 8(a),tlpotentialCustomer'' m eansany naturalperson orany entity thatm ightreasonably be expected to conduct business with Employer because Employer has,within the immediately prior six (6) month period,offered or presented its senices to such persons or entities' , b. interfere with the relationship between Employer and any of Em ployer's affiliates, Custom ers, Potential Custom ers or suppliers; engage in the Restricted Business with any of Em ployer's competitors. For pum oses of this Agreem ent, çtRestricted Business''shallm ean any business or transaction involving oilfield displacementtoolsorsenicesorany otherbusinesses then conducted by Em ployer. (Doc.No.181,Ex.2,at6.) W ES and Knobloch do notdisputethatthecovenantmeets the firstrequirem entunderTexaslaw- thatis,thatthe covenantwas ancillary to orpart ofan otherwise enforceable agreem entatthe tim e itwasm ade. Thus,the Courtturnsto thesecond requirem entforcovenantsnotto compete,and exam ineswhetherthecovenant is reasonable and does notim pose a greater restraint than is necessary to protect M -l's business interest. 48 Knobloch and W ES advance tlzree objections to Knobloch's covenantnot to com pete. First,they argue thatthe covenantimposes upon Knobloch an impennissible industrpwide work exclusion. The covenantnotto compete prevents Knobloch from engaging in the ttRestricted Business'' w ith any of the em ployer's com petitors. ttRestricted Business'' is defined as tlany business or transaction involving oilfield displacem enttoolsor servicesorany otherbusinessesthen conducted by''the em ployer. (Doc.No.181,Ex.2,at6.) Defendantsarguethat,accordingto Texaslaw,acovenant not to com pete containing an industrp w ide exclusion from subsequent em ploym ent is unenforceable.(Doc.No.181,!29.) Second,Knobloch and W ES argue thatthe covenant's restriction on soliciting tlpotentialcustomers''isoverly broad and unduly restrictive. They urge thisCourtthat, because the elause isnotlimited to clientswith whom Knobloch actually interacted,the covenantnOtto compete is unenforceable. (Id.!(33.) The covenantnotto compete preventsKnobloch from soliciting custom ers and ûipotentialcustom ers,''who aredefined asnaturalpersonsorentitiesûtthatmightreasonably be expected to conductbusinesswith Employerbecause Employer has,within the immediately prior six (6)month period, offeredorpresenteditsservicestosuchpersonsorentities.''(Doc.No.181,Ex.2,at6.) Third,Knobloch and W ES argue thatthe covenantis unenforceable because it contains no reasonable geographic lim itation. The limitation in the covenant forbids Knobloch from competing in ûlany geographic area where Employerdoesbusinessor is authorized to do business,''which Defendantsarguecoversabroad area encom passing at least300 locations in 75 countries. Given such an indefinite description ofgeographic restriction,Knobloch and W ES urgethiscourttorulethecovenantto beunenforceable. 49 M -Idisputes each of these points. lt asserts firstthatthe relevantemployer,as defined in the covenant,isSPS/GCS,notM -I. Next,M -1arguesthatthe geographic and scope ofactivity limitations are reasonable given K nobloch's position as a high level em ployee. M -l urges the Court to take a holistic approach in assessing the reasonableness of the covenantnotto com pete by considering the com bination ofthe tim e,geographic,and scope of activity lim itations together,rather than apart. M -linsists thatthe covenantnotto com pete's geographicaland scope of activity lim itations should beviewed in lightofthe shortsix month duration oftheentirecovenant. The Court considers M -l's first countem oint- that the relevant employer is SPS/GCS,and notM -l- before moving to the meritsofthe covenant's enforceability. Defining the relevantemployerisan importantstep,ofcourse,because thatdefinitively setsthegeographicand scopeofactivity lim itations. The Em plom ent A p eem ent, which contains the covenant not to com pete at issue,definesçtGlobalCompletionServices,lnc.''astheemployer.(Doc.No.181,Ex.2, at1.) M -1explainsthatGlobalCompletion Serviceschanged itsname to SPS when it wasacquiredbyM -1.(Doc.No.195,!32.) M-1arguesthatthecovenantnottocompete relatesto SPS/GCS businessneeds,ratherthan M -l'sbusinessneeds. The Courtagrees. $W n assignee standsin thesam eposition astheassignor,andm ay assertonly thoserights thattheassignorhad. Adams v.PetradeInt'l,Inc,754 S.W .2d 696,720 (Tex.App.- Houston (1stDist.)1988,writdenied). Texascourtshaveheld that,when abusinessis sold and the covenant not to com pete is assigned to the purchaser, the reasonable geographic restriction m ustbe ûtno largerthan to protectthebusiness sold.'' Williams v. PowellElec.Mfg.Co.,508 S.W .2d 665,668 (Tex.Civ.App.- Houston (14th Dist.j 50 1974,no writ)(citingBarrettv.Curtis,407 S.W .2d 359(Tex.Civ.App.- Dallas1966, no writll. Settled law confirmsthatcontractualrightsmay notexpand following an assignment. Knobloch's covenantnotto compete is therefore intem reted by SPS/GCS businessneeds. W ES and Knobloch respond that,although M -1arguesthatthe relevantemployer is SPS/G CS, M -I is nevertheless seeking dnm ages based on M -l's ow n lost profits, customers,and loss of future business opportunities. (Doc.No.211,! 13.) M -l's pleading does state dam agesin tenusofM -l's lostm oney,employees,and opportunity. M -1isnot,however,theproperbenchm ark fordeterm ining lossunderthe covenantnotto compete. lfM -1prevails on this claim ,it mustsubmit evidence showing the loss to SPS/GCS asaresultofKnobloch'salleged breach. The Courtwillaward damagesonly on thisbasis. To do otherwise,by granting M -Idam agesbased on itstotallosses,would reward M -Iwith dam agesbeyond whatitisentitled to receiveinthecovenant,and would imperm issibly expand itsrights. TheCourtnow turnsto the tllreeobjectionsto the covenantadvanced by W ES and Knobloch. They argue thatthe covenantnotto compete operates as an :iindustrp wide exclusion,''which they assertisim perm issible underTexas case law. M -1argues thatthecovenantisnotan industrp wideban,butinstead,appliesonly to wellcompletion services. Thus,M -1insists,Knobloch ttcould havechosen to work in any ofthem ultim de ofotherservice sectorsin the oiland gasindustly '' (Doc.No.195,!r50.) W ES and Knobloch appeartoconcedeasmuch in theirreply,butarguethat,nevertheless,ltltjoan individual...a globalindustrp wide prohibition forhalf a year,banning his ability to work in the oiltield displacem ent tools or services industry for six m onths, is not reasonable''because itimposesan unduehardship on an individual'slivelihood. (Doc. No211,!(15.) ln supportoftheirposition,W ES and Knobloch citeJohn R.Ray & Sons,Inc.v. Stroman. In thatcase,an employee washired as an insurance agentby a family-owned insurance agency. Pursuantto hisemploym entcontract,the employeecould notç'engage in or have an interest in any business that sold insurance policies or engaged in the insuranceagencybusinesswithin gthecounty)and al1adjacentcounties''foraperiod of fiveyearsfrom thedateofthecontract. 923 S.W .2d 80,83 (Tex.App.- llouston (141 Dist.) 1996,writdenied). ltalso provided thatthe employee would never solicitor acceptbusinessfrom any ofthe employer'saccounts,eitheraloneorasan employee for another com pany. Before the tive-year term had ended, the em ployee leh his em plom ent and began working with another insurance agency in the sanae county. W hen the form er employerchallenged hisactions,the employee filed suit,arguing that the covenantnot to compete was unenforceable. The court agreed,holding thatthe employee's contract had created tlan unenforceable industry-wide exclusion'' by preventing him from working in the localinsurancebusiness. TheStroman courtfurther found the contractunenforceable because the prohibition on custom er solicitation was unlimited asto tim e,extended to customerswith whom the employee had no association, and because the employerhad notshown thatthe lim itationswere necessary to protectits goodwillorbusinessinterests.f#.at85. The com bination of factors presented in Stroman convinces the Courtthat the case is readily distinguishable. First, as the Stroman court noted,the covenant not to com pete in thatcase restricted the employee's ability to work in the insurance business 52 altogether. By contrast,as W ES and Knobloch concede,Knobloch's covenant notto com pete does notbarhim from working in the oiland gas industry altogether. AsM -I notes,Knobloch could work in other senrice sectors within that industzy particularly given hisengineeringbackground. Knobloch'ssituation strikesthe Courtasmoresim ilarto the employeein Curtisv. Zt Energy Grp.lnthatcase,theemployeeworkedforemployerastheVicePresidentof Pipelines and Energy M arketing. The relevant covenant not to compete in that case prohibited the employee from engaging in competitive business in Canada orthe United States. ln theensuing litigation overthecovenant'senforceability,theem ployee claimed thathew asrestricted from working forany oiland gascompany in N orth Am erica. The employer disav eed, and subm itted evidence to show the court that it lim ited its competitorsto twenty companies,which were com prised ofoiland gasconsulting tirm s. 12 S.W .3d 114,119 (Tex.App.- Houston (14th Dist.j1999,no pet.). TheCourtsided with the employer, holding that, based on the employee's tjob description and responsibilities,itwasreasonable to restlict(him) from working in other oi1and gas consulting tirmsinNorthAmericaforasixmonth period.''Id.(citing Weed Eater,Inc. v.Dowling,562 S.W .2d 898,902 (Tex.Civ.App.- ldouston (1stDist.j1978,writrefd n.f.e.). According to Knobloch's covenant not to compete, he is prohibited from competing in the ûlRestricted Businessy''which isdetined asûtany businessortransaction involving oilfield displacem enttools or services or any other businesses then conducted byEmployer.'' (Doc.No.181,Ex.2,at6.) Though M -l,unliketheemployerin Curtis, did notprovide evidence of SPS/GCS'Scom petitorsin supportofitsargumentthatthe covenantisnotan industrp wide exelusion,the Courtissatisfied thatthe plain language oftheagreem entdoesnotcreate an industry-wide exclusion thatencom passesal1oiland gas, but instead restricts Knobloch from working for a com petitor within the oi1 displacem enttools or services industry. M -I asserts that SPS/GCS provided çlniche'' senices to the oi1 and gas industry, and W ES and Knobloch do not refute that characterization. Furtherm ore,although the definition ofitRestricted Business''contains acatchallphrase thatencom passesçtany otherbusinessthen conducted''by SPS/GCS,no allegation hasbeen m adethatSPS/GCS operated businessesoutside ofwellcompletion senices. The Courtfinds thatKnobloch'scovenantnotto com pete does notimpose an im permissible industrp wide exclusion, but instead, restricts his competition to a reasonably narrow businessareathatcorrelatesto hiswork with SPS/GCS. The Courtnow turns to Knobloch's and W ES'S argum entthat the covenant is unenforceable because itcontains no reasonable geop aphic lim itation. Texas courts generally require som e geographic limitation in a valid covenantnotto compete. See, e.g.,Goodin v.Joll? 257 S.W .3d 341,352 (Tex.App.- Forth W orth 2008,no pet.) (citing casesl;Zep Mfg.Co.v.Harthcock,824 S.W .2d 654,660-61 (Tex.App.- Dallas 1992,nopet.) CtA reasonablegeographicscopeisgenerallyconsidered tobetheterritory in which the employee worked for the employer.'' TranspetfectTranslations,Inc. Leslie,594 F.Supp.2(1742,754(S.D.Tex.2009)(citingHarthcock,824 S.W .2dat660). W ES and Knobloch rely on Goodin v.Jolfffoïtheirargumentthatthecovenant should failbecause itfails to setforth a reasonable geographic lim itation. Goodin is inapposite. The covenantin thatcase failed to include ûûany lim itation asto geop aphic scope whatsoever.'' 257 S.W .3d at 352. By contrast, Knobloch's covenant not to com pete prevents him from com peting Ktin any geographic area''w here SPS/G CS does businessorisauthorized todobusiness.(Doc.No.181,Ex.2,at6.) Thoug,h SPS/GCS'S authorized or actual business areas are not further detined in the covenant,M -1 has submitted evidence showing that SPS/GCS did business in North Am erican, South Am erican,and the Caribbean. AsM anagerofSales forthe Am ericas,Knobloch worked throughout this tenitory. He testitied that his territory covered North Am erica, the Caribbean,andpartsofSouthAmerica.(Knobloch Dep.95:17-96:12.) ltlNqon-competecovenantswithrestrictionscovering awidegeovaphicareamay bereasonable ifthey are limited in scope to a tirm 's currentorprospective clients such thatthey do notpose a greaterrestraintthan necessary to protectthe tirm 's goodwill.'' TranspelfectTranslations,Inc.v.Leslie,594 F.Supp.2d 742,754 (S.D.Tex.2009) (citing cases). Covenantswith wide geopaphic areashave been upheld frequently in Texascourts,especially when the areacovered constitutestheem ployee's actualsalesor work tenitory.See,e.g.,VaisArms,Inc.v.Vais,383F.3d 287,295(5thCir.2004).The Courtacknowledges thata geographic area covering the W estem hemisphere is broad, reaching to the outerlim its ofa restriction. However,the Courtis satisfied that,given Knobloch'sextensivejobresponsibilities,hisposition inuppermanagementatSPS/GCS, and the fact thathis actualterritory did span the Am edcas,the geographic restriction contained in the covenantwas reasonable to protectSPS/GCS'Sbusiness interests. See Curtisv.ZLffEnergyGr.p.,12 S.W .3d l14,119(Tex.App.- llouston (14th Dist.)1999, nopet.). 55 Knobloch and W ES'Sthird and lastobjection to the covenantnotto compete concerns the lim its on K nobloch interacting w ith all custom ers and potentialcustom ers. Theyarguethatsuch arestriction isoverbroad and unreasonable. The covenantprovidesthatKnobloch m ay notsolicitany custom ers orpotential custom ers fora period ofsix months. A customer isdetined as an entity thatconducts businessorhasan accountwith SPS/GCS.A ûtpotentialcustom er''isdefined assomeone who t4m ight reasonably be expected to conduct business'' with SPS/GCS because SPS/GCS has,ttwithin theimmediately priorsix (6)month period,offered orpresented itsservicestosuchpersonsorentities.'' (Doc.No.181,Ex.2,at6.) W ES andKnobloch cite Goodin v.Jol;fffor the proposition thatrestricting Knobloch from contacting all custom ers,including those with whom he had no contact,is unzeasonable. W ES and Knobloch also object to the covenant's requirementthat Knobloch not iûdirectly or indirectly''competewith SPS/GCS.(Doc.No.181,Ex.2,at6)(emphasisadded).They arguethatthislanguage,sim ilarto thatfound in Goodin,isalso overbroad. TheCourtaddressesthesecond argum entfirst.Thepertinentpm ofthe covenant in Goodin provided thatthe em ployeescould notstarta competing business,directly or indirectly,withoutçsany lim itation asto geom aphic scopewhatsoeven'' 257 S.W .3d 341, 352 (Tex.App.- Forth W orth 2008,no pet.).ln otherwords,itwasthecombination of factors, which prevented the employees in Goodin for a period of five years from competing indirectly with their form er em ployer without any geographic limitations, played a significantrole in that court's decision. The Courtis notconvinced that,ifthe ttdirectly orindirectly''language had been combined with a reasonable geographic and tim e-period restriction,thecourtwouldhave neverthelessstruck down the covenant. 56 The Courtfinds m ore troubling Knobloch and W ES'S central argum entin this objection the restriction on contacting customers. The covenant's restriction on solicitation of al1 custom ers and potential custom ers,which surely covers clients with whom Knobloch had no contact. Texas courts have struck down such covenants as unenforceable. TranspelfectTranslations,Inc.v.Lcslie,594 F.Supp.2d 742,754(S.D. Tex.2009)(liTexascourtsnotethatnon-competecovenantsthat...preventcontactwith clientswith whom the employee had no contactare unenforceable.'');PeatMarwick Main v.Haass,818S.W .2d 381,386-87 (Tex.1991)(holdingthatan accounting firm's protectable interest was its client base,and that the non-solicitation provision,which iA ibited departing partners 9om engaging accounting services for clients who were acquired aûerthe em ployeelel,orwith whom theaccountanthad no contactwhileatthe firm,wasoverbroad and unreasonable). On the otherhand,however,courtshave also dispensed with oneorm ore factorsentirely when thetotality ofcircum stances indicated thatthe covenantnotto com pete w as reasonably nanow to protecta com pany's business interest or goodwill. So, for exam ple, courts have held that covenants with no geographicallim itation werereasonable and enforceable. See,e.g.,TradersInt' I,Ltd.v. Scheurmann,2006 W L 2521366,at *8 (S.D.Tex.Aug. 30,2006) (ûçAlthough the Consdentiality and Invention Agreem entdoesnotspecify a geographic limitation on the non-competition agreem ent, it is nonetheless enforceable. W hile there is a split of authority on thislegalissue,the courtispersuaded thatwhere the employm entagreem ent restdcts the em ployee from contacting form er custom ers w ith whom the em ployee dealt while employed by the employer, this is a reasonable substitute for a geographic limitation.'')(intem alcitationsomittedl;Totino v.Alexander & Assocs.,Inc,1998 W L 552818,at*3(Tex.App.- llouston (1stDist.jAug.20,l998)(noting thatthelackofan expressgeographicrestrictionisnotperseunreasonable). The Court agrees with M -1 that the factors included in the covenant not to competeshouldbeconsidered in combination with one another,ratherthan asstand alone requirements. Applying thatapproach,theCourtcnnnotsay thattheban on allcustom er and potentialcustom er contacts is unreasonable to proteet SPS/G CS'S business interest. Tllree im portant factors bring the Court to this conclusion. First, the short six-m onth duration ofthe covenantnotto competeim posesa lim ited burden on Knobloch. During thatsix-m onth period,Knobloch stillhad severaloptions:hecould have chosen to work outside the wellbore completion industly to work in that industry but outside of the Am ericas,ornotto work and launch acom peting businesssixm onthslater. The Courtis convinced that,given Knobloch's scientific background and in-depth knowledge ofthe industry,al1of those optionsremained open to him when he leh his em ploym entwith SPS/GCS. The second factor is the upper m anagem ent position held by Knobloch at SPS/GCS. M -1has submitted evidence showing thatKnobloch wasmuch m ore than a m anager and salesm an forhis fonner em ployer. He oversaw SPS/GCS'S relationships with majorinternationalclients. (Knobloch Dep.85215-86:25, -Doc.No.196,Exs.25A n engineer by training, Knobloch participated in the design of SPS/GC S'S tools and in facilitating w ellbore com pletions. He delivered technical presentations intem ationally, fonnulated com pany grow th strategies, and discussed product developmentwith engineers. (Doc.No.196,Ex.16.) Given Knobloch'shigh levelof 58 involvem ent in the com pany's gowth and developm ent, the Court believes that restricting him from contacting SPS/GCS'Scustom erbasewasreasonable. The third, and perhaps m ostimportant, factor goes to SPS/GCS'S protectable interest.Texascourtsaregenerally concem ed aboutcustom ercontractrestrictionswhere theclientbaseistheprotectablebusinessinterest. See,e.g.,PeatHarwickM ain & Co.v. Haass,818 S.W .2d 381,387 (Tex.1991)(defining thebusinessinterestin thatcaseto includepreservingthefirm'sclientbase).M -1hasmadeastrong casethatthebusiness interestin this case extends beyond SPS/GCS'S clientbase,given Knobloch's intim ate knowledgeoftooldesignsand functionality. Knobloch had accessto sensitive company information,including m any trade secrets. ' I' he Courtis convinced thatthe defnable business interests in this case involve notjust preserving a client bases but also m aintainingtrade secretsand othersensitive inform ation. Therestriction on a11custom er contact is accordingly not an unreasonable restraint of trade as to this particular employee. See Weed Eater,Inc.v.Dowling,562 S.W .2d 898,902 (Tex.Civ.App.Houston (1stDist.j1978,writrefdn.r.e.). ' Fhe Court declines to grant W ES and Knobloch summary judpnent on the covenantnotto compete. The covenantnotto compete is areasonablerestraintoftrade, and isthereforeenforceable. lV . D EFEN D AN TS'M O TIO N FO R PR O TEC TIO N Defendantshavefiled ajointexpedited motion forprotection from discovery of their trade secret infonuation. They argue that,underthe burden shihing m echanism applied in Texas state courts,when a party seeking protection has established that the infonuation soughtis a trade secret,the party requesting the infonnation m ustestablish 59 thatthe information isnecessary fora fairadjudication ofitsclaim ordefense. (Defs.' JointExpedited M ot.forProtection f' rom Disc.ofProprietary Trade SecretInform ation, Doc.No.300,!J!8-9.) Defendants assertthatM -1has failed to make this critical showing,andthusisnotentitledtodiscovery.(1d.!!(17-21.) Theyarguefurtherthatthe depositionsrecently taken in Scotland ofM -1engineersshowsthatM -lhaslittleproofof its claimsthatDefendantshave stolen itstradesecrets. (ld.!! 1-6.) M -Icountersthat Defendantsare tlouting thisCourt'sdiscovery orders,which have already provided that Defendantsm ustproduce trade secretinform ation,and argue furtherthatthey have m et theirburden to show thatthe trade secretsare necessary fora fairadjudication oftheir claims.(M -ILLC'SResp.to Defs.'JointExpedited M ot.forProtection from Disc.of ProprietaryTradeSecretlnformation,Doc.No.316,15 5,35-40.) M -Ialso arguesthat itsengineersidentified severalsuspected misappropriationsoftrade secrets. (1d.M(828.) Discovery in thiscase hasbeen farfrom sm ooth. ln November2009,this Court ordered discovery to proceed along a certain schedule,due to the sensitive nature ofthe discoverablem aterial. TheCourtdivided discovery into two phases. Thefirstphasewas to includediscoveryofa11mattersçsexclusiveoftradesecrets.'' (Disc.Hr'gTr.33,Nov. 24,2009.) Aherthetirstphase,theDefendantswouldbeallowedtodeposecertain M -I engineersin orderto obtain m ore detailasto thetradesecrettheû atissue. Following the depositions,the case wasto proceed to a second round ofdiscovery where t4trade secret information (wouldjbedisclosed''pursuantto the agreed protective orderin thiscase. (1d.) The Courtsubsequently issued a written order outlining the planned discovery schedule.(SeeDoc.No.155.) 60 Despite M -l's protests that the frst phase of discovery had not yet been completed,the Courtordered depositions of four key M -l employees to go fonvard in April2010. n edepositionsofGeorge Telfer,M ark Temple,Graeme Laws,and Dennis H ankstoolplace in Scotland from April5-7,2010. According to the discovery schedule,then,phase two discovery requiring trade secretdisclosureshould havebegun aqertheScotland depositions. Defendants,however, haveadamantlyobjected toproducing anyoftheirtradesecrets,and M-lhascomplained equally loudly that Defendants are circum venting this Court's orders by refusing to producesensitiveinformation.AûeradjudicatingalargenumberofdisputesinApriland M ay,theCourtstayed thecasein orderto decide thepending dispositivem otions. A . Analysis Defendants,in som e ways,m ake a pitch for a question already decided. They seek protection underTexasRule ofEvidence 507by arguing thatM -1hasfailed to m eet itsburden ofshowing thatdiscovery oftrade secretsisnecessary in thiscase,asrequired underthecase1aw thathasdeveloped around thatnzle. TexasRule ofEvidence507 protectsdiscovery oftradesecrets,allowing aperson to refuseto discloseatradesecretundercertain circum stances.Theruleprovides: A person has a privilege,which m ay be claim ed by the person or the person's agent or employee,to refuse to disclose and to prevent other persons from disclosing a trade seeret owned by the person, if the allowanceoftheprivilegewillnottend to concealfraud orotherwisework injustice.W hendisclosureisdirected,thejudgeshalltakesuchprotective m easures asthe interests ofthe holderofthe privilege and ofthe parties andthefurtheranceofjusticemayrequire. The Texas Supreme Court has established a burden shiRing mechanism by which evidencem ustbeproduced underRule 507. 61 First,the party resisting discovery m ustestablish thatthe inform ation isa trade secret. The burden then shihs to the requesting party to establish thattheinformationisnecessary forafairadjudication ofitsclams.Ifthe requesting partym eetsthisburden,the trialcourtshould ordinarily compel disclosure ofthe information,subjectto an appropriateprotective order. ln each circum stance, the trial court m ust weigh the degree of the requesting party's need for the inform ation with the potential harm of disclosure to theresisting party. InreContinentalGen.Tire,Inc.,979S.W .2d 609,613(Tex.1998). The Federal Rules of Civil Procedure also provide for the protection of trade secretinformationundercertaincircumstances.Rule26(c)(1)provides' . A party or any person from whom discovery is soughtm ay move for a protective order in the court where the action is pending--or as an alternative on m attersrelating to a deposition,in the courtforthe district where the deposition willbe taken....The courtm ay,for good cause, issue an order to protect a party or person &om annoyance, embarrassment,oppression,or undue burden or expense,including .. . requiring thatatrade secretorotherconfidentialresearch,development,or comm ercialinform ation notbe revealed orberevealed only in a specified W ay .... ' It is ûtwell settled that there is no absolute privilege for trade secrets and similar confdentialinformation.'' 8 CHARLESALAN W RIGHT,ARTHURR.M ILLER & RICHARD L. MARCUS,FEDERAL PRACTICE AND PROCEDURE j2043 (2d ed.1994). Rather,federal courtsfollow asimilarscheme in determining whetherand how to orderthe disclosureof trade secretsor otherconfidentialinfonuation. First,the party seeking protection must establishthattherelevantinfonnation fallswithin theprovision ofthisrule.Id. ûtûlr flhe burden is upon (the party seeking the protective order) to show the necessity of its issuance, which contemplates a particular and specific dem onstration of fact as distinguished from stereotyped and conclusory statem ents.''' Sanchez v.Proper# & Cas.,2010W L 107606,at*1(S.D.Tex.2010)(quotingfnrc Terra Int'l,134 F.3d 302, 306 (5th Cir. 1998)). The party seeking protection Vtimust first establish that the 62 information sought is a trade secret or other eontidential information and then dem onstrate that its disclosure would cause an identifiable, sir iticant hann.''' f#. (quotingStoneConnection,Inc.v.Simpson,2008W L 1927033,at*1(E.D.Tex.Apr.28, 2008)). If the party seeking protection establishes thatthe information sought is both confidentialand thatdisclosurewould cause harm,then the burden fallson the opposing party to çtestablish thatthe inform ation issuo ciently relevantand necessary''to itscase to outweigh the harm thatdisclosure m ay cause. 8 CHARLES A LAN W RIGHT,ARTHUR R . MILLER & RICHARD L.M ARCUS,FEDERAL PRACTICE AND PROCEDURE j2043 (2d ed. 1994).Kççltiswithinthesounddiscretion ofthetrialcourttodecidewhethertradesecrets are relevantand whethertheneed outweighstheharm ofdisclosure.Likewise,ifthetrade secretsare deem ed relevantand necessary,the appropriate safeguards thatshould attend theirdisclosure by m eans ofa protective order are also a m atter within the trialcourt's discretion.''' A.C.Olmstead,Inc.v.CU Interface,LLC,606 F.3d 262,269 (6th Cir. 2010)(quoting Centurion Indus.,Inc.v.Fcrren Steurer& Assocs.s665 F.2d 323,326 (10thCir.1981)). The state and federal standards are very similar. Given its federal question jurisdiction over this case,the Courtapplies the Texas proceduralruleshere. As to Defendants' initial burden of proving that the m atter is a trade secret, M -1 does not dispute,and the Courtdoesnotdoubt,thatthe materialsin question qualify. Defendants' trade secrets include sensitive inform ation such as tool drawings, engineering data, individualcom ponentsketches,pricing and inventory lists,certain com m unications with 63 manufacturers,andmore. (Doc.No.300,!13.) Both parties have acknowledged from the outsetofthecasethatsuch m aterialqualitiesastradesecrets.TheCourtagrees. As discussed at length in this opinion,M -lbrings several state 1aw causes of action against Defendants in this suit. Their core allegation is that Defendants m isappropriated theirtrade secrets. M -lhas stated a claim form isappropriation oftrade secrets, and now seeks discovery in order to support those claim s with evidence. Importantly,trade secrets are the subjectofthislitigation. M -lisnotseeking W ES'S trade secrets so it may use the information to prove a tangential or connected point. Rather,thetrade secrets are soughtbecause M -Iallegesthatthetrade secretsthem selves were stolen,and needs evidence to bolster its claim . Specifically,the third elementof trade secretm isappropriation requiresthataplaintiffprove thatthe defendantisusing the trade secret. ln order to prove this element, M -l must establish that W ES'S tools ineorporate M -l's design features. lndeed, M -l has submitted aftidavits from two retained expertswho state thatthey cannotcome to any determ ination ofwhetherW ES hasm isappropriated M -1trade secrets in its own toolline withoutfirstinspecting tools drawings and otherproprietary infonuation. (Doc.No.317,Exs.J & K.) The trade secrets are both relevant and necessary for thatreason. Notbeing able to argue that certain tooldiameters were identical,orthatW ES adopted the same unique m aterialas M -Iin the constnzction ofits tools,would be fatalto M -l's claim s. W hatDefendants seek in protection,then,isnotaslightm odification ofdiscovery,butinstead a dismissal ofal1ofM -l'sclaims. ThistheCourtcannotdo. M-l's casehascleared the 12(b)(6) hurdle,and assuch,itisentitled to certain discovery thatwillallow itto litigatethiscase. 64 The Courttindsthatthe trade secretdrawings and otherconfidentialinform ation,which form thecruxofthisentire case,to be discoverable. The Court is not convinced, as Defendants insist, thatthe deposition of the Scotland engineers exposed the frivolity of M -l's claim s. Although all deponents stopped shortof claiming thatW ES tools were exactcopiesofM -ltools,each ofthem was able to point to specific design features that were unique to M -I before W ES launched its suite ofwellbore cleanouttools. The engineerspointed to stabilizersleeve sizes,pressure equalization components,m andreldesir ,filtertoolsimilarities,m ar et type, tool m atedal,bolts,and other dimensions, designs, and m echanism s that they strongly believe W ES copied from M -I. From the Court's review of the testim ony,it believes that the testim ony was specific and supported by the engineers' technical knowledgeaboutthedesignsand com ponentsofthesetools. Atthe very least,they have boosted M -l'sargum entthatexam ining drawingsofthesetools,and otherinform ation,is necessarytofairlyadjudicateitsmisappropriation oftradesecretsclaim. The Courtdoes notfinding convincing Defendants'citation to case 1aw on trade secretprotection. Theseminalcaseintem reting and applying Rule507,In re Continental GeneralTire,Inc.,isreadily distinguishable. ln thatcase,a driver's fronttire blew out, and he struck an oncoming vehicle,killing two people. Certain heirsbroughta products liability action againstdefendant,the manufacturerofthefailed tire. Plaintiffscontended thateither a design or manufacturing defectprevented the belts ofthe failed tire from properly bonding. During discovery,the plaintiffs requested defendant to produce the chem ical fonnula for w hat is known at t'skim stockr''in order to prove its claim . 979 S.W .2d 609,610 (Tex.1998). Defendantobjected on them oundsthatits skim stock 65 formula was a trade secretprotected by Rule 507. The Texas Suprem e Courtreviewed theundem inningsofRule507,established the burden shifting schem eoutlined above for production oftrade secretsunderthe rule,and applied thatschem e to the factsbefore it. In thatcase,the only evidence putforward by plaintiffs to establish thatthe skim stock fonuulawasnecessary to the litigation wasdeposition testim ony from defendant'sexpert stating thatacom pound thatdidn'thavethe rightingredientsin itcould cause tire failure. The unrefuted countervailing evidence,however,established thatthe form ula could not determ ine thephysicalpropertiesofatire,thatthe finished tireitselfhad to betested,and that plaintiffs had no other skim stock formulas with which to compare defendant's formula. ln other words,the evidence did notshow thatproduction ofthe skim stock formulawould allow plaintiffto establish thatthe failed tirew asdefective. The formula itselfcould notshow thespecificpropertiesofthefailed tire,and even ifthe fonuula was defective in som e way,plaintiffs would notbe able to show thatby comparing the formula to others. In this case, by contrast, Defendants' tool drawings and other infonnation willpointdirectlytothedesign featuresofitswellboretools(thatis,because m anufacturing flaws are not a concern in this litigation,the question of whether the drawingsreflectexactl y the tinalmanufactured productisirrelevantl;f'urthermore,M -I m ay compare Defendants' trade secrets to its own to establish whether Defendants' com mittedm isappropriation. The Courtfinds Defendants' other citations sim ilarly unconvincing. ln those cases,the courtsrejected discovery oftrade secretinformation whereplaintiffsfailed to indicate how the trade secret inform ation would show whether the finalproduct was defective, were able to prove defectiveness of products without discovery of the 66 inform ation,failed to establish thatthe information would be necessary to its experts ratherthan m erelyuseful,orfailed entirely to offerany evidenceshowing production was necessary. See,e.g.,In re Bridgestone/Firestone,Inc.,106 S.W .3d 730,733-34 (Tex. 2003);In reA'FO Res.L LP,248 S.W .3d 898,904 (Tex.App.- FortW orth 2008,no pd.);In re Waste Mgmt.of Fcx.,Inc.,286 S.W .3d 615,618 (Tex.App.- Texarkana 2009);ln reLeviton Mfg.Co.,1S.W .3d898,902-03 (Tex.App.- W aco 1999,no pet.); In reContinentalTireN Am.,Inc.,74 S.W .3d 884,886(Tex.App.- Eastland 2002,no pet.);InreFrost,998 S.W .2d 938,939 (Tex.App.- W aco 1999,no pet.) M -ldoesnot stand in the sam e position as the plaintiffs in the cited cases. First,the m anufacturing process is im materialto whetherDefendants misappropriated trade secrets. Second,as stated above,M -l will notbe able to prove m isappropriation of trade secrets,which requiresthem to show thatDefendantshave actually incom orated trade secrets into their own competitive products,without exam ining Defendants' tool drawings and other proprietary information. Last,M -Ihasproffered evidence on the issue ofnecessity,and thattvidenceestablishesthatexpertsmusthave accesstoproprietary information in order to prepare their conclusions. In other words,the inform ation is necessaly notsimply useful,forM -l'sexperts. TheCourtthereforerejectsDefendants'attemptsto analogize theinstantlitigation to caseswheretradesecretdiscoveryhasbeen rejected onRule507 grounds. Additionally,neitherparty disputesthatM -Ihas virtually no othersource forthe information. Although itmay go afterthem anufacturersofthe tools,a strategy thatM -l has undertaken, this is sim ply a m ore circuitous w ay of obtaining the m aterials from W ES itself. A11ofW ES'Sm anufacturershave signed confidentiality agreem entsnotto disclose the trade secrets,and so have referred requested item s to W ES so thatW ES could assertthetradesecretprivilege. The Courtpoints outthatit is notonly W ES'S disclosure thatis atissue here. Rather, it is clear that M -1 will need to produce its own tool drawings and other inform ation to Defendants so thatDefendantsm ay build theirdefense in this case. The Court is satisfied that, with both parties disclosing the m aterial at the heart of their companies' success,each of them willhave strong incentives to rigorously apply the protectiveorderand safeguard oneanother'strade secrets. TheCourttruststhe attom eys on allsidesofthiscaseto abide bytheterm softheprotectiveorder. Parties are generally given w ide latitude in conducting diseovery,even as to trade secretm atters. lndeed,in m ostcasesconcerning trade secretdiscovery,t4the key issueis notwhetherthe inform ation w illbe disclosed butunderwhatconditions.'' 8 CHARLES ALAN W RIGHT,A RTHUR R. M ILLER & RICHARD L.M ARCUS,FEDERAL PRACTICE AND PROCEDURE j2043 (2d ed.1994). The Supreme Courthasrecognized thatésorders forbidding any disclosure of trade secrets or confidential comm ercial information are rare.''Fc#.OpenMarketComm.oftheFed.Resen'es' ys'.v.Merrill,443 U.S.340:363 n.24 (1979). éûM ore commonly,the trialcourtwillentera protective orderrestricting disclosuretocounsel,ortotheparties.''f#.(intemalcitationsomitted).Defendantshave failed to citeto any federalcasesthatprohibited trade secretdisclosure outdght. lndeed, from the Court's own research, it is clear that such action is exceedingly rare. D efendants have failed to set forth com pelling reasons for why this m aterial should be entirely exempt from discovery. The Court finds that the material is relevant and necessary to the claim satissue in thiscase. 68 O fcourse,the Courtprefers thatthe partieshave a m utually agreeable protective orderin place. Defendantshave indicated thatthecurrentprotective orderisinsufficient. The Courtwillconvene the parties to discuss how the tenns of the currentprotective order m ay be m odified. Given the sensitive namre of the inform ation,the Court is amenableto m aking the orderasstrictaspossibleto ensure the continuing secrecy ofthe infonnation disclosed. The Courtm akes one finalpoint. ltunderstandsthatDefendants are extrem ely frustrated with the filing ofthislawsuit. Defendantshave repeatedly argued to the Court that this is a sham law suitbroughtby a large com oration seeking to extinguish a sm all one. Ifthis is tnze,ofcourse,an allocation of costsand fees,as wellasm ore serious m easures,m ay be in orderso thatW ES may be m ade whole again. Butthe Courtisnot in a position to dism iss an entirelawsuitatthisstage based on Defendants'impassioned arguments and accusations. It is the Court's task to adjudicate this case neutrally. HavingfoundnobasisforRule 12(b)(6)orRule56dismissaloftheentiresuit,theCourt m ustallow this litigation to proceed. Ithasconcluded that,in orderto try these claim s, both sidesmustproduce trade secretm aterial. The m erits ofM -l'sclaims can form no basisforthe Court'sdecisions atthisphase. Rather,a11itcan do,and indeed whatitis bound to do,is monitorthe pleadings and evidentiary standards to ensure thatthe case proceedsin away thatprotectsallparties'rights.The Courttdesto do so faithfully,and remainswilling to discussproblemsduring discoveryasthey arise. V. C O NC LU SIO N Forthereasonsstated intheorder,Defendants'motion to dismiss(Doc.No.9l) is granted in partand denied in part. Counts Four,Five, and Eleven are dism issed. 69 Defendants'motion forpartialsummaryjudgment(Doc.No.181)isgrantedinpartand denied in part. Counts Four,Five, Six,Eight,Nine,Ten,and Tw elve are preem pted to the extent they are based on M -l's tool draw ings and other copyrightable m atedal. Defendants'motionforpartialsummaryjudpnentisdenied astoM -l'smisappropriation oftrade secretsclaim ,and itscovenantnotto compete argum ent. Defendants'motion forprotection(Doc.No.300)isdenied. M -lmustfile an amended complaintwithin twenty (20)daysofthedate ofthis Orderthatreflecttherulingsherein. IT IS SO O R D ERED . < SIGNEDatHouston,Texas,onthisthe/ 7dayofAugust,2010. KEIT .E LISON UN ITED STA TES D ISTRICT JU D GE TO ENSURE PROPER NO TICE, EACH PARTY W H O RECEIVES TH IS O RDER SH ALL FO RW ARD A COPY OF IT TO EVERY OTHER PARTY AND AFFECTED NO N-PARTY EVEN THO UGH TH EY M AY HAVE BEEN SENT ON E BY THE CO URT. 70
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