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Schlumberger’s Ex-GC Seeks Dismissal Of Trade Secrets Suit

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By Jeremy Heallen

Law360, Houston (July 28, 2014, 6:00 PM ET) — Schlumberger Ltd.’s former general counsel for intellectual property asked a Texas judge on Monday to throw out a lawsuit her former employer filed against her, saying the oilfield services giant has no proof she stole trade secrets before going to work for patent holding company Acacia Research Group.

Attorneys for Charlotte Rutherford told Harris County District Judge R. K. Sandill that Schlumberger lacks “clear and specific” evidence connecting what Rutherford allegedly knew about Schlumberger’s patents to Acacia’s decision to sue it for infringement and that the case must therefore be dismissed under the Texas Citizens Participation Act.

Joseph Y. Ahmad of Ahmad Zavitsanos Anaipakos Alavi & Mensing PC told Judge Sandill that in the four and a half months since his client was sued, Schlumberger has offered little more than its own “conclusory” allegations that Rutherford used the company’s trade secrets against it when she signed off on a patent infringement suit Acacia filed.

Arguing that Rutherford’s right to free association under the First Amendment includes conferring with her employer about litigation strategies. Ahmad said that the TCPA — a free speech law that aims to curb so-called strategic lawsuits against public participation — requires dismissal because Schlumberger has been unable to produce more than circumstantial evidence in support of its allegations.

“Just because you might have access to information that might be useful, that doesn’t give you a cause of action,” Ahmad said.

For the next two hours, Schlumberger attorney Craig Smyser of Smyser Kaplan & Veselka LLP laid out the specifics of the case against Rutherford, attempting to persuade Judge Sandill that the TCPA is either inapplicable or that the company has enough evidence to survive dismissal, even if it lacks a smoking gun implicating Rutherford.

Smyser argued that because the TCPA is designed to encourage “participation in government” and protect communications that are “in the public interest,” the law shouldn’t apply to Rutherford’s written approval of Acacia’s decision to launch patent litigation.

When Judge Sandill suggested that the TCPA applies broadly, Smyser said that even if it does, Rutherford’s communications with Acacia about the patent litigation don’t qualify as protected speech because they involve a breach of her ethical and fiduciary obligations to Schlumberger.

Smyser added that the TCPA’s “commercial speech” exemption should apply since Rutherford’s advice to Acacia ultimately caused the company to monetize its unlicensed patent by suing Schlumberger.

“It’s all about the money,” Smyser said. “This case is all about their commercial action; suing Schlumberger in order to make money.”

Judge Sandill jumped on that point, saying that Acacia’s decision to petition the court to remedy Schlumberger’s alleged infringement is exactly the kind of participation in government the TCPA is meant to protect.

“If someone told you that filing a lawsuit is not protected … would that be incredible to you or credible?” Judge Sandill asked Smyser. “I have to take a broader view [beyond this case]. My world doesn’t revolve around Schlumberger and Rutherford.”

A skeptical Judge Sandill and Smyser also clashed over Schlumberger’s evidentiary burden under the TCPA, which requires the company to produce clear and specific evidence of each essential element of its causes of action against Rutherford.

Arguing that the TCPA only imposes a “minimal factual burden” and that the lawsuit is in its early stages, Smyser said that Schlumberger only needs to show facts from which a jury could draw “rational inferences,” to impose liability against Rutherford.

Smyser said it was more than a coincidence that Acadia filed suit after hiring Rutherford, as he walked Judge Sandill through what Rutherford knew about gaps in Schlumberger’s intellectual property and proof that she connected an external hard drive to her company computer before leaving for Acacia.

But Judge Sandill said Schlumberger likely needs more than circumstantial evidence to avoid dismissal under the TCPA.

“I’m handcuffed by the statute,” he said.

Judge Sandill did not rule on Rutherford’s motion to dismiss on Monday, saying he wanted to review briefs filed by both sides. He also asked Rutherford’s attorneys to prepare a statement on fees their client has incurred, which he is required by statute to award against Schlumberger if the company’s claims are tossed under the TCPA. Judge Sandill said he will consider any objections Schlumberger has to Rutherford’s attorneys’ fees at hearing set for Aug. 14 before ruling on the motion to dismiss.

The underlying suit was filed in March, alleging Rutherford, who worked for Schlumberger from 2006 until May 2013 and had served as the company’s director of intellectual property, “unlawfully appropriated, secured or stole” trade secrets in her final days with the company.

Schlumberger said Rutherford stole confidential trade secret data and information that was copied onto USB hard drives and deleted from her company-issued laptop shortly before her departure from the company to join Acacia, which later sued Schlumberger for infringing a patent that Rutherford allegedly recommended for acquisition.

Schlumberger is represented by Craig Smyser and Land Murphy of Smyser Kaplan & Veselka LLP.

Rutherford is represented by Joseph Y. Ahmad, John Zavitsanos, Timothy C. Shelby and Adam Milasincic of Ahmad Zavitsanos Anaipakos Alavi & Mensing PC, Ashish Mahendru and Darren A. Braun of Mahendru PC and Richard B. Specter of Corbett Steelman & Specter.

The case is Schlumberger Ltd. v. Rutherford, case number 2014-13621, in the 127th Judicial District Court of Harris County, Texas.

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