Case Studies
October 19, 2016
Background

Erdos Miller Inc. is a consulting and engineering services company specializing in customized drilling solutions, most often in rugged environments involving directional drilling. The custom nature of these operations means that Erdos Miller must enter into a new contractual relationship with clients for each project, as the resulting work inevitably creates intellectual property and the eventual ownership of that IP must be clear at the outset of any engagement.

The company is headquartered in Houston, TX and its clients are most frequently in the oil and gas industry. The industry as a whole, and specifically in Texas, has seen a sudden economic decline due to the plunging price of oil. As a result, claims of misappropriation of trade secrets have sharply increased, as companies are seeing upheaval in their workforce and business at large as employees with a high degree of institutional knowledge are either departing the industry as a whole or potentially finding a new home at a competitor.  

On June 1, 2016, Erdos Miller client, Leam Drilling Systems LLC, filed a claim in Texas state court, accusing Erdos Miller of violating contractual agreements and stealing trade secrets. The suit alleged that Erdos Miller created an alter ego company and was marketing Leam technology directly to its competitors. Leam asked for a temporary restraining order and permanent injunction against Erdos Miller. The suit had an immediate impact of stopping 70% of Erdos Miller’s business. 

Matter Specifics

Erdos Miller was notified of the suit at 12:00 p.m., and Polsinelli attorneys were in court on their behalf three hours later. The Polsinelli team, led by IP attorneys Gregory Novak, Tracy Druce, and Suni Sukduang immediately crafted a responsive litigation strategy incorporating the efforts of a number of discrete teams.  The team’s strategy included:
  • Extensive discovery was both produced and undertaken, and involved examining contracts with a high degree of technical specification.  
  • A separate team focused on technical experts – taking and defending twelve depositions in thirty days, and establishing legal theories and defenses as a result of the substantive information provided by the witnesses.  
  • A third team worked on purely legal issues. Choice of law matters were at play in this case, as the involvement of both Texas and Louisiana law resulted in conflicting direction on remedies.  
  • Lastly, engaging Polsinelli attorneys with significant depth of skill in the area of trade secrets and related issues allowed the team to remain nimble.  
Regarding the legal team’s structure, Polsinelli attorney Suni Sukduang observed that “every facet of our legal strategy had to have discrete teams that focused on the issues germane to that particular endeavor, and to pull resources from across the firm to tackle. Every team had to work both separately and in coordination to get it done.” This meant working around the clock, through weekends and taking depositions on the July 4 holiday.  

This matter was a true “bet-the-company” case in that if Leam was successful in its suit, Erdos Miller’s business would have been so significantly compromised that it would be forced to close its doors. Polsinelli attorneys were confident in their approach, but leaving nothing to chance also worked with colleagues across the firm to provide Erdos Miller with contingency counseling to protect their ultimate business interests. Employment attorneys worked with Erdos Miller’s in-house personnel to review the structure of their employment agreements, and bankruptcy attorneys structured prospective next steps should the litigation not end in Erdos Miller’s favor. Polsinelli’s Insurance Recovery and Appellate practices also consulted on the matter, examining all possible scenarios and working to protect Erdos Miller in any outcome.

Erdos Miller had more at stake than just the final legal verdict; in the interim it also faced a critical threat to its reputation. The shutdown of its business required that a large number of pending orders be put on hold, leading to unhappy customers who were also concerned they could be called as witnesses in the pending litigation. Polsinelli attorneys communicated directly with these clients, keeping them informed on the current status of the matter and assuring them that Erdos Miller’s business practices were sound. The firm worked not only to protect Erdos Miller and its reputation, but also its clients and customers from efforts by Leam to extract information from them.

Result

Polsinelli and Erdos Miller had just over 30 days to prepare for what was eventually a two-day trial. Ultimately the Honorable John Wooldridge ruled in Erdos Miller’s favor, determining that based on the facts under review, there was no evidence of any misappropriation of trade secrets or confidential information. The temporary restraining order was completely dissolved; while the ultimate suit is yet to be decided (with a court date set for December 5th), Erdos Miller is now free to return to its normal business practices with the interruption of services to its clients lasting only 37 days.

The ultimate success of this matter came down to seamless integration of Polsinelli attorneys across practices and geographic offices – among them Dallas, Chicago, Washington, D.C., and San Francisco. All teams worked together to map out and execute a successful legal strategy for a client with much to lose. Said Polsinelli attorney, Tracy Druce, “As a lawyer, you are not always faced with a bet-the-company type of litigation, but when you are able to preserve a company’s business, prevent layoffs, and let them get back to their daily work, you have succeeded because they have succeeded.”

Polsinelli is proud of the results we obtain for our clients, but you should know that past results do not guarantee future results; that every case is different and must be judged on its own merits; and that the choice of a lawyer is an important decision and should not be based solely upon advertisements. Polsinelli PC. Polsinelli LLP in California.