Amoco Production Co. v. Laird
62 U.S.L.W. 2294, 128 Oil & Gas Rep. 484, 622 N.E.2d 912 (1993)
Sections
Rule of Law:
Under the Indiana Uniform Trade Secrets Act, information is considered a trade secret and 'not readily ascertainable' if its duplication would require a substantial investment of time, expense, or effort, even if the information derives from public sources or technologies. The plaintiff is not required to prove that it is economically infeasible for a competitor to acquire the information by other means.
Facts:
- Amoco Production Company engaged in an extensive exploration project to identify potential oil reserves in the Northeast Central United States, aiming for significant discoveries of 50 million barrels.
- Amoco formed an expert team of geologists and geophysicists who spent months reviewing literature, confidential files, and conducting interviews to narrow the search from a massive region to four specific sites.
- Amoco paid $150,000 to Airborne Petroleum, Inc. to conduct a microwave radar survey of a 13,000-square-mile area using a specific navigational grid designed by Amoco's team.
- Based on the survey and subsequent analysis, Amoco identified two specific sites in Indiana with high potential for oil production.
- John Clendenning, an Amoco geologist frustrated with the company, faxed a map with circles accurately defining these potential reserve sites to William Laird, an oil wildcatter.
- Using the map provided by Clendenning, Laird traveled to the specific sites in Indiana and successfully obtained oil and gas exploration leases for a significant portion of the reserve locations.
- Amoco discovered Laird's activities when they sent a land negotiator to the area to secure leases and found that Laird had already acquired them.
Procedural Posture:
- Amoco filed a lawsuit against Laird in the trial court seeking a temporary restraining order and preliminary injunction.
- The trial court granted Amoco's request for a preliminary injunction prohibiting Laird from pursuing the leases.
- Laird filed an interlocutory appeal to the Indiana Court of Appeals.
- The Indiana Court of Appeals reversed the trial court's decision, ruling the information was not a trade secret because it was not 'economically infeasible' to reproduce.
- Amoco petitioned the Supreme Court of Indiana for transfer (appeal) of the case.
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Issue:
Does geological information regarding potential oil reserves constitute a protectable trade secret under the Indiana Uniform Trade Secrets Act when the information is derived from publicly available technologies but requires a substantial investment of time, expense, and effort to compile?
Opinions:
Majority - Dickson
Yes, the Court held that the information qualifies as a trade secret because duplication of the data would require a substantial investment of time, expense, and effort, rendering it not 'readily ascertainable.' The Court rejected the lower court's standard of 'economic infeasibility,' noting that such a high bar appears nowhere in the statutory text of the Uniform Trade Secrets Act (UTSA). While Amoco used publicly available tools like microwave radar and geological data, the unique compilation and the specific results generated by their expensive and time-consuming process were not previously known in the marketplace. Consequently, the difficulty and cost of generating the information independently made it a protectable secret.
Analysis:
This decision is significant because it clarifies the standard for what constitutes a trade secret in Indiana, specifically rejecting the harsh 'economic infeasibility' test which would have required plaintiffs to prove that a competitor literally could not afford to replicate the information. By adopting a standard based on 'substantial investment of time, expense, or effort,' the court aligned Indiana with other jurisdictions interpreting the Uniform Trade Secrets Act. This ruling encourages commercial innovation and exploration by ensuring that businesses can protect the fruits of their labor, even when those fruits are born from a combination of publicly known technologies. It validates the concept that a unique compilation of public data can still be a trade secret if the compilation process itself is burdensome.
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