Amoco Production Co. v. Laird

• Decision Date: 21 October 1993
• Docket Number: No. 25S05-9310-CV-1144,25S05-9310-CV-1144
• Citation: 622 N.E.2d 912
• Parties: , 30 U.S.P.Q.2d 1515 AMOCO PRODUCTION COMPANY, Appellee (Plaintiff Below), v. William D. LAIRD, Gary T. Casper, Control Flow, Inc., I.K. Production Company, and Laird Exploration Company, Appellants (Defendants Below).
• Court: Indiana Supreme Court

Page 912

622 N.E.2d 912

62 USLW 2294, 30 U.S.P.Q.2d 1515

AMOCO PRODUCTION COMPANY, Appellee (Plaintiff Below), v. William D. LAIRD, Gary T. Casper, Control Flow, Inc., I.K Production Company, and Laird Exploration Company Appellants (Defendants Below).

No. 25S05-9310-CV-1144.

Supreme Court of Indiana.

Oct. 21, 1993.

G. Morris Hamm, Schindler & Hamm, P.C., Houston, TX, Ted A. Waggoner, Peterson & Waggoner, Rochester, for appellants.

Franklin A. Morse, II, David R. Melton, Paul B. Hunt, Barnes & Thornburg, South Bend, Craig Hall, Amoco Production Co., Houston, TX, for appellees.

Daniel J. Lueders, Steven E. Zlatos, Spiro Bereveskos, Woodard, Emhardt, Naughton, Moriarty & McNett, Indianapolis, for amicus curiae, Indianapolis Bar Ass'n Patent, Trademark, and Copyright Section.

Thomas J. Dodd, Baker & Daniels, South Bend, Steven E. Zlatos, Woodard, Emhardt, Naughton, Moriarty, & McNett, Indianapolis, for amicus curiae Indiana State Bar Ass'n Patent, Trademark, and Copyright Section.

ON PETITION TO TRANSFER

DICKSON, Justice.

Finding that certain information as to the location of potential oil fields is a trade secret pursuant to Indiana statute, the trial court granted a preliminary injunction sought by Plaintiff-Appellee Amoco Production Company ("Amoco") against Defendants-Appellants William D. Laird, Gary T. Casper, Control Flow, Inc., I.K. Production Company, and Laird Exploration Company (collectively, "Laird"). The Court of Appeals reversed. Laird v. Amoco Prod. Co. (1992), Ind.App., 604 N.E.2d 1249. We grant transfer in this case of first impression to address the meaning of the phrase "not being readily ascertainable" as used in the Indiana Uniform Trade Secrets Act, Ind.Code Sec. 24-2-3-1, et seq., substantially derived from the Uniform Trade Secrets Act, 14 Uniform Laws Annotated, Uniform Trade Secrets With 1985 Amendments (1990) ("UTSA").

In early 1991, Amoco, a corporation engaged in the identification and production of new sources of oil in the continental United States, became interested in a large area of the Northeast Central United States. Amoco was hopeful of locating oil reserves of 50 million barrels in this area where such a significant discovery would be regarded as quite surprising. In April, 1991, Amoco authorized the formation of a team of experts to more specifically determine the oil reserve potential of the project area. The nucleus of this team consisted of a geologist and a geophysicist deployed on a full-time basis under the supervision of Amoco's exploration manager, Christopher Williams. In its quest for oil reserves, the team first reviewed published literature from the United States Geologic Survey and examined substantial territorial documentation kept by Amoco in a confidential library. The team also interviewed Amoco personnel to learn of previous Amoco-sponsored experience in the region. Twenty-four possible production locations were identified through this process.

Williams, after further statistical evaluation by the team, narrowed the endeavor to four sites. Based upon additional assessment of geological fault lines and fracture swarms, the team thereafter was authorized to refine its focus on a 13,000-square-mile area in southern Michigan and northern portions of Ohio and Indiana known as the Trenton Black River formation. The team subsequently suggested that microwave radar, a means by which micro-emissions associated with large concentrations of underground hydrocarbons are detected by radar return to an over-flying aircraft, be considered in Amoco's intensified assessment of the formation. John Clendenning, an Amoco geologist consulted as an expert in microwave radar, recommended that Amoco contract with Airborne Petroleum, Inc. ("Airborne") to conduct a microwave radar survey of the area. Supplied by Amoco with a navigational grid designed by the team to locate trending geological fault patterns, Airborne conducted the microwave radar study at a cost to Amoco of $150,000.00. Data retrieved by Airborne was then forwarded by Amoco to QC Data, Inc. ("QC"), which digitized the information and incorporated it into corresponding maps. In addition to its own internal security measures, Amoco took steps to preserve the confidentiality of the survey results through contractual agreements with Airborne and QC.

After its evaluation of the digitized maps, Amoco authorized further microwave radar study in the Indiana counties of Fulton, Marshall, and Kosciusko. Subsequent analysis directed Amoco's interest to two sites lying primarily in Fulton and Marshall Counties with an estimated yield of 22 to 23 million barrels of oil. Amoco sent a senior land negotiator to Fulton County to view the area and gather information relevant to the obtaining of oil and gas leases in the vicinity. On October 29, 1991, Williams met with the team to further assess the two suspected oil fields. Because estimated production potential fell below the original 50-million-barrel objective, the group recommended deferral of site development pending future study of the reserve locations.

Clendenning, long disappointed by his perception of Amoco's reluctance to rely upon microwave radar findings in favor of more conventional, established technologies, was convinced that Amoco once again would disregard the promise of microwave radar. On November 9, 1991, he sent to Texan William Laird, a former neighbor, oil wildcatter, and oil exploration financier, a facsimile transmission of a page from a road atlas upon which he had drawn circles accurately defining the location of the potential reserve sites. Within nine days, Laird travelled to Fulton County where he employed a douser to more definitively establish the contours of the prospective fields and eventually obtained oil and gas exploration leases for a significant portion of the reserve locations.

In November of 1991, an Amoco vice-president in charge of North American exploration overruled the team's recommended postponement of site development and directed that development should proceed. Surprised at this unexpected turn of events, Clendenning contacted Laird but failed in his attempt to terminate Laird's leasing efforts. Amoco again sent its land negotiator to Indiana whereupon he discovered the extensive lease purchases within the charted reserve areas. This information was reported to Amoco security which later determined that Clendenning was the source of the information provided to Laird.

On January 24, 1991, Amoco brought an action against Laird for a temporary restraining order, a preliminary injunction, damages, and attorney's fees. The trial court granted Amoco's request for a preliminary injunction which prohibited Laird from pursuing or developing oil and gas leases in areas identified by the map and from using or disclosing any other information gained in the discovery or litigation of this case. From the issuance of the preliminary injunction Laird brought the present interlocutory appeal.

Laird contends that Amoco failed to show that (1) it was not economically feasible for Laird to identify the location of the oil fields other than by Clendenning's map or (2) the oil reserves information could not have been created by means other than Amoco's business operations. Thus, Laird reasons, Amoco failed to establish that the information was not "readily ascertainable by other proper means," a requisite statutory element for trade secret protection.

Amoco urges that the oil reserve information highlighted on Clendenning's map is a trade secret. Amoco argues that Ind.Code Sec. 24-2-3-2, the definitional component of the Indiana Uniform Trade Secrets Act, ¹ unambiguously sets forth in part that a trade secret refers to information not known to and "not being readily ascertainable" through proper means by others who can obtain economic value from its disclosure or use. Thus, Amoco asserts, because Laird could have duplicated the reserve site information only by considerable expenditure of time, effort, and expense, the information contained on the map was not readily ascertainable and therefore qualifies as a trade secret.

It is within the sound discretion of the trial court to grant or deny a preliminary injunction, and the scope of appellate review thereof is limited to whether there has been a clear abuse of that discretion. Harvest Ins. Agency v. Inter-Ocean Ins. Co. (1986), Ind., 492 N.E.2d 686, 688. Our review in this case focuses upon the trial court's finding that there was sufficient evidence to support the conclusion that information on the Clendenning map is protectable as a "trade secret," defined in relevant part by Ind.Code Sec. 24-2-3-2 as

information, including a formula, pattern, compilation, program, device, method, technique or process, that:

(1) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and

(2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Ind.Code Sec. 24-2-3-2 (emphasis added).

Judicial construction of a statute is inappropriate where a statute is clear and unambiguous. Superior Constr. Co. v. Carr (1990), Ind., 564 N.E.2d 281, 284; Community Hosp. of Anderson and Madison County v. McKnight (1986), Ind., 493 N.E.2d 775, 777. Where a statute is susceptible to more than one interpretation, however, it is ambiguous and open to construction to effect the intent of the legislature. Hinshaw v. Board of Comm'rs of Jay County (1993), Ind., 611 N.E.2d 637, 638; P.B. v. T.D. (1990), Ind., 561 N.E.2d 749, 750.

Amoco contends that the information appearing on Clendenning's map, the product of an extended and costly exploration effort, is not readily ascertainable and thus constitutes a trade secret under Ind.Code Sec. 24-2-3-2. Conversely, Laird argues that because the information provided...