Geophysical Serv. Inc. v. Conocophillips Co.
| Decision Date | 13 May 2016 |
| Docket Number | CIVIL ACTION H-15-2766 |
| Parties | GEOPHYSICAL SERVICE INCORPORATED, Plaintiff, v. CONOCOPHILLIPS COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of Texas |
Pending before the court is a motion to dismiss filed by defendant ConocoPhillips Company ("Conoco"). Dkt. 13. Having considered the motion, response, reply, and applicable law, the court is of the opinion that the motion should be GRANTED.
Plaintiff Geophysical Service Incorporated ("GSI") is a Canadian company that provides seismic data services to the oil and gas industry. Dkt. 1. GSI asserts that this seismic data is confidential and proprietary to GSI and that it endeavors to maintain the secrecy of seismic data to protect it from disclosure to GSI's competitors. Id. GSI contends that it owns seismic data that was recorded and created offshore of Newfoundland and Labrador, Canada, in surveys in the Atlantic Ocean off the East Coast in 1972 and in Nova Scotia in 1984 ("GSI Seismic Materials"). Id. The GSI Seismic Materials are stored on paper, microfiche, or mylar. Id. GSI also stores all of its seismic data in digital form in a database. Id. GSI contends that the GSI Seismic Materials are protectable by copyright. Id.
According to GSI, it has been required to submit its seismic materials to Canadian regulatory boards including the Canada-Nova Scotia Offshore Petroleum Board ("CNSOPB"). Id. The CNSOPB was created pursuant to Canada Nova Scotia Offshore Atlantic Accord Implementation Act, S.C. 1988, c. 28. Id. The Implementation Act gave the CNSOPB authority to implement regulations "for the purposes of safety, the protection of the environment, and accountability as well as for the production and conservation of petroleum resources." Dkt. 13, Ex. E-2 § 153 (Canada Nova Scotia Offshore Atlantic Accord Implementation Act, S.C.). GSI claims that the Nova Scotia Offshore Petroleum Geophysical Operations Regulations, N.S. Reg. 191/95 (SOR/95-144) required GSI to submit a copy of the GSI Seismic Materials on a confidential basis. Dkt. 1. Conoco contends that the regulatory boards are authorized to freely disseminate data to third parties after ten years. Dkt. 13.
In 2003, a Canadian trial court issued a decision in a case involving GSI as the "applicant" and the chairperson of the National Energy Board as the "respondent."1 Dkt. 13, Ex. B. The case involved three applications brought by GSI under the Canadian Access to Information Act ("ATIA"). Id. The applications were against various boards, including the CNSOPB, that had refused GSI's information requests for the names and addresses of third parties who had requested access to information that GSI had provided to the boards. Id. The CNSOPB had refused to provide the information, stating that the information was privileged and could not be disclosed without written consent of the parties who requested the information. Id. The Canadian trial court concluded that GSI "was entitled to disclosure . . . of the names of those who requested of a Board the release of information or data provided to that Board by [GSI] and the link between each such requester and the data requested." Id.
GSI contends that it requested disclosure under the ATIA from the CNSOPB of any GSI seismic information released to Conoco on or about September 18, 2012, and again on or about July 24, 2013. Dkt. 1 & Exs. A-B. The CNSOPB's responses to GSI's ATIA requests indicate that Conoco had previously requested and received the GSI Seismic Materials. Dkt. 1, Exs. A-B. The CNSOPB sent the GSI Seismic Materials to a copy service that copied and shipped the materials to Conoco in Houston, Texas. Id. The complaint does not indicate where the copy service was located, but an invoice attached to the complaint demonstrates that at least some of the copies were made in Canada. Id.; Dkt. 1, Ex. A.
GSI contends that it was unaware that Conoco had obtained copies of the GSI Seismic Materials until on or after September 23, 2013. Id. GSI argues that Conoco knew it was not authorized to obtain GSI Seismic Materials from any source other than GSI and that had Conoco properly licensed the materials, it would have been required to pay GSI a licensing fee in excess of $500,000. Id.
On November 26, 2013, the Supreme Court of Nova Scotia heard arguments on a motion brought by GSI in an "application" in which GSI challenged the CNSOPB's "authority to make certain Regulations (the 'Regulations') pertaining to the collection and storage of seismic data generated by private companies." Dkt. 13, Ex. A. The court noted that Nova Scotia passed the Canada - Nova Scotia Offshore Petroleum Resources Accord Implementation (Nova Scotia) Act, S.N.S. 1987, c.3 (the "Nova Scotia Act") in 1987. Id. Then, in 1988, the Canadian federal government passed the Canada - Nova Scotia Offshore Petroleum Resources Accord Implementation Act, S.C. 1988, c. 28 (the "Federal Act"). Id. GSI challenged parallel regulations within the Nova Scotia Act and the Federal Act as ultra vires. Id. The challenged regulations require companies like GSI to obtain a license, and the regulations delegate authority to the CNSOPB to determine thelicensing requirements. Id. The court found that "the seismic operations performed by [GSI were] part of [the] overall scheme for exploration and development of Nova Scotia's offshore petroleum resources" and that the "data and information requirement[s] of the Board [were] an integral part of and consistent with the overall purpose, objective and scheme of the Acts and the Regulations." Id. The court held that "the impugned Regulations are vires and are part of the overall legislative and regulatory scheme of the Acts" and that the "fact that the information supplied by [GSI] to the [CNSOPB] for many years, pursuant to authorizations and upon agreed terms and conditions, is no longer confidential are the rules of the industry of Nova Scotia" and that these rules are "the 'governing authority's rule' and they are enabled by the governing statutes." Id. The court pointed out that GSI knew the rules when it "undertook to participate in this exploration more than a decade ago." Id.
GSI also filed twenty-five actions in Alberta, Canada against various Canadian petroleum boards, oil and gas companies,2 seismic companies, and copying companies, and Canadian Chief Justice Wittman took over case management of these actions in April 2015 and ordered a trial on two common issues: (1) What is the effect of the Regulatory Regime on GSI's claims? and (2) Can [Canadian] copyright subsist in seismic material of the kind that are the subject matter of GSI's claims? Dkt. 26, Ex. 1 (Geophysical Service Incorporated v. Encana Corporation, et al., 2016 ABQB 230, 61). The Court of Queen's Bench of Alberta issued an opinion in those cases on April 21, 2016. Id. The court held that "GSI has full [Canadian] copyright and other proprietary rights over its seismic data, but the Regulatory Regime applies to the extent it conflicts with the Copyright Act;the Regulatory Regime, in effect, creates a compulsory license over the data in perpetuity after the expiry of the confidentiality or privileged period." Id. The court determined that "there is nothing unlawful [under Canadian law] about [the oil and seismic companies] accessing or copying the information from the Boards." Id.
GSI filed this lawsuit on September 22, 2015. Dkt. 1. It asserts the following claims against Conoco: (1) direct copyright infringement in violation of 17 U.S.C. § 106; (2) contributory copyright infringement in violation of 17 U.S.C. § 106; (3) unjust enrichment; (4) trade secret misappropriation; and (5) misappropriation of trade secrets, conversion, or theft in violation of the Texas Theft Liability Act, Texas Penal Code section 31.03. Id. Conoco filed a motion to dismiss all claims, arguing that (1) the Act-of-State Doctrine requires dismissal; (2) GSI is collaterally estopped from challenging the CNSOPB's authority to disseminate the data; (3) the CNSOPB was authorized to disseminate the data; (4) the contributory infringement claims must be dismissed because the Copyright Act does not apply extraterritorially; (5) all of GSI's claims are time-barred; and (6) the direct copyright infringement claim is not plausible. Dkt. 13. Conoco alternatively argues that GSI lacks standing to assert its claims. Id. The motion is now ripe for disposition.
"Federal Rule of Civil Procedure 8(a)(2) requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1964-65 (2007). In considering a 12(b)(6) motion to dismiss a complaint, courts generally must accept the factual allegations contained in the complaint as true. Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982). The court does not look beyond the face of the pleadings in determining whether the plaintiff has stated a claim under Rule 12(b)(6). Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999). "[A] complaint attacked bya Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, [but] a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 127 S. Ct. at 1964-65 (citing Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc., 40 F.3d 247, 251 (7th Cir. 1994)) (citations omitted). And, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Twombly, 127 S. Ct. at 1965. The supporting facts must be plausible—enough to raise a reasonable expectation that discovery will reveal further supporting evidence. Id. at 1959.
The court will address, seriatim, Conoco's arguments that (1) GSI's contributory copyright...
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