Wellogix, Inc. v. Accenture, L.L.P.

• Decision Date: 15 May 2013
• Docket Number: No. 11–20816.,11–20816.
• Parties: WELLOGIX, INC., Plaintiff–Appellee, v. ACCENTURE, L.L.P., Defendant–Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

716 F.3d 867

WELLOGIX, INC., Plaintiff–Appellee,

v.ACCENTURE, L.L.P., Defendant–Appellant.

No. 11–20816.

United States Court of Appeals,Fifth Circuit.

May 15, 2013.

Richard Russell Hollenbeck, Randall Carroll Owens, Thomas Clark Wright, Wright & Close, L.L.P., Houston, TX, Richard N. Laminack, Laminack, Pirtle & Martines, Houston, TX, Frank Zugin Lin, Hagan, Noll & Boyle, L.L.C., Houston, TX, for Plaintiff–Appellee.

Macey Reasoner Stokes, Maria Wyckoff Boyce, Cristina Espinosa Rodriguez, Aaron Michael Streett, Baker Botts, L.L.P., Houston, TX, Jonathan F. Cohn, Eric Dean McArthur, Esq., Carter Glasgow Phillips, Sidley Austin, L.L.P., Washington, DC, Robert Lawrence Voyles, Baker Botts, L.L.P., Dallas, TX, for Defendant–Appellant.

Appeal from the United States District Court for the Southern District of Texas.

Before DeMOSS, SOUTHWICK, and HIGGINSON, Circuit Judges.

HIGGINSON, Circuit Judge:

Plaintiff–Appellee Wellogix, Inc. alleged that Defendant–Appellant Accenture, L.L.P., misappropriated its trade secrets. After a nine-day trial, a jury returned a unanimous verdict against Accenture, awarding Wellogix compensatory and punitive damages. After a careful review of the record, we find that there was sufficient evidence to support the jury's verdict, and the resulting damages awards. See Lavender v. Kurn, 327 U.S. 645, 653, 66 S.Ct. 740, 90 L.Ed. 916 (1946) (“Only when there is a complete absence of probative facts to support the conclusion reached does a reversible error appear.”). Had we sat in the jury box, we may have decided otherwise. “But juries are not bound by what seems inescapable logic to judges.” Morissette v. United States, 342 U.S. 246, 276, 72 S.Ct. 240, 96 L.Ed. 288 (1952). Guided by this deference, we AFFIRM.

I. Facts and Proceedings

The oil and gas industry spends “billions of dollars” each year to construct oil wells. Yet, traditionally, oil companies planned such projects over “coffee and doughnuts,” using paper records to track and pay costs. And, to the extent that they employed computer software, they relied on “basic tools” such as Excel. Due, in part, to this “paper process,” oil companies struggled to estimate certain well construction costs—known as “complex services.” Even modest improvements in how companies estimated such costs could save “[h]undreds of millions of dollars.”

Wellogix, Inc.—motto: “[m]aking the complex simple”—sought to modernize this process. Wellogix developed software that allowed oil companies to “plan, procure, and pay for complex services”—all online. The software featured: “dynamic templates” that adjusted cost and supply estimates based on “intelligence built into” the underlying source code; ¹ a “workflow navigator” that provided a framework for planning and procuring services; and “electronic field tickets” that allowed suppliers to record information about orders.

Wellogix was, according to its CEO, the only company offering complex services software from 2000 to 2005. However, Wellogix's software was not a stand-alone solution. Wellogix instead relied on other companies' software to perform core accounting functions.

To fill this technology gap, Wellogix entered into an agreement in 2005 with the software company SAP. The agreement allowed Wellogix to integrate its complex services software with SAP's accounting software. As part of the agreement, Wellogix provided its source code to SAP.

To promote its software, Wellogix entered into six marketing agreements with the consulting firm Accenture, L.L.P. Wellogix also participated in pilot projects with oil companies. Wellogix shared source code and access to its technology with both Accenture and the oil companies, subject to confidentiality agreements.

Some of the pilot projects involved Accenture. For example, Wellogix and Accenture worked together in 2000 on an “eServices” pilot that provided BP America, Inc. (“BP”) with access to the “dynamic template” and “workflow navigator” features. Others did not. For example, Wellogix worked with a different consultant on a 2004 “eTrans” pilot for BP.

As part of “eTrans,” BP implemented Wellogix software at two well sites. BP also hosted a confidential online portal that allowed Wellogix to share files and information with BP employees. Although a BP manager considered the pilot a success, BP discontinued the project in 2005 “due to cost and internal integration issues.”

After “eTrans,” BP sought to implement global software that “was not just for complex services, but was for [its] entire ... system.” To that end, BP sponsored a new pilot, known as “Purchase–to–Pay,” or “P2P.” BP instructed Accenture to select a software provider.

SAP and Wellogix pitched their integrated software to Accenture in May 2005. As part of the pitch, Wellogix described the software's dynamic templates.

Without notifying Wellogix, Accenture and SAP began developing the complex services component of the global software for BP.² As they developed the component, Accenture and SAP apparently accessed Wellogix technology—including flow diagrams, design specifications, and source code critical to Wellogix's software—that had been uploaded to the confidential eTrans portal.

Wellogix sued BP, Accenture and SAP in district court in 2008, alleging that they had stolen and misappropriated Wellogix trade secrets. District Judge Keith Ellisondismissed SAP from the lawsuit for lack of venue.

Wellogix and BP agreed to arbitrate. Judge Ellison, acting as the arbitrator, found that Wellogix's source code was a trade secret, but that BP did not use the code. However, Judge Ellison found that BP breached its confidentiality agreement with Wellogix by making Wellogix's confidential information accessible to Accenture and SAP.

Wellogix's suit against Accenture proceeded to trial. The jury returned a verdict for Wellogix, awarding $26.2 million in compensatory damages and $68.2 million in punitive damages. Accenture renewed its motion for judgment as a matter of law, and also filed a motion for a new trial. Judge Ellison denied both motions except to suggest a remittitur of the punitive damages award to $18.2 million—the amount Wellogix sought at trial. Wellogix accepted the remittitur, and the district court entered final judgment. Accenture appeals.

II. Accenture's Motion for Judgment as a Matter of Law

“Although we review denial of a motion for judgment as a matter of law de novo ... ‘our standard of review with respect to a jury verdict is especially deferential.’ ” SMI Owen Steel Co. v. Marsh USA, Inc., 520 F.3d 432, 437 (5th Cir.2008) (quoting Flowers v. S. Reg'l Physician Servs., Inc., 247 F.3d 229, 235 (5th Cir.2001)). In reviewing the record, “we draw all reasonable inferences in favor of the nonmoving party, and ... may not make credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000); see Brown v. Bryan Cnty., 219 F.3d 450, 456 (5th Cir.2000). This is because “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge.” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). Accordingly, we do not find that the district court erred unless “the evidence at trial points so strongly and overwhelmingly in the movant's favor that reasonable jurors could not reach a contrary conclusion.” Omnitech Int'l, Inc. v. Clorox Co., 11 F.3d 1316, 1323 (5th Cir.1994).

1. Misappropriation

“Trade secret misappropriation under Texas law is established by showing: (a) a trade secret existed; (b) the trade secret was acquired through a breach of a confidential relationship or discovered by improper means; and (c) use of the trade secret without authorization from the plaintiff.” ³Phillips v. Frey, 20 F.3d 623, 627 (5th Cir.1994); see also Taco Cabana Int'l, Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1123 (5th Cir.1991), aff'd sub nom. Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992).

a) Existence of Trade Secret

“ ‘The existence of a trade secret is properly considered a question of fact to be decided by the judge or jury as fact-finder.’ ” Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 150 (5th Cir.2004) (quoting Restatement (Third) Unfair Competition § 39 cmt. (1995)). A trade secret “is any formula, pattern, device, or compilation of information used in one's business, and which gives an opportunity to obtain an advantage over competitors who do not know or use it.” Taco Cabana, 932 F.2d at 1123;see Hyde Corp. v. Huffines, 158 Tex. 566, 314 S.W.2d 763, 776 (1958). To determine whether a trade secret exists, we consider six factors, weighed “in the context of the surrounding circumstances”:

(1) the extent to which the information is known outside of his business; (2) the extent to which it is known by employees and others involved in his business; (3) the extent of the measures taken by him to guard the secrecy of the information; (4) the value of the information to him and to his competitors; (5) the amount of effort or money expended by him in developing the information; (6) the ease or difficulty with which the information could be properly acquired or duplicated by others

In re Bass, 113 S.W.3d 735, 739–40 (Tex.2003) (quoting Restatement of Torts § 757 cmt. B. (1939)); see Triple Tee Golf, Inc. v. Nike, Inc., 485 F.3d 253, 267 (5th Cir.2007).

Here, Wellogix presented sufficient evidence and testimony to support the jury's finding that Wellogix's technology contained trade secrets. Wellogix showed that, because it was the only company offering complex services software from 2000 to 2005, its software—and, in particular, the underlying proprietary source code—gave it “an opportunity to obtain an advantage over competitors.” Taco Cabana, 932 F.2d at 1123. Wellogix also showed that the six Bass factors weigh in its favor....