Seismic Data: Damages for Stealing the Treasure Map
Seismic data in oil and gas businesses is a vital asset. But what happens when seismic data is used by someone without authorization (misappropriated)? Under Texas trade secret law, there are many remedies available including injunctive relief to stop the seismic data from being used, published, or transmitted by the party that obtained the seismic data without permission. One interesting aspect of damages for the misappropriation of seismic data is that the liable party doesn’t need to profit from its bad acts to be liable to the seismic owner. Sw. Energy Prod. Co. v. Berry–Helfand, No. 12–11–00370–CV, 411 S.W.3d 581, 608–09, 2013 WL 3461644, at *24 (Tex.App.-Tyler July 10, 2013, no pet. h.) (“[A] lack of profit from [the] misappropriation and use of the secret will not exempt the wrongdoer from liability in the amount of the trade secret's value when it was misappropriated.”). Indeed the 5th Circuit has taken a “flexible and imaginative” approach to the calculation of damages for misappropriation of trade secrets including seismic data. Univ. Computing Co. v. Lykes–Youngstown Corp., 504 F.2d 518, 538 (5th Cir.1974). Other than temporary and permanent injunctions, the valuation of seismic data can be demonstrated by the following methods:
1. Value of the seismic owner’s lost profits; 2. Defendant’s actual profits from the use of the seismic data; 3. The value a prudent person would have paid for the seismic data; 4. Damages in the amount of a reasonable royalty; and 5. The development costs defendant avoided by the misappropriation.
For seismic data, damages often focus on the cost to acquire the seismic data by the owner and the use of the seismic data by the defendant. If the trade secret has been destroyed by the use of the defendant, then damages typically center around the value of the trade secret over a number of a years. One interesting note is that seismic data is usually acquired a number of years before any misappropriation and as those in the oil business would agree, the cost of obtaining seismic data over the past 10 years has certainly increased. So if you own seismic data and obtained it a few years ago, the seismic data is most likely worth more today that it was when you acquired the data and any misappropriation of the seismic data today would focus on the value of the data today, not when you acquired the seismic data.
You may also ask whether exemplary damages are available for willful bad acts of a defendant and these damages can be obtained. In fact, assuming your seismic data is worth $5 million dollars, Texas law also allows you to recover up to 2 times the actual value of your data if you can prove the data was willfully and maliciously misappropriated by a defendant. Thus, in a scenario where your seismic data is worth $5 million dollars, you would have the potential to obtain $15 million dollars for the bad actions of a defendant if they were carried out in a willful or malicious manner. If the seismic data has been used to determine where to drill wells, without authorization, a seismic owner could also potentially seek damages based upon the production of the wells. This position would track the idea that the seismic data or “treasure map” is the reason why a person would drill for oil or gas in a certain location and thus, any misappropriation of seismic data used for determining where to drill would be subject to potential damages to be paid to the seismic data owner.
If you have any questions regarding your potential damages, recoveries, or on injunctions related to your seismic data, you should seek the legal advice from attorneys with experience in this field of law.
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