Petters v. Williamson & Associates, Inc.

151 Wash. App. 154
CourtCourt of Appeals of Washington
DecidedJuly 6, 2009
DocketNo. 62417-2-I
StatusPublished
Cited by6 cases

This text of 151 Wash. App. 154 (Petters v. Williamson & Associates, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Petters v. Williamson & Associates, Inc., 151 Wash. App. 154 (Wash. Ct. App. 2009).

Opinion

Dwyer, A.C.J.

¶1 For the second time this trade secrets case comes before us. In an unpublished 2003 decision,1 we affirmed a 2001 trial court ruling enjoining Williamson & Associates, Inc., from further misappropriating Richard Petters’ design of a particular seafloor drilling technology (referred to here as “remote rod-core drilling”). Presently at issue is a 2008 ruling by the trial court that dissolved the 2001 injunction based on the court’s conclusion that remote rod-core drilling no longer constitutes a trade secret. Petters contests this ruling as well as several rulings on novel claims that he raised in response to Williamson’s petition to dissolve the injunction, in particular the court’s rejection of his demand for additional royalties and his claim that another remote seafloor drilling technology developed by Williamson (“wire-line drilling”) constituted further misappropriation. Williamson, in turn, cross-appeals attorney fee and exemplary damage awards resulting from its violation of the injunction. Holding that the trial court correctly applied the law and that the court’s challenged factual findings are supported by substantial evidence, we affirm in all respects.

[158]*158Background

¶2 Petters is a design engineer who specializes in underwater engineering. Ex. 67 (2001 Memorandum Ruling) (MR) at 1. Beginning in the early 1980s, Petters worked with Williamson to design and market a remotely operated, deep-ocean rock coring drill. MR at 2-5; Clerk’s Papers (CP) at 995. Around 1992, Petters began adapting land-based drilling technologies for that purpose. MR at 5-6; CP at 996.

¶3 In 1994, a Japanese Company, Nichiyu Giken Kogyo Co., Ltd. (NGK) expressed interest, on behalf of the Japanese government, in acquiring a seafloor drill based on the technology being developed and marketed by Williamson. MR at 6-7; CP at 996. Petters then prepared a successful bid proposal for NGK on Williamson’s behalf. MR at 7; CP at 996-97.

¶4 Based on this bid, Williamson contracted with NGK to provide a completed remotely operated seafloor drill, referred to as the first “BMS” drill, or “BMS-I.”2 The drill was unique because it adapted an established land-based technology, rod-core drilling, for remote use on the seafloor. With the use of remote rod-core drilling, the purpose of the drill — taking consecutive cylindrical samples of subsurface material, or “core” — is achieved by advancing into the seafloor a long “drill string” tipped with a circular drill bit. The drill string consists of numerous three-meter-long sections of pipe, or “core barrel,” which can be advanced at any given time far enough to retrieve approximately two meters of core.

¶5 In order to retrieve any new two meters of core, however, the operator of the drill must disassemble the entire existing drill string (i.e., the string that has been used to retrieve the previous core sample) by unthreading each piece of core barrel from the next piece, and then, [159]*159ultimately, removing the sample from the piece of core barrel at the tip of the drill string. In order to retrieve another sample after this is done, the entire drill string must be reassembled piece-by-piece, another length of core barrel added, and the process repeated. Report of Proceedings (RP) (Jan. 3, 2008) at 41-42. Given the nature of the technology, the amount of time required to retrieve any sample increases exponentially in relation to its subsurface depth.

¶6 After Williamson contracted to supply NGK with the BMS-I drill, Petters and Williamson disagreed about the compensation due Petters. MR at 10-11. Soon thereafter, Petters ceased working for Williamson. In 1999, Petters brought this lawsuit against Williamson. As is relevant to this appeal, Petters alleged that Williamson had misappropriated trade secrets owned, in part, by Petters — specifically, BMS-I’s unique adaptation of rod-core drilling technology to remote seafloor operation — and sought both an award of damages and the entry of an injunction prohibiting further misappropriation. CP at 997.

¶7 Following a four-day bench trial, the trial court ruled that Williamson had misappropriated Petters’ trade secrets. Specifically, the court found that

the drill design itself and how it is arranged is not information available in the public domain. . . . Some components of the drill design are not unique, but the total configuration is.

MR at 15. Based on this finding, the court ruled that Williamson had misappropriated the BMS technology by transferring it to a subsidiary company without Petters’ authorization. MR at 17-18. Although the court concluded that Petters had “not proved that he suffered any ‘actual loss’ as a result of the misappropriation,” it also concluded that it was appropriate to enjoin further misappropriation. It further required Williamson to pay to Petters six percent of the gross proceeds obtained as a result of any future transfer of the technology. MR at 19.

¶8 Both Petters and Williamson appealed to this court, which affirmed the trial court’s order in its entirety. CP at [160]*1601016. Petters sought discretionary review by our Supreme Court, but review was denied. CP at 974.

¶9 lime passed. During that time, unbeknownst to Petters, Williamson had capitalized on the success of the BMS-I drill to seek, and win, a highly competitive contract to design and build a second remotely operated seafloor coring drill for NGK. CP at 976. Based on its award of the contract, Williamson manufactured a second drill, the BMS-II, which utilized a technology almost identical to that designed by Petters. According to the trial court, “[t]hat deal most definitely involved the very technology that the Court described in its injunction.” RP (April 18, 2008) at 86. The contract also included a “BMS License Agreement,” which provided to NGK “an exclusive license to manufacture, use and sell BMS” technology in Japan, Korea, China, and Taiwan. Plaintiff’s Ex. 13, at 2. Ultimately, NGK agreed to pay Williamson $3.45 million. CP at 976-77.

¶10 Petters first learned of this transaction after Williamson had already entered into the contract with NGK. RP (Apr. 18, 2008) at 45. He immediately demanded that Williamson cease all disclosure of the BMS technology. CP at 116. Williamson refused this demand, asserting that while the 2001 injunction required payment of royalties to Petters, it did not require authorization from Petters prior to disclosure of the BMS technology. CP at 118,121. Petters vehemently disputed this interpretation of the injunction.

¶11 Williamson responded in two ways: first, by commencing incremental payments of six percent royalties to Petters, and, second, by reopening this lawsuit, filing with the trial court in December 2006 a pleading entitled “APPLICATION TO TERMINATE TRADE SECRET INJUNCTION AND TERMINATE OBLIGATION TO PAY ROYALTY AND FOR TESTIMONIAL HEARING.” CP at 1-16. In addition to the relief described in the pleading’s heading, Williamson also sought to establish that the contract with NGK had not constituted a violation of the 2001 injunction, i.e., that Williamson, by paying to Petters six percent of the roughly [161]*161$3.45 million in new gross revenues3 obtained from NGK, was in compliance with the court’s 2001 ruling. CP at 16.

¶12 Discovery recommenced.

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Cite This Page — Counsel Stack

Bluebook (online)
151 Wash. App. 154, Counsel Stack Legal Research, https://law.counselstack.com/opinion/petters-v-williamson-associates-inc-washctapp-2009.