257 In re XTO Res. I, LP

Richard F. Brown

 
The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.
 
In re XTO Resources I, LP, 248 S.W.3d 898 (Tex. App.–Fort Worth 2008, no pet), holds that reserve estimates, recoverable gas reserve estimates, projected future revenues, and the location of proved undeveloped acreage and proved developed not producing acreage are trade secrets. Trade secrets are privileged from disclosure if the allowance of the privilege will not tend to conceal fraud or otherwise work injustice. The party asserting a trade secret privilege has the burden of proving that the discovery information sought qualifies as a trade secret.
 
Texas courts rely on the following six-factor test to determine whether information can be classified as a trade secret: (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; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. The party claiming a trade secret is not required to satisfy all six factors because trade secrets cannot fit into each factor every time, and other circumstances may be relevant to the trade secret analysis.
 
The Supreme Court in In re Bass held that the 3-D geological seismic data at issue in the case could be considered a trade secret. XTO presented evidence on all six factors through the means of affidavits and other evidence that was similar to the situation in In re Bass. The court ultimately held that the data sought by the Real Parties in Interest was a trade secret and was protected by Rule 507.