Ultraflo Corp. v. Pelican Tank Parts, Inc. (926 F. Supp. 2d 935, 2013)

OPINION AND ORDER

MELINDA HARMON, District Judge.

Pending before the Court in the above referenced cause, alleging in a Third Amended Complaint (instrument # 169) misappropriation of trade secrets, civil conspiracy for the alleged misappropriation, and copyright infringement and seeking a permanent injunction and declaratory judgment, are inter alia the following “renewed” motions for partial summary judgment:

1. Defendants Pelican Worldwide, Inc. (“Worldwide”), Pelican Tank Parts, Inc. (“Tank”), and Thomas Joseph Mueller’s (“Mueller’s”) renewed motion for partial summary judgment (instrument # 138) that this suit is barred by the statute of limitations;

2. Tank, Worldwide, and Mueller’s renewed motion for partial summary judgment (# 140) on the grounds that there are no trade secrets or other proprietary information that would support a claim of conversion, unfair competition by misappropriation, misappropriation of trade secrets, and civil conspiracy; and

3. Tank and Mueller’s renewed motion for partial summary judgment (# 142) that they have conclusively negated essential elements for Ultraflo Corporation (“Ultraflo”) to establish causes of action against them and there is no evidence to support any essential element of injunctive relief or damages against Mueller.

I. Procedural History

The dispute between the parties has a lengthy procedural history, summarized as follows by the Court in # 116, 823 F.Supp.2d at pp. 581-82:

Ultraflo sued Defendants Mueller and Pelican Tank in state court alleging various state law claims, including conversion, civil conspiracy, unfair competition, and misappropriation of trade secrets. Ultraflo Corp. v. Pelican Tank Parts, Inc., No. 4:08-cv-1460 (S.D.Tex.2008), Doc. 1-5 at 1. Defendants removed that case to the United States District Court for the Southern District of Texas on the basis of federal question jurisdiction, asserting that Plaintiffs state law claims were completely preempted by the Copyright Act, 17 U.S.C. § 101. No. 4:08-ev-1460. Judge Werlein found that Defendants’ removal was untimely, declined to address the potential preemption of Plaintiffs state law claims, and remanded the case to the 280th Judicial District Court of Harris County, Texas. Id., Doc. 21. Defendants filed a notice of appeal to the Fifth Circuit (No. 4:08—cv-1460, Doc. 24) which they subsequently withdrew. Id., Doc. 25.

Before the case was resolved in state court, Defendant Mueller brought a declaratory judgment action in the United States District Court for the Eastern District of Texas, alleging that Ultraflo infringed copyrights that Mueller held to the technical drawings that Ultraflo claimed were its “trade secrets.” Mueller v. Ultraflo Corp., No. 1:09-cv-160MAC (E.D.Tex.2009). Mueller and Pelican Tank also moved to dismiss the pending case in state court.

Ultraflo alleges that, out of “a desire to avoid costly procedural fights on two fronts,” it did not respond to the motion to dismiss in state court. The state court subsequently dismissed the case before it. Mueller filed a voluntary notice of dismissal of his case in the Eastern District, which the court granted.

In March of 2009, Ultraflo brought this case against Defendants Pelican Tank and Mueller in the Southern District of Texas, alleging the same state law causes of action it brought in its initial suit before Judge Werlein: conversion, unfair competition, misappropriation of trade secrets, and civil conspiracy. Doc. 1 at 6. Ultraflo also requested a declaratory judgment against Defendants Pelican Tank and Mueller, asserting that “Defendants have raised issues of federal copyright law and have asserted federal Copyright Act rights to assets that belong to Ultraflo.” Doc. 1 at 2. It was on this final request that Ultraflo based its assertion of federal subject matter jurisdiction.

In October of 2010, Ultraflo filed an amended complaint in this case, adding Pelican Worldwide as a defendant and adding a state law claim of unfair competition by misappropriation against all defendants. Doc. 66. On April 18, 2011, the Defendants filed four separate motions for partial summary judgment. Docs. 70, 71, 73, 75.

Only after the Court, in its Opinions and Orders of October 18, 2011 (# 116), 823 F.Supp.2d 578 (S.D.Tex.2011), and September 7, 2012 (# 160) 2012 WL 3929821, ruled in the instant action that Ultraflo’s claims for unfair competition, conversion, and civil conspiracy relating to these two torts are preempted by the federal Copyright Act, did Ultraflo supplement its Second Amended Complaint (Supplement to the Second Amended Complaint, # 161). In that Supplement, as ordered, Ultraflo identified provisions of the Copyright Act that Ultraflo was relying on in its request for declaratory judgment on Defendants’ counterclaim that Mueller owned the copyright in the valve drawings, which Ultraflo claims that he had made while employed by Ultra flo before he went to work for the Pelican Defendants, Ultraflo’s competitors, and which Defendants allegedly infringed. Then Ultraflo filed a motion for leave to file a Third Amended Complaint (# 162), adding Worldwide as a Defendant and asserting a claim for copyright infringement directly against Worldwide under the federal statute. On November 14, 2012 Judge Stacy granted the motion (# 168), and the Third Amended Complaint (# 169) was filed.

The Court’s dismissal of the claims for unfair competition, conversion, and civil conspiracy to engage in unfair competition by misappropriation moots substantial portions of the motions for partial summary judgment, which were filed before the September 7, 2012 Opinion and Order and the Third Amended Complaint and which also do not address the Copyright Act claims. Thus the Court reviews the motions for partial summary judgment only with respect to the still pending causes of action.

II. Standard of Review

Summary judgment under Federal Rule of Civil Procedure 56(c) is appropriate when, viewing the evidence in the light most favorable to the nonmovant, the court determines that “the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” A dispute of material fact is “genuine” if the evidence would allow a reasonable jury to find in favor of the nonmovant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Initially the movant bears the burden of identifying those portions of the pleadings and discovery in the record that it finds demonstrate the absence of a genuine issue of material fact; the movant may, but is not required to, negate elements of the nonmovant’s case to prevail on summary judgment. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Lujan v. National Wildlife Federation, 497 U.S. 871, 885, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990); Edwards v. Your Credit, Inc., 148 F.3d 427, 431 (5th Cir.1998).

If the movant meets its burden and points out an absence of evidence to prove an essential element of the nonmovant’s case on which the nonmovant bears the burden of proof at trial, the nonmovant must then present competent summary judgment evidence to support the essential elements of its claim and to demonstrate that there is a genuine issue of material fact for trial. National Ass’n of Gov’t Employees v. City Pub. Serv. Board, 40 F.3d 698, 712 (5th Cir.1994). “[A] complete failure of proof concerning an essential element of the nonmoving party’s case renders all other facts immaterial.” Celotex, 477 U.S. at 323, 106 5. Ct. 2548. The nonmovant may not rely merely on allegations, denials in a pleading or unsubstantiated assertions that a fact issue exists, but must set forth specific facts showing the existence of a genuine issue of material fact concerning every element of its cause of action. Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir.1998). Conclusory allegations unsupported by evidence will not preclude summary judgment. National Ass’n of Gov’t Employees v. City Pub. Serv. Board, 40 F.3d at 713; Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir.1996). ‘“[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment ....’” State Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir.1990), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). “Nor is the ‘mere scintilla of evidence’ sufficient; ‘there must be evidence on which the jury could reasonably find for the plaintiff.’ ” Id., quoting Liberty Lobby, 477 U.S. at 252, 106 S.Ct. 2505. The Fifth Circuit requires the nonmovant to submit “ ‘significant probative evidence.’” Id., quoting In re Municipal Bond Reporting Antitrust Litig., 672 F.2d 436, 440 (5th Cir.1982), and citing Fischbach & Moore, Inc. v. Cajun Electric Power Co-op., 799 F.2d 194, 197 (5th Cir.1986). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Thomas v. Barton Lodge II, Ltd., 174 F.3d 636, 644 (5th Cir.1999), citing Celotex, 477 U.S. at 322, 106 S.Ct. 2548, and Liberty Lobby, 477 U.S. at 249-50, 106 S.Ct. 2505.

The court must consider all evidence and draw all inferences from the factual record in the light most favorable to the nonmovant. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); National Ass’n of Gov’t Employees v. City Pub. Serv. Board, 40 F.3d at 712-13.

“ ‘A defendant moving for summary judgment on the affirmative defense of limitations has the burden to establish that defense conclusively.’ ” Janvey v. Democratic Senatorial Campaign Committee, Inc., 699 F.3d 848 (5th Cir.2012), quoting Johnston v. Crook, 93 S.W.3d 263, 269 (Tex.App.-Houston [14th Dist.] 2002), and KPMG Peat Marwick v. Harrison County Housing Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999). “ ‘Thus, the defendant must (1) conclusively prove when the cause of action accrued, and (2) negate the discovery rule, if it applies and has been pleaded or otherwise raised, by proving as a matter of law there is no genuine issue of material fact about when the plaintiff discovered, or in the exercise of reasonable diligence should have discovered, the nature of its injury.’ ” Id., citing KPMG, 988 S.W.2d at 748.

III. Motion for Partial Summary Judgment on Statute of Limitations (# 138)

A. Relation Back Doctrine

Under the doctrine of relation back, a complaint amended to add a new party, claim or defense that arises out of the conduct, occurrence or transaction alleged in a timely original pleading and that would otherwise be time-barred, may be treated, for purposes of the statute of limitations, as having been filed on the date of the original complaint. Krupski v. Costa Crociere S.p.A., 560 U.S. 538, 130 S.Ct. 2485, 2489, 177 L.Ed.2d 48 (2010); Pessotti v. Eagle Mfg. Co., 946 F.2d 974, 975 (1st Cir.1991). Federal Rule of Civil Procedure 15(e), “Relation Back of Amendments,” in pertinent part states,

(1) When an Amendment Relates Back. An amendment to a pleading relates back to the date of the original pleading when:

(A) the law that provides the applicable statute of limitations allows relation back;

(B) the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out — or attempted to be set out — in the original pleading; or

(C) the amendment changes the party or the naming of the party against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period provided by Rule 4(m) for serving the summons and complaint, the party to be brought in by amendment:

(i) received such notice of the action that it will not be prejudiced in defending on the merits; and

(ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity.

The result of Rule 15(c)(1)(A) “is that a claim will be deemed to ‘relate back’ if relation back is permitted under state law, even if it is not permitted under federal law.” Schirle v. Sokudo USA, L.L.C., 484 Fed.Appx. 893, 901 (5th Cir.2012), citing Coons v. Indus. Knife Co., Inc., 620 F.3d 38, 42 (1st Cir.2010). Federal law provides that a newly asserted claim relates back to a claim in the initial pleading if the two arose out of the same “conduct, transaction or occurrence,” i.e., “a ‘common core of operative facts’ must unite the original claim and the newly asserted claim.” Id., quoting Mayle v. Felix, 545 U.S. 644, 659, 125 S.Ct. 2562, 162 L.Ed.2d 582 (2005). “Under Texas law, a newly asserted claim relates back unless it is ‘wholly based on a new, distinct, or different transaction or occurrence.’ ” Id., citing Tex. Civ. Prac. & Rem.Code § 16.068 (2008) (“If a filed pleading relates to a cause of action, cross action, counterclaim, or defense that is not subject to a plea of limitation when the pleading is filed, a subsequent amendment or supplement to the pleading that changes the facts or grounds of liability or defense is not subject to a plea of limitation unless the amendment or supplement is wholly based on a new, distinct, or different transaction or occurrence.”).

Generally the addition of a new defendant does not relate back to the original complaint unless what is now Rule 15(c)(1)(C) applies. Braud v. Transport Service Co. of Ill., 445 F.3d 801, 806 (5th Cir.2006). Regarding Rule 15(c)(1)(C), the court must determine “ ‘what the prospective defendant reasonably should have understood about the plaintiffs intent in filing the original complaint.’ ” Al-Dahir v. F.B.I., 454 Fed.Appx. 238, 242 (5th Cir.2011), quoting Krupski v. Costa Crociere S.p.A., 560 U.S. 538, 130 S.Ct. 2485, 2496, 177 L.Ed.2d 48 (2010). Furthermore the defendant must have received notice of a plaintiffs mistake “within the period provided by Rule 4(m) for serving the summons and complaint,” i.e., 120 days of the filing of the complaint. Id., quoting Rule 15(c)(1)(C). Notice may be imputed based on shared legal counsel when the originally named party and the new party are represented by the same attorney. Sanders-Burns v. City of Plano, 594 F.3d 366, 378 (5th Cir.2010); Jacobsen v. Osborne, 133 F.3d 315, 320 (5th Cir.1998), citing Barkins v. Int’l Inns, Inc., 825 F.2d 905, 907 (5th Cir.1987). So, too, where “the parties are so closely related in their business operations or other activities that the institution of an action against one serves to provide notice of the litigation to the other.” Jacobsen, 133 F.3d at 320, citing Kirk v. Cronvich, 629 F.2d 404, 408 n. 4 (5th Cir.1980).

Furthermore “Rule 15(c) ‘is meant to allow an amendment changing the name of a party to relate back to the original complaint only if the change is the result of an error, such as a misnomer or misidentification.”’ Miller v. Mancuso, 388 Fed.Appx. 389, 391 (5th Cir.2010), quoting and emphasizing Jacobsen v. Osborne, 133 F.3d 315, 320 (5th Cir.1998). “ ‘[F]ailing to identify individual defendants cannot be characterized as a mistake.’ ” Id., citing id. at 321. A failure to name the correct defendant due to a lack of knowledge of the proper party is not a mistake and will not allow a plaintiff to avail itself of the relation back doctrine. Jacobsen, 133 F.3d at 321.

A number of courts have held that Rule 15(c) by its express language only applies to pleadings in the same action as the original pleading, if timely filed, and does not relate to the original pleading in a prior suit. See, e.g., Morgan Distributing Co., Inc. v. Unidynamic Corp., 868 F.2d 992, 994 (8th Cir.1989) (“the 1985 complaint could not plausibly be construed as an amendment to an already dismissed 1983 suit without ‘tempering] the plain meaning’ of Rule 15(c)”); Bailey v. Northern Indiana Public Serv. Co., 910 F.2d 406, 413 (7th Cir.1990) (“Rule 15(c), by its terms, only applies to amended pleadings in the same action as the original, timely pleading.”); Benge v. United States, 17 F.3d 1286, 1288 (10th Cir.1994) (plaintiffs’ contention that their second complaint should relate back to filing of their first timely filed complaint, which was dismissed for lack of proper service of process, is foreclosed by Pipkin v. U.S. Postal Serv., 951 F.2d 272 (10th Cir.1991), holding that “a separately filed claim, as opposed to an amendment or supplementary pleading, does not relate back to a previously filed claim”); U.S. ex rel. Koch v. Koch Industries, Inc., 188 F.R.D. 617, 631-32 (N.D.Okla.1999) (“The first amended complaint filed in this ease cannot plausibly be construed as an amendment to the already dismissed complaint in Precision I [United States ex rel. Precision Co. v. Koch Industries, Inc., 1990 WL 422422 (N.D.Okla. Nov. 27, 1990) ] without altering the plain meaning of Rule 15(c).”) (citing Morgan Distributing and Bailey inter alia); Protich v. Will County Health Dept., No. 02 CV 4796, 2002 WL 31875461, *2 (N.D.Ill. Dec. 24, 2002) (citing and quoting Bailey). In Carter v. Texas Dept. of Health, 119 Fed.Appx. 577, 581 (5th Cir.2004) (per curiam), cert. denied, 545 U.S. 1146, 125 S.Ct. 2978, 162 L.Ed.2d 900 (2005), the Fifth Circuit wrote,

The district court properly held that the “original pleading” may not be a pleading filed in a different case. While this Court has not specifically addressed whether Rule 15(c) provides for a complaint in one case to relate back to a complaint in another case, other courts have answered the question in the negative, holding that Rule 15(c) pertains only to pleading within the same case.

Id, citing inter alia Morgan Distributing, Bailey, and United States ex rel. Malloy v. Telephonics Corp., 68 Fed.Appx. 270, 273 (3d Cir.2003) (“We agree that ‘Rule 15(c) does not permit a complaint filed in one civil action to relate back to a complaint filed in a separate civil action.’ ”). See Budner v. Wellness Intern. Network Ltd., Civ. A. No. 3:06-CV-0329-K, 2007 WL 806642, *6 (N.D.Tex. Mar. 15, 2007), citing Carter and its predecessors for that proposition.

The initial complaint in the instant action was filed on March 17, 2009; the Third Amended Complaint was filed on November 14, 2012. Thus if the relation back doctrine applies, for purposes of the statute of limitations defense the claims against Worldwide in the Third Amended Complaint are deemed filed on March 17, 2009.

B. Substantive Law

“A trade secret is any formula, pattern, device or compilation of information which is used in one’s business and presents an opportunity to obtain an advantage over competitors who do not know or use it.” Seatrax, Inc. v. Sonbeck Intern., Inc., 200 F.3d 358, 365 (5th Cir.2000), citing Computer Assoc. Int’l. Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex.1996) (quoting from the Restatement of Torts § 757 (1939)). “It differs from other secret information in a business in that it is not simply information as to single or ephemeral events in the conduct of the business.... A trade secret is a process or device for continuous use in the operation of the business.” Restatement of Torts § 757, cmt. b.

To prevail on a trade secret misappropriation claim under Texas law a plaintiff must plead and ultimately prove (1) the existence of a trade secret, (2) breach of a confidential relationship or improper discovery of the trade secret, (3) use of the trade secret without the plaintiffs authorization, and (4) resulting damages. CQ, Inc. v. TXU Mining Co., 565 F.3d 268, 273 (5th Cir.2009), citing Gaia Techs. Inc. v. Recycled Prods. Corp., 175 F.3d 365, 376 (5th Cir.1999); In re TXCO Resources, Inc., 475 B.R. 781, 803 (Bkrtcy. W.D.Tex.2012).

Under Texas law, the statute of limitations for trade secret misappropriation is three years. Tex. Civ. Prac. & Rem.Code § 16.010 provides,

(a) A person must bring suit for misappropriation of trade secrets not later than three years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered.

(b) A misappropriation of trade secrets that continues over time is a single cause of action and the limitations period described by Subsection (a) begins running without regard to whether the misappropriation is a single or continuing act.

Moreover, it is clear from the prior suits that although Ultraflo may not have distinguished Pelican Worldwide from Pelican Tank, it believed that it had causes of action against Tank for misappropriation of trade secrets and conspiracy to misappropriate trade secrets before it filed its first suit on November 12, 2007 in the 280th District Court of Harris County, Texas.

As a general rule, under Texas law a cause of action accrues when a wrongful act causes a legal injury even if the injury is not discovered until later and even if all the resulting damages have not yet occurred. Seatrax, Inc. v. Sonbeck Intern., Inc., 200 F.3d 358, 365 (5th Cir.2000), citing Murphy v. Campbell, 964 S.W.2d 265, 270 (Tex.1997). See also Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex.2003) (“As a general rule, a cause of action accrues and the statute of limitations begins to run when the facts come into existence that authorize a party to seek a judicial remedy,”). A cause of action for misappropriation of trade secrets accrues when the trade secret is actually used. Id., citing Computer Assoc. Int’l. Inc. v. Altai, Inc., 918 S.W.2d 453, 455 (Tex.1996). “ ‘Use’ of a trade secret means commercial use, by which a person seeks to profit from the use of the secret.” Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452, 464 (Tex.App.-Austin, 2004, petdenied), citing Atlantic Richfield Co. v. Misty Prods., Inc., 820 S.W.2d 414, 421 (Tex.App.-Houston [14th Dist.] 1991, writ denied). Usually a party’s ignorance of material facts or lack of knowledge will not stop the statute from running. Id.

Two doctrines may apply to extend the limitations period: the discovery rule and the fraudulent concealment doctrine. BP America Prod. Co. v. Marshall, 342 S.W.3d 59, 65 (Tex.2011); Computer Assoc. Int’l. Inc. v. Altai, Inc., 918 S.W.2d 453, 455-56 (Tex.1996); S.V. v. R.V., 933 S.W.2d 1, 6 (Tex.1996). The discovery rule exception, which is expressly incorporated into § 16.010(a), defers accrual of a cause of action: “[a] person must bring suit for misappropriations of trade secrets not later than three years after the misappropriation is discovered or by the exercise of due diligence should have been discovered.” Id. (emphasis added). The discovery rule is applied where the nature of the injury incurred is inherently undiscoverable and the evidence of injury is objectively verifiable. BP America Prod., 342 S.W.3d at 65, citing Computer Assoc. Int’l. Inc. v. Altai, Inc., 918 S.W.2d 453, 456 (Tex.1996). The “inherently undiscoverable” requirement is satisfied when the injured party is not likely to discover the injury during the limitations period despite due diligence. S.V., 933 S.W.2d at 7. Although the injury need not be impossible to discover, a party’s failure to discover the injury, by itself, is insufficient to satisfy the requirement; “discovery of a particular injury is dependent not solely on the nature of the injury but on circumstances in which it occurred and plaintiffs diligence as well.” Id.

In Altai the Texas Supreme Court refused to apply the discovery rule to the statute of limitations for misappropriation of trade secrets. The Texas Supreme Court commented that because “we live in a world of high employee mobility and easy transportability of information[,] ... it is not unexpected that a former employee will go to work for a competitor and that the competitor might thereby acquire trade secrets.” Altai, 918 S.W.2d at 463. It further opined, “Because misappropriation of trade secrets is not a cause of action that is inherently undiscoverable, permitting application of the discovery rule exception in these cases would do no more than permit the litigation of stale claims.” Id.

The doctrine of fraudulent concealment suspends or tolls the running of the limitations period when it has already-begun. BP America Prod., 342 S.W.3d at 65. It applies when the party asserting fraudulent concealment establishes an underlying wrong and demonstrates that the “defendant actually knew that the plaintiff was wronged and concealed that fact to deceive him.” Id. at 67, citing Earle v. Ratliff, 998 S.W.2d 882, 888 (Tex.1999). See also Seureau v. ExxonMobil Corp., 274 S.W.3d 206, 228 (Tex.App.-Houston [14th Dist.] 2008, no pet.) (“To prove fraudulent concealment, the plaintiff must demonstrate that the defendant had (1) actual knowledge that a wrong occurred, (2) a duty to disclose the wrong, and (3), a fixed purpose to conceal the wrong.”). The doctrine of fraudulent concealment tolls the running of limitations only until the fraud is discovered or could have been discovered with reasonable diligence. Id. See also Seatrax, 200 F.3d at 366 (citations omitted), in which the Fifth Circuit opined,

“Where a defendant is under a duty to make disclosure but fraudulently conceals the existence of a cause of action from the party to whom it belongs, the defendant is estopped from relying on the statute of limitations until the party learns of the right of action or should have learned thereof though the exercise of reasonable diligence.” ... Mere concealment is insufficient to establish fraudulent concealment.... The party asserting fraudulent concealment defense to the statute of limitations bears the burden of showing that the defendant was under a duty to make a disclosure but fraudulently concealed the existence of action from the one to whom it belongs. To determine whether a duty to disclose exists, the court may consider (1) whether the parties entered an expressed contractual agreement restricting disclosure of the information ...; (2) whether a duty of confidentiality is implied, as a matter of law, from the parties’ relationship ...; (3) the nature and extent of security precautions taken by the possessor of the trade secret to keep the information from the general publicf;] and (4) the degree to which the information has been placed in the public domain by voluntary disclosure.

The statute of limitations for conspiracy under Texas law is two years. Tex. Civ. Prac. & Rem.Code Ann. § 16.003(a). To prevail on such a claim a plaintiff must show (1) two or more persons, (2) an object to be accomplished, (3) a meeting of the minds on the object or course of action, (4) one or more unlawful, overt acts in furtherance of the conspiracy, and (5) damages as a proximate result. Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex.1983).

The original claim in the instant action, which asserted a conspiracy claim, was filed on March 17, 2009. Thus the statute of limitations for conspiracy would reach conduct occurring after March 17, 2007; conspiracy allegations based on conduct before that are time-barred.

As noted, United States Magistrate Judge Frances Stacy granted Ultraflo’s motion to file a Third Amended Complaint, which, though challenged, is currently the controlling pleading and newly asserts a direct claim for copyright infringement against Defendants under the federal Copyright Act, 17 U.S.C. § 501 et seq. To prevail on a claim for copyright infringement a plaintiff must demonstrate (1) ownership of the copyrighted material and (2) copying by the defendant(s). Prostar v. Massachi, 239 F.3d 669, 677 n. 56 (5th Cir.2001), citing Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 772, 790 (5th Cir.1999). Although that federal claim is not addressed by the motion for partial summary judgment (# 138), as a matter of law, the Fifth Circuit has held that the statute of limitations for civil claims under the federal Copyright Act, 17 U.S.C. § 507(b), is three years, and that the period begins when the plaintiff knew or had reason to know of the injury on which the claim is based. Jordan v. Sony BMG Music Entertainment, Inc., 354 Fed.Appx. 942, 945 (5th Cir.2009), citing Pritchett v. Pound, 473 F.3d 217, 220 (5th Cir.2006). See also Prather v. Neva Paperbacks, Inc., 446 F.2d 338, 341 (5th Cir.1971) (holding that the statute of limitations for copyright infringement begins to run once “plaintiff is on inquiry that it has a potential claim”). The key inquiry is when the claim accrued, not when the infringement occurred. Groden v. Allen, 279 Fed.Appx. 290, 294 (5th Cir.2008).

The Court notes that Defendants, when they removed the first state court case between the parties on May 9, 2008, claimed federal question jurisdiction on the grounds that Ultraflo’s state law claims were completely preempted by the federal Copyright Act. That removal without question should have alerted Ultraflo to its potential copyright infringement claim. (As noted, the suit was subsequently remanded based on untimely removal, not the federal jurisdiction issue.)

C. Motion for Partial Summary Judgment on Limitations (# 138)

The Court has overruled Ultraflo’s objections (# 144) to the Defendants’ summary judgment evidence supporting this motion (# 187).

According to the Third Amended Complaint, Ultraflo first sued Tank and Mueller in state court on November 12, 2007 for trade secret misappropriation of its 390 valve. It was based on Ultraflo’s inspection of an allegedly infringing butterfly valve that it acquired in 2007, purportedly from Tank. Ex. B (Production Nos. ULTRAFLOW 00097-106 (listing supplier of butterfly valve as “Pelican Worldwide, Inc.”), Ultraflo Inspection Report dated Aug. 3-6, 2007). The report issued on August 3, 2007. The pleading charged that Mueller assisted Tank in producing the inspected butterfly valve by using trade secret dimensional information for Ultraflo’s 390-series valve that Mueller obtained while he had been employed at Ultraflo. Ex. A. Worldwide points out that page 1 of the Inspection Report shows that in it Ultraflo identified Worldwide as the producer of the valve and that Ultraflo had actual knowledge of this fact in 2007. Worldwide argues that Ultraflo waited more than three years, until October 12, 2010, to sue Worldwide, which was first added as a Defendant only in the Third Amended Complaint in this case, even though Ultraflo had actual knowledge that Worldwide had manufactured and sold a competing butterfly valve at least as early as the spring of 2007 and had exhibited the competing butterfly valve at a trade show, the Cargo Tank Maintenance Seminar and Exhibit Show in Nashville, Tennessee, attended by Ultraflo representatives, as early as October 2006, four years before Ultraflo sued Worldwide. Ex. I, President of Worldwide Garth E. Belue Deck; Ex. R (advertisement); Ex. S (brochure).

Ultraflo admits that its representatives attended many of the same trade shows as Worldwide. Ex. J, Lurk Dep., pp. 97:18-98:4. After the Nashville show, Ultraflo began internal discussions about Worldwide’s Series 190 butterfly valve and eventually acquired one [at an unspecified date] labeled “Pelican Worldwide, Inc. 866-455-7659” that was the subject of Ultraflo’s inspection report. Ex. B. An email from Ultraflo’s corporate representative, Mike Lurk, reveals that Ultraflo knew about the Pelican valve and was looking to obtain one as early as March 20, 2007. Ex. Q. At all relevant times Ultraflo also had in its own possession the Worldwide brochure about Worldwide’s Pelican valves and a butterfly valve that prominently bears the label, “PELICAN WORLDWIDE, INC.” Ex. H. Defendants contend that no one has concealed the identity of Worldwide, whose sale and distribution of butterfly valves have been open and known and presented on the internet at www.pelicanworldwide. com.

C. Ultraflo’s Response (# 143)

Claiming that Defendants attempted to conceal the role of the parties despite a duty under Texas law to disclose it, Ultraflo responds that when Tank answered in the initial state court suit between the parties on December 10, 2007, it did not disclose any misidentification of the parties or that Mueller was employed by Worldwide rather than by Tank. Ex. B-l to # 143. Texas Rule of Civil Procedure 93(2) and (4) requires defendants to verify certain defenses in answers, including an allegation that the defendant is not liable in the capacity in which it has been sued and an allegation of any other defect in the parties. Texas law also mandates that a defendant must raise misidentification as a verified denial in its answer. CHCA E. Houston, L.P. v. Henderson, 99 S.W.3d 630, 633 (Tex.App.-Houston [14th Dist.] 2003, no pet.).

Moreover in the state court action Ultraflo served Defendants with a request for disclosure under Texas Rule of Procedure 194.2(a), (b), and (1) and asked for the correct names of the parties to the lawsuit, the name, address, and telephone number of any potential parties, and the name, address, and telephone number of any person who may be designated as a responsible third party. Neither Tank nor Mueller revealed any involvement of Worldwide, even during discovery after the case was removed to federal court. Ex. B-2.

Ultraflo also served an interrogatory asking Tank to disclose the terms of Mueller’s employment. Ultraflo received an unverified response that “Mueller’s employment started on or about September 20, 2005,” without any indication whether he was employed by Tank or Worldwide. Ex. B-3 at Interrogatory No. 4 at pp. 4-5. Tank also answered that it did not manufacture a certain type of valve, implying that Ultraflo incorrectly described the valve as opposed to naming the wrong manufacturer. Id. In addition, Tank and Mueller filed a counterclaim asserting that Ultraflo’s suit was malicious prosecution and an abuse of process to keep Tank, as opposed to Worldwide, from fairly competing with Ultraflo in the marketplace, to discourage it from further employing Mueller, a valuable and knowledgeable employee, and to discourage it from competing against Ultraflo in a free market economy in unlawful restraint of trade. Ex. B-10 at ¶ 43 at p. 6 and ¶ 44 at p. 6. Defendants now appear to claim that Tank never competed or intended to compete with Ultraflo and that Worldwide is the competitor.

After Tank and Mueller removed the first of the three lawsuits to federal court, Tank still did not disclose Worldwide as a potential party that would need to be added. Ex. B-4. Tank and Mueller also filed another counterclaim and third-party claim on October 30, 2008 (Ex. B — 11), in which they again charged that Ultraflo was suing to keep Tank, as opposed to Worldwide, from competing with Ultraflo. Id. at 9. Tank reiterated its allegation that Ultraflo was attempting to interfere with Tank’s right to continue to employ Mueller. Id. at 10.

After the remand on December 8, 2008, Mueller filed the second suit in the Eastern District of Texas on February 12, 2009. Ultraflo claims that it decided it would rather have the matter resolved by the federal courts, including what it calls “specious copyright claims by Mueller,” and that it moved for an extension (Ex B-6), but before it could respond to a motion to dismiss, “allowed the state court to dismiss the litigation without prejudice so the parties could resolve their issues in one forum.” # 143 at p. 7; # 138, Ex, D. Therefore Ultraflo states that it “was forced to file a new complaint” in this Court, instituting the instant action on March 14, 2009. # 143 at p. 8.

In their Answer and Counterclaims (# 7), Defendants asserted 20 affirmative defenses, none of which suggested that Ultraflo had named the wrong party. In the Initial Disclosures Defendants again failed to identify Worldwide as a financially interested party or a possible party or to list any Worldwide individual as a person with knowledge of discoverable information. On December 12, 2009 Mueller objected to an interrogatory asking him to identify the terms of his employment. After Ultraflo filed a motion to compel, Mueller amended his answer on August 13, 2010 and stated that he had never worked for Tank, but had been an employee of Worldwide. Ex. B-7.

Ultraflo also asked Tank to produce its butterfly valve customers and its sales information. Initially Tank objected, but after Ultraflo filed a motion to compel, Pelican amended its responses and disclosed for the first time that Tank does not sell valves, but that Worldwide does. Ex. B-8. Ultraflo then sought Defendants’ consent to add Worldwide as a party, but Defendants refused, so Ultraflo filed a motion for leave to amend (# 53), which was granted (# 64) on September 28, 2010.

Ultraflo further points out that in filings with the Secretary of State, Garth Belue is listed as the registered agent for Worldwide and for Tank, and was the only listed director for each, with the same address. Exs. B-9, B-13. Ultraflo charges that Tank and Worldwide are related Pelican entities and that Worldwide knew of the suit the whole time, paid for the defense the entire time, and tried to hide its identity to take advantage of its limitations defense. At his deposition (Ex. B-16 at p. 20, 11.16-19) Worldwide’s President Belue testified that he set up Tank in 2006 or 2007. Although Defendants argue otherwise, Ultraflo states that it did not know of the difference between the two Pelican entities, Worldwide and Tank. Ex. A, Decl. of Mike Lurk. Its confusion is reflected in attachments to Defendants’ motion: Ultraflo employees variously refer to the named defendant as Pelican, Pelican Worldwide, Pelican Valve, and Pelican Tank. # 138, Exs. B, L, Q. Nor have Defendants submitted any evidence suggesting that anyone at Ultraflo knew the difference between Worldwide and Tank.

As noted, Defendants bear the burden of establishing their limitations affirmative defense. Their motion is based on the unsupported contention that the statute stopped running as to Worldwide on October 12, 2010 when the Court granted Ultraflo’s motion for leave to amend. Ultraflo argues that it stopped running on November 12, 2007, the date of the original lawsuit between the parties, and would thus include misappropriation back to November 13, 2004 because the Third Amended Complaint “relates back” to the date of the original complaint. The conspiracy claim would go back to November 13, 2005, when Mueller was still employed at Ultraflo, so limitations would not apply as a matter of law. While Defendants imply that Worldwide existed for years and was well known, Ultraflo points out that Defendants only registered the name Pelican Worldwide in March 2004, that its trademark applications state its first use in commerce of that name was not until March 1, 2006 (Ex. B-14), only 18 months before Ultraflo filed suit, and that Worldwide’s own marketing materials represent that it did not introduce the subject valves until April 2007 (Exs. B-15 and B-16 at Vol. II, pp. 55-58. Mike Lurk’s declaration (Ex. A)) shows that Ultraflo did not become aware of copying until March 29, 2007. Alternatively, if the statute stopped running as of March 17, 2009, the misappropriation claim would go back to March 18, 2006 and the conspiracy claim, to at least March 18, 2007.

Regarding notice to Worldwide for purposes of the relation back doctrine, Ultraflo states that Belue, the founder of Tank and President of Worldwide, admits that he knew about the first lawsuit and discussed it with Mueller. Ex. 16, Belue Dep. at Vol. I at 37:7-10. Notice to a new defendant may be imputed when there is an identity of interests between the original defendant and the defendant that the plaintiff seeks to substitute. Jacobsen, 133 F.3d at 320. The Pelican entities have the same counsel, the same officers, the same address, and the same corporate representatives. Ultraflo argues that Worldwide has had notice of the misappropriation claim for years. See Norton v. Int’l Harvester Co., 627 F.2d 18, 21 (7th Cir.1980) (identity of interest often found when original and added parties are two related corporations with substantially similar officers and directors, share office space, and have similar names), quoting Hernandez Jimenez v. Calero Toledo, 604 F.2d 99, 102-03 (1st Cir.1979) (“The identity of interest principle is often applied where the original and added parties are a parent corporation and its wholly owned subsidiary, two related corporations whose officers, directors or shareholders are substantially identical and who have similar names or share office space, past and present forms of the same enterprise, or co-executors of an estate.”); Sanders-Burns, 594 F.3d at 378.

Ultraflo proclaims that the real legal issue is whether the statute should have stopped running when the original petition was filed in state court on November 12, 2007, which is important only if the Court finds that Ultraflo knew or should have known of the conspiracy claim prior to March 17, 2007, two years before the filing of the first complaint in the instant action. Besides Defendants’ speculation that Ultraflo knew Mueller stole the drawings to design a copycat valve for Defendants because of a 2006 trade show displayed an early version, Ultraflo insists there is no evidence suggesting that Ultraflo knew or should have known before March 18, 2007 and Ultraflo denies that it did. Ultraflo urges that justice requires that the Court find that the statute stopped running on the filing of the original state court action. It was Defendants’ failure to comply with their discovery obligations that forced the filing of a second suit. The statute of limitations, as an affirmative defense, is subject to equitable considerations such as estoppel and waiver. Ultraflo contends that because Defendants played games and hid the identity of Worldwide, the true tortfeasor, they should not be able to claim a limitations defense. They suggest such as a sanction under Fed.R.Civ.P. 37(a)(4) for repeatedly breaching their duty to disclose Worldwide’s role, starting with the initial suit.

Ultraflo maintains that the display of the valve at the 2006 trade show is not the key to the running of the statute of limitations; instead it is Ultraflo’s knowledge, the time when it discovered the misappropriation or should have discovered it by the exercise of reasonable diligence. Tex. Civ. Prac. & RermCode § 16.010. A genuine issue of material fact exists as to whether the display of the early version of the valve at the October 2006 trade show should have alerted Ultraflo to Mueller’s stealing the drawings to design a copycat valve.

D. Defendants’ Reply (# 145)

Some of the arguments made in the reply have been incorporated into the discussion above. Defendants reiterate that Ultraflo had actual knowledge of the identities of the proper parties for years. It had in its possession a physical valve of Worldwide that prominently bore the name of the parties, and an internal report naming Worldwide; Ultraflo knew since 2006 that Worldwide was selling valves; nobody, including counsel, concealed the name of Worldwide, which was all over the web. Moreover Ultraflo lost in state court and had its case dismissed because it did not bother to file an answer to Defendants’ motion to dismiss challenging subject matter jurisdiction. # 63, Ex. D. Defendants’ dismissal of a lawsuit they filed against Plaintiff and subsequently tried to settle is not evidence of concealment but a good faith effort to end the litigation. Moreover counsel for both sides have cooperated for years in the course of their suits.

Defendants maintain that the relation back doctrine does not save Ultraflo because its standard is “knew or should have known.” Although Ultraflo did not sue Worldwide until it filed the Third Amended Complaint in this suit on October 12, 2010, it had an actual in-house corporate report that identified Worldwide and studied Worldwide’s valve in detail as of August 3, 2007 (# 138-4, Ex. B); it had internal email discussing the valve since May 2007 (# 138-17, Ex. Q, # 138-14, Ex. L); and Belue’s declaration shows that Ultraflo saw the copycat valves at the trade show in October 2006. All these are more than three years before the filing of the complaint against Worldwide.

E. Court’s Decision

Ultraflo’s claims of misappropriation of trade secrets and conspiracy to misappropriate trade secrets against Mueller and Tank were initially filed in the first petition in the first state court suit (which became H-08-1460 after removal) on November 12, 2007, by which time Ultraflo was clearly aware and believed that it had the claims against Tank and Mueller. H~ 08-1460, # 1-5, Ex. B-3. The instant action, H-09-0782, was filed on March 17, 2009, approximately a year and four months later. The two prior suits were dismissed without prejudice, with those claims again asserted in the Original Complaint in this suit. Thus the current misappropriation claim against Mueller and Tank can only reach back at most to March 18, 2006, and, given the fact that the claims were asserted in previous actions, the discovery rule and fraudulent concealment doctrine do not apply. The conspiracy claim against Mueller and Tank can only reach back to March 18, 2007, which would appear to cut off much of the conduct presumably underlying that cause of action.

As noted, as a matter of law, if the relation back doctrine applies, the new allegations against the new Defendant, Worldwide, in the Third Amended Complaint, filed on November 12, 2012, in the instant suit can only relate back to the Original Complaint filed in this action, on March 17, 2009, which appears to be largely after the alleged conspiracy took place. Thus most, if not all, of Ultraflo’s claim of conspiracy to misappropriate against Mueller, Tank, and Worldwide, with its two-year statute of limitations, is time-barred. The Court finds that the relation-back doctrine does apply to the claims against Worldwide here, including the copyright infringement, because the claims in the Third Amended Complaint arose out of the same conduct, transaction, or occurrence set out — or attempted to be set out — in the original pleading in the instant action. The claims in the Third Amended Complaint cannot relate back to either of the two prior suits between Ultraflow and Tank and Mueller under Carter and its cited precedent. 119 Fed-Appx. at 581. Given the nature of complete preemption, the claims under the Copyright Act relate back to the conduct described in the state law claims in this suit’s original complaint that were preempted. This Court’s analysis in its Opinion and Order (# 116, 823 F.Supp.2d at pp. 585-87, 587-89), in the context of examining whether it had federal question jurisdiction, was based on the fact that the equivalent state law claims of unfair competition, conversion (of intellectual property, which was beyond the scope of the state law cause of action and preempted), and civil conspiracy relating to these two were completely preempted because provisions in the Copyright Act covered all the elements of those causes of action. Moreover, when an amended complaint states a new basis for subject matter jurisdiction, as is the case here with federal question jurisdiction under the Copyright Act, the amended complaint relates back to the date of the original filing. See, e.g., 6A Charles A. Wright, Arthur R. Miller, and Mary Kay Kane, Federal Practice and Procedure § 1497, at p. 80 (2d ed. 1990) (“Amendments curing a defective statement of subject-matter jurisdiction ... will relate back .... ”), citing Carney v. Resolution Trust Corp., 19 F.3d 950, 954 (5th Cir.1994) (“Relation back to the date of the original filing applies even when the amendment states a new basis for subject matter jurisdiction.”).

As for the addition of Worldwide as a Defendant, regarding the required notice under Rule 15(c)(1)(C) Ultraflo has raised a plausible claim that Worldwide had notice and should reasonably have known about the basic misconduct alleged against it from the earliest suit against Tank and Mueller. Ultraflo has alleged and pleaded facts demonstrating that the Pelican entities are interrelated, share the same attorney, and have the same individual, Garth Belue, listed as registered agent and director with the same address, in filings with the Secretary of State. Moreover Ultraflo points to Belue’s deposition testimony in Ex. 16 stating that Belue knew about the first lawsuit and discussed it with Mueller. These alleged facts also support the addition of Worldwide as a Defendant to correct a clerical misidentification because of confusion regarding the Pelican entities, but stating facts plausibly showing that Worldwide had notice of Ultraflo’s claims against Tank and Mueller even from the first suit.

Ultraflo also first asserts its misappropriation claim against Worldwide in its Third Amended Complaint. The relation back doctrine relates that claim back to the Original Complaint filed in this action, on March 17, 2009, and therefore the three-year statute of limitations for that misappropriation extends back to March 2006. Most of the objective evidence reflects that Ultraflo became aware of and investigated the alleged misappropriation shortly after that month through emails in May 2007 and the issuance of its internal report on August 3, 2007. Moreover Ultraflo has alleged facts stating a plausible basis for applying the fraudulent concealment doctrine to Mueller and Tank’s nondisclosure of Worldwide’s role in the alleged theft of its trade secrets/copyrighted materials. The allegations that Ultraflo representatives attended the Nashville, Tennessee trade show in October 2006 and saw a brochure stating that Ultraflo manufactured valves seem rather vague and general to link Worldwide (as well as Tank and Mueller) to Ultraflo’s 390 valve and trigger an instant duty to investigate, but even that trade show would fall within the three-year limitations. Regardless, as will be discussed with respect to the second motion for partial summary judgment, Ultraflo has submitted evidence showing that the external dimensions of most butterfly valves generally followed industry standards so that competing butterfly valves and their parts, no matter who manufactured them, would be interchangeable, but that the inner dimensions and arrangements were not disclosed. Thus examining Worldwide’s valve from the outside or reading the brochures would not reveal the internal secret information. It is not clear when Worldwide first “commercially used” the suspect valve. Moreover the Copyright Act’s three-year statute of limitations for its claim against Worldwide similarly would reach back to the same time. At this stage it would appear that the misappropriation and Copyright Act claims against Worldwide are not time-barred.

IV. Tank, Worldwide and Mueller’s Renewed Motion for Partial Summary Judgment on Misappropriation of Trade Secrets

A. Substantive Law

As noted, to prevail on a claim of trade secret misappropriation, the plaintiff must show that (1) a trade secret existed, (2) it was acquired through a breach of a confidential relationship or discovered by improper means, and (3) it was used without plaintiffs authorization. Phillips v. Frey, 20 F.3d 623, 627 (5th Cir.1994). See p. 948 of this Opinion and Order.

“A trade secret ‘is one of the most elusive and difficult concepts in the law to define.’ ” Tewari De-Ox Systems, Inc. v. Mountain States/Rosen, LLC, 637 F.3d 604, 613 (5th Cir.2011), quoting Lear Siegler, Inc. v. Ark-Ell Springs, Inc., 569 F.2d 286, 288 (5th Cir.1978). Often “the question of whether certain information constitutes a trade secret ordinarily is best ‘resolved by a fact finder after full presentation of the evidence from each side.’ ” Id., citing id. at 289.

To determine whether a trade secret exists, the court examines six factors: (1) the extent to which information is known outside the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of the measures taken to guard the secrecy of the information; (4) the value of the information to the business and to its competitors; (5) the amount of effort or money expended 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 (Tex.2003), citing Restatement of Torts § 757 cmt. b (1939), and Restatement (Third) of Unfair Competition § 39 reporter’s n. cmt. d (“In determining the existence of a trade secret, many cases rely on factors identified in the Restatement of Torts § 757 cmt. B”). The Texas Supreme Court further stated in Bass, id.,

The Restatement of Unfair Competition treats the factors as relevant, but not dispositive criteria: It is not possible to state precise criteria for determining the existence of a trade secret. The status of information claimed as a trade secret must be ascertained through a comparative evaluation of all the relevant factors, including the value, secrecy of definiteness of the information as well as the nature of the defendant’s misconduct.

The Texas Supreme Court in Bass agreed with comment in the Restatement of Unfair Competition and held that a plaintiff does not need “to satisfy all six factors because trade secrets do not fit neatly into each factor every time” and that “other circumstances could be relevant to the trade secret analysis.” 113 S.W.3d at 740.

The owner of a trade secret “will lose his secret by its disclosure unless it is done in some manner by which he creates a duty and places it on the other party not to further disclose or use it in violation of that duty.” Taco Cabana Inter., Inc. v. Two Pesos, Inc., 932 F.2d 1113, 1123 (5th Cir.1991); Carson Prods. Co. v. Califano, 594 F.2d 453, 461 (5th Cir.1979) (“However strong may be the [plaintiffs] case on other indicia of trade secret status, it is elemental that ‘[t]he subject matter of a trade secret must be secret’ .... The subject of a trade secret ‘must not be of public knowledge or of general knowledge in the trade or business.’ ”). “[I]nformation generally known and readily available is not protectable.... Consistent with this concept of secrecy, a former employee may use the general knowledge, skills and experience acquired during employment to compete with a former employee.” Trilogy Software, Inc. v. Callidus Software, Inc., 143 S.W.3d 452, 467 (Tex.App.-Austin 2004), citing T-N-T Motorsports, Inc. v. Hennessey Motorsports, Inc., 965 S.W.2d 18, 22 (Tex.App.-Houston [1st Dist.] 1998), and Gonzales v. Zamora, 791 S.W.2d 258, 265 (Tex.App.-Corpus Christi 1990, no writ.).

Nevertheless, “[i]f a voluntary disclosure occurs in a context that would not ordinarily occasion public exposure, and in a manner that does not carelessly exceed the imperatives of a beneficial transaction, then the disclosure is properly limited and the requisite secrecy retained, [citations omitted].” Taco Cabana, 932 F.2d at 1124, citing Metallurgical Industries Inc. v. Fourtek, Inc., 790 F.2d 1195, 1200 (5th Cir.1986) (finding under Texas law that secrecy was not surrendered where disclosures were not public announcements and were divulged only to businesses with whom plaintiff dealt with the expectation of profit); see also Wellogix, Inc. v. Accenture, LLP, 823 F.Supp.2d 555, 564 (S.D.Tex.2011). Moreover the owner of a trade secret may provide it to employees who have pledged to secrecy and others in furtherance of business transactions from which the owner expects to profit without losing trade secret protection. Metallurgical, 790 F.2d at 1200, cited for that proposition, Recer v. Kramer, Civ. A. No. 3:97-CV-1258G, 1998 WL 401594, *2 n. 4 (N.D.Tex. July 10, 1998). Nevertheless, “[o]ne who voluntarily discloses information or who fails to take reasonable precautions to ensure its secrecy cannot properly claim that the information constitutes a trade secret.” Interox America v. PPG Industries, Inc., 736 F.2d 194, 202 (5th Cir.1984). The burden of proving secrecy is on the party claiming secrecy status, here Ultraflo. Trilogy Software, 143 S.W.3d at 467.

The Fifth Circuit has rejected the argument that a combination of disclosed technologies cannot constitute a trade secret. Tewari De-Ox Systems, Inc. v. Mountain States/Rosen, LLC, 637 F.3d 604, 613 (5th Cir.2011) (and cases cited therein). “ ‘[A] trade secret can exist in a combination of characteristics and components each of which, by itself, is in the public domain, but the unified process, design and operation of which in unique combination, affords a competitive advantage and is a protectible secret.’ ” Id., quoting Imperial Chem. Indus. Ltd. v. Nat’l Distillers & Chem. Corp., 342 F.2d 737, 742 (2d Cir.1965). Secret modifications of a known process or device can be trade secrets, especially where they are developed through hard work and expense. Metallurgical Industries Inc. v. Fourtek, Inc., 790 F.2d 1195, 1199 (5th Cir.1986); Ventura Mfg. Co. v. Locke, 454 S.W.2d 431, 433-34 (Tex.Civ.App.-San Antonio 1970, no writ).

Novelty and uniqueness are not prerequisites for a trade secret. Gonzales, 791 S.W.2d at 264, citing Cataphote Corp. v. Hudson, 422 F.2d 1290, 1293 (5th Cir.1970). Unlike patent law, which aims to protect novelty and nonobviousness, the policy behind trade secret law is to maintain standards of commercial ethics; “ ‘The necessity of good faith and honest, fair dealing is the very life and spirit of the commercial world.’ ” Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 482-83, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974), quoting National Tube Co. v. Eastern Tube Co., 3 Ohio Cir. Cr. R., N.S. at 462. “[Trade secret law’s] protection is not based on a policy of rewarding or otherwise encouraging the development of secret process or devices. The protection is merely against the breach of faith and reprehensible means of learning another’s secret.” Water Servs., Inc. v. Tesco Chems., Inc., 410 F.2d 163, 172 (5th Cir.1969).

“ ‘When money and time are invested in the development of a procedure or device which is based on an idea which is not new to a particular industry, and when that certain procedure or device is not generally known, trade secret protection will exist.’ ” Trilogy Software, 143 S.W.3d at 467, quoting Gonzales, 791 S.W.2d at 264. See also Water Servs., Inc. v. Tesco Chems., Inc., 410 F.2d 163, 164 (5th Cir.1969).

Blueprints and drawings have been recognized as trade secrets. Genesco Sports Enterprise, Inc. v. White, Civ. A. No. 3:11-CV-1345-N (BF), 2011 WL 6593415, *8 (N.D.Tex. Oct. 27, 2011) (and cases cited therein); Am. Precision Vibrator Co. v. Nat’l Air Vibrator Co., 764 S.W.2d 274, 276-78 (Tex.App.-Houston [1st Dist.] 1988, no writ); Texas Integrated Conveyor Systems, Inc. v. Innovative Conveyor Concepts, Inc., 300 S.W.3d 348, 367 (Tex.App.-Dallas 2009), citing Global Water Group, Inc. v. Atchley, 244 S.W.3d 924, 928 (Tex.App.-Dallas 2008, pet. denied). Ultraflo has claimed that its drawings and the dimensional information of its 390 butterfly valves are trade secrets.

Under the second element of trade secret misappropriation, “[i]mproper means of acquiring another’s trade secrets include theft, fraud, unauthorized interception of communications, inducement of or knowing participation in a breach of confidence, and other means either wrongful in themselves or wrongful under the circumstances of the case.” Astoria Indus. of Iowa, Inc. v. SNF, Inc., 223 S.W.3d 616, 636 (Tex.App.-Fort Worth 2007, pet. denied). Restatement of Torts § 757, comment f defines “improper means” as “[m]eans which fall below the generally accepted standards of commercial morality and reasonable conduct.” “ ‘The mere fact that the means by which a discovery is made are obvious ... cannot ... advantage the competitor who by unfair means, or as the beneficiary of a broken faith, obtains the desired knowledge wi