AZA Forces OFSI’s Competitor To Give Up In Multi-Round Trade Secret Litigation
November 11, 2021
Houston – AZA recently brought an end to a complex battle that a competitor waged against its client OFS International LLC (OFSI), which is primarily a manufacturer of proprietary threadings for casing pipe and tools used in oil wells. In this legal battle spanning across three cases in federal, state, and bankruptcy courts, OFSI’s former affiliate-turned competitor, IPSCO Tubulars, Inc. and its subsidiary Ultra Premium Services, LLC (collectively, IPSCO), claimed OFSI misappropriated trade secrets and breached license agreements.
AZA partner Tim Shelby, who led the defense of OFSI in all three cases, commented, “It is rare to have a plaintiff abandon its trade secret claims like this, especially in the context of wanting injunctive relief against a competitor. This is a big victory for OFSI. This should bring an end to the trade secret litigation and clear the way for OFSI to complete Chapter 11 reorganization.”
Round one of this protracted battle started when IPSCO sued OFSI in federal court in June 2019 for misappropriation of trade secrets and breach of license agreements. The AZA team defeated requests by IPSCO for a TRO and a preliminary injunction. AZA then negotiated a non-confidential settlement that included a cash component that was less than half of OFSI’s cost to defend the case, as well as OFSI’s voluntary discontinuation of certain products. OFSI’s victory at the preliminary injunction stage and the later settlement received widespread media attention. Coverage includes: Rig Pipe Maker Can’t Bar Rival From Selling Product Amid Suit; Rig Pipe Maker Bars Rival From Selling Alleged Knockoffs; and Trade Secrets Dispute Settles with Agreed Permanent Injunction on Eve of Trial (subscription required for all).
A few months after the settlement, IPSCO started Round 2 when it filed a pre-suit discovery lawsuit against OFSI in state court in Houston. IPSCO claimed it needed discovery to determine if OFSI had, among other things, failed to discontinue certain products and violated license agreements. Representing OFSI again, AZA argued that IPSCO cherry-picked similarities between products while failing to inform the court about significant differences between OFSI’s products and IPSCO’s products.
Due primarily to the impact of the COVID pandemic on the oil and gas industry, OFSI filed for Chapter 11 bankruptcy reorganization in May 2021. This happened before the state district court could rule on the pre-suit discovery petition.
Undeterred, on August 14, 2021, IPSCO initiated Round 3 when it filed six proofs of claims against OFSI and its subsidiaries, claiming that all the remaining products sold by OFSI were misappropriated or were produced in violation of the license agreements. IPSCO sought the recovery of significant monetary damages and potential injunctive relief that would prevent OFSI from manufacturing its products.
At OFSI’s request, AZA was appointed as Special Counsel for OFSI in the bankruptcy case. AZA objected to IPSCO’s proofs of claims and provided detailed evidence that OFSI had not misappropriated any trade secrets or breached the license agreements.
On October 13, 2021, IPSCO completely abandoned all claims against OFSI and filed a motion to withdraw those proofs of claims. On October 26, 2021, the bankruptcy court granted IPSCO’s motion to withdraw the claims, bringing an end to Round 3 of the litigation.
On November 9, 2021, IPSCO followed that up by voluntarily dismissing its pre-suit discovery lawsuit against OFSI. This ended Round 2 of the litigation.
In addition to Mr. Shelby, AZA’s team consisted of partners Joseph Ahmad and Sammy Ford IV, associates Jason McManis and Jordan Warshauer, and paralegals Renee Perez and Andrea Caswell.
Round 1: Ultra Premium Services, LLC and IPSCO Tubulars Inc. v. OFS International LLC, et al.; C.A. No. 4:19-cv-2277; In the United States District Court for the Southern District of Texas, Houston Division.
Round 2: In re Ultra Premium Services LLC, and IPSCO Tubulars Inc.; Cause No. 2020-66138; In the 152nd District Court of Harris County Texas.
Round 3: In re: OFS International, LLC, et al.; Case No. 21-31784.
AZA, or Ahmad, Zavitsanos, Anaipakos, Alavi & Mensing P.C., is a Houston-based law firm that is home to true courtroom lawyers with a formidable track record in complex commercial litigation, including energy, healthcare, intellectual property, and business dispute cases. AZA is recognized by Chambers USA 2021 among the best in Texas commercial law and intellectual property; by U.S. News – Best Lawyers’ Best Law Firms as one of the country’s best commercial litigation firms for nine years running; has been named Litigation Department of the Year by Texas Lawyer; and was previously dubbed by Law360 a Texas Powerhouse law firm. National corporate counsel named AZA one of the country’s best in client service among law firms serving the Fortune 500.