Free Reply to Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-CV-00413-JLK-BNB M.D. MARK, INC., Plaintiff, vs. KERR-McGEE CORPORATION and ORYX ENERGY COMPANY, Defendants. DEFENDANTS' REPLY TO PLAINTIFF'S RESPONSE TO DEFENDANT'S RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW PURSUANT TO RULE 50(b) OR, ALTERNATIVELY, MOTION FOR NEW TRIAL, FOR REMITTITUR, AND/OR TO ALTER AND AMEND THE JUDGMENT PURSUANT TO RULE 59 AND 59(e) Defendants Kerr-McGee Corporation ("Kerr-McGee") and Oryx Energy Company ("Oryx") (collectively "Defendants") respectfully submit this Reply to Plaintiff's Response to Defendants' Renewed Motion for Judgment as a Matter of Law Pursuant to Rule 50(b) or, Alternatively, Motion for New Trial, for Remittitur, and/or to Alter and Amend the Judgment Pursuant to Rule 59(e) ("Defendants' Renewed Motion"). INTRODUCTION Plaintiff's Response to Defendants' Renewed Motion ("Plaintiff's Response") seeks to recast the three categories of seismic data involved in the case to four categories of data. But contrary to Plaintiffs' contention, there are only three categories of seismic data involved here: (1) the some 16,000 miles of Oryx/Sun seismic data acquired by Kerr-McGee through the Kerr-

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McGee/Oryx merger (the "Category 1" data); (2) the 760 miles of Kerr-McGee seismic data that Kerr-McGee already licensed prior to the Kerr-McGee/Oryx merger (the "Category 2" data); and (3) the 3,100 miles of seismic data that Kerr-McGee had in its possession (in storage) for which Kerr-McGee could not locate a license agreement (the "Category 3" data that Plaintiff refers to as the "bootleg" data). Plaintiff suggests that there is a fourth category of "missing data," but fails to acknowledge that the so-called "missing" data consists of some 5,000 miles of the 16,000 miles of Oryx/Sun data (i.e., the Category 1 data) and 225 miles of the 760 miles of Kerr-McGee seismic data (i.e., the Category 2 data). No matter how Plaintiff now seeks to spin the evidence, only three categories of seismic data are involved, and Plaintiff's imaginary fourth category of "missing" seismic data is subsumed in the Category 1 and Category 2 seismic data. Plaintiff also ignores that (1) the Court's Special Verdict Form inquired about, in three different sections, distinct categories of seismic data and two specific causes of action (breach of contract and misappropriation of trade secrets), and (2) this Court required the jury, in answering Sections A and B of the Verdict Form, to specify the exact nature of the breach. Thus, · Section A of the Verdict Form asked whether Oryx, prior to its merger into Kerr-McGee, breached the license agreements concerning the 16,000 miles of Oryx/Sun (Category 1) seismic data that Kerr-McGee acquired through its merger with Oryx. Verdict Form, pp. 1-3. Section B of the Verdict Form asked whether Kerr-McGee breached a separate license agreement, entered into between Kerr-McGee and M.D. Mark in 1994 (the "1994 Agreement") concerning the 760 miles of (Category 2) seismic data that Kerr-McGee had prior to the Kerr-McGee/Oryx merger. Verdict Form, pp. 3-5. Section C of the Verdict Form asked whether Kerr-McGee misappropriated trade secrets as to (1) the 3,100 miles of (Category 3) seismic data for which KerrMcGee could find no license; and (2) the 16,000 miles of Oryx/Sun (Category 1) seismic data that Kerr-McGee acquired through its merger with Oryx. Verdict Form, pp. 5-6.

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Given the three categories of seismic data and how the jury was instructed and charged in each Section of the Verdict Form, Plaintiff cannot rely on evidence or license agreements that relate to only one category of data (or one type of claim) to support the jury's verdict as to another category of data (or another section of the Verdict Form). In other words, Plaintiff cannot mix and match. Nor can Plaintiff credibly contend that Defendants' Renewed Motion for JMOL is subject to review under the "clear error" standard for Rule 59(e) motions, as opposed to the normal legal sufficiency standard for a Rule 50(b) motion. Given this Court's instruction that a merger by a licensee does not constitute a breach of a license agreement unless the license agreement specifically so provides, Kerr-McGee certainly could not have anticipated that the jury would have found, in answer to Section A of the Verdict Form, that Oryx breached the license agreements governing the 16,000 miles of (Category 1) Oryx/Sun seismic data "by transfer[ing] the data to Kerr-McGee Corp., without prior consent" ­ i.e., that Oryx breached by "transferring" the data through the merger. Nor could Defendants reasonably have expected that the jury would have found in Section B that Kerr-McGee breached the license agreement governing the 760 miles of (Category 2) seismic data by transferring that data to "Kerr-McGee Oil & Gas Corp." ­ when there is no evidence that any such transfer ever occurred. Because this Court properly required the jury to specify the basis for its breach findings in Sections A and B of the Verdict Form, and because the jury's errors with respect to Sections A and B of the Verdict Form only became apparent after the jury returned its verdict, Defendants' Renewed Motion for JMOL should be judged under the normal, legal sufficiency review standards.

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Defendants recognize that the Court entered judgment based on Section C rather than Sections A or B of the Verdict Form. But Section C of the Verdict Form, which submitted Plaintiff's claim for misappropriation of trade secrets, likewise cannot support a judgment. No legally sufficient evidence supports the jury's answer to Question C1(b) that Kerr-McGee, after the merger, misappropriated the 16,000 miles of Oryx/Sun (Category 1) data by transferring the data to a Kerr-McGee subsidiary. The only reasonable conclusion to be drawn from the evidence is that the 16,000 miles of Oryx/Sun data was held by the same limited partnership entity (SOLP, whose name was changed to KMOGO LP) prior to and after the merger. As for the jury's finding in Question C1(a) that Kerr-McGee misappropriated the 3,100 miles of Category 3 seismic data, the only basis that Plaintiff provides to support that finding is that Kerr-McGee could not locate a license agreement. But the absence of a license agreement does not equate to sufficient evidence that Kerr-McGee improperly gained access to the 3,100 miles of data. In any event, the $25 million in damages found by the jury as a lump sum in Section C (for misappropriation of the 16,000 miles of Oryx/Sun Category 1 data and for the 3,100 miles of Category 3 data) cannot support a judgment because, given the lump sum damages finding, there is no way to tell what part of the $25 million in damages the jury awarded for the 3,100 miles. And, it would be patently excessive to award the full $25 million in damages found by the jury for misappropriation in Section C. At the very least, the jury's verdict reflected in Sections A, B, and C of the Verdict Form runs contrary to the great weight of evidence in the record. At a minimum a new trial should be ordered on all claims. In addition, the jury's damages findings are patently excessive in light of the evidence concerning reasonable and customary license fees (or, more properly, transfer fees)

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for seismic data like that involved here. Short of ordering a new trial, this Court should substantially remit or reduce the $25 million in damages awarded in the Court's Final Judgment. Plaintiff's Response is full of rhetorical hyperbole. Plaintiff claims that Defendants' arguments are "dead upon arrival," "specious," and "utter nonsense." Plaintiff's Response at 4, 5, 11. But when the jury's verdict is considered in light of the Court's instructions and Verdict Form, the governing legal standards, and the undisputed evidence, one thing becomes clear: no judgment for Plaintiff is proper. ARGUMENT I. DEFENDANTS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW (OR NEW TRIAL) ON THE CLAIMS SUBMITTED IN SECTION A OF THE VERDICT. A.
AT

LEAST

A

None of Plaintiff's Arguments Can Change the Fact That the Manner of Breach Found by the Jury Violates This Court's Instructions. 1. The jury found that the merger was the breach of contract.

Section A of the verdict asks the jury a series of questions relating to Plaintiff's claims for breach of the Oryx/Sun license agreements governing 16,000 miles of Oryx seismic data (the Category 1 data). The Verdict Form asks the jury whether Oryx breached the license agreements and, if so, requires the jury to find how Oryx breached the license agreements. See Verdict Form, Questions A1(b), (c). In response to these questions, the jury first found that Oryx did breach the license agreements and then wrote that the breach occurred when "Oryx (Sun) transferred the license agreement to Kerr-McGee Corp., without prior approval." Id. Under the evidence adduced at trial, the only way that Oryx could possibly have "transferred the license agreement to Kerr-McGee Corp." was through the merger of Oryx into Kerr-McGee Corporation. Thus, the jury's finding in A1(c) is a finding that Oryx breached a

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licensing agreement by merging with Kerr-McGee Corporation.

Plaintiff does not argue

otherwise, implicitly conceding that the jury found that the breach consisted of the merger. Plaintiff's Response at 4-8. However, the jury's finding of breach through merger cannot stand because that finding is contrary to the instructions that this Court gave the jury and is invalid as a matter of law. 2. The jury finding that the breach was the merger contravenes this Court's jury instructions.

This Court specifically instructed the jury concerning the conduct that could constitute a breach of contract, and the Court's instructions did not include, as a possible breach, the transfer of seismic data through merger. See Jury Instructions 3.2, 3.2.1. Rather, the jury was instructed that the breach of contract claims consisted of Plaintiff's claims that Defendants had breached the license agreements by "(1) failing to return all PGI seismic data following the 1999 KerrMcGee/Oryx Merger; (2) losing some of the seismic data; and (3) by allowing its wholly owned subsidiary corporations like Kerr-McGee Oil & Gas to take possession or control and/or to have access to the seismic data following the 1999 merger." See Jury Instruction 3.2.1. There is no suggestion in the Court's instructions that a merger could constitute a breach of contract--which is entirely logical given that the Court also gave the jury other instructions that precluded the jury from finding that Defendants breached any license agreements through merger. Instructions 3.2.2 and 3.2.3. The Court correctly instructed the jury that a "merger is not a conveyance, transfer, or assignment. It does not give rise to a claim that a contract with a party to the merger is no longer in effect on the ground of nonassignability, unless the contract specifically provides that it does not survive a merger." See Jury Instructions 3.2.2(4). This Court's instructions also correctly See Jury

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told the jury that a "merger does not affect a pre-existing license of one of the parties to a merger unless the license agreement specifically provides that it does," and that "if a license agreement is silent on the question of a merger, then the fact of a merger will not constitute a breach of that agreement." Jury instruction 3.2.3 (emphasis added). Because none of the Oryx/Sun licensing agreements expressly provided that a merger constitutes a breach, the jury's finding of breach by merger is contrary to the Court's instructions and legally invalid. Accordingly, Defendants are entitled to JMOL on Plaintiff's breach of contract claim relating to the 16,000 miles of Oryx seismic data. 3. Plaintiff cannot contort interpretation findings. the jury's answers into contract

Attempting to minimize the jury's disregard of the jury instructions, Plaintiff argues that the jury's breach finding was really a contract interpretation finding. Plaintiff's Response at 4-8. Thus, Plaintiff argues that "it was for the jury to determine whether the licenses expressly prohibited transfer via merger or not." Id. at 4. This argument fails for several reasons. As a preliminary matter, the interpretation of an unambiguous contract (like the contracts at issue in this case) presents a question of law, not fact. Resort Car Rental Sys., Inc. v. Chuck Ruwart Chevrolet, Inc., 519 F.2d 317, 320 (10th Cir. 1975); C. H. Codding and Sons v. Armour & Co., 404 F.2d 1, 8 (10th Cir. 1968). Moreover, nothing in this Court's instructions suggests that the jury was being asked (a) to decide the meaning of ambiguous contracts or (b) to determine whether particular contractual provisions prohibited transfers of data via merger. Rather, the Court instructed the jury concerning the legal effect of a merger so that the jury would know that a merger could not constitute a breach of the license agreements.

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Plaintiff argues that, under the instructions given by this Court, the jury was entitled to find that transfers of data through mergers were expressly prohibited by two types of license agreements (referred to herein as the "Type A" and "Type B" License Agreements). Plaintiff is wrong as to both types of license agreements. a. Type A License Agreements

With respect to the Type A License Agreements in the record (which represented 46 of the license agreements, i.e., most of the license agreements involved in this case), Plaintiff relies on the following contractual provision to support its argument that transfers of data through merger were expressly prohibited: The data covered under this agreement is for the sole use of Purchaser and is not to be sold, traded, disposed of, or otherwise made available to other parties except under the following conditions: 1. The data may be shown to a consultant for interpretation.

2. The data may be shown to a third party in order to secure partners in a specific drilling venture but may not be shown to another party to assist said party in making a regional interpretation. 3. The data will remain in the physical possession of Purchaser and will not be actually surrendered to any third party or a consultant without the prior written consent of Pennzoil Exploration and Production Company, P.G.I. or Geophysical Systems Corporation. According to Plaintiff, the quoted contract provision "expressly prohibits transfer via merger" because merger is not specifically identified as one of the conditions permitting the transfer of data. Plaintiff's Response at 6. In other words, the contract is silent as to merger. However, this Court charged the jury that "if a license agreement is silent on the question of a merger, then the fact of a merger will not constitute a breach of that agreement." See Jury Instruction 3.2.3. Because the contract provision quoted above is silent as to the effect of a

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merger, based on this Court's instructions to the jury, a merger cannot constitute a prohibited transfer as a matter of law under the Type A License Agreements. Plaintiff's interpretation of the contractual provision contravenes this Court's legal rulings, as found in the Court's jury instructions. In light of those rulings by the Court, there were no fact issues for the jury to decide concerning the meaning of the Type A License Agreements. b. Type B License Agreements

Twenty-one license agreements in the record are the Type B License Agreements, which contain language concerning transferability that is different from the transferability language in the Type A License Agreements. Plaintiff also claims that the transferability language in the Type B License Agreements expressly prohibits the transfer of data by merger. The relevant Type B language (in Section IV of those contracts) is as follows: Title to the Data shall remain in PGI, and Licensee shall not have the right to disclose the Data to third parties or convey or otherwise transfer the Data or any of Licensee's rights thereto, except as otherwise provided herein. IV. Licensee may disclose the Data by providing copies thereof: (1) to a wholly owned subsidiary of Licensee, to a company owning 50% or more of the voting stock of Licensee (providing such 50% ownership was effective on the date of this Agreement) or to a surviving company in the event of a complete merger by Licensee; (2) to a company having a farmout agreement with Licensee; and (3) to any party, partner, group or combine contracting with Licensee for the purpose of joint development programs for exploring for and producing hydrocarbons in all or portions of the areas to which the Data pertains, *provided that Licensee may disclose Data to third parties under this Section IV only after Licensee has paid the group rate for the Data and such disclosure shall be limited to those seismic sections or portions thereof displaying Data relative to the tracts in which such third party has an interest.* Licensee may show, but shall not provide copies of, seismic sections to a consultant or a party with whom Licensee is conducting bona fide negotiations for a farmout or contract for joint development interest, provided that any disclosure to such party shall be limited

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to seismic sections or portions thereof displaying Data relative to tracts under negotiation and shall not be disclosed until the other party has agree to keep the Data confidential. **Any party who is otherwise eligible to receive the Data or any part thereof pursuant to this Section IV, may not see or receive the same until (1) such party has executed with Licensee a sublicense agreeing to the restricted use of the Data and the seismic sections and the information derived therefrom and to be bound by the other terms and conditions of this Agreement, (2) Licensee has notified PGI in writing of such sublicense, and (3) the group rate fee for providing such copies has been paid to PGI.** (Italics and asterisks added.) The quoted contract provision expressly allows the licensee to disclose data to "a surviving company in the event of a complete merger by Licensee." Thus, the Type B License Agreement unambiguously does not expressly prohibit the transfer of data by merger. In addition, the Type B License Agreement unambiguously does not require KerrMcGee, as the surviving entity after a merger, to pay any fees or to satisfy any conditions precedent in order to have access to seismic data covered by the licensing agreement. There are only two provisions in the Type B License Agreement that deal with the payment of fees or the satisfaction of conditions precedent in order to have access to data. The first provision is the single-asterisked [*] "provided that" clause, and the second provision is the double-asterisked [**] final sentence of the paragraph. Neither provision requires the payment of fees or the satisfaction of conditions precedent in the kind of merger situation involved here. The single-asterisked "provided that" clause allows data to be disclosed to "third parties," but only after a "group rate" fee has been paid. Further, the disclosure must be "limited to . . . Data relative to the tracts in which such third party has an interest." That clause does not apply to the surviving entity from a merger because that entity is not a "third party," but rather is the very entity that owned the data prior to the merger. Moreover, the limitation of disclosure to

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"the tracts in which such third party has an interest" would make no sense with respect to the entity that survives a merger because that entity always will have an interest in all data covered by the license agreement. Nor does the double-asterisked final sentence of the paragraph require the surviving entity from a merger to pay fees or satisfy conditions precedent in order to have access to data. That sentence requires a party entitled to data to satisfy all three conditions precedent before receiving the data: (1) the execution of a sublicense, (2) the provision of notice of the sublicense to the licensor, and (3) the payment of a group rate fee. It would make no sense to require the surviving entity from a merger to execute a sublicense with respect to data already owned by that entity. The surviving entity would be executing a sublicense with itself. The final sentence was plainly not intended to apply to the surviving entity from a merger. Plaintiff implicitly acknowledges that the provisions in the final sentence could not apply to a merger because, in its Response, Plaintiff complains only that the conditions precedent for transfer were not satisfied with respect to alleged transfers of data from Kerr-McGee Corporation to Kerr-McGee Oil & Gas Corporation (not with respect to alleged transfers that occurred in the context of a merger). See Plaintiff's Response at 7-8. However, the jury did not find breach based on a transfer of data by Kerr-McGee Corporation to Kerr-McGee Oil & Gas Corporation, but rather found breach based on Oryx's transfer of data to Kerr-McGee Corporation by the merger of Oryx with Kerr-McGee Corporation. See 14, infra. Because all of the license agreements at issue were either silent on the question of merger or specifically allowed transfers via merger, the Court's instructions informed the jury that it could not find breach based on merger. Those instructions were clearly not asking the jury to

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decide the legal question whether a particular license agreement was silent on the question of merger or specifically allowed transfers through mergers. 4. Nor can the jury's breach finding be upheld based on extrinsic evidence concerning the supposed meaning of the license agreements.

To support its interpretation of the license agreements, Plaintiff points to extrinsic evidence concerning the supposed meaning of those agreements. Plaintiff's Response at 6-7. However, the interpretation of an unambiguous contract is a question of law for the Court, not a question of fact for the jury. Resort Car Rental, 519 F.2d at 320; C. H. Codding, 404 F.2d at 8. Extrinsic evidence concerning the supposed meaning of a contract is irrelevant to the jury's findings. In any event, the owner of Plaintiff's predecessor, PGI, who drafted the Type B License Agreement (which he referred to as the "new license agreement"), testified that he designed the general format of this contract, along with PGI's general counsel. Russell Depo:12, 55.

Specifically concerning Section IV of the Type B Agreements, Russell agreed that Section IV dealt with mergers and that it was not the intention of this Type B Agreement that, if data were given to a surviving company in a merger, a fee would be required. Russell Depo:56. Reading the specific language of Section IV, Russell testified: [T]he first portion [of Section IV] talks about if . . . it's a merger, there's no fees required. The latter part of this talks about other parties, like a ­ partnership in ­ in an operating agreement. But . . . it was never intended to have . . . an additional fee if the company merged. . . . There's no reason that ­ there's no way that . . . rationally, that you can charge again for the company to buy the data a second time. They've already bought the license to the data. Russell Depo:57-58. Russell was an officer, director, and shareholder of PGI, and he testified unequivocally that PGI ­ the party from whom Oryx/Sun licensed the data ­ never "took the

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position that it should receive a transfer fee or other payment as a result of a merger and acquisition." Russell Depo:87. Therefore, even if extrinsic evidence is considered, that evidence establishes, as a matter of law, that the Type B Agreements did not require the payment of a fee for any Oryx/Sun seismic data acquired by a surviving entity (like Kerr-McGee) as a result of a merger.1 5. In light of the jury's finding, Plaintiff cannot rely on alleged transfers of data to subsidiaries to support the jury's breach finding.

Plaintiff tries to support the jury's breach finding by discussing evidence allegedly showing that data was transferred to Kerr-McGee Oil & Gas Corporation, a wholly-owned subsidiary of Kerr-McGee Corporation. Plaintiff's Response at 7-8. Plaintiff then argues that Kerr-McGee did not satisfy the conditions precedent necessary to permit a transfer to a subsidiary. Id. However, the jury did not find breach based on transfer of data to a subsidiary, but rather found breach based on transfer of data from Oryx to Kerr-McGee Corporation--i.e., based on the merger. Thus, all Plaintiff's arguments concerning transfers to a subsidiary are beside the point. Plaintiff's Response at 7-8. 6. Plaintiff's standard of review arguments are misguided.

Plaintiff also is wrong in arguing that the usual JMOL standards do not apply because Defendants have not previously asserted their legal arguments concerning merger. In fact, Defendants have repeatedly argued that a merger does not constitute a prohibited transfer as a matter of law and that the construction of an unambiguous contract is a question of law for the court. See, e.g., Defendants' Brief in Support of Motion for Partial Summary Judgment Based If this Court concludes that the license agreements were ambiguous and that the jury did make implied fact findings concerning the meaning of those contracts, then the jury's fact findings are against the great weight of the evidence, and a new trial is required. 13
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Upon the Law of Corporate Merger and Contract Interpretation at 4-11. Indeed, Defendants made those arguments in their motion for judgment as a matter of law. Defendants' Motion for Judgment as a Matter of Law at the Close of Plaintiff's Evidence at 3-6, 8-9. Plaintiff's contention that Defendants' argument was not sufficiently detailed runs afoul of the Tenth Circuit principle that "technical precision" is not required. See Aguinaga v. United Food & Comm. Workers Int'l Union, 993 F.2d 1463, 1470 (10th Cir. 1993); Anderson v. United Tel Co. of Kan., 933 F.2d 1500, 1503-04 (10th Cir. 1991). If Plaintiff is complaining that Defendants have not previously asserted that there is "no evidence" that the merger constituted the breach, that complaint is wrong because Defendants could not have made a no evidence objection to that finding until the jury made the finding. Defendants could not have anticipated that the jury would make a finding that was directly contrary to this Court's instructions. Defendants asserted their "no evidence" objection to the finding at the first feasible opportunity. B. At the Very Least, Defendants Are Entitled to a New Trial on the Claims Submitted to the Jury in Section A of the Verdict.

As demonstrated above, Defendants are entitled to judgment as a matter of law on the claims submitted in Section A of the Verdict Form relating to Defendants' alleged breach of Oryx/Sun license agreements governing 16,000 miles of Oryx seismic data (Category 1 data). The Court's Instructions only allowed the jury to find breach of contract based on three types of conduct. Instead of finding a breach based on any of the permitted categories of conduct, the jury found breach based on the merger of Oryx and Kerr-McGee Corporation. Thus, the jury's finding is legally invalid and cannot support any judgment against Defendants.

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Moreover, a merger could not constitute a breach of the licensing agreements as a matter of law in any event. In light of this Court's legal rulings, a transfer of data through a merger most certainly could not be a breach of the Type A License Agreements, discussed above, which were silent as to merger. See Part I.A.3.a., supra. Defendants submit that a merger also could not constitute a breach of contract as a matter of law with respect to the Type B License Agreements that did specifically mention merger. See Part I.A.3.b, supra. However, even if a transfer of data in the merger context could be considered a breach of contract with respect to the Type B License Agreement (the agreements that mention merger), a new trial would be required because the jury's $15,745,000 damages awards was plainly an award of damages for both types of contracts. Although the number of miles of seismic data inquired about in Section A of the verdict has been rounded up to 16,000, the actual number of miles of data inquired about in Section A was 15,745. Day-5:820; PX-206. The jury awarded damages in the amount of $15,745,000-- which is exactly $1,000 for every mile of data inquired about in Section A. Thus, the jury's $15,745,000 award includes damages for the contracts that were silent as to merger, even though Plaintiff is plainly not entitled to damages for data covered by the agreements that were silent as to merger. At least 46 contracts relevant to the 16,000 miles of Category 1 data were silent as to the effect of a merger. PX-21 to PX-23, PX-25 to PX-59, PX-72 to PX-76, PX-78, PX-81, PX-188. Under this Court's ruling, a merger could not constitute a breach of those license agreements as a matter of law. Because the jury's damages figures include damages for the agreements on which there could be no recovery as a matter of law, at the very least, a new trial is required.

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Even if Plaintiff could recover based on a merger theory under the Court's instructions (and it cannot), Plaintiff had the burden of establishing that the license agreements upon which it was suing expressly prohibited merger. And even if Plaintiff had carried that burden with respect to the Type B License Agreements that expressly mentioned merger, there were only 21 Type B License Agreements in the record, and they covered only 2,059 miles of data. Based on the $1,000 per mile of data that the jury used in awarding damages, the Plaintiff would, at most, be entitled to $2,059,000. Even if the $1,200 figure urged by Plaintiff in closing arguments is used, the award would only be $2,470,800. The jury's $15,745,000 award in Part A of the verdict is plainly excessive. See infra Part IV (discussing other problems relating to the damages awarded in Section A of the Verdict Form). II. DEFENDANTS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW (OR AT LEAST TO A NEW TRIAL) ON THE CLAIMS SUBMITTED IN SECTION B OF THE VERDICT. A. None of Plaintiff's Arguments Can Create Evidence to Support the Jury's Breach Findings. 1. There is no evidence to support any of the jury's breach findings.

Section B of the Verdict Form asks the jury a series of questions about Plaintiff's claim for breach of license agreements relating to 760 miles of seismic data licensed directly to KerrMcGee Corporation (Category 2 data). The Verdict Form asks the jury whether Kerr-McGee Corporation breached the seismic data license agreements and, if so, required the jury to find how Kerr-McGee Corporation breached those agreements. The jury first found that Kerr-McGee Corporation did breach the agreements. In specifying what the breaches of contract were, the jury wrote: "Transfer license to Kerr-McGee Oil & Gas, no prior consent. All data was not

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returned, trade secrets were not safeguarded." There is, however, no evidence to support any of the jury's breach findings as to the 760 miles of (Category 2) seismic data. 2. There is no evidence to support the jury finding that Kerr-McGee Corporation transferred any licenses to Kerr-McGee Oil & Gas Corporation.

The 760 miles of seismic data inquired about in Section B of the verdict was data directly licensed to Kerr-McGee Corporation; that 760 miles of data had never been licensed to, or possessed by, Oryx or Sun. It is undisputed that, in 1996, Kerr-McGee sent the 760 miles of seismic data to storage. Day-4:585-86, 607; Day-5:756; Day-6:961-64, 1022-25. It also is undisputed that no one (except lawyers involved in this litigation) had accessed that data since it was sent to storage in 1996. Day-5:754-57; Day-6:960-61. Because Kerr-McGee Corporation, the licensee of the 760 miles of seismic data, sent the data to storage in 1996 ­ where it remained undisturbed until it was retrieved by lawyers for this litigation ­ Kerr-McGee Corporation obviously did not transfer the data to its subsidiary Kerr-McGee Oil & Gas Corporation (which was not even formed until 1997) or to anyone else. The evidence relied upon by Plaintiff in its Response is not evidence of a transfer of the 760 miles of seismic data from Kerr-McGee Corporation to its subsidiary Kerr-McGee Oil & Gas Corporation. Addressed below is each item of Plaintiff's supposed evidence. The testimony of Mr. Salazar and Mr. Schultz is discussed at page 9 of Plaintiff's Response. According to Plaintiff, Mr. Salazar of Oryx testified that, after the merger, KerrMcGee Corporation "did not engage in any onshore exploration" and that "all onshore exploration was done by subsidiaries such as Kerr-McGee Oil & Gas Corporation." Plaintiff's Response at 9. Similarly, Plaintiff says that Mr. Schultz testified that the Dallas office of Kerr-

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McGee Oil & Gas Corporation was the entity that, as a general matter, made use of seismic data. Plaintiff's Response at 9. As a preliminary matter, Mr. Salazar actually testified that Kerr-McGee Oil & Gas Corporation handled offshore exploration, not onshore exploration. Day-4:587, 633. In

addition, Mr. Salazar testified that the offices of Kerr-McGee Oil & Gas Corporation were located in Houston, not Dallas. Day-4:558, 587, 633. Moreover, the Salazar and Schultz testimony cited by Plaintiff concerns the 16,000 miles of Oryx seismic data (Category 1 data), not the 760 miles of Kerr-McGee seismic data (Category 2 data). Day-4:586-87; Day-6:961, 968, 1009-10. Thus, Plaintiff has misquoted and misconstrued the very testimony on which it seeks to rely. In any event, Plaintiff's own discussion of the Salazar and Schultz testimony shows that the testimony did not relate to transfers of data, but rather related to the division of responsibilities between Kerr-McGee Corporation and Kerr-McGee Oil & Gas Corporation. But general evidence relating to division of responsibilities is not evidence that the 760 miles of seismic data (Category 2 data) was transferred to Kerr-McGee Oil & Gas Corporation by KerrMcGee Corporation. Given the undisputed evidence that the 760 miles of data at all times remained packed away in storage, evidence of the kinds of functions that Kerr-McGee Oil & Gas Corporation performed is not evidence that this particular 760 miles of data was ever transferred to Kerr-McGee Oil & Gas Corporation or that Kerr-McGee Oil & Gas Corporation ever used that data. See pp. 26-27, infra (additional discussion of testimony of Mr. Schultz and Mr. Salazar and whether there is evidence of a transfer).

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Plaintiff's references to arguments by Kerr-McGee's counsel that parent and subsidiary corporations have a "unity of interest" is likewise not evidence that the 760 miles was transferred to a subsidiary. Plaintiff's Response at 10. In order for the jury's finding to stand, there must be evidence that the 760 miles (Category 2) of Kerr-McGee seismic data was actually transferred by the parent corporation (Kerr-McGee Corporation) to the subsidiary corporation (Kerr-McGee Oil & Gas Corporation). There is no such evidence. Regardless of whether Kerr-McGee believed that it was entitled to share seismic data with its subsidiaries and regardless of whether Kerr-McGee believed that it had common interests with its subsidiaries, the fact remains that Kerr-McGee Corporation did not share the 760 miles of data with Kerr-McGee Oil & Gas Corporation. Indeed, the 760 miles of seismic data was not transferred to anyone, was not shared with anyone, and was not conveyed to anyone. Most certainly, that 760 miles of data was not transferred to Kerr-McGee Oil & Gas Corporation, as the jury found. 3. The jury's breach finding cannot be upheld based on failure to return the 760 miles of Kerr-McGee seismic data because Kerr-McGee had no obligation to return that data. a. The merger of Oryx into Kerr-McGee Corporation did not trigger any data return requirements in the 1994 Agreement.

In arguing that the 1994 License Agreement required a return of the data, Plaintiff disregards, and even misquotes, the language of that agreement. The 1994 Agreement provided only that the license terminated if Kerr-McGee Corporation transferred assets, underwent a change in ownership, or was acquired by a third party. See Defendants' Renewed Motion at 15. The 1994 Agreement does not provide that the agreement terminates if Kerr-McGee Corporation (the licensee) acquires assets of another company or acquires another company through merger.

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See id. The merger at issue here did not cause a termination of the 1994 Agreement and did not trigger any duty to return data. Plaintiff quotes the 1994 Agreement as stating that "in the event of acquisition or merger, the license granted herein shall immediately terminate and all copies of the Data shall be promptly returned to Licensor." Plaintiff's Response at 10. In reality, the agreement states that "in the event of a third party acquisition or merger, the license granted herein shall immediately terminate and all copies of the Data shall be promptly returned to Licensor." PX-60 (emphasis added). Thus, Plaintiff has omitted the key term "third party" from its quotation. That omission is critical because the duty to return data is triggered only where a third party acquires KerrMcGee Corporation or Kerr-McGee Corporation is merged into a third party, and not where Kerr-McGee Corporation is the acquiring entity. Kerr-McGee Corporation was not acquired, but rather Kerr-McGee Corporation acquired Oryx. As a matter of law, there was no prohibited transfer of the 760 miles of seismic data because that data had been licensed to, and held by, Kerr-McGee Corporation prior to the merger and continued to be licensed to, and held by, KerrMcGee Corp. after the merger. b. There were no reorganizations that triggered a duty to return any data.

Plaintiff also contends that the 1994 Agreement provided that the agreement would terminate if a corporate reorganization occurred and that Kerr-McGee Corporation would be required to return its data to Plaintiff. See Plaintiff's Response at 10-11. The section of the 1994 Agreement on which Plaintiff is relying (Section V) deals with assignments and is concerned with preventing the licensee from transferring seismic data to another entity in any manner ­ whether by means of a transfer of assets or a corporate reorganization or in some other way. The

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data return requirement is obviously not intended to apply to a corporate reorganization that has nothing to do with rights to seismic data. Otherwise, the requirement would be triggered whenever there was a corporate restructuring, whether or not that restructuring had anything at all to do with rights to seismic data. The language of the 1994 Agreement does not require such an absurd interpretation. No reorganization occurred that changed the ownership of the 760 miles of data (Category 2 data), so no duty to return the data was triggered. 4. There is no evidence that Kerr-McGee Corporation failed to guard trade secrets in connection with the 760 miles of Kerr-McGee seismic data.

There is no evidence whatsoever that Kerr-McGee Corporation ever showed any of the 760 miles of seismic data to any third party. As discussed above, Kerr-McGee Corporation only sent that data to storage for safekeeping. While there is evidence that the storage company was unable to locate 225 miles of the 760 miles of data, such evidence is not evidence that KerrMcGee Corporation revealed the trade secrets to others or otherwise failed to safeguard those trade secrets. B. At the Very Least, Kerr-McGee Is Entitled to a New Trial in Connection With the Claims Relating to the 760 Miles of Kerr-McGee Seismic Data.

For the reasons discussed above, Plaintiff cannot recover for breach of any license agreement with respect to the 760 miles of Kerr-McGee seismic data based on the jury's finding that Kerr-McGee Corporation transferred data to a subsidiary or based upon the jury's finding that Kerr-McGee Corporation failed to return all of the seismic data. Even if Plaintiff could recover on its claim that Kerr-McGee failed to guard trade secrets because Kerr-McGee could not locate 225 miles of data, that finding could not support the entire $968,750.00 in damages found by the jury in response to Question B2(b). That amount is clearly based on the entire 760

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miles of data. Thus, at a minimum, a new trial or substantial remittitur is required. See also infra Part IV (discussing other problems relating to the damages awarded in Section B of the Verdict Form). III. DEFENDANTS ARE ENTITLED TO JUDGMENT AS A MATTER OF LAW (OR AT LEAST TO A NEW TRIAL) ON THE CLAIMS SUBMITTED IN SECTION C OF THE JURY'S VERDICT. Section C of the verdict asks the jury a series of questions relating to Plaintiff's claims for misappropriation of trade secrets. As Defendants demonstrated in their Renewed Motion for JMOL, the misappropriation claims submitted in Section C relate solely to the 16,000 miles of Oryx seismic data (Category 1 data) acquired by Kerr-McGee Corporation through its merger (Question C1(b)) and the 3,100 miles of seismic data (Category 3 data) from an unknown source (Question C1(a)). See Defendants' Renewed Motion at 25-26. In arguing that Section C of the verdict is not limited to those two categories of data, Plaintiff ignores this Court's jury instructions. The Court instructed the jury that, in order to find misappropriation of trade secrets, the jury had to find that one of the following two statements was true: (a) (b) Kerr-McGee Corporation gained access to and possessed approximately 3100 miles of PGI data by improper means; Kerr-McGee Corporation after the merger with Oryx, wrongfully transferred control of the PGI data from Oryx, or Oryx's previously wholly owned subsidiary Sun Operating Limited Partnership, to a subsidiary of Kerr-McGee Corporation. Jury Instruction 3.3.2.

The instruction concerning improperly gaining access to, and possession of, 3,100 miles of PGI data obviously does not relate to the 760 miles of data (Category 2 data) inquired about in Section B of the verdict. After all, it is undisputed that Kerr-McGee Corporation did not gain access to the 760 miles of data through improper means, since Kerr-McGee licensed that data directly from M.D. Mark. Nor does Paragraph (b) of Jury Instruction 3.3.2 relate to the 760

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miles of data (Category 2 data) since that data was not Oryx data, but rather was data licensed by Kerr-McGee Corporation directly. Thus, in spite of Plaintiff's denials, it is clear that the claims submitted in Section C of the Verdict Form did not relate to the 760 miles of Kerr-McGee seismic data (Category 2 data). Instead, Section C of the Verdict Form inquired only about the 16,000 miles of (Category 1) seismic data and the 3,100 miles of (Category 3) data. But the jury's verdict as to each of those categories cannot be sustained. A. Kerr-McGee Is Entitled to Judgment ­ or at Least a New Trial ­ With Respect to the Jury's Finding in Section C1(b) that Kerr-McGee Misappropriated All or Some of the Oryx/Sun Seismic Data (Category 1).

In answer to Question C1(b), the jury was asked a very narrow misappropriation of trade secrets question: "Did M.D. Mark, Inc. prove . . . by a preponderance of the evidence" that "Kerr-McGee Corporation, after the merger with Oryx, wrongfully transferred control of the PGI Data from Oryx, or any wholly owned subsidiary of Oryx, to a subsidiary of Kerr-McGee Corporation?" Thus, the jury was only asked whether Kerr-McGee Corporation committed a misappropriation of trade secrets, (1) after the merger between Oryx and Kerr-McGee, by (2) wrongfully transferring the Oryx PGI data (i.e., the 16,000 miles of Oryx/Sun seismic data then held by Oryx or its subsidiary (SOLP)), to (3) a subsidiary of Kerr-McGee Corporation. The jury answered Question C1(b) yes. However, contrary to Plaintiff's contention, Kerr-McGee is entitled to judgment ­ or at least a new trial ­ as to this misappropriation of trade secrets claim as to the 16,000 miles of Oryx/Sun seismic data (the Category 1 data).

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1.

Kerr-McGee Is Entitled to JMOL on the Jury's Finding that KerrMcGee Misappropriated the Sun/Oryx (Category 1) Data.

Plaintiff makes essentially three arguments as to why Kerr-McGee is not entitled to judgment with respect to the jury's finding, in answer to Section C1(b) of the Verdict Form, that Kerr-McGee misappropriated the 16,000 miles of Oyrx/Sun seismic data (the Category 1 data). First, Plaintiff argues that there is legally sufficient evidence that the 16,000 miles of seismic data was in fact transferred to a subsidiary of Kerr-McGee Corporation ­ specifically, Kerr McGee Oil & Gas Corporation ­ after the merger. Second, Plaintiff argues that the jury could have found that the pre-merger transfer from Oryx to SOLP constituted a misappropriation of trade secrets. Third, Plaintiff suggests that Ms. Young's testimony about a "top hat" merger involving Kerr-McGee Corporation permitted the jury to infer that the 16,000 miles of Oryx/Sun data did not remain in the possession of SOLP. None of Plaintiff's arguments has merit. a. There is no evidence that the Category 1 Oryx/Sun seismic data was actually transferred to Kerr-McGee Oil & Gas Corporation after the merger.

Kerr-McGee's renewed motion for JMOL explains what actually occurred with respect to the 16,000 miles of Oryx/Sun seismic data (Category 1 data). Prior to the February 1999 merger between Kerr-McGee and Oryx, the 16,000 miles of seismic data was held by SOLP, a limited partnership Oryx subsidiary, of which Oryx was the managing partner. Defendants' Renewed Motion at 17. Plaintiff has no evidence suggesting otherwise and, indeed, Plaintiff's own expert Moye confirmed that, in 1985, Sun Exploration and Production Company transferred all of its assets (including the 16,000 miles of seismic data) to SOLP. Day-1:193. Then, after the Kerr-McGee/Oryx merger, Kerr-McGee Corporation succeeded to the partnership interest that Oryx held in SOLP. Defendants' Renewed Motion at 18. But the

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16,000 miles of Oryx/Sun seismic data continued to be held by SOLP (the same limited partnership entity that held the 16,000 miles of seismic data prior to the merger). Id. Finally, on July 31, 1999 (after the merger), two things happened: (1) the name of SOLP was changed to KMOGO LP, but the same limited partnership entity (with a new name) continued to hold title to the 16,000 miles of the Oryx/Sun seismic data; and (2) Kerr-McGee Corporation, then the managing partner of SOLP (now known as KMOGO LP), transferred its partnership interest in the limited partnership (formerly SOLP, now named KMOGO LP) to a Kerr-McGee subsidiary called KMOGO LLC (which then became the managing partner of KMOGO LP, formerly SOLP). See Defendants' Renewed Motion at 18-20. Plaintiff mischaracterizes the testimony of Mr. Salazar and Mr. Schultz. Plaintiff says the evidence was disputed on this point because, according to Plaintiff, Mr. Schultz supposedly admitted that he "thought" the 16,000 miles of Oryx data was transferred to Kerr-McGee Oil & Gas Corporation. Plaintiff's Response at 12. Plaintiff mischaracterizes Mr. Schultz's testimony. In fact, Mr. Schultz testified only that (1) after the merger, Kerr-McGee (which had been "out" of the onshore business) got back into the onshore business; and (2) Oryx's onshore operations were located in Dallas, Texas, before the merger, and after the merger, the onshore operations continued at the same location. Day-6:961, 968, 975. When Plaintiff's counsel attempted to get Mr. Schultz to agree that Kerr-McGee Oil & Gas Corporation (which was never involved with "onshore" operations) was in Dallas, Mr. Schultz said he did not know. Day-6:1009. Plaintiff's counsel further attempted to get Mr. Schultz to agree that after the merger, the Oryx seismic data was being used by one of Kerr-McGee's subsidiaries, but again Mr. Schultz says only that he "supposes" but does not know. Day-6:975, 1009-10.

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Plaintiff's reliance on Mr. Salazar's testimony is also misplaced. Mr. Salazar testified, consistent with the letter written by Ms. Horsfall (and discussed in Defendants' Renewed Motion at 22-23), that ­ prior to the merger ­ he thought that the 16,000 miles of Oryx/Sun seismic data was going to be transferred to Kerr-McGee Oil & Gas Corporation. But Mr. Salazar ultimately testified that he did not know where the licenses to the Oryx/Sun seismic data were transferred after the merger. Thus, in response to questions asked by Plaintiff's counsel Mr. Pelz, Mr. Salazar testified as follows: Q. Now, it's my understanding, then, that the license was ­ were really supposed to be transferred to Kerr-McGee Oil & Gas Onshore LLC; is that correct? No. The letter said, [Kerr-McGee] Oil & Gas Corporation. And that's what was done; is that correct? I don't know whether it was done initially and then some may or may not have gone to [Kerr-McGee] Oil & Gas Onshore LLC. I was not involved in that process. And Kerr-McGee Oil & Gas Onshore LLC was a subsidiary of KerrMcGee Oil & Gas Corporation; isn't that correct? I'm not sure of the structure ­ exact structure at the time, or I don't recollect. But Kerr-McGee Oil & Gas Onshore LLC ­ and I admit it's confusing what the structure was. But it definitely was related to KerrMcGee Corporation and Kerr-McGee Oil & Gas Corporation. But I don't know for a fact that any licenses were transferred to [Kerr-McGee] Oil & Gas Onshore LLC.

A. Q. A.

Q. A.

Day-4:568-69 (emphasis added). Surely, testimony from a witness that he "does not know" whether seismic data licenses were transferred to Kerr-McGee Oil & Gas Corporation (or some other Kerr-McGee subsidiary, such as KMOGO LLC) is not legally sufficient evidence that, after the merger, the 16,000 miles of seismic data actually was transferred to Kerr-McGee Oil & Gas Corporation (or some other Kerr-McGee subsidiary). 26

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Nor can Plaintiff support the jury's misappropriation finding by arguing that there was evidence the Oryx/Sun data was used in Dallas. Plaintiff also suggests the jury could have inferred that the 16,000 miles of seismic data was transferred to Kerr-McGee Oil & Gas Corporation because of testimony that "this data was located in Dallas Texas at the Kerr-McGee Oil & Gas Corporation offices." Plaintiff's Response at 12. Plaintiff again mischaracterizes the record. While there was testimony that the Oryx/Sun seismic data was used in Dallas after the merger (Day-4:589), there is no evidence that Kerr-McGee Oil & Gas Corporation was in Dallas. To the contrary, Mr. Salazar (who at one time worked for Kerr-McGee Oil & Gas Corporation) testified that Kerr-McGee Oil & Gas Corporation is in Houston, not Dallas. Day4:554, 558, 587, 633. Indeed, the Kerr-McGee entities that were in Dallas were KMOGO LP and KMOGO LLC. Day-4:587, 590, 632; Day-6:968. Thus, the testimony that the Oryx/Sun data was used in Dallas actually corroborates the testimony of Ms. Young (and the corporate history recounted in DX A-25) that the 16,000 miles of Oryx/Sun seismic data stayed with the same limited partnership entity before and after the merger (i.e., before the merger, it was with SOLP, which became KMOGO LP after the merger). Day-6:1056-57. There is no legally sufficient evidence that some or all of the 16,000 miles of the Category 1 (Oryx/Sun) seismic data was, after the merger, actually transferred by Kerr-McGee Corporation to Kerr-McGee Oil & Gas Corporation. Indeed, the undisputed testimony was that Kerr-McGee Oil & Gas Corporation handled offshore oil and gas work. Day-4:587; Day6:1057. All of the Oryx/Sun seismic data, however, concerned onshore prospects. Day-6:952. Taking all of the evidence, no reasonable jury could have found that, after the merger, Kerr-

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McGee Corporation wrongfully transferred the Category 1 Oryx/Sun data to Kerr-McGee Oil & Gas Corporation. b. Plaintiff cannot support the jury's misappropriation finding as to the 16,000 miles of Oryx/Sun by relying on the pre-merger (1985) transfer by Oryx to SOLP.

Plaintiff also suggests that the jury could have found misappropriation of trade secrets with respect to the 16,000 miles of Oryx/Sun seismic data by relying on Oryx's transfer of the data (back in 1985) to Sun Operating Limited Partnership (SOLP). Plaintiff's Response at 1213. Thus, Plaintiff claims that "regardless of the conflicting testimony as to exactly which subsidiary of Kerr-McGee acquired this data, the transfer from Oryx (formerly Sun Exploration and Production) [to SOLP] constituted a breach of these licenses agreements." Id. There are at least two problems with this misappropriation theory. First, this Court's Verdict Form did not ask the jury whether (1) Oryx, (2) prior to the merger with Kerr-McGee, (3) wrongfully transferred the Oryx/Sun seismic data to a subsidiary of Oryx. Instead, this Court asked the jury, in Question C1(b), whether "[1] Kerr-McGee Corporation, [2] after the merger with Oryx, [3] wrongfully transferred control of the PGI Data from Oryx, or any wholly owned subsidiary of Oryx, to a subsidiary of Kerr-McGee Corporation." Thus, on its face, Question C1(b) did not permit the jury to find misappropriation of trade secrets with respect to the Category 1 Oryx/Sun seismic data based on a pre-merger transfer by Oryx to an Oryx subsidiary. To the contrary, only something that Kerr-McGee did after the Kerr-McGee/Oryx merger could support the jury's finding. Second, Plaintiff omits to mention that, at the outset of trial, Plaintiff abandoned its claims based on the 1985 transfer of the Oryx/Sun seismic data to SOLP as constituting a breach

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of the license agreement. Day-1:2-3. Therefore, Plaintiff cannot now, after the fact, seek to resurrect a claim that it has abandoned. To permit Plaintiff to do so at this late date would be grossly unfair ­ since, as Defendants have always maintained, any such claim would be timebarred as a matter of law. Accordingly, Plaintiff cannot sustain the jury's misappropriation of trade secrets finding in answer to Question C1(b) based on Oryx's 1985 transfer of the Oryx/Sun data to SOLP (then an Oryx subsidiary). c. Nor can Plaintiff suggest that some "reorganization" by KerrMcGee effected an improper transfer of the 16,000 miles of Oryx/Sun seismic data.

Finally, Plaintiff contends that the jury's finding in answer to Question C1(b) can be sustained based on testimony from Ms. Young that Kerr-McGee underwent some sort of corporate reorganization in 2002 involving a "top hat" merger. Day-6:1069. Of course, there is nothing in this testimony that in any way suggests or implies that the 16,000 miles of Oryx/Sun data was transferred in any way at all from the limited partnership (SOLP, renamed KMOGO LP) ­ the limited partnership that held the data before and after the Kerr-McGee/Oryx merger ­ to some other Kerr-McGee subsidiary. Instead, Plaintiff is trying to suggest that Kerr-McGee could misappropriate data through a corporate reorganization ­ under the terms of the 1994 License Agreement. But as this Court ruled, the 1994 License Agreement that contains the language allegedly restricting the transfer or assignment of seismic data through a third party merger or other corporate reorganization does not apply as a matter of law to the 16,000 miles of Oryx/Sun seismic data acquired by KerrMcGee through merger. Thus, Plaintiff cannot hope to sustain the jury's misappropriation

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finding as to the Category 1 Oryx/Sun seismic data (in answer to Question C1(b)) by arguing that Kerr-McGee underwent some type of corporate reorganization or "top hat" merger in 2002. 2. Kerr-McGee Is At Least Entitled to a New Trial Concerning Plaintiff's Claim for Misappropriation of the 16,000 Miles of (Category 1) Oryx/Sun Seismic Data.

The jury's verdict is at least against the great weight and preponderance of the evidence. Plaintiff does not address Kerr-McGee's new trial argument that the jury's finding of misappropriation in answer to Question C1(b) is against the great weight of the evidence. But, if, for some reason, the Court concludes that the evidence is legally sufficient to support a finding that Kerr-McGee in fact wrongfully transferred the 16,000 miles of Oryx/Sun seismic data (Category 1) to a wholly owned subsidiary of Kerr-McGee after the merger, then the Court should at least grant a new trial. Even considering Ms. Horsfall's letter and Mr. Salazar's testimony about his original belief that the Oryx/Sun seismic data was to be transferred to Kerr McGee Oil & Gas Corporation, this evidence indicates, at most, that Oryx believed (prior to the merger) that the Oryx/Sun seismic data was going to be transferred to a Kerr-McGee subsidiary. The overwhelming weight of the evidence as to what actually occurred, however, demonstrates (as already explained) that the Category 1 Oryx/Sun data was (a) held by SOLP prior to the merger; and (b) continued to be held by SOLP (the name of which was changed to KMOGO LP) after the merger. No transfer to a subsidiary occurred after the merger. The Court's instruction concerning transfers to subsidiaries also warrants a new trial. The Court instructed the jury that a transfer of seismic data to a subsidiary is prohibited unless expressly authorized by the license agreement. erroneous and warrants a new trial. That instruction was, Defendants believe,

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Plaintiff makes another bogus waiver argument, suggesting that somehow Kerr-McGee never objected to the Court's instruction concerning transfers to subsidiaries. Plaintiff's

Response at 13. But Kerr-McGee maintained throughout trial ­ including in its motion for JMOL at the close of Plaintiff's case and at the jury charge phase ­ that (1) the transfer of seismic data to a subsidiary did not, ipso facto, constitute a breach of the license agreement, and (2) there was at least a fact issue as to whether, under trade usage and custom, such transfers were permitted. Day-5:886-88; Day-8:1261-62; see also Defendant's Motion for JMOL at the Close of Plaintiff's Evidence at 6-8. Kerr-McGee did not waive its charge error complaint. Nor can Plaintiff credibly contend that all of the license agreements covering the Oryx/Sun data specifically prohibit the transfer of seismic data to subsidiaries. As seen in the quoted language above in Part I.A.3.a., the Type A License Agreements (which govern most of the miles at issue) are completely silent as to whether a transfer to a subsidiary is permitted. And the Type B Agreements permit such a transfer in some circumstances. See supra Part I.A.3.b. As Kerr-McGee has pointed out, both Patricia Cherne (Plaintiff's own witness) and Thomas Russell (an officer of PGI at the time the Oryx/Sun agreements were signed) indicated that transfers of seismic data to wholly owned subsidiaries are permissible and not objectionable. Day-3:522, 534-35; Russell Depo:53-54. Accordingly, there was at least a fact issue as to whether those Oryx/Sun agreements that were silent on the issue would permit the transfer to subsidiaries in light of the custom and usage in the industry. The Court's instruction was thus in error. Plaintiff cites Thistle v. Tenneco, Inc., 872 P.2d 1302, 1307 (Colo. App. 1994), as supposedly indicating that "it is the law" that transfers to subsidiaries are prohibited. But all

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Thistle says is that "the right to control the persons who have access to seismic data is an incidental right of ownership of that data. . . ." This statement, of course, does not address the issue. Where an agreement is silent on the issue, and both parties (here, Thomas Russell of PGI and Kerr-McGee) are in agreement that transfers to subsidiaries are normally allowed, it is not appropriate to instruct the jury as a matter of law that, when the agreement is silent on the issue, transfers to subsidiaries are not allowed. Accordingly, Kerr-McGee continues to maintain that a new trial is warranted because of this charge error. B. No Judgment Can Properly Be Entered for Misappropriation of Trade Secrets Based on the 3,100 Miles of Seismic Data From an Unknown Source.

Question C1(a) asked the jury whether "Kerr-McGee Corporation gained access to and possessed PGI Data through improper means" and directed the jury's attention to Instruction 3.3.2 for guidance in answering that Question. Instruction 3.3.2(a) told the jury that it must find misappropriation of trade secrets if it found that "Kerr-McGee Corporation gained access to and possessed approximately 3,100 miles of PGI Data through improper means." The jury also was instructed that "improper means" refers to "theft, bribery, misrepresentation, or breach--or inducement of a breach--of a duty to maintain secrecy or not to disclose a trade secret." Plaintiff takes issue with Kerr-McGee's contention that "no judgment for Plaintiff is proper" with respect to the 3,100 miles of data from an unknown source ­ the alleged "bootleg" data (Category 3 data). But the truth is that there is no evidence that Kerr-McGee acquired the 3,100 miles of data (Category 3 data) through improper means. Alternatively, the jury's finding that Kerr-McGee did so is at least against the great weight of the evidence, as Defendants argued in their Motion for New Trial. Defendants' Renewed Motion at 32-33.

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1.

For all this record reflects, Kerr-McGee may well have had a licensing agreement covering the 3,100 miles of data.

The only thing Plaintiff proved with respect to the 3,100 miles of data (Category 3 data) is that the data was in Kerr-McGee's possession (in storage at Mid-Continent Data) and that Kerr-McGee did not have in its possession a license agreement specifically covering the 3,100 miles of seismic data. But Kerr-McGee's inability to locate a license agreement covering the data is not evidence that Kerr-McGee "gained access to and possessed" that 3,100 miles of seismic data through "improper means." Kerr McGee may well have had a licensing agreement covering the 3,100 miles of data, but simply lost that agreement. Alternatively, Kerr-McGee may have acquired the data through a merger and the license agreement may not have been transferred with the seismic data. While Plaintiff tries to read something sinister into the fact that Kerr-McGee could not find a licensing agreement for the 3,100 miles of data, Plaintiff itself was unable to locate specific license agreements and had lost a great deal of material related to PGI's seismic data business. Day-5:782, 847-52. Sometimes, a lost document is just a lost document. Plaintiff certainly did not satisfy its burden of proving that the missing document meant that something improper had occurred. 2. For all this record reflects, Kerr-McGee may well have acquired th