On March 30, 2021, the Court of Appeals for the Fifth Circuit issued Polyflow, L.L.C. v. Specialty RTP, L.L.C., a decision concerning the arbitrability of claims related to the unauthorized use of trade secrets.
In 2014, John Wright resigned as the president of Polyflow LLC (“Polyflow”), the manufacturer of a proprietary pipe called Thermoflex used in the oil and gas industry, to form a competitor, Specialty RTP. Polyflow sued Specialty RTP and John Wright (collectively, “Specialty”) in 2015 for allegedly manufacturing a pipe identical to Thermoflex and deriving from Polyflow’s protected and confidential information. The parties settled this dispute in 2017, and the settlement agreement imposed a two-year limitation on Specialty’s ability to manufacture any competing pipes. After the two-year ban, Specialty was free to independently design a competing pipe, but, as a safeguard, the parties agreed to hire a neutral pipe expert to adjudicate whether Specialty was, in fact, independently designing its own product. The settlement agreement also contained an arbitration clause stating: “The sole and exclusive jurisdiction and venue for any action arising out of this Agreement shall be an arbitration in Harris County, Texas.”