In an industrial espionage case wedged somewhere between the worlds of James Bond and Austin Powers, National Oilwell Varco LP (NOV) has won its legal battle against Mud King Products Inc.

Houston’s Mud King will pay NOV nearly $400,000 in a case involving the theft of NOV’s blueprints by the third-party parts supplier. NOV had sought nearly $7 million in damages.

"We are happy to see the bankruptcy court made Mud King pay for wrongfully bribing an NOV employee and stealing NOV's trade secrets, although we're disappointed that Mud King's press release to the public failed to fully explain what happened in their bankruptcy," said NOV attorney John Zavitsanos.

Mud King attorney Suzanne Lehman Johnson said the company vigorously denied that the mud pump part drawings from the 1960s and 70s at issue were trade secrets.

Johnson said Mud King, a 30-person shop, technically lost against NOV, a massive company with tens of thousands of employees–but it was a pyrrhic victory.

“NOV spent over $2.3 million to prosecute this lawsuit for $75,000 in actual damages,” she said. “This was a tough case, hard fought, with a lot of time and energy better spent elsewhere.”

Mud King was accused in a September 2012 lawsuit of stealing drawings of NOV’s mud pumps by paying off an NOV employee. Mud King eventually stalled the civil lawsuit by filing for federal bankruptcy protection, NOV argued.

In August, NOV said it received an anonymous letter from an “outraged Mud King employee” who alerted the company that NOV’s proprietary engineering mud pump blueprints were being stolen, according to a civil suit filed in Harris County District Court.

Means, Motive, Mud

Mud King sold the blueprints to a Chinese company to manufacturer “knockoffs,” NOV’s suit said.

The large, reciprocating pumps are used to push heavy drilling fluid or mud at high pressures into a drill hole and back up. NOV controls about 70% of the market share for mud pump replacement parts.

A Mud King employee asked his sister-in-law, who worked at NOV, to provide him blueprints by leaving them on his kitchen table in exchange for about $1,000, federal court records show.

“Mud King boasts on its website that it sells mud pumps and mud pump parts that are 100% equivalent to the original equipment manufacturer,” NOV’s suit said. “But telling the truth about Mud King’s dirty tactics would have a negative effect on Mud King’s business.”

NOV also notified the FBI, which led to NOV being allowed to sift through Mud King’s computers. NOV found Mud King had stored hundreds of its drawings. Many of the mud pump drawings in question were developed in the 1960s and 1970s before NOV acquired the companies that made them.

Mud King and two employees, one a former NOV employee, denied the accusations in court documents.

In April 2013, Mud King filed for bankruptcy protection before the scheduled depositions of Mud King’s employees.

NOV argued Mud King’s bankruptcy was a delaying action, it said it court documents. One of Mud King’s operating reports showed assets of $18.1 million and $3.9 million in liabilities.

Winner Takes A Little

Federal Bankruptcy Judge Karen K. Brown ultimately tried the trade secrets case. She ruled that NOV failed to prove some of its claims, including unjust enrichment and violations of the Computer Fraud and Abuse Act but succeeded in showing Mud King had misappropriated some trade secrets and violated the Texas Theft Liability Act.

Brown said NOV’s drawings were stolen for Mud King and that the company undisputedly sold parts it manufactured with the aid of NOV’s trade secrets. Mud King used 23 NOV drawings to improve its own parts, selling 15 of them.

However, the company was lax in how it has previously handled blue prints and failed to prove that its confidentiality measures are sufficient to guard the secrecy of its parts design information, Brown said.

“NOV does not know what part design information is sent to which vendors,” Brown wrote in her ruling. “NOV does not retrieve design information from either current or previous vendors.”

Named Mud King defendants asserted their Fifth Amendment rights and refused to testify. The company admitted it used 23 NOV drawings in its collection to make 81 parts, some of which it sold in 2011-12 for net profits of $64,000, court documents say.

NOV was awarded $74,434.95 for the parts Mud King sold, but was denied more than $2 million in exemplary damages and $4 million for NOV’s estimates of what it would cost to reverse engineer 204 parts for blueprints.

NOV also sought $898,147 to partially cover legal fees of $2.2 million but was awarded $320,893.

NOV appealed both judgments but the ruling was upheld.