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Tech Firm Claims Halliburton Stole Secrets

MISSOULA, Mont. (CN) — When the Navy saw "incredible commercial potential" in a secret submarine warfare project, it declassified it and licensed it to a Montana-based tech company, which claims in court that Halliburton then courted it for a "business relationship" — and made off with its secrets to "clandestinely" claim a patent on it and sell it.

Adelos sued Halliburton on Sept. 12 in Missoula Federal Court, alleging infringement and conversion of three patents.

Fiber optics has been used in landline telephone service for decades. The Navy developed the technology through its "Blue Rose" project to serve as listening arrays to detect enemy submarines. Blue Rose is an acronym for the Navy's Battlescape Land Undersea Extensible Rayleigh Optical Sensor Electronics project.

When the Navy saw the technology's "incredible commercial potential" for oil and gas exploration and other defense applications, Adelos says, it declassified and patented it, and asked Adelos "to be its worldwide exclusive licensee to market and commercialize the Blue Rose technology."

The technology can be used to detect, or "listen" to, geological features and movements. The Navy took out several patents, and Adelos has applied for more than a dozen of its own. In its lawsuit, it says, "the technical information regarding the technology, and the advances made to this technology by Adelos are collectively referred to herein as 'the Adelos Proprietary Technology.'"

Adelos says it has been awarded contracts with the U.S. Department of Energy and the Air Force Nuclear Weapons Center. The annual market for such "distributed fiber optic sending technology" is estimated at $586 million and is expected to double within three years, according to the complaint.

Adelos says that Halliburton, unhappy with its own fiber optic technology, approached it in 2011 about building a partnership, which required disclosure of sensitive materials.

"During the next couple of years, from early 2012 through late 2014, Halliburton proceeded to extract detailed technical information about the Adelos proprietary technology," the company says in the complaint. "Believing that Halliburton was acting in good faith and intending to enter into a business relationship with Adelos, Adelos provided details related to the Adelos proprietary technology to Halliburton in an effort to facilitate this potential business relationship."

But Halliburton double-crossed Adelos, and "surreptitiously" filed an international patent claiming it was the sole inventor of the technology, Adelos says. It says the application was denied by the International Searching Authority in a May 2014 written opinion that Halliburton was trying to patent technology that belongs to Adelos.

Adelos says Halliburton has applied for other U.S. patents pending and has been selling the technology for financial gain.

"Without notice, and without the permission of Adelos, Halliburton began to incorporate the technology ... in its own products and services," the complaint states. "Defendants have been infringing, and continue to infringe, the technology ... through its distributed sensing products and services marketed under various trade names, including but not limited to Pinnacle, Optiphase and SensorTran."

Adelos apparently became aware of Halliburton's alleged conversion of its secrets when the two companies crossed paths at a trade show.

"As a result of defendants' infringement, Adelos has suffered irreparable harm due to the loss of potential customers and contracts, the loss of market share and the deterioration of its goodwill, and will continue to suffer such harm until and unless such infringement ... is enjoined," according to the complaint.

Halliburton said Thursday that it does not comment on pending litigation.

Adelos sued Halliburton and its subsidiaries Pennacle Technologies, Optiphase, and SensorTran. It seeks treble damages and punitive damages for patent infringement and conversion. It also asks the court to order to assign the patents in dispute to Adelos and/or to the Navy and list Adelos or its representatives as inventors of the patents "as well as any other patents and/or patent applications that falsely list others as the inventor, and listing Halliburton as the assignee, where a representative for Adelos and/or the U.S. Navy is the true inventor and rightful owner."

Adelos is represented by Randy Cox with Boone Karlberg, in Missoula.

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