On May 11, 2016, President Obama signed the Defend Trade Secrets Act of 2016 (the “DTSA”) into law. This law creates a new procedure that private citizens can use to protect their intellectual property rights. In exceptional circumstances, the owner of a trade secret can apply to a federal court ex parte (without the other person present) and obtain an order to seize trade secret materials that were allegedly misappropriated. The DTSA provides detailed requirements that a party must satisfy to obtain a seizure order. The DTSA also includes several rights that protect the person from whom seizure is sought.

To read a more detailed article about the DTSA and the ex parte seizure procedures, click here.

A copy of the Defend Trade Secrets Act of 2016 is available here.

If you have a question about the Defend Trade Secrets Act of 2016, please contact Trent Echard at techard@smgglaw.com or at (412) 281-5423. Trent is a shareholder and a registered patent attorney at Strassburger McKenna Gutnick & Gefsky in Pittsburgh. This post is provided for informational purposes only. Nothing in this post creates an attorney client relationship.

On December 9, 2015, the Pennsylvania Attorney General’s (“AG”) office filed a civil complaint against Chesapeake Energy Corp., Chesapeake Appalachia, LLC, Chesapeake Operating, Inc., Chesapeake Energy Marketing, Inc., and Williams Partners, LP. The suit was filed in the Bradford County Court of Common Pleas. A copy of the complaint is available here.

The AG’s lawsuit is based on Pennsylvania’s Unfair Trade Practices and Consumer Protection Law. The AG alleges that Chesapeake engaged in a “bait and switch” scheme involving a market enhancement clause and similar royalty provisions in the leases. The complaint alleges that the market enhancement clause was offered “as an inducement” to Pennsylvania landowners to secure leases of oil and gas rights in the Marcellus Shale in northeast Pennsylvania. The AG further alleges that Chesapeake Energy entered gathering agreements with its midstream unit and then divested its midstream assets. The AG alleges that those transactions “artificially inflated” post production costs to the landowners.

The AG also alleges that the Chesapeake Energy entered transition services agreements and received “a premium in excess of the actual cost of Midstream Services purportedly borne by both the Chesapeake Defendants and Pennsylvania Landowners as allocated by royalty interest; thus, resulting in a scheme of artificially-deflated royalty payments to Pennsylvania Landowners, who are to share in revenue realized related to the sale of gas.”

The complaint seeks restitution, statutory damages, and injunctive relief.

This article was written by Trent Echard, chair of Strassburger McKenna Gutnick & Gefsky’s Oil & Gas Practice Group in Pittsburgh at techard@smgglaw.com or at (412) 281-5423.

Many Oil and Gas leases are “paid up,” which means that the leasing company does not have to pay regular delay rental payments to hold the lease. However, in Pennsylvania, there are still some leases that require the leasing company to make “delay rental payments.” These are typically annual payments that are made until the first well is drilled. When an operator is obligated to make delay rental payments, what happens if the leasing company fails to make one of those payments?

The Pennsylvania Superior Court recently looked at this issue in Dewing v. Abarta Oil & Gas Co., et al., No. 268 MDA 2015, (Pa. Super. Ct. 2015). In 2001, the Dewings entered a lease with an Oil and Gas company that required a delay rental of $5.00 per acre per year until a well was drilled. In April of 2010, the Dewings gave the operator notice that the delay rental had not been paid. The Dewings’ attorney notified the operator that the lease was being terminated because the delay rental had not been paid. The operator then sent a check for the delay rental. The Dewings filed a lawsuit to determine whether the lease could be terminated.

The Superior Court determined that the lease could not be terminated. The court reviewed a forfeiture provision in the lease and determined that the operator’s failure to pay the delay rental did not “rise to the necessary level of materiality allowing for the grant of forfeiture by the court.” The court relied on a federal appellate case where it was also found that a failure to pay a delay rental was not material. Linder v. SWEPI, 549 Fed. APP’x. 104 (3d Cir. 2013) (In the Linder case, the court found no materiality because the delay in payment of the rental was brief and because the contract did not have a “time-is-of-the-essence” provision.)

In addition, the Dewing court rejected an argument that the operator abandoned the lease. The court determined that the contractors continued to work on the property until the Dewings requested them to cease work.

The Dewing case leaves open the possibility that an untimely delay rental could result in lease termination. This can depend on what exactly the lease says, and how quickly the operator responds to a communication from the Lessor.

If you have a question about an oil and gas lease, please contact Trent Echard, chair of Strassburger McKenna Gutnick & Gefsky’s Oil & Gas Practice Group in Pittsburgh at techard@smgglaw.com or at (412) 281-5423.

Recently, the Pennsylvania Superior Court emphasized the difference between a “reservation” and an “exception” in a deed.  The court explained that a reservation is a way for a person who conveys property to hold certain rights in things that do not yet exist (e.g. future gas royalties). Importantly, a reservation generally ends when the person who conveyed the property dies. On the other hand, an exception can last beyond the death of the person who made the conveyance. Typically, the deed will show whether the grantor intended to “reserve” or “except” something. Sometimes that determination can come down to only a few words in a deed. Those few words can determine who owns the Oil and Gas rights to a property.

In Steiminger v. Leopold, the Stevensons sold a 157 acre parcel of land in 1905. They included language stating that if Oil and Gas would be developed, the Royalties would be divided equally between the grantor and the grantee. The deed also stated that any bonus would be paid 1/3 to the grantor and 2/3 to the grantee. There was no Oil or Gas produced during the Stevensons’ lives. Therefore, no royalties were paid.

In 1986, Joseph and Marjorie Steiminger acquired a 72 acre portion of the property. They filed a lawsuit to determine that they owned the Oil and Gas rights. The court sided with the Steimingers.

The court determined that the deed included a reservation, which ended when the Stevensons died. The court explained that deed only referred to “future hypothetical oil and gas proceeds.” Furthermore, the deed did not use “words of inheritance.” The court also compared the language relating to Oil and Gas to other language in the deed.

This case demonstrates that each deed should be analyzed separately. If you have a question about a deed that relates to Oil and Gas rights, please contact Trent Echard, chair of Strassburger McKenna Gutnick & Gefsky’s Oil & Gas Practice Group in Pittsburgh at techard@smgglaw.com or at (412) 281-5423.

In 2013, the Pennsylvania Legislature passed a law that requires Oil and Gas producers to provide a minimum amount of information related to Oil and Gas production and royalties (e.g., the amount of gas produced, the selling price, and other related information).

That information includes:

(1) A name, number or combination of name and number that identifies the lease, property, unit or well or wells for which payment is being made; and the county in which the lease, property or well is located.

(2) Month and year of gas production.

(3) Total barrels of crude oil or number of Mcf of gas or volume of natural gas liquids sold.

(4) Price received per barrel, Mcf or gallon.

(5) Total amount of severance and other production taxes and other deductions permitted under the lease, with the exception of windfall profit tax.

(6) Net value of total sales from the property less taxes and deductions from paragraph (5).

(7) Interest owner’s interest, expressed as a decimal or fraction, in production from paragraph (1).

(8) Interest owner’s share of the total value of sales prior to deduction of taxes and deductions from paragraph (5).

(9) Interest owner’s share of the sales value less the interest owner’s share of taxes and deductions from paragraph (5).

(10) Contact information, including an address and telephone number.

If you receive royalties for Oil and Gas, it is advisable to review your royalty statement and verify that it complies with these requirements. If you have questions about your Oil and Gas rights, please contact Trent Echard, chair of Strassburger McKenna Gutnick & Gefsky’s Oil & Gas Practice Group in Pittsburgh at techard@smgglaw.com or at (412) 281-5423.

If there is a dispute about who own oil and gas rights, Pennsylvania courts may likely look to a deed to determine what the parties to the transaction intended. In Wright v. Misty Mountain Farm, LLC, 2015 Pa. Super 218 (Oct. 9, 2015), the Pennsylvania Superior Court reviewed the issue of whether a married couple had retained Oil and Gas rights when they sold a property.

In 1950, the Buck family sold property to the Wright family. The deed included language stating that the Buck family “excepted and reserved” all rights in oil, gas and minerals “under Lease dated June 16, 1949”. After that lease expired, the Wright family (the buyers) treated the Oil and Gas as their own. They entered several Oil and Gas leases over the following years.

In 2010, a group of landowners (who owned the Buck family’s interest) filed a lawsuit to determine who owns the rights to the Oil and Gas. The appellate court determined that the Buck family effectively kept the Oil and Gas rights with the language that they used in the deed when they sold the property to the Wrights. According to the court, the fact that the Wrights treated the Oil and Gas as their own was “of no moment.”

This case demonstrates that each deed should be analyzed separately. If you have a question about a deed that relates to Oil and Gas rights, please contact Trent Echard, chair of Strassburger McKenna Gutnick & Gefsky’s Oil & Gas Practice Group in Pittsburgh at techard@smgglaw.com or at (412) 281-5423.