Background: Trade Secrets Dispute and Failed Injunction

CreateAI Holdings, Inc. (formerly TuSimple Holdings, Inc.) filed suit against Bot Auto TX Inc. on October 1, 2024, alleging willful and malicious misappropriation of trade secrets under the Texas Uniform Trade Secrets Act (TUTSA). CreateAI sought temporary and permanent injunctive relief to prevent Bot Auto from "deploying or utilizing in any way, or from transferring, disseminating or dissipating" the allegedly misappropriated technologies. On December 28, 2024, the Business Court denied CreateAI's application for a temporary injunction. Two days later, Bot Auto filed six counterclaims, including two declaratory judgment counts (6.g and 6.h) seeking declarations that CreateAI "has not and cannot establish imminent and irreparable injury" and "has not and cannot establish there is no adequate remedy at law"—two elements required for injunctive relief under Texas law.

The Dispositive Issue: Mirror-Image Declaratory Counterclaims

CreateAI moved under Rule 91a to dismiss Bot Auto's counterclaims as having no basis in law. The central issue was whether Bot Auto's declaratory judgment counterclaims violated the so-called "mirror-image" rule, which "precludes a defendant from asserting a counterclaim under the Uniform Declaratory Judgments Act which presents nothing more than a mere denial of the plaintiff's claim." The court noted that under this rule, "a party generally may not invoke the Act to settle disputes that are already pending before the court," citing the Texas Supreme Court's decision in BHP Petroleum Co. Inc. v. Millard.

The Court's Analysis: No Affirmative Relief, No Independent Claim

The court acknowledged an exception to the mirror-image rule: "[W]hen a declaratory judgment counterclaim has greater ramifications than the original suit—such as settling future disputes—a court may allow the counterclaim." A counterclaim has such greater ramifications "if it seeks affirmative relief," meaning it "alleges that the defendant has a cause of action independent of the plaintiff's claim, on which the defendant could recover benefits, compensation, or relief, even if the plaintiff were to abandon or fail to establish his cause of action."

Applying this standard, the court found Bot Auto's counterclaims deficient:

Defendant's counterclaim counts 6.g and 6.h facially request declarations from the Court that Plaintiff has not and cannot meet its burden on two elements of its pending claims for temporary and permanent injunctive relief—imminent and irreparable injury, and adequate remedy at law. Said differently, counts 6.g and 6.h solely operate to deny Plaintiff's pending claim for a permanent injunction. Were Plaintiff to dismiss its suit, a judgment favorable to Defendant on counts 6.g and 6.h would not result in the recovery of any benefit.

Because the counterclaims did not seek affirmative relief independent of CreateAI's pending claims, the court granted the Rule 91a motion and dismissed counts 6.g and 6.h. The court issued its order on March 17, 2025, and this memorandum opinion followed CreateAI's request for a written opinion on April 14, 2025.