Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Alifax Holding Spa v. Alcor Scientific Inc.

United States District Court, D. Rhode Island

September 5, 2019




         This intellectual property odyssey came before the Court for a three-week jury trial in the spring of 2019. The jury found that the Defendants willfully misappropriated two of plaintiff Alifax Holding SpA's trade secrets in violation of Rhode Island law. The jury also found that defendant Francesco Frappa alone misappropriated a third trade secret and breached his confidential relationship with Alifax under Italian law.[1] The jury awarded Alifax $6.5 million in unjust enrichment damages. Before the Court are the Defendants' post-trial motions, which renew their requests for judgment as a matter of law[2] and, in the alternative, seek a new trial or remittitur.[3] See Alcor's Mot. for a New Trial, or in the Alternative, for Remittitur (“Mot. for New Trial”), ECF No. 303; Alcor's Renewed Mot. for J. As A Matter of Law (“Renewed Mot. for JMOL”), ECF No. 304.

         Three sophisticated parties aided by experienced counsel and experts locked horns in this dispute for nearly half a decade. In contrast, a lay jury was asked to grasp unfamiliar technological and mathematical concepts amid a complex and shifting web of legal theories in a tiny fraction of that time. The Court has calibrated the rigor of its post-trial assessment to reflect the length and complexity of this action.

         Regarding the Defendants' Rule 50(b) motion, the Court finds that Alifax failed to introduce sufficient evidence that using a clear, plastic photometer sensor (“CPS”) in an ESR analyzer was a protectable trade secret under the Rhode Island Uniform Trade Secrets Act (“RIUTSA”), R.I. Gen. Laws § 6-41-1 et seq. Thus, for the reasons that follow, the jury's verdict regarding this theory of liability must be vacated and judgment must enter for the Defendants. The Defendants' Rule 50(b) motion is otherwise denied.

         As for the Defendants' request under Rule 59, the Court has conducted an exhaustive review of the trial record. Important policies discourage overturning a jury's verdict, and there is no doubt that the jury in this action made a conscientious effort to find the facts and apply the law. Nevertheless, after a careful examination of evidence, the Court is left with a firm and abiding conviction that the verdict finding that the Defendants' misappropriated Alifax's secret conversion algorithm is contrary to the clear weight of the evidence. The Court is similarly persuaded that Alifax's sole damages witness exceeded the scope permitted by Federal Rule of Evidence 1006 and that a dramatic trial exhibit (a prototype black reading cell) was admitted in error, unfairly prejudicing the Defendants. These findings justify a new trial on what remains of Count II.

         I. Background

         The legal and technical principles that drive this dispute are complex. The story is simple.[4] Alifax produces automated clinical instruments that are used to determine the erythrocyte sedimentation rate (“ESR”) of human blood samples.[5] Francesco Frappa, an employee of an Alifax subsidiary, departed the company and began working with Alcor, a Rhode-Island based competitor.[6]Within a year, Alcor debuted a new instrument - the iSED - with rapid analytical capabilities comparable to Alifax devices. This thunderous litigation ensued.

         Alifax has accused Alcor and Frappa of developing the iSED by pilfering its intellectual property. Alifax's claims included the following: (1) infringement of two patents under 35 U.S.C. § 271; (2) willful and malicious misappropriation of numerous trade secrets under the Rhode Island Uniform Trade Secrets Act (“RIUTSA”), R.I. Gen. Laws § 6-41-1 et seq.; (3) breach of Frappa's confidential relationship with Alifax; and (3) copyright infringement. See generally Second Am. & Suppl. Compl., ECF No. 68; Pl.'s Identification of Misappropriated Trade Secrets, ECF No. 61-4. Alcor and Frappa have always denied these contentions. Alcor even counterclaimed, seeking declarations of patent invalidity and alleging Alifax intentionally interfered with its prospective contractual relations. Defs.' Ans. to Pl.'s Second Am. & Suppl. Compl. & First Am. Countercl. (“Ans.”) ¶ 43, ECF No. 71.

         The parties filed dispositive motions targeting various claims in mid-2018. In that context, the Court ruled that Italian law governed the substance of Alifax's cause of action for breach of a confidentiality relationship. Alifax Holding SpA v. Alcor Sci. Inc., 357 F.Supp.3d 147, 152 (D.R.I. Jan. 8, 2019). The Court denied the Defendants' motion for summary judgment on the claims of patent infringement, trade secret misappropriation, copyright infringement, and patent invalidity. Alifax Holding SpA v. Alcor Sci. Inc, No. CV 14-440 WES, slip op. at 40 (D.R.I. Mar. 26, 2019). As the Court observed, a hairsbreadth stood between some of Alifax's claims and an adverse result. Id. Regardless, the Noerr-Pennington doctrine supported summary judgment for Alifax on Alcor's intentional interference counterclaim. Id.

         The parties tried the remaining claims to jury over three weeks in April and May 2019. The trial was bifurcated into two phases: liability and damages. Prior to the start of trial, the Court excluded the copyright-related opinion of Alifax's damages expert. See Alifax Holding SPA v. Alcor Sci. Inc., C.A. No. 14-440 WES, 2019 WL 1579503, *1 (D.R.I. Apr. 12, 2019). Without a theory of damages, the parties agreed that Alifax's copyright claim was “out of the case.” Trial Tr. vol. 1, 3:10-16, Apr. 15, 2019. It was not tried to the jury. Five days of testimony later, Alifax expressed that it no longer wished to proceed on its patent infringement claims. Trial Tr. vol. 5, 4:7-10, Apr. 22, 2019. Without objection from any party, the Court reconsidered its March 26th ruling and granted summary judgment for Alcor on Count I of Alifax's Second Amended Complaint. Id. at 77:16-78:7. The parties also executed a covenant not to sue, which disposed of Alcor's invalidity counterclaims. Id. at 78:11-79:14. Thus, at the end of the liability phase, the jury deliberated over just two claims: misappropriation of trade secrets and breach of a confidential relationship. By that time the number of alleged trade secrets had been whittled down to four.

         On April 30, 2019, the jury returned its verdict. The jury found for Alifax, concluding that Alcor and Frappa misappropriated two of Alifax's trade secrets:

1. Using a clear, plastic capillary photometer sensor (“CPS”) in an automated ESR analyzer, but only through February 6, 2014; and
2. Portions of computer program source code concerning the conversion of photometric measurements, including source code containing four specific conversion constants.

         Jury Verdict Form Phase I: Liability, ECF No. 292. It also found Frappa (but not Alcor) misappropriated a trade secret comprised of “[i]nformation concerning an anemia factor . . . ”. Id. The jury found that both Defendants had acted willfully and maliciously. Id. At the conclusion of damages phase, the jury awarded Alifax $6.5 million in unjust enrichment damages attributable to Alcor's misappropriation of Alifax's source-code related trade secret.[7] Jury Verdict Form Phase II: Damages 2, ECF 299. One dollar in nominal damages was awarded for the Defendants' misappropriation of the CPS-related trade secret.

         II. Legal Standard

         Granting judgment as a matter of law to overturn a jury's verdict is warranted only if no reasonable jury could have found for the non-moving party. Fed.R.Civ.P. 50; Rinsky v. Cushman & Wakefield, Inc., 918 F.3d 8, 26 (1st Cir. 2019). The Court must examine the evidence from the nonmovant's case-in-chief, draw all reasonable inferences in the non-movant's favor, and determine whether the verdict has a sufficient evidentiary basis. Zimmerman v. Direct Fed. Credit Union, 262 F.3d 70, 75 (1st Cir. 2001); Coyante v. Puerto Rico Ports Auth., 105 F.3d 17, 22 (1st Cir. 1997) (confining Rule 50 review to “the record upon which the plaintiff rested her case . . .”). The Court “may not consider the credibility of witnesses, resolve conflicts in testimony, or evaluate the weight of the evidence.” Barkan v. Dunkin' Donuts, Inc., 627 F.3d 34, 39 (1st Cir. 2010). A verdict cannot be jettisoned with caprice; the evidence must “point[] unerringly to an opposite conclusion.” Zimmerman, 262 F.3d at 75. Nevertheless, claims built on conjecture, speculation, or a “mere scintilla” of evidence do not pass muster. Katz v. City Metal Co., 87 F.3d 26, 28 (1st Cir. 1996). If a district court grants a renewed motion for judgment as a matter of law, it must make a conditional ruling on whether it would grant a new trial if the judgment is later vacated. Fed.R.Civ.P. 50(c)(1); Jennings v. Jones, 499 F.3d 2, 21 (1st Cir. 2007).

         A trial court has much greater discretion under Rule 59. Jennings v. Jones, 587 F.3d 430, 436 (noting that a trial court may exercise “broad legal authority” in this context). A district court may order a new trial “whenever, in its judgment, the action is required in order to prevent injustice.” Id. (quotations omitted); Ins. Co. of N. America v. Musa, 785 F.2d 370, 375 (1st Cir.1986) (stating grounds for a new trial include finding “the verdict is against the clear weight of the evidence, is based upon evidence that is false, or resulted from some trial error and amounts to a clear miscarriage of justice.”) (quotation marks omitted). The Court is not bound by Rule 50's strictures. It is free to consider witnesses' credibility, independently weigh the proof, and order a new trial “even where the verdict is supported by substantial evidence.” Jennings, 587 F.3d at 439 (quoting Lama v. Borras, 16 F.3d 473, 477 (1st Cir. 1994)). The Court may also order a new trial if any legal or factual errors were sufficiently grievous “as to have rendered the trial unfair.'” Astro-Med, Inc. v. Plant, C.A. No. 06-533 ML, 2008 WL 4372727, *1 (Sept. 23, 2008), aff'd sub nom. Astro-Med, Inc. v. Nihon Kohden America, Inc., 591 F.3d 1 (1st Cir. 2009) (quoting Parker v. Town of Swansea, 310 F.Supp.2d 356, 370 (D. Mass. 2004)). Still, district courts must exercise their discretion with caution. See Jennings, 587 F.3d at 436 (“[T]rial judges do not sit as thirteenth jurors, empowered to reject any verdict with which they disagree.”).

         Alcor has also asked the Court to consider an alternative course: remittitur. If the court finds that jury's damages were excessive or contrary to the weight of the evidence, a district court may compel a victor to accept either a new trial on damages or a reduced award. See Conjugal P'ship Comprised by Joseph Jones & Verneta G. Jones v. Conjugal P'ship Comprised of Arthur Pineda & Toni Pineda, 22 F.3d 391, 397 (1st Cir. 1994); see also Phelan v. Local 305, 973 F.2d 1050, 1064 (2d Cir.1992). A court-ordered abatement is justified if, when considered in the most favorable light to the prevailing party, the jury's award “exceeds any rational appraisal or estimate of the damages that could be based upon the evidence before [the jury].” E. Mountain Platform Tennis, Inc. v. Sherwin-Williams Co. Inc., 40 F.3d 492, 502 (1st Cir. 1994); see also Trainor v. HEI Hosp., LLC, 699 F.3d 19, 32 (1st Cir. 2012) (holding remittitur required when evidence was “so thin” that award was “vastly out of proportion” to maximum recovery supported by evidence). The First Circuit follows the “maximum recovery rule.” Trainor, 699 F.3d at 33. Thus, any remittitur must reflect “the highest reasonable total of damages for which there is adequate evidentiary support.” Marchant v. Dayton Tire & Rubber Co., 836 F.2d 695, 704 (1st Cir. 1988).

         III. Discussion

         A. The Clear, Plastic Capillary Photometer Sensor Trade Secret

         1. Alifax Did Not Introduce Legally Sufficient Evidence to Support Its Claim That The CPS-Related Trade Secret Was Protectable Under RIUTSA.

         Alcor argues that the Court should vacate the jury's liability verdict on Alifax's CPS-related trade secret claim because Alifax failed to introduce evidence showing that the first asserted trade secret - “[u]sing a clear, plastic capillary photometer sensor (“CPS”) in an automated ESR analyzer” - satisfied RIUTSA's requirements for protectability. See Renewed Mot. for JMOL 4-15. Alcor alternatively requests a new trial on this claim. See Alcor's Mot. for New Trial 4-11. The Court agrees on both scores.

         RIUTSA defines a “trade secret” in broad terms. The statute protects:

[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process, that:
(i) Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and
(ii) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

R.I. Gen. Laws § 6-41-1(4). The Court required Alifax to disclose “with reasonable particularity” the trade secrets it alleged the Defendants misappropriated.[8] Scheduling Order ¶ 3, ECF No. 36. This request was not busy work. It is a common-sense requirement that furthers the practical needs of discovery and a basic premise of misappropriation claims: a party must be able to identify its asserted trade secrets with reasonable specificity. See, e.g., IDX Sys. Corp. v. Epic Sys. Corp., 285 F.3d 581, 583 (7th Cir. 2002); Dow Chem. Canada, Inc. v. HRD Corp., 909 F.Supp.2d 340, 346 (D. Del. 2012); Utah Med. Prods., Inc. v. Clinical Innovations Assoc., Inc., 79 F.Supp.2d 1290, 1313 (D. Utah 1999), aff'd, 251 F.3d 171 (Fed. Cir. 2000).

         Like other embodiments of the Uniform Trade Secrets Act (“UTSA”), RIUTSA does not protect “general categories of information” from exploitation. Luigino's, Inc. v. Peterson, 317 F.3d 909, 912 (8th Cir. 2003); Sarkissian Mason, Inc. v. Enter. Holdings, Inc., 955 F.Supp.2d 247, 255 (S.D.N.Y. 2013), aff'd, 572 Fed.Appx. 19 (2d Cir. 2014). To show a protectable interest, a plaintiff “must assert specific allegations that it possessed information that meets the definition of trade secret under [the act] and must proffer evidence that Defendants actually received the trade secret and improperly used it.” Sun Media Sys., Inc. v. KDSM, LLC, 564 F.Supp.2d 946, 965 (S.D. Iowa 2008) (interpreting language of Iowa UTSA); see also IDX Sys. Corp., 285 F.3d at 583 (affirming summary judgment for defendants on misappropriation claim because plaintiff “failed to identify with specificity the trade secrets that it accuses the defendants of misappropriating.”); Imax Corp. v. Cinema Techs., Inc., 152 F.3d 1161, 1164 (9th Cir. 1998) (“A plaintiff seeking relief for misappropriation of trade secrets ‘must identify the trade secrets and carry the burden of showing that they exist.'”).

         The uniform statute's language is the source of this principle. A fact finder cannot judge whether an alleged trade secret has “independent economic value” if its contours are not reasonably defined. See R.I. Gen. Laws § 6-41-1(4)(i). Nor could one assess whether such information is not generally known or readily ascer-tainable. See Dow Chem. Canada, Inc., 909 F.Supp.2d at 346 (holding trade secret “must be particular enough as to separate the trade secret from matters of general knowledge in the trade or of special knowledge of persons skilled in the trade.”); Utah Med. Prods., Inc., 79 F.Supp.2d at 1313 (concluding plaintiff “must define its claimed trade secret with the precision and particularity necessary to separate it from the general skill and knowledge possessed by [defendants].”).

         Alifax first identified its asserted trade secrets in May 2016. See Pl.'s Identification of Misappropriated Trade Secrets, ECF No. 61-4. It amended its disclosures twice over the ensuing ten months. See Pl.'s First Am. Identification of Misappropriated Trade Secrets, ECF No. 61-5; Pl.'s Second Am. Identification of Misappropriated Trade Secrets (“Pl.'s Second Disclosure”), ECF No. 137-27. The scope of its trade secret claims narrowed further at summary judgment. See Mem. of Law in Opp'n to Defs.' Mot. for Partial Summary J. 13 n.2, ECF No. 167 (dropping asserted trade secrets concerning the means of creating a capillary channel in the plastic CPS or the use of screws with Teflon washers). Each and every one of Alifax's pretrial disclosures describes the material for the plastic CPS as “a single, block of clear acrylic” and defines the component as a “hard transparent block with a capillary channel inside . . . ”. Pl.'s Second Disclosure ¶¶ 1-2 (emphasis added).

         Based on Alcor's disclosures, the Court defined the CPS-re-lated trade secret at the close of the liability phase as “[u]sing a clear, plastic capillary photometer sensor (“CPS”) in an automated ESR analyzer, but only through February 6, 2014.” See Verdict Form Phase I: Liability, ECF No. 292; Charge Conf. Tr. 7-11, Apr. 26, 2019, ECF No. 345. The Court included the term “clear” over Alifax's objection and explained its rationale. See Charge Conf. Tr. 7:18-8:17. Paragraph 1 of Alifax's disclosure described the CPS as a “transparent block.” Pl.'s Second Disclosure ¶ 1. Paragraph 2 described the CPS as a component made from “a single[] block of clear acrylic.” Id. ¶ 2. Thus, paragraph 2 simply specified the material (clear acrylic) for the “transparent block” referenced in paragraph 1. Charge Conf. Tr. 10.[9] The question confronting the Court is whether the evidence at trial can be rationally linked to the identified trade secret (a clear, plastic CPS).

         Viewed in the light most favorable to the verdict, Alifax's trial evidence showed that it was developing a CPS that was black or made of “dark material” to increase its analyzer's reliability and reduce maintenance. Two witnesses, Giovanni Batista Duic and Dr. Paolo Galiano, testified that “La Mecca” was a project to improve Alifax's instruments by replacing the Teflon tubing with a plastic reading cell.[10] Trial Tr. vol. 2, 40:7-41:6, Apr. 16, 2019; Trial Tr. vol. 6, 82:21-83:6. In 2008, Frappa corresponded with an Alifax vendor about producing “La Mecca” reading cells by using a “completely opaque . . . varnish or a thin layer of black plastic material” to create an “optical shield” around a clear reading cell. See Trial Ex. 421. This evidence comports with Frappa's account of “La Mecca” in his October 2011 technical report. See Trial Ex. 33. It describes the reading cell as a “block of dark material with a transparent area, inside, [sic] which can be traversed by the light . . . ”. Id. The codename “Mecca” was itself a reference to the reading cell's dark plastic material (i.e., to the Kaaba in Mecca, Saudi Arabia). See Trial Tr. vol. 2, 41:1-8. There is no mention of a “clear” or “transparent” reading cell. Duic confirmed that Frappa's report was “accurate and complete.” Id. at 108:23-25.

         What Duic could not confirm was that Sire employed Frappa when the company produced both clear and black prototype reading cells. Trial Tr. vol. 2, 53:4-8. He affirmed - at most - that the prototypes in Fall 2011 were black. Id. at 53:11-12. Several days later, Alifax introduced a tangible prototype of a black reading cell introduced into its analyzers in 2014. See Trial Ex. 136. Alifax's counsel invited the jury to compare the prototype to Alcor's design drawings for a plastic CPS in his summation. See id.; Trial Tr. vol. 9, 54:10-11, Apr. 29, 2019.

         Alifax now claims that the color of the CPS is irrelevant. Pl.'s Opp'n to Def. Alcor Sci. Inc.'s Renewed Motion for J. as a Matter of Law (“Opp'n to JMOL”) 6-7, ECF No. 313. That cannot be. Alifax's asserted trade secret was not the use of any plastic CPS in an automated ESR analyzer. It was the use of a plastic CPS that was “transparent” and made from a block of “clear acrylic.” These are the particular features Alifax used to distinguish its trade secret from general industry knowledge. Furthermore, Alifax contends that this information constituted a “combination” trade secret comprised of public domain elements. See Opp'n to JMOL 7; Pl. Alifax Holding SpA's Opp'n to Def. Alcor Sci. Inc.'s Mot. for a New Trial, or in the Alternative, for Remittitur (“Opp'n to New Trial”) 6, ECF No. 314. For such information to be protectable, the “unified process” resulting from the asserted combination must “afford[] a competitive advantage.” Imperial Chem. Indus. Ltd. v. Natl. Distillers & Chem. Corp., 342 F.2d 737, 742 (2d Cir. 1965). In other words, the elements of the combination trade secret must together create independent economic value. See, e.g., Electro-Craft Corp. v. Controlled Motion, Inc., 332 N.W.2d 890, 900 (Minn. 1983) (explaining that independent economic value element of UTSA “carries forward the common law requirement of competitive advantage”); Champion Foodservice, LLC v. Vista Food Exch., Inc., No. 1:13-CV-1195, 2016 WL 4468001, *12 (N.D. Ohio August 24, 2016) (granting summary judgment as plaintiff “advanced no evidence as to how the unique combination of the database files-taken as a whole-constitutes information not readily available to the public or within the industry, or how this unified combination of information provides Champion with a competitive economic advantage within the industry.”)

         Here, evidence of an essential element of the “unique combination” claimed by Alifax throughout this litigation was missing: the clear reading cell. The substance of Alifax's evidence from its case in chief relates exclusively to the development of a CPS made from “black” or “dark” material. Although Frappa's May 2008 email makes passing mention of a clear reading cell, the same passage refers to covering such a cell in “a completely opaque layer of varnish or a thin layer of black plastic material . . .”. See Trial Ex. 421. This speck of evidence cannot, by itself, support the conclusion that Alifax was developing a clear reading cell for use in its ESR analyzers during the relevant time period.

         This was not the only flaw in Alifax's case concerning the CPS-related trade secret. It is well-established that information that a party can acquire through “normal business channels” is not protectable. APG, Inc. v. MCI Telecomm. Corp., 436 F.3d 294, 307 (1st Cir. 2006) (affirming summary judgment for defendant on misappropriation claim holding disputed information was “obtainable within normal business channels, ” even if acquired by other means); Rego Displays, Inc. v. Fournier, 379 A.2d 1098, 1101 (R.I. 1977) (stating that information comprises a trade secret only if it “could not be obtained through public channels”). Thus, accepting for argument's sake that the opacity of the CPS was immaterial, Alifax still had to prove that its CPS-related trade secret was not “generally known” or “readily ascertainable by proper means” by persons who could “obtain economic value from its disclosure or use.” R.I. Gen. Laws § 6-41-1(4)(i); see also Giasson Aerospace Sci., Inc. v. RCO Engrg., Inc., 680 F.Supp.2d 830, 841 (E.D. Mich. 2010) (“There can be no trade secret where the ‘secret' is readily ascertainable from the public domain.”); MicroStrategy Inc. v. Business Objects, S.A., 331 F.Supp.2d 396, 416-17 (E.D. Va. 2004) (“If a competitor could easily discover the information legitimately, the inference is that the information was either essentially ‘public' or is of de minimus economic value.”).

         Again, the Court must consider the evidence from Alifax's case in chief in the light most favorable to the verdict. Alifax elicited testimony that its employees worked on the Mecca project for several years. See Trial Tr. vol. 2, 41:16-24. Evidence was introduced that Alifax worked with a third-party vendor to produce tangible versions of the CPS component. See id. at 41:11-15; Trial Ex. 421. The jury also heard some testimony concerning measures intended to maintain the confidentiality of Alifax's company data, including that preserving confidentiality was discussed at Alifax R&D meetings; the company used generic email footers noting that communications were confidential; and that Alifax provided devices for holding company data, which was not to be stored on personal devices.[11] See Trial Tr. vol. 2, 31:3-17, 35:2-24; Trial Ex. 20.

         Alifax's evidence was bereft of additional proof concerning ascertainability. There was no evidence quantifying the man-hours or monies expended on developing a CPS component.[12] There was no evidence about the hardware found in ESR analyzers or similar diagnostic instruments produced by companies other than Alifax or Alcor. There was no evidence about the state of knowledge in the blood-testing or clinical instrument industries concerning technologies for measuring optical density.[13] Indeed, Alifax cites nothing to support the proposition in its briefing that, before Frappa joined Alcor, “no other supplier of any type of ESR analyzer had developed or used a clear plastic CPS.” Opp'n to New Trial 8. Even if the Court credited that statement, “[s]imply being the first or only one to use certain information does not in and of itself transform otherwise general knowledge into a trade secret.” TGC Corp. v. HTM Sports, B.V., 896 F.Supp. 751, 757 (E.D. Tenn. 1995).

         The ruling in Pope v. Alberto-Culver Co., 694 N.E.2d 615, 617 (Ill.App.Ct. 1998) is also instructive.[14] In Pope, an Illinois appellate court affirmed judgment for the defendant on a trade secret misappropriation claim. Id. at 619. The plaintiff's alleged trade secret consisted of a lye-based hair relaxer in a squeezable tube that a consumer could use to spread the product. Id. at 616. The Court affirmed summary judgment, agreeing that plaintiff failed to produce evidence that this combination trade secret was not comprised of information “generally known or understood” within the relevant industry. Id. at 617. “[T]he key to secrecy under the Act, ” the Court held, “is the ease with which information can be developed.” Id. at 619. The Pope plaintiff's asserted trade secret “could have been easily and cheaply discovered utilizing existing technology.” Id. at 618; see also Buffets, Inc. v. Klinke, 73 F.3d 965, 968 (9th Cir. 1996) (recipes that were “so obvious that very little effort would be required to ‘discover' them” are not trade secrets).

         Here, Alifax was obliged to prove that a “clear, plastic [CPS] in an automated ESR analyzer” qualified as a trade secret. As a court from the District of Kansas explained in Bradbury Co., Inc. v. Teissier-duCros, “[t]here is a glaring lack of detail showing any facts about how [the CPS-related trade secret] was not readily ascertainable by the industry.” 413 F.Supp.2d 1209, 1227 (D. Kan. 2006) (finding plaintiff failed to meet burden of proving a protectable trade secret at summary judgment). There was no testimony or documentary proof concerning how difficult, relative to the state of industry knowledge, it would be to develop an ESR analyzer that measured optical density using a plastic CPS. Al-cor's generalized development timeline is, in and of itself, unavailing. See Trident Prods. & Servs., LLC v. Canadian Soiless Wholesale, Ltd., 859 F.Supp.2d 771, 779 (E.D. Va. 2012) (“[E]ven if a company has expended significant resources to develop a trade secret on its own, it cannot prevail . . . if the barrier to obtaining that trade secret is quite low in reality.”). Thus, for at least these two reasons, the jury's verdict with respect to misappropriation of a “clear, plastic CPS” under Count II must be vacated.

         2. The Defendants Would Be Entitled to A New Trial On Liability for Misappropriation of the CPS-Related Trade Secret.

         The Court would grant a new trial on the Defendants' liability for misappropriating the CPS-related trade secret even absent these evidentiary shortcomings. Upon reflection, the Court concludes that Trial Exhibit 136 - a prototype black reading cell introduced by Alifax and produced on the eve of trial - should not have been admitted into evidence. Alifax's use of this tangible evidence unfairly prejudiced Alcor and, by itself, justifies a new trial.

         Alifax first attempted to introduce Trial Exhibit 136 through Duic. See generally Trial Tr. vol. 2, 47-53. Alcor objected based on lack of disclosure. Id. at 48-49. The Court initially deferred ruling and gave Alifax an opportunity to lay additional foundation. Id. at 51:5-11. Duic testified that he could not recall what prototypes Frappa worked with and Alifax abandoned its attempt to admit the exhibit at that time. Id. at 53.

         Alifax tried again four days later while examining Dr. Gali-ano. See Trial Tr. vol. 6, 77-82. Dr. Galiano identified the object as “the device called MECCA.” Id. 78:11. Alcor renewed its objection. Id. at 78:3-5. Counsel for Alifax explained that the object “is simply the plastic reading cell which is one of our trade secret components” and that it was “introduced in 2014” into Alifax's products. Id. at 79:18-80:2.[15] Counsel also explained that (1) Alcor had not specifically requested this object in discovery, and (2) Alcor had an Alifax machine in their office, which when combined with Frappa's knowledge, obviated any prejudice. Id. at 80:24-81:9. It was undisputed that Alifax had produced the object at the final pretrial conference and that Alcor's counsel photographed it. Trial Tr. vol. 2, 49:11-50:4. The Court ruled that the exhibit was admissible for the reasons stated by Alifax's counsel. Trial Tr. vol. 6, 82:10-13.

         The Court should have sustained Alcor's objection. Alcor's purported failure to target a tangible version of the disputed reading cell in its discovery requests is irrelevant. Rule 26 requires a party to disclose “a copy . . . of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment.” Fed.R.Civ.P. 26(a)(1)(A)(ii) (emphasis added). A party's initial disclosures must be made “without awaiting a discovery request, ” Fed.R.Civ.P. 26(a)(1)(A), and must be supplemented “in a timely manner” if the response is materially incomplete and the additional information has not been made known to the other parties. Fed.R.Civ.P. 26(e)(1)(A). If a party fails to provide material supplemental information, it may not use that information at trial “unless the failure was substantially justified or is harmless.” Fed.R.Civ.P. 37(c)(1).

         The physical properties of Alifax's CPS were always material to its trade secret misappropriation claim. The Court also has reason to doubt the contention that the substance of Trial Exhibit 136 was “made known” to the Defendants through their acquisition of one or more Alifax devices. Alifax's counsel represented that Alifax introduced the CPS represented by the exhibit into its machines in 2014. See Trial Tr. vol. 6, 79:24-25. But the deposition testimony of Alcor's CEO, Carlo Ruggeri, suggests that the Alifax devices Alcor acquired were from early 2012. See Ruggeri Dep. 162:1-22.[16] Examining machines from that period would not have revealed the proffered exhibit's substance. If a tangible version of the CPS existed and Alifax intended to use it at trial, it should have produced it during discovery. It neither did so nor offered a substantial justification for its last-minute disclosure. See Fed.R.Civ.P. 37(c)(1). Moreover, when the Court admitted the prototype, it did not fully appreciate the incongruity between the proffered exhibit, the description of the asserted trade secret as a “clear” plastic block, and the complete dearth of evidence described above. With the benefit of 20/20 hindsight, the correct outcome dictated by these facts is more apparent.

         The Court also concludes that Alifax's failure to disclose Trial Exhibit 136 was not harmless. In his summation, Alifax's counsel urged the jury (as he urges the Court post-trial) to infer misappropriation based on access and substantial similarity. See Trial Tr. vol. 9 49:25-51:10; 54:3-11; Pl.'s Opp'n to New Trial 12-13. He argued that the design for Alifax' CPS “evolved into the ultimate design . . . that's in evidence as Exhibit 136.” Trial Tr. vol. 9, 46:18-24. He invited the jury to compare Trial Exhibit 136 and design specifications for Alcor's reading cell, Trial Exhibit 81, physically placing the tangible object over the drawings using the Court's document camera and achieving a compelling dramatic effect. Trial Tr. vol. 9, 50:17-51:9; 54:3-11. The Defendants, on the other hand, were hamstrung by their inability to investigate this object during discovery and challenge its significance. Such circumstances are fundamentally unfair. Thus, if the judgment for Alifax were not vacated, the Court would order a new trial on liability for the CPS-related trade secret. See Astro-Med, 2008 WL 4372727 at *1.

         A judge must make snap judgments at trial that are guided by experience and instinct (and often based on imperfect information). At other times, a judge is afforded time and space for effortful deliberation and reflection. To borrow an analogy offered by an observer of our profession: district judges sometimes act like tortoises; at other times, they must act like hares.[17] Rule 59 ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.