Tivo Research and Analytics, Inc. dba TRA, Inc.
(“TRA”) appeals a judgment of the district court granting
summary judgment in favor of TNS Media Research, LLC
dba Kantar Media Audiences and Cavendish Square
Holding B.V. (collectively, “Kantar”). Kantar initially
filed suit in the district court, seeking a declaratory
judgment that it did not infringe U.S. Patent No.
7,729,940 (the “’940 Patent”). Tivo Research and Analytics,
Inc. dba TRA, Inc. (“TRA”) counterclaimed, asserting
infringement of the ’940 Patent, and also U.S. Patent Nos.
8,000,993 (the “’993 Patent”); and 8,112,301 (the “’301
Patent”), misappropriation of trade secrets, and breach of
contract and fiduciary duty claims against Kantar. The
district court determined at summary judgment that
Kantar’s two categories of accused products—the Auto
Products and the Consumer Packaged Goods (“CPG”)
Products—did not infringe the patents-in-suit, that Kantar
did not misappropriate TRA’s trade secrets, that TRA
could not rely upon its damages expert’s testimony or
report to support its claim for damages with respect to its
non-patent claims, and that TRA could not seek punitive
damages against Kantar. Ultimately, the district court
determined that TRA only could pursue a request for
nominal damages for its remaining breach of contract and
fiduciary duty claims, but, was not entitled to do so before
a jury. The parties agreed to settle that remaining claim,
however, and the court entered final judgment.
We affirm-in-part, reverse-in-part, vacate-in part, and
As to trade secrets:
TRA also alleged that Kantar misused its confidential
information—which Kantar received during the merger
discussions and via its appointed board member—in order
to assess whether to launch its competing product and to
accelerate its own product development. But for this
improper use, TRA contended that Kantar would have
been unable to release a competing product as quickly as
it did. Originally, TRA asserted that Kantar misappropriated
twenty four categories of trade secrets but, in
order to streamline this case for trial, the district court
ordered TRA to reduce the number of asserted trade
secrets in April 2013. Following this order, TRA agreed to
reduce the number of trade secrets to the following five:
“(1) Media TRAnalytics’—TRA’s product—speed, reliability,
scalability and performance; (2) TRA’s client lists and
client interactions[;] (3) TRA’s strategic plans[;] (4) TRA’s
product positioning[;] and, (5) TRA’s capital structure,
financials, financing proposals target investor list, and
offers to acquire or merge the company.” Summary
Judgment Op., 984 F. Supp. 2d at 222.
Because allowing TRA to remedy its
deficiency after the close of discovery would be prejudicial
to Kantar and taxing on the district court, the district
court dismissed TRA’s trade secret claim as a sanction
under Fed. R. Civ. P. 37. Id. at 239.
The CAFC noted
Trade secret misappropriation is a matter of state
law. See Atl. Res. Mktg. Sys., Inc. v. Troy, 659 F.3d 1345,
1356 (Fed. Cir. 2011). The parties agree that New York
law applies to TRA’s trade secret claims against Kantar.
We review the grant of summary judgment under the law
of the regional circuit. Charles Mach. Works, Inc. v.
Vermeer Mfg. Co., 723 F.3d 1376, 1378 (Fed. Cir. 2013).
The Second Circuit reviews the grant or denial of summary
judgment de novo. Petrosino v. Bell Atl., 385 F.3d
210, 219 (2d Cir. 2004). Summary judgment is appropriate
when, drawing all justifiable inferences in the nonmovant’s
favor, there exists no genuine issue of material
fact and the movant is entitled to judgment as a matter of
law. Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 255 (1986). Additionally, this court reviews
a district court’s decision to exclude evidence and impose
discovery sanctions under the law of the relevant regional
circuit. See Meyer Intellectual Props. Ltd. v. Bodum, Inc.,
690 F.3d 1354, 1358 (Fed. Cir. 2012). In the Second
Circuit, such rulings are reviewed for abuse of discretion.
See Phoenix Assocs. III v. Stone, 60 F.3d 95, 100 (2d Cir.
1995); Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d
522, 525 (2d Cir. 1990).
Therefore, a failure to follow Rule 26(e) will warrant
preclusion of omitted information, “unless the failure was
substantially justified or is harmless.” Id. “Failure to
timely amend a contention interrogatory can bar use of a
theory of liability, especially when such failure results in
prejudice to the adverse party.” N.J. Dep't of Envtl. Prot.
v. Atl. Richfield Co., No. 1:00-cv-1898, 2014 U.S. Dist.
LEXIS 15966, at *9 (S.D.N.Y. Feb. 6, 2014) (citing
Unigene Labs. v. Apotex, Inc., No. 06-cv-5571, 2010 U.S.
Dist. LEXIS 67444, at *6 (S.D.N.Y. July 7, 2010), aff’d,
655 F.3d 1352 (Fed. Cir. 2011) (“[W]here there is substantial
prejudice to the Plaintiffs—namely, not being advised
of the contours of [a] claim until long after the termination
of discovery and the filing of dispositive motions—the
Defendants’ failure to amend their contentions results in
[a] claim being deemed waived.”)).
Here, the district court concluded that TRA violated
Rule 26 when it narrowed its trade secret claims on May
10, 2013. We note that on April 23, 2013, the court ordered
TRA to reduce its trade secret claims. In response
to that order the parties stipulated, with the court’s
approval, that TRA would reduce its trade secret claims
by May 10. While this does not necessarily establish that
TRA complied with Rule 26, it is also not clear that TRA’s
actions—to reduce its trade secret claims on the courtapproved
timeline—rise to the level of violating the rules
of procedure. For the reasons below, we conclude the
district court abused its discretion when it dismissed all of
TRA’s trade secret claims as a discovery sanction. On
remand, the district court should both address whether
TRA violated Rule 26 and, if there was a violation, craft a
more appropriate sanction.
We find that the district court abused its discretion
when it dismissed all of TRA’s trade secrets claims as a
discovery sanction. Generally, “[a] district court ‘abuses’
or ‘exceeds’ the discretion accorded to it when (1) its
decision rests on an error of law (such as application of
the wrong legal principle) or a clearly erroneous factual
finding, or (2) its decision—though not necessarily the
product of a legal error or a clearly erroneous factual
finding—cannot be located within the range of permissible
decisions.’” Zervos v. Verizon N.Y., Inc., 277 F.3d 635,
650 (2d Cir. 2002) (quoting Zervos v. Verizon N.Y, Inc.,
252 F.3d 163, 169 (2d Cir. 2001)). In order to determine
the appropriate sanction for a discovery violation, the
Second Circuit considers several factors including “(1) the
willfulness of acts underlying noncompliance; (2) the
efficacy of lesser sanctions; (3) the duration of noncompliance;
and (4) whether the noncompliant party was on
notice that it faced possible sanctions,’” but no one factor
is dispositive. Agiwal v. Mid Island Mortg. Corp., 555
F.3d 298, 302–03 (2d Cir. 2009);
Considering these factors, it is clear that a dismissal
was an inappropriate sanction in these circumstances.
First, there is no indication that TRA purposefully
shirked its discovery obligations. Cf. Robertson v.
Dowbenko, 443 F. App’x 659, 661 (2d Cir. 2011) (noting
that willful non-compliance exists when a party has
“repeatedly failed to respond to interrogatories and produce
documents . . . in violation of the district court’s
orders”). Instead, the record suggests that TRA actually
tried to meet its obligations, as evidenced by its decision
to amend its initial disclosures in response to Kantar’s
complaint that such disclosures were deficient and the
fact that it was not until Kantar lobbied the court in April
2013 to order TRA to identify and limit its trade secrets in
anticipation of trial that TRA became aware that Kantar
still believed its disclosures were inadequate. When the
court ordered the parties to confer in the hopes of streamlining
the case, moreover, TRA responded by reducing the
number of trade secret claims asserted. It did so within
days of the court’s suggestion and well before Kantar filed
its motion for summary judgment. We see no discovery
violation which would warrant such a harsh sanction,
especially one imposed without warning.
There is also nothing in the record that evinces the
district court considered the efficacy of lesser sanctions.
World Wide Polymers, Inc. v. Shinkong Synthetic Fibers
Corp., 694 F.3d 155, 159 (2d Cir. 2012) (finding that a
dismissal of a party’s damages claim was inappropriate,
in part, because “there [was] no indication in the record
that the district court considered any lesser sanctions”).
For the foregoing reasons, we affirm the district
court’s conclusion that there is insufficient evidence from
which a reasonable juror could conclude that Kantar’s
Auto Products do not infringe the asserted patent claims,
that TRA’s product positioning secrets are not protectable
as a matter of law, and that TRA’s damages expert failed
to comply with Fed. R. of Evid. 702. We reverse the
district court’s ruling that TRA’s financial projections and
strategic plans are not protectable as a matter of law. We
reverse the district court’s decision to dismiss TRA’s
misappropriation of trade secret claims as a discovery
sanction and its decision to dismiss TRA’s remaining
trade secrets claims as a matter of law. We also reverse
the district court’s determination that TRA was entitled
to only nominal damages on its non-patent claims, which
moots the propriety of the district court’s conclusion that
TRA was not entitled to a jury trial as to those claims.
And, we reverse the district court’s conclusion that TRA is
not entitled to injunctive relief on its fiduciary duty
claims as a matter of law. Lastly, we vacate the district
court’s decision that Kantar’s CPG Products do not infringe
the asserted patent claims. We remand for further
proceedings consistent with this opinion.