Tuesday, May 01, 2018

TAOS wins on liability, but damages have to be re-assessed. A case of multiple trade secrets.

In a mixed decision, plaintiff TAOS won on liabilty but the monetary award decision was vacated:

We now affirm in part, reverse in part, vacate in part,
and remand. Among our rulings, we affirm liability for
trade secret misappropriation, though on a more limited
basis than TAOS presented to the jury, and we affirm
liability for infringement of the asserted apparatus claims
of the patent at issue. But we vacate the monetary
awards, and we remand for further proceedings.

The basis of decision was modified

[Defendant] Intersil argues that we must reverse the jury verdict
of liability for trade secret misappropriation. We disagree,
although we agree that the verdict cannot properly
rest on some of the bases TAOS presented to the jury.


Intersil has persuasively shown that the misappropriation
verdict cannot properly rest on two of TAOS’s theories—the
theory that Intersil’s packaging choice was the
result of misappropriated information, and the theory
that Intersil misused the financial information for a Build
vs. Buy analysis. Nevertheless, Intersil has not shown
that the liability verdict should be set aside. Intersil does
not specifically contend that the submission of the first
(glass packaging) theory to the jury now requires vacating
the liability verdict. And though Intersil does make such
a contention based on the submission of the second (Build
vs. Buy) theory to the jury, we find vacatur on that
ground unjustified even if we assume (without deciding)
that Intersil is correct in viewing the second theory as not
merely unsupported by sufficient evidence but as “legally”

The general rule is that “if a jury could find liability
according to multiple theories, and one of them is [legally]
erroneous, we reverse unless we can tell that the jury
came to its decision using only correct legal theories. If it
is impossible to tell whether a correct theory has been
used, we reverse for a new trial.” Rodriguez v. Riddell
Sports, Inc., 242 F.3d 567, 577 (5th Cir. 2001) (citations
omitted); see McCaig v. Wells Fargo Bank (Tex.), N.A., 788
F.3d 463, 476 (5th Cir. 2015). But the verdict will stand if
the legal error is harmless. See Skilling v. United States,
561 U.S. 358, 414 & n.46 (2010); Hedgpeth v. Pulido, 555
U.S. 57, 60–61 (2008) (per curiam); United States v.
Skilling, 638 F.3d 480, 481–82 (5th Cir. 2011). An error is
harmless if it did not affect Intersil’s “substantial rights.”
28 U.S.C. § 2111; Fed. R. Civ. P. 61; see also Shinseki v.
Sanders, 556 U.S. 396, 407–08 (2009). Harmless-error
review is a flexible one in which we “determin[e] whether
[the] error is harmless through the . . . case-specific
application of judgment, based upon examination of the
record.” Shinseki, 556 U.S. at 407. Unless prejudice is
clear even without any explanation, “the party seeking
reversal normally must explain why the erroneous ruling
caused harm.” Id. at 410.


Both parties’
experts testified that there was no evidence of Intersil’s
independent design of that structure. J.A. 20867;
J.A. 21961. Intersil has not provided any explanation as
to why the error at issue is harmful in light of this evidence.

In these circumstances, we affirm the verdict of Intersil’s
liability for trade secret misappropriation, limited to
Intersil’s use of the photodiode array structure

As to the monetary award:

Intersil challenges the amount of the monetary award
for trade secret misappropriation on several grounds,
including that the absence of liability on at least the
“Build vs. Buy” trade secret requires vacatur of the award
and that the award encompassed damages attributable to
sales that occurred long after the 1:1 interleaved photodiode
array structure was no longer a trade secret.6 We
agree as to both and vacate the award.

The monetary award for trade secret misappropriation
must be vacated because we have determined that
misappropriation liability here can properly rest on only
one of the three grounds that TAOS presented to the jury.
TAOS’s calculation of monetary relief did not distinguish
among those grounds. TAOS’s expert testified that the
“trade secrets [were] the – the drivers of sales.”
J.A. 21137–38. But he did not explain which of the trade
secrets contributed to what amount of profit to be disgorged;
he assigned all profits to the misappropriation of
all trade secrets. On this record, we have no basis to
conclude that the remaining ground for liability—the
photodiode structure trade secret—supports the entire
award. This is one reason for vacating the award.

There is a second, independent reason. As to the loss
of trade secret status, the unrebutted evidence at trial
showed that TAOS’s 1:1 interleaved photodiode array was
accessible to Intersil by proper means long before the time
of many of the sales included in TAOS’s request for monetary
relief. Such accessibility existed no later than January
2006, when Intersil successfully reverse-engineered
the TSL2560, and perhaps as early as February 2005,
when TAOS “released” the TSL2560.8 We need not pinpoint
the date to know that it predated many of the sales
included in the calculation of monetary relief put before
the jury by TAOS’s expert.
Accessibility by proper means rendered the photodiode
array structure no longer a protected secret. See E.I.
duPont deNemours & Co. v. Christopher, 431 F.2d 1012,
1015 (5th Cir. 1970)


Here, the jury awarded disgorgement of profits in the
exact amount TAOS’s expert proposed, based on sales
from April 2006 through March 2014. More than 90% of
that award was attributable to sales that occurred between
January 2008 and March 2014. TAOS’s evidence
supporting its claim to monetary relief for trade secret
misappropriation did not limit the covered sales to a
head-start period, and that omission cannot be deemed
harmless. The jury awarded what TAOS sought, and
given the timing of the sales on which the relief sought
was based, the absence of any limitation to a head-start
period might have had large consequences. A head-start
period of less than two years, which Intersil has suggested,
would seem to require exclusion of the lion’s share of
the sales covered by the award on appeal. Oral Argument
at 7:05–17 (Intersil counsel representing that the headstart
period would be 22 months); see J.A. 19455 (TAOS,
in its opening statement to the jury, asserting a similar
head-start period).
For those reasons, we vacate the jury’s monetary
award for misappropriation of trade secrets.


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