Alifax Holding Spa v. Alcor Scientific Inc.
| Decision Date | 05 September 2019 |
| Docket Number | C.A. No. 14-440 WES |
| Parties | ALIFAX HOLDING SPA, Plaintiff, v. ALCOR SCIENTIFIC INC. ; and Francesco A. Frappa, Defendants. |
| Court | U.S. District Court — District of Rhode Island |
Christopher H. Little, Nicole M. Matteo, Michael J. Daly, Pierce Atwood, LLP, Providence, RI, Kyle M. Noonan, Pro Hac Vice, Margaret K. Minister, Pro Hac Vice, Robert H. Stier, Jr., Pro Hac Vice, Pierce Atwood LLP, Portland, ME, for Plaintiff.
Christine K. Bush, Craig M. Scott, Hinckley, Allen & Snyder LLP, Providence, RI, Brian D. Coggio, Pro Hac Vice, Fish & Richardson, New York, NY, Laurel M Gilbert, Pro Hac Vice, Hinckley, Allen & Snyder LLP, Boston, MA, for Defendants.
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 law2 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.
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. 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:
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.
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) (). 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 (1st Cir. 2009) (). 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) (...
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