[00:00:00] Speaker 02:
Our next case for argument is 22-1641, Alifax-Holding versus Elsewhere Scientific.

[00:00:10] Speaker 02:
Mr. Tucker, please proceed.

[00:00:11] Speaker 04:
Thank you.

[00:00:13] Speaker 04:
May it please the court, I'm Todd Tucker from Kalfi Halter Griswold in Cleveland, and I represent appellant Alifax.

[00:00:21] Speaker 04:
Alifax asked this court to reinstate the jury verdict finding trade secretness appropriation in a rather classic

[00:00:30] Speaker 04:
fact pattern, a situation where a competitor recruits a knowledgeable employee from the market leader, has that employee take confidential information from the market leader, join the new company, and develop a competing product in only a few months.

[00:00:48] Speaker 04:
What's unusual about this case is that the trial court overturned the jury finding that Alcor unjustly

[00:00:58] Speaker 04:
enriched itself to the tune of $6.5 million, even though the employee at issue, Francesco Frappa, admitted taking Alifax's software and programming that software and part of it, the conversion algorithm, into Alcor's source code that was used in its prototype models.

[00:01:18] Speaker 04:
Also, Alcor agreed to pay for that conversion algorithm, pay Frappa for the conversion algorithm, and then finally,

[00:01:27] Speaker 04:
The court described the damage award as a rational appraisal.

[00:01:32] Speaker 02:
Well, let's stop for a sec, because I think your first argument is about liability.

[00:01:37] Speaker 02:
And if I'm understanding it right, it's about whether or not it was appropriate for the district court to order a new trial on liability.

[00:01:46] Speaker 02:
Is that right?

[00:01:47] Speaker 02:
Am I following you?

[00:01:48] Speaker 04:
The district court ordered a new trial on liability, yes, and also initially,

[00:01:53] Speaker 04:
a new trial on damages, and then made a series of orders that removed the damages theory from the case.

[00:01:58] Speaker 02:
I'm trying to keep you focused on the first argument, because I think if I understand it right, your first argument is that it was erroneous to order the new trial on liability with regard to the conversion algorithm trade secret.

[00:02:10] Speaker 02:
Is that right?

[00:02:11] Speaker 04:
That's correct, Your Honor.

[00:02:13] Speaker 04:
Under US v. Rivera-Rangel, when a new trial is being granted or predicated on the weighing of evidence, which is what the- OK, well, let me try to help you streamline this, because there are so many issues in this case.

[00:02:30] Speaker 02:
So I want to give you a focus on what I care about at the moment.

[00:02:33] Speaker 02:
It seems to me that I see a district court that erred

[00:02:38] Speaker 02:
in failing to understand the statute and the legal definition of misappropriation, which includes acquisition.

[00:02:46] Speaker 02:
It seems that it's undeniable the evidence of record showed acquisition.

[00:02:53] Speaker 02:
Mr. Frappa took it over to Alcor.

[00:02:58] Speaker 02:
They used it.

[00:03:00] Speaker 02:
But what the district court judge seems to have gotten way late on is concerns about, well, they didn't use it in a commercially

[00:03:09] Speaker 02:
commercially profitable way at the end of the day.

[00:03:11] Speaker 02:
But that's irrelevant to the question of liability because liability includes on its base acquisition, not just use or commercially viable use.

[00:03:22] Speaker 02:
And so that's where I perceive there to be an error in the district court's initial decision

[00:03:28] Speaker 02:
to grant a new trial on liability?

[00:03:30] Speaker 02:
Is a failure to appreciate that?

[00:03:33] Speaker 02:
Can you address that issue?

[00:03:35] Speaker 02:
Is that one of your arguments?

[00:03:36] Speaker 02:
Do you agree with what I've said?

[00:03:37] Speaker 02:
Do you think I should go further than that?

[00:03:39] Speaker 02:
That seems to get you back to liability judgment.

[00:03:44] Speaker 04:
I absolutely agree with that, Your Honor.

[00:03:45] Speaker 04:
The Rhode Island Uniform Trade Secret Act says that misappropriation of a trade secret is acquisition or use.

[00:03:53] Speaker 04:
There's admitted acquisition.

[00:03:55] Speaker 04:
The judge got into the whole use rabbit hole, if you will, and did, and I respectfully submit, missed the boat on the Rhode Island Uniform Trade Secret Act that says,

[00:04:09] Speaker 04:
mere acquisition is misappropriation so just by the acquisition there's liability.

[00:04:15] Speaker 02:
And so is it your view then, if I agree with you on that interpretation of the Rhode Island law, which by the way I do, that the solution is to reinstate the first finding of liability?

[00:04:31] Speaker 04:
I would agree that yes, reinstate the first finding of liability.

[00:04:36] Speaker 04:
We also submit that because

[00:04:38] Speaker 04:
of the compensatory damages being intertwined with the same facts, the same issues, that that should be reinstated as well, the $6.5 million of unjust enrichment.

[00:04:48] Speaker 02:
The problem you have there, from my perspective, is that the judge concluded that there were some significant difficulties with your expert's testimony.

[00:05:00] Speaker 02:
And he ended up, after the fact, excluding that.

[00:05:04] Speaker 02:
And that $6.5 million judgment

[00:05:06] Speaker 02:
was a judgment that was rendered by a jury that heard all that testimony.

[00:05:10] Speaker 02:
Isn't that correct?

[00:05:13] Speaker 04:
The jury heard that testimony, but the series of orders that end with the September 2021 order, where compensatory damages as a theory is removed, it's not showing any prejudice to Alport that would be required to remove it.

[00:05:32] Speaker 04:
The underlying evidence of unjust enrichment under the restatement, the burden shifting for proving this, is Alifax has to show the revenues that the Head Start generated.

[00:05:46] Speaker 02:
Yes, but apart from your expert, what other testimony did you actually present in that first trial that resulted in the $6.5 million damage?

[00:05:57] Speaker 04:
So we had Mr. Frappa's employment agreement that showed the convoyed sales.

[00:06:03] Speaker 04:
There was the testimony about the trade shows that give the head start.

[00:06:07] Speaker 04:
And then that's where in the conferences for the presentation to the jury, when Mr. Bocart's opinion was excluded, the suggestion was, and this would be proper, that the CEO of Alcor, who was in the room,

[00:06:27] Speaker 04:
could be put on the stand, and all Alifax has to do is show what the revenues were for the head start.

[00:06:34] Speaker 04:
And that was in an Alport document.

[00:06:36] Speaker 02:
I agree with everything you're saying right now.

[00:06:38] Speaker 02:
And you've got me on this notion that this needs to get sent back, and there needs to be a new trial on damages, because you had other witnesses that could supplant and therefore justify a damage award.

[00:06:52] Speaker 02:
But the problem is, Mr. Bogart

[00:06:54] Speaker 02:
can't be one of them.

[00:06:55] Speaker 02:
He has to get thrown out according to the district court judge.

[00:06:59] Speaker 02:
And I don't see how we can just reinstate the $6.5 million verdict, because the jury heard his testimony.

[00:07:05] Speaker 02:
And we can't know, since it's a black box, to what extent his testimony formed the basis for that number.

[00:07:13] Speaker 02:
So I don't know how we could possibly reinstate that number, as opposed to simply sending it back and asking for a new damages trial.

[00:07:23] Speaker 02:
allowing Mr. Bogart's testimony to be excluded, but allowing you to present all of this other evidence.

[00:07:30] Speaker 04:
That certainly is an option, Your Honor.

[00:07:32] Speaker 04:
The issue with the new trial order on damages is the court never discusses what's the actual prejudice.

[00:07:40] Speaker 04:
When you look at the interplay, and as the case law says, I don't know how to pronounce the case.

[00:07:47] Speaker 03:
Let me ask you a couple questions along those lines.

[00:07:50] Speaker 03:
One, did you

[00:07:53] Speaker 03:
I actually present, and I understand that the case on the record may be trial exhibit 198.

[00:07:59] Speaker 03:
Was that a portion of what Mr. Beaux, I don't know how you say your expert's name, I apologize.

[00:08:05] Speaker 04:
Beauxhart.

[00:08:05] Speaker 03:
Beauxhart's testimony was based on the summary trial exhibit 198.

[00:08:10] Speaker 04:
So his testimony was based on putting up exhibit 173.

[00:08:17] Speaker 04:
which is in the record at the specific page is in the appendix 15960, putting that up.

[00:08:28] Speaker 04:
And then after introducing that evidence under 1006, his testimony and 198 were summary testimony.

[00:08:38] Speaker 04:
In the court.

[00:08:39] Speaker 03:
Is that exhibit in the joint appendix?

[00:08:41] Speaker 03:
If so, where?

[00:08:42] Speaker 03:
Exhibit 198.

[00:08:43] Speaker 03:
I know where exhibit 173 is.

[00:08:45] Speaker 04:
We will get that for you.

[00:08:47] Speaker 03:
Are you intending to pit Mr. Bulkhart on any new trial?

[00:08:51] Speaker 03:
Like, let's say we remand for a new trial on damages.

[00:08:54] Speaker 03:
Are you trying to present this person again, or would you present some other witnesses, such as the witnesses that Judge Moore was talking to you about?

[00:09:02] Speaker 04:
Well, there's two options.

[00:09:03] Speaker 04:
We could first off present the other fact witnesses, the CEO and the VP of International Sales for Alifax, who would explain the market.

[00:09:15] Speaker 04:
The second option is we also have appealed the court removing the signal acquisition trade secret from the case at the jury instruction phase.

[00:09:28] Speaker 04:
If that wasn't properly removed, if we have a new trial where we're going to do damages, we also have argued that we should be given a new trial on signal acquisition.

[00:09:40] Speaker 04:
That leads to a snowball or a cascade.

[00:09:43] Speaker 04:
If we have liability of signal acquisition, then Mr. Bocart's opinion is admissible.

[00:09:51] Speaker 03:
He's only excluded for- Just to stop you there.

[00:09:52] Speaker 03:
Hold on.

[00:09:53] Speaker 03:
Just to make sure I get this exactly on the record.

[00:09:56] Speaker 03:
You're saying that if you were to pit Mr. Bocart on, you would only pit him on for damages testimony related to signal acquisition if the signal acquisition trade secret were to get into any sort of new trial.

[00:10:10] Speaker 04:
That's correct, Your Honor.

[00:10:11] Speaker 04:
OK.

[00:10:11] Speaker 03:
Let me also get from you exactly where you contend in the record we can find your statement regarding the signal acquisition trade secret and also where exactly in the record you have stated the conversion algorithm trade secret.

[00:10:27] Speaker 03:
I want to make sure that I have those statements precise.

[00:10:29] Speaker 04:
OK.

[00:10:30] Speaker 04:
The conversion algorithm is, give me one second, this is complicated.

[00:10:42] Speaker 04:
The conversion algorithm, the test results of the conversion algorithm I believe is 77597761.

[00:10:52] Speaker 04:
I believe it's on 7761.

[00:10:58] Speaker 04:
Testing results showing use of that algorithm.

[00:11:02] Speaker 04:
I believe are 15742 to 15710.

[00:11:07] Speaker 04:
So that's the conversion algorithm.

[00:11:14] Speaker 03:
OK, hold on.

[00:11:15] Speaker 03:
You need to pull these pages.

[00:11:17] Speaker 03:
And also, can I ask you about JA 15193, which is the jury verdict form, which mentions conversion algorithm.

[00:11:24] Speaker 03:
Is that sufficient?

[00:11:26] Speaker 03:
statement regarding the conversion algorithm trade secret, JA 15193.

[00:11:31] Speaker 04:
The entire trade secret in the jury instruction that included signal acquisition is... I know it's very complicated.

[00:11:47] Speaker 04:
The full instruction is at our opening brief on page 20 that

[00:11:53] Speaker 04:
The full instruction should have read, the manner in which software used in plain ESR analyzers initiates an ESR measurement from a blood sample loaded in the analyzer, handles a blood sample to introduce it into the capillary container, and instructs the ESR analyzer to obtain photometric data, handles and converts the photometric data to calculate the ESR of the blood sample.

[00:12:17] Speaker 04:
That instruction was edited, and then so the jury

[00:12:23] Speaker 04:
verdict form for conversion algorithm is correct, but there's nothing on the verdict form about signal acquisition.

[00:12:30] Speaker 03:
Okay.

[00:12:32] Speaker 03:
Just to make sure I have it, which page were you reading from just now?

[00:12:35] Speaker 03:
I want to make sure the record's clear.

[00:12:36] Speaker 04:
Page 20 of appellant's opening brief.

[00:12:39] Speaker 03:
Does it cite to a specific page in the joint appendix?

[00:12:42] Speaker 04:
It does.

[00:12:42] Speaker 04:
This is a tough outline because there's so many issues here.

[00:12:45] Speaker 03:
We also recognize there are a lot of issues here.

[00:12:48] Speaker 03:
Did you present any alifax documents to the district court as evidence of your signal acquisition trade secret?

[00:12:54] Speaker 04:
Yes.

[00:12:55] Speaker 04:
So that is.

[00:12:58] Speaker 04:
What documents?

[00:13:00] Speaker 04:
Yes.

[00:13:00] Speaker 04:
There is a document.

[00:13:01] Speaker 04:
It's called the ISED software procedures description.

[00:13:06] Speaker 04:
And what that.

[00:13:08] Speaker 04:
What page?

[00:13:09] Speaker 04:
I'm getting there, Your Honor.

[00:13:10] Speaker 04:
That is.

[00:13:15] Speaker 04:
I believe 15716 to 15719.

[00:13:22] Speaker 04:
If we look at this document, what this is, this is the confidential information on how you stop the blood flow, how you, for instance, turn off the heater to eliminate noise so that you can get a proper photometric reading.

[00:13:40] Speaker 04:
So this is the confidential information.

[00:13:42] Speaker 04:
You have to know this information

[00:13:45] Speaker 04:
in order to then turn that into software code.

[00:13:48] Speaker 03:
Wait, let me clarify.

[00:13:49] Speaker 03:
Is this an Alcor document?

[00:13:51] Speaker 03:
It has an Alcor Bates number on it.

[00:13:53] Speaker 04:
This is an Alcor document that... Oh, I'm sorry.

[00:13:56] Speaker 03:
So, but my question is where are the Alifax documents that have the Signal Acquisition Trade Keeper as opposed to the Alcor documents?

[00:14:02] Speaker 03:
I didn't know where your Alifax documents are with that.

[00:14:05] Speaker 04:
Yes, I'm going to need to get that and I'll tell you on rebuttal.

[00:14:10] Speaker 04:
But this is

[00:14:11] Speaker 04:
This is a document that Frappa admitted to drafting when he got to Alcor based on Alifax information.

[00:14:22] Speaker 04:
And it even uses Alifax as the identifier.

[00:14:26] Speaker 02:
What I'm struggling with, even on this document, is what exactly is the signal acquisition trade secret?

[00:14:34] Speaker 02:
I don't understand.

[00:14:36] Speaker 02:
I understand your definition of conversion.

[00:14:40] Speaker 02:
Rhythm trade secret, but where's the what is exactly tell me what words?

[00:14:45] Speaker 02:
What are what's the trade secret for the signal acquisition?

[00:14:49] Speaker 04:
So as you're moving the blood through the machine There's several techniques that that you could not reverse engineer for instance Knowing when to start when to stop when to turn off the heater when to turn the heater back on That information is in this document

[00:15:08] Speaker 04:
That's confidential information of Alifax that FRAPA only knew, did you not reverse engineer from getting one of the Alifax machines, that they only knew from being at Alifax and then knew how to solve that problem.

[00:15:24] Speaker 04:
I have used my whole time.

[00:15:27] Speaker 02:
So along with Judge Cunningham, my question is, where did you describe that for the district court judge so he would understand?

[00:15:40] Speaker 02:
all your stuff and I walked away not understanding what your claim was, like what the signal acquisition trade secret even was.

[00:15:49] Speaker 02:
And so I kind of have a little sympathy for this district court judge who may likewise not have known it because here I am on appeal where you should be really able to streamline all this for me and I didn't understand and I still don't as I sit here understand what your arguments are precisely about what your signal acquisition trade secret is.

[00:16:07] Speaker 04:
Your honor, if you look at the AstroMed case, that talks about where you hire an employee specifically to bring confidential information, there is an- Well, you want to create a presumption.

[00:16:19] Speaker 02:
But the problem is, you want to create a presumption that he gave something, but you haven't told me what that something is.

[00:16:24] Speaker 02:
That's where I'm struggling.

[00:16:25] Speaker 02:
I don't understand what your trade secret is.

[00:16:27] Speaker 02:
Like the formula for coke.

[00:16:28] Speaker 02:
Yep, I got it.

[00:16:29] Speaker 02:
That's a trade secret, right?

[00:16:31] Speaker 02:
Your conversion algorithm trade secret.

[00:16:34] Speaker 02:
I actually agree.

[00:16:35] Speaker 02:
It's on like 7761.

[00:16:37] Speaker 02:
It's kind of defined and it's understood and you made assertions along the way about exactly what it was.

[00:16:43] Speaker 02:
But you really left a record in which I can't figure out what your alleged trade secret is with the signal opposition.

[00:16:52] Speaker 02:
trade secret.

[00:16:53] Speaker 02:
And that's why I'm struggling.

[00:16:54] Speaker 02:
I don't know.

[00:16:55] Speaker 02:
Look, I think all kinds of bad things happened here.

[00:16:57] Speaker 02:
You got my sympathy.

[00:16:58] Speaker 02:
I think the guy stole stuff.

[00:16:59] Speaker 02:
I mean, my favorite part is when he told you all that he needed your recommendation letter for his new job in Italy when in fact it was for his visa for, yeah.

[00:17:08] Speaker 02:
So I mean, there's all kinds of bad stuff here.

[00:17:10] Speaker 02:
There's bad actors, but you have an obligation to clearly define what the nature of your trade secret was.

[00:17:16] Speaker 02:
And I'm struggling to see that you met that obligation

[00:17:19] Speaker 02:
for this district court judge, because I sit here and don't know what it is.

[00:17:23] Speaker 04:
So first off, if I could address one thing on Astromed, we're not arguing that it's a presumption.

[00:17:28] Speaker 04:
We're saying it was an inference that the jury was allowed to accept.

[00:17:32] Speaker 04:
So I don't want to be accused later saying that Astromed creates a presumption.

[00:17:36] Speaker 02:
It creates an inference.

[00:17:38] Speaker 02:
But even in this inference concept, if I have no

[00:17:43] Speaker 02:
Jury's inferences can only be based on things that are reasonable to infer.

[00:17:47] Speaker 02:
And I can't figure out what your trade secret is.

[00:17:50] Speaker 02:
And you haven't still articulated it for me.

[00:17:53] Speaker 02:
And maybe you're going to do it on reply.

[00:17:54] Speaker 02:
But that seems a little late for him.

[00:17:56] Speaker 04:
I'm going to try to do it right now if I have 30 seconds.

[00:17:58] Speaker 02:
Yeah, go ahead.

[00:17:59] Speaker 04:
Please.

[00:18:00] Speaker 04:
On appendix 2000, I believe it's paragraph 5.

[00:18:07] Speaker 04:
This is an interrogatory answer that then the jury instructions were built off of.

[00:18:13] Speaker 04:
And that is describing what the signal acquisition trade secret is.

[00:18:19] Speaker 03:
Did this end up in the proposed jury instructions, this paragraph five?

[00:18:25] Speaker 04:
So five is going to track into the jury instruction that I mentioned from page 20 of our opening briefing.

[00:18:31] Speaker 04:
I believe five.

[00:18:32] Speaker 04:
I need to see what is it from memory.

[00:18:34] Speaker 04:
It's got both conversion algorithm and signal acquisition in it.

[00:18:38] Speaker 04:
And there were two instructions.

[00:18:42] Speaker 04:
Thank you.

[00:18:44] Speaker 03:
The other thing that I want to make sure you give us on the record, or a couple things.

[00:18:47] Speaker 03:
One, you mentioned that there was, and I asked you about it, trial exhibit 198.

[00:18:52] Speaker 03:
I don't think that's in the joint appendix.

[00:18:53] Speaker 03:
If it's not in the joint appendix, please give that to us.

[00:18:56] Speaker 04:
OK.

[00:18:57] Speaker 03:
Number two.

[00:18:59] Speaker 04:
That is 15979.

[00:18:59] Speaker 04:
What is 15979?

[00:19:02] Speaker 03:
Exhibit 198.

[00:19:06] Speaker 03:
And then also, you mentioned that there was testimony admitting that that Alcor exhibit we were talking about, that you contend is related to the signal acquisition

[00:19:13] Speaker 03:
trade secret comes from Alifax that's knowledge.

[00:19:16] Speaker 03:
What page of the record can you point us to where you're saying there's testimony admitting that?

[00:19:22] Speaker 04:
I will have to get that for you, Your Honor.

[00:19:24] Speaker 04:
I don't.

[00:19:25] Speaker 02:
I'm just... So jury instruction for what your trade secret is and how it's defined is at 10534.

[00:19:35] Speaker 02:
Will you look at it with me?

[00:19:37] Speaker 02:
Because I see how you've clearly defined your conversion algorithm trade secret in this jury instruction.

[00:19:43] Speaker 02:
But I don't see, and it's hard for me to understand, what it is you're saying corresponds to a separate trade secret in the form of the signal acquisition trade secret.

[00:19:53] Speaker 02:
Let me get a game instruction page.

[00:19:55] Speaker 02:
10534.

[00:19:56] Speaker 02:
Take a minute.

[00:19:57] Speaker 04:
Certain size.

[00:19:59] Speaker 04:
So I'm looking at a number of two on that page.

[00:20:03] Speaker 02:
Yep.

[00:20:04] Speaker 04:
certain software and firmware elements of the ESR analyzer that cannot be reverse engineered.

[00:20:08] Speaker 04:
So that's talking about both the conversion algorithm and all these techniques for getting the blood in a place to where you can acquire the photometric measurement.

[00:20:19] Speaker 02:
No, it's talking about software and firmware elements.

[00:20:22] Speaker 02:
That's not talking about how to do anything with blood.

[00:20:24] Speaker 02:
Software and firmware elements aren't blood.

[00:20:26] Speaker 02:
That's actually software.

[00:20:28] Speaker 04:
Right, but if you continue on, Your Honor, including how to acquire photometric signals from a blood sample,

[00:20:34] Speaker 04:
photometric signals from a blood sample are the The information for instance the certain variables so wait stop for a sec So then are you saying the signal acquisition trade secret is?

[00:20:50] Speaker 02:
How to acquire photometric signals from a blood sample because the next part how to convert those signals into an ESR That's the conversion algorithm

[00:20:59] Speaker 02:
So it's definitely not the next part.

[00:21:01] Speaker 02:
The second half, from the word and to one, everything after that.

[00:21:04] Speaker 02:
And in fact, your last sentence says, that's the conversion algorithm.

[00:21:08] Speaker 02:
So the only thing that isn't clearly and unequivocally the conversion algorithm, and I think it might be the conversion algorithm, but is that part that says how to acquire photometric signals from a blood sample.

[00:21:21] Speaker 02:
So are you saying that's the signal acquisition, the definition of your signal acquisition trademark?

[00:21:26] Speaker 04:
That is a describer of the signal acquisition trade secret.

[00:21:32] Speaker 04:
And then when we go back and look at the document, FRAPA drafted the ICED software procedures description.

[00:21:43] Speaker 04:
That then gives the details for the signal acquisition, the obtaining the photometric.

[00:21:51] Speaker 02:
uh... in that is again one five seven one six one five seven one nine these are these are not hostile questions just listen and hear me out and try to focus so one zero five three four you say uh... you define trade secret for the jury instruction is how how to acquire photometric signals from a blood sample that's the only portion of anything on this page that could arguably be relevant to the signal acquisition trade secret now let's go back to your complaint at appendix page two thousand

[00:22:22] Speaker 02:
And I think this is a complaint, or maybe it's not a complaint.

[00:22:26] Speaker 02:
I don't remember what document page 2000 is, but you pointed it to us.

[00:22:29] Speaker 02:
And let's look at number five on page 2000 because I think that further describes, you know, because you've just got a tiny little fragment of a sentence here, right, to acquire photometric signals for a blood sample.

[00:22:45] Speaker 02:
You know, that's going to have to carry a lot of water.

[00:22:48] Speaker 02:
But are you going to tell me that what's in paragraph five is for the most part a more detailed description of what that trade secret is in terms of the signal acquisition?

[00:22:59] Speaker 04:
Yes.

[00:22:59] Speaker 04:
So paragraph five then ties to appendix 15716, 15719.

[00:23:09] Speaker 04:
That appendix exhibit, that then gives the specific confidential information that you need to do on the signal acquisition to meet what's in number five of this interrogatory answer.

[00:23:24] Speaker 03:
But the part that I'm still struggling with is that's an Alcor document, right, those pages you were describing to us.

[00:23:31] Speaker 03:
And what I want is at least at a minimum where you said there was testimony where Frappa admitted

[00:23:38] Speaker 03:
that he created some portion of that document based on the stuff he learned at Alifax.

[00:23:43] Speaker 03:
Or if you can give me an Alifax document that shows the signal acquisition trade secret, that would help, too.

[00:23:49] Speaker 04:
At trial, Mr. Dewich, D-U-I-C, who was a director of R&D for Alifax, he testified that the I-S-E-D device

[00:24:07] Speaker 04:
was operating in the same manner for signal acquisition as what Alifax did.

[00:24:15] Speaker 04:
And he said that that could not be reverse engineered, I believe, and that the only way that that got to Alcor was through Frappa.

[00:24:25] Speaker 04:
And that's why the inference of Astromech comes into play.

[00:24:28] Speaker 03:
Can you point us to the citation so we can look at that testimony ourselves as well?

[00:24:32] Speaker 04:
Yeah.

[00:24:35] Speaker 04:
So.

[00:24:36] Speaker 04:
with that I know I've gone very long, I appreciate it.

[00:24:42] Speaker 02:
All right, just do it on the bottle.

[00:24:43] Speaker 02:
Sit down.

[00:24:44] Speaker 04:
Sounds good.

[00:24:45] Speaker 02:
Mr. Scott.

[00:24:47] Speaker 02:
Mr. Scott, you can have all day if you wish.

[00:24:51] Speaker 01:
I won't burden you with that, Your Honor.

[00:24:53] Speaker 01:
May it please the Court.

[00:24:54] Speaker 01:
Let's start with signal acquisition in your question, Justice Cunningham, because you're not going to find that in the record, because Mr. Duitch testified on cross-examination that signal acquisition is not a trade

[00:25:05] Speaker 01:
And in fact, their expert witness testified that signal acquisition is not a trade secret.

[00:25:11] Speaker 01:
And that's Dr. Bergeron.

[00:25:13] Speaker 02:
Well, when you say signal acquisition is not a trade secret, are they alleging that there was some trade secreted way in which they were acquiring photometric signals from a blood sample, some method of doing that that was secret?

[00:25:34] Speaker 01:
Not at the time of trial in this regard.

[00:25:38] Speaker 01:
The signal acquisition trade secret that counsel read to you, that long measurement that's in their blue brief at 19 to 20, that was narrowed, modified, sure rated before trial.

[00:25:54] Speaker 01:
And we went through in our brief showing the dozen or so trade secrets.

[00:25:58] Speaker 03:
What do you contend the signal acquisition trade secret is?

[00:26:00] Speaker 03:
Do you agree with these citations that he gave us?

[00:26:03] Speaker 03:
2000, and then we also looked at a proposed jury instruction.

[00:26:07] Speaker 01:
No, because the signal acquisition trade secret at the time of trial, that's why I was going through the arc of the modified and revised trade secrets.

[00:26:18] Speaker 01:
At the time of trial, it was limited to this, the means of optical signal acquisition.

[00:26:25] Speaker 03:
Where are you looking to say that's what it was limited to?

[00:26:28] Speaker 01:
I'm looking at the district court at appendix 11-727.

[00:26:33] Speaker 01:
which is the decision on the cross motions for summary judgment.

[00:26:38] Speaker 01:
And then I should also add that at the time of trial there was a preliminary jury instruction at appendix 13-829.

[00:26:46] Speaker 02:
So what is 11-727 again?

[00:26:52] Speaker 01:
Those are the two theories that remain for trial.

[00:26:57] Speaker 01:
The means of optical signal acquisition

[00:27:00] Speaker 01:
and to the means of converting photometric measurements to an ESR value.

[00:27:06] Speaker 01:
That was a result of the cross motions for summary judgment.

[00:27:11] Speaker 02:
But this doesn't say anything that narrows or defines what the means of optical signal acquisition is and whether or not there are allegations that we should look to page 10534 and page 2000 to fill in that gap.

[00:27:30] Speaker 01:
So the fundamental flaw in this whole signal acquisition theory of alifax is that it's not a trade secret, that it's selectometry.

[00:27:44] Speaker 01:
It's the process of making optical measurements.

[00:27:48] Speaker 01:
That's not protectable.

[00:27:49] Speaker 01:
That's the 557 patent to Schmidt-Schombine.

[00:27:52] Speaker 01:
That was the subject of the concessions at trial, that signal acquisition.

[00:27:57] Speaker 01:
Not only was there an absence of evidence for it to go to the jury, but there were concessions by their principal witness, Mr. Duitch, and their expert technical witness that it's not a trade secret.

[00:28:09] Speaker 03:
I'm going to be interested in those citations for those concessions as well, just to warn you.

[00:28:13] Speaker 03:
But what I also want to know is do you still agree or not agree with their statements about what the actual signal acquisition trade secret is?

[00:28:21] Speaker 03:
Pointing to the pages that Chief Judge Moore just reiterated.

[00:28:25] Speaker 01:
Yes, I disagree with their statement.

[00:28:28] Speaker 01:
They're going back to what they lost at summary judgment with this very technical, detailed description of trade secret that was modified by them.

[00:28:39] Speaker 01:
And then as a result of the summary judgment proceedings, the preliminary jury instructions was as I read earlier.

[00:28:46] Speaker 01:
It was just a means of optical detecting of a signal.

[00:28:49] Speaker 01:
The reason why they're focusing on that, but they don't have proof or even evidence that it's a trade secret, to the contrary,

[00:28:55] Speaker 01:
is that their technical expert witness only testifies as to a one month to acquire a signal.

[00:29:02] Speaker 01:
And that's where their damages expert connects to it.

[00:29:07] Speaker 01:
So if you don't have signal acquisition in the case, which is out of this case, then you don't have any damages.

[00:29:13] Speaker 01:
And that leads into the damages discussion of earlier.

[00:29:17] Speaker 01:
So there is no signal acquisition trade secret.

[00:29:20] Speaker 01:
It wasn't enough to get to the jury.

[00:29:22] Speaker 03:
You said, okay, hold on.

[00:29:24] Speaker 03:
You said no damages.

[00:29:25] Speaker 03:
Now I remember there was a $6.5 million figure for the conversion algorithm trade secret.

[00:29:31] Speaker 03:
Are you saying that you mean no damages related to the signal acquisition trade secret?

[00:29:36] Speaker 03:
I just want to be precise regarding what your statements are.

[00:29:39] Speaker 01:
So signal acquisition never went to the jury for a failure of proof.

[00:29:44] Speaker 01:
Understood.

[00:29:47] Speaker 01:
jury verdict of 6.5 million resulted from an error under rule thousand six of their expert after being excluded, being able to testify essentially as to his expertise on a head start.

[00:30:00] Speaker 03:
Do you agree that 6.5 million is related to the conversion algorithm trade secret?

[00:30:05] Speaker 01:
I disagree with that because the $6.5 million trade secret, and this was the subject of the rule 59 order was connected to

[00:30:14] Speaker 01:
Dr. Bergeron's opinion as to a one-month head start as to signal acquisition.

[00:30:20] Speaker 01:
So there wasn't any evidence to support any number for the conversion algorithm relative to a head start.

[00:30:28] Speaker 01:
Because there was no.

[00:30:29] Speaker 00:
But there was misappropriation of the conversion algorithm.

[00:30:33] Speaker 01:
No, there was not.

[00:30:34] Speaker 01:
And I disagree.

[00:30:35] Speaker 00:
Well, the court found there was a legally insufficient basis to support the jury's verdict.

[00:30:41] Speaker 01:
The district court made that finding in the context of a Rule 50 determination, where he has to look at the evidence in a way that's favorable to the jury verdict.

[00:30:51] Speaker 01:
But through the lens of Rule 59, he found that there was, to quote the district court, a motherlode of contrary evidence that does not support that jury verdict.

[00:31:02] Speaker 01:
He uses phrases like a wafer-thin factual record, that in Super Bowl.

[00:31:10] Speaker 02:
Yes.

[00:31:11] Speaker 02:
decision he made where he overturned the original liability verdict on the conversion algorithm.

[00:31:19] Speaker 02:
He seems to have misapprehended the legal standard for misappropriation under Rhode Island law, which includes acquisition and not just commercially viable use.

[00:31:30] Speaker 01:
I disagree.

[00:31:31] Speaker 02:
Well, I'm sure you do, but I'd love to hear why.

[00:31:34] Speaker 01:
Yeah, of course, Your Honor.

[00:31:37] Speaker 01:
So this court, just six weeks ago in the synopsis case,

[00:31:42] Speaker 01:
said that if there's not a trade secret definition that's been met, that dooms a misappropriation claim.

[00:31:50] Speaker 01:
And the way Alifax briefed this appeal is they go right to misappropriation.

[00:31:55] Speaker 01:
And we can go through those issues separately.

[00:31:58] Speaker 01:
But it doesn't meet the definition of a trade secret.

[00:32:00] Speaker 01:
And that's what the district court exhaustively, to use his words again, unpacked, the detailed unpacking, to show that there was no economic value.

[00:32:09] Speaker 01:
So the definition of trade secret

[00:32:11] Speaker 01:
requires under Rhode Island and the Uniform Trade Secret Act.

[00:32:14] Speaker 02:
I don't understand him when he overturned the original liability decision to be doing it on the basis of a failure to establish a trade secret.

[00:32:24] Speaker 02:
I understood him to be doing it on the basis of failure to show use of a trade secret.

[00:32:29] Speaker 02:
Am I missing something in that original opinion?

[00:32:32] Speaker 01:
You're not missing something, Your Honor, but the word use in the 59 section of that brief goes to economic value.

[00:32:41] Speaker 01:
Alcor got no use out of the alleged conversion algorithm because it provided it with no economic value.

[00:32:50] Speaker 02:
But that could simply be, look, you could steal a trade secret for Coke, but not have a manufacturing facility capable of producing it.

[00:32:56] Speaker 02:
So you stole it, you acquired it, but you weren't able to make it a commercially viable venture for you because you don't have the manufacturing facility with all the parts that you need to be able to make it.

[00:33:08] Speaker 02:
It's still misappropriation because you acquired through illicit means someone else's trade secret.

[00:33:14] Speaker 01:
No, it's not, Your Honor, respectfully.

[00:33:16] Speaker 02:
You have to... See, it is under Rhode Island law, quite clearly.

[00:33:19] Speaker 01:
Your Honor, you're going to step number two before addressing step number one.

[00:33:25] Speaker 01:
And step number one, under the 641-1 of the Rhode Island Trade Secret Act, at subsection four, defines trade secret as meaning that drives independent economic value from not being generally known or readily ascertainable by proper means by other persons who can obtain economic value from such disclosure or use.

[00:33:50] Speaker 02:
I'm sorry, but just because your company couldn't figure out how to

[00:33:53] Speaker 02:
use it in a manner that could give you economic value.

[00:33:58] Speaker 02:
It doesn't mean everyone else couldn't.

[00:33:59] Speaker 02:
In fact, Alifax did.

[00:34:02] Speaker 01:
No, because that ignores the overwhelming, unrefuted testimony of the technical expert Dan Smith.

[00:34:11] Speaker 01:
And that is that there is no economic value of Alifax's punitive conversion algorithm trade secret, because it would not work in a I said machine.

[00:34:23] Speaker 01:
Al Kors aggregometer, because it's device specific.

[00:34:28] Speaker 01:
And he did an empirical test showing that.

[00:34:31] Speaker 02:
But the most fundamental thing here is that- Didn't this district court judge conclude that there was evidence that this is in fact a trade secret?

[00:34:40] Speaker 01:
The district court concluded that- Repeatedly.

[00:34:45] Speaker 01:
Your Honor, the district court concluded- Yes or no.

[00:34:48] Speaker 01:
I'm sorry?

[00:34:49] Speaker 02:
Yes or no.

[00:34:50] Speaker 02:
Did the district court make repeated holdings in this case

[00:34:53] Speaker 02:
that the conversion algorithm trade seeker is a trade seeker under Rhode Island law?

[00:35:00] Speaker 01:
He said that there was sufficient evidence applying the Rule 50 standard for the jury to come to that conclusion.

[00:35:09] Speaker 01:
But applying the Rule 59 standard, he said that there was insufficient evidence for a reasonable jury to reject undisputed technical expert testimony

[00:35:22] Speaker 02:
and the other factors that fact that we laid out that the conversion algorithm had any economic value use to but i don't think that were true if that were true if there was no reasonable person to conclude that any economic value and how come he left the liability decision the second time around because he because it's at the fifty nine stage what is this different standard that you're talking about there's no difference

[00:35:51] Speaker 01:
Let me back up.

[00:35:53] Speaker 01:
At a retrial, he could have granted a Rule 50 in our favor on the trade secret issue on the conversion algorithm.

[00:36:02] Speaker 01:
And he said it barely crossed that threshold.

[00:36:05] Speaker 01:
Those were his words.

[00:36:07] Speaker 01:
It barely crossed the threshold of 59.

[00:36:10] Speaker 01:
But viewed through the prism of Rule 59, the conversion algorithm doesn't have any economic value.

[00:36:17] Speaker 02:
He never said that.

[00:36:19] Speaker 02:
He did not say that.

[00:36:20] Speaker 02:
He wanted to stick back findings into the decision that simply weren't there.

[00:36:24] Speaker 02:
And your entire argument is because it didn't have value to Alcor, therefore it has no economic value to anyone.

[00:36:31] Speaker 02:
And that seems to be proven completely false by Alifax's own success with it.

[00:36:35] Speaker 01:
No, that's not my argument, Your Honor.

[00:36:37] Speaker 01:
My argument is that it doesn't meet the definition of trade secret under rule of law because it doesn't have any economic value to Alcor.

[00:36:44] Speaker 02:
And that was... And yet the judge concluded to the contrary twice.

[00:36:47] Speaker 01:
in the context of Rule 50, that there was sufficient evidence for the jury.

[00:36:50] Speaker 01:
And if I may, can I just explain what the factual gap is here?

[00:36:56] Speaker 01:
Is that that correlation algorithm is not generated by source code.

[00:37:01] Speaker 01:
It's generated by Excel.

[00:37:04] Speaker 01:
And the aggregation index through the Alcord device, which is unique to any other device,

[00:37:11] Speaker 01:
is one data set.

[00:37:13] Speaker 01:
The second data set is the Westergren values.

[00:37:17] Speaker 01:
That information outside of the source code environment is plugged into Excel, and using its regression analysis function, generates that correlation or conversion algorithm.

[00:37:28] Speaker 01:
It's not the source code.

[00:37:30] Speaker 01:
And their conversion algorithm wouldn't work in the Alcor device, which is something that was proven at trial.

[00:37:35] Speaker 02:
He's not supposed to show me anywhere in his new trial decision on liability

[00:37:39] Speaker 02:
where he talked about independent economic value.

[00:37:42] Speaker 02:
Anything along those lines, anything you can point to that suggests that this is what he was thinking?

[00:37:48] Speaker 01:
I can, Your Honor.

[00:37:49] Speaker 02:
Because it's all about use.

[00:37:51] Speaker 01:
I can, Your Honor.

[00:37:52] Speaker 02:
I would love to see it.

[00:37:53] Speaker 02:
What page?

[00:37:53] Speaker 01:
Appendix 55, the jury's apparent decision to reject the technical expert's decision.

[00:38:01] Speaker 02:
Let me get to wherever you are.

[00:38:03] Speaker 02:
And what document is Appendix 55, just so we're all on the same page?

[00:38:06] Speaker 01:
That's the post-trial decision on 50 and 50.

[00:38:09] Speaker 02:
The post-trial decision in which he first rejects liability, this one?

[00:38:14] Speaker 01:
Yes, Your Honor.

[00:38:15] Speaker 02:
This is the one where he rejects liability for the CA algorithm.

[00:38:19] Speaker 01:
This is where he grants the rule 59, Your Honor.

[00:38:22] Speaker 02:
I'm with you now.

[00:38:23] Speaker 02:
Where are we on page 55?

[00:38:24] Speaker 02:
What do you want us to look at on page 55?

[00:38:27] Speaker 01:
OK, yes.

[00:38:27] Speaker 01:
On 59, where he says the jury's apparent decision.

[00:38:29] Speaker 03:
Oh, 59, not 55?

[00:38:32] Speaker 01:
55 is one.

[00:38:35] Speaker 01:
The jury's apparent decision to reject Judge Smith's

[00:38:38] Speaker 01:
uh... dense misopinion absent any reasonable challenge by Alifax to the basis for his opinions or an alternative explanation for his findings raises insuperable doubts about the verdict sounds.

[00:38:51] Speaker 02:
I'm really sorry, but I'm just having trouble finding where you're reading from on page fifty-five.

[00:38:56] Speaker 02:
Oh, okay, I think I'm there now.

[00:38:57] Speaker 02:
Alifax argues correctly that the jury was free to reject Smith's testimony.

[00:39:01] Speaker 02:
Is that where you're reading from?

[00:39:03] Speaker 01:
No, Your Honor, I'm reading.

[00:39:06] Speaker 01:
I'm reading from the sense that begins with however.

[00:39:09] Speaker 02:
Okay.

[00:39:10] Speaker 02:
Got it.

[00:39:11] Speaker 02:
But this is all about Mr. Smith's testimony.

[00:39:13] Speaker 02:
What did Mr. Smith's testimony go to?

[00:39:16] Speaker 01:
Mr. Smith's testimony went exactly to that.

[00:39:18] Speaker 01:
There's no economic value to... To Alcor.

[00:39:23] Speaker 02:
It never said to anyone.

[00:39:25] Speaker 02:
It said to Alcor.

[00:39:27] Speaker 02:
Go back and look at Smith's testimony.

[00:39:29] Speaker 01:
Right.

[00:39:29] Speaker 01:
To Alcor.

[00:39:30] Speaker 02:
Yes.

[00:39:31] Speaker 02:
It's not a trade secret, only if it's valuable to you.

[00:39:34] Speaker 02:
It's a trade secret.

[00:39:35] Speaker 02:
It's valuable to anyone.

[00:39:36] Speaker 01:
That's not their proof, Your Honor.

[00:39:39] Speaker 01:
They don't have evidence to support that.

[00:39:40] Speaker 01:
They were arguing that there was- It was valuable to them.

[00:39:43] Speaker 02:
There's evidence to support it was valuable to them.

[00:39:45] Speaker 01:
But they have to show it's valuable to others.

[00:39:46] Speaker 01:
That's an element of their proof.

[00:39:47] Speaker 01:
And I can also point you to Penix 59 and 94, where the court said, as to the conversion algorithm verdict, quote, achieving that outcome requires rejecting powerful expert testimony and a motherload

[00:40:03] Speaker 02:
of contrary evidence on use acquisition okay listen i don't think you and i are going to agree and it doesn't seem like you're going to be able to convince me so let's move on to the other issues because i think they're important suppose i think it was a mistake for him to have ordered a neutron liability in the first instance uh... because i think that he failed to appreciate that the rodent law included acquisition not just use

[00:40:29] Speaker 02:
and that he definitely didn't make any of these findings about the trade secret that you're talking about.

[00:40:34] Speaker 02:
What happens then?

[00:40:35] Speaker 02:
Do I reinstate the $6.5 million jury verdict?

[00:40:39] Speaker 02:
I'm assuming you're going to say no.

[00:40:40] Speaker 02:
And so I'd love to hear that.

[00:40:43] Speaker 01:
No, because there wasn't sufficient proper testimony to support the $6.5 million number.

[00:40:50] Speaker 01:
That $6.5 million number resulted from a putative head start.

[00:40:57] Speaker 01:
that resulted in a one-year unjust enrichment to Alcor.

[00:41:00] Speaker 01:
That's their argument.

[00:41:01] Speaker 01:
But there wasn't testimony, disclosed testimony, to support that.

[00:41:07] Speaker 01:
Their damages expert, Bachart, relied on Bergeron.

[00:41:10] Speaker 01:
Bergeron testified that there was a one-month advantage on signal acquisition, which is the same trade secret that didn't even make it to the jury, and which, as I indicated earlier, was not even a trade secret as they conceded.

[00:41:23] Speaker 03:
Do you agree that expert testimony is not required to support up the damages?

[00:41:26] Speaker 01:
It's not required to support generally.

[00:41:29] Speaker 01:
But here, that's their only disclosed damages expert.

[00:41:32] Speaker 01:
In their interrogatory responses, it's only Dr. Mr. Parker.

[00:41:36] Speaker 03:
Was there a requirement to separately disclose and identify damages versus liability witnesses?

[00:41:43] Speaker 03:
Or could you just identify all the possible witnesses?

[00:41:46] Speaker 01:
Well, we gave, they didn't disclose it in their initial disclosures.

[00:41:51] Speaker 01:
They didn't disclose it in response to a damages interrogatory.

[00:41:55] Speaker 01:
They didn't supplement.

[00:41:57] Speaker 01:
the damages interrogatory.

[00:41:59] Speaker 01:
And when Mr. Bockhart was excluded from testimony from trial, the district court gave Alifax the opportunity to examine the president of Alcor, Ms.

[00:42:12] Speaker 01:
Rajiri.

[00:42:12] Speaker 01:
And they declined to do it.

[00:42:13] Speaker 03:
This is my specific question, though.

[00:42:14] Speaker 03:
When you prepare and identify and give witness lists to the court, oftentimes you can just identify all your possible witnesses.

[00:42:21] Speaker 03:
Was there a requirement for this court that you had to identify these are the possible damages witnesses,

[00:42:26] Speaker 03:
These are the possible liability witnesses.

[00:42:29] Speaker 01:
No, that wasn't part of the pretrial order.

[00:42:32] Speaker 01:
But the disclosure is the disclosure.

[00:42:34] Speaker 01:
And that's the 403 analysis that the district court entertained.

[00:42:40] Speaker 01:
Because without an adequate disclosure, that unfairly prejudiced Alcor.

[00:42:46] Speaker 01:
Because the only disclosure was Bockhart.

[00:42:50] Speaker 01:
And Bockhart's testimony did not align with the evidence in the case or the opinions disclosed.

[00:42:56] Speaker 01:
by Dr. Bergeron.

[00:42:58] Speaker 01:
And under First Circuit law, the appellate court's role is not to conduct a fresh rule 403 balancing.

[00:43:07] Speaker 03:
Do you agree that there were other witnesses, other fat witnesses, separate and apart from Mr. Bockhart, who could put on some of the damages testimony?

[00:43:16] Speaker 01:
No.

[00:43:18] Speaker 03:
Why?

[00:43:19] Speaker 01:
Because they haven't identified anyone.

[00:43:23] Speaker 01:
There's no one that they've identified who can connect a head start.

[00:43:26] Speaker 01:
to an unjust enrichment, other than the, quote unquote, minimal disclosure by Mr. Bockhart.

[00:43:34] Speaker 03:
I thought when I was listening to your opposing counsel, I thought he identified a couple of fat witnesses that he thought would be useful.

[00:43:41] Speaker 03:
And maybe I need to be more precise.

[00:43:44] Speaker 03:
He identified potential fat witnesses that could help on damages on the conversion algorithm trade secret.

[00:43:51] Speaker 03:
He had separately said that for purposes of the signal acquisition trade secret, if we thought that was in the case, he would need Mr. Bockhart.

[00:43:59] Speaker 01:
The signal acquisition trade secret is not part of the damages analysis.

[00:44:04] Speaker 03:
Agreed.

[00:44:06] Speaker 01:
And so your question on that?

[00:44:08] Speaker 03:
Let me restate.

[00:44:09] Speaker 03:
Do you agree with my statement that your opposing counsel identified some witnesses who could assist with damages with respect to the conversion algorithm trade secret who are not Mr. Bockhart?

[00:44:20] Speaker 01:
No, I do not agree.

[00:44:23] Speaker 01:
That's not in the record.

[00:44:24] Speaker 01:
In their brief, they talk about Ms.

[00:44:26] Speaker 01:
Rizzotto, who is one of their witnesses, for marketing.

[00:44:30] Speaker 01:
Carla Ruggeri, who is the individual I referenced earlier, who is the president of Alcor.

[00:44:36] Speaker 01:
She was the only one who can get Alcor CEO, AEO information.

[00:44:42] Speaker 01:
The district judge availed them, with Bockhart being excluded from opining on damages,

[00:44:50] Speaker 01:
to call Ms.

[00:44:50] Speaker 01:
Ruggeri to the stand.

[00:44:52] Speaker 01:
And they declined to do it.

[00:44:54] Speaker 03:
So are you continuing that they would somehow be precluded from utilizing those individuals in a second trial?

[00:45:01] Speaker 01:
Yes, that's right.

[00:45:03] Speaker 01:
Because the district judge in weighing the evidence and made a determination that the scope of the retrial is going to be limited to the evidence and the witnesses that were presented in the first trial.

[00:45:17] Speaker 01:
And that limitation,

[00:45:19] Speaker 01:
is afforded a very great deference on appeal, the scope of the retrial.

[00:45:27] Speaker 01:
And that's the Fusco case in the First Circuit.

[00:45:30] Speaker 01:
So no, they don't have any other witnesses.

[00:45:33] Speaker 01:
And that's why it's limited to $1.

[00:45:34] Speaker 02:
So here's the problem.

[00:45:36] Speaker 02:
They didn't call Rogary in the first trial because the district court had already agreed to let Bocart testify.

[00:45:43] Speaker 02:
So now in hindsight, if Bocart can't testify, why can't they call Rogary?

[00:45:48] Speaker 01:
Because Ruggeri can't testify as to a head start.

[00:45:54] Speaker 01:
There's no one there to testify to a head start because that testimony is out on retrial.

[00:46:00] Speaker 01:
And there's no one to connect that to an alleged unjust enrichment.

[00:46:04] Speaker 02:
Of course, CEO could get the spreadsheet about core sales into evidence, which was part of the record.

[00:46:10] Speaker 02:
I don't see what prejudice Alcor could suffer from its CEO discussing a document Alcor itself prepared.

[00:46:16] Speaker 01:
But there's no evidence on retrial, Your Honor, relative to the head start.

[00:46:19] Speaker 02:
And the district court expressly said at pages 85 and 86, they could prove a head start.

[00:46:25] Speaker 02:
Do you have further questions?

[00:46:28] Speaker 02:
I guess you're OK.

[00:46:30] Speaker 02:
I think I'll leave it there for the time being.

[00:46:33] Speaker 02:
Any further questions?

[00:46:33] Speaker 02:
OK.

[00:46:34] Speaker 02:
Thank you, Mr. Scott.

[00:46:36] Speaker 02:
Mr. Tucker, we're going to restore two minutes of rebuttal.

[00:46:40] Speaker 00:
OK.

[00:46:40] Speaker 00:
Thank you.

[00:46:41] Speaker 02:
Oh, and we didn't address the cross-appeal, so you're not going to get any rebuttal time on your cross-appeal because that didn't get addressed.

[00:46:47] Speaker 01:
Well, may I have a few minutes to address it, Your Honor?

[00:46:50] Speaker 02:
Okay.

[00:46:51] Speaker 02:
Go ahead.

[00:46:53] Speaker 01:
I'll make it very brief.

[00:46:53] Speaker 01:
Thank you for the accommodation.

[00:46:55] Speaker 01:
On the copyright cause of action, there was an abject failure of proof on that.

[00:47:02] Speaker 01:
So there was three copyright registrations that were filed by plaintiffs' counsel in the middle of trial after reviewing ALCOR's source code.

[00:47:11] Speaker 01:
And as a result of that, they amended their complaint over our objection to assert a copyright claim.

[00:47:17] Speaker 01:
But they never put forward the basis for that copyright claim.

[00:47:23] Speaker 01:
Going into trial, they survived summary judgment on it by saying that they will put on the evidence, but they never put it on the basis for the copyright cause of action.

[00:47:31] Speaker 00:
Well, a failure of proof doesn't justify fees.

[00:47:35] Speaker 01:
A failure of proof doesn't justify fees per se, but if

[00:47:38] Speaker 01:
The cases like MAG Jewelry and the other cases that have been cited by the parties, they all involve the situation where the copyright holder presented the actual deposit copy or the basis for the copyright registration.

[00:47:56] Speaker 01:
What's behind it?

[00:47:57] Speaker 01:
Here, they never presented that.

[00:47:59] Speaker 01:
That's what makes it objectively weak in the First Circuit.

[00:48:04] Speaker 01:
And then on the patent side, I won't spend too much time on that, but they were never able to prove that patent case.

[00:48:10] Speaker 01:
And as you've read in the post-trial decisions and kind of the arc of the judge's commentary about plaintiffs' proof, part of that is that a third of this trial was spent on patents that they can never prove.

[00:48:24] Speaker 01:
Because following pre-suit, the ICED didn't meet the limitations of the assertive claims.

[00:48:33] Speaker 01:
post-march minute and going into trial, their expert conceded that the ICED does not register a value for viscosity, elasticity, or density.

[00:48:45] Speaker 01:
So they're never able to prove their patent case either.

[00:48:47] Speaker 01:
And that was a third of the case.

[00:48:50] Speaker 00:
You're representing a side where there certainly appeared to be misappropriation, but holes in the case, and you're asking for fees.

[00:49:01] Speaker 01:
The patent case is distinct.

[00:49:03] Speaker 01:
It's compartmentalized.

[00:49:05] Speaker 01:
The copyright case is distinct.

[00:49:08] Speaker 01:
And when you look at the whole, they had 12 or more trade secrets that muted, were modified, changed.

[00:49:16] Speaker 01:
Even here on appeal, they're reverting back to an alleged signal acquisition trade secret that was now or before trial.

[00:49:22] Speaker 01:
So on everything, except for that one conversion algorithm, the defendants prevailed on.

[00:49:27] Speaker 01:
a clear prevailing party on copyright and clear prevailing party on patents.

[00:49:32] Speaker 02:
Yeah, but we review it for an abuse of discretion.

[00:49:34] Speaker 02:
And the district court said it was not objectively weak.

[00:49:38] Speaker 02:
We don't really go behind that.

[00:49:40] Speaker 02:
I mean, he said it was not objectively weak.

[00:49:43] Speaker 02:
So I don't know what you want.

[00:49:46] Speaker 02:
And Judge Rory's position is really well taken.

[00:49:49] Speaker 02:
I mean, when you have a client that lied and stole and snuck around,

[00:49:54] Speaker 02:
It's kind of hard to come in and say, oh, we're the ones with the white hat on, and we should get attorney's fees.

[00:49:58] Speaker 02:
That's a tough road to hoe.

[00:50:00] Speaker 02:
And this district court judge, we review him for abusive discretion.

[00:50:05] Speaker 01:
Thank you for your time.

[00:50:07] Speaker 01:
I just disagree with the lie and the stole, because the district court found that it had no value to Alcor.

[00:50:15] Speaker 01:
And source code, per se, taking source code is not, per se, a theft, and it's not stealing.

[00:50:23] Speaker 01:
Thank you.

[00:50:24] Speaker 01:
Thank you, Your Honor.

[00:50:25] Speaker 02:
I'm going to give you four minutes, because we gave him two extra minutes to address the cross-appeal.

[00:50:29] Speaker 02:
Now mind you, if you don't address the cross-appeal, he doesn't get to stand back up.

[00:50:33] Speaker 04:
OK.

[00:50:36] Speaker 04:
I would first want to say on this no economic value to Alcor, they paid Mr. Frappa 3% of sales for coming up with an ESR device.

[00:50:47] Speaker 04:
I think that's a hard-pressed argument to say no economic value.

[00:50:53] Speaker 04:
What's the key thing here, Your Honors, to me at the end of the day is the only thing needed to prove damages was Appendix 15960.

[00:51:04] Speaker 04:
That is the list of Alcor's revenue under unjust enrichment, under the restatement.

[00:51:10] Speaker 04:
It's a burden shifting test.

[00:51:14] Speaker 04:
We put on what the sales were.

[00:51:16] Speaker 04:
It's then their burden to try to whittle down the sales.

[00:51:21] Speaker 04:
That exhibit, as the court noted on page 85 and 86 of the new trial order, also when you go to, I believe it's 15714,

[00:51:40] Speaker 04:
but there's the back-and-forth between the attorneys and the court.

[00:51:43] Speaker 04:
I might be wrong on 1754.

[00:51:44] Speaker 04:
I've got so many appendix numbers floating around here at this point.

[00:51:47] Speaker 04:
But there, 85, 86 talks about it.

[00:51:50] Speaker 04:
There was the back-and-forth that there were other witnesses who could bring in the document, and then an alifax witness who could talk about the market and how the convoy sales.

[00:52:01] Speaker 04:
So everything is in the record to show damages.

[00:52:05] Speaker 04:
Under 1006 versus the interplay with

[00:52:09] Speaker 04:
Federal Rule of Evidence 611A and 703.

[00:52:13] Speaker 04:
And we talk about this in, and I don't know how to say the name.

[00:52:16] Speaker 04:
I believe it's US v. Milchowitz and then US versus D. Simone.

[00:52:22] Speaker 04:
The First Circuit goes into, you might have used the wrong evidentiary rule for the evidence to come in.

[00:52:29] Speaker 04:
But if there was a right rule for it to come in under, as in this case, even if that included Mr. Bocart's testimony, you're fine.

[00:52:38] Speaker 04:
And that is a pretty critical thing that keeps getting left out.

[00:52:46] Speaker 04:
The other thing I would like to say is on the signal acquisition, when you look at in the appendix 15781, that's showing you blood mixing times, also on 15718.

[00:52:58] Speaker 04:
pump flow rates, 15719 the pump timing, 15719 how to reduce noise.

[00:53:08] Speaker 04:
That is all material that was not public.

[00:53:15] Speaker 04:
Duetsch talked about that that had to have come from an Alifax device.

[00:53:21] Speaker 04:
So to summarize, however, at the end of the day, when we look at what happened with the unjust enrichment damages, there's no prejudice to Alcor because everything that was needed to prove those damages were in the record and, again,

[00:53:45] Speaker 04:
under the interplay of 1006, 611A, and 703, maybe, I don't think the wrong rule was used, but maybe the wrong rule was, 611A and 703 allow for what happened and everything was.

[00:54:04] Speaker 04:
Yes, Your Honor.

[00:54:05] Speaker 03:
Counsel, the one question I have is I remember I was asking you all to connect up the dots for me in terms of the

[00:54:12] Speaker 03:
Alcor document that you point to relating to the signal acquisition trade secret.

[00:54:16] Speaker 03:
And then you said there was some testimony where there was a witness saying that document was created based off of Alifax knowledge.

[00:54:23] Speaker 03:
I just want to make sure I have that citation before you have a seat.

[00:54:26] Speaker 04:
I believe that's 14010 about that.

[00:54:33] Speaker 03:
Thank you.

[00:54:34] Speaker 04:
And with that, Your Honors, again, we think that when

[00:54:39] Speaker 04:
A court is granting a new trial based on weighing of the evidence, as in the U.S.

[00:54:49] Speaker 02:
Forbear case.

[00:54:50] Speaker 02:
OK, Mr. Tucker, you're driving my patience.

[00:54:52] Speaker 02:
You are now beyond the much extra time we gave you, and you're just sort of rambling at this point.

[00:54:58] Speaker 02:
So we're going to call it.

[00:54:59] Speaker 02:
Thank you.

[00:55:00] Speaker 02:
That's it.

[00:55:00] Speaker 02:
I thank both counsel for their argument.

[00:55:02] Speaker 02:
It was a complicated case.

[00:55:03] Speaker 02:
You both added value to our understanding of it.

[00:55:05] Speaker 02:
So thank you for that.

[00:55:07] Speaker 02:
The case is taken under submission.