Alifax Holding Spa v. Alcor Scientific Inc.
1:14-cv-00440
D.R.I.Sep 5, 2019Background
- Plaintiff Alifax (an Italian medical-instrument company) alleges that defendant Alcor and former Alifax employee Francesco Frappa misappropriated trade secrets used to produce a rapid ESR analyzer (the iSED). Trial ran three weeks in April–May 2019.
- Jury found Defendants willfully misappropriated two trade secrets: (1) using a clear, plastic capillary photometer sensor (CPS) (through Feb. 6, 2014) and (2) portions of source code for a conversion algorithm (including four numeric constants); Frappa alone misappropriated a third (anemia factor).
- The jury awarded $6.5 million in unjust-enrichment damages (attributable to the source-code trade secret) and $1 nominal for the CPS claim.
- Defendants moved under Rule 50(b) (JMOL) and Rule 59 (new trial/remittitur). The court vacated the CPS-related verdict (insufficient proof the asserted CPS was a protectable, clear/plastic design and disclosure failures), granted judgment for Defendants on that theory, and would have ordered a new trial on that claim.
- The court denied JMOL on liability for misappropriation of Alifax’s conversion algorithm (finding legally sufficient evidence), but concluded the verdict as to that algorithm was against the clear weight of the evidence and that damages testimony (Bokhart) improperly exceeded Rule 1006; the court ordered a new trial on liability and damages for the algorithm claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Protectability of CPS trade secret (clear, plastic CPS) | Alifax: CPS (described pretrial as a clear acrylic transparent block) was a secret, protectable element of its ESR design. | Alcor: Alifax failed to identify the secret with requisite particularity and presented evidence of a black/dark CPS and insufficient secrecy/ascertainability proof. | Court: Vacated jury verdict on CPS; Alifax failed to prove the identified "clear plastic" CPS was protectable or kept secret. Judgment for Defendants on that theory; new trial would be ordered if judgment not entered. |
| Admission of Trial Exhibit 136 (black prototype reading cell) and discovery prejudice | Alifax: Exhibit was a trade-secret component introduced as tangible evidence; Defendants had access to Alifax machines and could investigate. | Alcor: Late disclosure violated Rule 26 and prejudiced their ability to test or rebut the exhibit. | Court: Exhibit should not have been admitted; nondisclosure was not harmless and unfairly prejudiced Defendants—justified new trial on CPS claim. |
| Liability for misappropriation of conversion algorithm (containing four constants) | Alifax: Algorithm was derived from >40,000 samples, concealed, conferred competitive advantage; evidence (code commits, correlation tests, timeline) supports improper use by Defendants. | Alcor: Evidence is circumstantial and contradicted by expert proof that Alifax’s algorithm is device-specific and could not produce meaningful iSED results; timeline and code gaps undermine misappropriation claim. | Court: Denied JMOL; evidence minimally sufficient to let jury decide. But court found verdict against clear weight of evidence and ordered new trial on liability under Rule 59. |
| Damages methodology / admissibility of summary witness (Rule 1006) | Alifax: Bokhart (summary witness) fairly summarized Alcor revenues; offered head-start (one-year profits) or CLIA-related benefit, supporting $6.5M award. | Alcor: Bokhart’s testimony improperly blended excluded expert opinion with summaries and relied on non-admitted materials; causation between alleged misappropriation and revenues is speculative. | Court: Bokhart exceeded Rule 1006 limits (impermissible expert-style interpretation); damages award vacated and new trial on damages ordered. |
Key Cases Cited
- Rinsky v. Cushman & Wakefield, Inc., 918 F.3d 8 (1st Cir. 2019) (standard for Rule 50 review)
- Zimmerman v. Direct Fed. Credit Union, 262 F.3d 70 (1st Cir. 2001) (Rule 50: view evidence in nonmovant’s favor)
- Katz v. City Metal Co., 87 F.3d 26 (1st Cir. 1996) (claims based on conjecture or a mere scintilla fail)
- IDX Sys. Corp. v. Epic Sys. Corp., 285 F.3d 581 (7th Cir. 2002) (must identify trade secrets with reasonable particularity)
- Imax Corp. v. Cinema Techs., Inc., 152 F.3d 1161 (9th Cir. 1998) (plaintiff must identify trade secrets and show their existence)
- APG, Inc. v. MCI Telecomm. Corp., 436 F.3d 294 (1st Cir. 2006) (information obtainable through normal business channels is not a trade secret)
- Pope v. Alberto-Culver Co., 694 N.E.2d 615 (Ill. App. Ct. 1998) (combination trade secret fails when combination is easily and cheaply discoverable)
- Trainor v. HEI Hosp., LLC, 699 F.3d 19 (1st Cir. 2012) (remittitur and maximum-recovery rule)