53 F. Supp. 3d 929
E.D. Tex.2014Background
- Jury found Globus Medical misappropriated Sabatino Bianco, M.D.'s trade secrets in designing an adjustable intervertebral spacer.
- Damages awarded: $4,295,760 in reasonable royalties (5% of Globus' net sales on Caliber, Caliber-L, and Rise) and no disgorgement.
- Court granted ongoing royalty in lieu of injunction: 5% on future sales of Caliber, Caliber-L, and Rise for up to 15 years from July 1, 2007.
- Court instructed 30-day negotiation period; parties reached impasse; evidentiary hearing held on post-trial ongoing royalties.
- Bianco’s arguments: Paice framework applies; seeks 6% ongoing royalty; relies on change in bargaining position post-liability determination.
- Globus arguments: trade secret case; Paice analogies not controlling; argues no post-verdict damages or head-start theory.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is an ongoing royalty appropriate in this trade secret case? | Bianco seeks ongoing royalty; fixed as 5% start, adjusting is warranted by Paice-based analysis. | Paice framework not applicable to trade secrets; no post-verdict damages beyond past award. | Ongoing royalty granted at 5% for 15 years; Paice framework applied as starting point. |
| What should be the starting point and method for calculating the ongoing royalty? | Begin with jury’s 5% past-damages rate and adjust for post-verdict bargaining changes. | Should not increase beyond pre-verdict rate; consider head-start theory. | Use 5% jury rate as starting point; no enhancement based on head-start; maintain consistency with past damages. |
| Should a head-start theory limit post-verdict damages in this case? | Evidence contradicts head-start limitation; court should consider ongoing royalties. | Head-start theory should cap future damages after trial. | Reject head-start limitation; ongoing royalty tied to jury rate and 15-year term. |
| What is the duration and scope of the ongoing royalty? | 15-year term; applies to non-colorably different products as well; quarterly accounting. | Term and scope should be limited; avoid broad application beyond disputed products. | 15-year period; extends to products not colorably different from Caliber/Caliber-L/Rise; quarterly accounting authorized. |
Key Cases Cited
- Paice LLC v. Toyota Motor Corp., 504 F.3d 1293 (Fed.Cir. 2007) (establishes ongoing royalty framework and starting point in patent contexts)
- Telcordia Techs., Inc. v. Cisco Sys., Inc., 612 F.3d 1365 (Fed.Cir. 2010) (supplies guidance on Paice-based analysis for ongoing royalties)
- Amado v. Microsoft Corp., 517 F.3d 1353 (Fed.Cir. 2008) (distinguishes pre- and post-verdict royalty considerations; willful infringement not sole focus)
- ActiveVideo Networks, Inc. v. Verizon Communications, Inc., 694 F.3d 1312 (Fed.Cir. 2012) (applies Amado principles to ongoing damages, discusses bargaining-position changes)
- Univ. Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518 (5th Cir. 1974) (proper measure of damages in trade secrets analogized to patent royalties)
- Sikes v. McGraw-Edison Co., 665 F.2d 731 (5th Cir. 1962) (recognizes 15-year royalty periods in ongoing license contexts)
- Beacon Theatres, Inc. v. Westover, 359 U.S. 500 (Supreme Court, 1959) (binding starting-point approach for equitable determinations in judgments)
- Dairy Queen, Inc. v. Wood, 369 U.S. 469 (Supreme Court, 1962) (supports equitable relief considerations in damages framework)
- Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970) (Georgia-Pacific factors used to assess reasonable royalty)