HARBOR BUSINESS COMPLIANCE CORPORATION v. FIRSTBASE.IO, INC.
No. 25-1278
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
August 18, 2025
PRECEDENTIAL
Before: HARDIMAN, BIBAS, and FISHER, Circuit Judges.
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 25-1278
HARBOR BUSINESS COMPLIANCE CORPORATION
v.
FIRSTBASE.IO, INC., Appellant
On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 5:23-cv-00802)
District Judge: Honorable Joseph F. Leeson, Junior
Argued June 3, 2025
Before: HARDIMAN, BIBAS, and FISHER, Circuit Judges.
(Filed: August 18, 2025)
Quinn Emanuel Urquhart & Sullivan
295 5th Avenue
9th Floor
New York, NY 10016
Matthew T. Gardella
James J. Rodgers
David A. Rodkey
Dilworth Paxson
1650 Market Street
Suite 1200
Philadelphia, PA 19102
Joseph H. Margolies
Quinn Emanuel Urquhart & Sullivan
191 N Wacker Drive
Suite 2700
Chicago, IL 60606
Derek Shaffer [Argued]
Quinn Emanuel Urquhart & Sullivan
1300 I Street NW
Suite 900
Washington, DC 20005
Counsel for Appellant
Matthew P. Faranda-Diedrich [Argued]
David Scott Hollander
Royer Cooper Cohen Braunfeld
1717 Arch Street
Three Logan Square, 47th Floor
Philadelphia, PA 19103
Counsel for Appellee
OPINION OF THE COURT
FISHER, Circuit Judge.
Firstbase.io, Inc. and Harbor Business Compliance Corporation formed a temporary partnership to develop a software product for Firstbase. After the partnership fell apart and Firstbase independently took over the product, Harbor sued Firstbase for breach of contract, trade secret misappropriation, and unfair competition. A jury found for Harbor, awarding compensatory damages of approximately $1 million for breach of contract; $11 million for trade secret misappropriation; $15 million for unfair competition; and punitive damages of $1 million. Firstbase appeals the District Court‘s denial of several post-trial motions: for judgment as a matter of law; for a new trial on the grounds that the verdict was against the weight of the evidence and that expert testimony was improperly admitted; and for remittitur of the unfair competition damages. For the reasons below, we will affirm the denial of Firstbase‘s motions for judgment as a matter of law and a new trial but conditionally remand as to the
I.
A.
Every state imposes regulations and reporting requirements on companies operating within it. For example, companies are required to file incorporation documents and designate a registered agent who is authorized to receive legal correspondence on their behalf. Some companies outsource their regulatory compliance tasks to a business compliance company. These compliance companies can file the appropriate documentation with the state authorities and track changes in compliance requirements on behalf of their clients.
Firstbase and Harbor are business compliance companies. Firstbase, founded in 2019 and based in New York, promotes itself as an “all-in-one” online platform that provides a range of services including incorporation and registered agent services. App. 95. Harbor, founded in 2012 and based in Pennsylvania, is a “software-focused provider” of services that “include corporate formation, registered agent service, business licensing, and annual reporting.” Id. at 94-95.
Around February 2022, Firstbase contacted Harbor “seeking a business arrangement through which Harbor . . . would provide various ‘white-label’ services,” where Harbor‘s “identity and role would not be identified to Firstbase‘s customers and potential customers.” Id. at 95. This was a significant opportunity for both companies. Firstbase had already provided incorporation services to over a thousand companies in Wyoming and Delaware. It wanted to leverage Harbor‘s expertise and platform to quickly expand into registered agent services across the country. Firstbase could then refer many of those customers to Harbor. The relationship would support a new product, “Firstbase Agent,” which was
Firstbase initially discussed its ideal workflow with Harbor. Firstbase wanted customers to first request incorporation or registered agent services on its website by filling out an intake form. Firstbase would then send that information to Harbor. Harbor would then file the information with the state and transmit approvals and relevant alerts (like registration deadlines) back to Firstbase for customers to access. Firstbase drafted this process in a narrative form. To facilitate the exchange of data between the companies’ online platforms, Firstbase also wanted to use Harbor‘s application programming interface (API). An API defines how software components communicate and interact with each other. Conceptually, it provides a set of commands that one component can use to access the functionality of another, along with the specific format those commands must follow. Parth Sagdeo, Application Programming Interfaces and the Standardization-Value Appropriation Problem, 32 Harv. J.L. & Tech. 235, 236 (2018).
Harbor sent Firstbase a document outlining its API for registered agent services. Firstbase found Harbor‘s API to be inadequate for what it needed, and its engineers believed that they would need to invest resources in customization. On March 28, after the document transfer, the companies entered into a confidentiality agreement limiting the use of confidential information to the partnership. On March 30, the companies’ teams discussed the proposed workflow and Harbor‘s partnership lead summarized the conversation in a sketch he called a “process map,” App. 1254, which depicted a high-level flow of information between the companies. In the following months, the teams continued to iterate on Firstbase‘s
In May, the parties executed a partnership agreement. Pursuant to the agreement, for two years, Harbor would file business-formation documents and provide registered agent services to Firstbase customers at per-unit rates, in exchange for either a guaranteed customer volume or equivalent payment. Harbor also reserved the right to charge for implementation of services “not included in the Scope of the Project.” Id. at 1359. Firstbase agreed not to contract with third parties for “Registered Agent, Business Formation and Change of Registered Agent Filings, and Annual Reports.” Id. at 1352. On June 2, Firstbase Agent launched and quickly gained traction. Within three weeks, Harbor had processed 558 filings—its fastest pace ever. Harbor‘s growth continued into the summer, with record numbers in August and performance exceeding projections into October.
Despite its early success, the partnership began to fray. Although the terms of the partnership had been reduced to writing, Firstbase‘s partnership lead believed there was “confusion about who would do what with regards to the process that [the parties] agreed [to].” Id. at 190. By August, the API still “was not fully functional,” according to Firstbase, and so Firstbase continued to manually enter information into Harbor‘s site. Id. at 191. This led to customer complaints about service delays and quality issues.
In early September, Harbor sent Firstbase an invoice for $36,926.50 for “Out-of-Scope Work” completed in August. Id. at 1269. Firstbase‘s CEO wrote to the Harbor team contesting the invoice and conveying dissatisfaction with Harbor‘s performance. He said that Firstbase would “just build our own infrastructure” and “legally finish[] this relationship” if things did not turn around. Id. at 478. Firstbase began considering
In October, Firstbase and Harbor discussed amending the partnership agreement and rates. But those conversations also deteriorated. Internally, Harbor‘s CEO instructed employees not to offer any concessions.
In November, Harbor sent Firstbase updated API documentation with new features. But soon after, Firstbase took control of Firstbase Agent‘s infrastructure and started offering services without Harbor‘s support. In an internal message, a Firstbase employee said that the company‘s “product team built the logic and we no longer need [Harbor‘s] info to send reminders to our customers. We compared to the data [Harbor] was sending to us and it seems correct.” Id. at 257. On November 11, Firstbase notified Harbor that it intended to terminate the partnership and offered to settle any claims. Harbor responded through counsel and refused to terminate the agreement. It also accused Firstbase of “stealing the system that Harbor Compliance constructed.” App. 489.
B.
In March 2023, Harbor sued Firstbase in the District Court asserting state-law claims of unfair competition; breach of contract; and trade secret misappropriation under Pennsylvania‘s Uniform Trade Secrets Act,
The suit proceeded to discovery. Harbor hired Dr. Ricardo Valerdi, an academic in software development, to provide expert testimony. In his expert report and deposition, Dr. Valerdi identified eight trade secrets at issue: (1) the jurisdictional database and (2) the API documentation, both identified in the complaint, plus specific workflow documents, (3) the process map sketch Harbor prepared to summarize a meeting with Firstbase, and (4)-(7) four specific process workflows. Dr. Valerdi also pointed to (8) Harbor‘s “Entity Manager Dashboard,” Supp. App. 798, a trade secret not specifically identified in the complaint.
Additionally, Dr. Valerdi opined that Firstbase had used, or was using, all eight trade secrets without authorization. He described Firstbase as “a new entrant into the market” that “lacked the specialized knowledge possessed by Harbor.” Id. at 778. Yet during his deposition, Dr. Valerdi confirmed on cross-examination that he was “taking it as an assumption that the [alleged trade secrets were], in fact, invented by Harbor.” App. 750.
A ten-day trial ensued in April 2024. Documents, presentation slides, and videos of the trade secrets were shown to the jury. Six of the trade secrets are at issue on appeal.
(1)-(3) Three of the four workflows guiding the Firstbase Agent product development are at issue. On appeal, the parties aggregate them into one category. These documents conceptually outline, in written-bulleted form, the transfer of
(4) The Entity Manager Dashboard is a website dashboard for Harbor‘s customers to view their registered entities, registration dates, and annual reports in one place. In the center of the dashboard is an interactive map of the United States.
(5) The jurisdictional database is a spreadsheet of corporate filing and registration instructions for all fifty states and territories. The information in some columns is publicly available on state agency websites. Id. at 1304 (“filing method” required by each state). There is a “notes” column in one tab with tips for filing. For example, there is a note to file online in one state because it cuts processing time by half.
(6) The API documentation is a word document, intended for application developers, with instructions for integrating with Harbor‘s API.
Dr. Valerdi provided expert testimony on why each of the alleged trade secrets was protectable and how Firstbase had misappropriated them. Firstbase presented computer engineer Steve Waldbusser as an expert to counter Dr. Valerdi‘s testimony.
When Firstbase learned that Dr. Valerdi would testify about who owned the trade secrets, it objected, arguing such testimony was “out of bounds” because Dr. Valerdi had assumed, based on the complaint, “that all of the trade secret information belonged to Harbor.” Id. at 201. The District Court overruled the objection, relying on Federal Rules of Evidence 703 and 705 and explaining that Firstbase could challenge the basis of Dr. Valerdi‘s opinion through cross-examination.
Harbor also called on expert Gregory Urbanchuk to estimate the damages. He testified that Harbor suffered
Before the verdict, Firstbase moved for judgment as a matter of law under
After deliberating, the jury found Firstbase liable to Harbor, awarding compensatory damages of $1,090,271 for Firstbase‘s breach of the partnership agreement; $11,068,044 for Firstbase‘s trade secret misappropriation; and $14,757,399 for Firstbase‘s unfair competition. It also awarded $1,000,000 in punitive damages for unfair competition. In special interrogatories, the jury found that six of the eight alleged trade secrets were misappropriated. It said that Firstbase had misappropriated neither the “process map” created by Harbor‘s partnership lead to summarize Firstbase‘s ideal workflow nor a workflow for changing registered agents in Delaware or Wyoming for entities that had incorporated with Firstbase.
Firstbase filed several post-trial motions. It moved for judgment as a matter of law under
In February 2025, the District Court denied these motions. Firstbase timely appealed.
II.1
We “exercise plenary review of an order granting or denying a motion for judgment as a matter of law and apply the same standard as the district court.” Kars 4 Kids Inc. v. Am. Can!, 8 F.4th 209, 218 n.8 (3d Cir. 2021) (quoting Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993)). “The standard of review on a motion for a new trial is abuse of discretion unless the court‘s denial of the motion is based on application of a legal precept, in which case our review is plenary.” Curley v. Klem, 499 F.3d 199, 206 (3d Cir. 2007) (citation modified). We also review a district court‘s denial of a motion for remittitur for abuse of discretion. Spence v. Bd. of Educ. of Christina Sch. Dist., 806 F.2d 1198, 1201 (3d Cir. 1986). Lastly, we review for abuse of discretion a district court‘s determination that a party forfeited an argument by failing to raise it earlier in the proceedings. Kars 4 Kids Inc., 8 F.4th at 219 n.9.
III.
A.
Firstbase asks us to reverse the District Court‘s denial of its renewed motion for judgment as a matter of law on the
To prevail on a trade secret misappropriation claim, a plaintiff must prove both (1) the existence of a protectable trade secret; and (2) the misappropriation of that trade secret. See Oakwood Lab‘ys LLC v. Thanoo, 999 F.3d 892, 905 (3d Cir. 2021). Under the DTSA, a plaintiff must also establish that the trade secret “is related to a product or service used in, or intended for use in, interstate or foreign commerce.” Id. (quoting
A protectable “trade secret” is information, in any form, that the owner “has taken reasonable measures to keep secret,” which “derives independent economic value . . . from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from [it].”
The Pennsylvania Supreme Court has not defined the elements of a common law unfair competition claim. See Granite State Ins. v. Aamco Transmissions, Inc., 57 F.3d 316, 319 (3d Cir. 1995). But the essential element is “passing off
Firstbase argues that Harbor failed to prove that any of the alleged trade secrets were protectable or misappropriated by Firstbase. And Firstbase argues that since the unfair competition claim was based solely on trade secret misappropriation, it must likewise fail. Harbor responds that we can reach the merits only of Firstbase‘s sufficiency-of-the-evidence argument for the misappropriation element because, in its Rule 50(a) motion, it “waived” the sufficiency-of-the-evidence arguments for the unfair competition claim and protectability. Appellee‘s Br. 10. It also says that there was sufficient evidence to support the jury‘s verdict on each claim.
Judgment as a matter of law should be granted “only if, viewing the evidence in the light most favorable to the nonmovant[,] there is insufficient evidence from which a jury reasonably could find liability.” Kars 4 Kids, 8 F.4th at 218 n.8 (quoting Lightning Lube, 4 F.3d at 1166). The reviewing court cannot “weigh the evidence, determine the credibility of witnesses, or substitute its version of the facts for the jury‘s version. The question is not whether there is literally no evidence supporting the [verdict] but whether there is evidence upon which the jury could properly” reach the verdict. Id. (citation modified).
We first conclude that, in its Rule 50(a) motion, Firstbase forfeited (not waived) its sufficiency-of-the-evidence argument for the protectability element. We then conclude that there was sufficient evidence of the misappropriation element. And by extension, there was sufficient evidence of unfair competition.
Harbor argues, as it did in response to Firstbase‘s post-trial motions, that Firstbase “waived” an insufficiency-of-evidence argument related to the protectability element and unfair competition claim because Firstbase‘s Rule 50(a) motion discussed only the misappropriation element. Appellee‘s Br. 10. In its denial of Firstbase‘s Rule 50(b) motion, the District Court agreed in part and held that Firstbase‘s claim of insufficient evidence of unfair competition was not preserved. It went on—without deciding whether protectability was preserved—to discuss the sufficiency of evidence for both protectability and misappropriation.
A renewed motion for judgment as a matter of law under Rule 50(b) “must be preceded by a Rule 50(a) motion [at trial] sufficiently specific to afford the party against whom the motion is directed with an opportunity to cure possible defects in proof which otherwise might make its case legally insufficient.” Lightning Lube, 4 F.3d at 1173. A motion is sufficiently specific if the nonmoving party is “on notice of the legal rubric” and “adequately apprised . . . of the reasons” behind the motion. Fineman v. Armstrong World Indus., Inc., 980 F.2d 171, 184 (3d Cir. 1992). “[W]e do not measure its sufficiency by the text alone, but against the background, as reflected in the record, of what the party now claiming [forfeiture] understood as to the tenor of the Rule 50 movant‘s position and theory.” Brokerage Concepts, Inc. v. U.S. Healthcare, Inc., 140 F.3d 494, 519 n.18 (3d Cir. 1998).
After reviewing the record, we agree that Firstbase‘s Rule 50(a) motion lacked the specificity required to preserve its sufficiency-of-the-evidence argument related to the protectability element and unfair competition. At the close of trial, Firstbase‘s counsel moved for judgment as a matter of law “as to all claims” based on “insufficient evidence.” App. 266.
Firstbase argues on appeal that “[e]veryone could grasp that Firstbase‘s Rule 50(a) motion challenged protectability,” because it challenged the “evidence of . . . trade-secret misappropriation” which “naturally encompasse[s]” the first element of existence of a protectable trade secret. Reply Br. 3 (citation modified). But the general tenor of the motion concerned direct and circumstantial evidence of the misappropriation element, not protectability or the unfair competition claim. In support of its motion, Firstbase‘s counsel pointed out that “our agreed-upon jury instruction[s] require[] . . . both access” to the trade secrets and “substantial similarity” between Harbor‘s trade secrets and Firstbase‘s products. App. 267; see also Supp. App. 212-13 (jury instruction for “methods of proving ‘misappropriation‘“). Firstbase then argued that Harbor “failed to show substantial similarity as a matter of law.” Supp. App. 152. Thus, it was clear that Firstbase was developing an argument only to misappropriation. Equally telling is Harbor‘s response to the motion: it concerned expert-witness testimony that Firstbase misappropriated the trade secrets by using them. App. 268-69 (“Ricardo Valerdi actually did a source-code review and actually found evidence of misappropriation in [Firstbase‘s] source code.“). Firstbase thus did not preserve its argument that there was insufficient evidence of protectability and unfair competition.
Our review of an unpreserved argument turns on whether it was waived or forfeited. “The terms waiver and forfeiture—though often used interchangeably by jurists and litigants—are not synonymous.” United States v. Dowdell, 70 F.4th 134, 140 (3d Cir. 2023) (quoting Hamer v. NeighborhoodHous. Servs. of Chi., 583 U.S. 17, 20 n.1 (2017)). “Waiver is the ‘intentional relinquishment or abandonment of a known right.‘” Id. (quoting Johnson v. Zerbst, 304 U.S. 458, 464 (1938)). “‘[F]orfeiture is the failure to make the timely assertion of a right,’ an example of which is an inadvertent failure to raise an argument.” Barna v. Bd. of Sch. Dirs. of Panther Valley Sch. Dist., 877 F.3d 136, 147 (3d Cir. 2017) (quoting United States v. Olano, 507 U.S. 725, 733 (1993)). Waived arguments are not reviewable. Dowdell, 70 F.4th at 140. In contrast, forfeited arguments in civil cases are reviewable—but only in “truly ‘exceptional circumstances.‘” Barna, 877 F.3d at 147 (quoting Brown v. Philip Morris Inc., 250 F.3d 789, 799 (3d Cir. 2001)). We are “slightly less reluctant to bar consideration of a forfeited pure question of law,” id., if our “refusal to reach the [question] would result in a miscarriage of justice or where the [question‘s] resolution is of public importance,” id. (quoting Bagot v. Ashcroft, 398 F.3d 252, 256 (3d Cir. 2005)).
Arguments inadvertently left out of a Rule 50(a) motion are forfeited. Although Harbor says Firstbase “waived” the issue, Firstbase never affirmatively relinquished its right to argue the sufficiency of evidence of protectability. So Firstbase forfeited—not waived—its right to raise the argument in a renewed motion for judgment as a matter of law under Rule 50(b) or an eventual appeal.
In any event, Firstbase‘s forfeited argument falls outside our limited exception for appellate review because it does not rest on a tight, well-defined legal question or an issue important to the public. Indeed, Firstbase‘s sufficiency-of-the-evidence argument is about disputed facts. Cf. Frank C. Pollara Grp., LLC v. Ocean View Inv. Holding, LLC, 784 F.3d 177, 188 (3d Cir. 2015) (failure to preserve Rule 50 sufficiency-of-the-evidence arguments is “particularly vexing”
Because Firstbase forfeited its sufficiency-of-the-evidence argument for the protectability element of trade secret misappropriation and because this argument does not qualify for one of our narrow exceptions for reaching a forfeited argument, we assume—without deciding for the purposes of our review of the District Court‘s Rule 50(b) denial—that each alleged trade secret was protectable.
2.
The second element that the plaintiff must prove in a
Firstbase concedes there were similarities between the trade secrets and its product. But it argues the similarities between the trade secrets and Firstbase Agent did not disprove reverse engineering. The primary evidence supporting misappropriation came from Harbor‘s expert, Dr. Valerdi, whose testimony Firstbase characterized as describing “generalized concepts he claimed Firstbase learned from Harbor.” Appellant‘s Br. 41 (citation modified). For example, Dr. Valerdi found similarities in strings of Firstbase‘s “source code” and words in the jurisdictional database. App. 1376-77 But the similarities, Firstbase argues, were insufficient because they were public or general knowledge in the industry. For
Viewing the evidence in the light most favorable to Harbor, there was sufficient evidence of trade secret misappropriation by use. Even assuming the similarities between Firstbase Agent and the alleged trade secrets were insufficient on their own to disprove independent development, there were “plus factor[s]” that suggest Firstbase did not independently develop this technology. Oakwood, 999 F.3d at 912 n.19.
First, there were Firstbase‘s internal communications. As the District Court noted, around the time the partnership was fraying, a Firstbase employee bragged that he “convinced [Harbor] to share all the annual filings due date per state[,] lol[,] with that info, we can build the reminders logic ourselves without using their data.” Supp. App. 255. Firstbase‘s partnership lead responded, “The more we can get from them the better, especially if we truly are going to go down the route of being our own [Registered Agent].” Id. at 256. This is evidence of Firstbase intending to use Harbor‘s proprietary compilations of information to enrich itself and take business away from Harbor. A subsequent email sent around the time Firstbase terminated the partnership suggested that Firstbase
Second, there was the accelerated nationwide launch of Firstbase Agent. Firstbase offered incorporation services in Delaware and Wyoming before its partnership with Harbor, but it rapidly expanded incorporation and registered agent services to all fifty states shortly after the early termination of the partnership. See Mallet, 16 F.4th at 388 (explaining that the defendant‘s “actions[,] plus . . . access to what may be trade secret information” and “the accelerated launch of” a new product “may easily be sufficient circumstantial evidence” of misappropriation).
Firstbase argues the summary of annual filings deadlines was not among the alleged trade secrets and that Harbor published this information on its website—meaning Harbor did not try to keep it a secret. True, Harbor must prove that Firstbase‘s misappropriation “involv[ed] a trade secret” and that “there is some evidence tying [Firstbase‘s] conduct to the taking of those trade secrets.” Id. at 387-88. But coupled with the similarities between the protected trade secrets and Firstbase Agent, the internal communications and rapid expansion offer sufficient circumstantial evidence that Firstbase used the Harbor documents it had access to—which included protectable trade secrets—to assist and accelerate the development of Firstbase Agent.
Firstbase also argues that all the trade secrets could be
reverse engineered because the identified similarities consisted of general industry knowledge or publicly available or marketed information. But this argument falls short. “[W]hile ‘reverse engineering is a defense to misappropriation of [a] trade secrets claim, the possibility that a trade secret might be reverse engineered is not a defense.‘” Id. at 387 n.31 (second alteration in original) (quoting Bal Seal Eng‘g, Inc. v. Nelson Prods., Inc., No. 8:13-cv-1880, 2018 WL 4697255, at *4 (C.D. Cal. Aug. 3, 2018)). “Drawing ‘all reasonable and logical inferences’ in [Harbor‘s] favor, the jury had enough evidence to find that” Firstbase did not reverse engineer Firstbase Agent. Washington v. Gilmore, 124 F.4th 178, 185 (3d Cir. 2024) (quoting Lightning Lube, 4 F.3d at 1166). We agree that “[t]here may be situations in which reverse engineering is so straightforward that the distribution of a product is itself akin to a disclosure.” Mallet, 16 F.4th at 387 n.31. But that factual inquiry is inappropriate for judgment as a matter of law, as it ultimately re-litigates the sufficiency-of-the-evidence argument related to the protectability element—which was forfeited.3.
Firstbase also challenges the sufficiency of evidence of the unfair competition claim. It argues that if we reverse the District Court‘s denial of judgment as a matter of law on the trade secret misappropriation claim, we must also reverse the denial as to the unfair competition claim, because trade secret misappropriation was the sole predicate tort on which the District Court instructed the jury. But since we will affirm the District Court‘s denial of judgment as a matter of law on trade secret misappropriation, we will also affirm the denial of judgment as a matter of law on unfair competition.
***
In sum, we conclude Firstbase forfeited its sufficiency-
B.
Firstbase‘s appeal of the District Court‘s denial of its motion for new trial raises two arguments. First, it contends that even if we affirm the denial of judgment as a matter of law on the sufficiency of evidence, the verdict was nonetheless against the great weight of the evidence. Second, it contends that it was improperly prejudiced by portions of Dr. Valerdi‘s testimony about “who did what and when.” App. 200. We discuss each of these in turn.
1.
A party‘s failure to move for judgment as a matter of law at the close of all evidence does not bar a motion for a new trial on the ground that the verdict was against the weight of the evidence. Greenleaf v. Garlock, Inc., 174 F.3d 352, 365 (3d Cir. 1999). So, unlike its sufficiency-of-the-evidence argument related to protectability, Firstbase preserved the weight of evidence argument on appeal by timely raising it in its motion for new trial.
A court may grant a motion for a new trial based on the
evidence, but “it should do so only when ‘the great weight of
the evidence cuts against the verdict and a miscarriage of
justice would result if the verdict were to stand.‘” Leonard v.
Stemtech Int‘l Inc., 834 F.3d 376, 386 (3d Cir. 2016) (citation
modified) (quoting Springer v. Henry, 435 F.3d 268, 274 (3d
Cir. 2006)). To win reversal of the District Court‘s denial of a
new trial based on the weight of the evidence, Firstbase must
show that “(1) the jury reached an unreasonable result, and (2)
The jury reasonably found that at least the jurisdictional database was a protectable trade secret. As we explained in the sufficiency-of-evidence analysis above, the database contained tips that were not general knowledge in the trade or readily ascertainable through proper means but were the result of Harbor‘s experience in the industry. It is reasonable, and not a manifest injustice, for the jury to conclude the database had independent economic value.
The District Court properly exercised its broad discretion in upholding the verdict on that basis. The Court identified evidence it said was probative of protectability—the independent economic value of the jurisdictional database. App. 15 (noting testimony that said “information in [the jurisdictional database] was collected over more than ten years of research and work in a constantly changing technology business“). It also said that “the jury heard the testimony of more than ten witnesses and saw hundreds of exhibits. The specific evidence mentioned herein supporting the Court‘s conclusions is meant to be illustrative, not inclusive.” Id. at 14.
We need not determine whether it was reasonable for
the jury to conclude that the workflows, Entity Manager
Dashboard, and API documentation were also protectable trade
Turning to the misappropriation element, we have already concluded there was sufficient evidence that the trade secrets were misappropriated by use. After considering the evidence of Firstbase‘s internal messages and product acceleration, we conclude that the jury‘s finding of misappropriation was not only sufficient, but reasonable and not a manifest injustice. Thus, the District Court did not abuse its discretion in declining to set aside the trade secret misappropriation verdict. Similarly, because the unfair competition claim reasonably could be based on the tort of trade secret misappropriation, the District Court did not abuse its discretion in declining to set aside the unfair competition verdict.
2.
Improperly admitted evidence is also a valid ground for
granting a new trial. Montgomery Ward & Co. v. Duncan, 311
U.S. 243, 251 (1940). Firstbase also argues that it was
prejudiced by purported shifts in Dr. Valerdi‘s expert opinion
during trial compared to his expert report and deposition.
Specifically, it says that during discovery, Dr. Valerdi
expressly assumed that Harbor created the trade secrets he
identified and the technical competency of Firstbase—but
then, despite Firstbase‘s objection during trial, “testified
liberally . . . that Firstbase learned [of] the purported trade
Firstbase says this violated
We start by recounting the relevant procedural history.
On the sixth day of trial before Dr. Valerdi took the stand,
Firstbase objected both to the introduction of a video exhibit
created by Dr. Valerdi summarizing the trade secret
misappropriation and “to any testimony as to who did what and
when.” App. 200. Based on Dr. Valerdi‘s prior “assumption
that all of the trade secret information belonged to Harbor,”
Firstbase argued that it was “out of bounds . . . for him to opine
on what the parties did . . . and talk about who invented what.”
Id. at 201. In response to the objection, the District Court
reviewed the deposition testimony and acknowledged that Dr.
Valerdi was “not attesting that certain facts are true,” but was
merely “asked to assume [they] are true.” Id. at 213. But the
Dr. Valerdi testified that Harbor created the trade secrets and Firstbase misappropriated them. See, e.g., App. 937 (“Firstbase . . . could not do it by themselves . . . [and] needed to piggyback on . . . Harbor Compliance‘s trade secrets. . . . The entire corpus of this case points to that.“); id. at 868 (“[T]he trade [secrets] were in the possession of Firstbase because Harbor Compliance gave it to them under the understanding that they would follow the terms of the partnership agreement.“); id. at 890 (“Firstbase . . . learned how to do this process thanks to Harbor Compliance‘s trade secrets.“). On cross-examination, Firstbase‘s counsel asked him if he had “subsequently modified [his] analysis” since his deposition. Id. at 900. Dr. Valerdi responded that although he had been “informed further by the trial transcripts,” his expert opinions and conclusions about the trade secrets remained unchanged. Id. at 901.
In its motion for a new trial, Firstbase argued that Dr.
Valerdi‘s testimony violated
The District Court rejected the request for a new trial,
again citing
We assume without deciding that Firstbase preserved its
objection and the purported change in testimony constituted a
new opinion that lacked substantial justification. Still, we find
the District Court did not abuse its discretion in holding that
the admission of the testimony was harmless. The Court
properly exercised its broad discretion in concluding that any
unfair surprise at trial was cured. It noted that it gave a jury
instruction on the video. It also considered that Firstbase
challenged the factual bases of Dr. Valerdi‘s testimony during
cross-examination.
In sum, even if the District Court abused its discretion in concluding Firstbase did not adequately preserve its argument, it did not abuse its discretion in denying a new trial because it was reasonable to hold that Firstbase was not harmed by Dr. Valerdi‘s testimony.
C.
Finally, Firstbase argues the District Court abused its discretion by denying its motion for remittitur because the jury “award[ed] separate damages for the trade-secret misappropriation and unfair-competition claims,” so “the jury mistakenly disgorged the same profits from Firstbase twice.” Appellant‘s Br 56. We agree.
“[R]emittitur is well established as a device employed when . . . a decision of the jury is clearly unsupported and/or excessive.” Spence, 806 F.2d at 1201. “On review, . . . remittitur should be set at the ‘maximum recovery’ that does not shock the judicial conscience,” Evans v. Port Auth. of N.Y. & N.J., 273 F.3d 346, 355 (3d Cir. 2001) (citation modified), which is, in other words, “the maximum amount which the jury could reasonably find,” Gumbs v. Pueblo Int‘l, 823 F.2d 768, 772 (3d Cir. 1987) (citation modified).
The jury awarded Harbor $14,757,399 in compensatory
damages for the unfair competition claim, the exact amount of
Firstbase‘s profits as calculated by Harbor‘s damages expert,
Urbanchuk. The jury also awarded $11,068,044 for the trade
secrets misappropriation claim, which was seventy-five
percent of Firstbase‘s profits.
In its denial of Firstbase‘s motion to remit damages by $11,068,044,2 the District Court said Firstbase “failed to object to the award before the jury was released, thereby preventing the Court from inquiring of the jury.” App. 33. Second, it said Firstbase did not challenge the jury instructions or verdict form, which did not explicitly confine damages to disgorgement of Firstbase‘s profits. Lastly, it held the jury could have reasonably concluded that Harbor suffered different injuries from the trade secret misappropriation claim and merely used Urbanchuk‘s “calculations as a foundation” for the unfair competition award. Id. at 35.
To begin with, the District Court erred if it concluded that a jury award is unclear just because no follow-up inquiry was made with the jury. A district court can review the record to determine whether the jury‘s award was clearly excessive or
unsupported. See Starceski v. Westinghouse Elec. Corp., 54
F.3d 1089, 1101 (3d Cir. 1995).
And the record clearly shows the jury‘s methodology involved disgorging Firstbase‘s profits twice. Contrary to the District Court‘s characterization, Firstbase‘s argument is more than mere “speculation.” App. 34. Urbanchuk testified he “us[ed] the same calculation” to estimate Firstbase‘s profits for both the trade secrets misappropriation and the unfair competition claim. App. 998. He “conducted the same type of disgorgement analysis looking at the same revenues and profits to arrive at th[e] [$14,757,399] number.” Id. at 1000. His slides—which the jury specifically requested during deliberations—listed $14,757,399 next to both the trade secret and unfair competition claims. Because the only theory Harbor pursued at trial was disgorgement of $14 million in profits, it is exceedingly unlikely that this unique number was a mere “foundation.” Id. at 35.3 This was double recovery of the same remedy and not a coincidence.
Harbor contends that Firstbase‘s duplicative damages argument is “waived” (more properly, forfeited) “to the extent Firstbase purports to argue that the jury erred by awarding damages other than disgorgement damages (such as lost profit damages),” because Firstbase never objected to the jury instructions on damages. Appellee‘s Br. 53. But this
mischaracterizes Firstbase‘s argument. Firstbase is not
denying that the jury could have compensated Harbor for
remedies in addition to awarding disgorgement of Firstbase‘s
profits. Rather, it argues the maximum amount that could be
disgorged is $14,757,399 because that was the maximum
amount Firstbase realized by inflicting the harm—whether
characterized as trade secret misappropriation or unfair
competition. Therefore, Firstbase argues, the jury compensated
Harbor twice on the same profits by awarding $14,757,399 for
unfair competition and an additional $11,068,044 for trade
secret misappropriation. This argument is neither forfeited nor
waived.
Harbor‘s other response—that the jury heard evidence of “separate harm arising from separate conduct,” id. at 55— repeats the same mischaracterization. Harbor says the jury heard evidence that its unrealized revenue was up to $38,700,000. So it says anything less than that maximum amount is reasonable. Harbor‘s unrealized revenue represents expected revenue lost due to Firstbase‘s conduct, whereas disgorgement requires Firstbase to surrender the profits it gained from those actions. These are different types of remedies. The jury plainly did not base its damages on unrealized revenue—rather, the unique math shows it awarded both the lost profits and, improperly, another seventy-five percent of those same lost profits. The District Court incorrectly applied the same logic and thus abused its discretion.
Accordingly, we will reverse the District Court‘s denial
of Firstbase‘s motion for remittitur of damages. Because “the
maximum amount which the jury could reasonably find,”
Gumbs, 823 F.2d at 772 (citation modified), is $14,757,399,
we will conditionally remit the damages by $11,068,044—the
amount the jury awarded for the trade secret claims. Harbor
IV.
For the foregoing reasons, we will affirm in part and vacate and remand in part the District Court‘s judgment and its order denying Firstbase‘s motions for judgment as a matter of law, a new trial, and remittitur. The District Court is instructed to conditionally remit the damages by $11,068,044.