In 2018, Rock Fuel Media pitched its concept for a sports-gaming platform called “VSports Live” to Resorts World Las Vegas LLC during the development stage of Resorts World’s casino and resort on the Las Vegas Strip. Resorts World did not end up contracting with Rock Fuel, and Rock Fuel never built the VSports Live platform. When Resorts World opened its doors several years later, it instead partnered with third parties to create two apps from which visitors could engage in sports betting, connect to the casino’s loyalty program, make dining reservations, engage in cashless gambling, and more.
Rock Fuel, believing that Resorts World cribbed its app ideas from the 2018 presentation, alleged trade-secret misappropriation, breach of the nondisclosure agreement (NDA) the parties signed before the 2018 presentation, and unjust enrichment.
Resorts World filed a motion to exclude the opinions of Rock Fuel’s purported expert witness, James Martin.
Intellectual Property Expert Witness
James Patrick Martin has more than 25 years of experience representing high-tech companies and their employees in intellectual property matters and technology-based transactions.
He earned his Juris Doctor degree, cum laude, from the University of Michigan Law School.
Martin reviewed Rock Fuel’s presentation materials concerning its app concept and “extracted” an eight-element set of features that Rock Fuel now presents as its trade secret. He opined that the combination of features he identified is protectable and was misappropriated by Resorts World.
Resorts World challenged Martin’s qualifications and accused him of conjuring up this trade secret only after examining Resorts World’s app and highlighting elements that overlap while ignoring those that don’t.
It also moved to exclude Martin’s misappropriation opinion because it isn’t based on any specialized knowledge that would be helpful to a jury.
Rock Fuel relied on Martin’s opinion to contend that the similarities between Rock Fuel’s eight elements and Resorts World’s apps at launch are sufficient circumstantial evidence from which a jury could conclude that Resorts World used Rock Fuel’s presentation materials to create its mobile products.
However, Rock Fuel has not established that he has specialized expertise or knowledge in app development, casino or hotel management software, sports gaming software, or any other field that would give him the specialized knowledge to compare app functionalities. He merely downloaded the Resorts World apps, compared what he saw to the 2018 presentation materials, and concluded that they have some overlap.
Even if Martin’s qualifications sufficed, his opinions are excludable because they do not rely on any specialized knowledge or expertise. He merely reviewed Resorts World’s products, compared them to the combination of elements he identified as Rock Fuel’s trade secret, and concluded that Resorts World “has a system that looks a lot like” Rock Fuel’s concept.
As a result, the Court held that Martin’s opinion on whether Resorts World misappropriated Rock Fuel’s trade secret is not admissible.
Held
The Court granted in part Resorts World’s motion to exclude James Martin’s expert testimony.
Key Takeaway
While experts are generally allowed to opine on whether a product has been misappropriated, Martin lacks specialized experience that would permit him to glean anything more than a layperson could.
Case Details:
Case Caption:
Resorts World Las Vegas LLC V. Rock Fuel Media, Inc.
Plaintiff Gerald Hayden brought claims against Defendants International Business Machines Corporation (“IBM”), Pablo Suarez, and Shanker Ramamurthy, under the federal Defend Trade Secrets Act (“DTSA”) and for violating New York’s prohibition on the misappropriation of trade secrets.
Prior to joining IBM in 2015, Plaintiff developed a “methodology to construct an architecture for a digital platform,” which he called “Awareness to Execution” (“A2E”). According to Plaintiff, his alleged trade secret “describes an architecture for an IT solution that creates a digital platform which accesses data in near real-time . . . and applies big data prescriptive and predictive analytics.” A2E “can also be used as a methodology to market and sell the various components or elements of the digital platform, individually or in combination with each other.”
Plaintiff also brought a number of other claims under New York and federal law: breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, tortious interference, and retaliatory discharge under the Sarbanes-Oxley Act.
Defendants filed a motion to exclude the proffered testimony of Plaintiff’s expert, David Martin.
Risk Management Expert Witness
David Martin is a risk management consultant with over 40 years of experience as a financial executive. He has held senior positions at PricewaterhouseCoopers, Citibank, and AllianceBernstein, and has “extensive experience with technological solutions in the banking and financial markets industries.”
Plaintiff offered Martin as an expert to opine on the nature and value of A2E. Defendants did not dispute Martin’s qualifications regarding the topics for which he has been engaged to testify. Instead, Defendants argued that Martin’s opinions are irrelevant and that his methodologies warranted exclusion of his testimony. Specifically, Defendants argued that Martin’s opinions are not based on sufficient facts and that he does not apply reliable methodologies to reach his conclusions.
Reliance on Sufficient Facts or Data or Reliable Methodologies
IBM’s Awareness of A2E
Regarding IBM’s awareness of A2E and the value it may have held for the company, the Court observed that Martin based his conclusions solely on his personal experience. He asserted that the solutions embodied in A2E were not known to IBM or the broader market as of 2015.
IBM’s Internal Capabilities
Martin stated—after reviewing depositions from a former IBM employee and another individual he described as “an expert in software technology”—that “without access to [Plaintiff’s] A2E trade secrets, competitors and IBM would not have been able to execute on these strategies and solutions.”
However, Martin did not explain how his background or expertise led him to conclusions about IBM’s internal knowledge or capabilities at any specific time. He failed to clarify how he determined that IBM lacked awareness of the “formulas, architectures, and solutions contained in A2E,” especially given that he had never worked for IBM or with the company in any professional capacity.
The Court found that this omission weakened Martin’s opinion that IBM could not have executed the solutions without access to Plaintiff’s trade secrets. Because his assertion that IBM was unaware of certain strategies lacked a sufficient factual foundation, his related conclusion about IBM’s inability to implement or act on those strategies was similarly flawed.
IBM’s Commercial Objectives
Martin further opined that, before Plaintiff’s employment, IBM was not focused on the core elements of A2E or on horizontally integrating workflows. He based this view on his review of Plaintiff’s deposition and certain documents produced by IBM describing its commercial offerings.
Nevertheless, the Court found that IBM’s public-facing commercial materials, even when considered alongside Plaintiff’s testimony, did not constitute “sufficient facts and data.” Moreover, Martin did not demonstrate how his industry experience in banking and finance qualified him to determine, from that limited set of documents, what IBM’s commercial priorities actually were at the time.
Cloud Pak’s Overall Design
Martin claimed that IBM incorporated parts of the Plaintiff’s trade secret—A2E—into its Cloud Pak products, and as a result, profited from A2E. He pointed to specific similarities, stating that Cloud Pak included “key combinations of elements” found in A2E, such as integrated data systems, a distinctive marketing framework, and a unique framework for analytics and decision-making.
Based on these similarities, Martin concluded that IBM’s Cloud Pak was directly based on A2E. He argued that the overlap was too significant to be a coincidence and therefore believed that Cloud Pak’s overall design and architecture were derived from A2E.
However, the Court rejected this reasoning. It held that Martin’s opinion amounted to a bare assertion—or ipse dixit—which is not valid expert testimony because it lacked a reliable, tested methodology.
To support his conclusion, Martin had simply compared two slide decks: one showing A2E’s reference architecture and the other showing Cloud Pak’s. The Court found that this kind of side-by-side comparison was not a scientifically valid or reliable method under Rule 702, and therefore could not support his expert opinion.
Hybrid Cloud Platform Solution
Regarding Martin’s opinion on how long it would have taken IBM to develop a hybrid cloud platform without knowledge of A2E, the Court found that he failed to offer any methodology to estimate the time IBM allegedly saved by using A2E.
Although Martin asserted that IBM gained a “head start” by using Plaintiff’s trade secret, the Court pointed out that he did not examine IBM’s internal processes for securing approval or funding for research and development. As a result, his opinion lacked the necessary factual basis and analytical framework.
Intruding on the Province of the Fact Finder
Although Martin did not expressly state that A2E qualified as a trade secret—and claimed that he had “no opinion” on that legal issue—he assumed, for the purposes of his report, that a trade secret is any formula that offers a business advantage. Based on that assumption, he concluded that A2E met this definition. However, the Court ruled that this was an inadmissible legal conclusion, which an expert is not permitted to make.
The Court also noted that Martin made improper credibility judgments by repeatedly adopting the testimony of fact witnesses to support his own conclusions, rather than relying on independent analysis.
Ultimately, the Court held that Martin’s testimony was inadmissible because his opinions and inferences merely reinforced the Plaintiff’s version of events, rather than offering objective, expert analysis.
Held
The Court granted the Defendants’ motion to preclude the testimony of Plaintiff’s expert, David Martin.
Key Takeaway:
Although an expert can “draw a conclusion from a set of observations based on extensive and specialized experience,” the expert must base that opinion on sufficient facts or data and “must explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts.”
Case Details:
Case Caption:
Hayden V. International Business Machines Corporation Et Al
Plaintiff I-Mab Biopharma (“I-Mab” or “Plaintiff”) brought trade secret misappropriation claims against Defendants Inhibrx, Inc. (“Inhibrx”) and Brendan Eckelman (“Dr. Eckelman” and collectively with Inhibrx, “Defendants”).
Plaintiff asserted that Defendants misappropriated nine trade secrets (that correspond to molecules designed to treat cancer) that are referred to herein as Trade Secret 1, Trade Secret 2, Trade Secret 4, Trade Secret 5, Trade Secret 6, Trade Secret 7, Trade Secret 8, Trade Secret 9 and Trade Secret 10.
Plaintiff filed a motion to exclude certain opinions offered by Defendants’ technical expert Dr. Roland Newman.
Immunology Expert Witness
Roland Newman has extensive experience in the biotechnology industry, including experience in developing therapeutic antibodies and in the manufacturing, preclinical development and clinical planning phases. This experience includes several years employed as Vice President and Chief Scientific Officer of Tanabe Research Labs USA. His scientific experience also covers immunology, molecular biology and biochemical research in both academic and industrial environments and he has over 100 peer reviewed publications, several book chapters and 30 patents.
One of the ways in which a claim for damages for trade secret misappropriation can be quantified is by measuring unjust enrichment; to that end, unjust enrichment can be assessed by identifying development costs that were avoided by the misappropriator but would have been incurred, if not for the misappropriation (i.e., “avoided costs”).
When Newman offered his opinion regarding Defendants’ avoided costs (the “redevelopment opinion”), Plaintiff contended that Newman’s redevelopment opinion is unreliable and lacks “fit” (and should therefore be excluded) because “the number was pulled out of thin air, the opinion ignores known R&D expenses, and the opinion fails to account for numerous categories of trade secret data and analysis.”
The Court agreed that Newman’s redevelopment opinion does not pass muster, even under Daubert‘s liberal standard for the following reasons:
First, the paragraph at issue does not give any hint as to where Newman derives the cited cost data from.
Second, Newman’s redevelopment opinion is also insufficient because he does not explain how it accounts for the different trade secrets at issue here. In other words, while “I-Mab’s trade secrets pertain to multiple different molecules and comprise different amounts and types of data,” Newman estimates one cost for the recreation of data from conducting a preclinical monkey toxicity study—$290,000—and applies it to each trade secret.
B.Newman’s opinions regarding Defendants’ use of the trade secrets
Newman opined that with respect to Defendants’ alleged use of Trade Secret 1, “no substantial changes were made in the clinical development path of INBRX-105” (“paragraph 116”). Plaintiff contended that this portion of paragraph 116 must be excluded because Newman cites to no supporting evidence and did not review Inhibrx’s clinical protocol amendments.
Newman also added that the amendments that Inhibrx did make were “standard practices in running a clinical trial and no significant changes to the protocol were made” (“paragraph 118”). Plaintiff contended that this portion of paragraph 118 must be excluded because Newman did not have sufficient experience to opine regarding what is standard practice with respect to amending clinical protocols and did not review the protocol amendments.
The Court does not agree that these opinions should be excluded. Newman did testify that he did not have “direct experience” amending a clinical protocol but the Court found Newman’s extensive experience in the biotechnology industry relevant. Newman described the changes that were made to the clinical protocol (and why these changes were made) and opines that certain particular modifications are standard practice in running a clinical trial. Moreover, Newman described changes that were made in the clinical development path of INBRX-105, which established the basis for his opinion that no substantial changes were made.
C. Newman’s opinions about public disclosure
Plaintiff next moved to exclude Newman’s opinions that certain of I-Mab’s trade secrets are disclosed in particular publications.
According to Plaintiff, these opinions should be excluded because Newman does not identify where in these publications Plaintiff’s trade secrets are disclosed, or because Newman’s views are just incorrect.
The Court will not exclude these opinions because Newman either included screenshots of the portions of the publications at issue that he opined contained publicly disclosed information with respect to certain trade secrets, or explained what the publicly disclosed information is in the publication at issue.
D. Newman’s opinions on ownership and reasonable measures
Finally, Plaintiff argued that Newman’s opinions regarding the ownership of Plaintiff’s trade secrets and any reasonable measures to protect them in the time period after Plaintiff’s corporate restructuring in April 2024 should be excluded, on lack-of-qualifications grounds. However, in light of the Court’s ruling that the October 2024 trial should cover events occurring prior to, but not later than, the date of the divestiture, the Court does not understand how post-divestiture reasonable measures are relevant to the conduct that will be at issue during trial. Therefore, this portion of the Motion is denied as moot.
Held
The Court granted Plaintiff’s motion only with respect to Dr. Roland Newman’s redevelopment opinion but otherwise denied it.
Key Takeaways:
Newman’s opinion about standard practices in running a clinical trial constitutes appropriate rebuttal testimony that he is qualified to offer.
Without any understandable explanation for how one cost for one type of study applies equally to all trade secrets at issue, Newman’s redevelopment opinion “does not fit the issues to be tried and is not helpful.”
Please refer to the blog previously published about this case:
