Alifax Holding Spa v. Alcor Scientific Inc. et al

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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
ALIFAX HOLDING SPA, 	)
)
Plaintiff, 	)
)
v. 	) 	C.A. No. 14-440 WES
)
ALCOR SCIENTIFIC INC.; and 	)
FRANCESCO A. FRAPPA, 	)
)
Defendants. 	)
___________________________________)
MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
Before the Court is Defendants’ Motion to Exclude the Opinions
of 	Expert 	Witness 	Christopher 	J. 	Bokhart 	(ECF 	No. 	230).
Mr. 	Bokhart 	has 	proffered 	opinions 	concerning 	damages 	for 	the
Plaintiffs’ claims of patent infringement, copyright infringement,
and trade secret misappropriation. 	The Defendants have asked the
Court 	to 	exclude 	Mr. 	Bokhart’s 	opinions 	in 	their 	entirety. 	The
Court 	heard 	extensive 	argument 	on 	this 	motion 	over 	two 	days; 	the
motion 	was 	granted 	in 	part 	and 	denied 	in 	part 	in 	two 	earlier
rulings. 1
1 	The 	Court 	held 	Mr. 	Bokhart 	could 	opine 	concerning 	patent
infringement 	damages; 	his 	opinion 	concerning 	copyright 	infringe-
ment 	damages 	has 	been 	excluded. 	See 	generally 	Mem. 	& 	Order, 	ECF
No. 277.
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The 	Court 	kept 	the 	remainder 	of 	the 	motion 	under 	advisement
and 	bifurcated 	the 	trial 	into 	a 	liability 	phase 	and 	a 	damages
phase. 	During 	trial, 	the 	claims 	narrowed. 	The 	copyright 	claim
fell 	away 	with 	the 	exclusion 	of 	Mr. 	Bokhart’s 	damages 	testimony;
the 	patent 	infringement 	claim 	was 	withdrawn 	(with 	the 	Court 	en-
tering judgment for the Defendants) after the evidence fell short
of 	proving 	the 	allegations. 	Thus, 	the 	case 	has 	been 	narrowed 	to
one alleging trade secret misappropriation and breach of a confi-
dential relationship.
The Court held a lengthy conference with the parties to dis-
cuss 	the 	scope 	and 	admissibility 	of 	Mr. 	Bokhart’s 	opinions 	after
the 	jury 	returned 	a 	verdict 	finding 	liability 	on 	April 	30, 	2019.
This 	order 	now 	addresses 	the 	last 	subject 	of 	Mr. 	Bokhart’s 	opin-
ions: damages for trade secret misappropriation.
For the reasons that follow, the Defendants’ motion is GRANTED
IN PART and Mr. Bokhart’s opinions concerning trade secret misap-
propriation damages are EXCLUDED in their entirety.
I. 	Bokhart’s Trade Secret Damages Opinion
Mr. 	Bokhart 	advances 	two 	damages 	theories 	based 	on 	these
claims: 	(1) a general opinion that Alifax is entitled to recover
“all 	earned 	revenue” 2 	from 	the 	sale 	of 	Alcor’s 	iSED 	analyzers
2 	Plaintiffs contend that the Restatement (Third) of Unfair
Competition places the burden of apportioning revenues on the De-
fendants and that the Rhode Island Supreme Court would likely adopt
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(including convoyed sales) from fiscal year 2012 through at least
September 	30, 	2018, 	as 	unjust 	enrichment 	damages 	attributable 	to
misappropriation of all “trade secrets”; and (2) a narrower opinion
that 	Alifax 	is 	entitled 	to 	“head 	start” 	damages, 	i.e., 	unjust
enrichment 	specifically 	arising 	from 	any 	temporal 	advantage 	ob-
tained 	by 	the 	misappropriation 	of 	one 	particular 	trade 	secret 	—
“the 	trade 	secret 	related 	to 	software 	and 	firmware 	. 	. 	. 	.” 3 	See
Expert 	Report 	of 	Christopher 	J. 	Bokhart 	(“Bokhart 	Rpt.”) 	¶¶ 	189-
93, 	ECF 	No. 	237; 	Suppl. 	Expert 	Report 	of 	Christopher 	J. 	Bokhart
(“Suppl. Rpt.”) ¶ 11, Ex. 8.2A S n.3, ECF No. 237-1.
On 	April 	30, 	2019, 	the 	jury 	returned 	a 	verdict 	finding 	that
the Defendants willfully misappropriated three trade secrets:
(1) 	Using a clear, plastic capillary photom-
eter 	sensor 	(“CPS”) 	in 	an 	automated 	ESR
analyzer, 	but 	only 	through 	February 	6,
2014;
(2) 	Portions of computer program source code
concerning the conversion of photometric
measurements, including source code con-
taining 	four 	specific 	conversion 	con-
stants ; and
(3) 	Information 	concerning 	an 	anemia 	factor
set forth in trial exhibits 34 and 19. 4
that burden-shifting framework. 	The Court intends to rule on this
issue in a separate order.
3 	The 	Court 	interprets 	this 	passage 	as 	a 	reference 	to 	trade
secret (2) above.
4 The jury found that only Frappa misappropriated Alifax’s
“anemia factor” trade secret.
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See 	Trial 	Tr. 	Vol. 	10 	at 	14:21-15:18, 	15:25-16:16. 	An 	earlier
formulation 	of 	the 	“source 	code” 	trade 	secret 	included 	alleged
code used by Alifax to obtain or acquire photometric measurements.
See, 	e.g., 	Pl.’s 	Second 	Am. 	Identification 	of 	Misappropriated
Trade 	Secrets 	¶ 	5, 	ECF 	No. 	137-27. 	Over 	Alifax’s 	objection, 	the
Court 	declined 	to 	allow 	Alifax’s 	“acquisition” 	theory 	to 	be 	pre-
sented to the jury due to a failure of proof at trial. See Charge
Conf. 	Tr. 	at 	11:9-16:4. 	Only 	“conversion” 	source 	code 	evidence
was presented by Alifax during the liability phase.
II. 	Legal Standard
Rule 	702 	of 	the 	Federal 	Rules 	of 	Evidence 	instructs 	that 	an
expert may only provide opinion testimony if:
(a) 	the 	expert’s 	scientific, 	technical, 	or
other 	specialized 	knowledge 	will 	help 	the
trier of fact to understand the evidence or to
determine 	a 	fact 	in 	issue; 	(b) 	the 	testimony
is based on sufficient facts or data; (c) the
testimony 	is 	the 	product 	of 	reliable 	princi-
ples 	and 	methods; 	and 	(d) 	the 	expert 	has 	re-
liably 	applied 	the 	principles 	and 	methods 	to
the facts of the case.
See also Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 592-
93 	(1993). 	The 	Court, 	acting 	as 	gatekeeper, 	may 	exercise 	wide
discretion to admit or exclude such testimony consistent with its
obligation 	to 	ensure 	that 	the 	jury 	receives 	only 	relevant 	and
reliable expert evidence. 	Morris v. Rhode Island Hosp., C.A. No.
13-304-ML, 2014 WL 3107296, *5 (D.R.I. July 7, 2014) (citing Gen.
Elec. 	Co. 	v. 	Joiner, 	522 	U.S. 	136, 	143 	(1997)). 	And 	“while
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methodology 	remains 	the 	central 	focus 	of 	a 	Daubert 	inquiry 	. 	. 	.
trial judges may evaluate the data offered to support an expert’s
bottom-line 	opinions 	to 	determine 	if 	that 	data 	provides 	adequate
support to mark the expert’s testimony as reliable.” 	Ruiz-Troche
v. 	Pepsi 	Cola 	of 	P.R. 	Bottling 	Co., 	161 	F.3d 	77, 	81 	(1st 	Cir.
1998); Joiner, 522 U.S. at 146 (1997) (“A court may conclude that
there 	is 	simply 	too 	great 	an 	analytical 	gap 	between 	the 	data 	and
the opinion proffered.”).
Mr. 	Bokhart’s 	damages 	calculations 	need 	only 	be 	proven 	with
“reasonable certainty.” 	See, e.g., Grieco ex rel. Doe v. Napoli-
tano, 813 A.2d 994, 998 (R.I. 2003). 	But any damages theory must
be 	anchored 	on 	“sound 	economic 	and 	factual 	predicates.” 	La-
serDynamics, 	Inc. 	v. 	Quanta 	Comput., 	Inc., 	694 	F.3d 	51, 	67 	(Fed.
Cir. 	2012) 	(quoting 	Riles 	v. 	Shell 	Exploration 	& 	Prod. 	Co., 	298
F.3d 1302, 1311 (Fed. Cir. 2002). 	This principle applies to dam-
ages 	for 	trade 	secret 	misappropriation. 	See, 	e.g., 	Exmark 	Mfg.
Co. 	v. 	Briggs 	& 	Stratton 	Power 	Prods. 	Grp., 	LLC, 	879 	F.3d 	1332,
1348 (Fed. Cir. 2018) (“[A] reasonable royalty award ‘must be based
on the incremental value that the . . . invention adds to the end
product.’” (quoting Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d
1201, 1226 (Fed. Cir. 2014)) (emphasis added)).
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III. Discussion
A. 	Bokhart’s “All Earned Revenue” Opinion
The Court concludes that Mr. Bokhart’s opinion that Alifax is
entitled to all earned revenue from Alcor’s iSED-related sales as
damages for misappropriation rests on an unsound factual basis and
must be excluded.
The 	first 	flaw 	in 	Mr. 	Bokhart’s 	methodology 	concerns 	the
predicate facts tying his damages theory to the harm attributable
to the alleged misappropriation. 	Citing only a “[d]iscussion with
Bryan Bergeron,” Bokhart Rpt. ¶ 192 n. 296, Plaintiff’s technical
expert, he states:
I understand that Alifax’s trade secrets have
a 	direct, 	causal 	relationship 	to 	the 	ability
to produce an ESR result in 20 seconds. 	Spe-
cifically, the trade secrets enabled Alcor to
learn how to generate a signal when analyzing
a blood sample and how to process that signal
into an ESR value.
Id. 	at 	¶ 	192. 5 	The 	Court 	has 	scoured 	Dr. 	Bergeron’s 	disclosures
and 	deposition 	testimony. 	He 	does 	not 	opine 	that 	any 	specific
trade 	secret 	– 	or 	that 	Alifax’s 	trade 	secrets 	combined 	– 	causes
the 	iSED 	to 	produce 	ESR 	results 	in 	20 	seconds. 	Dr. 	Bergeron 	has
expressed 	no 	opinion 	whatsoever 	concerning 	the 	plastic 	CPS 	or
5 While its meaning is by no means clear, the Court interprets
the second sentence of this paragraph as a reference to the earlier
formulation of trade secret (2) above, i.e., portions of computer
program source code.
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Alifax’s research about myeloma and anemia. 6 	And his conclusions
about portions of Alifax’s computer program code are strictly lim-
ited 	to 	considering 	whether 	these 	materials 	comprise 	trade 	se-
crets. 	See Expert Report of Bryan Bergeron (“Bergeron Rpt.”) ¶ 7,
ECF No. 144-11 (disclosing opinion that programming at issue “con-
cerned 	information 	that 	has 	value 	from 	not 	being 	generally 	known
to or readily ascertainable by other persons using proper means”)
If 	Dr. 	Bergeron 	had 	other 	opinions 	about 	a 	competitive 	ad-
vantage obtained by Alcor from any alleged trade secret, they were
not 	disclosed, 	and 	Mr. 	Bokhart 	cannot 	serve 	as 	his 	proxy. 	See
Dura Auto. Sys. of Ind., Inc. v. CTS Corp., 285 F.3d 609, 614 (7th
Cir. 2002) (“A scientist, however well credentialed he may be, is
not 	permitted 	to 	be 	the 	mouthpiece 	of 	a 	scientist 	in 	a 	different
specialty. 	That 	would 	not 	be 	responsible 	science.”). 	Without 	an
opinion 	that 	– 	at 	a 	minimum 	– 	Alifax’s 	proprietary 	computer 	code
contributes 	to 	the 	iSED’s 	20-second 	results, 	Mr. 	Bokhart’s 	“all
earned revenue” opinion is nothing more than ipse dixit; it has no
factual 	foundation. 	Such 	a 	shortcoming 	cannot 	be 	written 	off 	as
merely affecting the weight of the evidence. 	See Irvine v. Murad
Skin 	Research 	Labs., 	Inc., 	194 	F.3d 	313, 	321 	(1st 	Cir. 	1999)
(“[T]he 	basic 	premise 	of 	the 	expert’s 	opinion 	to 	justify 	damages
6 	This 	is 	undisputed. 	See 	Pl.’s 	Statement 	of 	Disputed 	Facts
¶¶ 98, 107, ECF No. 161-1.
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. 	. 	. 	is 	flawed. 	Absent 	adequate 	factual 	data 	to 	support 	the
expert’s conclusions his testimony [is] unreliable.”); Rothbaum v.
Samsung 	Telecomms. 	Am., 	LLC, 	52 	F. 	Supp. 	3d 	185, 	196 	(D. 	Mass.
2014) (excluding opinions because they were “not supported by the
data 	[the 	expert] 	cites, 	and 	they 	do 	not 	satisfy 	Rule 	702’s 	re-
quirement 	that 	his 	testimony 	[be] 	based 	on 	sufficient 	facts 	or
data” (quotation marks omitted)).
This flaw is underscored by Mr. Bokhart’s failure to account
for dramatic shifts in this action’s factual landscape over time.
Mr. Bokhart’s initial report explains that Alifax first identified
nearly a dozen misappropriated trade secrets. 	See Bokhart Rpt. ¶
43. 	Since 	he 	issued 	that 	report, 	the 	number 	and 	nature 	of 	those
trade secrets have narrowed significantly: 	just four trade secrets
were presented to the jury. 	See Trial Tr. Vol. 10 at 13:22-14:13.
Nevertheless, 	Mr. 	Bokhart 	neither 	decreased 	his 	damages 	calcula-
tion nor explained why no decrease is warranted. 7 	Thus, his “all
earned revenue” opinion is, on its face, unmoored to the scope of
the 	alleged 	harm 	and 	must 	be 	excluded. 	See 	Joiner, 	522 	U.S. 	at
146.
7 	Mr. 	Bokhart’s 	damages 	valuation 	has 	only 	increased 	over
time due to additional iSED sales. 	See Suppl. Rpt. ¶ 11.
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B. 	Bokhart’s “Head Start” Opinion
The 	Court 	reaches 	a 	similar 	conclusion 	regarding 	head 	start
damages. 	In 	Mr. 	Bokhart’s 	opinion, 	Alifax 	is 	entitled 	to 	unjust
enrichment 	damages 	specifically 	arising 	from 	the 	temporal 	ad-
vantage 	Alcor 	obtained 	by 	misappropriating 	one 	trade 	secret 	“re-
lated 	to 	software 	and 	firmware 	. 	. 	. 	.” 	Suppl. 	Rpt. 	Ex. 	8.2A 	S
n.3. 	This conclusion, in turn, rests on a purported opinion from
Dr. 	Bergeron 	that 	“Alcor’s 	use 	of 	the 	trade 	secret 	related 	to
software 	and 	firmware 	provided 	it 	an 	advantage 	of 	at 	least 	one
month 	of 	development 	time.” 	Suppl. 	Rpt. 	Ex. 	8.2A 	S 	n.3. 	Mr.
Bokhart provides no specific citation to Dr. Bergeron’s report for
this 	conclusion. 	See 	id. 	In 	his 	initial 	report, 	Dr. 	Bergeron
opines that it would have taken “a skilled engineer . . . at least
one 	entire 	month 	working 	full 	time 	just 	to 	program 	the 	signal
acquisition features of the instrument.” 	Bergeron Rpt. ¶ 44 (em-
phasis 	added). 	In 	his 	report, 	Dr. 	Bergeron 	does 	not 	opine 	con-
cerning how long it would take an engineer, or any other person of
skill, 	to 	program 	an 	instrument 	to 	convert 	photometric 	measure-
ments to an ESR value. 8 	Relying on other fact witnesses’ testimony,
Mr. 	Bokhart 	extrapolates 	that 	Dr. 	Bergeron’s 	estimated 	one-month
8 	Dr. 	Bergeron 	states 	that 	he 	understands 	it 	took 	Alifax’s
researchers 	three 	years 	to 	develop 	a 	conversion 	algorithm, 	but
offers 	no 	express 	opinion 	about 	whether 	that 	period 	reflects 	the
time it would take to develop a method to convert photometric data
into an ESR value. 	See Bergeron Rpt. ¶ 45.
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delay 	would 	have 	in 	fact 	postponed 	the 	iSED’s 	launch 	by 	at 	least
a 	full 	year 	to 	coincide 	with 	the 	next 	clinical 	chemistry 	trade
show. 	Suppl. Rpt. Ex. 8.2A S n.3. 	He concludes, therefore, that
Alcor 	was 	unjustly 	enriched 	by 	at 	least 	one 	additional 	year 	of
revenue as “head start” damages. 	Id.
The 	Defendants 	argue 	that 	this 	opinion 	should 	be 	excluded
because (1) it was not disclosed in Mr. Bokhart’s initial report;
and 	(2) 	it 	is 	speculative. 	The 	Defendants 	are 	right 	to 	complain
about the minimalist disclosure of Mr. Bokhart’s head start opin-
ion. 	His first report does not appear to reference such damages.
So-called 	“head 	start” 	damages 	appear 	only 	in 	a 	lengthy 	footnote
in an exhibit on page 69 of his 151-page supplemental report. 9 	See
Suppl. Rpt. Ex. 8.2A S n.3.
Under 	most 	circumstances, 	the 	Court 	would 	not 	consider 	such
a disclosure adequate or timely under Fed. R. Civ. P. 26. 	Exclu-
sion is the presumptive sanction for such a violation. See Lohnes
v. 	Level 	3 	Commc’ns, 	Inc., 	272 	F.3d 	49, 	60 	(1st 	Cir. 	2001). 	The
Court is not, however, stripped of all discretion, particularly if
the Defendants had been put on notice and were not unfairly prej-
udiced 	by 	the 	inadequate 	disclosure. 	See 	Santiago-Díaz 	v.
9 	Notably, 	when 	asked 	to 	direct 	the 	Court 	to 	where 	in 	the
record Mr. Bokhart disclosed this opinion aside from this footnote,
counsel pointed the Court to his deposition testimony rather than
his initial report.
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Laboratorio 	Clínico 	Y 	De 	Referencia 	Del 	Este, 	456 	F.3d 	272, 	276
(1st Cir. 2006). 	And here, it appears that the Defendants ques-
tioned Mr. Bokhart about the relationship between his trade-secret
opinions and Dr. Bergeron’s one-month estimate during his December
2017 	deposition. 	See 	Bokhart 	Dep. 	190-192, 	ECF 	No. 	250-1. 	The
record 	thus 	suggests 	that 	Defendants 	had 	some 	awareness 	of 	this
theory 	or 	related 	concepts 	before 	January 	2019. 10 	Accordingly,
under 	these 	peculiar 	circumstances, 	the 	adverse 	effects 	of 	any
surprise 	do 	not, 	in 	and 	of 	themselves, 	merit 	total 	preclusion.
See 	Macaulay 	v. 	Anas, 	321 	F.3d 	45, 	51 	(1st 	Cir. 	2003) 	(stating
“[s]urprise and prejudice” are the important factors in a district
court’s decision to preclude untimely expert testimony).
Even 	if 	Mr. 	Bokhart’s 	opinion 	was 	sufficiently 	(if 	barely)
disclosed, the Court concludes that, like his “all earned revenues”
opinion, 	it 	proceeds 	from 	a 	flawed 	factual 	premise 	that 	cannot
comport with any basis for the jury’s verdict of misappropriation.
Bokhart’s “head start” analysis is wholly reliant on Dr. Bergeron’s
opinion 	that 	Alcor’s 	“use 	of 	[Alifax’s] 	trade 	secret 	related 	to
software 	and 	firmware” 	provided 	it 	with 	a 	one-month 	advantage.
But Dr. Bergeron’s opinion was not general; it was specific. 	The
alleged one-month advantage was expressly tied to programming “the
10 The Court was provided only with excerpts of Mr. Bokhart’s
deposition; 	thus, 	it 	has 	been 	unable 	to 	review 	his 	complete 	tes-
timony.
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signal 	acquisition 	features 	of 	the 	instrument.” 	Bergeron 	Rpt. 	¶
44 	(emphasis 	added). 	It 	had 	nothing 	whatsoever 	to 	do 	with 	the
trade 	secret 	that 	the 	jury 	found 	the 	Defendants 	misappropriated:
source code concerning the conversion of photometric measurements.
As 	noted 	above, 	there 	was 	no 	evidence 	presented 	in 	the 	liability
phase of the trial pertaining to “signal acquisition” – all of the
source 	code 	evidence 	related 	directly 	to 	the 	“conversion 	algo-
rithm.” 	This is a critical difference, and the jury was not given
“signal acquisition” as an element of the trade secret because of
this failure of proof. 	Thus, Mr. Bokhart’s head start conclusions
are 	derived 	from 	an 	opinion 	related 	to 	a 	trade 	secret 	theory 	the
Court 	rejected 	as 	unsupported 	by 	the 	evidence. 	See 	Charge 	Conf.
Tr. 11:9-16:4. 	Because the remaining theory has no relationship
to 	a 	misappropriation 	found 	by 	the 	jury, 	it 	is 	unreliable 	and
inadmissible. 11
11 	The 	Court 	recognizes 	that 	Dr. 	Bergeron 	appeared 	to 	drift
from his disclosed opinions by testifying at trial that “[i]t would
definitely take months” to develop a “commercially viable conver-
sion 	algorithm 	if 	you 	were 	starting 	from 	scratch[.]” 	Trial 	Tr.
Vol. 3 at 115:23-116:1. 	As discussed above, however, this opinion
is not disclosed in Dr. Bergeron’s report. 	Federal Rule of Civil
Procedure 26(a)(2)(D) establishes the timeline for expert disclo-
sures 	and 	Rule 	37(c) 	expressly 	prohibits 	a 	party 	from 	using 	in-
formation at trial that was not provided as required by Rule 26(a).
Accordingly, the Court will not permit Mr. Bokhart offer an opinion
based on another expert’s conclusions voiced for the first time in
his trial testimony.
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IV. 	Conclusion
For the aforementioned reasons, Defendants’ Motion to Exclude
the 	Opinions 	of 	Expert 	Witness 	Christopher 	J. 	Bokhart 	(ECF 	No.
230) is GRANTED IN PART. 	Mr. Bokhart’s opinions concerning trade
secret misappropriation damages are EXCLUDED in their entirety.
IT IS SO ORDERED.
William E. Smith
Chief Judge
Date: 	April 30, 2019
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