[00:00:04] Speaker 04: OK. [00:00:05] Speaker 04: The first argued case this morning is number 16, 1945, Raytheon Company against Indigo Systems Corporation. [00:00:13] Speaker 04: Mr. Cunningham. [00:00:15] Speaker 02: Thank you, Your Honor. [00:00:22] Speaker 02: Proceed. [00:00:22] Speaker 02: May it please the Court. [00:00:25] Speaker 02: Your Honor, as a trial, Raytheon pursued trade secrets. [00:00:27] Speaker 02: The jury found four of them to be secret. [00:00:30] Speaker 02: The jury did not find misappropriation. [00:00:34] Speaker 02: Given the weight and the evidence, given the evidence at trial, no reasonable juror could have concluded that misappropriation did not occur for the four trade secrets that were found to be secret. [00:00:45] Speaker 04: What is your view of the basis for the verdict that the trade secrets, although they were trade secrets, so we will treat them that way, were not used by indigo systems or that they were not misappropriated? [00:01:01] Speaker 04: Well, they said they found they were misappropriated. [00:01:03] Speaker 04: They found they were trade secrets. [00:01:05] Speaker 02: Yes, Your Honor. [00:01:05] Speaker 02: They found they were trade secrets, but when they asked the second question, was there misappropriation? [00:01:10] Speaker 02: On the four in which they found they were secret, they did not find misappropriation. [00:01:14] Speaker 04: They found they were not used or that they were not wrongly taken. [00:01:18] Speaker 02: Well, the question on the jury charge was misappropriation, Your Honor. [00:01:21] Speaker 02: It was, if you answered no to question two, identify which alleged trade secrets are in fact secrets. [00:01:27] Speaker 02: I'm sorry. [00:01:28] Speaker 02: That was the one. [00:01:30] Speaker 02: Did Raytheon prove by preponderance of evidence that Indigo misappropriated one or more of the secrets? [00:01:35] Speaker 02: That was the question on the charge. [00:01:37] Speaker 02: The jury was asked, do you find any secret? [00:01:41] Speaker 02: They found yes to four. [00:01:42] Speaker 02: The next question was, do you find misappropriation? [00:01:45] Speaker 02: Misappropriation under Catoosa, the relevant law, is use or disclosure based on improper means. [00:01:52] Speaker 01: Before we can figure out whether there's misappropriation of a trade secret, [00:01:57] Speaker 01: We first have to figure out, what is the trade secret? [00:02:00] Speaker 01: What is the scope of the trade secret? [00:02:02] Speaker 01: Absolutely, Your Honor. [00:02:03] Speaker 01: There wasn't any instruction to the jury saying, trade secret number 14, here's the definition of it. [00:02:11] Speaker 02: Absolutely, Your Honor. [00:02:12] Speaker 02: I believe that was the bird of indigo. [00:02:14] Speaker 02: They did not object to the definition or the description. [00:02:17] Speaker 00: Burden their burden? [00:02:18] Speaker 02: I'm sorry? [00:02:18] Speaker 02: You're the plaintiff? [00:02:20] Speaker 00: Yes. [00:02:20] Speaker 00: Is their burden to identify what the trade secret is? [00:02:22] Speaker 02: No, Your Honor. [00:02:23] Speaker 02: We assigned the trade secrets. [00:02:25] Speaker 02: The jury charge actually defined the trade secret. [00:02:27] Speaker 02: It said method and number 14 is the first one I'm talking about. [00:02:31] Speaker 02: Method and use. [00:02:32] Speaker 00: Why isn't it your burden to establish what the trade secret is? [00:02:35] Speaker 02: Well, Your Honor, I believe we did. [00:02:36] Speaker 02: Both in the jury charge and the evidence at trial, we identified what the trade secret was. [00:02:41] Speaker 00: How do we know what the definition is? [00:02:42] Speaker 02: Between the testimony from Raytheon's witnesses and Indigo's witnesses, the definition of trade secret 14 was agreed upon. [00:02:49] Speaker 02: It was a series of cascading [00:02:52] Speaker 02: bakes. [00:02:52] Speaker 02: It was the method and use of a sequential vacuum bake. [00:02:58] Speaker 02: Indigo would like to say that it was a specific recipe, a time, a temperature, and a pressure. [00:03:02] Speaker 00: But if that's the definition of the trade secret, that was well known. [00:03:05] Speaker 02: I'm sorry, your honor? [00:03:06] Speaker 00: If that's the definition of the trade secret, that was well known to have a cascading bake. [00:03:13] Speaker 02: Actually, your honor, the evidence of trial found that the trade secret, the use of a sequential vacuum bake or a cascading bake, [00:03:19] Speaker 02: as practiced by Raytheon and Indigo was not in the public domain and was not well known. [00:03:24] Speaker 00: That's a different question. [00:03:24] Speaker 00: You're changing the definition of the trade secret. [00:03:28] Speaker 00: The question is, is cascading be the general concept well known? [00:03:33] Speaker 00: And yes, it was. [00:03:34] Speaker 00: That can't have been the trade secret that the jury found to exist. [00:03:40] Speaker 00: It had to be. [00:03:42] Speaker 00: the cascading beast on certain particular parameters, right? [00:03:47] Speaker 02: Your Honor, when Steve Black, Raytheon's expert witness, was asked what... Try to answer my question. [00:03:51] Speaker 02: Certainly. [00:03:51] Speaker 02: The evidence at trial from both Raytheon and Indigo witnesses was that Trade Secret 14 was defined as a series of cascading bakes. [00:04:00] Speaker 02: That was the definition. [00:04:01] Speaker 00: Any series of cascading bakes? [00:04:03] Speaker 02: Yes, Your Honor. [00:04:04] Speaker 02: That was the definition that was given. [00:04:05] Speaker 02: That was the description that was given to the jury by both witnesses from Raytheon and Indigo. [00:04:10] Speaker 02: That is the definition of trade secret 14. [00:04:12] Speaker 01: There's no testimony anywhere in the record where there was a more specific conception of the trade secret number 14 other than the basic concept of doing the sequential vacuum bake? [00:04:26] Speaker 01: Is that what you're telling me? [00:04:27] Speaker 02: No, Your Honor. [00:04:28] Speaker 02: The testimony at trial was that the trade secret was a series of cascading or sequential vacuum bakes that were product dependent. [00:04:35] Speaker 02: The time, temperature, and pressure were based on the products. [00:04:39] Speaker 02: The exact recipes for any cascading bake were product-dependent. [00:04:43] Speaker 02: Both witnesses from Raytheon and Indigo agreed that a cascading bake or a sequential vacuum bake as practiced was not in the public domain, was not known, and that the recipes were product-dependent. [00:04:55] Speaker 00: You keep saying as practiced. [00:04:57] Speaker 00: And it seems to me you're changing the definition of the trade secret even as we talk about it. [00:05:03] Speaker 00: Is it the general concept of the cascading bake, or is it the peculiar circumstances here? [00:05:09] Speaker 02: It is the concept of a sequential vacuum bake. [00:05:12] Speaker 02: The concept of vacuum baking? [00:05:13] Speaker 00: The general concept, regardless of the actual parameters. [00:05:18] Speaker 02: Yes, even as Indigo's witness testified that the series of cascading bakes is not in the public domain. [00:05:24] Speaker 00: Who testified that the general concept was not in the public domain? [00:05:28] Speaker 00: Could you show me that? [00:05:30] Speaker 02: Mr. Kinnon. [00:05:32] Speaker 02: I believe it as, I'm sorry, Your Honor. [00:05:34] Speaker 02: Let me pull up the record site for you, because that's more important. [00:05:38] Speaker 02: App site 980506. [00:05:43] Speaker 02: And I will read from the record here. [00:05:52] Speaker 02: Oh, Your Honor, I do not know the volume. [00:05:59] Speaker 00: You know, you're supposed to bring the appendix and the briefs and things like that to oral argument with you. [00:06:05] Speaker 04: As long as you mind. [00:06:06] Speaker 02: I have the site, Your Honor. [00:06:07] Speaker 02: I just don't know. [00:06:08] Speaker 02: I have all the record excerpts that I needed to decipher them. [00:06:11] Speaker 02: I have the briefs. [00:06:12] Speaker 02: I apologize for not having the appendix which volume it's from. [00:06:15] Speaker 02: It is from appendix 98, page 9805 and 06. [00:06:21] Speaker 02: Indigo's expert was. [00:06:22] Speaker 02: Wait. [00:06:22] Speaker 02: I'm sorry? [00:06:23] Speaker 02: Wait. [00:06:23] Speaker 02: Certainly. [00:06:35] Speaker 00: OK, it seems to be in volume five. [00:06:39] Speaker 02: My apologies. [00:06:40] Speaker 02: What is it? [00:06:42] Speaker 02: 9805 and 06. [00:06:50] Speaker 02: OK. [00:06:52] Speaker 02: Indigo's expert witness was asked, would you agree with me? [00:06:56] Speaker 02: What line is this on? [00:06:57] Speaker 02: Starting on line 25 on 9805, going to line 5 on 9806. [00:07:03] Speaker 02: Would you agree with me? [00:07:04] Speaker 02: I believe you would agree with me that for trade secret number 14, the piece-part vacuum bake process, that there are no public domain documents discussing the concept of a sequential bake as opposed to a final piece-part bake. [00:07:19] Speaker 02: Answer, yeah. [00:07:20] Speaker 02: That, I think that's correct. [00:07:23] Speaker 02: This was Indigo's witness, their expert, who admitted that the trade secret 14, the concept of a sequential vacuum bake. [00:07:31] Speaker 00: Yeah, but it's related to the pierce-part vacuum-based [00:07:34] Speaker 00: process. [00:07:35] Speaker 00: It's talking about an individual process. [00:07:39] Speaker 00: Where does somebody say that the general concept of a sequential bake is a trade secret? [00:07:44] Speaker 02: Right there on line three, Your Honor, discussing the concept of a sequential bake. [00:07:48] Speaker 00: I don't read it that way. [00:07:48] Speaker 00: Is there any other place? [00:07:50] Speaker 02: Your Honor, that's the most definite and direct citation in the record. [00:07:54] Speaker 01: I guess another way of looking at this is the question isn't whether you can point to some testimony somewhere in the record [00:08:04] Speaker 01: that defines the trade secret in a way you like. [00:08:09] Speaker 01: The more relevant question is, was there testimony in the record that arguably defines the trade secret in a much narrower way, in the way the other side likes, that would be reasonable for a reasonable jury to accept as the proper conception of your trade secret? [00:08:29] Speaker 01: And if the answer to that is yes, then I think we're done. [00:08:32] Speaker 02: I would agree with you, Your Honor, but there is not. [00:08:34] Speaker 02: There is no citation, there is no evidence in the record at all where the definition of Trade Secret 14 was more narrowly defined. [00:08:42] Speaker 02: The concept of piece-part vacuum baking with recipes as being product-dependent was discussed, but never once, and in fact, Raytheon was asked on cross-examination, is it two steps, five steps, 50 steps? [00:08:55] Speaker 02: And the answer was, it is a cascading series of bakes that is product-dependent, at no point during the trial ever, [00:09:02] Speaker 02: was trade secret 14 given a more specific or narrow definition by any witness or document. [00:09:09] Speaker 02: Indigo did not object to the jury charge as drafted. [00:09:13] Speaker 02: Indigo did not request an instruction to the jury that provided a more specific definition of trade secret 14. [00:09:19] Speaker 02: The witnesses agreed that the trade secret was a cascading series of bakes. [00:09:24] Speaker 04: Let me take you back to the path that I was trying to understand. [00:09:29] Speaker 04: Yes. [00:09:29] Speaker 04: That is to accept [00:09:30] Speaker 04: that at least for the four items that the jury found were trade secrets. [00:09:37] Speaker 04: Nonetheless, they found no misappropriation. [00:09:42] Speaker 04: And that was the inquiry that seems to me to be uncertain. [00:09:48] Speaker 04: And again, was there no misappropriation because there was evidence that this information, although it was trade secret, was not used, not embodied in their product? [00:10:00] Speaker 02: Well, Your Honor, at least with respect to trade secret 14, Indigo admitted to practicing the exact same trade secret, a sequential vacuum bake. [00:10:08] Speaker 02: They admitted it. [00:10:09] Speaker 02: I believe the jury erred by not finding misappropriation, given the admission by Indigo that they used it. [00:10:16] Speaker 02: There was admissions by Farhad Mirbad, one of the packaging engineers from Indigo, also from Indigo's expert, Mr. Jonathan Knaut. [00:10:23] Speaker 02: He admitted, they both admitted, that Indigo practices a piece-part sequential vacuum bake. [00:10:31] Speaker 02: Given that testimony, and it was not contradicted, it was against the evidence. [00:10:36] Speaker 02: And no reasonable juror could conclude no misappropriation. [00:10:40] Speaker 04: Well, that's what I'm trying to understand. [00:10:42] Speaker 04: Nonetheless, that was their verdict. [00:10:44] Speaker 02: That was their verdict. [00:10:45] Speaker 02: But in our opinion, that is what the appeal is based on, is that no reasonable juror could have concluded that, given the admissions by Indigo that they practice the trade secret. [00:10:57] Speaker 00: On appeal, Indigo has tried... The problem is there's plenty of evidence in this record that the general concept of a cascading bake was well known, right? [00:11:06] Speaker 02: There is plenty of evidence in the record that vacuum baking is well known. [00:11:10] Speaker 02: There was no evidence in the record that a sequential vacuum baking process is, and the expert admitted, that the concept of a sequential vacuum Peace Park bake is not in the public domain. [00:11:22] Speaker 02: And regardless of your... Where? [00:11:24] Speaker 00: I'm sorry? [00:11:24] Speaker 02: What I just read from you, AB 9506 to 9505-06, Your Honor, Mr. Canal admitted that the concept is not in the public domain, and the jury found that it was a secret. [00:11:35] Speaker 02: It was defined on the jury charge as a method and use of sequential vacuum bake. [00:11:40] Speaker 02: The testimony at trial was that the trade secret was the use of sequential vacuum baking. [00:11:47] Speaker 02: It was never defined, Judge Chen, as a specific, it must be [00:11:51] Speaker 02: Three stages, four stages, five stages must be this temperature. [00:11:55] Speaker 02: It must be this pressure. [00:11:56] Speaker 02: It was never defined that specifically. [00:11:58] Speaker 02: It was always defined as a series of vacuum bakes that are product-dependent. [00:12:03] Speaker 02: The jury found it to be a secret based in part because everyone agreed it was not in the public domain. [00:12:09] Speaker 02: Indigo admitted to using the trade secret, Judge Newman. [00:12:13] Speaker 02: It was no reasonable juror could conclude no misappropriation given the admission. [00:12:20] Speaker 02: That is what the appeal is about. [00:12:21] Speaker 02: is that with the testimony and with the admissions that are uncontroverted, no reasonable juror could have concluded no misappropriation once they concluded there was a secret. [00:12:32] Speaker 02: That's with respect to trade secret 14, Your Honor. [00:12:36] Speaker 02: I see I'm on my rebuttal time. [00:12:38] Speaker 04: Would you? [00:12:38] Speaker 04: We'll save you rebuttal time. [00:12:39] Speaker 04: Let's hear from the other side. [00:12:48] Speaker 04: Mr. Palmore? [00:12:50] Speaker 03: Thank you, Your Honor, and may it please the court. [00:12:53] Speaker 03: I'm Joseph Palmore here on behalf of Indigo Fleer. [00:12:55] Speaker 03: There was ample evidence supporting the jury verdict of no misappropriation in this case. [00:13:00] Speaker 03: Raytheon is effectively reprising its jury argument. [00:13:04] Speaker 03: It points to evidence in its favor and asks for inferences in its favor and says that a finding of misappropriation could be made based on that evidence. [00:13:12] Speaker 00: I thought there was a lot of evidence in the record that the general notion of a cascading vape was in the public domain. [00:13:18] Speaker 00: Is that true? [00:13:19] Speaker 03: Absolutely, Your Honor. [00:13:20] Speaker 00: And why don't you show us where the evidence is. [00:13:23] Speaker 03: Sure. [00:13:24] Speaker 03: So my colleague on the other side talked about our expert, Mr. Knauth. [00:13:28] Speaker 03: If you look at volume five of the appendix, page 9727, Mr. Knauth has asked about this very concept. [00:13:39] Speaker 03: explains that it is public record. [00:13:42] Speaker 03: I'll give you a... Starting at page nine, he's talking about his time... Line nine, I'm sorry. [00:13:50] Speaker 03: Line nine. [00:13:51] Speaker 03: He's talking about his prior employment before the relevant period at a company called the ICC and says, let's talk about that period. [00:13:58] Speaker 03: Did you have any experience with a sequential vacuum bake? [00:14:01] Speaker 03: Yes, absolutely. [00:14:02] Speaker 03: And what was that? [00:14:03] Speaker 03: Well, we did it all the time. [00:14:05] Speaker 03: We had piece-part ovens. [00:14:06] Speaker 03: We had ovens that were used for assembly, sub-assembly baking. [00:14:10] Speaker 03: And then the final baking was done on the vacuum system while you're actively pumping on the doer. [00:14:15] Speaker 03: And then the exchange goes on. [00:14:16] Speaker 03: And if you look over on the opposing page, 9728, line 10, so you know it's piece part baking and final baking. [00:14:25] Speaker 03: I think it is well known. [00:14:27] Speaker 03: The intermediate stuff is just piece part baking of the part that's never been baked before. [00:14:31] Speaker 03: So to me, it's a distinction without a difference. [00:14:33] Speaker 03: All of that testimony shows that the concept of piece part baking and sub-assembly baking [00:14:40] Speaker 03: was well known. [00:14:41] Speaker 03: All of that testimony, of course, has to be. [00:14:42] Speaker 04: So what was the position in defense that all of these procedures were independently developed or just that they were not protectable and therefore were properly transferred? [00:14:59] Speaker 03: Judge Newman, to the extent they were protectable, it was the recipes that were protectable, the specifics of the process, time, temperature, pressure. [00:15:08] Speaker 03: And the evidence. [00:15:09] Speaker 00: The specifics weren't misappropriated. [00:15:10] Speaker 03: And the specifics were not misappropriated. [00:15:13] Speaker 03: To be sure, FLIR used piece-part baking. [00:15:15] Speaker 03: Everyone in this industry does when manufacturing. [00:15:18] Speaker 04: Let me go back to the question. [00:15:19] Speaker 04: Yes. [00:15:19] Speaker 04: Is the position that all of this was independently developed? [00:15:23] Speaker 04: Absolutely, Your Honor. [00:15:24] Speaker 04: All of that, it was, there was a matter of entitlement because of either reverse engineering or it was being published. [00:15:32] Speaker 03: The trade secret as properly understood and as argued to the jury [00:15:37] Speaker 03: was not used, was not acquired. [00:15:40] Speaker 03: The specific times and temperatures, the specifics of the process were independently developed. [00:15:45] Speaker 03: And I can point you to that, that part of this. [00:15:47] Speaker 04: Yes, it was not acquired. [00:15:47] Speaker 04: It was independently developed. [00:15:49] Speaker 04: This is what I'm trying to understand as to the rules behind all of this. [00:15:52] Speaker 03: It was not acquired. [00:15:53] Speaker 03: I understand, Your Honor. [00:15:55] Speaker 03: It was not acquired. [00:15:56] Speaker 03: And then it, it wasn't independently developed in the sense of they ended up at the same place through independent development. [00:16:03] Speaker 03: The processes were actually dramatically different. [00:16:05] Speaker 03: And again, Mr. Knauth's testimony, this is at 9730, which must be accepted as true. [00:16:11] Speaker 03: He talks about the dramatic differences between the two processes in terms of time, temperature, pressure. [00:16:17] Speaker 03: And that evidence, again, I think by itself provided a basis for a reasonable jury to conclude that there was no acquisition, because they could look at the dramatic differences between the processes and make that reasonable inference. [00:16:30] Speaker 03: And of course, on this standard of review, that's the question, what could a reasonable jury [00:16:35] Speaker 03: do. [00:16:35] Speaker 03: This was a 17-day trial. [00:16:37] Speaker 03: There were more than 30 witnesses. [00:16:39] Speaker 03: There were thousands of pages of documents, as the court knows from the volume of the joint appendix. [00:16:43] Speaker 03: The jury was quite attentive. [00:16:44] Speaker 03: The jury said some of these things were trade secrets. [00:16:47] Speaker 03: Most of them weren't. [00:16:48] Speaker 03: But then he said none of them were misappropriated. [00:16:51] Speaker 03: To overturn that verdict for a plaintiff, an unsuccessful plaintiff to overturn that verdict [00:16:58] Speaker 03: It has to show that the evidence in its favor was so overwhelming that any reasonable jury would have been compelled to accept it. [00:17:07] Speaker 03: And even crediting all the evidence on the other side, even giving Fleer the benefit of all available inferences on the other side. [00:17:14] Speaker 01: The honest counsel just said a few moments ago that the jury was charged with a particular understanding of trade secret 14 that sounded like a very basic conceptual definition. [00:17:27] Speaker 03: Your Honor, if you look at the verdict form, it was simply a list, three or four words per. [00:17:33] Speaker 03: There was no jury charge in terms of here's the definition of the trade secret. [00:17:37] Speaker 03: And I think that's key here, because as the court pointed out, it's plaintiffs. [00:17:41] Speaker 03: It's the owner of the putative trade secret that has the obligation to define it under California law. [00:17:47] Speaker 03: That's their obligation, because otherwise you can't put on a defense if you don't know what's being claimed. [00:17:52] Speaker 01: So you're saying what happened here was a trial where there was a lot of talk about [00:17:57] Speaker 01: trade secret and then both sides had their different competing understandings of the trade secret was and then it was left to the jury to try to draw from the competing stories what was the trade secret and then figure out whether that was misappropriated. [00:18:13] Speaker 03: Well your honor that's the I think one could certainly get that impression now based on how Raytheon has briefed the case. [00:18:19] Speaker 03: At the jury trial itself we think it quite clear that the trade secret 14 that was claimed [00:18:25] Speaker 03: was the specific recipes, the time, the temperatures. [00:18:29] Speaker 00: In the closing argument to the jury, you mean? [00:18:31] Speaker 03: There was reference by Fleer's counsel to that aspect of the trade secret in the closing argument. [00:18:37] Speaker 00: I think what we're struggling for is to find out what the jury thought the trade secret was, or what the trade secret was argued to be. [00:18:46] Speaker 00: Right. [00:18:47] Speaker 00: There's no oral charge defining the trade secret. [00:18:51] Speaker 00: The jury forum doesn't really define it. [00:18:55] Speaker 00: The question is, did they define it in their argument to the jury? [00:19:00] Speaker 03: It's not in the closing argument, Your Honor, but I think there are two key points to keep in mind here. [00:19:05] Speaker 03: One is that to the extent that there is ambiguity or uncertainty about the scope of the trade secret, that doesn't mean that Raytheon wins. [00:19:12] Speaker 03: That means that Raytheon loses. [00:19:14] Speaker 03: The MAI Systems case from the Ninth Circuit that we cite in our brief holds that when the plaintiff has failed to discharge its California law duty to find the trade secret with specificity, [00:19:27] Speaker 03: no judgment can be entered on misappropriation, because you can't figure out what has or hasn't been misappropriated if the plaintiff hasn't fulfilled its obligation to define the trade secret. [00:19:36] Speaker 03: So to the extent that there's confusion about what the trade secret was, that means Raytheon loses. [00:19:41] Speaker 03: It certainly doesn't mean they can overturn the jury verdict. [00:19:43] Speaker 04: It's a lengthy trial, enumerated trade secrets, and you're saying that nobody said what a trade secret is? [00:19:51] Speaker 03: Not in the jury charge, but Your Honor, [00:19:54] Speaker 03: Raytheon's counsel and witnesses did. [00:19:56] Speaker 04: I was not asking about the jury. [00:19:57] Speaker 04: You're answering a different question, which is a matter of concern. [00:20:04] Speaker 04: My question is, was the jury throughout all of this trial, which dealt with trade secrets, you're telling us they were never told what a trade secret is? [00:20:16] Speaker 03: No, Your Honor, they, to the contrary, they were repeatedly told by Raytheon's counsel and Raytheon's witnesses that the trade secret was the specifics, was the recipes. [00:20:25] Speaker 03: And I'm happy to point to that, that testimony that we, we cite in our brief. [00:20:30] Speaker 03: Raytheon's expert at 10390 says the particular details of this trade secret are the processing requirements, including time and temperatures for each material type that is necessary to ensure maximum vacuum life. [00:20:46] Speaker 03: Their own witness, Black, this is at 7373. [00:20:52] Speaker 03: He's being examined by Raytheon's counsel. [00:20:55] Speaker 03: Raytheon's counsel reads something from a document that refers to the FLIR document that refers to vacuum degassing of subassemblies is required to maintain vacuum life requirements. [00:21:07] Speaker 03: In general, you want to vacuum bake the highest temperature possible for the longest amount of time tolerable. [00:21:13] Speaker 03: and ask, is that one of our trade secrets? [00:21:15] Speaker 03: Black. [00:21:15] Speaker 03: Raytheon's witness says, I think it's actually reasonably well-known. [00:21:19] Speaker 03: It's just if you want to clean this stuff up, the hotter you get it, the longer you do it. [00:21:23] Speaker 03: That was well-known, he says. [00:21:25] Speaker 04: And, of course, it's well-known that you need to clean it, but not the detail of how they achieved it. [00:21:30] Speaker 03: Correct. [00:21:30] Speaker 03: Because then he goes on to say, and, of course, you're bounded by what the part can stand, and that's how you get into the trade secret here, what the part can stand, temperature, time, pressure. [00:21:43] Speaker 03: Mr. Sharp, who is the employee who Raytheon says disclosed, brought the trade secret with him from Raytheon, is being examined by Raytheon's counsel. [00:21:53] Speaker 03: And counsel says, in fact, you acknowledge that those recipes are Raytheon's trade secrets, don't you, sir? [00:22:03] Speaker 03: Mr. Sharp, the specific time and tolerance associated with them, yes. [00:22:08] Speaker 03: And counsel for Raytheon says, sure, and I'm talking about the specifics. [00:22:12] Speaker 03: I'm not talking about the general recipe. [00:22:15] Speaker 03: So there was repeated testimony and statements by Raytheon's counsel that the trade secret 14 was the specific recipe. [00:22:22] Speaker 01: What secret do you have for that, about Raytheon's counsel? [00:22:25] Speaker 03: That last one? [00:22:26] Speaker 03: Yeah. [00:22:26] Speaker 03: That was 6816, your honor. [00:22:29] Speaker 03: So there were repeated statements by Raytheon witnesses, Raytheon's counsel that the trade secret was the specific recipes. [00:22:36] Speaker 03: And Mr. Sharp testified that he developed the recipes [00:22:41] Speaker 03: with the help of vendors. [00:22:44] Speaker 03: That is at 6992 in consultation with part suppliers. [00:22:48] Speaker 03: His own notes show that they were, and this is at 11230 and 11246 through 47. [00:22:58] Speaker 03: He talks about using trial and error, consulting with vendors, consulting with textbooks to get the specifics on the temperatures and the specifics of the process. [00:23:06] Speaker 03: There was ample evidence that the jury could have relied on, and apparently did rely on, after this lengthy jury trial, to find that there was no misappropriation of a trade secret. [00:23:16] Speaker 01: The other side pointed to JA9805-06 this morning, out of what we now know as volume five. [00:23:24] Speaker 03: Right. [00:23:26] Speaker 03: That was from the expert, the indigo expert, Nouth. [00:23:30] Speaker 03: And I think Judge Dyke was exactly right that he was talking there about the specifics. [00:23:36] Speaker 03: His testimony is what I started off reading at 9727 through 9728, where he talks about this idea of sub-assembly sequential baking was something that was well known that he himself had done at a prior company. [00:23:48] Speaker 03: That's the same witness. [00:23:50] Speaker 03: And the jury easily could have relied on that. [00:23:54] Speaker 03: Council didn't talk about trade secret 30, but the analysis is effectively the same. [00:23:59] Speaker 03: Their theory there was that the trade secret came over with former Raytheon employee Magoon. [00:24:05] Speaker 03: They never called Magoon to testify. [00:24:08] Speaker 03: And Mr. Schweickert, who was an Indigo employee who had never worked at Raytheon, testified that he developed that process on his own. [00:24:16] Speaker 03: And he talked about all the experiments he did. [00:24:19] Speaker 03: All that evidence has to be accepted as true. [00:24:21] Speaker 03: And that establishes that there was no misappropriation. [00:24:25] Speaker 03: In my time remaining, if I could, I'd like to, unless there are further questions on the main appeal, I'd like to shift to our cross appeal. [00:24:32] Speaker 04: OK. [00:24:32] Speaker 04: You can turn to your cross appeal. [00:24:36] Speaker 03: Sure, Your Honor. [00:24:38] Speaker 03: The district court committed an error of law by failing to appreciate that a choice of law determination is a decision on the merits for purposes of Texas law. [00:24:48] Speaker 00: Well, it can be, but the question is whether the choice of law decision here defeated the claim. [00:24:56] Speaker 00: And I don't see in your brief that you say that there's any difference between the claim under Texas law or California law. [00:25:03] Speaker 00: In fact, to the extent that there's any difference, I gather that California law is more favorable. [00:25:08] Speaker 03: Well, there certainly is a difference on attorney's fees, Judge Dyke. [00:25:11] Speaker 00: No, no, but put that aside. [00:25:12] Speaker 00: Underline the claim in determining whether there was a prevailing party here by getting a decision that California applied as opposed [00:25:26] Speaker 00: Texas law, that didn't defeat any claim, did it? [00:25:30] Speaker 03: Well, it defeated a Texas claim, Your Honor, and I think the Texas courts follow a fairly formalistic approach to this. [00:25:35] Speaker 00: Okay, but the Texas claim on the trade ticket is no different from the California claim, or at least it's no more favorable to that. [00:25:44] Speaker 03: Well, it is different on attorney's fees, and it is different in the sense of it is under a different body of law. [00:25:51] Speaker 03: There are cases from Texas, for instance, when [00:25:53] Speaker 03: a party proceeds to trial on a contract claim, even though the factual basis is the same as the TTLA claim. [00:26:02] Speaker 03: If the TTLA claim was voluntarily dismissed or was non-voluntarily dismissed earlier, there would still be an award of fees because it's a claim-specific analysis. [00:26:14] Speaker 01: And the court here... Was it your position all along that Texas law should apply to the trade secret claim? [00:26:21] Speaker 03: No, to the contrary, Your Honor. [00:26:22] Speaker 03: Our position all along was that California law applied. [00:26:25] Speaker 03: We repeatedly said that. [00:26:28] Speaker 03: And nonetheless, Raytheon clung to both claims for years and years through at least five years of litigation. [00:26:36] Speaker 03: When it came up to this court the last time, when this court kind of knocked the legs out from under, the only basis for denying us fees under the TTLA, when it went back on remand, all of a sudden, Raytheon agreed [00:26:51] Speaker 03: that, of course, California law applies. [00:26:53] Speaker 03: We're going to get rid of this. [00:26:54] Speaker 01: How much fees are you actually looking for? [00:26:56] Speaker 01: It seems like where the choice of law was still unresolved, the basic problem of the trade secret case was running forward and was going to run forward either way. [00:27:12] Speaker 01: And ultimately, when the facts were on the ground and materialized, we would know it's either California or Texas. [00:27:19] Speaker 01: So it's not clear to me, even if you were to get fees under the TTLE, just what kind of fees you would deserve. [00:27:28] Speaker 03: Well, Judge Chen, we never got to that point because the judge. [00:27:32] Speaker 01: Right. [00:27:32] Speaker 01: So I'm asking you now, what is it that you're looking for? [00:27:34] Speaker 03: Well, I can't give you an answer today because that question was never briefed. [00:27:42] Speaker 03: The record was never developed on, for instance, was there separate work required? [00:27:47] Speaker 00: Do you want to collect the cost of arguing that California law applied rather than Texas law? [00:27:51] Speaker 03: Well, that would be one possible way of doing it. [00:27:53] Speaker 03: Or you might split it 50-50, given that they were proceeding under both. [00:27:56] Speaker 01: But did you ever file a motion that California law should apply and not Texas law? [00:28:00] Speaker 03: No, we never filed a motion. [00:28:02] Speaker 03: That was our position all along. [00:28:04] Speaker 03: And we would have had to file a motion before trial. [00:28:07] Speaker 00: Summary judgment was granted. [00:28:09] Speaker 03: Pardon me? [00:28:10] Speaker 00: Where are the costs? [00:28:12] Speaker 03: Well, the costs are in the having to litigate both these claims together. [00:28:19] Speaker 03: So this is all, these are all questions for the district court on remand if we get a remand. [00:28:23] Speaker 01: the court in its discretion. [00:28:24] Speaker 01: Help us understand the logic of what's going on here. [00:28:26] Speaker 01: Because at the moment, I don't see any delta in having an additional legal cost burden of a specific Texas-based cause of action versus the California cause of action when it was the same basic cause of action that was being litigated. [00:28:47] Speaker 03: Right. [00:28:47] Speaker 03: Your Honor, as far as entitlement defeats, I don't think that's the relevant question under Texas law. [00:28:52] Speaker 01: So for instance, if you go to trial on the contract claim. [00:28:54] Speaker 03: I'm just trying to understand where's the delta. [00:28:58] Speaker 03: Right. [00:28:58] Speaker 03: Well, there was legal research on these issues. [00:29:01] Speaker 03: There was legal research on the venue when the case was first filed in Texas, despite all the relationships with Texas, with California. [00:29:07] Speaker 01: You never filed an issue on the choice of law? [00:29:09] Speaker 03: No, we didn't, because we got summary judgment on statute of limitations. [00:29:11] Speaker 03: So it was a different basis. [00:29:14] Speaker 03: And then when it came back down from this court, [00:29:17] Speaker 03: then that's when, as the parties were proceeding toward trial, that issue would have been teed up, but all of a sudden they then withdrew the claim. [00:29:25] Speaker 03: But this is, again, this would all be within the discretion of the district court. [00:29:29] Speaker 03: The district court could look at, well, I see you are having to litigate both these together. [00:29:34] Speaker 03: They're very similar claims, so I'm gonna give only a certain percentage. [00:29:39] Speaker 00: Why any percentage? [00:29:41] Speaker 03: Because there may have been specific work done. [00:29:43] Speaker 03: And we were put to the test of defending against a Texas law claim for five years. [00:29:49] Speaker 00: If the evidence you developed was equally useful for Texas and California law, why should you get any fees with respect to the development of that evidence? [00:29:58] Speaker 03: Well, again, Your Honor, that would be a question for the district court on remand and the exercise of its discretion. [00:30:04] Speaker 00: My question is, what is the basis for getting [00:30:07] Speaker 00: any legal fees for evidence development when you had to develop the same evidence, no matter which law it was. [00:30:14] Speaker 03: Well, I mean, you could flip that around and say, if you can't segregate it, then we're entitled to fees. [00:30:20] Speaker 03: And that is the law in some states. [00:30:23] Speaker 03: But again, I think these are all questions for the broad discretion of the district court. [00:30:26] Speaker 03: The district court very well might not say you get all of it. [00:30:29] Speaker 03: Maybe you get a percentage. [00:30:30] Speaker 03: Maybe the district court will require us to show what specific work did you have to do because of the filing of the suit in Texas and the venue in Texas. [00:30:39] Speaker 04: The district court already said no. [00:30:41] Speaker 03: The district court said no at the threshold, but he never got to these questions that we're talking about now. [00:30:45] Speaker 03: Those would be remand questions. [00:30:47] Speaker 03: The district court made a legal error in concluding and failing to appreciate that the choice of law determination is a decision on the merits, and a voluntary withdrawal of a claim in order to avoid that decision can and does trigger fees under Texas law. [00:31:03] Speaker 01: But there was no choice of law motion on the book. [00:31:06] Speaker 03: There was no motion, but the issue was patent. [00:31:08] Speaker 03: The issue lurked. [00:31:08] Speaker 03: The issue was going to have to be decided. [00:31:10] Speaker 03: And there's no requirement that there be a pending motion. [00:31:13] Speaker 00: So suppose there were an issue about which version of the statute applied, whether the statute was amended and the question was whether the original statute applied or the amended statute applied. [00:31:24] Speaker 00: But it didn't make any difference which applied. [00:31:26] Speaker 00: Are you suggesting in those circumstances that a determination that the amended statute applied rather than the original statute applied would result in legal fees? [00:31:36] Speaker 03: I don't think so, Your Honor, but this is fundamentally different. [00:31:39] Speaker 03: And Vasquez and the other cases that we cite explain that a choice of law determination has claim-proclusive effect. [00:31:46] Speaker 03: So if you get a choice of law determination that California law applies rather than Texas law, that is a decision on the merits of the Texas law claims. [00:31:54] Speaker 03: It means you cannot bring that Texas law claim ever again. [00:31:58] Speaker 01: What about the fairly common scenario where someone alleges trade secret misappropriation, but they're not exactly sure of the locus [00:32:05] Speaker 01: are the primary locus of that misappropriation. [00:32:08] Speaker 01: Maybe it happened more in this state, or maybe the defendant's shenanigans were really primarily located in a different state. [00:32:16] Speaker 01: So I'm not really sure, but I'm going to elect both. [00:32:19] Speaker 01: And ultimately, I'm going to pursue one over the other. [00:32:21] Speaker 01: Once after discovery, I understand really where the alleged misappropriation in the acts took place. [00:32:29] Speaker 01: And then ultimately, it turns out, [00:32:31] Speaker 01: There's a Texas claim, but that's not the right place after discovery. [00:32:35] Speaker 01: It's really this other state. [00:32:37] Speaker 01: Every single time, the defendant's going to be able to ask for TTLA fees, because that unilateral withdrawal of the Texas claim was to avoid a choice of law adverse opinion? [00:32:51] Speaker 03: I don't know why I would say every single time, because it would be an inquiry into what motivated the withdrawal. [00:32:56] Speaker 03: But Texas has made a decision to award fees on a mandatory basis. [00:33:01] Speaker 03: to it's a loser pay system in both directions. [00:33:05] Speaker 03: And the Texas Supreme Court's decision in Epps addresses this issue and says, yes, this might disincentivize parties to withdraw losing claims. [00:33:14] Speaker 03: But the Texas legislature made the judgment that when legal relationship between the parties has changed, fees should be awarded. [00:33:24] Speaker 03: So if there are no more questions, we'd ask that for affirmance on the main appeal and for a reversal on our cross-appeal. [00:33:29] Speaker 04: Thank you. [00:33:39] Speaker 02: Your Honor, briefly on trade secret 30, the in situ sealing process. [00:33:43] Speaker 02: Carlton Magoon was the engineer at Raytheon who was credited with discovering that trade secret and embodying that at Raytheon. [00:33:50] Speaker 02: In the record on app site 11499, his initial job worksheet at Indigo, the very first task he was asked to do was develop in situ vacuum processing system for IR detector packages. [00:34:04] Speaker 02: When he was hired on, that's what he was asked to do. [00:34:07] Speaker 02: at AppSight 11512, his first year annual performance review, the very first thing under his notable accomplishments was one of the key duties when Carlton was hired was to develop in situ vacuum processing for the AutoCAM package. [00:34:24] Speaker 02: His design efforts have been directed towards a device that can be mass produced in a repeatable and reliable process. [00:34:31] Speaker 02: That is how Indigo obtained improperly Raytheon's TradeSecret 30. [00:34:37] Speaker 02: They have not disputed that. [00:34:38] Speaker 02: Their only evidence to attempt to dispute that is that Mr. Paul Schweikert, years later, performed some testing to tweak the process. [00:34:47] Speaker 00: As you said in your opening argument, there wasn't any evidence that the cascading bank was well known. [00:34:54] Speaker 00: And your opposing counsel has just written several excerpts from the record that say that. [00:35:01] Speaker 02: Your Honor, the idea of Peace Park vacuum baking, the idea of final vacuum baking is well known. [00:35:05] Speaker 02: Vacuum baking is nothing new. [00:35:08] Speaker 02: As Mr. Knaut, their own expert, said, the trade secret, as practiced by Raytheon and Indigo, is not well known. [00:35:15] Speaker 02: Mr. Knaut also. [00:35:17] Speaker 00: That's a different question. [00:35:19] Speaker 00: You keep changing the definition. [00:35:21] Speaker 00: Your Honor, the question is, you were arguing in your opening argument [00:35:27] Speaker 00: that the cascading bake, the very concept of it, was a trade secret. [00:35:32] Speaker 00: And just read all sorts of testimony from the records that says it's not a trade secret. [00:35:37] Speaker 00: It was well known. [00:35:38] Speaker 00: So that's a problem for you. [00:35:40] Speaker 02: Your Honor, I appreciate your position on that and your comment on that. [00:35:43] Speaker 02: Mr. Knaut testified on cross-examination that the concept of sequential piece-part vacuum baking is not well known. [00:35:52] Speaker 02: And anyway, Your Honor, that goes to whether or not it is a trade secret, and the jury found that it was. [00:35:56] Speaker 02: The defendants have admitted they practice the exact same vacuum bake that we do. [00:36:01] Speaker 02: At the app, Appendix 9777 and 7-8, Mr. Farhad Mirabod, one of the engineers for Indigo, he was asked, okay, second fundamental process that Indigo considers fundamental, Peace Park vacuum bake. [00:36:20] Speaker 02: Yes. [00:36:21] Speaker 02: At least according to 420, the exhibit. [00:36:24] Speaker 02: And we've talked about that at length. [00:36:25] Speaker 02: This is the piece part, the same piece part vacuum bake that you learned at Raytheon. [00:36:30] Speaker 02: Correct. [00:36:31] Speaker 02: Also from the app, 9806 and 9807, Mr. Knaut testifying again. [00:36:37] Speaker 02: Question, your testimony, I believe, was that your understanding was that Raytheon's piece part vacuum bake process is really just a breakdown to bake out contaminants based on steel, gold, paint, and epoxy limits. [00:36:51] Speaker 02: Is that accurate? [00:36:52] Speaker 02: Answer, that sounds about right. [00:36:54] Speaker 02: on page 9807. [00:36:57] Speaker 02: I want to go over, I believe it's the 23rd page. [00:37:00] Speaker 02: This is from lines 3 through 14. [00:37:02] Speaker 02: It's a section called Fundamental Processes. [00:37:04] Speaker 02: There, thank you. [00:37:05] Speaker 02: And I want to go down the second bullet point. [00:37:08] Speaker 02: And this is where Indigo describes as fundamental process a piece-part vacuum bake for the steel limit, gold limit, epoxy, and paint limits. [00:37:15] Speaker 01: Right? [00:37:16] Speaker 01: Yes. [00:37:16] Speaker 01: What if we agree or find that it was reasonable for the jury to conclude [00:37:24] Speaker 01: that the scope of your trade secret is something more specific, and it has all the timing and temperature details, that level of a true recipe, then is it likewise reasonable for the jury to have concluded, based on the record, that there was no misappropriation of that narrow understanding of the trade secret number 14? [00:37:49] Speaker 02: Respectfully no your honor because that didn't happen and I also want to discuss you actually mentioned the charge are you arguing with the premise of my question you arguing with the question I'm arguing with the Question the premise if the trade secret had ever been defined that specifically I might agree with your premise however till you note the jury charge which was a list of 31 trade secrets which was a chart that was in front of the jury from the opening statement through closing trade secret 14 was defined as [00:38:15] Speaker 02: method and use of sequential vacuum bake. [00:38:19] Speaker 02: That was the definition of the trade secret that was provided to the jury. [00:38:22] Speaker 02: It never changed. [00:38:23] Speaker 02: Indigo never objected, claiming that it was not specific enough. [00:38:27] Speaker 02: Not during discovery, not during pretrial motion practice, not during the jury charge. [00:38:31] Speaker 02: Indigo didn't have a problem with trade secret being defined that broadly. [00:38:36] Speaker 02: The method and use of a sequential vacuum bake. [00:38:39] Speaker 02: That's how it was defined. [00:38:40] Speaker 00: You haven't pointed to any evidence that that was a trade secret. [00:38:45] Speaker 00: There's been plenty of evidence pointed out by the opposing counsel saying that this was well known. [00:38:50] Speaker 00: What you define is the general trade secret. [00:38:54] Speaker 00: And aside from that one exchange by one witness who elsewhere made perfectly clear that the general concept of sequential trading was well known, you have nothing. [00:39:05] Speaker 00: to suggest in this record that the concept of the general concept of sequential baking was not well known. [00:39:13] Speaker 02: Respectfully, Your Honor, the jury was charged with the definition of trade secret 14, method and use of a sequential vacuum bake, and they found that to be a secret. [00:39:22] Speaker 02: Indigo has not appealed that. [00:39:24] Speaker 02: They have not raised any error claiming that the trade secret was not sufficient. [00:39:28] Speaker 00: They certainly have. [00:39:28] Speaker 00: They've argued that the general thing was not a trade secret, and that wasn't [00:39:33] Speaker 00: what the jury found. [00:39:35] Speaker 02: Your Honor, they have not moved to overturn the jury's verdict with respect to the secret status. [00:39:38] Speaker 02: The jury found it to be a secret. [00:39:40] Speaker 02: It has not been charged. [00:39:41] Speaker 01: When you say it, though, that's the question. [00:39:43] Speaker 01: When you say they found it to be a secret, that's what we're trying to figure out. [00:39:47] Speaker 01: The jury had to figure out what it is. [00:39:50] Speaker 01: And they very well may have concluded that it is something narrower than you believe it to be. [00:39:56] Speaker 02: Well, what we have, Your Honor, is the jury charge. [00:39:58] Speaker 02: That is what we have to work with. [00:39:59] Speaker 02: The jury charge, the secret was defined as, [00:40:02] Speaker 02: method and use of a sequential vacuum bake. [00:40:04] Speaker 02: Indigo did not request a limiting instruction. [00:40:06] Speaker 02: They did not request any instruction or any kind of comment from the court to further limit or identify the trade secret. [00:40:12] Speaker 02: That is the definition of the trade secret that the jury found to be secret. [00:40:17] Speaker 02: That is the totality of the definition. [00:40:19] Speaker 02: Indigo never complained that it should be more. [00:40:22] Speaker 01: I see you're out of your time. [00:40:25] Speaker 01: Can you speak something about the cross appeal? [00:40:27] Speaker 02: The cross appeal, your honors are exactly correct. [00:40:30] Speaker 02: The choice of law was never made. [00:40:32] Speaker 02: As you said, we pled under both laws because we did not know prior to discovery which locus and which facts would be more germane to the trade secret definitions and the misconduct. [00:40:45] Speaker 02: After the appeal on the statute of limitations, it was repled. [00:40:49] Speaker 02: We pled under California law. [00:40:50] Speaker 02: There was no choice of law. [00:40:51] Speaker 02: There was no fight as to law. [00:40:53] Speaker 02: We pled under both. [00:40:54] Speaker 02: They said they thought it should be California. [00:40:56] Speaker 02: We agreed. [00:40:57] Speaker 02: There was no [00:40:59] Speaker 02: Dismissal with prejudice. [00:41:00] Speaker 02: There was no adverse finding. [00:41:02] Speaker 02: The statute, the TTLA, and the Catoosa statute on the definition and the recovery of a trade secret case are, on all aspects, effectively identical. [00:41:11] Speaker 02: Our position didn't change. [00:41:15] Speaker 02: We did not avoid any kind of a ruling on the merits. [00:41:17] Speaker 02: We proceeded with a trade secret case. [00:41:19] Speaker 02: We tried a trade secret case. [00:41:20] Speaker 02: There was nothing different under Catoosa and under TTLA. [00:41:24] Speaker 01: I guess the other side is saying what you're trying to avoid is TTLA fees. [00:41:29] Speaker 02: And at trial, they actually charged the jury with the bad faith question. [00:41:34] Speaker 02: So they would be entitled to fees under the Catoosa standard if the jury found that the litigation were pursued in bad faith. [00:41:39] Speaker 02: The jury was charged with that. [00:41:40] Speaker 02: The jury found there was no bad faith. [00:41:42] Speaker 02: So we're not trying to avoid anything. [00:41:44] Speaker 02: The jury was charged with the question of whether the conduct was bad faith on their part or the lawsuit was brought in bad faith on our part. [00:41:51] Speaker 02: The jury found no to both. [00:41:52] Speaker 02: We weren't avoiding anything. [00:41:53] Speaker 02: Fees were always in play. [00:41:55] Speaker 02: The statutes were identical. [00:41:57] Speaker 02: The case law was identical with respect to the standard for pursuing a trade secret case. [00:42:01] Speaker 02: We didn't avoid any kind of a trial in the merits or any kind of a substantive ruling by simply electing California law as they pressed for. [00:42:12] Speaker 04: OK. [00:42:12] Speaker 04: Any more questions? [00:42:13] Speaker 04: Any more questions? [00:42:14] Speaker 04: Thank you. [00:42:15] Speaker 04: Thank you, Your Honor. [00:42:16] Speaker 04: The case is seconded under submission.