[00:00:04] Speaker 02:
We have three argued cases this morning.

[00:00:06] Speaker 02:
The first one is number 16-21-21, Texas Advanced versus Intersil Corporation.

[00:00:13] Speaker 02:
Mr. Costanzos.

[00:00:15] Speaker 00:
Thank you, Your Honor, and may it please the Court.

[00:00:18] Speaker 00:
I propose to take the issues in this order unless the Court wants me to go in a different direction.

[00:00:23] Speaker 00:
First, I'll address the fact that there should be no trade secret liability here.

[00:00:28] Speaker 00:
The one-to-one ratio that's at the core of this case

[00:00:30] Speaker 00:
is the subject matter of the 981 patent and the other alleged secrets, either taken alone or in combination, were either not secret or not misappropriated.

[00:00:39] Speaker 04:
Can I interrupt you right there?

[00:00:41] Speaker 04:
Please.

[00:00:41] Speaker 04:
The trade secret, the technical trade secret that I understood to be at issue was not simply one-to-one ratio.

[00:00:51] Speaker 04:
It's a two-part one-to-one ratio and interleaved or alternating.

[00:00:56] Speaker 04:
And the testimony that, including the testimony you cite,

[00:01:00] Speaker 04:
discuss both of them, when I look at what is, I take it, the key to your argument for why this was disclosed, it's claim one, which just talks about implicitly one-to-one, but doesn't talk about an interleaving with one-to-one, so I'm not sure why that gets you where you need to go and whether you have anything else to help you get there.

[00:01:26] Speaker 00:
I do have more, Judge Taranto.

[00:01:28] Speaker 00:
First of all, in the claims themselves,

[00:01:30] Speaker 00:
It says that the open and the shielded one must be proximate to one another.

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That's one.

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Secondly, look at figures two and three of the patent.

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You will see an interleaved pattern in those circumstances of open and closed.

[00:01:46] Speaker 00:
It may not be one to one.

[00:01:47] Speaker 02:
For other ratios, right.

[00:01:48] Speaker 00:
For other ratios, in fact.

[00:01:49] Speaker 00:
Of course, one to one is disclosed in other places.

[00:01:52] Speaker 00:
But Judge Dike, I'd like to step back there for a second and say that I think that the inquiry under Texas law is not just whether

[00:02:00] Speaker 00:
This is within the written description or enabled under the patent law.

[00:02:04] Speaker 00:
But the Texas law, as set forth in cases like Wellogic's, which is cited repeatedly by my friends, as well as the Texas Supreme Court's decision in Lucas, say that it is drawn to the subject matter of the patent.

[00:02:19] Speaker 00:
And what seems to be striking in this case is that the same patent claim and the same limitation was said to be both infringed by our devices,

[00:02:29] Speaker 00:
but also a trade secret.

[00:02:31] Speaker 00:
Well, which is it?

[00:02:32] Speaker 00:
Does it belong to the public?

[00:02:33] Speaker 04:
It's not the same thing.

[00:02:35] Speaker 04:
You can think of the trade secret as essentially, if there had been, a dependent claim, which doesn't exist, namely one-to-one and interleaved.

[00:02:45] Speaker 04:
And it might well have been a perfectly proper dependent claim, but that's not in the pack.

[00:02:49] Speaker 04:
You could infringe the one-to-one without having disclosed, while practicing something not disclosed in the patent, namely the alternating.

[00:03:00] Speaker 00:
But Judge Toronto, that was exactly my point to Judge Dyken.

[00:03:02] Speaker 00:
That is, the Texas law uses the term subject matter of the patent.

[00:03:07] Speaker 00:
The ratio and the interleaving is the subject matter of the patent.

[00:03:13] Speaker 00:
Now, if there was an additional element of our invention

[00:03:18] Speaker 00:
of our device, the accused device or the at-issue devices, say it had a handle on it, or something that wasn't covered by the claims, and that handle had been a trade secret.

[00:03:27] Speaker 00:
Well, then maybe.

[00:03:29] Speaker 00:
And that would make it much more like the Fifth Circuit's decision in Phillips versus Frye.

[00:03:34] Speaker 00:
That was the one involving the tree stand, the hunting tree stand.

[00:03:37] Speaker 00:
And that's the sort of case where a patent and a trade secret can coexist comfortably.

[00:03:41] Speaker 00:
The patent is drawn to the tree stand.

[00:03:43] Speaker 00:
The trade secret is for a special method of making the tree stand.

[00:03:48] Speaker 00:
that isn't disclosed in the patent.

[00:03:49] Speaker 00:
But here, the subject matter of the patent really put Taos to an election.

[00:03:54] Speaker 00:
Once they got the patent, they covered that subject matter.

[00:03:57] Speaker 00:
They covered, and in fact, they say that that is met, and we don't dispute that the one-to-one ratio interleaved is met in the claims.

[00:04:08] Speaker 00:
But the fact of the matter is that then they ought to have a patent claim.

[00:04:12] Speaker 00:
They, of course, don't have a patent claim because of the separate

[00:04:15] Speaker 00:
in distinct monolithic requirement that isn't satisfied here.

[00:04:19] Speaker 00:
But if I can just walk through very quickly our case with regard to the absence of a secret here.

[00:04:25] Speaker 02:
Could I ask you, suppose we were to, as I understand it, there are basically three alleged trade secrets involved here.

[00:04:34] Speaker 02:
One is the one-to-one ratio with the interleaving.

[00:04:38] Speaker 02:
The second one is the build versus buy, and the third one is the use of plastic.

[00:04:42] Speaker 02:
Suppose we were to agree with you on some but not all of your arguments with respect to the trade secret so that the verdict is set aside with respect to let's say hypothetically one trade secret but not as to the other two.

[00:04:59] Speaker 02:
What do we do with that?

[00:05:00] Speaker 00:
I think in that hypothetical circumstance you have to remand for a new trial at the very least on damages because

[00:05:07] Speaker 00:
If, for example, you say that the one-to-one ratio, and of course, there are other reasons that you have to remand on damages anyway.

[00:05:13] Speaker 00:
But there's no way that only, for example, the bill versus buy, which I think goes straight to a permitted use under the agreement, that couldn't support a $48 million judgment here.

[00:05:25] Speaker 00:
The plastic, by the way, was already within Intersil's plans.

[00:05:29] Speaker 00:
And I want to make sure that the court understands

[00:05:32] Speaker 00:
And I want to direct the court to page A30499.

[00:05:37] Speaker 00:
That is an Intersil product proposal dated a good four months before the confidentiality agreement in this case.

[00:05:44] Speaker 00:
That already said that they were going to use lightweight, inexpensive packaging, the plastic packaging that is said to be a trade secret here.

[00:05:50] Speaker 00:
That wasn't a trade secret at all.

[00:05:52] Speaker 00:
In fact, with regard to the technical, the product aspects of it versus the

[00:05:57] Speaker 00:
What I guess I'd separate out and say are the evaluative or financial aspects of the claim trade secrets here.

[00:06:04] Speaker 00:
The technical ones, everything but the one-to-one ratio is already disclosed at A30499.

[00:06:09] Speaker 00:
You've got the I2C, you've got the analog to digital converter, and you've got plastic packaging.

[00:06:16] Speaker 00:
The only thing you don't have is the one-to-one ratio and we say that's within the subject matter of the patent, so no technical

[00:06:22] Speaker 02:
But apart from that, you're arguing also that it could have been reverse engineered at some point?

[00:06:27] Speaker 00:
Yes, that's right.

[00:06:28] Speaker 00:
Because by the time that Tauss came to market, and they came to market with their product in early 2006, we did, in fact, reverse engineer.

[00:06:36] Speaker 04:
And it went very fast, if I remember.

[00:06:39] Speaker 00:
It did go very fast.

[00:06:40] Speaker 00:
There wasn't much of a secret there at all, to the extent there was anything at all.

[00:06:44] Speaker 00:
And we started and finished in January of 2006.

[00:06:47] Speaker 02:
Does that cover the whole period of decline, the reverse engineering?

[00:06:52] Speaker 00:
Well, I think what it would end up doing is significantly eliminating damages in this case.

[00:07:00] Speaker 02:
It wouldn't cover the whole period.

[00:07:03] Speaker 00:
It wouldn't cover the entire period, but it would cover most of the period, because if you take the reverse engineering and say, okay, from that point, that's when we started engineering our own devices, then it would be 22 months.

[00:07:16] Speaker 00:
It still would have been, by the way, developed well before we contracted with Apple.

[00:07:20] Speaker 00:
which was, of course, the gravamen of this case was the Apple contract.

[00:07:25] Speaker 04:
Can I ask you, I realize this is switching around a little bit, but it's related to what happens if something needs to be remanded.

[00:07:31] Speaker 04:
Do I understand correctly that your argument that disgorgement is for the judge, not the jury, is a point about who needs to decide the monetary relief, not who needs to decide whether there was a misappropriation?

[00:07:46] Speaker 00:
That's correct.

[00:07:47] Speaker 00:
We've never claimed that the misappropriation decision

[00:07:49] Speaker 00:
is an equitable one, but the disgorgement one is absolutely equitable under Supreme Court precedent.

[00:07:55] Speaker 03:
If I could, again, I think I'm hoping to be nimble enough to go back and forth.

[00:08:00] Speaker 00:
I mean, I'll interleave if you don't.

[00:08:04] Speaker 03:
The question I have goes to the evidence of gross versus net profit.

[00:08:10] Speaker 03:
And with respect to, as I read the Texas case, the ERI case, I guess, which came out slightly before the MGE case that you rely on, but the MGE case doesn't cite it.

[00:08:21] Speaker 03:
So I'm assuming the MGE case court was not aware of that decision.

[00:08:26] Speaker 03:
That decision seems, as I read it, to suggest that there is, in fact, some burden

[00:08:32] Speaker 03:
on the defendant at least to come forward with evidence, some evidence showing a reduction in the profits from the level that was asserted by the plaintiff.

[00:08:45] Speaker 03:
Now my question to you is what in Mr. Ratliff's testimony do you find that constitutes a sufficient level of proof to satisfy that some evidence requirement?

[00:08:59] Speaker 00:
Well, I think, excuse me, I'm losing my voice a little bit here, Judge Bryson.

[00:09:03] Speaker 00:
It's a very short segment of his testimony.

[00:09:05] Speaker 00:
It is a short segment.

[00:09:06] Speaker 00:
And of course, the answer is that there were these costs.

[00:09:10] Speaker 00:
They did exist.

[00:09:11] Speaker 00:
And I think that the Texas case.

[00:09:13] Speaker 03:
He doesn't say much by way of detail about the costs.

[00:09:18] Speaker 03:
He just sort of alludes to the fact that there can be these kinds of costs.

[00:09:23] Speaker 03:
And while he's testifying, this is a little frustrating, but he's referring to a chart

[00:09:29] Speaker 03:
which, as far as I can see, is not in our appendix.

[00:09:34] Speaker 00:
It is in the record, and we can get that to you if you think it would be helpful.

[00:09:37] Speaker 03:
Yes, I think it's exhibit 300A.

[00:09:39] Speaker 03:
Am I correct about that?

[00:09:40] Speaker 00:
I think that's correct.

[00:09:41] Speaker 00:
Okay.

[00:09:41] Speaker 03:
So we probably should have that.

[00:09:43] Speaker 00:
And we'll get that to you by a letter after this argument.

[00:09:45] Speaker 03:
That was in evidence, I take it.

[00:09:46] Speaker 03:
It wasn't just a demonstrative, correct?

[00:09:48] Speaker 00:
That is, again, Judge Bryson, that's my recollection.

[00:09:51] Speaker 03:
If it's just a demonstrative, it doesn't exist for purposes of the record.

[00:09:54] Speaker 00:
Well, of course, of course.

[00:09:56] Speaker 03:
But if you could tell me what it is that he said that gets you past the ERI standard, and I assume you would agree that the ERI is the right standard.

[00:10:07] Speaker 00:
Well, I'm not sure.

[00:10:08] Speaker 00:
Well, I think actually MGE is the right standard because that's the later decision.

[00:10:13] Speaker 00:
It's from the Fifth Circuit.

[00:10:14] Speaker 00:
It's exactly on point.

[00:10:15] Speaker 03:
Well, but the Fifth Circuit is just making an eerie type guess.

[00:10:18] Speaker 00:
Well, and that's right.

[00:10:19] Speaker 03:
And the ERI case is the Supreme Court of Texas decision.

[00:10:23] Speaker 03:
Presumably, if we conclude that there's a

[00:10:26] Speaker 03:
Tension between the two, we have to go with the Texas case.

[00:10:28] Speaker 00:
Well, I'm not sure that's right, but assuming that it is, Your Honor, if you take the ERI case on its face, I think the burden that it puts on us is not a burden of proof.

[00:10:40] Speaker 00:
It doesn't shift the burden to us, but it's a burden of production, or at least identifying.

[00:10:45] Speaker 00:
And Mr. Ratliff certainly did identify the components of damages or the components of expenses that needed to be extracted.

[00:10:54] Speaker 00:
And among those were, of course, research and development costs, marketing costs, the contribute, and of course, these are the deductions to get to net profits, and that doesn't even take into account the apportionment issues, which, of course... Do you think he satisfies the burden by identifying the categories without providing evidence as to the amount of each category?

[00:11:17] Speaker 00:
Well, I think he did provide evidence as to the amount because, in fact, he came up with a total of 7.9 million.

[00:11:23] Speaker 00:
after deductions with regard to disgorgement.

[00:11:25] Speaker 03:
That evidence would better be on the exhibit because it wasn't in his transcript.

[00:11:29] Speaker 00:
It certainly was backed up with evidence that was put forth at trial.

[00:11:31] Speaker 00:
Of course, we apologize for that.

[00:11:33] Speaker 03:
Put forth in the form of that exhibit 300X?

[00:11:35] Speaker 03:
Yes.

[00:11:36] Speaker 02:
Yes.

[00:11:37] Speaker 02:
So just to be clear, your argument about disgorgement being equitable really doesn't have anything to do with the sufficiency of the evidence.

[00:11:46] Speaker 02:
In other words, the way the district

[00:11:49] Speaker 02:
conducted this trial, the evidence was supposed to be put before the jury.

[00:11:53] Speaker 02:
You're not claiming that you should have had an opportunity to supplement that evidence when it came time for the judge to decide the issue.

[00:12:01] Speaker 00:
We are not claiming that that is the error.

[00:12:03] Speaker 00:
We might have had that opportunity, had the judge in fact followed what he was saying initially, but we're not standing here resting and saying we held something back.

[00:12:11] Speaker 00:
What we are saying, though, is that an impartial adjudicator would do a much better job of doing the sort of deductions and apportionment that are necessary here.

[00:12:22] Speaker 00:
In addition, a judge, rather than a jury, would have to issue findings under Rule 52, which would essentially show the court's work to this court and make appellate review much better.

[00:12:34] Speaker 00:
And quite frankly, we're much better off with the Rule 52 findings in terms of appellate review than a black box jury.

[00:12:40] Speaker 00:
But those are the practical reasons.

[00:12:42] Speaker 00:
The legal reason is simply this, that it's an equitable determination.

[00:12:46] Speaker 00:
The Supreme Court has repeatedly said that disgorgement, because it's not damages, but it's measured, in fact, by the allegedly wrongful gains of the defendant, is an equitable remedy.

[00:12:58] Speaker 03:
Well, what about the theory, which has popped up in a number of cases, that disgorgement isn't necessarily and in all instances equitable because

[00:13:09] Speaker 03:
it may be used in certain circumstances as a proxy for the losses suffered by the plaintiff.

[00:13:16] Speaker 03:
And several of those cases are cited.

[00:13:19] Speaker 03:
The Black and Decker case, for example, has a lengthy discussion of this and concludes that in the setting in which the purpose is compensatory as opposed to either punitive or deterrence, that not only is it legal, but it is a durable question.

[00:13:39] Speaker 03:
Why isn't that the correct way to look at the question?

[00:13:43] Speaker 00:
Well, I think, first of all, I think you'll search this record in vain for any indication that the Discouragement Award here was meant to be compensatory.

[00:13:52] Speaker 03:
Well, the judge instructed the jury that compensation was the purpose of the award.

[00:13:56] Speaker 03:
So you could start there.

[00:13:58] Speaker 00:
Well, you can start there.

[00:13:59] Speaker 00:
But then when you look at the evidence and you look at what elements went into that, for example, it was entirely Intersil's lost profits.

[00:14:08] Speaker 00:
There was no showing that Taos would have made these sales.

[00:14:11] Speaker 00:
In fact, it's pretty telling that they didn't make a lost profits claim on their patent claim or alternatively on their trade secrets claim.

[00:14:20] Speaker 00:
They made a royalty claim.

[00:14:22] Speaker 00:
And it's further telling, I think, that it wasn't compensatory because the royalty claim was but a fraction.

[00:14:28] Speaker 00:
And royalties are true real losses.

[00:14:30] Speaker 00:
Those are the lost royalties that they would have had.

[00:14:33] Speaker 00:
The royalty claim that they made in this case was a fraction.

[00:14:36] Speaker 00:
of what the disgorgement claim was and what the disgorgement award, which was to the penny what their experts said without any deductions and without any allocations.

[00:14:44] Speaker 00:
So the fact of the matter is that no matter who the decision maker is, it's too big.

[00:14:51] Speaker 00:
But with regard to who the decision maker is here, this award did not have anything to do with their losses.

[00:14:58] Speaker 00:
It had everything and only to do with our gains.

[00:15:01] Speaker 00:
And if you look at the way that the jury was invited to penalize us,

[00:15:05] Speaker 00:
you certainly see that as well.

[00:15:07] Speaker 04:
Can I ask you a question, which is, I guess, jumping around in topics.

[00:15:11] Speaker 04:
On the assumption, for the purposes of this question, that patent infringement survives, there's a question about what, if anything, to do with the district court's ruling that eliminated 99%, almost, I think, of the potential sales that might have been covered by the ruling.

[00:15:31] Speaker 04:
The Supreme Court, I think, has pending a cert petition in the Western Gecko case.

[00:15:37] Speaker 04:
Does that case have a bearing on this?

[00:15:40] Speaker 04:
Because it has something to do with domestic versus extraterritorial events covered by, I think, in that case, a lost profits award.

[00:15:49] Speaker 04:
But if I remember right, there's discussion in the cert petition, at least, and in the government's invitation brief of the royalty counterpart to the profits.

[00:16:01] Speaker 00:
And I've read all of those papers, and the court did not act on that petition this morning.

[00:16:07] Speaker 00:
What I can tell you about Western GECO, or GECO, or GECO, I'm not really sure yet at this point how to pronounce it.

[00:16:13] Speaker 00:
I'll learn eventually.

[00:16:16] Speaker 00:
I'm sorry, I realize I'm into my red light time, Your Honor.

[00:16:22] Speaker 00:
The Western GECO case involves a 271f claim.

[00:16:27] Speaker 00:
It involves a claim that is by its nature cross-border.

[00:16:30] Speaker 00:
It's one of those from the provision that was added after Deep South for sending components overseas and having them assembled and brought back.

[00:16:37] Speaker 00:
This is a 271A and only a 271A case.

[00:16:40] Speaker 00:
It's not even a contributory infringement case.

[00:16:42] Speaker 04:
Am I remembering right that the crucial precedent that's at least discussed in the government's invitation brief is the power integrations case, which was not a 271A?

[00:16:52] Speaker 04:
F or G case, but an A case.

[00:16:53] Speaker 04:
And therefore, what the Supreme Court has to say, assuming it takes Western, what's called a GECO case, might have some bearing on whether... I can't tell you right now, if the court takes that case, what its decision will look like.

[00:17:13] Speaker 00:
I'm telling you that I think that Western GECO involves a very different section of the infringement statute.

[00:17:21] Speaker 00:
And it's unlikely to affect this case, which is strictly a 271A case.

[00:17:27] Speaker 00:
Well, that's right.

[00:17:28] Speaker 00:
That's right.

[00:17:29] Speaker 03:
I take it your position with respect to the extraterritoriality issue, which came up as a summary judgment issue, is that they didn't present enough evidence at the summary judgment stage to get by the Rule 56 standard.

[00:17:44] Speaker 00:
Right.

[00:17:45] Speaker 00:
And in fact, although it wasn't our burden, we did.

[00:17:48] Speaker 00:
Although this is a cross-appeal issue, and I'm sure my friend will address this when he stands up, the facts with regard to the extra-territorial liability are set forth in Mr. Aji's declaration, which is at A12456 and 57.

[00:18:06] Speaker 00:
And this is important.

[00:18:09] Speaker 00:
The location of the sale, as Mr. Aji set forth with regard to that 98.8, was not from Intersil Corporation, the defendant in this case, but from

[00:18:18] Speaker 00:
inter-sales affiliate companies in Kuala Lumpur and in Hong Kong.

[00:18:23] Speaker 00:
So, Judge Toronto, your opinion for the court in Carnegie Mellon seems to suggest that you've got to have either a making or a using or a selling somewhere in the United States.

[00:18:35] Speaker 00:
They don't have making or using.

[00:18:37] Speaker 00:
In fact, all that's taking place across border.

[00:18:40] Speaker 00:
And then, although they have lots of evidence that they throw up about precatory discussions,

[00:18:47] Speaker 00:
that may or may not have taken place in the United States.

[00:18:50] Speaker 00:
The simple fact is that the sale didn't even involve InterSale Corporation, let alone did it take place in the United States.

[00:18:57] Speaker 00:
I realize the court has been very indulgent with my time.

[00:19:00] Speaker 00:
I've sort of skipped over the patent issue, but I want to raise that issue very quickly so that my friend has an opportunity to respond to it.

[00:19:09] Speaker 00:
Our point with regard to the patent issue is a very simple one, that although

[00:19:15] Speaker 00:
One to one, an interleaved is disclosed in the patent, and so it's not a trade secret.

[00:19:21] Speaker 00:
There is not infringement here because the patent also requires that the detector be monolithic.

[00:19:29] Speaker 00:
The facts in our case, which are undisputed, unvarnished, in fact not even responded to in my friend's brief before this court, are that when the chips are sold,

[00:19:40] Speaker 00:
They cannot perform the mathematical operation that's required by the last portion of the independent claim one, the mathematical subtraction or addition or whatever it is that has to happen there.

[00:19:51] Speaker 00:
The only way that can happen is if an I2C, you'll recall that from the trade secret aspect of the case, an intra-integrated conductor off board, off the chip, commands the chip to switch into a mode that allows that to happen.

[00:20:09] Speaker 00:
But the chip itself can't do that.

[00:20:11] Speaker 00:
The only way the chip can do it is by having a non-monolithic component to it.

[00:20:16] Speaker 03:
But isn't that like saying that an on-off switch, which allows the component to operate in the way that it was designed to operate, is part of the component?

[00:20:29] Speaker 03:
I mean, you may have to turn on a circuit breaker in order to make your refrigerator run.

[00:20:35] Speaker 03:
But I doubt you would say that the circuit breaker is part of the refrigerator.

[00:20:39] Speaker 03:
Well, isn't that what we've got here?

[00:20:41] Speaker 00:
Well, I don't think it's that at all, Your Honor.

[00:20:42] Speaker 00:
First of all, because, as of course, as we pointed out also in our brief, there's no evidence that anyone, not Apple and not anyone, ever operated these devices at number three.

[00:20:51] Speaker 00:
No, but it's a capability issue.

[00:20:53] Speaker 00:
Well, right.

[00:20:54] Speaker 00:
But the claims aren't drawn to capability.

[00:20:55] Speaker 00:
And then with regard to what has to happen, the one thing about the refrigerator that you're hypothesizing is that they wrote the patent and required it to be monolithic.

[00:21:04] Speaker 00:
And they got the judge to construe the term monolithic.

[00:21:08] Speaker 00:
and to say that monolithic means formed on a single chip.

[00:21:12] Speaker 00:
And we're just holding them to their claim language with regard to that issue.

[00:21:16] Speaker 00:
And I hope the court will indulge me on rebuttal.

[00:21:18] Speaker 00:
Thank you.

[00:21:18] Speaker 00:
I think we're out of time.

[00:21:20] Speaker 02:
We'll give you two minutes for rebuttal.

[00:21:28] Speaker 02:
Mr. Alibi, is that how you pronounce it?

[00:21:30] Speaker 02:
Yes, your honor.

[00:21:37] Speaker 01:
May it please the court.

[00:21:38] Speaker 01:
This was a case in which Intersil tried to buy TAUS because its ambient light sensor program could not reject infrared light, one of the key aspects of an ambient light sensor.

[00:21:51] Speaker 01:
After TAUS disclosed how its products do that and how its next generation products were going to do that, and the due diligence talks ended, then Intersil copied the next generation product, the TSL2560,

[00:22:06] Speaker 01:
which had the interleaved one-to-one ratio.

[00:22:10] Speaker 02:
On the one-to-one ratio, if I recall correctly, your brief doesn't really respond to the reverse engineering point.

[00:22:20] Speaker 02:
Am I correct about that?

[00:22:21] Speaker 01:
No, Your Honor.

[00:22:22] Speaker 01:
Our point is that under Texas law, including the K&G case by the Texas Supreme Court, if you find out about something confidentially and misappropriate that information, you cannot later claim

[00:22:36] Speaker 01:
that the product either became available publicly or that you reverse engineered it after you misappropriated it.

[00:22:42] Speaker 02:
Wouldn't that, if you could reverse engineer it, wouldn't that put an end to the damages period?

[00:22:46] Speaker 01:
No, not under KNG.

[00:22:48] Speaker 01:
In Texas, unlike patent infringement law, misappropriation is a single tort.

[00:22:53] Speaker 01:
It occurs when you misuse the information, when you use improper means.

[00:22:58] Speaker 01:
And so the improper means here was

[00:23:01] Speaker 01:
a breach of this duty of confidentiality.

[00:23:02] Speaker 02:
I don't understand that, but I'm asking about damages.

[00:23:05] Speaker 02:
Under Texas law, can you, for example, claim trade secret damages for a period after which the trade secret becomes publicly available?

[00:23:14] Speaker 01:
With respect to somebody that's misappropriated the trade secret prior to the time that it was publicly available, yes.

[00:23:20] Speaker 01:
The Willogic's case discusses that in passing.

[00:23:24] Speaker 01:
The K&G case talks about it a little bit more about the misappropriation, not about the damage side.

[00:23:30] Speaker 01:
But here,

[00:23:31] Speaker 01:
There's no evidence that they relied on the reverse engineering whatsoever.

[00:23:35] Speaker 01:
There's no evidence that they were using the reverse engineering or anything public, even the patent they've talked about on appeal, to make their new product.

[00:23:47] Speaker 01:
What Intersil did, under the evidence that was shown, was that it used the next generation product, the TSL 2560, that Taos was releasing.

[00:23:57] Speaker 02:
And the important thing- Where do you discuss this K&P case in your first

[00:24:05] Speaker 03:
It's just a single citation to page 70.

[00:24:09] Speaker 01:
Page 70, Your Honor.

[00:24:11] Speaker 02:
So I don't see that you're addressing this damages question.

[00:24:24] Speaker 01:
That's meant to address it, is that the reverse engineering doesn't absolve the prior use of misappropriated trade secrets.

[00:24:30] Speaker 01:
Nor is there any evidence in the trial court

[00:24:33] Speaker 01:
there was use of the reverse engineering whatsoever.

[00:24:37] Speaker 02:
I don't think the theory is not that they used the reverse engineering, but that the trade secret became publicly available because it could be reverse engineered at some point and that that should stop the damages.

[00:24:49] Speaker 02:
But go ahead.

[00:24:50] Speaker 01:
I understand your point.

[00:24:53] Speaker 01:
And the damages that flowed from their misappropriation was building an entire line of products that competed with Taos based upon the misappropriation.

[00:25:02] Speaker 01:
And that misappropriation

[00:25:03] Speaker 01:
Although it occurred in 2004, these are a number of products that came out between 2004 and 2006.

[00:25:09] Speaker 01:
So all these products were continuing to be sold.

[00:25:12] Speaker 01:
So you don't dispute that it could have been reverse engineered.

[00:25:14] Speaker 02:
You're just basically saying that's irrelevant.

[00:25:17] Speaker 01:
It's irrelevant because the products have already been released and are competing with Taos.

[00:25:21] Speaker 01:
And they were based upon a misappropriation of trade secrets.

[00:25:24] Speaker 03:
And that would be true.

[00:25:26] Speaker 03:
There's no end to the liability.

[00:25:29] Speaker 03:
I mean, this was carried up through 2014, but only because that was the end of the

[00:25:34] Speaker 03:
the period within which evidence was available at the time that Dr. Yugo looked at.

[00:25:40] Speaker 03:
But presumably, could you sue again, for example, between 2014 and present?

[00:25:43] Speaker 03:
No.

[00:25:44] Speaker 03:
No.

[00:25:45] Speaker 03:
Had Dr. Yugo gone had additional evidence going through the present, would that all go to increasing damages?

[00:25:54] Speaker 01:
It could.

[00:25:55] Speaker 03:
The question is really, does this never end?

[00:25:57] Speaker 03:
Is there ever a cutoff?

[00:25:58] Speaker 01:
For a misappropriated product, no, because it's competing.

[00:26:02] Speaker 01:
And the point is,

[00:26:03] Speaker 01:
of trade secret law to prevent somebody from taking the trade secret and competing with you.

[00:26:08] Speaker 03:
Even though it's clear to everyone in the industry, including the defendant, that the product, how the product works and that it's on the market and it's readily discerned as to how it works, still the damages continue to accumulate with respect to the defendant.

[00:26:26] Speaker 01:
Because unlike patent law, misappropriation is a single tort.

[00:26:30] Speaker 01:
It occurs at one fixed time.

[00:26:32] Speaker 01:
It's not based upon each sale.

[00:26:34] Speaker 01:
It's just the damages that are.

[00:26:35] Speaker 03:
I'm not sure that the fact that it's a single tort necessarily means that it's a single and unending liability.

[00:26:41] Speaker 03:
It seems to me there's two questions that are different.

[00:26:44] Speaker 01:
I understand that.

[00:26:45] Speaker 01:
And it goes to whether the issue is what damages reasonably flowed from the misappropriation, from creating an entire line of ambient light sensors that competed and continued to compete.

[00:26:56] Speaker 01:
The evidence was that even at the preliminary injunction hearing that occurred in this case,

[00:27:00] Speaker 01:
that they were still selling this device, mainly the 29003.

[00:27:03] Speaker 01:
That was the main selling device of all of the different devices, the 19, that incorporated the trade secret information.

[00:27:11] Speaker 02:
But the trade... Is Texas law different in this respect from general trade secret law?

[00:27:16] Speaker 01:
It's a little bit different in some senses because Texas had not yet adopted the Uniform Trade Secret Act, and so it's using common law principles regarding damages.

[00:27:25] Speaker 01:
not some statutory basis for damages.

[00:27:28] Speaker 02:
Under the Uniform Trade Secret Act, the damages stop when trade secret becomes publicly available?

[00:27:34] Speaker 01:
I've not seen cases on that subject, Your Honor.

[00:27:38] Speaker 03:
Well, perhaps this is where you were going.

[00:27:40] Speaker 03:
Could you address the question of the net versus gross profits, and in particular, whether Mr. Ratner's testimony, as supplemented by the chart that he was using during his testimony, was that, by the way,

[00:27:55] Speaker 03:
Exhibit 300A that he was using.

[00:27:59] Speaker 01:
I'm not sure what exhibit he was using.

[00:28:01] Speaker 03:
But anyway, he was using a chart, I take it.

[00:28:03] Speaker 01:
That's correct.

[00:28:03] Speaker 03:
Which had a number of numbers on it, I gather.

[00:28:07] Speaker 03:
Why did his testimony not satisfy the requirement under ERI for showing some evidence to reduce the profits from the gross bank of the net?

[00:28:21] Speaker 01:
Because what his testimony is, and

[00:28:24] Speaker 01:
he discusses is, number one, he assumed that every category of expenses that he was talking about, and it's not clear what categories they are, but he says every category of expense that exists that a, that Intersil has applies to this line of products.

[00:28:45] Speaker 01:
That's the first assumption, and that's at A2, Appendix 21135.

[00:28:50] Speaker 01:
He then assumed

[00:28:51] Speaker 01:
that for a company that's a multi-billion dollar corporation, and this product line was 1% of all revenues, that all those costs applied in the same pro-rata portion as they did for this line of business as it did to the entire corporation, and that's at A22112.

[00:29:11] Speaker 01:
What Dr. Ugone testified in converse to that was that's not reliable.

[00:29:16] Speaker 01:
To assume that the cost exists,

[00:29:18] Speaker 01:
without any intercell documentation, without intercell testimony that those costs existed or existed in that proportion.

[00:29:25] Speaker 01:
And based upon those two assumptions and guesses that he makes, estimations that he makes, it was not reliable evidence, even if it were.

[00:29:33] Speaker 01:
Then the point becomes that under ERI, they've said, we think these costs exist, and there's no error.

[00:29:41] Speaker 01:
The jury's allowed to determine whether to believe Dr. Ugone

[00:29:45] Speaker 01:
or Mr. Ratliff as to whether these expenses really exist.

[00:29:49] Speaker 01:
And given that there's not a single Intersil document or Intersil representative testimony to support the existence of those costs, Dr. Ugone had subtracted all direct costs attributable to this product line and not used revenues, but a profit calculation.

[00:30:07] Speaker 03:
On the question of whether the

[00:30:10] Speaker 03:
Disgorgement remedy is equitable or legal for purposes of a jury trial right.

[00:30:17] Speaker 03:
What do you think is your strongest case in support of the notion that disgorgement is a legal remedy, not an equitable remedy?

[00:30:27] Speaker 03:
There are a lot of cases that say, such as Terry, that say disgorgement is an equitable remedy.

[00:30:34] Speaker 03:
But your argument, as I understand it, is that no, in this particular case, it's not.

[00:30:38] Speaker 03:
And what is your best case for that proposition?

[00:30:41] Speaker 01:
Hard to answer that question as to the best case.

[00:30:43] Speaker 03:
Well, there are not many cases that talk about the jury trial in the context of disgorgement, particularly in the trade secret area.

[00:30:56] Speaker 01:
Sure.

[00:30:57] Speaker 03:
In fact, none.

[00:30:58] Speaker 01:
Black and Decker that your honor mentioned.

[00:31:00] Speaker 03:
It's not a trade secret case.

[00:31:00] Speaker 01:
It's not a trade secret case.

[00:31:02] Speaker 01:
I believe there's a recent case, and I can get your honor the complete site, which is T-Mobile versus Huawei, Western District of Washington, 2017, in which that issue did come up, and the issue of disgorgement was submitted to the jury.

[00:31:19] Speaker 01:
The court found that it was a jury question.

[00:31:21] Speaker 01:
It was a trade secret case.

[00:31:22] Speaker 02:
Did that depend on its being compensatory?

[00:31:25] Speaker 01:
Well, I think that's part of the test.

[00:31:27] Speaker 01:
Part of the test is... Well, suppose we were to decide

[00:31:30] Speaker 02:
here that the disgorgement claim was not a compensatory claim, then it's equitable, isn't it?

[00:31:41] Speaker 01:
It could be, but the claim is legal, and there's no dispute about that.

[00:31:45] Speaker 01:
But it's not always legal, right?

[00:31:47] Speaker 01:
No, the claim of trade-separate misappropriation is always a legal claim.

[00:31:50] Speaker 01:
No, no, no, no, that's the question.

[00:31:52] Speaker 01:
And because under Texas law,

[00:31:55] Speaker 01:
The remedy is four measures under wellogics, four different measures that you can use for determining damages.

[00:32:03] Speaker 01:
Texas law has decided that this is compensatory.

[00:32:07] Speaker 01:
And so based upon.

[00:32:08] Speaker 03:
Well, they've decided that these are remedies.

[00:32:11] Speaker 03:
It doesn't necessarily follow that A, that it's compensatory, or B, that it's therefore legal, or C, that it's therefore a jury trial.

[00:32:20] Speaker 01:
Well.

[00:32:20] Speaker 03:
The third would follow from the second, presumably.

[00:32:23] Speaker 01:
The first question is, is this a question of damages that are compensatory?

[00:32:26] Speaker 03:
And Texas says, in the event that you have trade... Isn't by virtue of the use of the term damages you're saying that necessarily means it's compensatory?

[00:32:34] Speaker 01:
That's the first part.

[00:32:35] Speaker 01:
Yes, Your Honor.

[00:32:36] Speaker 01:
And I'd also say that you have to look... I'm sorry.

[00:32:38] Speaker 04:
Just to be clear, you said Texas law uses the term damages as an umbrella term to refer to several different forms of monetary relief, including disbursement.

[00:32:51] Speaker 01:
Absolutely.

[00:32:51] Speaker 01:
In the Wellogic's case,

[00:32:53] Speaker 01:
these sentences that when somebody misappropriates a trade secret, you're entitled to actual damages.

[00:32:59] Speaker 01:
Actual damages in misappropriation case, there are four measures.

[00:33:02] Speaker 02:
So what they're saying is one... But that doesn't say that if the disbursement remedy is noncompensatory, that that should be true in the damages, does it?

[00:33:15] Speaker 01:
No, but damages, according to Dairy Queen and the United States Supreme Court, are traditionally a legal claim.

[00:33:21] Speaker 01:
So what

[00:33:22] Speaker 01:
Intersil would have you hold is that somehow damages when it's based on one measure versus another measure under trade secret law, under Texas law, somehow became equitable when Texas has never held that.

[00:33:34] Speaker 01:
And in fact, I'm not aware of any court.

[00:33:36] Speaker 02:
Texas law doesn't tell us whether it's equitable or not.

[00:33:40] Speaker 01:
Well, we know that many cases in Texas do go to jury trials on this issue.

[00:33:46] Speaker 02:
But that's irrelevant.

[00:33:47] Speaker 02:
I mean, it's a federal question as to whether it's equitable

[00:33:51] Speaker 02:
remedy that is to be tried by the court or a legal remedy that's supposed to go to the jury.

[00:33:56] Speaker 01:
It is a federal Seventh Amendment question, but we do look to the underlying law to see what the situation is.

[00:34:02] Speaker 01:
That's what Dairy Queen did.

[00:34:04] Speaker 01:
I think that's an important case because they looked at the nature of the claim and they looked at the nature of the relief.

[00:34:10] Speaker 01:
They said that since the merger of law and equity, these distinctions about what we call it, although we all learned in law school that disgorgement may be equitable, that's changed in the terms of what is it?

[00:34:20] Speaker 01:
This Kokish case from the U.S.

[00:34:21] Speaker 01:
Supreme Court in 2017 distinguished, when we're talking about SEC actions versus a private action, what type of claim it is.

[00:34:31] Speaker 01:
So it does depend.

[00:34:32] Speaker 01:
We can't just say disgorgement as a whole is an equitable remedy.

[00:34:36] Speaker 01:
I think it matters what type of relief is being requested and what type of claim it's being requested for.

[00:34:42] Speaker 01:
I'd also like to address, Your Honor, you had asked a question that if you find that one trade secret or one issue

[00:34:48] Speaker 01:
that under this Court's holding in North Point, I believe that was your opinion, Judge Bryson, as well as the... Sotomayor.

[00:34:56] Speaker 03:
I descended.

[00:34:57] Speaker 01:
But not on that issue, was that it was necessary, it's not necessary for every possible factual basis for liability to be independently sufficient.

[00:35:06] Speaker 01:
Carbo, a Fifth Circuit case dealing with a trade secret, footnote 2, the existence of one trade secret supports the verdict, is what Carbo said.

[00:35:15] Speaker 01:
And in that case, there were nine trade secrets being debated about.

[00:35:18] Speaker 02:
Well, that's in relation to a sufficiency of the evidence question.

[00:35:22] Speaker 02:
Whereas with respect to the bill versus by, it seems to me there's a legal argument that the theory is improper because it's foreclosed by the agreement.

[00:35:33] Speaker 01:
So there's a couple of different arguments to make.

[00:35:36] Speaker 01:
Wait, wait, wait.

[00:35:36] Speaker 02:
But don't stray from what I'm asking.

[00:35:39] Speaker 01:
No, no.

[00:35:39] Speaker 01:
Bill versus by.

[00:35:40] Speaker 01:
Is a legal question.

[00:35:42] Speaker 01:
I don't believe it is.

[00:35:42] Speaker 01:
The question is.

[00:35:44] Speaker 01:
Why is it a sufficiency of the evidence question?

[00:35:46] Speaker 01:
Because the question is.

[00:35:48] Speaker 01:
they were given confidential information.

[00:35:50] Speaker 01:
With respect to the financial information, with respect to unreleased products, there's no dispute in this case that they were given trade secret information.

[00:35:57] Speaker 01:
They've not appealed that.

[00:35:59] Speaker 01:
So the question of use under Texas law, under the law of any state, is that that's a jury question for the jury to determine whether you've used it for improper means.

[00:36:09] Speaker 01:
And under well logics, the types of things.

[00:36:11] Speaker 02:
There's a legal question as to whether the agreement, the non-disclosure agreement,

[00:36:16] Speaker 02:
gave them the right to use this material to make a bill versus by decision.

[00:36:22] Speaker 02:
That's not a sufficiency question.

[00:36:24] Speaker 02:
It's a legal question, isn't it?

[00:36:27] Speaker 01:
Well, no.

[00:36:29] Speaker 01:
And here's the reason.

[00:36:30] Speaker 01:
Number one, the language, which is quoted on page 10 of our brief, is that the information was given in strict confidence for the limited.

[00:36:38] Speaker 02:
You're arguing that the district court got it right.

[00:36:43] Speaker 02:
No.

[00:36:43] Speaker 02:
But my question is, is that question a sufficiency of the evidence question?

[00:36:50] Speaker 01:
It's not a sufficiency.

[00:36:51] Speaker 01:
It is a sufficiency of the evidence question because it's not a contract interpretation question.

[00:36:57] Speaker 01:
First of all, this is a trade secret claim, not the breach of contract claim.

[00:37:00] Speaker 02:
Why isn't it a contract interpretation?

[00:37:03] Speaker 01:
Because the question is whether they use the information for a purpose other than

[00:37:07] Speaker 01:
what was allowed by the contract.

[00:37:08] Speaker 01:
Well, the question is, what is the contract allowed to be used for?

[00:37:11] Speaker 01:
The contract's clear.

[00:37:12] Speaker 01:
Nobody said it was unambiguous.

[00:37:14] Speaker 01:
That's a merits argument.

[00:37:16] Speaker 01:
And so the question is whether they went beyond using the information for the financial condition, for determining the financial condition of the other.

[00:37:25] Speaker 01:
That's the quote from the contract itself.

[00:37:27] Speaker 01:
That question of whether they went beyond is something that the jury had to determine.

[00:37:34] Speaker 03:
Maybe you can correct me if I have a misapprehension of what the position is here, but it seems to me that the way to look at this is to say what the contract says is you're interested in potentially purchasing this company

[00:37:53] Speaker 03:
And you want to look at this information to decide whether you want to go forward with that proposal.

[00:38:00] Speaker 03:
And there would be, therefore, as a matter of the law, there's nothing wrong with looking at that information as part of making that decision.

[00:38:07] Speaker 03:
Your position, if I understand it, is they went beyond that authorized purpose as a matter of fact, and that they used this information for purposes that weren't authorized by the contract by its terms.

[00:38:22] Speaker 01:
That's correct.

[00:38:22] Speaker 03:
That's correct.

[00:38:23] Speaker 01:
That they use that information to design, build, market, and sell ambient light sensors rather than using it for the purposes of determining whether to purchase us.

[00:38:34] Speaker 01:
So it's not just a question of, hey, were they making a theoretical decision about whether to build us, build their own, or to buy?

[00:38:40] Speaker 01:
They're using our information to make their decision to build.

[00:38:43] Speaker 01:
They did, in fact, build.

[00:38:45] Speaker 01:
They did, in fact, use that information.

[00:38:47] Speaker 01:
So under a breach of contract, that would be a sufficiency of the evidence question.

[00:38:50] Speaker 01:
under trade secret.

[00:38:52] Speaker 02:
This is confusing, because you do allege that some of the technology was improperly used, but that seems to be a different question than presented by this first trade secret about build versus buy, which is, I understand, focused entirely on the question of whether they were going to buy or whether they were going to build, right?

[00:39:15] Speaker 01:
use of the confidential information and the trade secret information in the context of... For that limited purpose.

[00:39:21] Speaker 02:
It's not... That argument doesn't concern whether they use the technology in building.

[00:39:29] Speaker 02:
That trade secret relates only to the question of whether they should build versus buy, right?

[00:39:34] Speaker 01:
No, and I think that's something that gets lost in the papers.

[00:39:37] Speaker 01:
It's not just the issue of could they make a decision to build versus buy.

[00:39:41] Speaker 02:
Well, how do I know that?

[00:39:43] Speaker 01:
Because the evidence at trial was

[00:39:45] Speaker 02:
But in terms of the definition of what the trade secret was that was being put to the jury, how do I know that the bill versus buy went beyond that?

[00:39:55] Speaker 01:
Because the question was whether they designed, revamped their design from the jury, from the instructions to the jury.

[00:40:04] Speaker 01:
What was the instruction on that?

[00:40:06] Speaker 01:
The instruction to the jury was that the plaintiff was claiming that they used the trade secrets to conduct

[00:40:15] Speaker 01:
a build versus buy to determine whether the defendant should design and build the defendant's competing ambient light sensors.

[00:40:22] Speaker 02:
OK, but that doesn't talk about using the information to build.

[00:40:28] Speaker 02:
It talks about using the information to make a choice.

[00:40:33] Speaker 01:
I think it does, Your Honor.

[00:40:34] Speaker 01:
It's Appendix 75.

[00:40:35] Speaker 01:
Use the plaintiff's trade secret to conduct a build versus buy analysis to determine whether the defendant should design and build the defendant's competing ambient light sensors.

[00:40:44] Speaker 01:
So it was during the course of that discussion.

[00:40:46] Speaker 01:
And more importantly, Your Honor, after those negotiations ended, they definitely used the information to redesign their products.

[00:40:54] Speaker 01:
So this argument that they were allowed to do these things during due diligence, after due diligence ended, and it's only two weeks later, that they changed their design based upon the design of an unreleased product, the TSL 2560.

[00:41:07] Speaker 01:
And let me just mention a point about that that goes to the, I see that amount of time, so let me just finish here.

[00:41:14] Speaker 01:
This use of the TSL2560, which used the interleaved one-to-one photodiode array, was something that Taos came up with after it applied for a patent and had a previous product, the 2550, in the marketplace and determined through use and trial and error and research and development and expenditure of money that a better way to use these exposed and shielded diodes was to put them together in this interleaved one-to-one ratio

[00:41:43] Speaker 01:
And as a result, it kept that information a trade secret.

[00:41:47] Speaker 01:
And there's no dispute that TSL 2560 that used that design was the first of its kind, and was not released to the public, and that that intercell copied that design in coming out with its first-generation product.

[00:42:02] Speaker 01:
So it accelerated its development.

[00:42:04] Speaker 02:
I think we're out of time.

[00:42:05] Speaker 02:
Thank you.

[00:42:05] Speaker 02:
Thank you, Your Honor.

[00:42:09] Speaker 02:
Let's get the standings ready in minutes.

[00:42:13] Speaker 00:
Thank you, Your Honor.

[00:42:14] Speaker 00:
I'll try to be as brief as I can.

[00:42:16] Speaker 00:
Judge Bryson, you asked my friend about the KNG case.

[00:42:20] Speaker 00:
It speaks not at all to damages, but only to liability.

[00:42:23] Speaker 00:
What it said is that the fact that somebody could independently discover it does not absolve from liability.

[00:42:29] Speaker 04:
And WellLogix?

[00:42:31] Speaker 00:
WellLogix, I did not come prepared to answer to, but I think it stands for the same proposition.

[00:42:36] Speaker 00:
But KNG and WellLogix in both cases, in either case,

[00:42:40] Speaker 00:
Reverse engineering would cut off the causal chain with regard to damages.

[00:42:45] Speaker 00:
So that's, I think, exactly the point that Judge Dyke was getting at in his colloquy with my friend.

[00:42:53] Speaker 00:
Judge Bryson, as we've said before, will get you the trial exhibit that we've been talking about.

[00:42:58] Speaker 00:
I just would like to point you to the Ratliff's report in the appendix, which is A10405.

[00:43:07] Speaker 00:
10412 and 10415, which goes through with some detail some of the things that Ratliff was subtracting.

[00:43:14] Speaker 00:
That's not part of the evidence.

[00:43:15] Speaker 00:
No, of course.

[00:43:16] Speaker 00:
I'm giving that to you now and we'll provide you with whatever we can after.

[00:43:20] Speaker 00:
Now, I'm after that, but I'd love to.

[00:43:23] Speaker 00:
Go ahead.

[00:43:23] Speaker 00:
OK, so I'm beating it.

[00:43:24] Speaker 04:
Can I ask you, we've talked about the one-to-one interleaving trade secret, the build-or-buy trade secret.

[00:43:30] Speaker 04:
There's a third one.

[00:43:32] Speaker 04:
What's wrong with the third one?

[00:43:34] Speaker 00:
The third one, which is?

[00:43:36] Speaker 00:
Plastic plastic plastic.

[00:43:38] Speaker 00:
I thought I'm sorry.

[00:43:39] Speaker 00:
I thought I'd answer plastics I thought I'd answered that in my opening.

[00:43:44] Speaker 00:
I'll return to it and it said that it's that that initial Intersil design which took place four months before were entitled under the confidentiality agreement to use information that we came up with already and

[00:43:56] Speaker 00:
And it's already in there, documented four months beforehand.

[00:43:59] Speaker 04:
But why might the cost information you got during that summer of 2004, I think it was, not have led you to not contemplate the change?

[00:44:14] Speaker 00:
Well, there was no change contemplated.

[00:44:16] Speaker 00:
And in fact, if you'll look at that exhibit, you'll see that competitive intelligence at that point was already telling Intersil that Taos was on the market.

[00:44:24] Speaker 00:
And the plastic was going to be able to make our products cheaper and more competitive with them.

[00:44:29] Speaker 00:
With regard to the build versus buy, it's absolutely a legal question, absolutely a question of contract interpretation.

[00:44:35] Speaker 00:
And in fact, my friend's colloquy with Judge Bryson shows that build versus buy is just another way of inflaming the jury to argue, once again, the technical trade secret issue, which isn't there.

[00:44:46] Speaker 00:
Finally, on the jury trial right, my friend mentioned Kokish, which was decided after the briefing.

[00:44:51] Speaker 00:
Kokesh makes very clear that disgorgement requires that, and this is quoting from the case at page 1640, disgorgement requires that the defendant give up those claims properly attributable to the defendant's interference with the claimant's legally protected rights.

[00:45:08] Speaker 00:
It is not at all about the plaintiff's damages.

[00:45:11] Speaker 00:
It is about the defendant's, what they generated.

[00:45:20] Speaker 03:
Perhaps you're not familiar, as you suggested, with the Wellogix case.

[00:45:24] Speaker 03:
But Wellogix does say, and it's a Fifth Circuit case on Texas law, that it referred to the compensatory damages and then includes, among the list of compensatory damages,

[00:45:43] Speaker 03:
defendants' actual profits from the use of the secret.

[00:45:46] Speaker 03:
So while that may not actually close the loop, it seems to me it gets pretty close to saying that in this context at least, the defendants' profits can be a measure of compensatory damages which would seem to indicate a jury trial right, wouldn't you think?

[00:46:04] Speaker 00:
I can agree with you insofar as you say can be.

[00:46:08] Speaker 00:
They weren't here.

[00:46:09] Speaker 00:
If, for example, this worked strictly a one-to-one, that the proof was that every sale we made was a sale they lost, then maybe a disgorgement award, properly limited with expenses and attribution and that sort of thing, would actually be their damages.

[00:46:28] Speaker 00:
But again, I come back to the fact that... For our jury to decide.

[00:46:30] Speaker 00:
And that could be for a jury to decide, if that were the claim that were being put forth.

[00:46:34] Speaker 00:
Kagan-Powell.

[00:46:34] Speaker 00:
Wouldn't it be?

[00:46:34] Speaker 03:
What would be the argument that it wouldn't be for a jury to decide in that context?

[00:46:37] Speaker 00:
It's not for the jury to decide where the disgorgement is strictly about give up your money.

[00:46:41] Speaker 00:
It doesn't have to be.

[00:46:42] Speaker 00:
It's not in any way tied to their.

[00:46:44] Speaker 03:
In the circumstances that you just outlined, where you said it could be compensatory, that wouldn't necessarily imply a jury, right, wouldn't it?

[00:46:53] Speaker 00:
I think if it is compensatory, I think we've agreed in our briefs that a compensatory

[00:46:59] Speaker 00:
is damages, as that term is understood.

[00:47:01] Speaker 00:
And that would be juryable at 1789.

[00:47:04] Speaker 00:
We're saying that that argument now being made on appeal on the record of this case is not tenable.

[00:47:10] Speaker 00:
And really, the best proof is that their damages claim, the one where they showed their injury, was a royalty claim that was a fraction of the amount of the disgorgement claim.

[00:47:19] Speaker 00:
Thank you all very much.