INTERNATIONAL MEDICAL DEVICES v. CORNELL
Oral Argument — 03/05/2026 · Case 25-1580 · 64:32
0:00
Judge Dyk
75-15-80, International Medical Devices v. Cornell.
0:05
Okay, Mr. Post, how are you dividing your time?
0:09
Appellant Attorney
Your Honor, I'm going to take the first nine minutes of the opening.
0:13
Judge Dyk
No, I don't understand, but in terms of issues.
0:15
Appellant Attorney
Your Honor, I'm here for the Court.
0:17
I intend to address the common issues that affect trade secrecy for all the appellants,
0:22
but also the individual liability issues that affect Mr. Finker uniquely
0:27
and the exemplary damages issues which intersect both common and unique issues.
0:33
Judge Dyk
Okay, go ahead.
0:34
Appellant Attorney
May it please the Court, as I said, Russell Post as counsel for the appellant Richard Finker.
0:39
There are multiple paths to reversal here.
0:41
As to Mr. Finker, who is a businessman who invested $300,000 in what he understood to be a new startup,
0:49
there's no evidence of misappropriation.
0:51
It's certainly not evidence of malicious conduct that would support exemplary damages.
0:55
And over $20 million.
0:57
That's a personal liability.
0:58
As to all the appellants, all these trade secrets are barred by prior patent disclosures
1:04
and issues that the District Court never even addressed in the post-judgment motion.
1:08
The exemplary damages were abandoned by the pretrial order,
1:12
and there is no jury finding as required to support them.
1:15
And the royalties here are tainted by a failure to apportion in violation of a number of this Court's precedents.
1:22
And so reversal is required on numerous grounds.
1:25
I'm happy to address whatever questions.
1:27
I'm happy to address whatever questions the Court wishes to address.
1:28
Otherwise, I'll begin with the common point that the patent disclosures foreclose trade secrecy as a matter of law.
1:36
And I want to call your attention to page 31 of the appendix,
1:39
which is where the District Court's order on the post-judgment motions addresses trade secrecy.
1:44
Judge Taranto
Why don't you talk about the actual evidence on the four trade secrets?
1:49
I'd be happy to, Your Honor.
1:50
There's the instruments and then the other three things.
1:53
And I guess my impression was the instruments are kind of a separate category.
1:57
There's, you know, everybody knows what the instruments are, and I want to put that aside for now.
2:02
But the other three, the distal tabs, the use of absorbable sutures, and the internal pockets.
2:14
And the internal pockets.
2:15
I guess my impression coming in here is that the prior art documents that you cite, a couple of patents and the PCT application,
2:27
get close, but not all the way there.
2:30
And that might not be decisive in an obviousness case,
2:36
but it's not clear to me why it's not decisive in a trade secret case
2:40
where the issue of what's in the public domain and whatnot is basically a factual question.
2:48
Appellant Attorney
Your Honor, I think it is not a factual question to the extent that the secret is disclosed in the patents.
2:53
And I'll call the Court's attention to your decision in Ultimax Cement,
2:57
which was...
2:58
This is also a California trade secret.
2:59
Judge Taranto
It all depends on whether it's disclosed.
3:03
Whether it's actually disclosed.
3:04
Correct.
3:04
Appellant Attorney
And so I want to speak to the factual question that you posed.
3:07
And in particular, I want to call attention to the internal voids secret,
3:12
because that is the one that is unequivocally disclosed.
3:16
If you look at 16600-01...
3:20
Judge Dyk
That's Sabrini 477.
3:22
Appellant Attorney
That's right, Sabrini 477.
3:23
It discloses a penile implant with cavities to adjust the heart...
3:27
The hardness of silicone.
3:28
That is precisely the internal pocket secret that's alleged here.
3:32
And it represents more than 50% of the total value of the judgment.
3:37
It is squarely foreclosed by the Sabrini patent.
3:39
And if you look at page 14557-58,
3:44
you will see the expert testimony upon which the plaintiffs rely.
3:47
And it fails to deal with Sabrini.
3:49
I apologize, Your Honor.
3:50
Judge Taranto
No, no, no.
3:51
Where in Sabrini do you want me to look to find it?
3:55
Appellant Attorney
At 16600-01.
3:57
At 16600-01.
3:58
Judge Taranto
It's a new column and line number.
4:00
Appellant Attorney
Of course, Your Honor.
4:00
Let me call that up.
4:11
Look at column 4, beginning at line 3.
4:16
Judge Taranto
Yep.
4:17
Appellant Attorney
It states that it should be noted that the presence of cavities,
4:21
and go on down to the end of line 4,
4:24
makes it possible to give it a hardness less than that which it would have
4:27
if it were formed of a solid and homogenous body.
4:30
And if you look one page prior, or pardon me, two pages prior,
4:35
at 16598,
4:37
you see the illustrations.
4:39
And the illustrations, of course, bring this to light
4:41
because they show the internal cavities
4:43
embedded in the implant.
4:47
That is precisely what Dr. Ehlert alleged was his trade secret.
4:52
Judge Taranto
So this might not be quite the point that I thought.
4:57
I was remembering from the papers here
5:00
that it was rather important whether the cavities are,
5:07
like, fully enclosed or merely, like, indented in.
5:12
And one could use the word cavity for either thing.
5:16
Appellant Attorney
There was a dispute about that that related to the way
5:19
the Augmenta product was ultimately designed
5:22
because it wasn't fully embedded cavities.
5:25
But the point here is what Dr. Ehlert said was his trade secret,
5:29
was cavities fully enclosed in the device.
5:33
And that is precisely what Subirini 477 discloses.
5:36
And as a matter of law, that should foreclose
5:39
that trade secret claim.
5:40
Judge Dyk
I think that...
5:41
We have a jury instruction which defines the trade secret.
5:46
Appellant Attorney
There was a jury instruction which defined the trade secret.
5:48
The court did not permit a jury instruction
5:51
about the principle that disclosure in a patent forecloses...
5:55
Judge Dyk
No, no, I understand.
5:56
But I'm saying in terms of comparing the prior patents
6:01
to the trade secret,
6:02
we can take the jury instruction as defining the trade secret.
6:05
Appellant Attorney
Yes, that's correct.
6:06
That's right.
6:07
The jury instruction defined the claim trade secrets.
6:10
I want to shift gears because I do want to address
6:13
Mr. Finger's individual responsibility.
6:15
Judge Dyk
Let's stick with this question of what was disclosed in the patents.
6:22
Of course, I'm happy to.
6:23
The second one is the mesh.
6:27
That's right.
6:28
Appellant Attorney
And there it's the Finney patent.
6:30
That's right.
6:30
It's the Finney patent which disclosed a penile implant
6:34
with suturing strips of mesh.
6:36
And Dacron is what's referenced in Finney,
6:39
and that is a form of mesh.
6:41
Judge Taranto
But not at the distal end?
6:43
Appellant Attorney
Not at the distal end.
6:44
But then the ELIST International patent application,
6:47
which incorporated Finney,
6:49
disclosed the use of these types of suturing strips
6:52
at the distal end.
6:54
Judge Taranto
Well, I thought, I thought, and you correct me,
6:57
I thought that what the PCT application disclosed
7:01
were silicone strips and that there is evidence
7:06
that whatever else silicone strips are,
7:09
they don't encourage tissue ingrowth.
7:13
Appellant Attorney
But that's where, Your Honor, you have to account for the fact
7:15
that that application was incorporating Finney.
7:19
And Finney referred to the use of these distal end tabs in a mesh.
7:27
And so the point is that when you account for the incorporation
7:30
of Finney into the ELIST application,
7:34
you have all the components.
7:36
Of this alleged secret.
7:37
It's right there in the public eye.
7:38
Judge Taranto
And the best spot in Finney is?
7:41
Appellant Attorney
Your Honor, I would look at 16607 to 10.
7:47
Judge Taranto
Right, but Finney's a tiny, tiny pattern, so.
7:51
Judge Dyk
And the language of the trade secret
7:56
is in or around the distal end,
8:00
whereas some of the witnesses seem to assume
8:02
that it had to protrude from the distal end,
8:05
which is not part of the trade secret.
8:08
Appellant Attorney
Your Honor, I think the testimony was that
8:12
this idea of mesh tabs was that tabs
8:15
that extend from the distal end.
8:17
The way in which the trade secret...
8:19
Judge Dyk
No, what I'm saying is that some of that testimony
8:20
is not relevant because the trade secret...
8:22
Because of the definition.
8:23
...doesn't say extending from the distal end.
8:25
It says in and around the distal end.
8:28
Appellant Attorney
That may be correct, Your Honor.
8:30
I mean, I'm trying to harmonize the instruction
8:33
with the testimony that was given
8:35
and just to acknowledge that if you accept
8:38
the possibility of extending from the distal end,
8:38
the plaintiff's testimony as being a fair application
8:41
of that instruction, it's fully disclosed
8:43
by Finney and the ELIST international application.
8:48
Judge Dyk
And let's see other questions.
8:50
Judge Taranto
I guess I'd...
8:51
Of course, Your Honor.
8:52
...be more specific in Finney.
8:54
Appellant Attorney
Yes, in Finney, Your Honor, I would...
9:03
Judge Taranto
This kind of thing really does make a difference.
9:05
Appellant Attorney
Of course it does, absolutely.
9:08
I would point to...
9:12
Let's look at the abstract.
9:14
Judge Taranto
Right.
9:14
Appellant Attorney
Midway through the abstract...
9:16
Right.
9:16
...it makes clear...
9:17
...that the sleeve includes suturing strips
9:18
on the inside wall that facilitate the suturing of the sheet.
9:23
And at the bottom, the last two lines,
9:25
it states that the suturing strips are of Dacron fabric,
9:28
which Dacron is mesh.
9:30
And if you look in the next two pages,
9:35
you can see the discussion of these suturing strips.
9:39
And, for example, I think a good illustration here
9:45
would be at 16609,
9:49
column 2, lines 33 to 37,
9:54
which allude to the illustrations
9:56
and point out that you can see the suturing strips
9:58
that are attached to the sleeve.
10:02
Judge Taranto
Right.
10:03
This...
10:04
I don't think you've identified something
10:07
unless I've missed it about the tabs at the end.
10:12
Appellant Attorney
The distal end.
10:13
And that, Your Honor, is because Finney is incorporated then into...
10:17
Judge Dyk
Carson testified that Finney showed...
10:19
Yes.
10:20
Appellant Attorney
Yes, that's exactly right, Your Honor.
10:21
Carson conceded that Finney showed this.
10:24
That's at 14653 to 64.
10:27
That's plaintiff's expert conceding that point.
10:31
14653 to 64, Your Honor.
10:33
Or, pardon me, 14653 to 54.
10:36
And the point, Judge Chironta, that I was making
10:38
in response to your question was,
10:39
it's the ELIST international application
10:41
that then incorporates Finney
10:43
and applies it to the distal end.
10:46
And so that discloses the entire secret as a matter of law.
10:50
I want to make certain that I have an opportunity
10:58
to emphasize the lack of proof
11:00
with respect to Mr. Finger individually.
11:02
Judge Dyk
We'll get there.
11:03
Appellant Attorney
Okay, very good, Your Honor.
11:04
I apologize.
11:05
Judge Dyk
Can we move on to number three now?
11:06
Yes, of course.
11:07
So, number three is this combination
11:13
of absorbable sutures in the mesh.
11:17
Appellant Attorney
Right.
11:17
And so that is disclosed by the Kim patent.
11:21
And that appears at 17-080.
11:26
Of the appendix.
11:31
And it appears specifically in column three at line 30.
11:37
Judge Reyna
0-8-0.
11:38
Appellant Attorney
1-7-0-8-0.
11:40
Correct, Your Honor.
11:44
Column three, line 30.
11:47
The multiple slits implant is then applied to the space
11:50
and fixed on the back fascia with an absorbable future.
11:56
And the multiple slips implant is itself a mesh structure.
12:01
And so I call your attention in,
12:03
in column four to line 40,
12:05
where this is explained further.
12:07
The patent says it is fixed to Buck's fascia
12:10
using an absorbable suture.
12:13
Then the dermal tissue is incised
12:15
to form a mesh structure of multiple slits.
12:18
So it's absorbable sutures with a mesh structure.
12:22
The only argument the plaintiffs make
12:24
is that that mesh structure in this patent
12:26
is natural tissue as opposed to mesh.
12:29
But that makes no difference to the idea
12:32
that is described.
12:33
The only argument that is disclosed,
12:33
which is the use of absorbable sutures with mesh.
12:36
And so that definitively forecloses
12:39
all of the trade secrets.
12:40
I see that our opening time is expired.
12:43
I'm happy to answer questions about the other issues.
12:47
Judge Dyk
I want to go on to number four.
12:49
I appreciate it, Your Honor, absolutely.
12:51
Appellant Attorney
It's a privilege.
12:52
Judge Dyk
And with respect to number four,
12:54
I take it your contention is that this was,
12:59
there was a failure, not only that it was generally known,
13:02
but there was a failure to keep it confidential.
13:05
Appellant Attorney
Your Honor, there's three points.
13:07
I think that the...
13:08
Judge Taranto
Is there an online video?
13:10
Appellant Attorney
There is an online video that reveals the use
13:13
of most of the instruments.
13:15
The instrument list itself is not anything unique
13:20
or distinctive.
13:20
The instruments are common knowledge.
13:23
They were not protected by any confidentiality.
13:26
And I would point out the simplest way to deal with this
13:29
is that a trade secret
13:31
must derive independent economic value from its secrecy.
13:35
If you look at the pages of the brief
13:37
where the plaintiffs argue independent economic value,
13:40
they never even refer to the instrument list.
13:42
And no surprise, because no one could credibly say
13:45
that the instrument list creates independent economic value.
13:48
So it's an easy way to decide that trade secret claim
13:51
without even getting into the question
13:53
of whether it's confidential.
13:55
Judge Reyna
Okay.
13:55
Unless there are further questions.
13:57
Wasn't there some...
13:59
I'm sorry. Go ahead.
14:01
Wasn't there some evidence
14:02
that there were several instruments on the instrument list
14:06
that are generally just not used at all in this type of surgery?
14:10
Appellant Attorney
Your Honor, the evidence is that all of the instruments
14:13
on the list are regularly available
14:17
and regularly used in surgical procedures.
14:20
Not all of them are used commonly
14:22
in standard urological procedures,
14:25
but there's no instrument on this list
14:27
that is special and unique.
14:29
And in fact, on the contrary,
14:30
Dr. Ehlis has promoted...
14:32
his procedure by saying any surgeon can do it
14:35
with conventional surgical instruments.
14:37
Judge Taranto
Well, why do you think it's enough that, you know,
14:42
say some instrument that has never been used
14:45
for urological work and has been used, I don't know,
14:50
in heart surgery or something,
14:53
why would there not be an eligible trade secret,
14:58
or at least a possible eligible trade secret, putting us
15:02
on the side, whether it's been disclosed,
15:03
the other reasons?
15:06
Appellant Attorney
Well, Your Honor...
15:08
Judge Taranto
This is just, I think, a different version
15:11
of Judge Ray's question.
15:12
Appellant Attorney
And I certainly want to make sure
15:14
that I'm engaging with this question fairly.
15:16
I think the point would be that if all of the instruments
15:20
are conventional surgical instruments,
15:22
which I believe it's undisputed is the case,
15:25
and there's no distinct value that derives from the particular list
15:31
of those instruments in this case...
15:33
Judge Taranto
That's a different point, I think.
15:35
Appellant Attorney
That is, I think, a fair point, Your Honor.
15:37
And I would say, again, I think that's the simple way
15:39
to decide this alleged secrecy claim without needing to worry
15:43
about whether there's a particular magic instrument
15:46
that's included in this list, which I think the evidence
15:48
indicates that's not the case.
15:50
Judge Dyk
But the list was sent by email.
15:52
Appellant Attorney
The list was communicated, that's right,
15:54
without confidentiality, that's right.
15:57
Judge Reyna
In the video or separately?
16:01
Appellant Attorney
Separately to Dr. Ehlis.
16:02
To Dr. Cornell.
16:03
And do a third party, too.
16:05
That's correct, that's correct.
16:09
Judge Dyke has answered the question for me correctly.
16:12
Judge Dyk
Okay, unless there are further questions on these traces,
16:16
there's going to be a couple of minutes to talk about Mr. Finger.
16:19
Appellant Attorney
Good, I'll take advantage of that freedom to make two points.
16:24
First, there is no evidence in this record that Mr. Finger,
16:27
who was an individual investor, had knowledge of these secrets,
16:32
as required to impose trade secret liability,
16:35
or had any reason to know that they had been wrongfully possessed.
16:40
At the most, what he knew is that Dr. Cornell had attended a training session.
16:45
Dr. Cornell said that very little was discussed.
16:50
There was no discussion of these design concepts.
16:53
And Dr. Cornell represented in the PPM
16:57
that he had independently developed the product.
17:00
That is no evidence upon which a jury would be able to say,
17:02
well, I don't know, I don't know, I don't know, I don't know.
17:02
that the party can draw a reasonable inference of misappropriation.
17:04
And I call your attention to two cases from the California courts.
17:08
One is the Silvaco case in 2007 that held that mere knowledge
17:13
that a party might claim misappropriation of a trade secret when there is a dispute
17:17
is not itself a basis to charge an inference of see enter.
17:21
The second case is the Hook Media case from the California Court of Appeals in 2020.
17:27
That's a case where a new employer had engaged employees who had confidential information.
17:33
There was some evidence that the employees had used that confidential information.
17:36
But the Court of Appeals held that was no evidence to impute knowledge of that to the employer.
17:42
Mr. Finger is in this situation exactly.
17:45
Whatever Mr. Cornell did or did not do with respect to Dr. Ehlers,
17:48
Mr. Finger had no reason to know he was lying if he was lying.
17:52
And so Mr. Finger can't be liable.
17:54
And that brings me to the last point that I would make is,
17:56
the exemplary damages here depend on a finding by the court,
18:01
which is highly irregular, and I say waived by the pretrial order,
18:04
but a finding of malice.
18:05
California law requires proof of both willful conduct and malice.
18:09
And in the Applied Medical case in 2024 and the Champion Systems case in 2024,
18:17
the California court said, malice is different.
18:20
It requires proof of intent to cause harm or despicable criminal conduct.
18:25
The plaintiffs here had no evidence.
18:26
They have not cited any evidence of malice by Mr. Finger.
18:30
At most, they've cited evidence that they say would go to willfulness.
18:33
That's an easy issue.
18:34
Judge Dyk
Okay. I think we're out of time.
18:35
I appreciate the time. Thank you, Your Honor.
18:37
We'll give you two minutes for rebuttal.
18:38
And we'll have Ms. White.
18:49
Appellant Attorney 2
Thank you, Your Honors. May it please the Court.
18:51
Subject to the Court's questions, I'll spend a brief amount of time talking about the Royalty Award
18:56
and the problems with the Royalty Award.
18:58
There are several, and the Court should remand at minimum on the Royalty Award.
19:02
As this Court knows, there's a requirement to apportion between the aspects of the product
19:09
or the profits here, the projected profits, that relate to the protected idea, the trade secrets,
19:16
and those that don't.
19:17
That did not happen at all.
19:19
Judge Taranto
What are some of those aspects?
19:21
Appellant Attorney 2
So, this gets a little complicated because the trade secrets, it's undisputed,
19:27
are not actually in the Augmenta product.
19:30
So,
19:33
when we're looking at apportioning, you can't actually apportion with the product.
19:38
So, at most, what they could have done is said,
19:41
we need to apportion the projections that Augmenta had put together,
19:45
what they thought they could earn with the trade secrets versus without.
19:50
Judge Taranto
With a product that would incorporate the trade secrets.
19:54
Correct.
19:54
So, what else would be of value in said product?
20:02
In the not yet made,
20:05
Augmenta product that incorporates the trade secrets.
20:08
Appellant Attorney 2
It would be everything that is not the improvements.
20:12
Judge Taranto
What is the everything?
20:13
Appellant Attorney 2
That would be the Pneuma.
20:15
The implant, there was already a commercially available implant, the Pneuma.
20:20
The trade secrets are supposedly an improvement on the Pneuma.
20:24
So, if you took the projections that Cornell had back then,
20:29
the thing that we have in the record that they could have been based on
20:33
that weren't the improvements,
20:34
is the Pneuma.
20:36
The Pneuma had,
20:39
the year before the hypothetical negotiation would have been occurring,
20:43
did not even have a million in profits.
20:46
So, if you look at the actual product,
20:48
the one thing we know doesn't have the trade secrets in it.
20:51
It's nowhere near the base that Arst used.
20:56
Judge Taranto
Would I be right?
20:59
So, it seems to me, I guess, two thoughts are coming in a row.
21:03
One is,
21:04
okay, there's improvements on an existing product,
21:07
so the existing product might have some value.
21:10
Second thing is,
21:11
you're telling me that existing product had really, really,
21:14
really small value compared to the rest.
21:16
So, if you're going to subtract something,
21:18
you might not be subtracting very much.
21:21
Nobody wants it.
21:22
I'm exaggerating.
21:24
Nobody wants the Pneuma without the approvals.
21:26
Not nobody.
21:27
Compared to what they projected.
21:30
Appellant Attorney 2
The problem is that the Augmenta also doesn't have,
21:35
the improvements.
21:36
Well, it doesn't now, but they're projecting.
21:38
Judge Taranto
Aren't you measuring against the what-if Augmenta product
21:42
that included the trade secrets?
21:45
I may be misunderstanding.
21:47
I don't understand why you keep talking about
21:49
how the current Augmenta doesn't have them.
21:53
Appellant Attorney 2
Because, and I'm sorry, Your Honor,
21:55
I'm trying to understand your question as well.
21:57
So, and if I'm understanding it now,
22:00
the question is that the Pneuma as it existed
22:03
had very little profits.
22:04
So, the projections must have been,
22:05
must be just because of the trade secrets.
22:07
Is that what you're testing?
22:10
Yeah.
22:10
So, that could be the case,
22:14
but that analysis was never done.
22:16
Ars did not do that.
22:17
What Ars did is said,
22:18
I'm assuming the Augmenta,
22:20
everything about the projected profits for the Augmenta,
22:23
those are co-extensive.
22:26
So, you are correct that maybe that is the analysis
22:29
that needs to be done.
22:29
It was not done here.
22:31
And that's the problem.
22:32
So, at minimum, we need a remand for that.
22:34
There are also problems with the royalty rate.
22:38
It has to be sufficiently tied to the facts of the case
22:41
and the two comparable transactions that Ars used.
22:45
Did you have a question?
22:46
Judge Taranto
No.
22:47
Okay, I'm sorry.
22:48
I wanted to ask one thing about the exemplary damages.
22:54
I don't see how there was a waiver in the pretrial order.
23:00
The pretrial order says we're going to try damages.
23:04
Full stop.
23:06
It doesn't distinguish among different types of damages.
23:10
And then, what, two weeks later,
23:12
there's a stipulation that says all the yet undetermined damages,
23:17
all of them, are going to be for the judge, not the jury.
23:21
At that point, why wasn't it your obligation to say
23:28
all the damages are in the case,
23:30
we've all just agreed they're going to the judge,
23:34
I have to assume, as I think the district court ultimately said she did assume,
23:42
that that meant all the issues that go into the damages,
23:47
including the exemplary damages,
23:48
are going to be tried by the court.
23:51
And if you disagreed and said,
23:54
no, we would like that one to go to the jury,
23:56
it was your obligation to ask.
23:58
Appellant Attorney 2
The answer to your question, Your Honor,
23:59
is that the characterization of the stipulation
24:01
that you're operating under is incorrect.
24:03
So, the stipulation is incorrect.
24:04
The stipulation was that after liability,
24:07
the court would determine whether to award a reasonable royalty.
24:10
Judge Taranto
But it seems to me you've made two different points.
24:13
Your main point has been the pretrial order waived it.
24:18
That happened, what, May 24th, 2023.
24:22
No stipulation until June 5th, I think it was, 2023.
24:26
I don't see how you can say, I mean, literally,
24:30
I do not see how you can say the pretrial order waived
24:33
a claim to exemplary damages.
24:36
It said damages is what we want.
24:40
That's going to be tried.
24:44
Appellant Attorney 2
I understand Your Honor's point now.
24:46
The pretrial order, the reason we say it waived it
24:50
was that willful and malicious misappropriation
24:55
have been pled as a separate thing.
24:57
You are right that exemplary damages is part of damages.
25:00
What was not identified in the pretrial order
25:02
is that they were going to be pushing
25:04
for the predicate liability finding
25:06
of willful and malicious misappropriation,
25:08
which has its own elements.
25:11
Judge Taranto
So damages...
25:12
When you say willful and malicious misappropriation
25:17
was separately pled, what do you mean?
25:19
Appellant Attorney 2
I mean that in their petition, they had said,
25:21
you have misappropriated trade secrets
25:23
and you have also done so willfully and maliciously,
25:25
and that is what entitles us to exemplary damages.
25:28
Our point about the waiver and the joint pretrial order
25:31
is that there's a special liability finding,
25:34
for exemplary damages,
25:36
and that's not identified as something at issue anymore.
25:39
And so for the defendants to know that that's being tried,
25:45
we have no way of knowing that.
25:46
It's not in the joint pretrial order.
25:48
And the exemplary damages follow from that liability finding.
25:51
It's the liability finding that they waived
25:54
by not including...
25:55
Judge Taranto
And when you say liability finding...
25:56
Appellant Attorney 2
I mean the predicate liability finding to exemplary...
25:59
Judge Taranto
You're referring to something in the operative complaint?
26:03
Appellant Attorney 2
Yes.
26:04
What I am referring to is that...
26:07
Willful and malicious misappropriation...
26:09
Wait, what's a predicate?
26:09
Oh, I'm sorry, I'm sorry.
26:10
I mean complaint.
26:11
I'm sorry.
26:12
I missed that.
26:13
In the complaint, willful and malicious misappropriation
26:17
is set out as the basis that they will use
26:21
to seek exemplary damages
26:22
because they can't just get exemplaries
26:24
based on a liability finding misappropriation.
26:27
They need an extra finding.
26:30
And our point about waiver is that
26:33
in the joint pretrial order,
26:34
they do not identify that as something
26:36
that is a factual issue
26:37
that's going to be determined
26:38
whether the misappropriation was willful and malicious.
26:42
Judge Dyk
Okay, I think we're out of time.
26:43
Thank you.
26:44
Mr. Mammon?
27:01
Appellee Attorney
May it please the Court,
27:02
Nathan Mammon on behalf of the plaintiffs.
27:05
I'll start wherever your honors want,
27:07
but I'll start...
27:08
Since the questioning began with the trade secrets,
27:10
I'd like to address those questions first.
27:13
And the first thing I'd like to point out is
27:15
I think a critical thing that was elided over
27:18
with these trade secrets
27:19
is what they actually are.
27:21
The context of these trade secrets,
27:23
if you look at the trade secrets in the jury instructions,
27:26
they're in a cosmetic penile implant.
27:28
That's a requirement for the three structural trade secrets.
27:33
They all have to be in a cosmetic penile implant.
27:36
Sobrini is not a cosmetic penile implant.
27:39
It's a therapeutic implant.
27:40
That's a different type of implant.
27:42
There's testimony in the record that the jury,
27:44
in making its factual finding,
27:45
was able to hear and figure out.
27:47
Judge Dyk
Okay, so where is the testimony
27:49
that it, for a purpose,
27:51
let's take these trade secrets one by one,
27:53
that with respect to this first trade secret
27:56
about the pockets,
27:57
that it made a difference
27:58
whether it was a cosmetic or a functional implant?
28:02
Appellee Attorney
Yes, so the testimony you could find
28:06
at Appendix 14557 in...
28:12
Judge Dyk
14557?
28:13
Appellee Attorney
Yes, that's plaintiff's expert Drury.
28:15
He was a technical expert.
28:17
And then there's another expert, Dr. Carson,
28:19
that I'll refer to.
28:20
And the way the trial...
28:21
Wait, wait, wait.
28:22
Judge Dyk
I'm sorry.
28:23
14557?
28:24
Appellee Attorney
14557.
28:27
Judge Dyk
Okay, so where's the testimony here
28:29
about the pockets being different
28:33
for cosmetic and functional implants?
28:38
Appellee Attorney
So there's a few different places, Your Honor,
28:40
that I may have to point you to.
28:42
But 14557, there's the discussion of Sobrini.
28:47
And I think it's important to note
28:49
that the way this part was presented below,
28:52
the defendants threw up a lot of prior evidence.
28:54
And so he's addressing the art as it's presented.
28:57
Judge Dyk
Show me where your witness says that it's a difference,
29:01
whether it's from the point of view of this first trade secret,
29:04
it's a cosmetic or a functional implant.
29:08
Appellee Attorney
So the cosmetic point,
29:10
I will have to look back at what Drury said.
29:14
I'll point you for the cosmetic distinction
29:16
if you look at 14636.
29:20
Judge Dyk
14636?
29:20
Appellee Attorney
Which is Dr. Carson, who's also an expert.
29:24
Judge Dyk
636.
29:24
636.
29:32
Go ahead.
29:34
Appellee Attorney
Yeah, here.
29:35
So the context, again, as I said,
29:37
there was art that was presented together,
29:38
including the small carry-on prior art and Sobrini.
29:43
And he's discussing how these two references aren't the same.
29:47
And Dr. Carson here explains the therapeutic implant.
29:51
Judge Dyk
Where?
29:52
Appellee Attorney
Well, if you look at starting on line one,
29:56
where he's talking about the small carry-on implant,
29:58
and then you also see down below,
30:01
he ties it in at line 19 with Sobrini.
30:05
Sobrini says it's a therapeutic penile implant.
30:08
It's designed, therapeutic implant goes in.
30:10
Judge Dyk
Okay, but where does he say it makes a difference
30:12
from the point of view of the trade secrets?
30:15
Appellee Attorney
Well, it makes a difference from the point of view of the trade secrets
30:17
because the trade secrets are limited to cosmetic penile implants.
30:20
I mean, it's not the same.
30:22
Okay, but look, there's a Ninth Circuit case
30:27
Judge Dyk
about the California Trade Secrets Act.
30:29
I mean, there was a trade secret that claimed
30:41
that having bubbles under the hull of a jet ski
30:45
made it operate better.
30:47
And the court said, no, that's not, that's well known
30:50
because while there's no evidence that it was known for jet skis,
30:54
it was known for boats generally,
30:56
and there's no difference between boats and jet skis.
30:58
They're a kind of boat.
30:59
So, I mean, there's no evidence that it was known for jet skis,
30:59
so, you know, what I'm asking you,
31:05
is there some testimony here that from the point of view
31:08
of this particular trade secret, the Void's trade secret,
31:11
makes a difference whether it's a cosmetic implant
31:14
or a functional implant?
31:16
And so far you haven't shown me any testimony that addresses that.
31:20
Appellee Attorney
Your Honor, I respectfully think we're switching it to say,
31:23
well, what's this trade secret versus,
31:25
or what's the particular feature versus talking about the trade secret.
31:29
The trade secret is a cosmetic implant.
31:31
The only cosmetic implant that was ever on the market is my client's,
31:35
and these are additional improvements to that.
31:37
And so I think it does matter that it's in the context
31:40
of the cosmetic peanut implant that no one else,
31:43
he would have his own improvements to the product that he developed.
31:46
Judge Dyk
So, would it be fair to say then there's no testimony
31:49
that relates the trade secret to the type of implant,
31:53
but you're saying it's just a different kind of implant
31:55
because inherently cosmetic and functional implants
31:59
are different.
31:59
Appellee Attorney
Your Honor, I don't think it would be fair to say that.
32:01
I mean, we discussed, you know, have a lot of,
32:04
try to be detailed with the record in the opening brief
32:07
talking about what the testimony was
32:09
and about how even Dr. Cornell acknowledged differences
32:13
between cosmetic implants and therapeutic implants
32:18
that go in different parts of the body.
32:20
I mean, I think, again, these are fact issues for the jury to decide
32:23
of whether a prior art discussing something in a therapeutic implant
32:29
whether that is, you know, and we're even meshing terms here.
32:34
This is trade secrets.
32:34
This is not patent law.
32:35
We're not talking about obviousness.
32:37
Judge Dyk
Trade secret has...
32:39
Okay, so as far as this first trade secret is concerned,
32:41
the difference is you say it's about a functional implant,
32:47
not a cosmetic implant, right?
32:49
Appellee Attorney
And specifically because it's an implant that goes into corpus cavernosum.
32:53
It's not a cosmetic implant that goes in a different part of the body.
32:59
And the jury heard evidence, the defendants presented evidence
33:03
about what they said Subrini disclosed.
33:06
The jury heard expert testimony from both sides.
33:08
And the jury found, as a matter of fact, that Subrini did not disclose the trade secret.
33:14
Judge Dyk
Let's put it this way.
33:15
Let's suppose we were to conclude that there is no material difference
33:20
between a cosmetic and a functional implant.
33:23
Let's assume that.
33:23
I know you don't agree with that and you've argued to the contract,
33:26
but let's assume that.
33:27
Is there any other...
33:28
Is there any other difference between Subrini and this trade secret?
33:33
Appellee Attorney
Understand or resist your hypothetical, but taking that,
33:36
on the art itself, I mean, if you're assuming that Subrini
33:40
is essentially a cosmetic implant, there's other...
33:46
Not necessarily a testament I could think of to point you to about Subrini.
33:49
I think the testament is relevant that Subrini is not something
33:52
that's ever been commercialized.
33:54
It goes to the point of whether this was known,
33:57
and that goes to the point of trade secret law.
34:00
Judge Dyk
Okay, but whether it's been commercialized or not under the cases
34:02
is not something that's relevant.
34:04
Judge Taranto
Does one but not the other have fully enclosed cavities,
34:10
or does the fully enclosed cavities appear in Subrini's therapeutic insertions?
34:17
Appellee Attorney
My understanding is Subrini's, it is an enclosed cavity.
34:21
Okay.
34:21
Judge Taranto
My understanding is that.
34:22
So it really comes down to this,
34:24
the different kind of implant which goes in different parts of the anatomy
34:30
to serve different functions, whether it's like the boats and jet skis,
34:37
no material difference.
34:39
And I think the question that Judge Dykes has been asking you is,
34:43
what specific evidence says,
34:46
here's why the fully enclosed cavities would make some difference
34:54
because of the different locations and functions
34:58
of the two different kinds of implants?
35:00
Appellee Attorney
Well, I think we're, I'm having to.
35:04
Judge Taranto
I'm not asking you to concede that that's the decisive issue,
35:08
but what is the evidence?
35:09
Appellee Attorney
Again, I mean, I point to, in the testament,
35:12
I know we cite it in the briefs,
35:13
but Dr. Ehlers explained the differences between what he has
35:16
as a cosmetic implant and a therapeutic.
35:19
Dr. Carson, the expert, talking about that,
35:21
that when you're designing the cosmetic implant,
35:24
you're taking different things into consideration.
35:26
So yes, we may be talking about similar, you know,
35:29
screws are used in a lot of different components, right?
35:32
But it doesn't mean that you might have one aspect of use of that part
35:36
or that feature that may be, you know, a trade secret.
35:40
Judge Taranto
Was there testimony, I think there was testimony
35:42
that having the cavities can make it lighter, right?
35:45
Appellee Attorney
It makes it lighter, makes it a more natural feeling, more.
35:49
Judge Taranto
And is there some testimony that that matters more
35:52
for the kind of rapid,
35:54
the wraparound cosmetic thing
35:55
than for the more internal therapeutic thing?
35:58
Appellee Attorney
I don't know specifically.
35:59
Certainly there was testimony about it being important
36:01
for the wraparound and for the natural feeling
36:05
that it creates for the wraparound.
36:08
I don't know if I can point you to testimony that says,
36:10
and that distinguishes from therapeutic
36:12
because the testimony on therapeutic was,
36:14
we're talking about a different purpose.
36:17
The purpose of why you use a therapeutic
36:19
is totally different than the purpose of this cosmetic.
36:23
But yeah, I mean,
36:24
I don't want to be a broken record,
36:25
but it's important.
36:25
This was, there's nothing,
36:28
I like to counter what my friend said that this,
36:31
none of the prior art,
36:32
if you want to use the term,
36:33
all fours with the trade secrets.
36:37
None of it discloses exactly
36:39
what is claimed as a trade secret.
36:42
And that becomes a fact question then
36:44
for the jury to determine of,
36:45
okay, we hear what you're saying,
36:47
pointing the prior art.
36:49
Here's what we've been instructed
36:50
the trade secrets are.
36:51
Does this prior art actually disclose,
36:53
or what the trade secrets?
36:55
And the jury found no.
36:56
Judge Dyk
Okay, so can we go on to trade secret number two?
36:59
It's the same argument you're making
37:02
with respect to trade secret number two,
37:04
that it's a cosmetic implant
37:06
rather than a functional one.
37:09
Appellee Attorney
With trade secret number two,
37:14
the point of appendix 14336,
37:17
this is Drury talking about
37:19
that the mesh patches
37:22
that run the length of things,
37:23
that are around the tip,
37:27
and the purpose of the patches
37:29
at the tip in a cosmetic implant,
37:30
again, are different,
37:31
because the cosmetic implant
37:35
is going to move in different ways,
37:36
and designed to move for different reasons.
37:38
Judge Dyk
But Carson conceded that Finney has tabs
37:41
at the distal end.
37:44
Yes, that's to promote tissue growth, right?
37:46
Appellee Attorney
He gave that answer in cross-examination,
37:48
but he gave other testimony as well
37:50
that the mesh tabs,
37:54
weren't there at 14623.
37:59
And the jury could reconcile that expert,
38:01
both what he said in one place,
38:04
and then a cross-examination question.
38:07
Judge Dyk
What did he say at 14623?
38:09
Appellee Attorney
That the mesh tabs
38:13
were not used for functional...
38:17
Sorry, I'll go there myself.
38:29
Judge Taranto
121, 22.
38:30
Appellee Attorney
I'm sorry?
38:31
Judge Taranto
Lines 21 and 22.
38:33
Appellee Attorney
Thank you, Your Honor, yes.
38:35
That you're taking these implants,
38:37
the reason why you wouldn't take the Finney teaching
38:41
is because they're not used in the same way.
38:44
Again, the importance of this being a cosmetic implant
38:47
versus being a therapeutic implant
38:49
mattered to the trade secrets,
38:51
and what was being done here.
38:52
Judge Dyk
Okay, so that's the difference, again,
38:54
with respect to trade secret number two.
38:56
Appellee Attorney
Well, that's a different point.
38:57
I don't want to waive the things
39:00
you're pointing out in the brief.
39:00
Judge Dyk
It's not a question of waiving it,
39:01
but we're here to try to figure out what's on it.
39:04
If there's some other reason
39:06
that Finney doesn't disclose this trade secret
39:10
other than the difference between functional and cosmetic,
39:13
show it to us.
39:14
Appellee Attorney
Yeah, so 14336 through 339,
39:17
Mr. Drury is discussing Finney.
39:19
He explains that the Finney mesh patches
39:21
that are discussed aren't like the mesh tabs
39:23
at the distal end,
39:25
and that's his testimony.
39:27
Let me see, Steve.
39:27
What are you talking about?
39:30
14336.
39:32
14336.
39:33
And 636.
39:38
143.
39:41
You're right.
39:43
Sorry, Your Honor.
39:45
This is...
39:46
636.
39:47
I lost my notes.
39:48
Where am I?
39:49
336.
39:50
14336.
39:50
Is Drury.
39:52
Yes, Drury is on that, Your Honor,
39:53
our technical expert.
39:59
He discusses, I mean, carrying on
40:01
through 14337, 338.
40:04
Judge Dyk
He says on line 15,
40:06
he says the trade secrets are mesh tabs
40:07
extending from the distal end,
40:09
but that's not the definition
40:11
that the district court gave to the trade secret
40:13
that the parties agreed on.
40:15
Appellee Attorney
Again, I mean, he gave that testimony, yes,
40:18
but the jury was instructing the trade secrets,
40:19
and they were able to take that.
40:22
I mean, his testimony's not excluded.
40:23
Judge Dyk
But he's defining the trade secret
40:24
really differently than the district court did.
40:26
Appellee Attorney
I think, you know, at most, you know,
40:29
perhaps it's not precise language
40:31
that he should have used,
40:31
but I don't think it's different.
40:33
And again, this is...
40:35
Judge Dyk
Well, this is extending it.
40:36
I think extending from and in and around
40:37
seems to be different.
40:38
Appellee Attorney
But the jury heard that testimony,
40:40
and they were instructed.
40:40
We presume the jury follows its instructions
40:42
on determining what was the trade secret,
40:44
so they have to determine what was there.
40:46
And if you look at 338,
40:47
he talks about, you know, how those,
40:50
you know, what's on...
40:51
And Finney is not the same thing
40:52
as the trade secrets in this case.
40:56
There was reference to ELIS as well.
40:59
And ELIS, I think, Judge Schroeder,
41:01
you noted...
41:02
The PCT application.
41:03
It's a PCT application, yes.
41:05
The PCT was a silicone tab
41:07
that wasn't a mesh.
41:09
And so, again, it's not doing the same...
41:11
It's not even existing for the same purpose
41:13
of allowing tissue in.
41:15
Do I remember right,
41:16
Judge Taranto
the language is silicone netting?
41:19
I'm not going to challenge your honor.
41:20
Appellee Attorney
I mean, I think...
41:21
But I think it was silicone...
41:22
The testimony was it's a silicone...
41:25
It's not open in the sense that
41:28
tissue could ingrow
41:30
as with the mesh concepts here,
41:32
which the trade secret requires.
41:35
It allows tissue ingrows.
41:38
The absorbable suture point,
41:42
the reference on Kim,
41:44
my friend pointed to Kim and said,
41:46
well, Kim shows slits.
41:49
Kim's not a...
41:51
What do I say?
41:54
It's fat.
41:54
It's taking fat from the buttock
41:56
and using that as an implant.
41:57
I mean, it's not even talking about
41:58
a silicone implant or cosmetic implant
42:00
of that style at all.
42:01
It's a different...
42:02
We're not disputing
42:04
absorbable sutures are known.
42:05
I mean, there's testimony on that.
42:07
It's the use of absorbable sutures
42:09
in this application
42:10
with a silicone,
42:14
cosmetic silicone implant.
42:15
Judge Dyk
I don't understand
42:17
what's the trade secret about it.
42:19
Absorbable sutures are used
42:20
in all kinds of surgery
42:22
for decades, right?
42:23
And the testimony establishes that.
42:26
Appellee Attorney
They were used in all kinds of surgery.
42:28
They'd never been used
42:29
in a cosmetic penile implant surgery.
42:31
And there's testimony...
42:32
I mean, that's clear.
42:33
Judge Dyk
So Finney discloses
42:34
mesh with sutures,
42:37
but it doesn't say they're absorbable, right?
42:42
Appellee Attorney
I don't believe Finney discusses absorbing, no.
42:46
Judge Dyk
So that's the difference?
42:48
I'm sorry, about Finney or about the...
42:50
Yeah, about Finney.
42:51
I mean, Finney shows mesh and sutures,
42:54
but it doesn't say that the sutures
42:56
are absorbable, correct?
42:59
Appellee Attorney
It doesn't say that the sutures are absorbable,
43:02
and Finney doesn't disclose using,
43:03
as we talked about with the second trade secret,
43:05
using the mesh taps.
43:07
They're not the same mesh taps.
43:08
I mean, you don't have to speak to that,
43:09
but that's...
43:10
That's a different one.
43:10
But I think it's part of trade secret three
43:13
is the mesh tap.
43:14
Judge Dyk
So it's a trade secret
43:16
to use absorbable sutures
43:18
with a particular mesh
43:20
and a particular implant?
43:21
I mean, that seems to get back
43:22
to this Ninth Circuit case, right?
43:25
Appellee Attorney
I mean, I...
43:26
Things...
43:27
You know, trade secret law protects
43:28
a broad amount of subject matter.
43:30
It's not patent law.
43:31
I mean, I know we approach this
43:32
and we think of this
43:32
as how we approach patents,
43:34
but these aren't patent laws.
43:35
Judge Taranto
I think that's why we're focusing
43:38
on some of the very specific issues.
43:44
For example, I could imagine,
43:46
but it's just my imagining,
43:48
that there might be a difference
43:50
in whether you use absorbable
43:52
or not absorbable
43:54
according to how fast they dissolve,
43:57
how fast the tissue grows,
43:59
the place and how much wear and tear
44:02
that place is going to get.
44:04
Was there any...
44:05
Was there any testimony
44:06
about that sort of thing?
44:13
Appellee Attorney
I don't...
44:13
I'm standing here.
44:14
I don't recall.
44:15
Again, I don't want to...
44:16
You know, I laid out a lot of...
44:18
There's a lot of issues in this case,
44:19
and I've laid out the facts in the brief,
44:21
but I don't recall specifically...
44:24
As I understand it,
44:25
your Honor's question,
44:26
I think there's testimony
44:27
about using absorbable sutures
44:29
and using them in this context,
44:31
which, again,
44:31
trade secrets allows protection
44:33
of context or new uses here.
44:36
Judge Taranto
Right, but I guess
44:37
we've been trying
44:38
to...
44:38
I think the questions
44:39
have been trying to think about,
44:41
you know,
44:42
is this like or unlike
44:45
the Kawasaki case
44:46
that was described
44:48
where, you know,
44:49
a very strong kind of
44:53
layperson's first intuition
44:55
is there's no difference
44:56
between these things,
44:57
and so do you really want
44:58
to have some evidence saying it,
44:59
saying that here's why
45:01
there is a difference?
45:02
And the question is,
45:04
at least in my mind,
45:05
is there evidence
45:06
about why there...
45:09
It's plausible
45:10
that there is a difference here
45:12
so that it really would become
45:15
a jury question
45:16
as opposed to
45:17
we just don't see
45:18
a reasonable basis
45:19
for saying there's any difference.
45:20
Appellee Attorney
Well, again,
45:21
if you go back
45:22
to the beginning
45:22
of Dr. Ehlers' testimony,
45:24
talking about the difference
45:25
in what he does
45:28
in surgeries
45:29
with therapeutic versus cosmetic,
45:31
how he developed this,
45:32
the reason he developed
45:33
these technologies,
45:34
I mean, he walked through that.
45:35
Dr. Cornell,
45:36
in his testimony,
45:37
admitted the differences
45:38
between therapeutic...
45:38
Judge Dyk
But he didn't relate it
45:39
to the trade secrets
45:40
as to why it would make a difference,
45:42
for example,
45:42
to use nonabsorbable sutures
45:45
for functional
45:48
is different from using it
45:50
for cosmetic.
45:51
I mean, on the face of it,
45:53
it seems a little unusual
45:57
that there would be a difference,
45:58
but there's no testimony
45:59
saying there is, right?
46:01
Appellee Attorney
Well, I think, again,
46:02
the jury's all how to take
46:03
this evidence
46:03
and put it together
46:04
in a way, you know,
46:06
and this court is reviewing
46:07
for substantial evidence here.
46:09
And what the jury hears
46:11
about the importance
46:12
of differences
46:13
between these two types
46:14
of implants,
46:15
why Dr. Ehlers developed
46:16
and was contemplating
46:18
and developing
46:19
the potential way
46:19
of using mesh tabs
46:21
for a cosmetic implant,
46:23
why the defendants
46:25
in the documents
46:26
that discuss taking this idea
46:28
and how they're going
46:29
to distinguish Pneuma,
46:30
they're talking about
46:31
the advantage of these things.
46:32
I mean, these are all things
46:33
that are for the jury
46:35
to determine that
46:36
what did Dr. Ehlers have?
46:38
How did the defendants
46:39
develop this technology?
46:39
They weren't looking
46:40
at the prior art.
46:42
Judge Dyk
Okay, let's go on
46:43
to number four.
46:44
Yeah.
46:44
Where you have this video
46:49
and you have the emails,
46:51
and there's the question
46:52
of whether it satisfies
46:55
the confidentiality requirement.
46:57
Appellee Attorney
Well, I don't believe,
46:58
I'm not aware of any challenge
46:59
that the email somehow
47:00
wasn't confidential.
47:01
I mean, it was from an IMD agent.
47:05
Who was requested,
47:06
and at this time,
47:07
Dr. Cornell had signed the NDA.
47:08
Well, the burden of proof
47:08
Judge Dyk
is on you,
47:10
and there's no evidence
47:12
that was confidential, right?
47:15
Appellee Attorney
I disagree.
47:16
I think there was evidence.
47:18
Dr. Cornell had attended
47:19
the surgery.
47:20
After the surgery,
47:21
he asked for this information.
47:23
He gets it.
47:24
As far as the actual information,
47:26
I think even the defendants
47:27
aren't arguing that you could see
47:29
everything in the videos.
47:31
But it was sent
47:32
Judge Dyk
to a third party also.
47:35
Appellee Attorney
The third party,
47:36
it was sent by an agent of,
47:38
I mean, I'm not aware
47:39
of a testimony saying
47:40
that it was sent to anyone
47:42
other than people subject
47:43
to the duty of...
47:45
Judge Dyk
No, no, there's testimony
47:46
that it was sent to a third party,
47:48
and there's no evidence
47:48
that third party was under
47:50
obligation of confidentiality.
47:52
Appellee Attorney
Okay, I,
47:54
that's not my recollection
47:55
of the facts, Your Honor,
47:56
but I will, you know,
47:57
I think that it was sent by,
47:58
at least Dr. Cornell
47:59
got this evidence
48:01
or got the list
48:02
from an IMD,
48:06
an IMD sales agent.
48:08
What about the online
48:09
journal publications
48:10
that included a video?
48:12
Yes, so the video
48:13
doesn't disclose all the,
48:15
it's not a comprehensive
48:16
instrument list.
48:17
And the testimony was
48:18
that you could see
48:18
some instruments used,
48:20
but not all of them.
48:22
And Dr. Carson,
48:22
who's a practicing urologist,
48:24
talked about the instrument list.
48:25
And you could find this
48:29
at Appendix 14643.
48:31
He's talking about
48:32
why the instrument list matters.
48:34
And what he explains
48:35
is that when you're in surgery,
48:36
you have an operating room,
48:38
you're paying for the operating room,
48:39
your patient's under anesthesia,
48:41
under surgery,
48:42
time matters in this context, right?
48:44
And you even heard,
48:45
my friends acknowledge that,
48:46
well, you may not have,
48:47
for common urology surgery,
48:49
you may not have all those,
48:50
all those instruments.
48:51
That's the point.
48:52
Judge Dyk
So the video is for the whole surgery?
48:54
Appellee Attorney
I'm sorry?
48:54
Judge Dyk
The video is of the whole surgery?
48:57
Appellee Attorney
You know, I don't call it
48:58
the whole surgery,
48:59
but I think it's undisputed
49:00
it didn't just show
49:01
all the instruments being used.
49:03
Undisputed?
49:03
I don't think that's undisputed.
49:04
Okay.
49:05
I thought today that they acknowledged
49:07
that it doesn't show everything.
49:10
Judge Dyk
I think there's testimony
49:11
that it showed everything
49:12
and I think there's some offhand remark
49:15
that maybe it didn't,
49:17
that one snapshot,
49:19
that is one picture,
49:20
didn't show everything.
49:22
Appellee Attorney
My recollection of the record,
49:23
Judge Icke,
49:23
is that it actually doesn't show everything.
49:25
I don't think the defendants argued
49:26
it doesn't show everything.
49:26
But at the very least,
49:27
Your Honor,
49:28
this is a fact question
49:29
for the jury.
49:30
It's why we have juries
49:31
as fact finders.
49:32
And, you know,
49:33
they could present evidence
49:34
that showed everything.
49:35
We present evidence
49:35
that didn't.
49:36
This is for the jury.
49:37
This is for the jury.
49:37
They were free to decide
49:37
those factual questions
49:38
and they decided those here.
49:40
And so,
49:40
Unless there are further questions
49:42
Judge Dyk
about this aspect,
49:43
I'll give you a couple minutes
49:45
to go into other things
49:46
which you want to talk about.
49:48
Appellee Attorney
Yes.
49:49
Thank you.
49:50
I'm happy to go
49:51
to whatever issue,
49:52
if there is one.
49:56
Attention.
49:57
Let me address
49:58
Mr. Finger,
49:58
I guess.
49:59
I think this evidence
50:00
that my friend said
50:02
that, you know,
50:02
there was no indication
50:03
that he had any involvement,
50:04
it's just not true
50:05
on the record.
50:06
And I could give you,
50:07
if you'll indulge
50:08
me,
50:08
he knew before
50:09
he ever invested
50:11
in this
50:12
with Dr. Cornell
50:13
that Cornell
50:13
had attended this
50:14
and had an NDA.
50:16
He knew
50:17
that he attended
50:18
the training.
50:19
Finger received
50:20
Cornell's drawings
50:21
from Michie
50:22
and the description
50:23
of the advantages.
50:25
He received those
50:26
and I think
50:26
it was August
50:27
of 2018
50:28
and forwarded
50:29
those on
50:30
to talk medical
50:31
for design.
50:33
If you look
50:34
at the...
50:34
Do we have
50:35
those drawings
50:35
in the record?
50:36
They are.
50:38
I think
50:38
the 16...
50:40
Appendix 16067
50:41
is the email
50:42
that he forwarded
50:43
from Mr. Cornell
50:44
or Dr. Cornell.
50:44
And how many
50:45
of the trade secrets
50:46
Judge Taranto
are shown
50:47
in those drawings,
50:48
if I may?
50:49
Appellee Attorney
The drawings
50:51
show...
50:51
The discussion
50:53
in the email
50:54
that he forwarded
50:56
discloses...
50:58
Let me find
50:59
my notes.
51:00
Discloses
51:01
the mesh tabs.
51:04
Discloses
51:04
absorbable sutures.
51:06
So those
51:06
are there.
51:08
And the
51:08
and then
51:09
he attended...
51:10
Finger attended
51:11
a meeting
51:11
and I believe
51:12
it was September
51:13
of 2018
51:15
which was...
51:16
That's
51:16
an appendix.
51:17
Testament
51:17
is at
51:17
appendix 13974
51:21
and appendix
51:23
14189
51:23
is where
51:24
this starts
51:24
where Finger
51:24
shared his notes
51:25
and shared
51:26
with what
51:27
he learned
51:27
from Elist
51:28
and that...
51:28
Those notes
51:29
are in the record
51:30
as well.
51:31
And there's
51:32
a lot of
51:32
Testament in the record.
51:33
There's a lot of
51:34
mention of Elist
51:35
in this reading
51:35
and that's where
51:36
the honeycomb
51:37
design
51:38
came mentioned
51:40
as well.
51:40
And I think
51:41
that the important thing
51:42
to also sort of
51:43
note with Finger's
51:44
involvement,
51:44
if you look
51:45
at appendix 16312
51:47
that was the
51:48
personal placement
51:49
or product
51:51
placement
51:51
memorandum,
51:52
the investment
51:52
memorandum
51:53
that Finger
51:54
admitted
51:54
he helped draft.
51:56
He's identified
51:57
as being
51:58
the CFO
51:59
of Augmenta
52:02
management and oversight
52:03
for Augmenta
52:04
and assists
52:04
Dr. Cornell
52:06
in overseeing
52:07
the development
52:08
work being
52:09
performed by
52:09
Huck Medical Technologies.
52:11
And then if you look at
52:12
he acknowledged
52:14
he wrote
52:14
part of the provision
52:15
talking about
52:16
the risk
52:16
of a loss
52:16
from Elist.
52:18
That's 1613.
52:20
He at 1654
52:22
is updating
52:22
investors
52:23
about the
52:24
development
52:25
work that's
52:25
being done
52:26
in the test.
52:27
And...
52:28
Judge Taranto
Can I just ask you
52:29
to go back
52:29
for a minute?
52:35
Because I think
52:39
a couple of
52:39
Dr.
52:40
Huck.
52:41
Dr.
52:43
Huck.
52:44
Huck.
52:46
Huck.
52:47
Dr.
52:47
Huck.
52:48
Dr.
52:51
Huck.
52:53
Dr.
52:56
Huck.
53:03
Appellee Attorney
Dr. Huck.
53:04
Okay,
53:05
I said 16069,
53:06
is that your question?
53:08
That's one of them.
53:09
Judge Taranto
That's September 25, 2018.
53:11
Yes,
53:11
that's the notes
53:12
of the meeting.
53:13
Okay.
53:13
And then the next one I guess
53:14
is the 16 100 is March 8 2017.
53:19
Was that one involving
53:21
Mr. Finger or no?
53:22
Appellee Attorney
I'm missing that date, I'm sorry
53:28
which page are, oh that
53:30
no those, sorry those notes I see them at 16
53:32
100, those
53:33
are, I'm asking because
53:36
that one says mesh at distal tip
53:38
no those are
53:40
notes of meetings that
53:42
Dr. Elist had, my client
53:44
had with the engineering firm
53:46
that was helping him develop the trade sequence
53:47
Judge Taranto
so you said the notes 16
53:50
069 to 71
53:51
and you think that they
53:53
say something about
53:56
these trade secrets? Yeah if you look
53:58
Appellee Attorney
at, if I could turn you back a page
54:00
of 16 067
54:02
at the bottom of that page
54:04
this is again an email that
54:06
Cornell sends to Finger to begin with
54:08
and the top of his finger then sends it on
54:10
Cornell sends this to Finger in July of
54:12
2018 and says
54:14
the implant comprises soft
54:16
derm, durometer, silicone
54:18
with embedded mesh tabs that
54:20
extend from the distal, dorsal,
54:22
lateral, proximal, ventral margin
54:24
and permit tissue
54:26
ingress over the buck's fascia
54:28
and then it says allowable
54:29
allowing absorbable sutures, I mean that's the trade
54:32
secrets right there
54:35
and
54:38
so I think
54:40
there's a reference to a California case
54:42
I think the case that I
54:44
think is really important
54:46
to address in this context was
54:48
we cite three different iterations of it
54:50
but it was the AJAXO versus
54:51
E-Trade case where the
54:54
California appellate court
54:55
had different opinions
54:57
dealing with trade secret law
54:59
the 2005 decision
55:01
that's 135 California appellate
55:03
4th
55:05
21, that actually talks
55:07
about this type of scenario
55:09
exactly where
55:10
the person being found to have been a
55:13
willful misappropriator wasn't the one who actually
55:15
received the trade secrets at the time, he received
55:17
it from the person who actually did take the trade
55:19
secrets and the court
55:21
that company was called Everypath
55:23
and the courts
55:25
affirmed a judgment of
55:27
willful misappropriation saying that
55:30
Everypath's manager
55:31
must have known that technology
55:33
that engineers developed came about
55:35
in too short of a time for independent
55:37
development, yet they failed to investigate
55:39
why, in short they best
55:41
turned a blind eye to what was happening
55:43
and that court found that that was enough
55:45
for willful and malicious misappropriation
55:47
that same thing here is applied
55:48
Mr. Singer knew all along what was going on
55:51
he was involved in the development
55:53
and I don't think it's accurate
55:55
record of the
55:57
record below, accurate recitation
55:59
to say that somehow he was just
56:01
this passive investor
56:04
Judge Dyk
Okay, I think unless we have other questions
56:06
we're out of time. I didn't address
56:08
Appellee Attorney
but if you don't have any questions, I'm happy to address
56:10
that Your Honor
56:12
Judge Dyk
I think we're done. Thank you
56:18
Appellant Attorney
I think it's apparent from the questioning
56:31
that there really should be no trade secrets
56:33
in this case and so we shouldn't have
56:35
to dwell much on Mr. Finger's evidence
56:37
but I do want to speak directly to those
56:39
questions very briefly. The record citations
56:41
the counsel provided to the court
56:43
you will notice never make any reference
56:45
to the internal pockets idea
56:47
one side or another
56:48
Judge Taranto
I mean, why would that matter?
56:51
Why isn't one enough?
56:53
Appellant Attorney
Because, Your Honor, they submitted four distinct
56:55
trade secret questions finding liability
56:57
on four distinct alleged secrets
56:59
Judge Taranto
Oh, I see, and the pockets are the big dollars
57:02
Appellant Attorney
That's right, the pockets are more than 50%
57:04
and nothing that they've cited
57:05
makes any reference to the pockets
57:07
and the only document he pointed out is the pockets of the big dollars
57:09
The only thing that he pointed to that relates to the mesh tabs
57:11
and the absorbable sutures is Mr. Finger forwarding
57:15
a description authored by Dr. Cornell
57:17
Mr. Finger had no reason to doubt that Dr. Cornell
57:20
had independently designed the product as he represented
57:24
That's not evidence of cyanther
57:26
It simply does not support a verdict as to Mr. Finger
57:28
but it frankly shouldn't matter because the exchange
57:31
with counsel makes clear that none of these are protected secrets
57:34
All of the arguments that you've heard come down
57:36
to one distinction, which is that
57:39
Somehow the context in which the idea is applied changes the effect of the patent disclosure.
57:44
And that is fundamentally wrong.
57:45
The essence of the patent bargain is when you place the idea in the patent, you place it in the public domain.
57:52
Judge Taranto
I mean, just at that level, the idea here, to take the first trade secret, is pockets in a cosmetic implant.
58:02
That's not in the prior art.
58:05
Appellant Attorney
Your Honor, the distinction between a cosmetic and a therapeutic implant?
58:09
Judge Taranto
Well, now, that's a factual question.
58:10
And the question is, what evidence is there that that difference matters or that it doesn't matter?
58:19
Appellant Attorney
And there is no evidence that it matters.
58:20
Judge Taranto
I guess my starting intuition is to think, boy, it really may matter.
58:27
So now I want to hear from you why it doesn't matter.
58:30
Appellant Attorney
Your Honor, because the idea of...
58:33
Judge Taranto
They really are in different parts of the body.
58:35
One is closer to the skin than the other.
58:39
For serving different functions, why would one assume it doesn't matter?
58:46
Appellant Attorney
I want to take this question very sincerely on face value.
58:50
The idea of, for example, using internal pockets to soften silicon does not matter between cosmetic or therapeutic implants.
58:59
It has the same physical consequence either way.
59:02
The Goosler decision, to which the court has alluded, said that ideas dictated by well-known principles of physics...
59:09
...are not protected by trade secrets.
59:10
And that's what you have here.
59:12
So the fact is that the idea of using cavities to soften silicon was disclosed by the prior art.
59:19
How that might be applied in commercial applications makes no difference to whether it's a secret.
59:24
And the Ultimax concrete decision from the Ninth Circuit, I think, squarely establishes that point.
59:29
Judge Taranto
Did you have evidence essentially saying what you just said?
59:34
Cases that don't involve this particular thing.
59:36
We did.
59:37
Establish a general principle.
59:38
We're talking about...
59:39
We did, Your Honor.
59:39
Appellant Attorney
And to the extent the court would care to take a look at it, I would point to, for example, at pages, I think, 14986 to 88,
59:48
you would see the defense expert testimony on the issue of internal voids.
59:53
Judge Taranto
This is from Dr. Mulcahy.
59:54
Appellant Attorney
That's from Dr. Mulcahy.
59:55
And I haven't dwelt on that since we didn't have the burden of proof.
59:59
But the point is that when the court presses the plaintiffs to establish some basis to differentiate their supposed trade secrets from the patent disclosures,
60:08
their only argument is that somehow the context matters.
60:11
That is not the way trade secrecy law works with respect to patents.
60:15
Once the idea is in the public domain, it is no longer a secret, regardless of its application.
60:20
Judge Taranto
But I'm not...
60:21
Well, it depends what you mean by works with respect to patents.
60:25
Do you mean with respect to patent law or with respect to what a patent discloses?
60:30
Because there's a big difference, right?
60:32
The obviousness standard is the standard in patent law.
60:36
It's not the standard.
60:37
It's the trade secret.
60:38
One possible difference is that patents are not supposed to protect against independent discovery by an ordinary skilled partisan.
60:50
But trade secret does protect only against the miscreant appropriator.
60:59
Appellant Attorney
But the point is that when you place the idea in the public domain,
61:03
you sacrifice the ability to claim trade secrecy in exchange for the limited monopoly...
61:07
Judge Taranto
But the term public domain is a tricky one, right?
61:11
We sometimes have used that to cover what's obvious.
61:15
That cannot possibly be the meaning in trade secret law.
61:19
Appellant Attorney
May I call your attention, Your Honor, to this court's decision in Ultimax Cement,
61:24
and I'm going to just quote because it speaks directly to the point you just made.
61:28
Judge Taranto
It uses the term obvious or something like that, but not with a focus on this.
61:33
Appellant Attorney
It is focused on trade secrecy protection under the California...
61:37
It is focused on trade secrecy protection under the California statute.
61:38
And this court said it is well established that disclosure of a trade secret in a patent
61:43
places the information comprising the secret into the public domain.
61:47
Once the information is in the public domain...
61:50
Judge Taranto
I'm sorry, that's of course true.
61:52
Appellant Attorney
Yes.
61:53
Judge Taranto
What is anticipated is in a public domain, in the public domain,
61:58
in a way that would suffice for trade secret.
62:01
What is in the public domain only because it's obvious from what was put in a publisher.
62:08
It's not necessarily implied protection as a trade secret.
62:14
Appellant Attorney
Well, Your Honor, I think what these cases establish
62:16
and what the Gussler case from the Ninth Circuit likewise establishes
62:20
is once the idea is placed in the public domain,
62:24
the protection of trade secrecy is gone.
62:26
And you can't differentiate the way in which the idea might be used
62:31
to claim that it somehow becomes a secret.
62:33
Judge Dyk
The problem is...
62:35
I mean, these are important.
62:37
These are important questions.
62:38
There just is not a lot of law about it.
62:40
I mean, I think everybody agrees that the obviousness standard
62:44
is not the standard of trade secret law.
62:49
At the same time, it doesn't have to be exactly the same context.
62:53
That's correct.
62:55
And that's my point.
62:57
And the question is, what does this record tell us
63:01
about whether the context matters or not?
63:04
Appellant Attorney
And I think the point would be,
63:06
the ideas...
63:07
are all squarely disclosed,
63:09
and nothing in this record
63:11
provides any evidentiary support for the idea
63:13
that the unique context here matters.
63:17
It was the plaintiff's burden to prove a trade secret.
63:19
You asked pointed questions about each of these alleged secrets.
63:23
Counsel could not cite any evidence
63:25
that actually established any meaningful distinction for the context.
63:29
Judge Reyna
How would you define context?
63:31
Is it the same field?
63:34
The same industry sector?
63:37
Appellant Attorney
Well...
63:37
The plaintiffs are trying to suggest
63:39
that different commercial applications
63:42
within the field of medical devices
63:46
and, in fact, implants,
63:48
and, in fact, even penile implants
63:50
is somehow a sufficiently different context
63:52
to create an opportunity for trade secrecy
63:56
when ideas that are disclosed in that field
63:59
with respect to these specific design features
64:03
are disclosed in patents.
64:05
Wherever you draw the line,
64:06
that's no lie.
64:07
This is in the medical device industry.
64:10
It's dealing with penile implants.
64:11
It's disclosing these very ideas.
64:13
They're simply saying,
64:14
well, because it's therapeutic versus cosmetic,
64:18
there's a difference,
64:18
and there is no evidence that establishes
64:20
that there is any difference.
64:22
And for that reason,
64:23
the court should reverse and render a judgment
64:25
against all these trade secret claims.
64:27
I appreciate the court's patience.
64:29
Judge Dyk
Okay, thank you.
64:29
Thank both counsel.
64:31
The case is submitted.