GSI Technology, Inc. v. United Memories, Inc.

Filing 1039

FINAL JURY INSTRUCTIONS. Signed by Judge Paul S. Grewal on November 22, 2015. (psglc1S, COURT STAFF) (Filed on 11/22/2015)

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UNITED STATES DISTRICT COURT
United States District Court
For the Northern District of California

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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GSI TECHNOLOGY, INC.,

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Plaintiff,
v.
UNITED MEMORIES, INC., et al.,

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Defendants.
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Case No. 5:13-cv-01081-PSG
FINAL JURY INSTRUCTIONS

Case No. 5:13-cv-01081-PSG
FINAL JURY INSTRUCTIONS

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Table of Contents

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1.

Burden of Proof – Preponderance of the Evidence .................................................................. 4

2.

Burden of Proof – Clear and Convincing Evidence................................................................. 5

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3.

Expert Opinion ......................................................................................................................... 6

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4.

Deposition in Lieu of Live Testimony ..................................................................................... 7

5.

Impeachment Evidence – Witness ........................................................................................... 8

6.

Demonstrative Evidence .......................................................................................................... 9

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7.

Corporate Liability ................................................................................................................. 10

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8.

Multiple Parties ...................................................................................................................... 11

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9.

Party Having Power to Produce Better Evidence .................................................................. 12

10.

Failure to Explain or Deny Evidence ..................................................................................... 13

11.

GSI’s Claims as to UMI ......................................................................................................... 14

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GSI’s Claims as to ISSI ......................................................................................................... 15

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Misappropriation of Trade Secrets – Essential Factual Elements.......................................... 16

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“Trade Secret” Defined .......................................................................................................... 17

15.

Secrecy Requirement ............................................................................................................. 18

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Reasonable Efforts to Protect Secrecy ................................................................................... 19

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17.

“Independent Economic Value” Explained ........................................................................... 20

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Mere Possession of Another’s Trade Secret .......................................................................... 21

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Certain Knowledge of Employee Not Imputed to Employer ................................................. 22

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Improper Means of Acquiring Trade Secret .......................................................................... 23

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21.

Misappropriation by Use ........................................................................................................ 24

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Misappropriation by Disclosure ............................................................................................. 25

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General Skills, Knowledge and Experience ........................................................................... 26

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Remedies for Misappropriation of Trade Secret .................................................................... 27

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Causation: Substantial Factor................................................................................................. 28

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26.

Misappropriation – Actual Loss – Lost Profits ...................................................................... 29

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Misappropriation – Unjust Enrichment.................................................................................. 30

28.

Unfair Competition ................................................................................................................ 31

29.

“Unfair” Business Practice .................................................................................................... 32

30.

Intentional Interference With Prospective Economic Relations –
Essential Factual Elements .................................................................................................... 33

31.

Causation: Substantial Factor................................................................................................. 34

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United States District Court
For the Northern District of California

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Intentional Interference with Prospective Economic Relations – Actual Loss –
Lost Profits ............................................................................................................................. 35
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32.

33.

Contract Performance – Breach of Contract – Elements of Liability .................................... 36

34.

Contract Performance – Breach of Contract Defined ............................................................ 37

35.

Contract Interpretation – Disputed Term – LLDRAM .......................................................... 38

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36.

Contract Interpretation – Parties’ Intent ................................................................................ 39

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Contract Interpretation – Contract as a Whole ...................................................................... 40

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Contract Interpretation – Ordinary Meaning ......................................................................... 41

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Contract Interpretation – Use of Technical Words in a Contract .......................................... 42

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Contract Interpretation – Specific and General Clauses ........................................................ 43

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41.

Contract Damages – Special Damages .................................................................................. 44

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42.

Lost Profits ............................................................................................................................. 45

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Nominal Damages .................................................................................................................. 46

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Fraud – Intentional Misrepresentation ................................................................................... 47

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45.

False Promise ......................................................................................................................... 48

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Reliance.................................................................................................................................. 49

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Reasonable Reliance .............................................................................................................. 50

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Measures of Types of Damages ............................................................................................. 51

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Damages Arising in the Future – Discount to Present Cash Value ....................................... 52

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50.

Punitive Damages .................................................................................................................. 53

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51.

Affirmative Defense – Unclean Hands .................................................................................. 54

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Affirmative Defense – Trade Secret Misappropriation – Information Was Readily
Ascertainable by Proper Means ............................................................................................. 55

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53.

Affirmative Defense – Trade Secret Misappropriation – Statute of Limitations ................... 56

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Affirmative Defense – Breach of Contract – Waiver ............................................................ 57

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Affirmative Defense – Breach of Contract – Non-compete – Statute of Limitations............ 58

56.

Affirmative Defense – Fraud – Waiver ................................................................................. 59

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Affirmative Defense – Fraud – Statute of Limitations .......................................................... 60

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Affirmative Defense – Estoppel............................................................................................. 61

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Affirmative Defense – Mitigation of Damages ..................................................................... 62

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Schematics Beyond GSI’s 25 Trade Secret Claims ............................................................... 63

61.

Contention of Misappropriation Claimed in Bad Faith ......................................................... 64

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Introduction to Special Verdict Form .................................................................................... 67

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For the Northern District of California

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1. BURDEN OF PROOF – PREPONDERANCE OF THE EVIDENCE
When a party has the burden of proof on any claim or affirmative defense by a preponderance of
the evidence, it means you must be persuaded by the evidence that the claim or affirmative defense
is more probably true than not true.
You should base your decision on all of the evidence, regardless of which party presented it.

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United States District Court
For the Northern District of California

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2. BURDEN OF PROOF – CLEAR AND CONVINCING EVIDENCE
When a party has the burden of proving any claim or defense by clear and convincing evidence, it
means you must be persuaded by the evidence that the claim or defense is highly probable. This is
a higher standard of proof than proof by a preponderance of the evidence.
You should base your decision on all of the evidence, regardless of which party presented it.

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United States District Court
For the Northern District of California

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3. EXPERT OPINION

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Some witnesses, because of education or experience, were permitted to state opinions and the
reasons for those opinions.
Opinion testimony should be judged just like any other testimony. You may accept it or reject it,
and give it as much weight as you think it deserves, considering the witness’s education and
experience, the reason given for the opinion, and all the other evidence in the case.

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United States District Court
For the Northern District of California

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4. DEPOSITION IN LIEU OF LIVE TESTIMONY
As I have previously explained, a deposition is the sworn testimony of a witness taken before trial.
The witness is placed under oath to tell the truth and lawyers for each party may ask questions. The
questions and answers are recorded. When a person is unavailable to testify at trial, or because the
parties have agreed not to call an individual live, the deposition of that person may be used at the
trial.
You should consider deposition testimony, presented to you in court by videotape or read to you
from a deposition transcript in lieu of live testimony, insofar as possible, in the same way as if the
witness had been present to testify.

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United States District Court
For the Northern District of California

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5. IMPEACHMENT EVIDENCE – WITNESS
The evidence that a witness testified differently on a prior occasion may be considered, along with
all other evidence, in deciding whether or not to believe the witness and how much weight to give
to the testimony of the witness and for no other purpose.

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United States District Court
For the Northern District of California

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6. DEMONSTRATIVE EVIDENCE
During the trial, materials have been shown to you to help explain testimony or other evidence in
the case. Other materials have also been shown to you during the trial, but they have not been
admitted into evidence. You will not be able to review them during your deliberations because they
are not themselves evidence or proof of any facts. You may, however, consider the testimony given
in connection with those materials.

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United States District Court
For the Northern District of California

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7. CORPORATE LIABILITY

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Under the law, a corporation is considered to be a person. It can only act through its employees,
directors, or officers. Therefore, a corporation is responsible for the acts of its employees,
directors, and officers performed within the scope of authority.

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United States District Court
For the Northern District of California

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8. MULTIPLE PARTIES

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There are two defendants in this trial, United Memories, Inc. and Integrated Silicon Solution, Inc.
You should decide the case against each defendant separately as if it were a separate lawsuit. Just
as Plaintiff GSI Technology, Inc. deserves individual attention as to each claim it brings, each
defendant is entitled to a fair and separate consideration of its defense.

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United States District Court
For the Northern District of California

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9. PARTY HAVING POWER TO PRODUCE BETTER EVIDENCE
You may consider the ability of each party to provide evidence. If a party provided weaker
evidence when it could have provided stronger evidence, you may distrust the weaker evidence.

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United States District Court
For the Northern District of California

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10. FAILURE TO EXPLAIN OR DENY EVIDENCE
If a party failed to explain or deny evidence against it when it could reasonably be expected to have
done so based on what it knew, you may consider its failure to explain or deny in evaluating that
evidence.
It is up to you to decide the meaning and importance of the failure to explain or deny evidence
against the party.

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United States District Court
For the Northern District of California

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11. GSI’S CLAIMS AS TO UMI

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You are to decide whether GSI has met its burden of proving the following claims alleged in GSI’s
complaint as to UMI:
1.

Misappropriation of trade secrets;

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2.

Unfair competition;

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Intentional interference with prospective economic relations;

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Breach of contract;

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Fraud; and

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False promise.

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United States District Court
For the Northern District of California

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The elements that GSI must prove in order to succeed on these claims are described elsewhere in
the instructions.
UMI denies those claims and also contends that:

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1.

GSI’s breach of contract claim is barred by the doctrine of fraud in the inducement;

2.

GSI’s breach of contract and fraud claims are barred by the doctrine of waiver;

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3.
GSI’s misappropriation of trade secrets, breach of contract, and fraud claims are barred by
the statute of limitations;

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4.

GSI’s breach of contract claim is barred due to GSI’s failure to mitigate damages;

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5.
GSI’s unfair competition, intentional interference with prospective economic relations,
misappropriation of trade secrets, breach of contract, fraud, and false promise claims are barred by
the doctrine of unclean hands; and
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GSI’s unfair competition, intentional interference with prospective economic relations,
misappropriation of trade secrets, breach of contract, fraud, and false promise claims are barred by
the doctrine of estoppel.
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Each of GSI’s alleged trade secrets is readily ascertainable;

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The elements that UMI must prove in order to succeed on these affirmative defenses are described
elsewhere in the instructions.

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GSI denies UMI’s affirmative defenses.

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12. GSI’S CLAIMS AS TO ISSI

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You are to decide whether GSI has met its burden of proving the following claims alleged in GSI’s
complaint as to ISSI:
1.

Misappropriation of trade secrets;

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2.

Unfair competition; and

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3.

Intentional interference with prospective economic relations.

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The elements that GSI must prove in order to succeed on these claims are described elsewhere in
the instructions.

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For the Northern District of California

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ISSI denies those claims and also contends that:
1.
GSI’s unfair competition, tortious interference with prospective economic relations, and
misappropriation of trade secrets claims are barred by the doctrine of estoppel;
2.
GSI’s unfair competition, tortious interference with prospective economic relations, and
misappropriation of trade secrets claims are barred by the doctrine of unclean hands;

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3.
GSI’s unfair competition, tortious interference with prospective economic relations, and
misappropriation of trade secrets claims are barred due to GSI’s failure to mitigate damages; and

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4.

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Each of GSI’s alleged trade secrets is readily ascertainable.

ISSI further contends that:

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GSI brought and maintained its trade secret misappropriation claims in bad faith.

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The elements that ISSI must prove in order to succeed on these affirmative defenses and this bad
faith claim are described elsewhere in the instructions.
GSI denies ISSI’s affirmative defenses and bad faith contention.

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13. MISAPPROPRIATION OF TRADE SECRETS – ESSENTIAL FACTUAL
ELEMENTS

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United States District Court
For the Northern District of California

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The court has ruled that GSI owns each of 25 schematics based on a product design contract
between GSI and UMI, named as follows:
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25.

chcon
rclk
rclk_match
dmmatch
wclk
rcbufwrc
wbkcom
qcalblk
qcal
qcaladj
qcals
pcalreg
ncalreg
fidec
gclk
yclkmix
r13buf
rbuf
bnkcon
yclkclk
lwrite
pretimer
bab_s80
lread
rcbuf.

GSI claims that UMI and/or ISSI has misappropriated trade secret information in these schematics,
which is distinct from the schematics themselves. To succeed on these claims, GSI must prove all
of the following for one or more of the 25 schematics.

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1.

That GSI owned the information in the schematic, and not just the schematic itself;

2.

That the information was a trade secret at the time of the claimed misappropriation;

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3.

That UMI and/or ISSI improperly acquired, used, or disclosed the trade secret;

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4.

That GSI was harmed in connection with the trade secret; and

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That UMI and/or ISSI’s improper acquisition, use, or disclosure of the trade secret was a
substantial factor in causing GSI’s harm.

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14. “TRADE SECRET” DEFINED

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To prove a trade secret in the information in any of the 25 schematics, GSI must prove all of the
following:
1.

That the information was secret;

2.
That the information had actual or potential independent economic value because it was
secret; and

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3.

That GSI made reasonable efforts to keep the information secret.

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For the Northern District of California

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15. SECRECY REQUIREMENT

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The secrecy required to prove that the information in any of the 25 schematics is a trade secret does
not have to be absolute in the sense that no one else in the world possesses the information. It may
be disclosed to employees involved in GSI’s use of the trade secret as long as they are instructed to
keep the information secret. It may also be disclosed to nonemployees if they are obligated to keep
the information secret. However, it must not have been generally known to the public or to people
who could obtain value from knowing it.

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For the Northern District of California

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16. REASONABLE EFFORTS TO PROTECT SECRECY

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To establish that the information in any of the 25 schematics is a trade secret, GSI must prove that
it made reasonable efforts under the circumstances to keep the information secret. “Reasonable
efforts” are the efforts that would be made by a reasonable business in the same situation and
having the same knowledge and resources as GSI, exercising due care to protect important
information of the same kind.
In determining whether or not GSI made reasonable efforts to keep the information secret, you
should consider all the facts and circumstances. Among the factors you may consider are the
following:
1.

Whether documents or computer files containing the information were marked with
confidentiality warnings;

2.

Whether GSI instructed its employees to treat the information as confidential;

3.

Whether GSI restricted access to the information to persons who had a business reason
to know the information;

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Whether GSI kept the information in a restricted or secure area;

5.

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Whether GSI required employees or others with access to the information to sign
confidentiality or nondisclosure agreements;

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Whether GSI took any action to protect the specific information, or whether it relied on
general measures taken to protect its business information or assets;

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The extent to which any general measures taken by GSI would prevent the unauthorized
disclosure of the information; and

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Whether there were other reasonable measures available to GSI that it did not take.

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For the Northern District of California

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The presence or absence of any one or more of these factors is not necessarily determinative.

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17. “INDEPENDENT ECONOMIC VALUE” EXPLAINED

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The information in any of the 25 schematics has independent economic value if it gives the owner
an actual or potential business advantage over others who do not know the information and who
could obtain economic value from its disclosure or use.
In determining whether the information had actual or potential independent economic value
because it was secret, you may consider the following:
1.

The extent to which GSI obtained or could obtain economic value from the information
in keeping it secret;

2.

The extent to which others could obtain economic value from the information if it were
not secret;

3.

The amount of time, money, or labor that GSI expended in developing the information;
and

4.

The amount of time, money, or labor that would be saved by a competitor who used the
information.

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The presence or absence of any one or more of these factors is not necessarily determinative.

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18. MERE POSSESSION OF ANOTHER’S TRADE SECRET
Possession of another’s trade secret is not by itself a basis for liability.

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19. CERTAIN KNOWLEDGE OF EMPLOYEE NOT IMPUTED TO EMPLOYER
A company is deemed to have notice and knowledge of any facts any of its employees ought, in
good faith and in the exercise of ordinary care and diligence, to communicate to the company.
GSI contends that ISSI engaged in acts that constitute misappropriation of trade secrets based on
knowledge attributable to them through certain employees. The law distinguishes between
knowledge of an employee that is attributable to an employer and knowledge that is not.
One example of information that is not attributable to an employer through an employee is where
an employee is acting adversely to the company in a transaction or matter, for the employee’s own
purposes, or acting for the interests of another person or company.
A second example of information that is not attributable to an employer through an employee is
where an employee’s knowledge is gained before or outside the scope of the employee’s particular
job duties and responsibilities.

United States District Court
For the Northern District of California

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A third example of information that is not attributable to an employer through an employee is
where an employee lacks authority to bind the company, such as where an employee is not a
company executive or officer, and whose job duties and responsibilities do not include entering
into a transaction on behalf of the company.

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A fourth example of information that is not attributable to an employer through an employee is
when the employee has learned information subject to confidentiality protections, such as a nondisclosure agreement, that does not permit further disclosure to the employer.

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20. IMPROPER MEANS OF ACQUIRING TRADE SECRET

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Improper means of acquiring a trade secret or knowledge of a trade secret include, but are not
limited to, theft, misrepresentation, breach or inducing a breach of a duty to maintain secrecy, and
acquisition with knowledge or reason to know that another party used improper means to acquire it.

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However, it is not improper to acquire a trade secret or knowledge of the trade secret by any of the
following:

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1.

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2.
Obtaining the trade secret as a result of a license agreement with the owner of the
information;

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For the Northern District of California

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3.

Independent efforts to invent or discover the trade secret;

Observing the trade secret in public use or on public display;

4.
Obtaining the trade secret from published literature, such as patents, trade journals,
reference books, the Internet, or other publicly available sources; or
5.
Independently deriving the same information GSI claims as a trade secret. Independent
derivation can mean knowing the information before acquiring the information GSI alleges to
constitute its trade secrets. Independent derivation can also mean deriving the information from a
source independent of GSI, or from a source not owned by GSI.

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21. MISAPPROPRIATION BY USE

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UMI and/or ISSI misappropriated a GSI trade secret by use if UMI and/or ISSI

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1.

Used it without GSI’s consent; and

2.

Did any of the following:

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

At the time of the use, had acquired knowledge of the trade secret by improper means, as
defined in other instructions;



At the time of use, knew or had reason to know that its knowledge of the trade secret came
from or through another party, and that another party had previously acquired the trade
secret by improper means; or



At the time of use, knew or had reason to know that its knowledge of the trade secret came
from or through another party, and that another party had a duty to GSI to limit use of the
trade secret.

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22. MISAPPROPRIATION BY DISCLOSURE

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UMI misappropriated a GSI trade secret by disclosure if UMI

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1.

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disclosed it without GSI’s consent; and

2.
at the time of disclosure, knew or had reason to know that its knowledge of the trade secret
was acquired under the agreement between GSI and UMI, and the agreement created a duty to keep
the secret confidential.

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23. GENERAL SKILLS, KNOWLEDGE AND EXPERIENCE
A former employee of another company has the right to use general skills, knowledge, and training
after leaving the job, including for another employer, so long as he or she does not misappropriate
the former employer’s trade secrets or a third party’s trade secrets known only to the employee by
virtue of his or her previous employment.

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24. REMEDIES FOR MISAPPROPRIATION OF TRADE SECRET
If GSI proves that ISSI misappropriated a GSI trade secret, then GSI is entitled to recover damages
if the misappropriation caused GSI to suffer an actual loss or unjustly enriched ISSI.
If ISSI’s misappropriation did not cause GSI to suffer an actual loss or ISSI to be unjustly enriched,
GSI may still be entitled to a reasonable royalty for no longer than the period of time the use could
have been prohibited. However, I will calculate the amount of any royalty.

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25. CAUSATION: SUBSTANTIAL FACTOR
A substantial factor in causing harm is a factor that a reasonable person would consider to have
contributed to the harm. It must be more than a remote or trivial factor. It does not have to be the
only cause of the harm.
Conduct is not a substantial factor in causing harm if the same harm would have occurred without
that conduct.

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26. MISAPPROPRIATION – ACTUAL LOSS – LOST PROFITS
GSI contends that its measure of actual loss caused by UMI’s misappropriation of trade secrets is
GSI’s lost profits.

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To recover damages for lost profits, GSI must prove with reasonable certainty GSI would have
earned profits but for UMI’s misappropriation of a trade secret.
To decide the amount of damages for lost profits, you must determine the gross amount GSI would
have received but for UMI’s conduct and then subtract from that amount the expenses including
the value of the labor, materials, and manufacturing costs GSI would have had if UMI’s conduct
had not occurred.
The amount of the lost profits need not be calculated with mathematical precision, but there must
be a reasonable basis for computing the loss.

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27. MISAPPROPRIATION – UNJUST ENRICHMENT
ISSI was unjustly enriched if its misappropriation of GSI’s trade secrets caused ISSI to receive a
benefit that it otherwise would not have achieved.
To decide the amount of any unjust enrichment, first determine the value of ISSI’s benefit that
would not have been achieved except for its misappropriation. Then subtract from that amount
ISSI’s reasonable expenses including the value of the labor and materials. In calculating the
amount of any unjust enrichment, do not take into account any amount that you included in
determining any amount of damages for GSI’s actual loss.

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28. UNFAIR COMPETITION

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GSI claims that UMI and/or ISSI tortiously interfered with GSI’s economic relationship
with Cisco by engaging in unfair business practices and acts of unfair competition.

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29. “UNFAIR” BUSINESS PRACTICE
A business practice can be “unfair” even if it is not illegal. To establish that UMI and/or ISSI
engaged in unfair business practices, GSI must establish UMI and/or ISSI’s conduct significantly
threatens or harms competition.

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30. INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC
RELATIONS – ESSENTIAL FACTUAL ELEMENTS

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GSI claims that UMI and/or ISSI intentionally interfered with an economic relationship between
GSI and Cisco that probably would have resulted in an economic benefit to GSI. To establish this
claim, GSI must prove all of the following:
1.
That GSI and Cisco were in an economic relationship that probably would have resulted in
an economic benefit to GSI;

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2.

That UMI and/or ISSI knew of the relationship;

3.

That UMI and/or ISSI engaged in unfair competition;

4.
That by engaging in this conduct, UMI and/or ISSI intended to disrupt the relationship or
knew that disruption of the relationship was certain or substantially certain to occur;

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5.

That the relationship was disrupted;

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6.

That GSI suffered economic harm; and

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That UMI and/or ISSI’s conduct was a substantial factor in causing GSI’s harm.

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31. CAUSATION: SUBSTANTIAL FACTOR
As explained earlier, a substantial factor in causing harm is a factor that a reasonable person would
consider to have contributed to the harm. It must be more than a remote or trivial factor. It does
not have to be the only cause of the harm.
Conduct is not a substantial factor in causing harm if the same harm would have occurred without
that conduct.

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32. INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC
RELATIONS – ACTUAL LOSS – LOST PROFITS

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To recover damages for lost profits, GSI must prove it is reasonable certain GSI would have earned
profits but for UMI and/or ISSI’s intentional interference with prospective economic relations.
To decide the amount of damages for any lost profits, you must determine the gross amount GSI
would have received but for UMI and/or ISSI’s conduct and then subtract from that amount the
expenses including the value of the labor, materials, and manufacturing costs GSI would have had
if UMI and/or ISSI’s conduct had not occurred.
The amount of the lost profits need not be calculated with mathematical precision, but there must
be a reasonable basis for computing the loss

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33. CONTRACT PERFORMANCE – BREACH OF CONTRACT – ELEMENTS OF
LIABILITY

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I have already found that GSI entered into a contract with UMI in which UMI agreed (1) not to
compete with GSI, directly or indirectly, for the design of a LLDRAM chip until at least April 30,
2013; (2) to protect GSI’s confidential information; and (3) that GSI would own all circuit
schematics and associated intellectual property, excluding Project Patents and intellectual property
developed prior to or independent from the contract between GSI and UMI, as “deliverables” under
the contract.

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For GSI to recover from the UMI on GSI’s claim of breach of contract, you must find either of the
following have been proved by a preponderance of the evidence:
1.
UMI failed to comply with its obligation not to compete with GSI, directly or indirectly, for
the design of an LLDRAM chip;
UMI failed to protect confidential information in GSI’s schematics; or

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For the Northern District of California

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2.

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3.
UMI allowed ISSI to access and use circuit schematics and associated intellectual property
owned by GSI.

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If you find that none of these statements have not been proved, then your verdict must be for UMI.

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On the other hand, if you find that one or more of these statements have been proved, then you
must consider UMI’S affirmative defenses.

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If you find that UMI proved any one or more of these affirmative defenses by a preponderance of
the evidence, then your verdict must be for UMI.

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However, if you find that none of these affirmative defenses have been proved, then your verdict
must be for GSI.

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34. CONTRACT PERFORMANCE – BREACH OF CONTRACT DEFINED
A breach of contract is the failure to perform a contractual promise when performance is due. A
material breach occurs when a party fails to substantially comply with the essential terms of a
contract.
In determining whether a breach is material, you may consider the nature of the promised
performance, the purpose of the contract, and whether any defects in performance have defeated
the purpose of the contract.

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35. CONTRACT INTERPRETATION – DISPUTED TERM – LLDRAM
GSI and UMI dispute the meaning of the following term contained in the contract:

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Article III.6

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“Low Latency DRAM Product” means a latency optimized and/or address rate
optimized memory product that employs a capacitive charge-based memory cell
technology, including, but not limited to, RLDRAM and FCRAM products.

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GSI contends that the term “Low Latency DRAM Product” includes Atris. On the other hand,
UMI claims that the term does not include Atris.

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36. CONTRACT INTERPRETATION – PARTIES’ INTENT
The statements or conduct of the parties before any dispute arose between them is an indication of
what the parties intended at the time the contract was formed.
To determine what the parties intended the terms of the contract to mean, you may also consider
the language of the written agreement, the parties’ negotiations of the contract, any earlier dealings
between the parties, any reasonable expectations the parties may have had because of the promises
or conduct of the other party, and any other facts or circumstances that existed at the time that the
contract was formed.

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37. CONTRACT INTERPRETATION – CONTRACT AS A WHOLE
The entire agreement (with any attachments) is to be considered in determining the existence or
nature of the contractual duties. You should consider the agreement as a whole and not view
clauses or phrases in isolation.

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38. CONTRACT INTERPRETATION – ORDINARY MEANING
Words or phrases not defined in a contract should be given their plain, ordinary, and generally
accepted meaning.

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39. CONTRACT INTERPRETATION – USE OF TECHNICAL WORDS IN A
CONTRACT

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When a contract uses words or phrases from a trade or technical field, those words or phrases
should be given their usual meaning in that trade or technical field.

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40. CONTRACT INTERPRETATION – SPECIFIC AND GENERAL CLAUSES
Where there is an inconsistency between general and specific provisions in a contract, the specific
provisions express more exactly what the parties intended.

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41. CONTRACT DAMAGES – SPECIAL DAMAGES

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GSI claims damages for lost profits. These are special damages.

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Under the limitation of liability provision in Section V.3 of the agreement, GSI may only recover
lost profits for breach of the confidentiality provision in Article VI of the agreement.

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The fact that an instruction on measure of damages has been given to you does not mean that I am
instructing you to award or not to award damages. The question of whether or not damages are to
be awarded is a question for the jury’s consideration.
To recover for lost profits, in addition to proving that the limitation of liability for special damages
is not valid, GSI must additionally prove that when the parties made the contract, UMI knew or
reasonably should have known of the special circumstances leading to GSI’s claimed lost profits.

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For the Northern District of California

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42. LOST PROFITS

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To decide the amount of damages for lost profits, you must determine the gross amount GSI would
have received but for UMI’s conduct and then subtract from that amount the expenses including
the value of the labor, materials, and manufacturing costs GSI would have had if UMI’s conduct
had not occurred.
The amount of the lost profits need not be calculated with mathematical precision, but there must
be a reasonable basis for computing the loss.

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United States District Court
For the Northern District of California

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43. NOMINAL DAMAGES

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If you find in favor of GSI on its breach of contract claim, but do not award any special damages,
you shall award GSI nominal damages in the sum of one dollar.

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44. FRAUD – INTENTIONAL MISREPRESENTATION

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GSI claims that UMI made a false representation that harmed GSI. To establish this claim, GSI
must prove all of the following:
1.

That UMI represented to GSI that a fact was true;

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2.

That UMI’S representation was false;

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3.
That UMI knew that the representation was false when UMI made it, or that UMI made the
representation recklessly and without regard for its truth;

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4.

That UMI intended that GSI rely on the representation;

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5.

That GSI reasonably relied on UMI’S representation;

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6.

That GSI was harmed; and

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That GSI’s reliance on UMI’S representation was a substantial factor in causing GSI’s
harm.

United States District Court
For the Northern District of California

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45. FALSE PROMISE

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GSI claims it was harmed because UMI made a false promise. To establish this claim, GSI must
prove all of the following:
1.

That UMI made a promise to GSI;

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2.

That UMI did not intend to perform this promise when UMI made it;

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3.

That UMI intended that GSI rely on this promise;

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4.

That GSI reasonably relied on UMI’S promise;

5.

That UMI did not perform the promised act;

6.

That GSI was harmed; and

7.

That GSI’s reliance on UMI promise was a substantial factor in causing GSI’s harm.

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46. RELIANCE

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GSI relied on UMI’s misrepresentation or false promise if:

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1.
The misrepresentation or false promise substantially influenced GSI to engage UMI to
design the 576 Mb chip for GSI; and

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2.

GSI would probably not have engaged UMI without the misrepresentation or false promise.

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It is not necessary for a misrepresentation or false promise to be the only reason for GSI’s conduct.

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47. REASONABLE RELIANCE

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In determining whether GSI’s reliance on the misrepresentation or false promise was reasonable,
GSI must first prove that the matter was material. A matter is material if a reasonable person
would find it important in determining his or her choice of action.
If you decide that the matter is material, you must then decide whether it was reasonable for GSI to
rely on the misrepresentation or false promise. In making this decision, take into consideration
GSI’s intelligence, knowledge, education, and experience.

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However, it is not reasonable for anyone to rely on a misrepresentation or false promise that is
preposterous. It also is not reasonable for anyone to rely on a misrepresentation or false promise if
facts that are within its observation show that it is obviously false.

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48. MEASURES OF TYPES OF DAMAGES
In determining the measure of damages for any UMI false promise, you may award only general
damages. GSI may not obtain lost profits or potential business opportunity damages, which are
special damages.

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49. DAMAGES ARISING IN THE FUTURE – DISCOUNT TO PRESENT CASH
VALUE

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Any award for future economic damages must be for the present cash value of those damages.
Present cash value means the sum of money needed now, which, when invested at a reasonable rate
of return, will pay future damages at the times and in the amounts that you find the damages would
have been received.
The rate of return to be applied in determining present cash value should be the interest that can
reasonably be expected from safe investments that can be made by a person of ordinary prudence,
who has ordinary financial experience and skill. You should also consider decreases in the value
of money which may be caused by future inflation.

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For the Northern District of California

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50. PUNITIVE DAMAGES

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If you find for GSI on its misappropriation, intentional interference with prospective economic
relations, fraud or false promise claims, you may, but are not required to, award punitive damages.
The purposes of punitive damages are to punish a defendant and to deter similar acts in the future.
Punitive damages may not be awarded to compensate a plaintiff.
GSI has the burden of proving by clear and convincing evidence of the evidence that punitive
damages should be awarded, and, if so, the amount of any such damages.

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United States District Court
For the Northern District of California

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You may award punitive damages only if you find that UMI and/or ISSI’s conduct that harmed
GSI was malicious, oppressive or in reckless disregard of GSI’s rights. Conduct is malicious if it is
accompanied by ill will, or spite, or if it is for the purpose of injuring the plaintiff. Conduct is in
reckless disregard of the plaintiff’s rights if, under the circumstances, it reflects complete
indifference to the plaintiff’s safety or rights, or if the defendant acts in the face of a perceived risk
that its actions will violate the plaintiff’s rights under federal law. An act or omission is oppressive
if the defendant injures or damages or otherwise violates the rights of the plaintiff with unnecessary
harshness or severity, such as by the misuse or abuse of authority or power or by the taking
advantage of some weakness or disability or misfortune of the plaintiff.
If you find that punitive damages are appropriate, you must use reason in setting the amount.
Punitive damages, if any, should be in an amount sufficient to fulfill their purposes but should not
reflect bias, prejudice or sympathy toward any party. In considering the amount of any punitive
damages, consider the degree of reprehensibility of the defendant’s conduct. In addition, you may
consider the relationship of any award of punitive damages to any actual harm inflicted on the
plaintiff. You may impose punitive damages against one or more of the defendants and not others,
and may award different amounts against different defendants. Punitive damages may be awarded
even if you award GSI only nominal, and not compensatory, damages.

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51. AFFIRMATIVE DEFENSE – UNCLEAN HANDS
UMI and ISSI each claim as a defense that GSI’s misconduct precludes its enforcement of GSI’s
claims. To establish this defense, UMI and/or ISSI must prove that GSI’s conduct was
unconscionable and resulted in prejudice to UMI and/or ISSI.
GSI’s misconduct must be intimately connected with GSI’s claims and of such a prejudicial nature
that it would be unfair to allow GSI to rely on its claim.

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52. AFFIRMATIVE DEFENSE – TRADE SECRET MISAPPROPRIATION –
INFORMATION WAS READILY ASCERTAINABLE BY PROPER MEANS

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UMI and/or ISSI did not misappropriate a GSI trade secret if UMI and/or ISSI proves that the trade
secret information in the schematic was readily ascertainable by proper means at the time of the
alleged misappropriation.
There is no fixed standard for determining what is “readily ascertainable by proper means.” In
general, information is readily ascertainable if it can be obtained, discovered, developed, or
compiled without significant difficulty, effort, or expense. For example, information is readily
ascertainable if it is available in trade journals, reference books, or published materials. On the
other hand, the more difficult information is to obtain, and the more time and resources that must
be expended in gathering it, the less likely it is that the information is readily ascertainable by
proper means.

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53. AFFIRMATIVE DEFENSE – TRADE SECRET MISAPPROPRIATION –
STATUTE OF LIMITATIONS

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If GSI proves that its trade secrets were misappropriated by UMI, then you must consider each and
every one of UMI’S affirmative defenses. UMI contends that GSI’s claim for misappropriation of
its alleged trade secrets was not filed within the time set by law.
UMI will succeed on this defense if it shows that the claimed misappropriation of GSI’s trade
secrets occurred before August 20, 2010.

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If UMI shows that the claimed misappropriation of GSI’s trade secrets occurred before August 20,
2010, then GSI can only prove that the lawsuit was filed on time if GSI proves that before August
20, 2010, it did not discover, nor with reasonable diligence should have discovered, facts that
would have caused a reasonable person to suspect that UMI had misappropriated the information
that GSI claims are its trade secrets. If GSI fails to prove this, then you must enter a verdict for
UMI.

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54. AFFIRMATIVE DEFENSE – BREACH OF CONTRACT – WAIVER

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UMI is not legally responsible to GSI on GSI’s claim of breach of the 2008 contract if the
affirmative defense of waiver is proved.
I have already found that no waiver of any term of the contract could be deemed a further or
continuing waiver of that term.
This defense is proved if you find all of the following:

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1.

GSI knew that UMI was required to perform a promise by the 2008 contract;

2.
GSI knew that failure of UMI to perform this contractual promise gave GSI the right to sue
UMI for breach of contract;

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3.

GSI intended to give up this right; and

4.

GSI voluntarily gave up this right.

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55. AFFIRMATIVE DEFENSE – BREACH OF CONTRACT – NON-COMPETE –
STATUTE OF LIMITATIONS
UMI contends that GSI’s breach of contract claim based upon breach of the covenant not-tocompete embodied in certain provisions of the 2008 contract was not filed within the time set by
law.
UMI is not legally responsible to GSI for breach of the non-compete provision of the 2008 contract
if you find the following:

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1.
That UMI directly or indirectly, designed or developed, or contributed to the design or
development of the Atris chip during the term of the 2008 contract at issue, in breach of the express
language of that contract; and
2.
That GSI knew, or should have known with the exercise of reasonable diligence, that UMI
directly or indirectly, designed or developed, or contributed to the design or development of Atris
during the term of the 2008 contract at issue, in breach of the express language of that contract
before March 8, 2010 (three years before the filing of the original complaint).

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56. AFFIRMATIVE DEFENSE – FRAUD – WAIVER

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If GSI proves its fraud claim, then you must consider each of UMI’s affirmative defenses.

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UMI is not legally responsible to GSI on its fraud claim if the affirmative defense of waiver is
proved. This defense is proved if you find both of the following:

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1.
GSI learned the actual facts after it began performing its obligations under the 2008
contract, but before it completed them; and

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2.
GSI continued performing its obligations with full knowledge of the actual facts when a
reasonable person under the same or similar circumstances would not have done so.

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57. AFFIRMATIVE DEFENSE – FRAUD – STATUTE OF LIMITATIONS
UMI is not responsible for GSI’s damages if GSI did not file its fraud claim within the time set by
law. You only need to consider this defense if you have already determined that GSI has proved its
fraud claim against UMI.
You must enter a verdict for UMI if you find it is more likely than not that the harm GSI claims
resulted from the fraud occurred before March 8, 2010, and that GSI could not have discovered the
fraud before that date.

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If you find that GSI’s claimed harm occurred before March 8, 2010, then GSI has the burden to
show that its fraud claim was still filed on time. To do so, GSI must prove both of the following:
1.
GSI must prove that it did not discover facts constituting the fraud or mistake before March
8, 2010; and
2.
GSI must prove that it could not have discovered any such facts even if it had acted with
reasonable diligence.

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58. AFFIRMATIVE DEFENSE – ESTOPPEL
UMI and ISSI each claim as a defense that GSI is barred from each of its claims. To establish this
defense, UMI and/or ISSI must prove all of the following:

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(1) That GSI made a representation of fact by words or conduct intending that UMI and/or ISSI
should rely on it. This conduct may also include silence if GSI had a duty to speak and remained
silent knowing that the circumstances required it to speak;

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(2) That GSI knew the facts;

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(3) That UMI and/or ISSI was ignorant of the true state of facts; and

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(4) That UMI and/or ISSI reasonably relied on GSI’s representation to UMI and/or ISSI’s injury.
UMI and/or ISSI’s reliance must be reasonable in the sense that under the circumstances a
reasonable person would have acted as UMI and/or ISSI did.

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59. AFFIRMATIVE DEFENSE – MITIGATION OF DAMAGES
If you decide UMI and/or ISSI is responsible for the original harm to GSI, GSI is not entitled to
recover damages for harm that UMI and/or ISSI proves GSI could have avoided with reasonable
efforts or expenditures. GSI has a duty to mitigate damages and cannot recover losses it could
have avoided through reasonable efforts.
You should consider the reasonableness of GSI’s efforts in light of the circumstances facing it at
the time, including its ability to make the efforts or expenditures without undue risk or hardship.

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If GSI made reasonable efforts to avoid harm, then your damages award to GSI should include
reasonable amounts that it spent for this purpose.

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60. SCHEMATICS BEYOND GSI’S 25 TRADE SECRET CLAIMS

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You have heard testimony about schematics other than the 25 schematics GSI claims as trade
secrets in this lawsuit, including testimony about 273 or so “non-trade secret” schematics.

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The Court has ruled that GSI has no claim against ISSI regarding ISSI’s acquisition or use of any
schematic other than the 25 schematics claimed as trade secrets. In other words, you cannot find
against ISSI and in favor of GSI with regards to liability or damages based on ISSI’s acquisition or
use of the 273 or so “non-trade secret” schematics.

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Evidence regarding schematics beyond the 25 trade secret claims may nevertheless be considered
on other issues, such as
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GSI’s breach of contract claim against United Memories;

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Whether ISSI knew or should have known that at some point it had in its possession GSI
trade secrets; and

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3.

Whether GSI brought this lawsuit in bad faith.

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61. CONTENTION OF MISAPPROPRIATION CLAIMED IN BAD FAITH

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If you conclude that GSI has not proved its misappropriation claim, you should determine whether
GSI brought the claim in bad faith. GSI filed the misappropriation claim on October 3, 2013 in the
Second Amended Complaint. To prove GSI brought its misappropriation claim in bad faith, ISSI
must prove by clear and convincing evidence

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That GSI’s misappropriation claim is objectively specious and

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That GSI acted in subjective bad faith in bringing or maintaining the claim.

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An objectively specious claim is defined as one without substance in reality. To show subjective
bad faith, ISSI must prove that GSI engaged in misconduct that is at least reckless or grossly
negligent, if not intentionally negligent and willful.

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62. INTRODUCTION TO SPECIAL VERDICT FORM
A verdict form has been prepared for you. After you have reached unanimous agreement on a
verdict, your presiding juror will fill in the form that has been given to you, sign and date it, and
advise the court that you are ready to return to the courtroom.

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SO ORDERED.

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Dated: November 22, 2015

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_________________________________
PAUL S. GREWAL
United States Magistrate Judge

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