Iconics, Inc. v. Massaro, et al.

Filing 660

Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered granting in part and denying in part #538 Motion to Strike Zatarian testimony; granting in part and denying in part #541 Motion to strike Pappas testimony; granting in part and denying in part #546 Motion to Strike Kullberg testimony. (Woodlock, Douglas)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

ICONICS, INC.
Plaintiff,
v.
SIMONE MASSARO,
CHRISTOPHER VOLPE, VENTO
INDUSTRIES, INC., BAXENERGY GmbH
And BAXENERGY ITALIA S.r.L.,
Defendants.

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CIVIL ACTION NO.
11-11526-DPW

MEMORANDUM AND ORDER
July 19, 2017
Before me are motions to disqualify experts, which I now
take up and resolve as prelude to resolving defendants’ motion
for summary judgment which I will address in a separate
Memorandum.
Defendants Simone Massaro, BaxEnergy GmbH, Christopher
Volpe, BaxEnergy Italia, and Vento Industries have moved
[Dkt. No. 541] to disqualify Jimmy Pappas and to strike his
expert report.

Plaintiff Iconics in turn has moved to exclude

the testimony of Arthur Zatarain [Dkt. No. 538] in its entirety
and the report of Bradford Kullberg [Dkt. No. 546] in part.
In considering these motions, I perform a gatekeeping role
through which I determine whether the expert testimony offered
by these witnesses is sufficiently reliable to be introduced

into evidence.
Cir. 2002).

United States v. Mooney, 315 F.3d 54, 62 (1st

Under Federal Rule of Evidence 702:

A witness who is qualified as an expert by knowledge,
skill, experience, training, or education may testify in
the form of an opinion or otherwise if: (a) the expert’s
scientific, technical, or other specialized knowledge will
help the trier of fact to understand the evidence or to
determine a fact in issue; (b) the testimony is based on
sufficient facts or data; (c) the testimony is the product
of reliable principles and methods; and (d) the expert has
reliably applied the principles and methods to the facts of
the case.
I may consider a variety of factors when deciding whether to
admit an expert’s testimony, including:
(1) whether the theory or technique can be and has been
tested; (2) whether the technique has been subject to peer
review and publication; (3) the technique’s known or
potential rate of error; and (4) the level of the theory or
technique’s acceptance within the relevant discipline.
Mooney, 315 F.3d at 62 (citing Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579, 593-94 (1993)).

Once it is

established that an expert’s testimony “rests upon good grounds
based on what is known,” however, I should allow the evidence to
be presented to the jury and “be tested by the adversarial
process.”

Milward v. Acuity Specialty Products Group, Inc., 639

F. 3d 11, 15 (1st Cir. 2011) (internal quotation and citation
omitted).
I. JIMMY PAPPAS
Jimmy Pappas is a forensic accountant serving as Iconics’
damage expert.

His opinion assumes liability has been

2

established and then estimates the amount of damages due in four
categories: the intellectual property claims (taken together),
breach of contract damages, Digital Millennium Copyright Act
Damages (“DMCA”) statutory damages, and attorneys’ fees and
costs in the related state and bankruptcy court proceedings.
A.

Qualifications
As a threshold matter, defendants seek to exclude Pappas as

an expert for being unqualified to opine on the subject matter.
Pappas is a managing director in the forensic services practice
of PricewaterhouseCoopers.

He is a certified public accountant

and certified fraud examiner with experience in valuing damages
related to fraud, breach of contract, and misappropriation of
assets.

As defendants point out, however, Pappas does not have

experience providing valuations of intellectual property in the
context of litigation.
Given Pappas’s theory of valuation, such a gap in his
experience does not render his opinions unreliable.

Although

Pappas has not negotiated licenses or sales of intellectual
property, his opinion is not based on those approaches.

His

approach focuses on forensic accounting, valuations of companies
and investor contributions more broadly, and the calculation of
profits.

These are subjects where he has the specialized skill

sufficient to serve as an expert witness.

3

B.

Intellectual Property Claims
Pappas provides two estimates of the damages owed for the

intellectual property claims based on two different calculation
methods.
The primary method he advances is a novel one he calls the
“unwitting investment” method.1

Using this method, Pappas opines

that because Iconics owns the intellectual property Massaro
allegedly brought to BaxEnergy in return for a 49 percent stake
in the company, Iconics should be viewed as an investor, albeit
unwittingly, in BaxEnergy.

Pappas estimates the value of that

investment at approximately $8 million.

Defendants argue that

this “unwitting investment” method does not reflect the current
law and therefore would not reliably assist the jury in
calculating the appropriate measure of damages.

They do not

contest Pappas’s calculations; they contest only his underlying
approaches.
Both Massachusetts trade secrets law and federal copyright
law authorize damages based on theories of disgorgement and

1

The alternative method he presents is a profit disgorgement
analysis, a remedy generally available under both 17 U.S.C. §
504(b) and Massachusetts trade secret law. The parties have
been invited to file summary judgment motions as to whether
Iconics has adduced sufficient evidence on damages to support
its trade secret and copyright claims. I will therefore
determine the proper scope of Pappas’s profit disgorgement
theory in light of the resolution of those motions and will not
address the motion to exclude on those grounds at this time.
4

unjust enrichment.

Bruce v. Weekly World News, Inc., 310 F.3d

25, 28 (1st Cir. 2002) (“A plaintiff who establishes copyright
infringement is entitled to recover (1) actual damages, which
consist of all income and profits lost as a consequence of the
infringement; and (2) any nonduplicative profits earned by the
defendant as a consequence of the copyright infringement, see 17
U.S.C. § 504(b)”); Jet Spray Cooler, Inc. v. Crampton, 385
N.E.2d 1349, 1356 (Mass. 1979) (“The measure of damages in cases
involving business torts such as the misappropriation of trade
secrets entitles a plaintiff to recover full compensation for
his lost profits and requires a defendant to surrender the
profits which he realized from his tortious conduct.”).
In order to establish defendants’ unjust profits,
plaintiffs must “‘do more initially than toss up an
undifferentiated gross revenue number; the revenue stream must
bear a legally significant relationship to the infringement.’”
Real View, LLC. v. 20-20 Techs., Inc., 811 F. Supp. 2d 553, 56061 (D. Mass. 2011) (quoting Polar Bear Prods., Inc. v. Timex
Corp., 384 F.3d 700, 711 (9th Cir. 2004)).

But, “[o]nce the

plaintiffs demonstrate that the defendants have made profits
from sales of products incorporating the misappropriated trade
secrets, the burden shifts to the defendants to demonstrate the
portion of their profits which is not attributable to the trade
secrets.” See Jet Spray Cooler, 385 N.E.2d at 1359 n.14.
5

Pappas’s “unwitting investment” theory of damages cannot be
accepted as a reliable methodology here for calculating damages
in this instance.

The approach strays from the traditional lost

profits theory of damages under trade secrets and copyright
unjust enrichment law towards a property-based conception of
liability in which misappropriation of intellectual property
provides the victim with the equivalent of an equity share in
the misappropriator’s enterprise.

Neither Pappas nor

plaintiff’s counsel have identified any case that uses such an
approach.

Rather, plaintiff simply invokes the Supreme Judicial

Court’s reminder that while “traditional lost profits analysis
as a measure of damages may not be an adequate model” in all
trade secret cases “other theories of damages may . . . be ripe
for testing in our courts.” Lightlab Imaging, Inc. v. Axsun
Techs., Inc., 13 N.E.3d 604, 614 (Mass. 2014).
In Lightlab, the court sought to protect companies, in
particular start-up companies, that fall victim to trade secret
misappropriation before they have yet to show a profit.

Id.

The court recognized that strict application of the lost profits
measure for damages could bar these companies from recovery and
therefore the court indicated that a company facing that dilemma
should be allowed to present alternative theories of damages.
Id. (“Such businesses often operate for years without profit.
This fact should not render them ‘damage proof.’”).
6

Unlike the

hypothetical companies addressed in Lightlab, it appears Iconics
could have relied on a traditional method to capture the damages
at issue fully, and indeed has offered a profit disgorgement
analysis for at least some of its claims.

I therefore see no

basis to employ a novel and untested theory of liability under
these circumstances and will strike Pappas’s testimony regarding
the unwitting investment theory.
C.

Contract Damages
Defendants seek to exclude Pappas’s testimony concerning

contract damages on two grounds.

First, they argue that his

testimony addresses claims not properly remaining in the case.
Second, they argue that his calculations include damages that
were not foreseeable, in derogation of contract law.

These

objections are not the proper focus of a Daubert inquiry.

They

are legal arguments against the plaintiff’s theory of the case
and the predicate factual proof to support an expert opinion.

I

have not foreclosed contractual claims and it is premature to
address the availability of expert testimony regarding resultant
damages until the underlying evidence regarding that matter is
adduced.
D.

I will not strike Pappas’s testimony on these grounds.

DMCA Damages
Similarly, defendants’ objection to Pappas’s DMCA damages

testimony falls outside the scope of a Daubert challenge.
Defendants have legal disagreements with plaintiff over what
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constitutes an individual DMCA violation.

This is an important

legal question which remains unsettled in this circuit and in
this case.

Plaintiff asserts that there were 282 violations;

defendants counter that the number of violations, if any, should
be in the single digits.

In creating his expert report,

however, Pappas permissibly accepted plaintiff’s legal
interpretation and calculated damages for 282 violations.

To be

sure, all Pappas did to calculate DMCA damages was multiply the
number of violations by the statutory range for damages.

Even

if his testimony here serves a limited need, it is reliable and
will not be excluded if the factual predicates for DMCA
violations are established.2
II. ARTHUR ZATARAIN
Iconics has moved to exclude the testimony of Arthur
Zatarain, defendants’ technical expert.
expert report on March 10, 2016.

Zatarain produced his

After Iconics filed its

narrative description of its asserted trade secrets, Zatarain
issued a supplemental report on August 24, 2016.3

Because

Zatarain’s supplemental report incorporates his initial report
to the extent that it is consistent with the March 10, 2016

2

I note that the parties have been invited to file summary
judgment motions as the case advances to trial as to the number
of individual violations of the DMCA, if any, that are at issue.
3 Zatarain also filed a supplement to his supplemental report on
August 31, 2016, adding two citations inadvertently left out of
his supplemental report.
8

report, I consider Iconics’ challenges to both the initial
report and the supplemental report.
Iconics contends there are numerous shortcomings in
Zatarain’s analysis and therefore seeks to exclude his testimony
entirely or, in the alternative, to exclude those problematic
areas of his testimony.

See Bricklayers & Trowel Trades Int'l

Pension Fund v. Credit Suisse Sec. (USA) LLC, 752 F.3d 82, 96
(1st Cir. 2014) (district court may exclude witness rather than
“prune away” inadmissible testimony).

I begin with Iconics’

challenges to Zatarain’s methodology and then discuss his
analysis of Iconics’ alleged trade secrets.
A.

Methodology
In both of its motions, Iconics criticizes the methods

Zatarain used to construct his report.

Iconics argues that he

improperly relied on Massaro and other BaxEnergy employees to
interpret its trade secrets, that he never inspected Iconics’
code directly (with the single exception of the webHMI.js file),
and that he did not use Iconics technical documents which even
he admitted would have helped him better understand the trade
secrets.

Iconics builds upon these arguments in its second

motion, pointing to Zatarain’s deposition where he struggled to
explain clearly how BaxEnergy’s source code supported his
opinions.

Defendants mostly do not contest Iconics’

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characterization of Zatarain’s approach, but rather argue that
there is nothing improper about it.
An expert is responsible for ensuring that his opinion is
based on reliable data; he may not blindly rely on his client’s
representations.

SMS Sys. Maint. Servs., Inc. v. Digital Equip.

Corp., 188 F.3d 11, 25 (1st Cir. 1999) (“[A]n expert must
vouchsafe the reliability of the data on which he relies and
explain how the cumulation of that data was consistent with
standards of the expert's profession.”); Rand A Tech. Corp. v.
Parametric Tech. Corp., No. 03-CV-11046-MEL, 2005 WL 6768210, at
*1 (D. Mass. Oct. 19, 2005) (“An expert must do more than simply
rely on a client's representations.”).

Nor may an expert

“parrot” the conclusions of other witnesses, although an expert
may rely on other witness’s testimony or other expert
conclusions to form an opinion.

See, e.g., Thorndike v.

DaimlerChrysler Corp., 266 F. Supp. 2d 172, 185 (D. Me. 2003).
Ultimately, however, it is the factfinder’s role to evaluate the
credibility of an expert’s testimony, which may include a
consideration of the data underlying the testimony.

See

Milward, 639 F.3d at 22 (“When the factual underpinning of an
expert's opinion is weak, it is a matter affecting the weight
and credibility of the testimony—a question to be resolved by
the jury.”).

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Zatarain’s reliance on BaxEnergy employees to assist him in
interpreting the code at issue coupled with his struggles to
explain the relevant code at his deposition may be a rich
subject for cross-examination.

But, absent evidence that

Zatarain merely adopted defendants’ statements about the trade
secrets wholesale, the jury should be given the opportunity to
evaluate the credibility of Zatarain’s opinion.
B.

Trade Secret Analysis
Iconics objects to Zatarain’s discussion of the core

architecture, data intake, and workflow trade secrets alleged.
This objection is directed both to his conclusion that BaxEnergy
employs none of these purported trade secrets and to his
conclusion that all of these purported trade secrets have been
publicly disclosed.

I will evaluate each of these challenges in

turn.
1.

Core Architecture

In its initial motion, Iconics argues that Zatarain’s
opinion on the core architecture trade secret is unreliable
because he bases it exclusively on his analysis of three
architectural diagrams, rather than on an examination of the
underlying source code.

Zatarain’s supplemental report adopts,

without any changes, his conclusion that BaxEnergy does not use
Iconics’ core architecture trade secret.

Zatarain admitted in

his deposition that looking at the code would add to his
11

understanding, although how much this is so is disputed.
Defendants contend that code-level information is not necessary
to analyze the core architecture trade secret.
Regardless of the benefits of any alternative approaches,
Zatarain’s opinion on the core architecture trade secret is
sufficiently reliable to be presented to the jury.

Iconics

itself, in its narrative description, uses architectural
diagrams, with accompanying annotations, to explain the
implementation of its core architecture trade secret.

Even if a

code-based analysis, like the analysis performed by Iconics’
expert Christian Hicks, provides a more precise description of
Iconics’ trade secret, Zatarain’s analysis nevertheless
illuminates aspects of the core architecture trade secret and
how it allegedly differs from BaxEnergy’s core architecture.
Any questions on the comparative weight or credibility of these
two analyses are questions for a jury to resolve.
Iconics also contests Zatarain’s comparison of both
BaxEnergy and Iconics’ software to a generic SCADA framework,
represented in the Daneels study, as a way of determining
whether BaxEnergy used Iconics’ core architecture.

Zatarain

altered the generic Daneels diagram in order to compare the two
products involved in this litigation more easily.

In that

process, he modified not only the placement of components but
also the connections between them.
12

In his deposition, he

explained that this was done where certain connections were not
relevant, or where relevant connections were not portrayed
graphically, for example.

Although Zatarain’s expert report did

not explain the modifications, Iconics fails to identify any
particular modification that lacks grounding.

Because Zatarain

provided some explanation, albeit belatedly, for the
modifications and in the absence of evidence showing how these
modifications make Zatarain’s methodology unreliable, I find
this to be a matter for cross-examination.
Finally, Iconics disputes Zatarain’s analysis regarding the
public disclosure of the core architecture trade secret.

In its

initial motion, Iconics argues that Zatarain fails to explain
sufficiently how a 2008 diagram published by Iconics disclosed
its core architecture trade secret.

Zatarain’s supplemental

report includes further analysis of how the 2008 diagram and
other public Iconics materials from around that time may be
found to disclose the core architecture trade secret as
presented in the narrative description.

Zatarain’s analysis on

this subject may be somewhat conclusory and underdeveloped, but
it has enough grounding and support to be presented to the jury.
Similarly, Iconics’ argument that Zatarain’s supplemental report
does not list the documents that actually disclose the core
architecture trade secret fails.

Zatarain’s supplemental report

identifies the 2008 architectural diagram, the explanatory
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content in the “Genesis 64 Technical Overview,” and the
disclosures found in the commercial offering of BizViz, which
includes BridgeWorkX, ReportWorX, and Mobile HMI modules.
Although he does at times speak broadly about “other public
Iconics material,” there are enough specific references to
ground his opinion and plaintiff remains free to cross-examine
Zatarain about such matters.

See Int'l Adhesive Coating Co.,

Inc. v. Bolton Emerson Int’l., Inc., 851 F.2d 540, 544 (1st Cir.
1988) (“The burden is on opposing counsel through crossexamination to explore and expose any weaknesses in the
underpinnings of the expert's opinion.”).
2.

Data Intake

Iconics argues that Zatarain fundamentally misunderstands
its data intake trade secret and therefore contends that his
testimony would not be helpful to the jury.

Defendants counter

that Iconics has altered its definition of the data intake trade
secret throughout this litigation and that Zatarain’s testimony
responds to these evolving definitions.

Zatarain opines in his

supplemental report that the term “data intake” is not commonly
used in relation to SCADA software and then points out the
similarities between Iconics’ narrative definition of the data
intake trade secret and other common data acquisition methods
and concepts.

Zatarain’s report traces the history of Iconics’

attempts to define its data intake trade secret, compares it to
14

standard practices in the industry, and concludes that Iconics
current definition is a post-hoc attempt to recreate the trade
secret in light of potential public disclosures.

Zatarain does

briefly engage with the narrative description’s definition of
the trade secret, analyzing BaxEnergy source code to conclude
that BaxEnergy at the very least does not employ the data intake
trade secret in the way Iconics has implemented that trade
secret.

Although Zatarain may not reply fully to Iconics’

current definition of its data intake trade secret, his
testimony may be helpful to a jury in light of defendants’
theory of the case.

Zatarain’s data intake testimony will not

be excluded.
3.

Workflow

Relying on Zatarain’s initial report, Iconics argues that
Zatarain improperly concluded that all workflow functions in ESP
were performed by third-party Microsoft software and therefore
did not include the Iconics workflow trade secret.

Iconics

points out that in his deposition testimony Zatarain admitted
that BaxEnergy wrote its own code that “wraps around” the
Microsoft product and manages the same issues of triggering
events that the workflow trade secret involves.

Iconics also

criticizes Zatarain for not citing the BaxEnergy code that uses
the Microsoft product to accomplish similar ends.

In response,

defendants repeat their arguments on the merits of the case,
15

claiming that the ESP technique is different than the Iconics
technique, and contesting the allegedly shifting trade secret
descriptions.

I do not find this an adequate response to

evidence of inaccuracies and gaps in an expert’s methodology.
Because of the differences in the workflow trade secret sections
in Zatarain’s initial report and in his supplemental report, I
read his supplemental report to supplant the earlier report for
this section.

But, for the sake of clarity and completeness, I

will exclude Zatarain’s testimony from his initial report
concerning the use of Microsoft software for workflow functions.
Iconics asserts that Zatarain’s discussion of the workflow
trade secret in the supplemental report is without support,
relying on his shaky responses to plaintiff’s counsel’s
questions during his deposition.

Zatarain repeatedly stated

that parts of BaxEnergy’s source code were “too complicated” for
him to explain and that, at the time of his deposition, he could
no longer “go into the details of the code.”

Zatarain did,

however, attest that he understood the workings of the code well
enough at one time to create diagrams of the workflow trade
secret.

Moreover, he freely admitted that he received

assistance from Massaro and other BaxEnergy employees in order
to learn about how the code functions.

As discussed above,

Zatarain’s deposition statements and his reliance on BaxEnergy
employees may create fertile grounds for cross-examination, but
16

they do not establish that Zatarain is merely “parroting” the
views of BaxEnergy and Massaro.
at 185.

See Thorndike, 266 F. Supp. 2d

I therefore will not exclude Zatarain’s evidence as

crystalized in his supplemental report on the workflow trade
secret.
Iconics also, in its initial motion, argues that Zatarain
conceded at deposition that the workflow trade secret has not
been publicly disclosed and therefore should be excluded from
testifying at trial to the contrary.

Defendants dispute this

reading of Zatarain’s deposition and claim that his report
contains ample evidence showing that the workflow trade secret
was in the public domain.

Such factual disputes fall outside

the proper scope of a Daubert inquiry.

In his supplemental

report, Zatarain analyzes several generic workflow structures to
conclude that the workflow secret has been publicly disclosed.
To the degree Iconics seeks to pursue the contention that
Zatarain’s earlier statements are inconsistent with his final
conclusions, it may do so at trial.
C.

Software Development
Zatarain’s initial report also includes a discussion of the

history of software development at BaxEnergy.

Iconics seeks to

exclude this testimony on the grounds that it merely repeats
information of percipient witnesses, such as Massaro, without
adding any meaningful expertise.
17

Defendants respond that

Zatarain’s historical background information was meant to rebut
Hicks’s report, which includes similar background, and
references a variety of documents and sources outside of the
statements of potential fact witnesses.
addressed in the context of trial.

This issue is best

Defendants will not be

permitted to use Zatarain to introduce factual or historical
background that is not rooted in his direct analysis or
professional expertise, but some background may be needed to
frame his views.

Moreover, certain opinions, as a matter of

order of proof, may be appropriate only after another fact
witness lays a proper foundation on which Zatarain can rely, but
not before.

An individualized inquiry, employed in light of

evidence and opinions as introduced, is preferable here.

I do

not exclude this testimony for now.
D.

Interoperability
Iconics seeks to exclude Zatarain’s testimony from his

initial report concerning the interoperability of Iconics and
BaxEnergy software, in which he opines that the way the two
programs interoperate does not indicate any special possession
or use of Iconics materials in developing ESP.

First, Iconics

criticizes Zatarain for asserting that “documents provided by
Iconics” support his conclusion when his report fails to
identify the documents to which he refers.

Defendants respond

that Zatarain was simply referencing the same materials that
18

Hicks did in his report, without providing new citations.

These

minor oversights in citation, while frustrating to the reader,
do not, by themselves, require this testimony to be excluded.
Zatarain’s failure, however, to explain his conclusions and
methodology beyond blanket assertions in this section leads me
to exclude this testimony.

Iconics points to several instances

of unsubstantiated and conclusory testimony throughout this
section.

For example, in response to testimony from Hicks that

there was an unauthorized interaction between the security
features of the two programs, Zatarain’s expert report states
that “[c]onfiguring the Iconics security features was done at
the request of the Iconics customer who no longer desired to
have separate login procedures for the Bax and Iconics software.
Configuring the Iconics security features in no way involved
proprietary information or access to the software.” [Dkt. No.
457, Ex. 1, ¶ 23.7.3].

I agree that this opinion, and others in

this section, lacks any methodological explanation.

I need not

“admit opinion evidence that is connected to existing data only
by the ipse dixit of the expert,” and will exclude Zatarain’s
testimony concerning interoperability.

General Electric Co. v.

Joiner, 522 U.S. 136, 146 (1997).
E.

Retention of Source Code
Iconics also seeks to exclude Zatarain’s testimony

concerning Massaro’s possession of two Iconics source code files
19

in September 2009, which Iconics claims can be inferred from
Massaro emailing copyright headers to Volpe Industries attorneys
at that time.

Iconics argues that Zatarain’s testimony here

merely repeats the testimony of Massaro without any additional
analysis.

Zatarain opines that Massaro’s explanation of the

presence of these copyright headers is plausible, basing his
opinion both on Massaro’s testimony and on his own
interpretation of third-party files.

As with certain of the

other statements by Zatarain previously discussed, this
testimony teeters on the fine line between permissible reliance
on the statements of another witness and impermissible parroting
of a client’s view.

Compare Int'l Adhesive Coating Co., 851

F.2d at 545 (“Vesey testified that he derived his damage
estimates by reviewing International's business and financial
records and through interviews with company personnel.

We think

it obvious that these are sources of information normally and
reasonably relied upon by accountants.”) with Thorndike, 266 F.
Supp. 2d at 185.

Because Zatarain’s interpretation of third-

party files provides an independent basis for his opinion, I
will not exclude his testimony and will instead allow his
testimony to be tested through cross-examination.
F.

Copyright Issues
Iconics seeks to exclude Zatarain’s testimony related to

copyright issues.

In part, it seeks to do so for reasons
20

related to the discovery dispute over remote access to BaxEnergy
customer servers.

I addressed and resolved these issues in the

June 27, 2016 order granting Iconics’ motion to compel and for
sanctions and, in light of that order, I see no need for
exclusion here.

Iconics also seeks to prevent Zatarain from

testifying on whether the use of webHMI.js was fair use under
copyright law and whether it was “reasonable.”

These arguments

do not go to the substance of Zatarain’s expert report, but only
to the language that he uses.

Rather than categorically exclude

this testimony, which properly channeled could prove useful to
the jury given the likely importance of webHMI.js at trial, I
simply warn that any testimony which offers legal conclusions
along these lines is precluded and will be stricken in forceful
terms if offered in the presence of the jury.
G.

Misrepresentations of Record
Finally, Iconics raises a host of challenges to Zatarain’s

characterization of the record.

Calling these

mischaracterizations does not obscure the fact that they amount
to rival interpretations of relevant issues in this case, such
as the distinctions between Iconics’ asserted trade secrets and
the implementation of those trade secrets, or minor quibbles
over word choice.

They do not establish that Zatarain’s

methodology is unreliable and I will not exclude Zatarain’s
testimony on these grounds.
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H.

Summary
In conclusion, I will preclude Zatarain’s testimony from

his initial report concerning interoperability and the use of
Microsoft software for workflow functions.
efforts to offer legal conclusions.

I will also preclude

The remainder of Zatarain’s

expert testimony need not be excluded.
III. BRADFORD KULLBERG
Bradford Kullberg is a damages expert for defendants.
Kullberg produced his expert report on March 11, 2016 and then
issued a supplemental report in light of the additional
discovery on Iconics’ trade secret claims on August 31, 2016, in
which he made no changes to his initial report.

Iconics moved

to exclude certain areas of his testimony in light of his
initial report and renewed its motion to exclude in light of his
supplemental report.
A.

Reliance on Zatarain
As a damages expert, Kullberg relies substantially on the

technical opinions of defendants’ expert Zatarain.

Iconics

moves that insofar as Zatarain’s testimony is excluded as
unreliable, Kullberg’s testimony should likewise be excluded as
unreliable.

Although it is generally the case that “when an

expert relies on the opinion of another, such reliance goes to
the weight, not to the admissibility of the expert's opinion,”
Ferrara & DiMercurio v. St. Paul Mercury Ins. Co., 240 F.3d 1, 9
22

(1st Cir. 2001), gatekeeper judges “may evaluate the data
offered to support an expert's bottom-line opinions to determine
if that data provides adequate support to mark the expert's
testimony as reliable.”

Ruiz–Troche v. Pepsi Cola of P.R.

Bottling Co., 161 F.3d 77, 81 (1st Cir. 1998).

I have allowed

much of Zatarain’s testimony to be admitted as expert opinion
and I therefore will not exclude Kullberg’s testimony on these
grounds.
Iconics also seeks to exclude portions of Kullberg’s
testimony based on information that was provided by Zatarain but
was not included in Zatarain’s expert report.

Under the Federal

Rules of Evidence, an expert is permitted to “base an opinion on
facts or data in the case that the expert has been made aware of
or personally observed.”

Fed. R. Evid. 703.

Experts may rely

on a wide range of information in constructing their opinions,
including information gleaned from a fellow expert outside of
his or her formal report.

Mass. Mut. Life Ins. Co. v. DB

Structured Products, Inc., No. CIV.A. 11-30039-MGM, 2015 WL
2130060, at *7, *13, *15 (D. Mass. May 7, 2015) (finding an
expert’s testimony reliable even though it was based in part on
“discussions with other experts he knows and with whom he
worked”).

As discussed above, the strength of the factual

underpinning of an expert’s opinion is a matter of weight and
credibility.

Milward, 639 F.3d at 22.
23

I will permit Kullberg

to opine as to damages using assumptions based on information
provided by Zatarain.
B.

Opinions as to Liability
Kullberg is a damages expert, and the parties agree he is

not qualified to opine on technical matters outside his
expertise.

Iconics argues that he strayed into opinions as to

liability at several points throughout his expert report.
review of the record indicates otherwise.

A

In the passages cited

by Iconics, Kullberg mentions the defendants’ liability
arguments for the sole purpose of framing his damage
calculations.

In the first instance, Kullberg writes “I

understand that Mr. Zatarain has evaluated the alleged trade
secrets and concluded that they have been publicly disclosed . .
. .”

The second passage cited begins “Counsel for the

Defendants has also informed me . . . .”

Such fleeting,

introductory remarks do not constitute an opinion on liability
and will not be excluded unless the predicate to which they make
reference is not adequately established to present a jury issue.
C.

Opinions Regarding the OPC Foundation
Iconics seeks to exclude certain opinions concerning

Iconics’ participation in the OPC Foundation, a standard-setting
organization, and its effect on liability or damages.

In their

first motion, defendants claimed that these opinions were
“placeholders” included only temporarily due to pending
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discovery disputes over this very issue.

Kullberg’s

supplemental report, however, makes no changes to these
placeholder opinions, even in light of the additional discovery
on Iconics’ trade secrets.

Kullberg indicated in his deposition

on March 24, 2016 that his opinions related to Iconics’
participation in the OPC Foundation necessarily relied on the
development of certain facts in discovery.

Without a further

discussion linking Iconics’ participation in the OPC Foundation
to his speculative assertions in this section, Kullberg’s
testimony regarding these issues will be excluded.

I have

afforded defendants the opportunity for development of the OPC
Foundation participation issue, but it appears nothing
meaningful has been uncovered.

Consequently, I will exclude

testimony regarding OPC participation.
D.

Opinions as to Legal Issues
Iconics asserts that certain sections of Kullberg’s expert

report improperly offer legal opinions.

First, Kullberg’s

report makes several references to statutory copyright damages
under 17 U.S.C. § 504(c), which are not being sought in this
case.

Because Iconics does not seek these damages, I agree that

reference to them could prove misleading to the jury.

I will

therefore not permit Kullberg to opine as to statutory copyright
damages under § 504(c).

Second, Iconics lays out a smattering

of references to other legal issues throughout Kullberg’s
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report, but, like his so-called opinions on liability discussed
above, these fleeting statements are no more than assumptions,
often with direct citations to “discussions with counsel,” that
introduce Kullberg’s view on damages.

I will not exclude any of

these references again assuming that they merely introduce and
frame his own views or matters within his expertise.
E.

Methodology
Iconics challenges two aspects of Kullberg’s methodology as

unreliable: his apportionment of profits attributable to
infringement of intellectual property and his estimation of
royalty payments in connection with Project Foxtrot.

Put

simply, Kullberg apportions profits from the webHMI.js
infringement by assuming each customer contributed equally to
BaxEnergy’s operating profit and that each line of code
contributes equally to the software’s overall value.

He

apportions trade secret liability by comparing the number of
trade secrets still in the case to the 649 originally claimed by
Iconics.

In response, Iconics argues that some clients, some

lines of code, and some trade secrets are more important and
valuable than others and that it is an unsound methodology to
calculate damages otherwise.

Comput. Assocs. Int’l, Inc. v.

Altai, Inc., 775 F. Supp. 544, 571-72 (E.D.N.Y. 1991) aff’d in
part, vacated in part, 982 F.2d 693 (2d Cir. 1992) (“The
significance or the value of the copied material is not
26

necessarily measured by counting lines of code; their
qualitative value should also be taken into account.”); cf.
Samsung Elec. Co., Ltd., v. Apple Inc., 137 S. Ct. 429, 436
(2016) (under patent law, when evaluating jury award, courts
must identify the infringing “article of manufacture,” which can
include “both a product sold to a consumer and a component of
that product,” and ensure that the damages are limited to the
profits realized from the infringing “article of manufacture”).
The First Circuit has held, however, that a statistical analysis
which fails to take into account important distinctions in what
is being analyzed may still be admissible, for the weakness of
the statistical analysis can be viewed “as a matter of weight
rather than admissibility.”

Currier v. United Techs. Corp., 393

F.3d 246, 252 (1st Cir. 2004).

Kullberg justified his

apportionment methodology and applied it in a defensible and
replicable way.

The merits of that apportionment may be

explored during cross-examination at the appropriate time.4
Kullberg’s opinion concerning royalties that Project
Foxtrot may have owed Iconics is not methodologically flawed.

4

I have invited the parties to make further summary judgment
submission to determine whether apportionable copyright damages
are available on the record before. If I determine that they
are not, of course, I will strike that damage theory and this
aspect of Kullberg’s testimony will be excluded. If I find the
damage theory is viable, I will consider whether additional
discovery, in service of a bifurcated trial proceeding on this
aspect of damages, is necessary.
27

Kullberg opines that because the proportion of Iconics code in
Project Foxtrot would decline over time, as the product was
revised and improved, it would be reasonable for the amount of
royalties it paid to decline as well.

Iconics argues instead

that there is no reason to believe that the same absolute amount
of code would be worth less in royalties over time.

This is an

argument about Kullberg’s conclusions and not his methodology.
It is for the jury to decide.
F.

Opinions Unsupported by Sufficient Facts or Data
Finally, Iconics criticizes parts of Kullberg’s report as

being unsupported by sufficient facts or data to demonstrate
reliability.

These criticisms do not amount to grounds for

exclusion here.

Some of the statements cited by Iconics are

assumptions permissibly borrowed from other experts or from
counsel, such as Kullberg’s assumption, based on his reading of
Zatarain’s report, that Mr. Bax would have been aware of certain
Iconics technologies.

Others are minor, one-off disputes, such

as the proper cost of a license for a rival SCADA software.

If

Iconics continues to dispute these statements, it may raise them
at trial, but for now they are not issues sufficient, as a
matter of Daubert gatekeeping, to cause me to foreclose his
testimony.

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IV. CONCLUSION
For the reasons discussed in greater detail above with
respect to [Dkt. No. 541], I exclude Pappas’s testimony
regarding the “unwitting investor” theory of damages, but will
not exclude any of his other testimony at this time;
With respect to [Dkt. No. 538], I exclude Zatarain’s
testimony regarding interoperability, the use of Microsoft
software for workflow functions, and his own legal conclusions,
but will not exclude any of his other testimony; and
With respect to [Dkt.No. 546], I exclude Kullberg’s
testimony regarding statutory copyright damages and Iconics’
participation in the OPC Foundation, but will not exclude any of
his other testimony.

/s/ Douglas P. Woodlock______
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE

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