Alifax Holding Spa v. Alcor Scientific Inc. et al
MEMORANDUM AND ORDER granting in part and denying in part 354 MOTION/Defendants' Request for Case Management Order Permitting Alcor to File Motion for Summary Judgment and Set the Limited Scope of any Second Trial; and, denying 306 MOTION for Exceptional Case Determination Under the Patent Act and For Attorney and Expert Fees. Additional briefing due as described. So Ordered by District Judge William E. Smith on 7/16/2021. (Jackson, Ryan)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
ALCOR SCIENTIFIC INC.; and
FRANCESCO A. FRAPPA,
ALIFAX HOLDING SPA,
C.A. No. WES 14-440
MEMORANDUM AND ORDER
WILLIAM E. SMITH, District Judge.
Alifax Holding Spa v. Alcor Sci. Inc., 404 F. Supp. 3d 552, 558
The jury returned a verdict in favor of Alifax,
but the Court granted in part Defendants’ renewed request for
judgment as a matter of law and ruled that retrial was necessary
on the claim that Defendants misappropriated Alifax’s conversion
Id. at 582.
Subsequent attempts at settlement failed
During a conference in February, the Court instructed
Defendants to file a motion addressing, inter alia, their request
to file a renewed summary judgment motion and the scope of the new
The Court also invited the parties to submit supplemental
Determination Under the Patent Act and for Attorney and Expert
Fees (“Alcor’s Motion for Patent Legal Fees”), ECF No. 306.
For the reasons that follow, Defendants’ request to file a
renewed motion for summary judgment is DENIED, Defendants’ request
to limit the scope of the new trial is GRANTED IN PART, and Alcor’s
Motion for Patent Legal Fees is DENIED. The parties are instructed
potential damages on the remaining claim. 1
In a renewed motion for summary judgment, Alcor would argue
that the four conversion constants are not trade secrets because
they can be derived using simple regression analysis.
Request for Case Management Order Permitting Alcor to File Mot.
for Summ. J. and Set the Limited Scope of Any Second Trial (“Defs.’
Mot. for CMO”) 2-5, ECF No. 354.
However, the Court already ruled
on this issue in its post-trial decision:
The jury’s finding that the conversion algorithm was a
trade secret was reasonably supported by Alifax’s
evidence. . . . Converting the optical data into a
sedimentation rate (“ESR”)] value is a critical step in
the process. . . . Duic testified that there were “no
mathematical models in the market” for correlating
optical signal data to Westergren results when Alifax
developed its conversion algorithm. . . . Without a
This decision assumes familiarity with the case.
additional background, the reader is referred to the Court’s posttrial decision on Defendants’ renewed request for judgment as a
matter of law. See Alifax Holding Spa v. Alcor Sci. Inc., 404 F.
Supp. 3d 552 (D.R.I. 2019).
correlation algorithm, Alifax’s instruments could not
generate ESR results.
The algorithm was not publicly
known and not readily accessible to purchasers of Alifax
Alifax, 404 F. Supp. 3d at 567 (citations omitted).
Alcor’s arguments regarding the ease of doing regression analysis
See Defs.’ Mot. for CMO 5.
As stated below,
discovery closed years ago, and no new discovery will be allowed.
economic value in non-Alifax machines.
See id. at 3-4.
“[A]t least one rational interpretation of the evidence
supports the conclusion that Alcor made some use of Alifax’s
This is enough evidence (if barely) to
find that Alifax’s conversion algorithm containing four specific
constants had independent economic value from not being generally
known or readily ascertainable.”
Alifax, 404 F. Supp. 3d at 567-
68 (citing R.I. Gen. Laws § 6-41-1).
Alcor’s last argument for summary judgment is that Alifax did
not take sufficient steps to protect its purported trade secret.
See Defs.’ Mot. for CMO 4-5.
Once more, this contention runs
counter to a specific ruling of the Court:
“[The] evidence was
sufficient to support the jury’s conclusion that Alifax’s took
reasonable efforts under the circumstances to maintain the secrecy
of its conversion algorithm.”
Alifax, 404 F. Supp. 3d at 568.
Thus, Alcor’s request to file a second motion for summary
judgment is, in fact, a motion for reconsideration of the Court’s
As with any interlocutory ruling, that
entry of [final] judgment.”
to . . .
Nieves-Luciano v. Hernandez-Torres,
397 F.3d 1, 4 (1st Cir. 2005) (quoting Geffon v. Micrion Corp.,
249 F.3d 29, 38 (1st Cir. 2001)).
However, for reasons recounted
here and explained in the post-trial decision, reconsideration is
Therefore, Alcor’s request for permission to file
a renewed motion for summary judgment is denied.
SCOPE OF NEW TRIAL
In their Motion, Defendants raise three issues regarding the
scope of the new trial.
Discovery in this case was extensive.
More than four years
elapsed between the filing of the original Complaint and the final
close of discovery.
See Compl., ECF No. 1 (filed Oct. 7, 2014);
Jan. 11, 2019 Mem. & Order 2, ECF No. 212 (granting motion to
compel the production of source code). The Court has issued dozens
of written decisions regarding discovery disputes and substantive
discovery for limited purposes).
At some point, enough is enough,
and that point has long passed.
For reasons of fairness and
See Fusco v. Gen. Motors Corp., 11 F.3d 259, 267 (1st
Cir. 1993) (“[T]he discovery deadline had long since passed and
the district court had no automatic obligation to reopen the
The matter was one for the informed discretion
of the trial judge, and the breadth of that discretion in managing
pre-trial mechanics and discovery is very great.”); Oriental Fin.
Group, Inc. v. Fed. Ins. Co., 483 F. Supp. 2d 161, 167 (D.P.R.
2007) (barring new discovery where “the exclusion of new evidence
would not result in manifest injustice to either party”).
Signal Acquisition Trade Secret
At trial, Alifax sought to prove two software trade secrets,
both of which were contained within the second count of its Second
See Second Am. Compl. ¶¶ 61-70, ECF No. 68.
The first involved the process by which Alifax’s devices gathered
ESR-related raw data through signal acquisition.
algorithm that converted that raw data into Westergren-equivalent
See id.; Alifax, 404 F. Supp. 3d at 567-68.
At the charge
conference, the Court noted that all of the pertinent evidence
“concern[ed] the use of the so-called four constants” in the
conversion algorithm, and therefore ruled that the evidence would
not “support a finding by the jury that source code or software
used in Alifax’s analyzers were misappropriated to acquire the
Charge Conference Tr. 12; see also id.
Defendants now argue that this limitation should also apply
to the new trial, thus barring Alifax from advancing a theory of
misappropriation of a signal acquisition trade secret.
Mot. for CMO 9-10.
In response, Alifax contends that a trial on
solely the conversion algorithm, without a signal acquisition
claim, “would inevitably cause confusion and uncertainty for the
jurors, who would wonder why Alifax was not claiming that all its
software was a trade secret.”
Pl.’s Mem. in Opp’n to Defs.’
Request for Case Management Order (“Pl.’s Opp’n to Defs.’ Mot. for
CMO”) 6, ECF No. 355.
A partial retrial is inappropriate “unless it clearly appears
that the issue to be retried is so distinct and separable from the
others that a trial of it alone may be had without injustice.”
Gasoline Prods. Co. v. Champlin Refining Co., 283 U.S. 494, 500
(1931). Based on its extensive involvement in this case, the Court
concludes that the distinction between signal acquisition and
conversion can be readily grasped by a lay jury.
complexity of this distinction is dwarfed by that of other concepts
involved in Alifax’s theory of liability.
The signal acquisition
claim “ha[s] been properly and conclusively resolved,” and the
remaining issue of the conversion constants is “so distinct and
separable from the [signal acquisition claim] that a trial [on the
conversion constants] alone may be had without injustice.” See
Drumgold v. Callahan, 707 F.3d 28, 46 (1st Cir. 2013) (quoting
Gasoline Prods., 283 U.S. at 500); see also Oriental Fin. Group,
483 F. Supp. 2d at 166 (holding that issue resolved at previous
permit the former to be submitted to a new jury independently from
Gasoline Prods., 283 U.S. at 500)).
Therefore, the scope of Alifax’s claim on retrial will be
limited to the conversion algorithm.
Alifax will not be permitted
to pursue its theory that Defendants misappropriated a signal
acquisition trade secret.
At trial, Alifax sought to introduce expert testimony from
Christopher J. Bokhart on the issue of damages caused by trade
April 30, 2019 Mem. & Order 2, ECF No.
In his expert report, Mr. Bokhart opined that Alifax was
entitled (based on a theory of unjust enrichment) to all of Alcor’s
earned revenue from iSED sales.
Id. at 3-4.
The Court excluded
this theory because it “rest[ed] on an unsound factual basis.”
Id. at 7.
Additionally, Alifax sought to introduce Mr. Bokhart’s
opinion that Alifax was entitled to one year of iSED revenue based
on a “head-start” theory.
Id. at 4.
However, the head-start
theory was dependent on Dr. Bryan Bergeron’s statement that the
software would take at least one month to create from scratch
(which Mr. Bokhart expanded to a one-year head start based on trade
Id. at 10-11.
As the Court noted, Dr. Bergeron
conversion software; rather, he opined that the signal acquisition
software would take a month to produce.
Therefore, the Court
excluded Mr. Bokhart’s head-start testimony as “unreliable and
Id. at 13.
As discussed, no new discovery will be allowed on retrial.
Therefore, the Court’s rulings on Defendants’ Motion to Exclude
the Opinions of Expert Witness Christopher J. Bokhart, ECF No.
230, will apply with full force at the second trial.
Alifax has no evidence that the alleged misappropriation of trade
secrets caused damages.
See Defs.’ Mot. for CMO 10, 13.
does not provide a substantive response. See Pl.’s Opp’n to Defs.’
Mot. for CMO 12-13.
Instead, Alifax argues that the Court did not
solicit briefing on this issue and that the matter should be left
The Court disagrees.
Within one week of
the issuance of this decision, Alifax shall articulate its theory
The Court’s decision to exclude parts of Mr. Bokhart’s
testimony was issued after the liability phase (during which the
signal acquisition claim was tossed out), but before the damages
of damages in a filing of no more than five pages, with citations
to any evidence that supports its theory.
Moreover, if there is
no admissible evidence regarding damages stemming from the alleged
misappropriation of the conversion algorithm, Alifax must explain
Defendants shall file a reply of no more than five pages within
three business days of the filing of Alifax’s brief.
III. PATENT LEGAL FEES
Under 35 U.S.C. § 285, “[t]he court in exceptional [patent]
cases may award reasonable attorney fees to the prevailing party.”
Invoking this provision, Alcor submitted a post-trial request for
the legal fees it incurred defending the patent claims.
Alcor’s Mot. for Patent Legal Fees 1.
The Court denied the Motion
as moot, stating that it could not ascertain which party had
prevailed until after the new trial.
Sept. 5, 2019 Text Order.
However, at the February 25, 2021 conference, the Court invited
the parties to submit supplemental briefing on the fee request.
explained below, Alifax’s patent claims were not exceptional, and
Alcor’s Motion for Patent Legal Fees must therefore be denied on
“[A]n ‘exceptional’ case is simply one that stands out from
others with respect to the substantive strength of a party’s
litigating position (considering both the governing law and the
facts of the case) or the unreasonable manner in which the case
Octane Fitness, LLC v. ICON Health & Fitness,
Inc., 572 U.S. 545, 554 (2014).
“District courts may determine
whether a case is ‘exceptional’ in the case-by-case exercise of
their discretion, considering the totality of the circumstances.”
components of the case) and the need in particular circumstances
to advance considerations of compensation and deterrence.”
(quoting Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 n.19 (1994)).
Absent misrepresentation regarding the evidence, a plaintiff’s
success on summary judgment indicates that its patent claims were
BrainLAB Medizinische Computersysteme GmbH, 603 F.3d 943, 954
(Fed. Cir. 2010), and cases cited.
The party seeking fees must
prove exceptionality by a preponderance of the evidence.
Fitness, 572 U.S at 557-58.
Alcor’s basic argument is that Alifax pulled a bait and switch
regarding its theory of patent infringement.
Patent Legal Fees 15-16.
Alcor’s Mot. for
According to Alcor, Alifax represented
to the Court that it would show literal infringement, all the while
pursuing a theory based on the doctrine of equivalents. 3
Under the doctrine of equivalents, “a product or process
that does not literally infringe upon the express terms of a patent
Furthermore, Alcor contends, Alifax was estopped from pursuing a
doctrine-of-equivalents claim due to its actions during patent
Id. at 3.
However, the Court was well aware of the creativity
inherent in Alifax’s theory. The Court’s summary judgment decision
explains the needle that Alifax was attempting to thread and why
the Court allowed the patent claims to go forward.
summary judgment, the Court had construed the limitations in the
two patents to mean “processing the acquired optical density or
absorbance data to obtain the speed of sedimentation, viscosity,
elasticity and density.”
Mar. 26, 2019 Mem. & Order 10, ECF No.
244 (citation and quotations omitted).
And at summary judgment,
the Court recognized that “the iSED does not measure, record, or
report any measurement for the viscosity, elasticity, or density
However, the Court rejected Alcor’s argument that
suit . . . means obtaining a numerical value for that parameter”
and “that the iSED [therefore] does not ‘obtain’ these parameters.”
claim may nonetheless be found to infringe if there is
‘equivalence’ between the elements of the accused product or
process and the claimed elements of the patented invention.”
Warner-Jenkinson Co. v. Hilton Davis Chem. Co., 520 U.S. 17, 21
(1997) (quoting Graver Tank & Mfg. Co. v. Linde Air Products
Co., 339 U.S. 605, 609 (1950)).
Id. (citations and quotations omitted).
This was because “[n]one
of the asserted claims, as construed by the Court, include the
limitation that the iSED measures, calculates, records, reports,
or obtains a ‘numerical value’ for the parameters of viscosity,
elasticity, and density of blood.”
Id. at 10-11.
But how could the iSED obtain those parameters if it did not
produce a numerical value for them?
The Court accepted (for the
parameters “are a function of data obtained from the [iSED’s]
measurement data the iSED obtains the correlated parameters.”
at 11 (citations and quotations omitted).
Alifax’s theory did not pan out.
At trial, though,
Dr. Bergeron testified, arguably
inconsistently with his previous conclusions, that the iSED did
not obtain viscosity, elasticity, or density, and Alifax decided
to drop the patent claims.
Trial Tr., Vol. 4, at 88:5-18, ECF No.
341; Trial Tr., Vol. 5, at 4-6, ECF No. 342. 4
The parties had trouble agreeing on a method for disposing
of the patent claims, and the Court decided, with the parties’
approval, to reconsider its summary judgment decision and grant
judgment for Defendants on the patent claims. See Trial Tr., Vol.
5, at 76:22-78:7, ECF No. 342. This decision does not cast doubt
on the Court’s original decision to allow the patent claims to
proceed to trial. Rather, the mid-trial reconsideration was based
on Dr. Bergeron’s trial testimony and Alifax’s resulting decision
to abandon those claims. See id.
Alcor thus argues that there was never a legitimate theory of
literal infringement because the iSED did not actually obtain those
parameters; instead, the iSED merely accomplished an equivalent
Alcor’s Mot. for Patent Legal Fees 8, 15.
But this argument
rehashes arguments that were rejected on summary judgment, where
the Court ruled that Dr. Bergeron’s opinion created a genuine issue
of material fact as to whether the iSED literally infringed on the
Moreover, Alcor has not shown that Alifax misrepresented
its evidence to the Court.
Rather, the evidence shifted between
summary judgment and trial.
Thus, through its summary judgment
decision, the Court indicated that the patent claims were “suitable
for resolution at trial.”
Medtronic, 603 F.3d at 954.
Based on its extensive involvement – lasting the better part
of a decade – with this litigation, the Court determines that this
substantive strength of a party’s litigating position (considering
unreasonable manner in which the case was litigated.”
Fitness, 572 U.S. at 554.
Accordingly, the Court withdraws its
previous decision to defer ruling.
See Sept. 5, 2019 Text Order.
Alcor’s Motion for Patent Legal Fees is denied on the merits.
For the reasons contained herein, Defendants’ request to file
a renewed motion for summary judgment is DENIED, Defendants’
request to limit the scope of the new trial is GRANTED IN PART,
and Defendant’s Motion for Patent Legal Fees, ECF No. 306, is
IT IS SO ORDERED.
William E. Smith
Date: July 16, 2021
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