Texas Advanced Optoelectronic Solutions, Inc. v. Intersil Corporation

Filing 737

MEMORANDUM OPINION AND ORDER. It is ORDERED that Renesas Electronics America, Inc.'s Motion to Exclude Trial Testimony of Plaintiff's Technical Expert Joseph McAlexander (Dkt. # 712 ) is hereby GRANTED in part and DENIED in part. Signed by District Judge Amos L. Mazzant, III on 2/26/2021. (mcg)

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

AMS SENSORS USA INC. f/k/a
TEXAS ADVANCED OPTOELECTRONIC
SOLUTIONS, INC.
v.
RENESAS ELECTRONICS AMERICA
INC. f/k/a INTERSIL CORPORATION

§
§
§ Civil Action No. 4:08-cv-00451
§ Judge Mazzant
§
§
§
§

MEMORANDUM OPINION AND ORDER
Pending before the Court is Renesas Electronics America, Inc.’s Motion to Exclude Trial
Testimony of Plaintiff’s Technical Expert Joseph McAlexander (Dkt. #712). Having considered
the Motion and the relevant briefing, the Court finds the Motion should be GRANTED in part
and DENIED in part.
BACKGROUND
I.

The First Trial
The parties develop and sell ambient light sensors, which are used in electronic devices to

adjust screen brightness in response to incident light.
In the summer of 2004, the parties confidentially shared technical and financial information
during negotiations for a potential acquisition. 1 In August 2004, the parties went their separate
ways.

Soon after, Defendant Renesas Electronics America Inc. f/k/a Intersil Corporation

(“Renesas” f/k/a “Intersil”) released new sensors with the technical design Plaintiff AMS Sensors
USA Inc. f/k/a Texas Advanced Optoelectronic Solutions, Inc. (“AMS” f/k/a “TAOS”) disclosed
in the confidential negotiations. In January 2005, Plaintiff won a contract from Apple for the first1

For simplicity’s sake, the Court refers to the parties as “Plaintiff” and “Defendant.” When quoting briefing or prior
rulings, the Court does not alter the quotations. As such, some quotations may refer to the parties by their current
names or former names, and sometimes a mix of both.

generation iPhone. In February 2005, Plaintiff released its product that contained the confidential
technology. In January 2006, Defendant reverse-engineered that product. In March 2008,
Defendant won a contract from Apple for the second-generation iPhone.
On November 25, 2008, Plaintiff sued for patent infringement, breach of contract, trade
secret misappropriation, and tortious interference with prospective business relations (Dkt. #1).
The trade secret claim asserted one technical trade secret and two financial trade secrets.
After a trial in early 2015, a jury returned a verdict for Plaintiff and awarded damages on
all four claims. The Court ruled on the parties’ post-trial motions and entered final judgment.
Both parties appealed.
II.

The Federal Circuit Mandate
The Federal Circuit wrote a lengthy opinion, affirming in part, reversing in part, vacating

in part, and remanding the case (Dkt. #614). Among its rulings, the Federal Circuit affirmed
liability for trade secret misrepresentation, but only on the theory of a technical trade secret. It
identified the single “asserted trade secret” (“ATS”) as “a structure that includes both a 1:1 ratio
of shielded to unshielded wells and interleaving of the wells in that ratio, i.e., repetition of the 1:1
ratio in an alternating pattern (requiring more than one set of wells).”

Tex. Advanced

Optoelectronic Sols., Inc. v. Renesas Elecs. Am., Inc., 895 F.3d 1304, 1313 (Fed. Cir. 2018)
(hereinafter “TAOS”) (emphasis original). Liability for the two financial trade secrets was vacated.
The misappropriation damages were overturned for two independent reasons: (1)
Plaintiff’s expert “did not explain which of the trade secrets contributed to what amount of profit
to be disgorged” and (2) the ATS “was accessible to Intersil by proper means long before the time
of many of the sales included in TAOS’s request for monetary relief.” Id. at 1317. The Federal
Circuit further explained the second reason:

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Such accessibility existed no later than January 2006, when Intersil successfully reverseengineered the TSL2560, and perhaps as early as February 2005, when TAOS ‘released’
the TSL2560. . .
. . . Secrecy protection terminated at the end of the period of time it would have taken
Intersil, after Intersil’s permissible discovery of the photodiode structure, to recreate that
structure in its own products. . . .
. . . That limited head-start period, which ‘depend[s] upon the facts of each case,’ ends
TAOS’s entitlement to monetary relief.
Here, the jury awarded disgorgement of profits in the exact amount TAOS’s expert
proposed, based on sales from April 2006 through March 2014. . . . TAOS’s evidence
supporting its claim to monetary relief for trade secret misappropriation did not limit the
covered sales to a head-start period, and that omission cannot be deemed harmless.
Id. at 1317-18. The Federal Circuit concluded: “On remand, any determination of sales-based
monetary relief for trade secret misappropriation requires evidence and a determination of the time
at which the trade secret became properly accessible to Intersil and the duration of any head-start
period.” Id. at 1318.
The Federal Circuit discussed additional errors with Plaintiff’s disgorgement award. In
trade secret cases, plaintiffs sometimes use the defendants’ gains as evidence of the plaintiffs’
losses, or of the reasonable royalty. But here, Plaintiff sought disgorgement of Defendant’s profits
without “any evidence or arguments that such profits soundly measured . . . TAOS’s losses or a
reasonable royalty.” Id. at 1320. Defendant’s profits were therefore not “a case-specific proxy
for, TAOS’s losses or a reasonable royalty.” Id. There was “no evidence” that Defendant’s profits
from misappropriating Plaintiff’s trade secret correlated with Plaintiff’s losses. Id. at 1321. “For
example, . . . TAOS has not identified evidence showing that it would have won the [Apple]
contract had Intersil not used TAOS’s photodiode array structure.” Id.

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III.

On Remand
On remand, the parties dispute damages. On August 9, 2019, Judge Schell 2 transferred this

case to the undersigned (Dkt. #662).
On November 25, 2019, Plaintiff moved for Entry of Final Judgment (Dkt. #672). The
Court denied the motion on March 27, 2020 (Dkt. #682). Relevantly, the Court concluded
Plaintiff’s tortious interference claim was eliminated on appeal (Dkt. #682 at p. 22). The Federal
Circuit found no causation between Defendant’s trade secret misappropriation and its subsequent
iPhone contract (Dkt. #682 at p. 22, n.11). This Court was unequivocal:
In light of the Federal Circuit’s discussion . . ., there is no evidence to support any link
between these underlying acts and Apple’s decision to purchase Renesas’s ambient light
sensors for the iPhone 3G in 2008.
...
Renesas’s other two arguments can be boiled down to once concept: Renesas did not win
the Apple iPhone 3G contract using any misappropriated information or by using TAOS’s
patent subject matter; rather, as the Federal Circuit summarized the evidence at trial,
Renesas won the contract “primarily” due to Renesas’s “significantly lower bid price, made
possible by using the (lower cost) plastic packaging.” . . . The Court must agree.
...
Although the Federal Circuit’s discussion was not directed at TAOS’s tortious interference
claim, the Court struggles to see how it is not the law of the case. [citations omitted]. And
as the law of the case, the Court may not reexamine the Federal Circuit’s determination
that Apple’s decision to award Renesas the iPhone 3G was driven by Renesas’s use of lowprice plastic packaging.
(Dkt. #682, pp. 22, 24-25). The Court noted the Federal Circuit determined “that TAOS’s only
misappropriated trade secret was properly accessible to Renesas no later than January 2006.” (Dkt.
#682 at p. 26). This “precludes TAOS from claiming that any misappropriated information
interfered with any reasonably probable Apple business—Renesas did not even start contracting
with Apple until after TAOS’s [ATS] lost trade-secret status.” (Dkt. #682 at pp. 26-27).

2

United States Senior District Judge Richard Schell assumed senior status on March 10, 2015.

4

Plaintiff moved for reconsideration (Dkt. #686).

The Court denied the motion and

reiterated it was bound by the law of the case as determined by the Federal Circuit (Dkt. #696).
IV.

The Present Motion
As trial approaches, the parties filed various expert motions. These motions focus on how

to interpret and apply the Federal Circuit’s opinion. On December 1, 2020, Defendant moved to
Exclude Trial Testimony of Plaintiff’s Technical Expert Joseph McAlexander (“Mr.
McAlexander”) (Dkt. #712). On December 15, 2020, Plaintiff responded (Dkt. #717). On
December 22, 2020, Defendant replied (Dkt. #719).
LEGAL STANDARD
Federal Rule of Evidence 702 provides for the admission of expert testimony that assists
the trier of fact to understand the evidence or to determine a fact in issue. FED. R. EVID. 702. In
Daubert v. Merrell Dow Pharmaceuticals, Inc., the Supreme Court instructed courts to function
as gatekeepers, and determine whether expert testimony should be presented to the jury. 509 U.S.
579, 590-93 (1993). Courts act as gatekeepers of expert testimony “to make certain that an expert,
whether basing testimony upon professional studies or personal experience, employs in the
courtroom the same level of intellectual rigor that characterizes the practice of an expert in the
relevant field.” Kuhmo Tire Co. Ltd. v. Carmichael, 526 U.S. 137, 152 (1999). “This gate-keeping
obligation applies to all types of expert testimony, not just scientific testimony.” Pipitone v.
Biomatrix, Inc., 288 F.3d 239, 244 (5th Cir. 2002) (citing Kuhmo, 526 U.S. at 147).
The party offering the expert’s testimony has the burden to prove by a preponderance of
the evidence that: (1) the expert is qualified; (2) the testimony is relevant to an issue in the case;
and (3) the testimony is reliable. Daubert, 509 U.S. at 590-91. A proffered expert witness is

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qualified to testify by virtue of his or her “knowledge, skill, experience, training, or education.”
FED. R. EVID. 702.
In deciding reliability, the Court considers numerous factors. See Daubert, 509 U.S. at
594. In Daubert, the Supreme Court offered the following, non-exclusive list of factors that courts
may use when evaluating the reliability of expert testimony: (1) whether the expert’s theory or
technique can be or has been tested; (2) whether the theory or technique has been subjected to peer
review and publication; (3) the known or potential rate of error of the challenged method; and (4)
whether the theory or technique is generally accepted in the relevant scientific community. Id. at
593-94; Pipitone, 288 F.3d at 244. When evaluating Daubert challenges, courts focus “on [the
experts’] principles and methodology, not on the conclusions that [the experts] generate.”
Daubert, 509 U.S. at 594.
The Daubert factors are not “a definitive checklist or test.” Daubert, 509 U.S. at 593. As
the Court has emphasized, the Daubert framework is “a flexible one.” Id. at 594. The test for
determining reliability can adapt to the particular circumstances underlying the testimony at issue.
Kuhmo, 526 U.S. at 151. Accordingly, the decision to allow or exclude experts from testifying
under Daubert is committed to the sound discretion of the district court. St. Martin v. Mobil
Exploration & Producing U.S., Inc., 224 F.3d 402, 405 (5th Cir. 2000).
Rule 403 dictates that a court “may exclude relevant evidence if its probative value is
substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing
the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative
evidence.” FED. R. EVID. 403. Furthermore, the Fifth Circuit has consistently held that an expert
may not render conclusions of law. See Snap-Drape, Inc. v. C.I.R., 98 F.3d 194, 198 (5th Cir.
1996); see also Goodman v. Harris Cnty., 571 F.3d 388, 399 (5th Cir. 2009) (“an expert may never

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render conclusions of law.”); Owen v. Kerr-McGee Corp., 698 F.2d 236, 240 (5th Cir. 1983)
(“allowing an expert to give his opinion on legal conclusions to be drawn from the evidence both
invades the court’s province and is irrelevant.”).
ANALYSIS
Defendant asks this Court to exclude testimony from Plaintiff’s technical expert, Mr.
McAlexander. Fundamentally, the parties have different interpretations of the Federal Circuit’s
decision. As this Court has repeated, it is bound by the Federal Circuit’s opinion as it is the law
of the case. See Terrell v. Household Goods Carriers’ Bureau, 494 F.2d 16, 19 (5th Cir. 1974).
Accordingly, the Court carefully reviewed the lengthy trial and appellate records, its two recent
orders, and the parties’ briefing. It now addresses each of the eight disputes.
I.

Mr. McAlexander’s Opinions Regarding Apple
On remand, the central dispute is how Defendant benefitted from Plaintiff’s intellectual

property. A hotly contested issue is Defendant’s contractual relationship with Apple.
Defendant asks this Court to exclude Plaintiff’s technical expert, Mr. McAlexander, from
testifying about his opinions regarding Apple. Mr. McAlexander opines “there is a linkage”
between Defendant’s trade secret misappropriation and Apple’s decision to purchase Defendant’s
product (Dkt. #712, Exhibit 2 at 161:4-8). Defendant argues this contradicts the Federal Circuit’s
finding of no evidentiary linkage (Dkt. #712 at p. 3).
Plaintiff disagrees with this characterization and argues there is no such finding. Plaintiff
argues Mr. McAlexander opines about whether Plaintiff would have profited without the
misappropriation—not whether Defendant profited from the misappropriation (Dkt. #717 at p. 5).
Plaintiff’s argument ignores the Federal Circuit’s unambiguous finding. The Federal
Circuit found “no evidence” that Defendant’s profits from misappropriation correlated with

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Plaintiff’s loss. TAOS, 895 F.3d at 1321. On remand, this Court applied the finding and reiterated
“there is no evidence to support any link between these underlying acts [of misappropriation and
infringement] and Apple’s decision to purchase Renesas’s ambient light sensors for the iPhone 3G
in 2008.” (Dkt. #682 at p. 22).
Contradicting these rulings, Mr. McAlexander opines “there is a linkage” between
misappropriation of the ATS and Apple’s decision to purchase Defendant’s product (Dkt. #712,
Exhibit 2 at 161:4-8). Specifically, he opines that Defendant “would not have won any design-in
or contract to supply the ISL29003 for Apple’s iPhone 3G products had it not misappropriated
TAOS’s Trade Secret.” (Dkt. #712, Exhibit 3 at ¶ 181). These opinions cannot be squared with
the Federal Circuit’s factual finding and this Court’s application of that finding. Because these
opinions cannot be squared, Mr. McAlexander is excluded from testifying to any linkage between
Defendant’s misappropriation and the Apple iPhone 3G contract.
Plaintiff tries to thread the needle by arguing that Mr. McAlexander’s testimony goes to
Defendant’s profits earned from using the ATS—not Plaintiff’s profits lost from Defendant’s
misappropriation. While the Court appreciates the nuance, the Federal Circuit’s factual finding
precludes this argument. The Court is bound by what the Federal Circuit “decided by necessary
implication as well as those decided explicitly.” Terrell, 494 F.2d at 19. As the Court held in its
Order denying Plaintiff’s Motion for Final Judgment (Dkt. #682) and its Order denying Plaintiff’s
Motion for Reconsideration (Dkt. #696): there is no evidence to support any link between these
underlying acts and the iPhone 3G contract. There is no leeway in this finding.
Still, Plaintiff asserts it can recover Defendant’s profits. It relies on a Fifth Circuit case
that discussed trade secret damages. Univ. Computing Co. v. Lykes-Youngstown Corp., 504 F.2d
518 (5th Cir. 1974). There, the Fifth Circuit noted two main approaches to damages: (1) measuring

8

plaintiff’s loss or (2) measuring the value to the defendant. Id. at 535-356. Plaintiff argues Mr.
McAlexander is testifying as to the second approach—the value to the defendant. 3 The crux of
Plaintiff’s argument is that Defendant benefitted from the ATS and that benefit enabled them to
profit with an Apple contract.
Again, this argument ignores the Federal Circuit’s mandate. The Federal Circuit held that
Plaintiff did not establish causation between Plaintiff’s loss and Defendant’s gain. As a specific
example, the Federal Circuit found there was no evidence that Plaintiff would have won the Apple
contract but for the misappropriation. From here, this Court found no connection between the
underlying acts of misappropriation and infringement and the Apple contract. 4
Plaintiff’s argument invokes the related issues surrounding the so-called “derivative”
products that are “derived” from the ATS but do not actually practice the ATS. The parties
separately contest the admissibility of derivative products, which the Court addresses below.
While trade secret law permits, to some extent, damages on derivative products, the Court cannot
evade the Federal Circuit’s factual findings about Defendant’s iPhone 3G contract.
The Court excludes Mr. McAlexander’s testimony to the extent he contradicts prior Court
rulings. For example, he may not opine to a “linkage” between Defendant’s misappropriation and
the iPhone 3G contract. The Court declines to grant Defendant’s broad request of excluding any

3

Mr. McAlexander characterizes this Court’s rulings as bearing on “Apple’s decision to buy a product” whereas he is
opining on “Intersil’s ability to provide a product.” (Dkt. #712, Exhibit 2 at 164:9-17). Similarly, Mr. McAlexander
opines that “Intersil was able to learn from the trade secret, put it into place, and produce what Apple would then
consider to be a viable product for purchase.” (Dkt. #712, Exhibit 2 at 166:6-167:3). Both of these arguments suggest
there is “a linkage” between Defendant’s misappropriation and the Apple iPhone 3G contract.

4

Plaintiff asserts “this Court never suggested that the Intersil products sold to Apple did not use TAOS’s trade secret
or that Intersil could keep the profits from such sales.” (Dkt. #717 at p. 2). This is incorrect. The Court held that
“AMS’s photodiode array structure had already lost its trade secret status by the time Renesas was entering into talks
with Apple. . . When Renesas won the contract, the photodiode technology was not a trade secret.” (Dkt. #696 at p. 89) (emphasis original). Consequently, Defendant’s products sold to Apple for the iPhone 3G did not use the ATS.
These products may have contained the same technology, but by this late date, it was properly accessible and so could
not “use TAOS’s trade secret.”

9

testimony regarding Apple. As Plaintiff notes, the Federal Circuit did not make a similar factual
finding regarding Defendant’s sales to Apple for the iPod (Dkt. #717 at p. 6 n.4). The parties may
move in limine and object to evidence at trial.
II.

Mr. McAlexander’s Opinions Regarding A 17-Month Head-Start Duration and Pre2004 Head-Starts
A crucial issue for misappropriation damages is determining the head-start duration. The

Federal Circuit described the head-start duration as, “the end of the period of time it would have
taken Intersil, after Intersil’s permissible discovery of the [ATS], to recreate that structure in its
own products.” TAOS, 895 F.3d at 1317. In other words, the head-start is the time “which would
have been required for one having no background in the . . . business to launch such an enterprise.”
Id. (quoting Equip. Co. v. C. H. Galloway & Sci. Cages, Inc., 485 S.W.2d 953, 956 (Tex. Civ.
App.—Waco 1972, no writ)). When the Federal Circuit considered this, it held Plaintiff’s damages
expert used sales “from April 2006 through March 2014” which “did not limit the covered sales
to a head-start period” and “that omission cannot be deemed harmless.” Id. at 1318.
On remand, the parties have differing opinions on the head-start duration, including how
to define it. Is it the time necessary to merely incorporate the trade secret into an existing product,
as Defendant argues? Or is it longer, requiring the time “to develop an identical product with
identical clientele,” as Plaintiff argues? (Dkt. #717, p. 8 (citing Halliburton Energy Services, Inc.
v. Axis Techs., LLC, 444 S.W.3d 251, 259 (Tex. App.—Dallas 2014, no pet.))).
Defendant asks this Court to exclude Mr. McAlexander’s testimony on a 17-month headstart because it includes the design time to “create a new product,” and not merely incorporate the
trade secret (Dkt. #712 at pp. 5-6). Specifically, the 17 months includes the time to digitize an
analog device by incorporating multiple, non-secret features, in addition to adding the trade secret.

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These are more steps than necessary to incorporate the ATS. Because of this, Defendant argues
Mr. McAlexander’s testimony should be excluded.
Plaintiff disagrees. It asserts that under Texas law, the head-start period must “correct
more than just the lead time gained through misappropriation.” Halliburton, 444 S.W.3d at 259.
The “additional reasonable period of time . . . to eliminate any commercial advantage” extends
throughout the time “required to develop an identical product with identical clientele.” Id.
Plaintiff asserts this is therefore a factual question for the jury.
The Court turns to the Federal Circuit’s opinion, which defines the head-start duration as
the time “to recreate” the ATS in Defendant’s products. TAOS, 895 F.3d. at 1317. The Federal
Circuit did not assign additional requirements of clientele building, as Plaintiff proposes. Nor does
the Federal Circuit’s language of “recreate” the trade secret require developing an identical
product. The Federal Circuit’s focus is only on incorporating the trade secret into “[Defendant’s]
own products.” Id. The opinion relied on Texas law, which defines the head-start as the time for
someone having “no background” to “launch such an enterprise.” Research Equip. Co., Inc. v. C.
H. Galloway & Sci. Cages, Inc., 485 S.W.2d 953, 956 (Tex. Civ. App.—Waco 1972, no writ).
This language suggests “recreating” is more than physically reproducing the trade secret in a
product because it discusses having an inexperienced person “launching” a similar venture.
On matters of state law, both the Federal Circuit and this Court are bound by Texas
Supreme Court precedent. The Texas Supreme Court defined the head-start duration as “a
marketing advantage or head start as compared to the patentee or any manufacturer or processor
licensed by him after the issuance of the patent.” Hyde Corp. v. Huffines, 158 Tex. 566, 581, 314
S.W.2d 763, 773 (1958). This “marketing advantage” creates an unfair head-start; he who
misappropriates “may not and often does not stand on the basis of economic equality with

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competing manufacturers or the public at large at the date of the public disclosure of the [trade
secret].” Id. at 588. “For this reason relief . . . should not be arbitrarily denied because the trade
secrets . . . have been made public.” Id. at 588-89. It “depend[s] upon the facts of each particular
case” whether relief should be granted beyond the publication date. Id. at 589.
Taken together, the head-start duration is for the factfinder to determine when that
“marketing advantage or head start” was neutralized. The Texas Supreme Court has not required
a more extensive showing, such as requiring “the time to develop an identical product with
identical clientele,” as Plaintiff argues (Dkt. #717, p. 8). Instead, the Court’s language focuses on
a fact-specific inquiry to determine when the defendant “stand[s] on the basis of economic equality
with competing manufacturers or the public at large.” See id. at 588. The Court’s reference to
“competing manufacturers or the public at large” undercuts Plaintiff’s argument that the head-start
is the time for a true novice to launch a comparable company.
Texas precedence comports with the Federal Circuit’s opinion, which recognized that the
“limited head-start period . . . depend[s] upon the facts of each particular case.” TAOS, 895 F.3d
at 1318 (citing Hyde, 158 Tex. at 589). The factfinder must determine the time necessary for
Defendant to “recreate” the ATS in its own product. This may include additional time beyond
strictly implementing the ATS, to account for the unfair “marketing advantage” gained from
misappropriation. Plaintiff argues it would take many months to do so; Defendant argues it would
be a snap. Neither argument is wrong as a matter of law. As such, the motion is denied on this
basis.
III.

Mr. McAlexander’s Opinions on Proper Accessibility
The Federal Circuit remanded for determination of the time that the trade secret became

properly accessible. Id. at 1318. Once the ATS was properly accessible, it was no longer a

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protected secret. Id. Defendant asks this Court to exclude Mr. McAlexander’s testimony because
he purportedly uses the wrong legal standard for whether a trade secret is properly accessible.
Mr. McAlexander explains proper accessibility as: “the public sale of a product
incorporating trade secrets will not terminate secrecy unless it is a simple device widely circulated,
the construction of which is ascertainable at a glance.” (Dkt. #712, Exhibit 2 at 93:9-14). He relies
heavily on this purported standard of “ascertainable at a glance.” (See Dkt. #712, Exhibit 2 at
93:15-19). Mr. McAlexander emphasizes that “[j]ust because it was accessible does not mean it
was ascertainable” (Dkt. #712, Exhibit 2 at 102:19-20). He appears to rely on this to define “proper
accessibility” as “ascertainable at a glance.”
This is not the correct legal standard. The Court finds the Texas Uniform Trade Secrets
Act to be instructive, even if the Act does not govern the case. 5 The Act defines “proper means”
of access as “discovery by independent development, reverse engineering unless prohibited, or any
other means that is not improper means.” TEX. CIV. PRAC. & REM. CODE ANN. § 134A.002(4).
Improper means include theft, bribery, misrepresentation, breach, espionage, and the like. Id. §
134A.002(2).

This is much different than “ascertainable at a glance,” which implies that

something is only accessible if it is obvious.

The Act’s definition includes independent

development and reverse-engineering, both of which require some amount of effort to learn the
trade secret.
The Federal Circuit’s use of “properly accessible” comports with the Act, but not with Mr.
McAlexander. The Federal Circuit found the ATS “was accessible to Intersil by proper means
long before the time of many of the sales included in TAOS’s request for monetary relief. Such

5

The Texas Uniform Trade Secrets Act, which governs claims accruing on or after September 1, 2013, does not apply
here. See Sw. Energy Prod. Co. v. Berry–Helfand, 491 S.W.3d 699, 711 n.7 (Tex. 2016) (citing Tex. Civ. Prac. &
Rem. Code § 134A.001–.008).

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accessibility existed no later than January 2006, when Intersil successfully reverse-engineered the
TSL2560, and perhaps as early as February 2005, when TAOS ‘released’ the TSL2560.” TAOS,
895 F.3d at 1317. In support, the Federal Circuit relies on a Fifth Circuit case applying Texas law.
Id. at 1317 (citing E.I. duPont deNemours & Co. v. Christopher, 431 F.2d 1012, 1015 (5th Cir.
1970)). That case confirms a trade secret is properly accessible “if he discovers [the trade secret]
by his own independent research” or “discovers the process by reverse engineering applied to the
finished product.” E.I. duPont deNemours, 431 F.2d at 1015. This language mirrors the Act’s
concise definition. Neither of these sources reference “ascertainable at a glance.”
Plaintiff relies on K & G Oil for Mr. McAlexander’s use of “ascertainable at a glance,” but
the case is inapposite. K & G Oil Tool & Serv. Co. v. G & G Fishing Tool Serv., 158 Tex. 594,
314 S.W.2d 782 (1958), on reh'g sub nom. K & G Oil Tool & Serv. Co., Inc. v. G & G Fishing
Tool Serv., A-6577, 1958 WL 91271 (Tex. June 4, 1958). There, the Texas Supreme Court
considered trade secret misappropriation of a magnetic fishing tool. The Texas Supreme Court
discussed the product’s novelty and stated it “is no simple device, the construction of which was
ascertainable at a glance.” Id. at 606. It distinguished the complex device from a simpler fishing
tool, which was previously found not to be entitled to secrecy protection. Id. After further
analysis, the Texas Supreme Court concluded the device was entitled to secrecy protection. Id.
This did not create a new standard of “ascertainable at a glance.” The Texas Supreme
Court commented that the magnetic fishing tool was sufficiently complex such that it may have
secrecy protection. See id. If it were a simple device, “the construction of which was ascertainable
at a glance,” then it would not be entitled to any secrecy protection as a matter of law. See id. But,
because it was not ascertainable at a glance, the Texas Supreme Court had to engage in further
analysis to determine if it qualified for protection. See id. For example, if the complex device had

14

been reverse-engineered, it would be properly accessible. This case does not create a per se rule
that something must be “ascertainable at a glance” to be accessible. It would be a misleading to
testify otherwise.
Neither Texas law nor the mandate support Mr. McAlexander’s characterization of proper
accessibility as “ascertainable at a glance.” Mr. McAlexander must apply the correct statement of
the law, as defined by the Federal Circuit’s use of “properly accessible.” To the extent he does
not, his opinions are excluded.
IV.

Mr. McAlexander’s Opinions that Draw a Distinction Between Confidential
Information Separate from the ATS
On remand, the parties dispute damages for trade secret misappropriation and breach of the

Confidentiality Agreement through misuse of confidential information. The parties disagree on
the scope of these claims. Defendant argues the ATS and the confidential information are the
same. Plaintiff argues the confidential information is separate from the ATS and they are not
coextensive.
The Court returns to the law of the case. The crux of Defendant’s argument is that Plaintiff
inappropriately argues theories that did not survive appellate review. The Federal Circuit affirmed
trade secret liability for the ATS, but not for Plaintiff’s two theories of financial trade secrets. 6
TAOS, 895 F.3d at 1312. The Federal Circuit noted there was “overwhelming evidence that Intersil
learned of TAOS’s design during the due diligence and changed its design soon after the
negotiations fell through.” Id. at 1316. The breach of contract claim was not on appeal.
On remand, this Court upheld liability for breach of the Confidentiality Agreement but did
not enter final judgment on the damages (Dkt. #687 at p. 18). Defendant’s breach was supported
under the theory “that Renesas used TAOS’s confidential information to revamp Renesas’s designs

6

The two financial theories were the “build v. buy” theory and the “packaging roadmap” theory.

15

for its ambient light sensor and develop a new line of light sensors to compete with TAOS” (Dkt.
#687 at pp. 20-21). The damages were unsupported because they were based in some part on a
theory of liability that was vacated on appeal (Dkt. #687 at p. 22). Consequently, the parties
dispute damages for trade secret misappropriation and for breach of the Confidentiality Agreement
through inappropriate use of confidential information.
Mr. McAlexander’s report makes references to these separate issues. For example, Mr.
McAlexander’s report states he was retained “to provide opinions related to . . . the competitive
advantage Intersil gained from TAOS’ technical trade secret and confidential information that
were misappropriated by Renesas.” (Dkt. #712 at p. 9). He also states that “by early January 2006,
Intersil already had misappropriated TAOS’ Trade Secret . . . and also had begun using, in August
2004, TAOS’ Confidential information in violation of the Confidentiality Agreement.” (Dkt. #712
at p. 9).
These statements are in line with the mandate because they recognize that Defendant is
liable for both trade secret misappropriation and separately for breach of contract.

Mr.

McAlexander does not conflate the two issues, nor does he opine that the confidential information
is necessarily a trade secret. The breach of contract and trade secret claims are not coextensive.
See Daniels Health Scis., L.L.C. v. Vascular Health Scis., L.L.C., 710 F.3d 579, 582 (5th Cir. 2013)
(looking to the “broad contractual definition of ‘confidential information” for the breach of
contract claim and separately at “the legal definition of a trade secret” for misappropriation). This
Court already recognized there was “overwhelming evidence” to support the jury’s finding that
Defendant “used TAOS’s confidential information to revamp Renesas’s designs for its ambient
light sensor and develop a new line of light sensors to compete with TAOS.” (Dkt. #682 at pp. 1920). This is distinct from the Federal Circuit’s definition of the ATS. See TAOS, 895 F.3d at 1313.

16

And Mr. McAlexander’s opinion on Defendant’s “know how” to implement and maximize the
benefits of the ATS is supported by the trial record (Dkt. #712, Exhibit 2 at 65:24-66:9). As such,
there is no basis to exclude these opinions.
V.

Mr. McAlexander’s Opinions Limiting the ATS to an Ambient Light Sensor or to
Plaintiff’s Implementation of the ATS
The parties dispute the scope of the ATS. Defendant argues Mr. McAlexander goes beyond

the scope of the Federal Circuit’s definition. The Federal Circuit specified, “[t]he asserted trade
secret is a structure that includes both a 1:1 ratio of shielded to unshielded wells and interleaving
of the wells in that ratio, i.e., repetition of the 1:1 ratio in an alternating pattern (requiring more
than one set of wells).” Id. at 1313 (emphasis original).
Mr. McAlexander’s report defines the ATS twice, as shown in the below table.
The Trade Secret in ¶ 73

The Trade Secret in ¶ 76

TAOS’ ‘dual-diode’ approach with an array of
interleaved Diode1 (exposed) and Diode2
(shielded) photodiodes in a 1:1 ratio (i.e.
TAOS’ Trade Secret)

TAOS’ ‘dual-diode’ approach using an array
of interleaved Diode1 (exposed) and Diode2
(shielded) photodiodes in a 1:1 ratio with
Diode2 covered by metal (i.e. TAOS’ Trade
Secret).
(emphasis added)

His second reference in ¶ 76 specifies that the Diode2 is “covered by metal.” He testified that his
second definition is how Plaintiff implemented the trade secret (Dkt. #712, Exhibit 2 at 32:13-19).
Mr. McAlexander acknowledged that the Federal Circuit’s definition does not include this
limitation (Dkt. #712, Exhibit 2 at 32:13-15). The Federal Circuit’s definition controls. If Mr.
McAlexander defines the ATS, he must use the Federal Circuit’s definition. That definition does
not contain the limitation “covered by metal.”
Separately, Mr. McAlexander testified the ATS “is limited to an ambient light sensor.”
(Dkt. #712, Exhibit 2 at 131:12-13). The Federal Circuit’s definition does not contain this
17

limitation either. As such, Mr. McAlexander is precluded from inserting it into the ATS’s
definition.
Plaintiff argues the ATS “has always been defined in the context of an ambient light sensor
(ALS) device.” (Dkt. #717 at p. 13). In support, Plaintiff cites prior filings that reference ambient
light sensors (See Dkt. #1 at ¶ 2 (identifying TAOS’s introduction of the “first digital ambient light
sensor”); Dkt. #505 (referring to “ambient light sensor” nearly 50 times)). This does not address
the mandate. The Federal Circuit made a factual finding of the ATS. The Court is bound by that
finding. See Terrell, 494 F.2d at 19. The Federal Circuit’s definition leaves no room for
interpretation; Mr. McAlexander is precluded from modifying it.
VI.

Mr. McAlexander’s Opinions Regarding Defendant’s Derivative Products
The parties disagree if damages can include products derived from the ATS, but that do

not practice the ATS. Specifically, Mr. McAlexander identifies a group of products that “were
developed based on or derived from” the ATS (Dkt. #712, Exhibit 3 at ¶ 20). Mr. McAlexander
acknowledges these products do not practice the ATS and refers to them as derivative products. 7
Still, Mr. McAlexander opines these derivative products are “based upon knowledge of that trade
secret.” (Dkt. #712, Exhibit 2 at 234:4-15).

Plaintiff’s damages expert relies on Mr.

McAlexander’s statements to include these derivative products in Plaintiff’s damages base.
Defendant argues for a strict interpretation of how a trade secret is “used.” (See Dkt. #712
at pp. 15-16). It points to the Federal Circuit’s opinion, which states that misappropriation occurs
when one “discloses or uses” a trade secret.” Tex. Advanced Optoelectronic Sols., Inc. v. Renesas
Elecs. Am., Inc., 895 F.3d 1304, 1312 (Fed. Cir. 2018) (“One who discloses or uses another’s trade

7

When asked whether these derivative products “fall outside of the ATS,” Mr. McAlexander responded that: “They’re
not in the primary products that actually practice and implement the Federal Circuit’s definition for a trade secret. But
they’re derived based upon knowledge of that trade secret.” (Dkt. #712, Exhibit 2 at 234:4-15).

18

secrets, without a privilege to do so, is liable to the other if . . .”) (quoting Hyde, 314 S.W.2d at
769; Restatement of Torts § 757). Defendant reasons that only products that “actually practice
and implement” the ATS can be part of the damages (Dkt. #712 at p. 16).
Defendant construes “use” of a trade secret too narrowly. The Fifth Circuit adopted the
Third Restatement of Unfair Competition’s broader definition of “use”:
As a general matter, any exploitation of the trade secret that is likely to result in injury to
the trade secret owner or enrichment to the defendant is a “use[.]” . . . Thus, marketing
goods that embody the trade secret, employing the trade secret in manufacturing or
production, relying on the trade secret to assist or accelerate research or development, or
soliciting customers through the use of information that is a trade secret . . . all constitute
“use.”
Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 877 (5th Cir. 2013) (quoting RESTATEMENT
(THIRD) OF UNFAIR COMPETITION § 40(c) (1995)). This is a broad definition that encompasses
derivative products.
The Third Restatement continues, asserting that “use of any substantial portion of the secret
is sufficient to subject the actor to liability. Similarly, the actor need not use the trade secret in its
original form.” RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 40 (1995). Defendant is liable
“for using the trade secret with independently created improvements or modifications if the result
is substantially derived from the trade secret.” Id. If the trade secret’s contribution “is so slight
that [Defendant’s] product or process can be said to derive from other sources of information or
from independent creation,” then the trade secret has not been “used.” Id.
Mr. McAlexander’s testimony comports with this definition. He opines the derivative
products were “derived based upon knowledge of that trade secret.” (Dkt. #712, Exhibit 2 at
234:14-15). “[I]t’s derivative based upon the . . . knowledge that Intersil had of the trade secret
and . . . the design basically was revamped and involved basically a new set and new theory as to
how to develop their products. Some products that were based on that new approach would be
19

derivatives of that.” (Dkt. #712, Exhibit 2 at 239:7-17). The crux of Mr. McAlexander’s opinion
is that Defendant used the ATS to “assist or accelerate research or development.” See Wellogix,
716 F.3d at 877. This is permissible for damages. Defendant may argue that the products are not
derivative at all or derive “so slight[ly]” from the ATS that trade secret is not used at all. See
RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 40 (1995).
VII.

Mr. McAlexander’s Opinions Regarding Any Proportionate Value of the ATS
Defendant asks this Court to preclude Mr. McAlexander from testifying as to “any

proportionate value of the ATS” (Dkt. #712 at p. 13). The entirety of the briefing on this issue is
below:
One of the bases for reversal of the damages award in the prior trial was the failure to
apportion the value of the ATS relative to the other two secrets that the CAFC found
invalid. [citation]. Mr. McAlexander testified that he “did not recall addressing the
proportionate value” [citation] of the trade secret in his Report. Because he did not address
that issue in his Report, as required by Fed. R. Civ. P. 26(a)(2)(b)(i), he has no basis to
testify about it at trial.
(Dkt. #712 at p. 13-14). Plaintiff does not respond, and Defendant does not revisit this argument
in its reply. This is insufficient briefing for the Court to understand the dispute. The Court can
only repeat the truism that experts are bound by the opinions expressed in their reports. FED. R.
CIV. P. 26(a)(2). And just because Mr. McAlexander “did not recall” whether something was in
his report does not mean it was not in his report.
VIII.

Mr. McAlexander’s Testimony as to Any Legal Issues or What the Jury Found
Defendant asks this Court to preclude Mr. McAlexander from testifying “about legal

issues, court rulings, and jury findings or verdicts” (Dkt. #712 at p. 14).
The Court declines to grant a general, blanket exclusion. Experts may testify to their
understanding of the relevant law, provided they do not opine about the meaning of a law. See
Gibson Brands, Inc. v. Armadillio Distribution Enterprises, Inc., 4:19-CV-00358, 2021 WL
20

229463, at *3 (E.D. Tex. Jan. 22, 2021). And at trial, the jury will be routinely reminded that the
Court provides the applicable law. Defendant may raise specific, targeted objections at the PreTrial Conference or at trial.
With that said, the Court addresses Defendant’s targeted objection to Mr. McAlexander’s
testimony. In his report, Mr. McAlexander describes the jury verdict as finding that specific
products misappropriated the ATS:
138. As already confirmed by a jury and the courts . . . the Intersil Primary ALSs
(ISL29001, ISL29002, ISL29003, ISL29004, ISL29010, ISL29012, and ISL29013) each
incorporate and use TAOS’ specific photodiode array structure . . .
(Dkt. #712 at p. 14). But the verdict did not contain a product list. 8 Nor did the Federal Circuit’s
opinion. It would be misleading to testify otherwise. Mr. McAlexander is therefore precluded
from testifying that specific products were found to use the ATS.
CONCLUSION

.

It is therefore ORDERED that Renesas Electronics America, Inc.’s Motion to Exclude
Trial Testimony of Plaintiff’s Technical Expert Joseph McAlexander (Dkt. #712) is hereby
GRANTED in part and DENIED in part.

SIGNED this 26th day of February, 2021.

___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

8

On the verdict, the jury found that the ISL29001, ISL29002, ISL29003, and ISL29004 infringed asserted patent
claims. This is not the same thing as a product list that uses the ATS (Dkt. #511 at p. 5).

21