Judge vacates $6.5M trade secrets verdict, awards new trial.

Byline: Barry Bridges

In the latest installment of "thunderous litigation" involving alleged misappropriations of trade secrets, a federal judge has overturned a $6.5 million jury verdict that he deemed to be unsupported by the evidence presented during the three-week trial.

Even though the jury determined that defendants Alcor Scientific and one of its employees had violated Rhode Island law by willfully misappropriating two of plaintiff Alifax Holding SpA's trade secrets, and notwithstanding its corresponding award of damages for unjust enrichment, U.S. District Court Chief Judge William E. Smith, in ruling on post-trial motions, decided that the defendants should be entitled to a new trial on both the issues of liability and damages.

"Important policies discourage overturning a jury's verdict, and there is no doubt that the jury in this action made a conscientious effort to find the facts and apply the law," Smith wrote. "Nevertheless the court is left with a firm and abiding conviction that the verdict finding that the defendants misappropriated Alifax's secret conversion algorithm is contrary to the clear weight of the evidence."

A new trial on damages would be required in any event, Smith continued, as the testimony of Alifax's summary witness exceeded the "strict confines" of Federal Rule of Evidence 1006 by veering into the nature of expert testimony, resulting in unfair prejudice to Alcor.

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CASE: Alifax Holding SpA v. Alcor Scientific Inc., et al., Lawyers Weekly No. 52-101-19 (65 pages)

COURT: U.S. District Court

ISSUE: Was a jury verdict finding defendants liable for misappropriation of a plaintiff's trade secrets, and its corresponding damages award of $6.5 million, supported by the evidence presented at trial?

DECISION: No[/box]

He concluded that allowing the damages award to stand would constitute a miscarriage of justice.

Attorneys for plaintiff Alifax Holding Pierce Atwood's Michael J. Daly and Christopher H. Little, of Providence declined to comment on the ongoing litigation.

Trying the case for defendant Alcor Scientific were Providence attorneys Christine K. Bush and Craig M. Scott, and Boston's Laurel M. Gilbert, all of Hinckley Allen.

"Litigation like this is expensive and distracting, and Judge Smith's decision is very meaningful for our client, which is a second-generation family business with deep roots in Rhode Island and very well regarded in the industry," Scott...