Proofpoint, Inc. v. Vade Secure, Incorporated

Background

Proofpoint, Inc. and Cloudmark LLC moved to exclude testimony from five defense experts: James Pooley, Anthony Ferrante, Christopher Bakewell, Dr. Paul Clark, and Dr. Aaron Striegel. The motion concerned expert testimony relevant to plaintiffs’ claims, including a claim under the Defend Trade Secrets Act. The court analyzed each expert and each challenged opinion under Federal Rule of Evidence 702, which governs when expert testimony is admissible, and the reliability principles associated with Daubert.

James Pooley

Pooley was retained to address whether plaintiffs took reasonable measures to protect their alleged trade secrets. Plaintiffs argued that, because Pooley is an attorney, he would improperly offer legal opinions. The court found that Pooley also had experience designing and managing trade-secret protection systems and had served as Deputy Director General of the World Intellectual Property Organization, where he was responsible for the secrecy of confidential documents. The court held that he was not unqualified and understood his opinion as addressing whether the evidence showed that plaintiffs took reasonable measures, rather than deciding whether plaintiffs met their burden of proof. The motion to exclude Pooley’s testimony was denied.

Anthony Ferrante

Ferrante was retained to offer cybersecurity opinions about whether plaintiffs took reasonable measures to protect the alleged trade secrets. Plaintiffs argued that Ferrante improperly applied a best-practices standard instead of the Defend Trade Secrets Act’s reasonable-measures standard. The court read Ferrante’s report differently, finding that his opinion that Cloudmark failed to take reasonable measures was not based on an alleged failure to follow best practices and did not equate the two standards. The motion to exclude Ferrante’s testimony was denied.

Christopher Bakewell

Bakewell was retained to analyze remedies and damages if liability were established.

Deductible costs. Plaintiffs challenged Bakewell’s calculation of costs that could be deducted from an unjust-enrichment figure. Bakewell used the percentage of sales attributable to the challenged products to estimate the percentage of costs attributable to those products. The court found that Vade Secure had not shown that this correlation-based method was scientifically valid or would help the factfinder determine an issue in the case. The court therefore issued a protective order precluding defendants from referring to this opinion, including in opening statement, or calling Bakewell to offer it until defendants make a showing that the opinion satisfies Rule 702 and Daubert.

Value of the alleged trade secrets and reasonable royalty. Bakewell also offered an opinion that the alleged trade secrets were worth no more than approximately $600,000, based on hypothetical development costs and, alternatively, the amount Vade Secure paid Zenika to recreate a challenged module. The court rejected plaintiffs’ arguments that Bakewell lacked sufficient information to support his calculations. It found that damages experts commonly rely on information supplied by others, that plaintiffs had deposed the technical experts whose information Bakewell used, and that Bakewell’s alternative Zenika calculation was intended for use only if the jury found that the module was not misappropriated. The motion to exclude Bakewell’s opinions about a reasonable royalty was denied.

Dr. Paul Clark

Dr. Clark offered opinions that information identified by plaintiffs as trade secrets was publicly and generally known and therefore did not derive independent economic value from secrecy. Plaintiffs argued that his report lacked explanation and documentary support. The court found that Clark identified publications and specific pages for each trade secret he discussed. The court said disputes about whether those publications actually disclosed the alleged trade secrets concerned the weight of his opinions, not their admissibility. The court also rejected plaintiffs’ argument that Clark improperly confused trade-secret law with patent-law obviousness. The motion to exclude Clark’s opinions was denied on both grounds.

Dr. Aaron Striegel

Dr. Striegel offered opinions concerning the trade-secret misappropriation and copyright-infringement allegations, including whether information was known and whether misappropriation or infringement occurred. The court rejected plaintiffs’ argument that Striegel’s opinions were conclusory because he relied on discussions with Clark. It found that Striegel adopted opinions that addressed each asserted trade secret and identified publications where the information could be found. The court also found that Striegel explained the basis for the opinion in one challenged paragraph and that his reliance on his knowledge and experience in secure gateways and machine learning could support an expert opinion. The court further found that the other challenged paragraphs included explanations, citations, or descriptions of how the information was used in the field. The motion to exclude Striegel’s challenged opinions was denied.

Disposition

The court’s order granted in part and denied in part plaintiffs’ motion to exclude the five defense experts. The exception was the protective order concerning Bakewell’s opinion about the amount of deductible costs. That opinion could not be presented or referenced unless defendants first made the required showing under Rule 702 and Daubert. The court denied the remaining requests to exclude testimony.