Syntel Sterling Best Shores Mauritius Limited v. The Trizetto Group, Inc.

Background

Syntel Sterling Best Shores Mauritius Limited and Syntel, Inc., together called “Syntel,” moved to exclude damages testimony by Thomas Britven under Federal Rules of Evidence 403 and 702 and the Supreme Court’s decision in Daubert v. Merrell Dow Pharmaceuticals, Inc. The motion concerned Britven’s opinions about damages for alleged trade-secret misappropriation, copyright infringement, and breach of contract.

Legal Standard

Rule 702 governs expert testimony. It permits a qualified expert to testify when specialized knowledge would help the jury understand evidence or decide a disputed fact, the testimony rests on sufficient facts or data, the methods are reliable, and the expert reliably applied those methods. The court acts as a gatekeeper by deciding whether expert testimony has a reliable foundation and is relevant. The court also stated that an expert may not give ultimate legal conclusions or opinions about what the law means, because those matters belong to the judge and jury.

Trade-Secret Damages

Syntel argued that avoided development costs were not legally available as damages for trade-secret misappropriation. The court concluded that the federal Defend Trade Secrets Act allows damages for unjust enrichment caused by misappropriation when those damages are not included in calculating the plaintiff’s actual loss. The court found no contrary authority cited by Syntel and held that Britven’s avoided-cost calculation was relevant to the federal claim.

The court noted that New York law does not allow trade-secret damages to be based on an infringer’s avoided development costs. However, it stated that the jury could return an advisory verdict on avoided costs under New York law.

The court rejected Syntel’s other challenges to Britven’s trade-secret calculations, including his reasonable-royalty analysis. Britven tied the development costs to the alleged misappropriations by relying on another expert’s opinion about Syntel’s use of the alleged trade secrets and by relying on facts from the record. The court treated Syntel’s disputes about the extent of the alleged misappropriation as matters for cross-examination and the jury. It said a limiting instruction could address any potential prejudice by telling the jury to consider the opinion only if it found that Syntel misappropriated the alleged trade secrets as assumed in the calculations.

The court also rejected challenges concerning technology decay and Britven’s use of a lump-sum rather than a running royalty. The court found that Britven had provided reasonable explanations for those approaches. Syntel could challenge the calculations through cross-examination, and the jury could decide whether the evidence supported the claimed damages.

Copyright Damages

The court also allowed Britven’s copyright-damages calculations. Syntel argued that Britven had not adequately connected Syntel’s Facets consulting revenues to infringement, had used an avoided-cost analysis for a reasonable royalty, and had assumed that the Data Dictionary and related trade secrets were copyrightable. The court found that these arguments challenged the sufficiency of the evidence rather than the reliability of Britven’s methods. The court said the issues could be tested through cross-examination and resolved by the jury.

Contract-Damages Opinion

The court excluded Britven’s opinion about costs allegedly incurred because of Syntel’s breach of contract. The defendants described this figure as an acknowledgment that TriZetto had determined it suffered $2 million in damages for one aspect of Syntel’s alleged breach, with fact witnesses supporting the figure. The court held that this was not an expert opinion based on scientific, technical, or specialized knowledge and therefore did not satisfy Rule 702.

Disposition

The court ordered that Syntel’s motion in limine No. 1 was granted in part and denied in part. Britven’s testimony was excluded only as to the asserted costs incurred for breach of contract. The Clerk of Court was directed to close the motion at Docket No. 727.