Medidata Solutions, Inc. v. Veeva Systems Inc.

Background

Medidata moved to exclude portions of the rebuttal reports of Veeva’s damages expert, Daniel Ingberman. Medidata renewed the same arguments in another motion. Ingberman’s reports responded to Medidata damages expert David Hall’s opinions concerning four remedies: unjust enrichment, disgorgement, lost profits, and hypothetical royalties.

The court had previously excluded evidence of Veeva’s hypothetical future profits from Hall’s unjust-enrichment and reasonable-royalty calculations. Hall later submitted supplemental and corrected reports after a math error, changes in the categories of trade secrets at issue, and new information concerning documents retained by former Medidata employee Anthony Tsai after he left for Veeva. Medidata’s technical expert, Jim Davies, stated that the retained documents contained additional valuable trade secrets. Ingberman’s supplemental report argued that Hall’s damages analysis was unreliable because Hall did not update his calculations in response to Davies’ updated technical analysis.

Legal standard

Federal Rule of Evidence 702 governs expert testimony. Under that rule, the court acts as a gatekeeper by considering whether an expert is qualified, whether the opinion rests on reliable data and methods, and whether the testimony will help the factfinder.

Court’s analysis

Expertise. Medidata argued that Ingberman, an economist, offered technical opinions outside his expertise. The court disagreed. It found that Ingberman’s reports mainly identified non-economic evidence that Hall allegedly failed to consider, including testimony about whether Veeva employees used Medidata’s claimed trade secrets, Veeva’s development timelines, a possible acquisition through Medrio, competition in the clinical-trial software market, and the rapidly declining value of information. The court concluded that these opinions applied Ingberman’s economic experience and did not purport to conduct technical analysis.

Methodology. Medidata argued that Ingberman’s lack of quantitative analysis concerning three of Hall’s four opinions made his reports unreliable. The court held that a rebuttal expert may criticize another expert’s methodology and opinions without offering a competing model or analysis. Ingberman could therefore challenge Hall’s work by identifying qualitative evidence that Hall allegedly overlooked. At trial, however, Ingberman would be limited to the contents of his reports. Those reports included a corrected running-royalty calculation responding to Hall’s fourth opinion but did not include quantitative analyses of Hall’s first three opinions.

Supplemental report. The court also held that Ingberman’s supplemental criticism of Hall’s failure to update his damages estimates fell within Ingberman’s expertise. The court characterized the criticism as an economic argument: Hall should have updated his economic analysis after Davies updated his technical analysis, did not do so, and therefore produced an unreliable analysis. The court rejected Medidata’s argument that these were arguments Veeva should have made earlier, because the supplemental report addressed new analyses and assumptions in Hall’s latest report. The court specifically noted new analyses by former Medidata employees Mike Wendell and Rick Piazza, new head-start periods underlying Hall’s revised opinions, and an exhibit applying previously disclosed methods to Hall’s new assumptions and calculations.

Disposition

The court denied Medidata MIL 1 and Medidata MIL 16. It directed that, at trial, Veeva would be limited to the analyses set forth in Ingberman’s reports. The clerk was directed to close the motions at Docket Nos. 407, 409, and 662.