TOWN & COUNTRY LINEN CORP. and TOWN & COUNTRY HOLDINGS v. INGENIOUS DESIGNS LLC

Background

The case was scheduled for a bench trial on August 1, 2022. The parties’ joint pretrial order was due July 11, 2022. The court had pending requests under Daubert—the rule governing whether expert testimony is admissible—and had heard oral argument on those requests on June 9, 2022.

This order gave the court’s likely views so the parties could prepare for trial. The court said it expected to issue a later opinion stating its rulings more precisely and identifying the testimony that would be excluded.

Likely limits on expert testimony

The court stated that experts for both sides would be precluded from offering opinions that merely described their understanding of the law or repeated the parties’ factual narratives. Because the case would be tried to the judge rather than a jury, the court said that testimony would not be helpful. The court also said it would exclude testimony concerning issues removed from the case by the earlier summary-judgment ruling, including whether the fabric used by the defendants was substantially similar to the plaintiffs’ Luggage Idea (d).

Contract damages

The court was likely to exclude expert testimony supporting the defendants’ breach-of-contract claim based on lost royalties or lost sales from a hypothetical or potential transaction that never occurred. The plaintiffs’ breach-of-contract recovery would therefore be limited to damages that naturally and probably resulted from the unauthorized use and disclosure of the information—described by the court as the information’s decrease in value.

Federal trade-secret damages

For the plaintiffs’ federal trade-secret claim under the Defend Trade Secrets Act, the court said the plaintiffs’ expert could testify about the damages theories identified in the expert’s report. Those theories included actual loss, unjust-enrichment damages, and a reasonable royalty, as allowed by federal law.

The court did not decide before trial the defendants’ arguments that the proposed damages measure failed to divide profits among the three asserted factory trade secrets, only one of which remained in the case, or between the protectable trade secret and other unprotected product features that might have increased the defendants’ profits. The court said those issues could be raised through a renewed request to exclude the testimony during trial.

New York claims

For the plaintiffs’ New York common-law claims for trade-secret misappropriation and idea misappropriation, the court said it would receive expert testimony based on calculating damages from the defendants’ profits only to the extent those profits reasonably approximated the plaintiffs’ losses.

The court would not receive damages opinions based on unjust enrichment for the alleged misappropriation of Factory Trade Secret 2 under New York common law. It found that theory did not fit the facts of the case and was not admissible under Federal Rule of Evidence 702. The expert could testify that a reasonable royalty was available as a damages measure for the plaintiffs’ idea-misappropriation claim.

Patent claim and disposition

For the plaintiffs’ patent-infringement claim, the court said the plaintiffs’ expert would not be permitted to testify about damages based on lost profits.

Judge Lewis J. Liman’s order outlined likely evidentiary rulings rather than setting out the court’s final, more detailed opinion on the pending requests. The order addressed expert-testimony limits for the upcoming bench trial.