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Morrison & Foerster Wins $36 Million in Trade Secrets Trial
The Recorder
April 22, 2009
A San Jose, Calif., jury hit Luna Innovations for $36 million in damages in a trade secret case Tuesday, handing Hansen Medical and its lawyers at Morrison & Foerster the victory.
MoFo's Arturo Gonzalez had squared off with Wilson Sonsini Goodrich & Rosati's Jamie DiBoise in the three-week trial, culminating in animated closing arguments Thursday.
The jury took 1 1/2 days to come to a verdict. They found that Luna broke an agreement it had to help Hansen develop a robotic catheter and misused trade secrets to land a lucrative contract with a Hansen competitor, Intuitive Surgical Inc., instead.
"It's huge because the winner controls the industry," Gonzalez crowed on Tuesday.
DiBoise warned jurors last week that Luna, a Virginia tech development company with a $20 million market cap, "would cease to exist" if they awarded the damages being sought.
Mountain View, Calif.'s Hansen asked for $39 million at trial, and the jury obliged with $36 million -- $26 million in lost profits, $10 million in unjust enrichment and $95,000 in actual damages. The jury found that Luna had willfully misappropriated trade secrets, so Santa Clara County Superior Court Judge Joseph Huber will decide whether to impose trebled damages, the MoFo lawyers said. The jury found that Luna breached its contract with Hansen in five ways, including breaking a nondisclosure agreement and failing to offer Hansen the first opportunity to negotiate an exclusive license to the technology they were developing together. But the jurors didn't buy a fraud claim brought by Hansen.
"I think we're pretty pleased that the jurors saw the fraud case the same way that we did," said DiBoise. "We are disappointed most importantly on the first opportunity clause."
DiBoise said that he would file post-trial motions that he hopes will take a bite out of the award. If that fails, an appeal is planned, he said. Throughout closing arguments, Gonzalez stuck with simple yet colorful metaphors, comparing Luna to a dishonest spouse. With the five women on the jury voting unanimously for Hansen, Gonzalez speculated that they felt the same way.
"I've always thought that this case smacks of the cheating husband," he said. "That is exactly how I view this case, and I think perhaps women more than men sympathize with that."
Gonzalez also showed some flair with his dress, sporting a tie that featured a wolf howling below a full moon. Gonzalez said on Tuesday that he's had good luck wearing it at trial in the past. But there was also another reason. Gonzalez said that three of the jurors said in voir dire that they were opposed to animal testing, which is used by Hansen. The tie, he said, was to show them that he liked animals, too.
Hansen originally sued Luna in 2007. Luna made counterclaims, but they were all dropped or dismissed.
Gonzalez said the verdict will allow MoFo to seek attorney fees, which will be in the "millions."
Asked Tuesday about his statement about the possible doom of tiny Luna, given the high damage award, DiBoise said only: "Their net assets are 20 million, so you can do the math."
