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Contour Design, Inc. v. Chance Mold Steel Co., Ltd.

United States District Court, First Circuit

May 14, 2013

Contour Design, Inc.
Chance Mold Steel Co., Ltd. and EKTouch Co., Ltd.


JOSEPH N. LAPLANTE, District Judge.

Following a six-day trial in May 2011, a jury in this court awarded the plaintiff, Contour Design, Inc., $7.7 million in damages. The jury found that the defendants, Chance Mold Steel Co., Ltd., and EKTouch Co., Ltd. (collectively, "Chance") had misappropriated Contour's trade secrets, and that Chance had also breached a non-disclosure agreement with Contour (the "NDA").

This court later doubled this damages award, and also awarded Contour nearly $1.5 million in attorneys' fees, based on the court's finding that Chance's misappropriation was "willful and malicious" under New Hampshire's version of the Uniform Trade Secrets Act, N.H. Rev. Stat. Ann. § 350- B. Contour Design, Inc. v. Chance Mold Steel Co. , 2011 DNH 214, 31-43. In the same order, this court entered a permanent injunction that, among other things, prevented Chance from selling products in breach of the NDA, including a product known as the "ErgoRoller." Id. at 44. The injunction also required Chance to recall any orders for those products that had yet to reach their end-users and to surrender, to Contour, certain information used to design or manufacture those products. Id. at 75-76.

Chance asked this court to stay the injunction pending appeal, but this court denied the request. Contour Design, Inc. v. Chance Mold Steel Co., No. 09-451, 2012 WL 82864 (D.N.H. Jan. 11, 2012). Chance did not appeal this court's denial of its motion to stay, nor, after filing its appeal, did Chance ask the Court of Appeals to enter a stay. Chance also did not ask this court to require Contour to post security for the injunction pending appeal. Instead, Chance says, it complied with the permanent injunction.

Chance appealed aspects of both the jury's damages award and the permanent injunction. Chance did not, however, challenge this court's finding of willful and malicious misappropriation. Chance attempted to challenge the jury's award of damages, as the product of an erroneous jury instruction, but the court of appeals rejected that argument. Contour Design, Inc. v. Chance Mold Steel Co., Ltd. , 693 F.3d 102, 112 (1st Cir. 2012). Chance also appealed the permanent injunction insofar as it applied to the "Ergoroller." This aspect of Chance's appeal succeeded, as the Court of Appeals ruled that this court had erred in finding that Chance's manufacture of the ErgoRoller amounted to a breach of two different provisions of the NDA. Id. at 108-112. So the Court of Appeals reversed the permanent injunction as applied to the ErgoRoller, but otherwise affirmed the injunction, and the jury verdict. Id. at 113. The court remanded the case here "for further proceedings consistent with [its] opinion." Id.

Following remand, more than four months passed without either party asking this court to take any further action. On its own initiative, this court entered an amended judgment for nearly $16.9 million (including the jury's award of damages, doubled, and an award of attorneys' fees, but not including pre- or post-judgment interest). Order of Jan. 7, 2013. In accordance with the decision by the Court of Appeals, this court also modified the permanent injunction so it no longer applied to the ErgoRoller. Id.

Chance responded by filing a "motion to alter judgment and for new trial, " seeking this relief for three stated purposes:

(1) to refigure the damages awarded by the jury, "excluding categories that result from sales and marketing of the ErgoRoller";

(2) "to recover the damages suffered and the benefits conferred upon Contour during the pendency of" the permanent injunction, as well as a temporary restraining order issued at the beginning of the litigation, in January 2010; and

(3) "to address Contour's possession and use of Chance's trade secrets, which Contour obtained as a result" of the permanent injunction's requirement that Chance turn over to Contour the information used to design or make the ErgoRoller.

At this point, however, Chance is simply barred from obtaining this relief, with the possible exception of restitution for the benefit that Chance claims to have conferred by providing its trade secrets to Contour in response to the permanent injunction. But Chance is almost certainly barred from seeking restitution, an equitable remedy, by its own unclean hands in its dealings with Contour-namely, Chance's willful and malicious misappropriation of Contour's trade secrets. Jury's award of damages

First, Chance cannot revise the jury verdict at this stage in the proceedings. The Court of Appeals specifically noted, in fact, that "[w]hile the damages award encompassed Contour's lost sales as a result of the marketing of the ErgoRoller, on appeal Chance makes no challenge to the damages award on this basis." Contour Design , 693 F.3d at 106 n.4. Chance's decision not to mount that challenge then prevents it from doing so now, because "a party ordinarily cannot raise for the first time on remand issues that it could have and should have litigated on the original appeal." United States v. Bryant , 643 F.3d 28, 33 (1st Cir. 2011); see also, e.g., United States v. Bell , 988 F.2d 247, 250 (1st Cir. 1993).[1] Injunction-based damages

Second, as the Court of Appeals has recognized, "a party injured by the erroneous issuance of an injunction has no action for damages in the absence of a bond.'" Int'l Ass'n of Machinists & Aerospace Workers v. E. Airlines, Inc. , 925 F.2d 6, 10 (1st Cir. 1991) (quoting W.R. Grace & Co. v. Local Union 759 , 461 U.S. 757, 770 n.14 (1983)); see also, e.g., 11A Charles Alan Wright et al., Federal Practice & Procedure § 2973, at 463 (2d ed. 1995). As already noted, Chance never asked this court (or the Court of Appeals) to require Contour to post a bond as security for any damages Chance suffered in complying with the injunction, in the event it were overturned on appeal. So Chance cannot recover the "out-of-pocket expenses as well as lost sales and profits, lost customers, and lost market share" it claims to have incurred by complying with the permanent injunction's direction to recall shipments of the ErgoRoller, and to stop manufacturing, marketing, and selling it. See Buddy Sys., Inc. v. Exer-Genie, Inc. , ...

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