Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Vention Medical Advanced Components, Inc. v. Pappas

Supreme Court of New Hampshire, Merrimack

June 8, 2018

VENTION MEDICAL ADVANCED COMPONENTS, INC. D/B/A ADVANCED POLYMERS, A VENTION MEDICAL COMPANY
v.
NIKOLAOS D. PAPPAS & a.

          Argued: October 25, 2017

          Welts, White & Fontaine, P.C., of Nashua (Jack S. White on the brief), and Cook, Little, Rosenblatt & Manson, PLLC, of Manchester (Arnold Rosenblatt and Kathleen Mahan on the brief, and Mr. Rosenblatt orally), for the plaintiff.

          Devine, Millimet & Branch, Professional Association, of Manchester (Steven E. Grill on the brief and orally), for the defendants.

          LYNN, C.J.

         The defendants, Nikolaos D. Pappas (Pappas) and Ascend Medical, Inc. (Ascend), appeal multiple orders of the Superior Court (McNamara, J.) ruling that they misappropriated trade secrets of the plaintiff, Vention Medical Advanced Components, Inc. d/b/a Advanced Polymers, a Vention Medical Company (Vention), in violation of the New Hampshire Uniform Trade Secrets Act, RSA chapter 350-B (2009) (UTSA). Vention cross-appeals the trial court's denial of its request for attorney's fees. We affirm.

         I

         The pertinent facts follow. Vention is a medical components manufacturer in the medical device industry. Vention makes medical balloons, medical tubing, and heat shrink tubing (HST). Vention's current chief technology officer, Mark Saab, co-founded the company Advanced Polymers in 1989. KRG Capital Management (KRG), a majority shareholder of Vention, acquired Advanced Polymers in 2010 for a substantial purchase price. A KRG officer testified that, at that time, a core consideration of KRG's decision to purchase Advanced Polymers was its belief that the company's "proprietary [HST] capabilities offer high margin component business with significant trade secret protection." (Quotation omitted.) After the acquisition, Advanced Polymers became part of Vention, which conducted a financial analysis and attributed more than a third of the purchase price to the value of Advanced Polymers' unpatented technology.

         Pappas began working at Vention after he graduated from the University of Massachusetts Lowell with a bachelor of science degree in plastics engineering and a master's degree in innovative and technological entrepreneurship. Prior to working at Vention, Pappas had neither specifically studied HST nor had any experience working with HST. In December 2013, after working for Vention for about ten years, Pappas resigned from the company.

         During his employment, Pappas signed an "Employee Invention Assignment and Confidentiality Agreement" (confidentiality agreement). The confidentiality agreement provides:

At all times, both during my employment and after its termination, I will keep and hold all such Proprietary Information in strict confidence and trust, and I will not use or disclose any of such Proprietary Information without the prior written consent of the Company, except as may be necessary to perform my duties as an employee of the Company.

         The confidentiality agreement defined proprietary information to mean "information of a confidential or secret nature, " including but not limited to "Inventions, Intellectual Property Rights, Moral Rights, marketing plans, product plans, business strategies, financial information, forecasts, personnel information and customer lists."

         During his employment, Pappas was exposed to Vention's confidential HST technology and information. He also had knowledge of Vention's business and marketing information and strategies, including the sales volumes for Vention's various products. At the time he resigned, he was serving as the engineering manager of the HST department. At some point before Pappas resigned, he consulted with an attorney about his obligations under the confidentiality agreement.

         Almost immediately after leaving Vention, Pappas established Ascend. In late December 2013 and January 2014, the defendants began working with a website developer, communicated with one equipment vendor, and provided an initial machine design to a second equipment vendor. This design included extensive detail and critical specifications of the equipment they wanted built. By August 2014, the defendants began actively marketing HST. After the defendants launched their HST line, Vention requested information about the products. The defendants sent Vention samples of their HST in August and September 2014.

         Vention petitioned the trial court for injunctive and other relief under the UTSA in October 2014. On November 4, 2014, counsel for the defendants filed appearances, in which they requested a jury trial. On November 14, 2014, the defendants filed an answer, but they did not request a jury trial in the answer. See Super. Ct. Civ. R. 9(c) (requiring a defendant to request a jury trial in his or her answer to preserve the right to a jury trial). The defendants included several paragraphs in their answer under the heading "counterclaims."

         Subsequently, on January 7, 2015, the defendants filed a motion to amend their answer. In the motion, the defendants asserted that the original answer "contains a single counterclaim for unfair business practices, based on the New Hampshire Consumer Protection Act, RSA [chapter] 358-A." The defendants further asserted that they "wish to amend the counterclaim by adding allegations of additional conduct which they believe support the unfair trade practices counterclaim" and that "because some of the conduct alleged, if proven, would amount to defamation, they also wish to add a cause of action for defamation." The defendants also sought to "add a jury demand to the pleading."

         After a four-day hearing conducted between November and December, the trial court granted a preliminary injunction in January 2015 that, among other relief, enjoined the defendants from "directly or indirectly designing, manufacturing, producing and/or selling" certain HST products. In February 2016, the trial court issued another order, ruling that the defendants had waived their right to a jury trial by failing to assert it in their answer and ordered that the case proceed by bench trial.

         During discovery, Vention filed a trade secret disclosure and an amended "Trade Secret/Confidential Information Disclosure" with the trial court. Sometime thereafter, Vention moved to compel responses to certain interrogatories and production requests from the defendants. The defendants objected, arguing that they should not be required to provide discovery until Vention produced an adequate description of its trade secrets, and they moved to compel an adequate trade secret designation and responses to interrogatories that would require Vention to specify its trade secrets. The trial court denied the defendants' motion to compel and granted Vention's motion to compel, ruling that Vention had adequately disclosed its trade secrets.

         The trial court held an eight-day bench trial in June 2016. During the trial, Vention presented expert testimony from Dr. Chris Rauwendaal, who had worked for 43 years in plastics extrusion. Rauwendaal testified that the technology Vention used to create HST was proprietary, as were a number of features in Vention's process for making HST. Rauwendaal testified that these features were all trade secrets, and that the defendants' process for making HST utilized all of these features. Rauwendaal further testified that Vention's process for making HST was distinguishable from several other industry and competitor processes. Additionally, Rauwendaal reviewed the defendants' design and experimentation records and concluded that they could not have duplicated Vention's technology without copying it, based upon the timeframe in question and the lack of documentation of experimentation.

         Vention also presented expert testimony from Dr. Amad Tayebi, a retired professor in mechanical and plastics engineering. Tayebi testified regarding a certain part of Vention's equipment, which he concluded was a trade secret. He testified that he had never seen a design like that used by Vention, and he identified four specific component features of the part. He testified that Vention designed and fabricated each of these components and that the components were not available on the open market. Tayebi compared Vention's part to a part that the defendant used, and he opined that the two parts were "substantially identical." Tayebi distinguished Vention's part from those used by three other companies. Additionally, Tayebi reviewed the defendants' design and experimentation records and concluded that the defendants could not have duplicated Vention's part without copying it, based upon the timeframe in question and the lack of documentation of experimentation.

         In September 2016, the trial court issued an order ruling that the defendants had misappropriated Vention's trade secret technology for producing certain HST. The trial court further ruled that Vention was entitled to equitable relief on its breach of contract claim, but it denied Vention's request for attorney's fees. The trial court ruled that the defendants were not entitled to judgment on their counterclaims for violation of RSA chapter 358-A and business disparagement.

         The trial court issued five injunctions against the defendants:

1. The Defendants are hereby permanently enjoined and restrained from directly or indirectly disclosing or utilizing in any way any confidential or proprietary information, trade secrets, designs, inventions, intellectual property, and moral rights or processes of the Plaintiff.
2. The Defendants are hereby permanently enjoined and restrained from directly or indirectly designing, manufacturing, producing, selling, or consulting on polyester heat shrink tubing with a [specified] wall thickness . . .;
3. The Defendants are hereby enjoined and restrained for ten years from directly or indirectly designing, manufacturing, producing, selling, or consulting on heat shrink tubing made with materials other than polyester with a [specified] wall thickness. . .;
4. The Defendants are hereby permanently enjoined from directly or indirectly designing, manufacturing, producing, selling, or consulting on [the part that Tayebi testified was trade secret] or . . . [a] substantially similar [part] . . .;
5. The Defendants are ordered to destroy all their equipment, designs, and testing within 30 days of this Court's order and provide certification of such destruction . . . .

(Footnote omitted.)

         Vention filed a motion for reconsideration of the trial court's denial of its request for attorney's fees, which the trial court denied. The defendants did not file a motion for reconsideration. This appeal followed.

         On appeal, the defendants argue that: (1) the trial court erred in denying the defendants' request for a jury trial; (2) the trial court erred as a matter of law in failing to require Vention to specify its trade secrets prior to discovery; (3) the trial court erroneously shifted Vention's burden of proof at trial to the defendants; (4) the trial court's finding that the defendants did not misappropriate certain specified Vention technology was fatal to Vention's case; (5) certain admissions of Vention's trial witnesses were fatal to Vention's case; and (6) the trial court's injunctions were not supported by specific findings, were overbroad, and were not tailored to remedy the alleged harm. We will address each argument in turn.

         II

         The defendants argue that the trial court erred in denying their request for a jury trial. The right to a jury trial is guaranteed by the New Hampshire Constitution. See N.H. CONST. pt. I, art. 20. "To preserve the right to a jury trial, a defendant entitled to a trial by jury must indicate his or her request for a jury trial upon the first page of the Answer at the time of filing." Super. Ct. Civ. R. 9(c). "Failure to request a jury trial in accordance with this rule shall constitute a waiver by the defendant thereof." Id. "The trial court has broad discretion in determining whether to waive its rules, and we will not reverse its decision absent an unsustainable exercise of discretion." Anna H. Cardone Revocable Trust v. Cardone, 160 N.H. 521, 525 (2010).

         The defendants acknowledge that they did not comply with Rule 9(c) by asserting their right to a jury trial in the answer that they filed in November 2014. However, they argue that the trial court had the discretion to waive the application of Rule 9(c). See Super. Ct. Civ. R. 1(d) ("As good cause appears and as justice may require, the court may waive the application of any rule."). The defendants argue that the trial court unsustainably exercised its discretion by denying their request because they indicated at the beginning of the case, albeit in improper form, that they wanted a jury trial, and the case was still at a very early stage when they recognized the error and requested to cure it. They further argue that "Vention did not demonstrate that any prejudice or harm would result from granting the request [for] a jury trial." According to the defendants, "these facts simply cannot be construed as an intentional waiver of the right to a jury."

         The defendants failed to demand a jury trial in their answer. Rule 9(c) is clear that such a failure constitutes a waiver of the right to a jury trial. The trial court considered and ultimately denied the defendants' request that it allow for a late assertion of a jury trial. In making its ruling, the trial court reasoned that the trial would involve "many confidential documents" and that "the difficulties in ensuring that the jury be given access to relevant documents but that those documents do not fall into the public domain will undoubtedly lengthen the trial." See Super. Ct. Civ. R. 1(b) ("The rules shall be . . . administered to secure the just, speedy, and cost-effective determination of every action.").

         Considering all the circumstances, as well as the defendants' request to deviate from the clear terms of Rule 9(c), we cannot say that the trial court committed an unsustainable exercise of discretion when it decided not to grant relief from the rule under these circumstances.

         The defendants alternatively argue that, even if they did waive their right to a jury in their original answer, they did not waive their right to a jury for the "entirely new claim for defamation" that they included in their amended answer. The defendants contend that, because they were entitled to a jury on this counterclaim, it was an ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.