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25-1278•Harbor Business Compliance Corporation v. Firstbase.io, Inc
25-1278Court of Appeals for the Third CircuitAug 18, 2025
PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______
No. 25-1278
______
HARBOR BUSINESS COMPLIANCE CORPORATION
v.
FIRSTBASE.IO, INC.,
Appellant
______
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 5:23-cv-00802)
District Judge: Honorable Joseph F. Leeson, Junior
______
Argued June 3, 2025
Before: HARDIMAN, BIBAS, and FISHER, Circuit Judges.
(Filed: August 18, 2025)
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David M. Cooper
Quinn Emanuel Urquhart & Sullivan
295 5th Avenue
9th Floor
New York, NY 10016
Matthew T. Gardella
James J. Rodgers
David A. Rodkey
Dilworth Paxson
1650 Market Street
Suite 1200
Philadelphia, PA 19102
Joseph H. Margolies
Quinn Emanuel Urquhart & Sullivan
191 N Wacker Drive
Suite 2700
Chicago, IL 60606
Derek Shaffer [Argued]
Quinn Emanuel Urquhart & Sullivan
1300 I Street NW
Suite 900
Washington, DC 20005
Counsel for Appellant
Matthew P. Faranda-Diedrich [Argued]
David Scott Hollander
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Robert Toland, II
Royer Cooper Cohen Braunfeld
1717 Arch Street
Three Logan Square, 47th Floor
Philadelphia, PA 19103
Counsel for Appellee
______
OPINION OF THE COURT
______
FISHER, Circuit Judge.
Firstbase.io, Inc. and Harbor Business Compliance
Corporation formed a temporary partnership to develop a
software product for Firstbase. After the partnership fell apart
and Firstbase independently took over the product, Harbor
sued Firstbase for breach of contract, trade secret
misappropriation, and unfair competition. A jury found for
Harbor, awarding compensatory damages of approximately $1
million for breach of contract; $11 million for trade secret
misappropriation; $15 million for unfair competition; and
punitive damages of $1 million. Firstbase appeals the District
Court’s denial of several post-trial motions: for judgment as a
matter of law; for a new trial on the grounds that the verdict
was against the weight of the evidence and that expert
testimony was improperly admitted; and for remittitur of the
unfair competition damages. For the reasons below, we will
affirm the denial of Firstbase’s motions for judgment as a
matter of law and a new trial but conditionally remand as to the
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motion for remittitur.
I.
A.
Every state imposes regulations and reporting
requirements on companies operating within it. For example,
companies are required to file incorporation documents and
designate a registered agent who is authorized to receive legal
correspondence on their behalf. Some companies outsource
their regulatory compliance tasks to a business compliance
company. These compliance companies can file the
appropriate documentation with the state authorities and track
changes in compliance requirements on behalf of their clients.
Firstbase and Harbor are business compliance
companies. Firstbase, founded in 2019 and based in New York,
promotes itself as an “all-in-one” online platform that provides
a range of services including incorporation and registered
agent services. App. 95. Harbor, founded in 2012 and based in
Pennsylvania, is a “software-focused provider” of services that
“include . . . corporate formation, registered agent service,
business licensing, and annual reporting.” Id. at 94–95.
Around February 2022, Firstbase contacted Harbor
“seeking a business arrangement through which Harbor . . .
would provide various ‘white-label’ services,” where Harbor’s
“identity and role would not be identified to Firstbase’s
customers and potential customers.” Id. at 95. This was a
significant opportunity for both companies. Firstbase had
already provided incorporation services to over a thousand
companies in Wyoming and Delaware. It wanted to leverage
Harbor’s expertise and platform to quickly expand into
registered agent services across the country. Firstbase could
then refer many of those customers to Harbor. The relationship
would support a new product, “Firstbase Agent,” which was
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ideally set to launch in June 2022. Id. at 96. Firstbase and
Harbor assigned employees to be partnership leads who would
negotiate the structure of the relationship and build the product.
Firstbase initially discussed its ideal workflow with
Harbor. Firstbase wanted customers to first request
incorporation or registered agent services on its website by
filling out an intake form. Firstbase would then send that
information to Harbor. Harbor would then file the information
with the state and transmit approvals and relevant alerts (like
registration deadlines) back to Firstbase for customers to
access. Firstbase drafted this process in a narrative form. To
facilitate the exchange of data between the companies’ online
platforms, Firstbase also wanted to use Harbor’s application
programming interface (API). An API defines how software
components communicate and interact with each other.
Conceptually, it provides a set of commands that one
component can use to access the functionality of another, along
with the specific format those commands must follow. Parth
Sagdeo, Application Programming Interfaces and the
Standardization-Value Appropriation Problem, 32 Harv. J.L.
& Tech. 235, 236 (2018).
Harbor sent Firstbase a document outlining its API for
registered agent services. Firstbase found Harbor’s API to be
inadequate for what it needed, and its engineers believed that
they would need to invest resources in customization. On
March 28, after the document transfer, the companies entered
into a confidentiality agreement limiting the use of confidential
information to the partnership. On March 30, the companies’
teams discussed the proposed workflow and Harbor’s
partnership lead summarized the conversation in a sketch he
called a “process map,” App. 1254, which depicted a high-
level flow of information between the companies. In the
following months, the teams continued to iterate on Firstbase’s
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proposed “workflows” in anticipation of the June launch date.
Id. at 1319–22, 1329.
In May, the parties executed a partnership agreement.
Pursuant to the agreement, for two years, Harbor would file
business-formation documents and provide registered agent
services to Firstbase customers at per-unit rates, in exchange
for either a guaranteed customer volume or equivalent
payment. Harbor also reserved the right to charge for
implementation of services “not included in the Scope of the
Project.” Id. at 1359. Firstbase agreed not to contract with third
parties for “Registered Agent, Business Formation and Change
of Registered Agent Filings, and Annual Reports.” Id. at 1352.
On June 2, Firstbase Agent launched and quickly gained
traction. Within three weeks, Harbor had processed 558
filings—its fastest pace ever. Harbor’s growth continued into
the summer, with record numbers in August and performance
exceeding projections into October.
Despite its early success, the partnership began to fray.
Although the terms of the partnership had been reduced to
writing, Firstbase’s partnership lead believed there was
“confusion about who would do what with regards to the
process that [the parties] agreed [to].” Id. at 190. By August,
the API still “was not fully functional,” according to Firstbase,
and so Firstbase continued to manually enter information into
Harbor’s site. Id. at 191. This led to customer complaints about
service delays and quality issues.
In early September, Harbor sent Firstbase an invoice for
$36,926.50 for “Out-of-Scope Work” completed in August. Id.
at 1269. Firstbase’s CEO wrote to the Harbor team contesting
the invoice and conveying dissatisfaction with Harbor’s
performance. He said that Firstbase would “just build our own
infrastructure” and “legally finish[] this relationship” if things
did not turn around. Id. at 478. Firstbase began considering
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building its own registered agent infrastructure “as a backup
plan,” id. at 472, “in parallel” to its partnership with Harbor,
id. at 463. That month, a Firstbase employee also boasted to a
colleague about convincing Harbor to share a document
summarizing annual filing deadlines for each state, to which
Firstbase’s lead responded, “The more we can get from them
the better, especially if we truly are going to go down the route
of being our own [Registered Agent].” Supp. App. 256.
In October, Firstbase and Harbor discussed amending
the partnership agreement and rates. But those conversations
also deteriorated. Internally, Harbor’s CEO instructed
employees not to offer any concessions.
In November, Harbor sent Firstbase updated API
documentation with new features. But soon after, Firstbase
took control of Firstbase Agent’s infrastructure and started
offering services without Harbor’s support. In an internal
message, a Firstbase employee said that the company’s
“product team built the logic and we no longer need [Harbor’s]
info to send reminders to our customers. We compared to the
data [Harbor] was sending to us and it seems correct.” Id. at
257. On November 11, Firstbase notified Harbor that it
intended to terminate the partnership and offered to settle any
claims. Harbor responded through counsel and refused to
terminate the agreement. It also accused Firstbase of “stealing
the system that Harbor Compliance constructed.” App. 489.
B.
In March 2023, Harbor sued Firstbase in the District
Court asserting state-law claims of unfair competition; breach
of contract; and trade secret misappropriation under
Pennsylvania’s Uniform Trade Secrets Act, 12 Pa. Cons. Stat.
§§ 5301 et seq. It also asserted a federal claim of trade secret
misappropriation under the Defend Trade Secrets Act of 2016
(DTSA), 18 U.S.C. § 1836 et seq. The complaint alleged three
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categories of trade secrets misappropriated: (1) “Workflow
Documents,” App. 596, which were “the specific means
through which the Parties anticipated servicing Firstbase’s . . .
existing users and . . . projected new users,” id. at 595; (2) a
jurisdictional database, which consisted of “compilations of
detailed [state]-specific jurisdictional requirements,” id.; and
(3) “API Documentation,” id. at 603.
The suit proceeded to discovery. Harbor hired Dr.
Ricardo Valerdi, an academic in software development, to
provide expert testimony. In his expert report and deposition,
Dr. Valerdi identified eight trade secrets at issue: (1) the
jurisdictional database and (2) the API documentation, both
identified in the complaint, plus specific workflow documents,
(3) the process map sketch Harbor prepared to summarize a
meeting with Firstbase, and (4)–(7) four specific process
workflows. Dr. Valerdi also pointed to (8) Harbor’s “Entity
Manager Dashboard,” Supp. App. 798, a trade secret not
specifically identified in the complaint.
Additionally, Dr. Valerdi opined that Firstbase had
used, or was using, all eight trade secrets without authorization.
He described Firstbase as “a new entrant into the market” that
“lacked the specialized knowledge possessed by Harbor.” Id.
at 778. Yet during his deposition, Dr. Valerdi confirmed on
cross-examination that he was “taking it as an assumption that
the [alleged trade secrets were], in fact, invented by Harbor.”
App. 750.
A ten-day trial ensued in April 2024. Documents,
presentation slides, and videos of the trade secrets were shown
to the jury. Six of the trade secrets are at issue on appeal.
(1)–(3) Three of the four workflows guiding the
Firstbase Agent product development are at issue. On appeal,
the parties aggregate them into one category. These documents
conceptually outline, in written-bulleted form, the transfer of
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information between Firstbase’s customers, Firstbase’s
website, and Harbor.
(4) The Entity Manager Dashboard is a website
dashboard for Harbor’s customers to view their registered
entities, registration dates, and annual reports in one place. In
the center of the dashboard is an interactive map of the United
States.
(5) The jurisdictional database is a spreadsheet of
corporate filing and registration instructions for all fifty states
and territories. The information in some columns is publicly
available on state agency websites. Id. at 1304 (“filing method”
required by each state). There is a “notes” column in one tab
with tips for filing. For example, there is a note to file online
in one state because it cuts processing time by half.
(6) The API documentation is a word document,
intended for application developers, with instructions for
integrating with Harbor’s API.
Dr. Valerdi provided expert testimony on why each of
the alleged trade secrets was protectable and how Firstbase had
misappropriated them. Firstbase presented computer engineer
Steve Waldbusser as an expert to counter Dr. Valerdi’s
testimony.
When Firstbase learned that Dr. Valerdi would testify
about who owned the trade secrets, it objected, arguing such
testimony was “out of bounds” because Dr. Valerdi had
assumed, based on the complaint, “that all of the trade secret
information belonged to Harbor.” Id. at 201. The District Court
overruled the objection, relying on Federal Rules of Evidence
703 and 705 and explaining that Firstbase could challenge the
basis of Dr. Valerdi’s opinion through cross-examination.
Harbor also called on expert Gregory Urbanchuk to
estimate the damages. He testified that Harbor suffered
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$14,757,399 in damages arising from trade secret
misappropriation and $14,757,399 in damages arising from
unfair competition.
Before the verdict, Firstbase moved for judgment as a
matter of law under Federal Rule of Civil Procedure 50(a)
based on insufficient evidence “as to all claims alleged”—but
Firstbase’s counsel noted that it was arguing only “two items
. . . in detail.” Id. at 266. The first argument concerned the out-
of-scope invoices for the breach-of-contract claim. Id. at 266–
67. The second argument concerned the lack of “direct
evidence of trade-secret misappropriation” or circumstantial
evidence of misappropriation of the trade secrets. Id. at 267.
The District Court denied the motion.
After deliberating, the jury found Firstbase liable to
Harbor, awarding compensatory damages of $1,090,271 for
Firstbase’s breach of the partnership agreement; $11,068,044
for Firstbase’s trade secret misappropriation; and $14,757,399
for Firstbase’s unfair competition. It also awarded $1,000,000
in punitive damages for unfair competition. In special
interrogatories, the jury found that six of the eight alleged trade
secrets were misappropriated. It said that Firstbase had
misappropriated neither the “process map” created by Harbor’s
partnership lead to summarize Firstbase’s ideal workflow nor
a workflow for changing registered agents in Delaware or
Wyoming for entities that had incorporated with Firstbase.
Firstbase filed several post-trial motions. It moved for
judgment as a matter of law under Federal Rule of Civil
Procedure 50(b), or in the alternative, a new trial under Rule
59(a), and remittitur of damages under Rule 59(e). It argued
there was insufficient evidence of trade secret
misappropriation, which likewise undermined the unfair
competition verdict. It also argued that Dr. Valerdi’s expert
testimony exceeded the scope of his report and deposition. On
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damages, it argued that the jury impermissibly double counted
Firstbase’s disgorged profits.
In February 2025, the District Court denied these
motions. Firstbase timely appealed.
II.1
We “exercise plenary review of an order granting or
denying a motion for judgment as a matter of law and apply the
same standard as the district court.” Kars 4 Kids Inc. v. Am.
Can!, 8 F.4th 209, 218 n.8 (3d Cir. 2021) (quoting Lightning
Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993)).
“The standard of review on a motion for a new trial is abuse of
discretion unless the court’s denial of the motion is based on
application of a legal precept, in which case our review is
plenary.” Curley v. Klem, 499 F.3d 199, 206 (3d Cir. 2007)
(citation modified). We also review a district court’s denial of
a motion for remittitur for abuse of discretion. Spence v. Bd. of
Educ. of Christina Sch. Dist., 806 F.2d 1198, 1201 (3d Cir.
1986). Lastly, we review for abuse of discretion a district
court’s determination that a party forfeited an argument by
failing to raise it earlier in the proceedings. Kars 4 Kids Inc., 8
F.4th at 219 n.9.
III.
A.
Firstbase asks us to reverse the District Court’s denial
of its renewed motion for judgment as a matter of law on the
1 The District Court had jurisdiction under 28 U.S.C.
§§ 1331 (federal question) and 1367 (supplemental
jurisdiction) because Harbor asserted a federal statutory claim,
alongside other claims forming part of the same case or
controversy. We exercise appellate jurisdiction under 28
U.S.C. § 1291 (final decisions of district courts).
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trade secret misappropriation and unfair competition claims.
To prevail on a trade secret misappropriation claim, a
plaintiff must prove both (1) the existence of a protectable
trade secret; and (2) the misappropriation of that trade secret.
See Oakwood Lab’ys LLC v. Thanoo, 999 F.3d 892, 905 (3d
Cir. 2021). Under the DTSA, a plaintiff must also establish that
the trade secret “is related to a product or service used in, or
intended for use in, interstate or foreign commerce.” Id.
(quoting 18 U.S.C. § 1836(b)(1)). Except for this jurisdictional
hook and some “different wording,” the DTSA and the
Pennsylvania Uniform Trade Secrets Act “essentially protect
the same type of information.” Teva Pharms. USA, Inc. v.
Sandhu, 291 F. Supp. 3d 659, 675 (E.D. Pa. 2018); compare
18 U.S.C. § 1836(b)(1), with 12 Pa. Cons. Stat. § 5302.
Likewise, any minor differences between the definitions of
“misappropriation” under the PUTSA and the DTSA are not
relevant to this appeal. See 12 Pa. Cons. Stat. § 5302. So
references in this opinion to the DTSA’s requirements also
include the PUTSA.
A protectable “trade secret” is information, in any form,
that the owner “has taken reasonable measures to keep . . .
secret,” which “derives independent economic value . . . from
not being generally known to, and not being readily
ascertainable through proper means by, another person who
can obtain economic value from [it].” 18 U.S.C. § 1839(3).
Misappropriation is “improper acquisition, disclosure, or use
of a trade secret without consent.” Oakwood, 999 F.3d at 908
n.16 (citing 18 U.S.C. § 1839(5)). Misappropriation “does not
include reverse engineering.” 18 U.S.C. § 1839(6).
The Pennsylvania Supreme Court has not defined the
elements of a common law unfair competition claim. See
Granite State Ins. v. Aamco Transmissions, Inc., 57 F.3d 316,
319 (3d Cir. 1995). But the essential element is “passing off
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the goods of one for that of another.” Goebel Brewing Co. v.
Esslingers, Inc., 95 A.2d 523, 526 (Pa. 1953) (citation
modified).
Firstbase argues that Harbor failed to prove that any of
the alleged trade secrets were protectable or misappropriated
by Firstbase. And Firstbase argues that since the unfair
competition claim was based solely on trade secret
misappropriation, it must likewise fail. Harbor responds that
we can reach the merits only of Firstbase’s sufficiency-of-the-
evidence argument for the misappropriation element because,
in its Rule 50(a) motion, it “waived” the sufficiency-of-the-
evidence arguments for the unfair competition claim and
protectability. Appellee’s Br. 10. It also says that there was
sufficient evidence to support the jury’s verdict on each claim.
Judgment as a matter of law should be granted “only if,
viewing the evidence in the light most favorable to the
nonmovant[,] there is insufficient evidence from which a jury
reasonably could find liability.” Kars 4 Kids, 8 F.4th at 218 n.8
(quoting Lightning Lube, 4 F.3d at 1166). The reviewing court
cannot “weigh the evidence, determine the credibility of
witnesses, or substitute its version of the facts for the jury’s
version. The question is not whether there is literally no
evidence supporting the [verdict] but whether there is evidence
upon which the jury could properly” reach the verdict. Id.
(citation modified).
We first conclude that, in its Rule 50(a) motion,
Firstbase forfeited (not waived) its sufficiency-of-the-evidence
argument for the protectability element. We then conclude that
there was sufficient evidence of the misappropriation element.
And by extension, there was sufficient evidence of unfair
competition.
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1.
Harbor argues, as it did in response to Firstbase’s post-
trial motions, that Firstbase “waived” an insufficiency-of-
evidence argument related to the protectability element and
unfair competition claim because Firstbase’s Rule 50(a)
motion discussed only the misappropriation element.
Appellee’s Br. 10. In its denial of Firstbase’s Rule 50(b)
motion, the District Court agreed in part and held that
Firstbase’s claim of insufficient evidence of unfair competition
was not preserved. It went on—without deciding whether
protectability was preserved—to discuss the sufficiency of
evidence for both protectability and misappropriation.
A renewed motion for judgment as a matter of law under
Rule 50(b) “must be preceded by a Rule 50(a) motion [at trial]
sufficiently specific to afford the party against whom the
motion is directed with an opportunity to cure possible defects
in proof which otherwise might make its case legally
insufficient.” Lightning Lube, 4 F.3d at 1173. A motion is
sufficiently specific if the nonmoving party is “on notice of the
legal rubric” and “adequately apprised . . . of the reasons”
behind the motion. Fineman v. Armstrong World Indus., Inc.,
980 F.2d 171, 184 (3d Cir. 1992). “[W]e do not measure its
sufficiency by the text alone, but against the background, as
reflected in the record, of what the party now claiming
[forfeiture] understood as to the tenor of the Rule 50 movant’s
position and theory.” Brokerage Concepts, Inc. v. U.S.
Healthcare, Inc., 140 F.3d 494, 519 n.18 (3d Cir. 1998).
After reviewing the record, we agree that Firstbase’s
Rule 50(a) motion lacked the specificity required to preserve
its sufficiency-of-the-evidence argument related to the
protectability element and unfair competition. At the close of
trial, Firstbase’s counsel moved for judgment as a matter of law
“as to all claims” based on “insufficient evidence.” App. 266.
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But counsel developed that argument on only “two items”: the
breach-of-contract claim and “direct evidence of trade-secret
misappropriation” and circumstantial evidence of
misappropriation. Id. at 266–67.
Firstbase argues on appeal that “[e]veryone could grasp
that Firstbase’s Rule 50(a) motion challenged protectability,”
because it challenged the “evidence of . . . trade-secret
misappropriation” which “naturally encompasse[s]” the first
element of existence of a protectable trade secret. Reply Br. 3
(citation modified). But the general tenor of the motion
concerned direct and circumstantial evidence of the
misappropriation element, not protectability or the unfair
competition claim. In support of its motion, Firstbase’s counsel
pointed out that “our agreed-upon jury instruction[s] require[]
. . . both access” to the trade secrets and “substantial similarity”
between Harbor’s trade secrets and Firstbase’s products. App.
267; see also Supp. App. 212–13 (jury instruction for “methods
of proving ‘misappropriation’”). Firstbase then argued that
Harbor “failed to show substantial similarity as a matter of
law.” Supp. App. 152. Thus, it was clear that Firstbase was
developing an argument only to misappropriation. Equally
telling is Harbor’s response to the motion: it concerned expert-
witness testimony that Firstbase misappropriated the trade
secrets by using them. App. 268–69 (“Ricardo Valerdi actually
did a source-code review and actually found evidence of
misappropriation in [Firstbase’s] source code.”). Firstbase thus
did not preserve its argument that there was insufficient
evidence of protectability and unfair competition.
Our review of an unpreserved argument turns on
whether it was waived or forfeited. “The terms waiver and
forfeiture—though often used interchangeably by jurists and
litigants—are not synonymous.” United States v. Dowdell, 70
F.4th 134, 140 (3d Cir. 2023) (quoting Hamer v. Neighborhood
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Hous. Servs. of Chi., 583 U.S. 17, 20 n.1 (2017)). “Waiver is
the ‘intentional relinquishment or abandonment of a known
right.’” Id. (quoting Johnson v. Zerbst, 304 U.S. 458, 464
(1938)). “‘[F]orfeiture is the failure to make the timely
assertion of a right,’ an example of which is an inadvertent
failure to raise an argument.” Barna v. Bd. of Sch. Dirs. of
Panther Valley Sch. Dist., 877 F.3d 136, 147 (3d Cir. 2017)
(quoting United States v. Olano, 507 U.S. 725, 733 (1993)).
Waived arguments are not reviewable. Dowdell, 70 F.4th at
140. In contrast, forfeited arguments in civil cases are
reviewable—but only in “truly ‘exceptional circumstances.’”
Barna, 877 F.3d at 147 (quoting Brown v. Philip Morris Inc.,
250 F.3d 789, 799 (3d Cir. 2001)). We are “slightly less
reluctant to bar consideration of a forfeited pure question of
law,” id., if our “refusal to reach the [question] would result in
a miscarriage of justice or where the [question’s] resolution is
of public importance,” id. (quoting Bagot v. Ashcroft, 398 F.3d
252, 256 (3d Cir. 2005)).
Arguments inadvertently left out of a Rule 50(a) motion
are forfeited. Although Harbor says Firstbase “waived” the
issue, Firstbase never affirmatively relinquished its right to
argue the sufficiency of evidence of protectability. So Firstbase
forfeited—not waived—its right to raise the argument in a
renewed motion for judgment as a matter of law under Rule
50(b) or an eventual appeal.
In any event, Firstbase’s forfeited argument falls
outside our limited exception for appellate review because it
does not rest on a tight, well-defined legal question or an issue
important to the public. Indeed, Firstbase’s sufficiency-of-the-
evidence argument is about disputed facts. Cf. Frank C.
Pollara Grp., LLC v. Ocean View Inv. Holding, LLC, 784 F.3d
177, 188 (3d Cir. 2015) (failure to preserve Rule 50
sufficiency-of-the-evidence arguments is “particularly vexing”
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because such arguments are typically factually based and
“simply do not fit” within the exception that allows us to
address forfeited issues). As just one example, Firstbase claims
that the jurisdictional database had no independent economic
value—and thus was not protectable—because it contained
public information generally known or readily ascertainable
through proper means, such as “(i) state-mandated filing
requirements and fees, (ii) processing times for filings, and
(iii) street addresses for the registered-agent firm Registered
Agents Inc. (all of which are available upon a Google search).”
Appellant’s Br. 33. But a “confidential compilation . . . of
public information can amount to a trade secret,” Mallet & Co.
v. Lacayo, 16 F.4th 364, 386 (3d Cir. 2021), if the “unique
combination” of the information “affords a competitive
advantage,” id. (quoting AirFacts, Inc. v. de Amezaga, 909
F.3d 84, 96 (4th Cir. 2018)). Harbor argues the database was
protectable for this reason, highlighting testimony that it took
years to build and included a “notes” column with tips based
on Harbor’s experience providing registered agent services in
each of the states. In other words, who is right here is a deeply
factual question. Firstbase’s arguments relating to the
remaining alleged trade secrets—the workflows, Entity
Manager Dashboard, and API documentation—similarly hinge
on disputed facts.
Because Firstbase forfeited its sufficiency-of-the-
evidence argument for the protectability element of trade secret
misappropriation and because this argument does not qualify
for one of our narrow exceptions for reaching a forfeited
argument, we assume without deciding—for the purposes of
our review of the District Court’s Rule 50(b) denial—that each
alleged trade secret was protectable.
2.
The second element that the plaintiff must prove in a
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trade secret misappropriation claim is the misappropriation
itself. As mentioned above, this can be established through
“improper acquisition, disclosure, or use of a trade secret
without consent.” Oakwood, 999 F.3d at 908 n.16 (citing 18
U.S.C. § 1839(5)). Relevant to this appeal is misappropriation
by use. To demonstrate improper use, a plaintiff must prove
“exploitation of the trade secret that is likely to result in injury
to the trade secret owner or enrichment to the defendant.” Id.
at 909 (quoting Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d
444, 450–51 (5th Cir. 2007)). “Use” has an “expansive
interpretation” that encompasses assisting and accelerating
product development. Id. at 910. A plaintiff may rely on
circumstantial evidence showing access to the trade secrets and
similarities between those secrets and the accused product. Id.
at 912 n.19. But a defendant is permitted to reverse engineer a
product; this does not constitute misappropriation of a trade
secret it has access to. 18 U.S.C. § 1839(6)(B). So “it is
necessary to disprove independent development—when
raised—in order to meet the burden of proving the element of
use.” Moore v. Kulicke & Soffa Indus., 318 F.3d 561, 572 (3d
Cir. 2003).
Firstbase concedes there were similarities between the
trade secrets and its product. But it argues the similarities
between the trade secrets and Firstbase Agent did not disprove
reverse engineering. The primary evidence supporting
misappropriation came from Harbor’s expert, Dr. Valerdi,
whose testimony Firstbase characterized as describing
“generalized concepts he claimed Firstbase learned from
Harbor.” Appellant’s Br. 41 (citation modified). For example,
Dr. Valerdi found similarities in strings of Firstbase’s “source
code” and words in the jurisdictional database. App. 1376–77
But the similarities, Firstbase argues, were insufficient because
they were public or general knowledge in the industry. For
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19
instance, Firstbase points out that the street address of a
national third-party registered agent service is public, and that
it is generally known that California and New York are U.S.
jurisdictions. Dr. Valerdi also opined that certain strings of
source code resembled the data fields in the workflows. But
Firstbase says those similarities were also insufficient—they
consisted of general knowledge or public information easily
susceptible to reverse engineering, such as classifications of
business entities, the determination of “whether [a user] is an
existing customer or a new customer,” and the idea that certain
checks “have to occur to see whether a filing will be accepted
or rejected.” Id. at 871–72.
Viewing the evidence in the light most favorable to
Harbor, there was sufficient evidence of trade secret
misappropriation by use. Even assuming the similarities
between Firstbase Agent and the alleged trade secrets were
insufficient on their own to disprove independent
development, there were “plus factor[s]” that suggest Firstbase
did not independently develop this technology. Oakwood, 999
F.3d at 912 n.19.
First, there were Firstbase’s internal communications.
As the District Court noted, around the time the partnership
was fraying, a Firstbase employee bragged that he “convinced
[Harbor] to share all the annual filings due date per state[,]
lol[,] with that info, we can build the reminders logic ourselves
without using their data.” Supp. App. 255. Firstbase’s
partnership lead responded, “The more we can get from them
the better, especially if we truly are going to go down the route
of being our own [Registered Agent].” Id. at 256. This is
evidence of Firstbase intending to use Harbor’s proprietary
compilations of information to enrich itself and take business
away from Harbor. A subsequent email sent around the time
Firstbase terminated the partnership suggested that Firstbase
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may have used the annual filing deadline information—or
possibly other unidentified documents obtained from Harbor—
as a reference point to assist or accelerate development of its
product. Id. at 257 (“Sharing some news: annual report,
franchise tax, and federal tax are now available on agent
dashboard. Our product team built the logic and we no longer
need [Harbor’s] info to send reminders to our customers. We
compared to the data [Harbor] was sending to us and it seems
correct.”).
Second, there was the accelerated nationwide launch of
Firstbase Agent. Firstbase offered incorporation services in
Delaware and Wyoming before its partnership with Harbor, but
it rapidly expanded incorporation and registered agent services
to all fifty states shortly after the early termination of the
partnership. See Mallet, 16 F.4th at 388 (explaining that the
defendant’s “actions[,] plus . . . access to what may be trade
secret information” and “the accelerated launch of” a new
product “may easily be sufficient circumstantial evidence” of
misappropriation).
Firstbase argues the summary of annual filings
deadlines was not among the alleged trade secrets and that
Harbor published this information on its website—meaning
Harbor did not try to keep it a secret. True, Harbor must prove
that Firstbase’s misappropriation “involv[ed] a trade secret”
and that “there is some evidence tying [Firstbase’s] conduct to
the taking of those trade secrets.” Id. at 387–88. But coupled
with the similarities between the protected trade secrets and
Firstbase Agent, the internal communications and rapid
expansion offer sufficient circumstantial evidence that
Firstbase used the Harbor documents it had access to—which
included protectable trade secrets—to assist and accelerate the
development of Firstbase Agent.
Firstbase also argues that all the trade secrets could be
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21
reverse engineered because the identified similarities consisted
of general industry knowledge or publicly available or
marketed information. But this argument falls short. “[W]hile
‘reverse engineering is a defense to misappropriation of [a]
trade secrets claim, the possibility that a trade secret might be
reverse engineered is not a defense.’” Id. at 387 n.31 (second
alteration in original) (quoting Bal Seal Eng’g, Inc. v. Nelson
Prods., Inc., No. 8:13-cv-1880, 2018 WL 4697255, at *4 (C.D.
Cal. Aug. 3, 2018)). “Drawing ‘all reasonable and logical
inferences’ in [Harbor’s] favor, the jury had enough evidence
to find that” Firstbase did not reverse engineer Firstbase Agent.
Washington v. Gilmore, 124 F.4th 178, 185 (3d Cir. 2024)
(quoting Lightning Lube, 4 F.3d at 1166). We agree that
“[t]here may be situations in which reverse engineering is so
straightforward that the distribution of a product is itself akin
to a disclosure.” Mallet, 16 F.4th at 387 n.31. But that factual
inquiry is inappropriate for judgment as a matter of law, as it
ultimately re-litigates the sufficiency-of-the-evidence
argument related to the protectability element—which was
forfeited.
3.
Firstbase also challenges the sufficiency of evidence of
the unfair competition claim. It argues that if we reverse the
District Court’s denial of judgment as a matter of law on the
trade secret misappropriation claim, we must also reverse the
denial as to the unfair competition claim, because trade secret
misappropriation was the sole predicate tort on which the
District Court instructed the jury. But since we will affirm the
District Court’s denial of judgment as a matter of law on trade
secret misappropriation, we will also affirm the denial of
judgment as a matter of law on unfair competition.
* * *
In sum, we conclude Firstbase forfeited its sufficiency-
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22
of-the-evidence argument as to protectability and therefore
assume that the alleged trade secrets were protectable. Because
the evidence of misappropriation by use was sufficient to
support the verdict, we will affirm the District Court’s denial
of Firstbase’s Rule 50(b) motion.
B.
Firstbase’s appeal of the District Court’s denial of its
motion for new trial raises two arguments. First, it contends
that even if we affirm the denial of judgment as a matter of law
on the sufficiency of evidence, the verdict was nonetheless
against the great weight of the evidence. Second, it contends
that it was improperly prejudiced by portions of Dr. Valerdi’s
testimony about “who did what and when.” App. 200. We
discuss each of these in turn.
1.
A party’s failure to move for judgment as a matter of
law at the close of all evidence does not bar a motion for a new
trial on the ground that the verdict was against the weight of
the evidence. Greenleaf v. Garlock, Inc., 174 F.3d 352, 365 (3d
Cir.1999). So, unlike its sufficiency-of-the-evidence argument
related to protectability, Firstbase preserved the weight of
evidence argument on appeal by timely raising it in its motion
for new trial.
A court may grant a motion for a new trial based on the
evidence, but “it should do so only when ‘the great weight of
the evidence cuts against the verdict and a miscarriage of
justice would result if the verdict were to stand.’” Leonard v.
Stemtech Int’l Inc., 834 F.3d 376, 386 (3d Cir. 2016) (citation
modified) (quoting Springer v. Henry, 435 F.3d 268, 274 (3d
Cir. 2006)). To win reversal of the District Court’s denial of a
new trial based on the weight of the evidence, Firstbase must
show that “(1) the jury reached an unreasonable result, and (2)
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the District Court abused its broad discretion in not setting the
verdict aside.” Id. at 386. A district court’s discretion in
weighing the evidence is still limited; it should not “substitute
its judgment of the facts and the credibility of the witnesses for
that of the jury.” Id. (quoting Delli Santi v. CNA Ins. Cos., 88
F.3d 192, 201 (3d Cir. 1996)). “Only in very clear cases can
the evidence be weighed with enough accuracy by an appellate
court to justify it in saying that the trial [court] abused [its]
discretion in either granting or refusing the new trial.”
Mihalchak v. Am. Dredging Co., 266 F.2d 875, 878 (3d Cir.
1959) (footnotes omitted). This case is not so clear.
The jury reasonably found that at least the jurisdictional
database was a protectable trade secret. As we explained in the
sufficiency-of-evidence analysis above, the database contained
tips that were not general knowledge in the trade or readily
ascertainable through proper means but were the result of
Harbor’s experience in the industry. It is reasonable, and not a
manifest injustice, for the jury to conclude the database had
independent economic value.
The District Court properly exercised its broad
discretion in upholding the verdict on that basis. The Court
identified evidence it said was probative of protectability—the
independent economic value of the jurisdictional database.
App. 15 (noting testimony that said “information in [the
jurisdictional database] was collected over more than ten years
of research and work in a constantly changing technology
business”). It also said that “the jury heard the testimony of
more than ten witnesses and saw hundreds of exhibits. The
specific evidence mentioned herein supporting the Court’s
conclusions is meant to be illustrative, not inclusive.” Id. at 14.
We need not determine whether it was reasonable for
the jury to conclude that the workflows, Entity Manager
Dashboard, and API documentation were also protectable trade
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24
secrets. The jury designated the jurisdictional database in the
special interrogatory as a trade secret. Thus, we are not left
with a situation “where a general verdict [leaves] open the
possibility that one of [Harbor’s] theories of liability for which
there was insufficient evidence might have been the one on
which the jury grounded its determination of liability.” S.E.C.
v. Teo, 746 F.3d 90, 100 (3d Cir. 2014). In this case, the
existence of one protectable trade secret is enough to support
the general verdict of trade secret misappropriation.
Turning to the misappropriation element, we have
already concluded there was sufficient evidence that the trade
secrets were misappropriated by use. After considering the
evidence of Firstbase’s internal messages and product
acceleration, we conclude that the jury’s finding of
misappropriation was not only sufficient, but reasonable and
not a manifest injustice. Thus, the District Court did not abuse
its discretion in declining to set aside the trade secret
misappropriation verdict. Similarly, because the unfair
competition claim reasonably could be based on the tort of
trade secret misappropriation, the District Court did not abuse
its discretion in declining to set aside the unfair competition
verdict.
2.
Improperly admitted evidence is also a valid ground for
granting a new trial. Montgomery Ward & Co. v. Duncan, 311
U.S. 243, 251 (1940). Firstbase also argues that it was
prejudiced by purported shifts in Dr. Valerdi’s expert opinion
during trial compared to his expert report and deposition.
Specifically, it says that during discovery, Dr. Valerdi
expressly assumed that Harbor created the trade secrets he
identified and the technical competency of Firstbase—but
then, despite Firstbase’s objection during trial, “testified
liberally . . . that Firstbase learned [of] the purported trade
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25
secrets from Harbor, that Harbor created them, and that
Firstbase could not have devised its products on its own.”
Appellant’s Br. 19.
Firstbase says this violated Federal Rules of Civil
Procedure 26 and 37 because Dr. Valerdi exceeded the scope
of his expert report and deposition. An expert must provide “a
complete statement of all opinions the witness will express and
the basis and reasons for them,” Fed. R. Civ. P. 26(a)(2)(B)(i),
and is precluded from offering additional opinions that were
not previously disclosed unless their nondisclosure is
“substantially justified or is harmless,” Fed. R. Civ. P. 37(c)(1).
Firstbase’s argument hinges on a debatable characterization of
Dr. Valerdi’s change in testimony as a new opinion. As we
explain below, the District Court held that this argument was
not properly preserved when it was raised in Firstbase’s post-
trial motion, and so it did not consider it. Assuming that the
District Court abused its discretion in holding that Firstbase
forfeited the argument, the Court properly denied the motion
for a new trial. Even if Dr. Valerdi’s testimony technically was
a new opinion, the nondisclosure was harmless.
We start by recounting the relevant procedural history.
On the sixth day of trial before Dr. Valerdi took the stand,
Firstbase objected both to the introduction of a video exhibit
created by Dr. Valerdi summarizing the trade secret
misappropriation and “to any testimony as to who did what and
when.” App. 200. Based on Dr. Valerdi’s prior “assumption
that all of the trade secret information belonged to Harbor,”
Firstbase argued that it was “out of bounds . . . for him to opine
on what the parties did . . . and talk about who invented what.”
Id. at 201. In response to the objection, the District Court
reviewed the deposition testimony and acknowledged that Dr.
Valerdi was “not attesting that certain facts are true,” but was
merely “asked to assume [they] are true.” Id. at 213. But the
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26
District Court ultimately overruled the objection, believing
“there [was] a sufficient factual foundation for his
assumptions” consistent with Federal Rules of Evidence 703
and 705. Id. Rule 703 permits an expert to “base an opinion on
facts or data in the case.” Fed. R. Evid. 703. Rule 705 permits
“an expert [to] state an opinion—and give the reasons for it—
without first testifying to the underlying facts or data.” Fed. R.
Evid. 705. The District Court agreed to give a jury instruction
that the video was not proof of any facts.
Dr. Valerdi testified that Harbor created the trade
secrets and Firstbase misappropriated them. See, e.g., App. 937
(“Firstbase . . . could not do it by themselves . . . [and] needed
to piggyback on . . . Harbor Compliance’s trade secrets. . . .
The entire corpus of this case points to that.”); id. at 868
(“[T]he trade [secrets] were in the possession of Firstbase
because Harbor Compliance gave it to them under the
understanding that they would follow the terms of the
partnership agreement.”); id. at 890 (“Firstbase . . . learned
how to do this process thanks to Harbor Compliance’s trade
secrets.”). On cross-examination, Firstbase’s counsel asked
him if he had “subsequently modified [his] analysis” since his
deposition. Id. at 900. Dr. Valerdi responded that although he
had been “informed further by the trial transcripts,” his expert
opinions and conclusions about the trade secrets remained
unchanged. Id. at 901.
In its motion for a new trial, Firstbase argued that Dr.
Valerdi’s testimony violated Rules of Civil Procedure 26 and
37 because he “performed a full analysis of the facts of the
case” which exceeded the scope of his expert report and
deposition, as Valerdi was not engaged “to opine on the facts
as to who did what.” Supp. App. 343, 345 (citation modified).
It highlighted later portions of his testimony on cross-
examination where it said Dr. Valerdi admitted to
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27
“perform[ing] a full analysis of the facts of the case” after
submitting his expert report, “including an analysis of the
shortcomings of Firstbase’s knowledge of the industry prior to
its relationship with Harbor Compliance,” and admitted “that
he had reviewed all of the evidence he used to make a factual
determination well before his deposition, but had only chosen
to provide this analysis now that he was on the stand.” Id. at
344.
The District Court rejected the request for a new trial,
again citing Federal Rules of Evidence 703 and 705. App. 38.
It added that challenges to the scope of Dr. Valerdi’s testimony
“not only lack merit, [but] were waived” because “the portions
of [his] trial testimony that Firstbase cites as problematic . . .
were unobjected to at trial and were in response to Firstbase’s
questions on cross examination.” Id. at 39. Lastly, it found that
“even if the testimony exceeded the scope of his deposition,”
Valerdi’s “testimony [was] consistent with his expert report,
such that Firstbase was not prejudiced by its admission.” Id.
We assume without deciding that Firstbase preserved its
objection and the purported change in testimony constituted a
new opinion that lacked substantial justification. Still, we find
the District Court did not abuse its discretion in holding that
the admission of the testimony was harmless. The Court
properly exercised its broad discretion in concluding that any
unfair surprise at trial was cured. It noted that it gave a jury
instruction on the video. It also considered that Firstbase
challenged the factual bases of Dr. Valerdi’s testimony during
cross-examination. Federal Rule of Evidence 705, along with
703, “places the burden of exploring the facts and assumptions
underlying the testimony of an expert witness on opposing
counsel during cross-examination.” Stecyk v. Bell Helicopter
Textron, Inc., 295 F.3d 408, 414 (3d Cir. 2002); see also Hill
v. Reederei F. Laeisz G.M.B.H., Rostock, 435 F.3d 404, 423
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(3d Cir. 2006) (stating that surprises by new testimony can be
adequately cured by “extensive cross-examination of” the
expert, “a sidebar on the issue of surprise, and even a recess to
investigate the new evidence”). Furthermore, the jury was free
to credit the testimony of Firstbase’s expert, Steve Waldbusser.
In sum, even if the District Court abused its discretion
in concluding Firstbase did not adequately preserve its
argument, it did not abuse its discretion in denying a new trial
because it was reasonable to hold that Firstbase was not
harmed by Dr. Valerdi’s testimony.
C.
Finally, Firstbase argues the District Court abused its
discretion by denying its motion for remittitur because the jury
“award[ed] separate damages for the trade-secret
misappropriation and unfair-competition claims,” so “the jury
mistakenly disgorged the same profits from Firstbase twice.”
Appellant’s Br 56. We agree.
“[R]emittitur is well established as a device employed
when . . . a decision of the jury is clearly unsupported and/or
excessive.” Spence, 806 F.2d at 1201. “On review, . . .
remittitur should be set at the ‘maximum recovery’ that does
not shock the judicial conscience,” Evans v. Port Auth. of N.Y.
& N.J., 273 F.3d 346, 355 (3d Cir. 2001) (citation modified),
which is, in other words, “the maximum amount which the jury
could reasonably find,” Gumbs v. Pueblo Int’l, 823 F.2d 768,
772 (3d Cir. 1987) (citation modified).
The jury awarded Harbor $14,757,399 in compensatory
damages for the unfair competition claim, the exact amount of
Firstbase’s profits as calculated by Harbor’s damages expert,
Urbanchuk. The jury also awarded $11,068,044 for the trade
secrets misappropriation claim, which was seventy-five
percent of Firstbase’s profits.
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Firstbase says there is a clear explanation for the
$11,068,044 award: the jury found that Firstbase
misappropriated only six of the eight alleged trade secrets (or
seventy-five percent) and disgorged that proportion of
Firstbase’s profits twice. Therefore, it says, the jury
impermissibly recovered the same profits twice under two
theories of recovery. “Simply because [a plaintiff] was able to
wrap [its] loss into several different legal theories of recovery
does not entitle it to recoup twice.” Fineman, 980 F.2d at 218.
In its denial of Firstbase’s motion to remit damages by
$11,068,044,2 the District Court said Firstbase “failed to object
to the award before the jury was released, thereby preventing
the Court from inquiring of the jury.” App. 33. Second, it said
Firstbase did not challenge the jury instructions or verdict
form, which did not explicitly confine damages to
disgorgement of Firstbase’s profits. Lastly, it held the jury
could have reasonably concluded that Harbor suffered different
injuries from the trade secret misappropriation claim and
merely used Urbanchuk’s “calculations as a foundation” for
the unfair competition award. Id. at 35.
To begin with, the District Court erred if it concluded
that a jury award is unclear just because no follow-up inquiry
was made with the jury. A district court can review the record
to determine whether the jury’s award was clearly excessive or
2 Firstbase requests us to remit damages by
$14,757,399, the amount awarded on the unfair competition
claim. Harbor says this argument is forfeited because Firstbase
asked the District Court to remit damages only by
$11,068,044—the amount of the trade secret misappropriation
award. Harbor is correct that a request for remittitur of
$14,757,399 is forfeited, but the substantive argument related
to double damages is preserved.
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30
unsupported. See Starceski v. Westinghouse Elec. Corp., 54
F.3d 1089, 1101 (3d Cir. 1995).
And the record clearly shows the jury’s methodology
involved disgorging Firstbase’s profits twice. Contrary to the
District Court’s characterization, Firstbase’s argument is more
than mere “speculation.” App. 34. Urbanchuk testified he
“us[ed] the same calculation” to estimate Firstbase’s profits for
both the trade secrets misappropriation and the unfair
competition claim. App. 998. He “conducted the same type of
disgorgement analysis looking at the same revenues and profits
to arrive at th[e] [$14,757,399] number.” Id. at 1000. His
slides—which the jury specifically requested during
deliberations—listed $14,757,399 next to both the trade secret
and unfair competition claims. Because the only theory Harbor
pursued at trial was disgorgement of $14 million in profits, it
is exceedingly unlikely that this unique number was a mere
“foundation.” Id. at 35.3 This was double recovery of the same
remedy and not a coincidence.
Harbor contends that Firstbase’s duplicative damages
argument is “waived” (more properly, forfeited) “to the extent
Firstbase purports to argue that the jury erred by awarding
damages other than disgorgement damages (such as lost profit
damages),” because Firstbase never objected to the jury
instructions on damages. Appellee’s Br. 53. But this
3 The only damages Harbor mentioned in its opening
statement were the “$1.1 million invoiced under the party’s
contract” and the “$14 million” that “Firstbase will profit . . .
from using the secrets and knowhow that Harbor Compliance
shared with them in confidence.” App. 108–09. And, at
closing, Harbor repeated the same “$14 million figure,”
representing Firstbase’s “gross revenue,” in connection with
both claims. Id. at 314.
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31
mischaracterizes Firstbase’s argument. Firstbase is not
denying that the jury could have compensated Harbor for
remedies in addition to awarding disgorgement of Firstbase’s
profits. Rather, it argues the maximum amount that could be
disgorged is $14,757,399 because that was the maximum
amount Firstbase realized by inflicting the harm—whether
characterized as trade secret misappropriation or unfair
competition. Therefore, Firstbase argues, the jury compensated
Harbor twice on the same profits by awarding $14,757,399 for
unfair competition and an additional $11,068,044 for trade
secret misappropriation. This argument is neither forfeited nor
waived.
Harbor’s other response—that the jury heard evidence
of “separate harm arising from separate conduct,” id. at 55—
repeats the same mischaracterization. Harbor says the jury
heard evidence that its unrealized revenue was up to
$38,700,000. So it says anything less than that maximum
amount is reasonable. Harbor’s unrealized revenue represents
expected revenue lost due to Firstbase’s conduct, whereas
disgorgement requires Firstbase to surrender the profits it
gained from those actions. These are different types of
remedies. The jury plainly did not base its damages on
unrealized revenue—rather, the unique math shows it awarded
both the lost profits and, improperly, another seventy-five
percent of those same lost profits. The District Court
incorrectly applied the same logic and thus abused its
discretion.
Accordingly, we will reverse the District Court’s denial
of Firstbase’s motion for remittitur of damages. Because “the
maximum amount which the jury could reasonably find,”
Gumbs, 823 F.2d at 772 (citation modified), is $14,757,399,
we will conditionally remit the damages by $11,068,044—the
amount the jury awarded for the trade secret claims. Harbor
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32
may accept the reduced award or elect a new trial on damages
on the trade secret misappropriation claims. See Cortez v.
Trans Union, LLC, 617 F.3d 688, 717 (3d Cir. 2010)
(explaining that “a court cannot reduce an award without
affording the plaintiff the option of a new trial”).
IV.
For the foregoing reasons, we will affirm in part and
vacate and remand in part the District Court’s judgment and its
order denying Firstbase’s motions for judgment as a matter of
law, a new trial, and remittitur. The District Court is instructed
to conditionally remit the damages by $11,068,044.
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