HALLOWEEN TREAT: Judge’s October 31 Order Adds $21 Million to Jury’s $70 Million Award for Trade Secret Theft

On October 31st of this year, a district judge in Massachusetts granted a motion for enhanced damages in a theft of trade secrets case, adding an additional $21 million to a $70 million jury award.

The theft of trade secrets case pitted CardiAQ Valve Technologies, Inc., a Delaware corporation and a unit of Edwards Lifesciences Corp., against Neovasc Inc., a Canadian medical device company. In June 2009, CardiAQ hired Neovasc to manufacture part of an experimental heart valve that CardiAQ was developing – a trans-catheter mitral valve (TMVI), a replacement heart valve that can be implanted using a catheter rather than by open-heart surgery. The parties signed a non-disclosure agreement.

After working closely with CardiAQ for five months, Neovasc engineer Randy Lane sketched out what would become Neovasc’s competing TMVI device. Neovasc’s CEO Alexi Marko gave Lane the green light to proceed with development, advising Lane not to tell CardiAQ about the internal project.

When CardiAQ leased its own manufacturing facility in April 2010, it stopped using Neovasc’s services. However, it wasn’t until December 2011 that CardiAQ learned that Neovasc was developing its own TMVI, when Neovasc’s heart valve patent application became public. CardiAQ filed suit in Massachusetts district court in June 2014.

After a two-week trial, the jury awarded CardiAQ $70 million dollars, finding that Neovasc had stolen three of the six trade secrets at issue. As neither party’s device has yet been approved for sale, CardiAQ pursued a “reasonable royalty” theory of damages, meaning that the $70 million the jury awarded constituted the jury’s estimate of what Neovasc would have been willing to pay to use CardiAQ’s trade secrets indefinitely.

After the verdict, CardiAQ filed a motion for enhanced damages and injunctive relief, citing a Massachusetts law that allows judges, in their discretion, to increase damages awarded in trade secret cases up to double the amount of the original verdict. Massachusetts and New York are the only states that have not adopted the Uniform Trade Secrets Act.

U.S. District Judge Allison Burroughs granted CardiAQ’s motion, increasing the damages awarded by 30%, or $21 million. In making her ruling, the judge noted that Neovasc’s misappropriation was willful, and that it never took any steps to prevent the conflict created by Lane’s working simultaneously on both projects. The judge denied CardiAQ’s request for an injunction requiring Neovasc to suspend work on all of its TMVI projects for 18 months, finding it contrary to the public’s interest in access to potentially life-saving technology. Finally, the court ordered Neovasc to add the names of two CardiAQ inventors to its previously-issued patent.