United States Court of Appeals for the Federal Circuit
04-1572
MICROSTRATEGY INCORPORATED,
Plaintiff-Appellant,
v.
BUSINESS OBJECTS, S.A. and BUSINESS OBJECTS AMERICAS, INC.,
Defendants-Appellees.
Carter G. Phillips, Sidley Austin Brown & Wood, LLP, of Washington, DC, argued
for plaintiff-appellant. With him on the brief were Kathi A. Cover and Brian T.
Fitzpatrick.
Daniel J. Furniss, Townsend and Townsend and Crew LLP, of Palo Alto,
California, argued for defendants-appellees. With him on the brief were Gary H. Ritchey
and Joseph A. Greco. Of counsel were Dana Johannes Finberg, LeClair Ryan, of
Richmond, Virginia, and Robert D. Luskin, Patton Boggs LLP, of Washington, DC.
Appealed from: United States District Court for the Eastern District of Virginia
Judge Jerome B. Friedman
United States Court of Appeals for the Federal Circuit
04-1572
MICROSTRATEGY INCORPORATED,
Plaintiff-Appellant,
v.
BUSINESS OBJECTS, S.A. and BUSINESS OBJECTS AMERICAS, INC.,
Defendants-Appellees.
___________________________
DECIDED: November 17, 2005
___________________________
Before NEWMAN, Circuit Judge, ARCHER, Senior Circuit Judge, and RADER, Circuit
Judge.
RADER, Circuit Judge.
MicroStrategy and Business Objects are competitors in the field of business
intelligence software. MicroStrategy initially sued Business Objects, S.A., a French
corporation, and Business Objects Americas, Inc. (collectively Business Objects), its
wholly-owned American subsidiary, in the United States District Court for the Eastern
District of Virginia for infringement of MicroStrategy’s U.S. Patent No. 6,260,050 (the
’050 patent) and U.S. Patent No. 6,270,033 (the ’033 patent). MicroStrategy later
amended its complaint to add four business tort claims stemming from the hiring of
several MicroStrategy employees by Business Objects. Although a trial took place on
some claims, the district court ultimately disposed of both the patent claims and
business tort claims without a jury verdict. For separate reasons on each issue, this
court affirms the district court on all matters, except one. Because the district court
erroneously determined that Virginia law would not acknowledge MicroStrategy’s
contractual non-solicitation clause, this court reverses on that issue and remands for
further proceedings consistent with this opinion.
I.
This court reviews the grant or denial of a motion for judgment as a matter of law
(JMOL) “under the law of the regional circuit where the appeal from the district court
normally would lie.” Riverwood Int’l Corp. v. R.A. Jones & Co., 324 F.3d 1346, 1352
(Fed. Cir. 2003). Under the law of the United States Court of Appeals for the Fourth
Circuit, this court reviews the denial of a motion for judgment as a matter of law without
deference. Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 431 (4th Cir. 2004). “We
must view the evidence in the light most favorable to . . . the nonmovant, and draw all
reasonable inferences in [the non-movant’s] favor without weighing the evidence or
assessing the witnesses’ credibility.” Id. “The question is whether a jury, viewing the
evidence in the light most favorable to [the nonmovant], could have properly reached
the conclusion reached by this jury.” Baynard v. Malone, 268 F.3d 228, 235 (4th Cir.
2001). “We must reverse [the denial of a motion for JMOL] if a reasonable jury could
only rule in favor of [the movant]; if reasonable minds could differ, we must affirm.” Id.
This court reviews the district court’s grant or denial of summary judgment under
the law of the regional circuit. Chamberlain Group, Inc. v. Skylink Techs., Inc., 381 F.3d
1178, 1191 (Fed. Cir. 2004). Under the law of the Fourth Circuit, this court reviews the
grant or denial of summary judgment without deference. Gallagher v. Reliance
Standard Life Ins. Co., 305 F.3d 264, 268 (4th Cir. 2002).
04-1572 2
This court reviews a district court’s evidentiary rulings under the law of the
regional circuit. Sulzer Textil A.G. v. Picanol N.V., 358 F.3d 1356, 1363 (Fed. Cir.
2004). Under the law of the Fourth Circuit, this court reviews the district court’s
exclusion of evidence for an abuse of discretion. United States v. Wilkerson, 84 F.3d
692, 696 (4th Cir. 1996).
II.
With respect to the patent claims, MicroStrategy voluntarily dismissed its
infringement claim on the ’030 patent before trial. On the ’050 patent, however, the
district court granted summary judgment of non-infringement in favor of
Business Objects. The district court reached this result after interpreting the claims to
require an association of output devices with a “device-specific style” on a device-by-
device basis. See MicroStrategy, Inc. v. Business Objects, S.A., 331 F. Supp. 2d 432
(E.D. Va. Aug. 6, 2004) (Patent Judgment). This court agrees with the district court’s
construction.
The ’050 patent is directed at a system and method for automatic broadcasting of
information to multiple types of subscriber output devices and formatting output for
those devices using configurable parameters. ’050 patent, col. 1, ll. 26-32. The
invention allows companies to access and mine enormous volumes of data generated
by their business operations. The ’050 patent gives some idea of the problems
addressed by the invention:
The availability of large volumes of data presents various challenges. One
challenge is to avoid inundating an individual with unnecessary
information. Another challenge is to ensure all relevant information is
available in a timely manner.
04-1572 3
’050 patent, col. 1, ll. 39-44. The ’050 patent further specifies that the data must be
available to “multiple types of subscriber output devices, including electronic mail,
personal digital assistants (PDA), pagers, facsimiles, printers, mobile phones, and
telephones.” Id., col. 1, ll. 28-31. The parties dispute whether, as claimed, the system
and method must associate these various output devices with a “device-specific style”
on a device-by-device basis. Moreover if each device – printer, pager, etc. – requires
its own presentation style, this requirement suggests that the invention also requires
support for multiple types of output devices. Claim 8 is representative of the disputed
language; it reads:
8. A method for generating output from an on-line analytical processing
system to user output devices comprising the steps of:
processing at least one scheduled service in an on-line analytical
processing system according to a schedule established for the service and
generating a service output, each service comprising at least one query to
be performed by the on-line analytical processing system and at least one
user device subscribed to that service;
enabling a plurality of subscribers to subscribe to the scheduled service
and enabling the subscriber to specify at least one user output device at
which to receive service outputs from the service;
wherein each user device subscribed to that service is associated with a
device-specific style that designates the format in which that particular
type of user device is to output to the service outputs to a user to maintain
the integrity of the service outputs;
determining whether to forward the generated output to one or more user
devices based on output conditions specified for each user device
subscribed to the service;
creating a device-specific formatted output for each user device
subscribed to the service selected to receive the output according to a
selection of predefined values specified for each of a plurality of
predefined parameters provided by the style specified for the user output
device, and
04-1572 4
automatically forwarding a device-specific formatted service output to
each of the user output devices selected to receive the output for that
service;
wherein the determining step comprises determining whether each user
device subscribed to the service is an alert subscription or a periodic
subscription and selecting the user device if it is a periodic subscription or
if an alert condition specified in the alert subscription has been satisfied.
Id., col. 18, l. 51-col. 19, l. 21 (emphases added).
The district court first construed the term “device-specific style” during a
Markman proceeding. During that proceeding, MicroStrategy argued that the term
meant “[o]ne or more parameters that designate the format in which a particular type of
output device receives service outputs.” After a careful review of the claim language
and relevant statements in the specification and file wrapper, the district court largely
adopted MicroStrategy’s proposed definition. Thus, the district court construed “device-
specific style” to mean “[t]he format in which a particular type of output device receives
and displays service output, consisting of values of a plurality of parameters.”
MicroStrategy, Inc. v. Business Objects, S.A., Civil Action No. 2:01cv826, slip op. at 27
(E.D. Va. Mar. 18, 2004) (Claim Construction Order).
The district court construed the remaining claim language on summary judgment.
Patent Judgment, 331 F. Supp. 2d at 439. Based on the claim language, the district
court “conclude[d] . . . that the system or method [must] function on a device-by-device
basis.” Id. at 440. The district court’s interpretation focused on two aspects common to
the three independent claims: “(1) each user device is associated with a device-specific
style, and (2) output is created for each user device according to the style specified for
the user output device.” Id. (emphasis in original). Thus, the district court concluded
that the claim language requires association of output devices with a device-specific
04-1572 5
style on an individual, device-by-device basis. Id. In other words, the invention requires
a particular format and presentation for one device, e.g. mobile phone data, that could
differ from the format for a second device, e.g., electronic mail data. The district court
summarized its conclusion as follows:
[T]he patent covers methods and systems that retain associations
between individual devices and device styles . . . because only in that
manner does the patent cover systems that handle multiple device types
or customization of subscription features on a subscriber-by-subscriber or
device-by-device basis. . . . While it is not necessary that the devices
always be different, the system or method described in the claims is
structured to facilitate the transmission of the same output to multiple
device types.
Id. at 442-43.
This court recently restated: “It is a ‘bedrock principle’ of patent law that ‘the
claims of a patent define the invention to which the patentee is entitled the right to
exclude.’” Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005) (en banc)
(quoting Innova/Pure Water, Inc. v. Safari Water Filtration Sys., Inc., 381 F.3d 1111,
1115 (Fed. Cir. 2004)). “The inquiry into how a person of ordinary skill in the art
understands a claim term provides an objective baseline from which to begin claim
interpretation.” Id. “Importantly, the person of ordinary skill in the art is deemed to read
the claim term not only in the context of the particular claim in which the disputed term
appears, but in the context of the entire patent, including the specification.” Id.
All three of the ’050 patent’s independent claims recite the term “device-specific
style.” As previously noted, the district court construed this term as part of its Markman
proceedings to mean “[t]he format in which a particular type of output device receives
and displays service output, consisting of values for a plurality of parameters.” Claim
Construction Order, slip op. at 27. This construction accurately reflects the claim
04-1572 6
language and the context supplied by the specification. See ’050 patent, col. 4, ll. 49-
63.
While accepting the district court’s Markman construction, the parties dispute its
meaning. MicroStrategy argues that this Markman construction and the context of the
invention do not require support for more than one type of output device. In particular,
MicroStrategy notes that the specification contemplates a system with “one or more”
output devices. See id., col. 5, ll. 4-6. Thus, MicroStrategy reads the claim and the
district court’s Markman construction to permit a system with support for just one type of
user device.
To the contrary, as noted in the district court’s summary judgment order, all three
independent claims require that each user output device subscribed to a service be
associated with a device-specific style. See id., col. 17, ll. 58-62; col. 18, l. 65-col. 19,
l.2; col. 20, ll. 21-25. The term “associated” implies that the system creates a link
between user output devices and corresponding “styles.” In other words, the system
must identify and track in some manner the “style” in which a particular user output
device receives and displays output. This claim language further requires a direct link
between each user output device, individually, and a corresponding “device-specific”
style.
In addition, the claims require a device-specific formatted output according to a
style specified for each device. See id., col. 17, l. 66-col. 18, l.10; col. 19, ll. 6-11; col.
20, ll. 30-35. As noted by the district court, the words “specified” and “each” reaffirm
that these claims require individual, device-by-device association. Moreover, the
ultimate creation of a “device-specific” format requires at least two different device-
04-1572 7
specific styles. Otherwise, the references in the claims to individualized, device-by-
device association of styles with user output devices and corresponding creation of a
device-specific formatted output would be meaningless.
The specification supports this construction as well. The specification reads:
According to one embodiment of the present invention, a system for
automatically generating output from an on-line analytical processing
system based on scheduled services specified by subscribers of the
system is provided. The system processes scheduled services in an on-
line analytical processing system with each service comprising at least
one query to be performed by the on-line analytical processing system.
The system then automatically forwards output from the services to one
or more subscriber output devices specified for that service. Users may
define new services, including the schedule of the services and the type,
such as alert services or scheduled services, and may also subscribe to
the services provided by the system. . . . The output devices the system
may forward output to may comprise electronic mailbox, facsimile, printer,
mobile phone, telephone, pager, PDA or web pages.
Id., col. 4, l. 64-col. 5, l. 22 (emphases added).
While this paragraph does state the system may ultimately forward output to only
“one” output device, it does not address at all a minimum capacity to support a number
of output formats (e.g., only one). Instead, this paragraph is open to an interpretation
requiring support for multiple types of subscriber output devices, see id., col. 5, ll. 19-22,
even though, in practice, all the subscribers may receive their subscription via only one
format (e.g., e-mail or another suitable format). Therefore, this paragraph does not
conflict with a claim construction requiring support for multiple device types or an
association of styles with devices on an individual, device-by-device basis. The district
court read the specification correctly in its well-reasoned decision. See Patent
Judgment, 331 F. Supp. 2d at 443 (commenting that, while the system must be
structured to support multiple device types, in operation, it is not necessary for the
output devices to be different). In sum, based on the claim language in proper context
04-1572 8
and the specification that supplies much of that context, the district court correctly
interpreted the claims.
The district court then turned correctly to analyze Business Object’s accused
product, i.e. the Broadcast Agent Publisher (Publisher). “[I]nfringement is assessed by
comparing the accused device to the claims[;] the accused device infringes if it
incorporates every limitation of a claim, either literally or under the doctrine of
equivalents.” Nazomi Commc’ns, Inc. v. Arm Holdings, PLC, 403 F.3d 1364, 1732
(Fed. Cir. 2005). If, however, even one claim limitation is missing or not met, there is no
literal infringement. Mas-Hamilton Group v. LaGard, Inc., 156 F.3d 1206, 1211 (Fed.
Cir. 1998).
In this case, the district court concluded that Publisher does not contain each of
the limitations of the asserted claims:
In Publisher, users are subscribed to “publications,” which are similar to
[the] services [disclosed in the ’050 patent]. A publication is a “broadcast”
of information to a group of “recipients.” The creator of the publication
determines who is a recipient of the publication and when it is sent. The
publication sent to a recipient is simply information obtained through a
query or queries on a database. The Publisher software is only designed
to be run with email. In other words, the recipient output device is simply
an email address. There are, however, several different formatting
options for such email, depending upon the type of email server
employed.
See Patent Judgment, 331 F. Supp. 2d at 437. As noted by the district court, Publisher
“does not make any association between the [output] devices and the format. The
system does not know what the devices are or the styles that each device needs to
properly receive and display output.” Id. at 439-40. Rather, “[i]t only supports one style
per publication.” Id. at 443. Thus, Publisher does not provide an association between
devices and device-specific styles on a device by device basis as required by the
04-1572 9
court’s claim construction. For at least this reason, the district court properly concluded
that Business Objects does not literally infringe.
The district court further determined that MicroStrategy could not “rely on the
doctrine of equivalents to prove infringement” because MicroStrategy’s expert “failed to
[opine] in a sufficient manner regarding the doctrine of equivalents.” Id. at 445 (citing
Zelinshi v. Brunswick Corp., 185 F.3d 1311 (Fed. Cir. 1999) (finding a conclusory
statement by a patent attorney expert insufficient to prove infringement under the
doctrine of equivalents)). Because MicroStrategy does not challenge this finding on
appeal, this court need not address infringement by equivalents.
In brief, the district court properly construed the disputed claim terms and
properly concluded that Business Object’s Publisher product cannot infringe.
Accordingly this court affirms the district court’s grant of summary judgment of non-
infringement.
III.
On MicroStrategy’s four business tort claims, the district court disposed of much
of the dispute with various evidentiary rulings that excluded MicroStrategy’s evidence on
damages and causation. MicroStrategy’s tort case relied heavily on the presentation of
its damages expert, David E. Yurkerwich,1 and his three expert reports (collectively
referred to as “the expert reports”). These three expert reports, however, were
excluded primarily due to a flawed methodology that rendered them speculative and
unreliable. MicroStrategy’s tort case also relied on non-expert damage theories that
1
According to Yurkerwich’s initial expert report, he is a managing director
and chairman of InteCap, Inc., an international consulting firm related to intellectual
property and complex commercial disputes.
04-1572 10
were excluded due to a failure to timely supplement discovery interrogatories. As
discussed below, the district court did not abuse its discretion in making these
evidentiary rulings.
The district court first excluded Yurkerwich’s initial expert report, dated July 17,
2002, due to the use of a flawed methodology. The district court found that the initial
expert report did not consider relevant factors in its damages analysis, and did not link
any single instance of misconduct to a specific amount of damages. MicroStrategy, Inc.
v. Business Objects, S.A., Civil Action No. 2:01cv826, slip op. at 5-9 (E.D. Va. Dec. 2,
2002) (Exclusion Order). While Yurkewich later attempted to supplement that initial
expert report, the district court excluded the additional information as well because it
contained the same flawed methodology. Moreover, the “supplement” contained new
opinions and doubled the amount of damages, which prevented it from filling the role of
a true supplement to a previously filed report. Thus, Yurkerwich’s second expert report
was untimely, having been filed in violation of the district court’s scheduling order and
not being a true supplement to the initial report. Id., slip op. at 14-19. Finally, the
district court refused to allow MicroStrategy to submit a third expert report (the “revised”
report) because, yet again, it contained the same flawed methodology as the initial
expert report and the supplement, and because it was filed in violation of the district
court’s scheduling order. Id., slip op. at 19-21. Without reports to support any
testimony, the district court refused to allow Yurkerwich to testify at trial. These
evidentiary rulings (collectively referred to as “the expert rulings”) left MicroStrategy with
little evidence of damages or causation.
04-1572 11
These expert rulings alone, however, do not tell the complete story. Rather, at
trial, the district court also prevented MicroStrategy from introducing its non-expert
damages theories because MicroStrategy had not supplemented discovery
interrogatories. The combined effect of the expert rulings and the exclusion of
MicroStrategy’s non-expert damages theories left MicroStrategy with little or no
evidence of damages or causation.
A brief summary of MicroStrategy’s financial problems sets the scene for review
of the district court’s exclusion orders. During the “dot com” bubble burst of the late
1990s, MicroStrategy began to suffer severe financial problems. A major accounting
error, however, exacerbated MicroStrategy’s problems and required a downward
readjustment of its 1997, 1998, and 1999 earnings reports. Exclusion Order, slip op. at
2. In the aftermath, MicroStrategy’s stock plummeted 62% in one day, eventually falling
from a high of $313 per share to a low of 49 cents per share. The company also faced
a U.S. Securities & Exchange Commission (SEC) investigation and a series of class
action law suits. Id. As MicroStrategy fought to remain solvent, it laid off two thirds of
its workforce and cut its sales and marketing budget in half. Id. MicroStrategy’s chief
executive officer (CEO) summed up this period in three words: “It was painful.”
With this backdrop, the district court properly identified the shortcomings in
MicroStrategy’s expert reports. Confronted first with the initial expert report, the district
court properly concluded that, despite the rather obvious role that MicroStrategy’s
financial instability played in the company’s ongoing struggles, Yurkerwich attributed all
of the company’s post 2000 losses solely to the alleged tortious conduct by Business
Objects. No wonder that the district court found that the expert report did not link a
04-1572 12
single misconduct to a specific injury. See Tr. of Pending Mot., No. 2:01cv826 at 43
(E.D. Va. Sept. 19, 2002).2
MicroStrategy claims that Yurkerwich accounted for these grave market set-
backs by selecting the year 2000 as his baseline. However, while the last year of the
downward adjustment of income was indeed 1999, Yurkerwich provided no basis for
assuming that all of MicroStrategy’s financial struggles and corporate restructuring,
which were far reaching in scope and breadth, had no lingering effects beyond 1999.
The record contained no indication that these economic set-backs had no effect in 2000
and thereafter. Moreover, even if those set-backs could be contained in the period prior
to 2000, Yurkerwich’s report also did not account for several other major factors, such
as the introduction of new products by Business Objects. In brief, Yurkerwich’s report
ignored any significant factor that might have attributed MicroStrategy’s difficulties to
factors other than the torts. Thus, the district court properly perceived that Yurkerwich’s
report did not accurately link the alleged damages to the torts. Instead the record
suggests that other market factors caused most, if not all, of the damage to
MicroStrategy, which highlights the need for reliable proof of the specific amount
attributable to the alleged tortious acts.
In the direct, but supportable, terms of the district court, “[t]his report does not
pass the red face test. It does not pass the Daubert test. It does not pass the Rule 702
test. . . . I read the report before I read any of the briefs, and I, frankly, was appalled at
2
The evidentiary rulings initially were ordered by Magistrate Judge Tommy
E. Miller, who presided over various portions of the trial below. All of Judge Miller’s
rulings were upheld by District Court Judge Friedman on appeal. Thus, the rulings of
both Judge Miller and Judge Friedman are collectively referred to as “the district court’s
rulings” for purposes of this opinion.
04-1572 13
it.” Id. Exercising its gatekeeper role, the district court properly excluded the initial
expert report on this basis. Exclusion Order, slip op. at 8.
The rule in the Fourth Circuit that an expert need not consider every possible
factor in rendering an opinion does not provide a basis for finding that the district court
abused its discretion in excluding the initial expert report. See Westbury v. Gislaved
Gummi AB, 178 F.3d 257 (4th Cir. 1999) (holding that an expert’s conclusions “should
not be excluded because he or she has failed to rule out every possible alternative
cause.”). This court does not read its sister circuit’s rule to eliminate the district court’s
obligation to weigh the admissibility of expert evidence. The Fourth Circuit does not
mean that an expert’s testimony is admissible so long as the expert is qualified, even if
the expert’s basis for rendering the opinion in question is speculative and unreliable, if
not groundless. To the contrary, the district court has an obligation to weigh the
admissibility of expert evidence under the Federal Rules. “[U]nder the [Federal] Rules
[of Evidence] the trial judge must ensure that any and all scientific testimony or
evidence admitted is not only relevant, but reliable.” Daubert v. Merrell Dow Pharm.
Inc., 509 U.S. 579, 589 (1993). While an expert need not consider every possible factor
to render a “reliable” opinion, the expert still must consider enough factors to make his
or her opinion sufficiently reliable in the eyes of the court. See United States v.
Barnette, 211 F.3d 803, 815 (4th Cir. 2000) (“The trial judge must ensure that the
evidence is based on scientific knowledge, or is reliable, and ensure that the evidence
will assist the trier of fact, or is relevant.”) (citing Daubert, 509 U.S. at 592); United
States v. Prince-Oyibo, 320 F.3d 494, 498 (4th Cir. 2003) (A trial court must ensure
expert testimony is both reliable and relevant.); United States v. Hammoud, 381 F.3d
04-1572 14
316, 337 (4th Cir. 2004) (en banc) vacated on other grounds, 125 S.Ct. 1051 (2005) (“In
determining whether proffered expert testimony is reliable, the district court has broad
discretion to consider whatever factors bearing on validity that the court finds to be
useful; the particular factors will depend upon the unique circumstances of the expert
testimony involved.”) (citing Kumho Tire Co. v. Carmichael, 526 U.S. 137, 152-53
(1999)); United States v. Cruz, 363 F.3d 187, 192 (2nd Cir. 2004) (The court must
evaluate whether proffered testimony has a sufficiently reliable foundation to permit it to
be considered.).
This pre-admission determination (i.e., whether or not enough factors have been
considered to make an expert report sufficiently reliable) is committed to the sound
discretion of the district court, not the jury. See Hammoud, 381 F.3d at 337; Westbury,
178 F.3d at 261; Prince-Oyibo, 320 F.3d at 499. Stated simply, an expert need not
consider every possible factor. At the same time, the district court has the responsibility
to exclude an expert opinion that overlooks factors that render the testimony unreliable
and/or speculative.
In this case, the record shows that the excluded expert report did not link a single
loss to a specific misconduct and ignored significant factors that might have excluded
the torts as the reason for the losses. For these reasons, the district court was well
within its discretion to exclude it.
As to the supplement and revised report, the district court also excluded these
reports because they both suffered from the same flawed methodology as the initial
expert report. See Exclusion Order, slip op. at 18-19, 21. While challenging those
flaws, MicroStrategy admits that the supplemental and revised reports use the same
04-1572 15
basic methodology and base data as the initial July Report. See id., slip op. at 21.
Because this court affirms the district court’s exclusion of the initial report due to its
flawed methodology, this court affirms the district court’s exclusion of the supplemental
and revised reports as well. This court need not address whether the supplement or
revised report were timely filed.
The district court also acted within its discretion in preventing Yurkerwich from
testifying at trial. See id., slip op. at 9-12. Specifically, Rule 702 of the Federal Rules of
Evidence allows for the testimony of an expert witness if:
(1) the testimony is based upon sufficient facts or data, (2) the testimony is
the product of reliable principles and methods, and (3) the witness has
applied the principles and methods reliably to the facts of the case.
Fed. R. Evid. 702 (effective Dec. 1, 2000). In this case, the district court determined
that Rule 702 was not satisfied, in part, because Yurkerwich’s principles and methods,
as disclosed in his three expert reports, were speculative and unreliable. For this
reason alone, the district court was well within its discretion to prevent Yurkerwich from
testifying.
This court is aware of the Fourth Circuit’s rule in Southern States Rack & Fixture,
Inc. v. Sherwin-Williams Co., 318 F.3d 592 (4th Cir. 2003), discussing whether
exclusion of testimony is an appropriate sanction for a late disclosure to the opposing
party. MicroStrategy argues that because Yurkerwich’s testimony is supported by his
supplement and revised report, under Southern States his testimony is admissible even
if these reports were untimely. The Southern States precedent might apply to some
degree if the only reason for excluding Yurkerwich was a tardiness concern. In this
case, however, the district court excluded all of MicroStrategy’s expert evidence, in part,
due to its flawed methodology. Thus Southern States simply does not apply.
04-1572 16
The district court also acted within its discretion in excluding MicroStrategy’s non-
expert damages theories for failure to supplement discovery interrogatories.
Specifically, during the discovery process, Business Objects served an interrogatory on
MicroStrategy that required MicroStrategy to identify its damages theories and the
factual basis and methodology for its calculations. At trial, MicroStrategy sought to
introduce evidence of damages not disclosed in response to that interrogatory.
Therefore, the district court excluded the evidence under Rule 37(c)(1) of the Federal
Rules of Civil Procedure.
MicroStrategy now presents three arguments as to why the district court abused
its discretion in excluding its non-expert damages theories: (1) a supplemental
interrogatory response filed on Oct. 7, 2002 sufficiently disclosed the new damage
theories; (2) even if the Oct. 7, 2002 supplement did not sufficiently disclose it, the
evidence should not have been excluded under the Southern States exclusion test; and
(3) Business Objects did not properly object to introduction of the evidence when it was
introduced. Not one of these theories is persuasive.
MicroStrategy’s first argument directly contradicts statements made at trial,
acknowledging no supplements incorporating the non-expert damages evidence were
ever filed. Specifically, MicroStrategy sought to excuse its failure to supplement
because they had relied on their expert report which the district court excluded on the
eve of trial and left no time to supplement the interrogatory responses again:
THE COURT: You made reference to the [expert] report . . . which is
no longer relevant to this particular case
Mr. MOLL: Hm-hmm
THE COURT: You never supplemented your answers
04-1572 17
Mr. MOLL: No, we didn’t, because again, the procedural posture
of this was, the [expert] report had been submitted at
the time
Based on this exchange (and others in the record), this court must acknowledge
MicroStrategy’s repeated admissions that it did not properly supplement their answers
to Business Objects’ discovery interrogatories.
As to MicroStrategy’s second argument, under the Fourth Circuit’s Southern
States test, the trial court applies a five-factor test to justify harmless nondisclosure of
evidence:
(1) the surprise to the party against whom the witness was to have
testified; (2) the ability of the party to cure that surprise; (3) the extent to
which allowing the testimony would disrupt the trial; (4) the explanation for
the party's failure to name the witness before trial; and (5) the importance
of the testimony.
Southern States, 318 F.3d at 596 (internal quotation marks omitted). Applying these
factors to the present case, the nondisclosure of MicroStrategy’s non-expert damages
theories was neither substantially justified nor harmless. For example, the record
shows that MicroStrategy’s new theories surprised Business Objects on the eve of trial
and prejudiced any response. MicroStrategy could not cure the surprise without
postponing trial and reopening discovery. Moreover, the record shows that most of the
information MicroStrategy sought to introduce was in its possession for over a year
before trial. While this exclusion admittedly left MicroStrategy without evidence of
damages or causation for most of its business tort claims, this factor is only one of five
that does not tip the scale in favor of MicroStrategy, particularly where MicroStrategy
alone is to blame for creating this situation. Thus, this court cannot say the district court
abused its discretion in excluding the new damages theories under the Fourth Circuit’s
Southern States test.
04-1572 18
Finally, the record shows that Business Objects properly objected to introduction
of the evidence:
THE COURT: Aren’t we really getting to one of the main issues in
this case, as to whether or not you all frankly have
answered interrogatories appropriately so that there
would be any element of damages in this particular
case?
....
THE COURT: I mean I’m really, really concerned about it. I haven’t
seen a brief yet from you either.
MR. MOLL: Your Honor, I have –
THE COURT: In response to [Business Object’s] brief.
MR. MOLL: I apologize for that. I have four people here –
THE COURT: I understand that.
MR. MOLL: – I have people that were up all night trying to do
things and have things right, and I apologize that it
wasn’t ready.
As demonstrated by these transcripts, Business Objects objected in understandable
terms to the introduction of this evidence and even filed a brief to protest introduction of
the new damage theories before trial. Thus, this court rejects MicroStrategy’s third
argument as well.
In sum, this court perceives no abuse of discretion in the district court’s exclusion
of MicroStrategy’s expert reports and expert testimony. Nor does this court perceive an
abuse of discretion in the district court’s exclusion of MicroStrategy’s additional non-
expert damage theories. Thus, the district court’s evidentiary rulings must be affirmed.
IV.
Turning now to the merits of MicroStrategy’s four business tort claims,
MicroStrategy’s first business tort claim involves misappropriation of trade secrets. The
district court tried this issue without a jury. The district court examined eighteen
instances where Business Objects had received MicroStrategy information, and
determined that only two actually involved misappropriation of trade secrets.
04-1572 19
MicroStrategy, Inc. v. Business Objects, S.A., 331 F. Supp. 2d 396, 421-29 (E.D. Va.
2004) (Trade Secret Judgment) (see discussion of the “Business Objects Competitive
Recipe” and the “Volume Discount Schedule”). For the trade secret information in
Business Objects’ possession, the district court promptly issued an injunction against its
further use. Id. at 430-31. The parties do not dispute the district court’s findings in this
regard. Thus, this court does not address the propriety of these findings.
The district court did not, however, award damages to MicroStrategy because,
prior to trial, the district court granted partial summary judgment on damages in favor of
Business Objects on the grounds that MicroStrategy did not “show the amount of
damages . . . sustained with reasonable certainty” or “a causal connection between the
damages it suffered and the actions of [Business Objects].” MicroStrategy, Inc. v.
Business Objects, S.A., Civil Action No. 2:01cv826, slip op. at 8 (E.D. Va. Dec. 30,
2002) (Partial Summary Judgment Order). MicroStrategy challenges this grant of partial
summary judgment on appeal, arguing that the district court improperly excluded its
evidence on damages and causation.
Having already concluded in the preceding section that the district court’s
evidentiary rulings were proper, this court affirms the district court’s related grant of
partial summary judgment of damages on this claim to Business Objects. What little
evidence the district court did not exclude was simply insufficient to show causation or
damages with any reasonable certainty.
V.
MicroStrategy’s second business tort claim, tortious interference with contract,
has two aspects. The first aspect involves a non-solicitation clause in MicroStrategy’s
04-1572 20
employee contract. The district court declared this clause invalid and unenforceable as
a matter of Virginia law in a summary judgment order. See MicroStrategy, Inc. v.
Business Objects, S.A., 233 F. Supp. 2d 789, 795 (E.D. Va. 2002) (Non-solicitation
Judgment). The second aspect involves a confidentiality clause in the same employee
contract. The district court granted JMOL to Business Objects on this aspect of the
claim due to MicroStrategy’s failure to show that the purported tortious interference was
a proximate cause of the claimed damages. As discussed below, because
MicroStrategy failed to provide any evidence showing that Business Objects’ purported
interference with the “confidentiality clause” in the employee agreement was the
proximate cause of its claimed damages, the grant of JMOL on this aspect of the
tortious interference with contract claim is affirmed. However, because the non-
solicitation clause in the agreement is valid under Virginia law, the grant of summary
judgment of unenforceability of this clause is reversed.
The Non-solicitation Clause
The non-solicitation clause in the employee contract reads:
I agree that, for the period of one (1) year after termination of my
employment with MicroStrategy for any reason, I will not, directly or
indirectly, seek to influence any employees, agents, contractors or
customers of MicroStrategy to terminate or modify their relationship with
MicroStrategy.
Non-solicitation Judgment, 233 F. Supp. 2d at 794. The district court found the words
“indirect,” “influence,” “modify,” and “relationship” ambiguous, rendering the clause
invalid under Virginia law. Id. at 795. Later, a Virginia state court disagreed, and
upheld the very same provision as valid under Virginia law. See MicroStrategy, Inc. v.
Egrail, Inc., No. 177631 (Va. Cir. Ct. June 20, 2003) (State Court Decision). Thus, this
04-1572 21
court confronts a conflict between a federal district court and a Virginia state court on
purported ambiguity in this Virginia contract.
As a preliminary matter, when a state court has decided a matter of state law, as
in the present case, federal courts should pay careful attention to the state court
decision. See Litton Indus. Prod., Inc. v. Solid State Sys., Corp., 755 F.2d 158, 165
(Fed. Cir. 1985) (“If there is no decision by the state’s highest court, proper regard
should be given relevant rulings of other courts of that state.”) (citation omitted); In re
Byrd, 357 F.3d 433, 438 (4th Cir. 2004) (“A state court judgment is not to be treated
lightly, particularly where it interprets state law.”) (citing Nat’l Bank of Wash. v. Pearson,
863 F.2d 322, 327 (4th Cir. 1988) (deferring to state trial court's interpretation of state
law)). However, the state court decision is not binding on a federal court unless
rendered by the state’s highest court. See Derungs v. Wal-Mart Stores, Inc., 374 F.3d
428, 433 (6th Cir. 2004) (“If the state supreme court has spoken on the issue, its
decision should be followed; if, however, the only precedent is from the state’s
intermediate appellate courts, the intermediate court’s decision should be followed
absent a strong showing that the state supreme court would act in a different manner.”)
(citations omitted); Johnson v. Riddle, 305 F.3d 1107, 1118 (10th Cir. 2002) (“When the
federal courts are called upon to interpret state law, the federal court must look to the
rulings of the highest state court, and, if no such rulings exist, must endeavor to predict
how that high court would rule.”) (citations omitted). Because in this case a Virginia
circuit court (i.e., not the Virginia Supreme court) rendered a decision contrary to the
federal district court, this court accords the state decision respect but is not bound to
follow it.
04-1572 22
In Virginia, the ambiguity of contract language is a question of law subject to de
novo review. Eure v. Norfolk Shipbuilding & Drydock Corp., 263 Va. 624, 631 (2002).
Virginia enforces restrictive covenants if reasonable. Non-Solicitation Judgment, 233 F.
Supp. 2d at 794 (citing Foti v. Cook, 220 Va. 800, 805 (1980)). A three-part test
determines reasonableness in Virginia:
(1) Is the restraint, from the standpoint of the employer, reasonable in the
sense that it is no greater than necessary to protect the employer in some
legitimate business interest?; (2) From the standpoint of the employee, is
the restraint reasonable in the sense that it is not unduly harsh and
oppressive in curtailing his legitimate efforts to earn a livelihood?; [and] (3)
Is the restraint reasonable from the standpoint of a sound public policy?
Id. (quoting Alston Studios, Inc. v. Lloyd V. Gress & Assocs., 492 F.2d 279, 282-83 (4th
Cir. 1974) (citing Meissel v. Finley, 198 Va. 577 (1956))). Because of the ambiguity, the
district court determined that the clause violated all three parts of the test. For example,
the district court hypothesized: “A former employee of the plaintiff has no real yardstick
to measure what actions would influence a customer to modify its relationship with
MicroStrategy and cause him or her to be in violation of the clause.” Id. (emphasis
added).
The state court, however, disagreed:
My admiration for the federal court, and Judge Friedman knows no
bounds. Of course, this Court’s not constrained by those opinions, and
quite frankly, I think Judge Friedman was straining at nats on paragraph
five here.
I don’t find the ambiguity that he finds. I certainly agree that all of these
cases are fact dependent. But this is a facial attack and I find facially that
this does not violate Virginia law. I think it’s not ambiguous.
[The agreement] says [the former employee] will not seek to influence any
employees or agents or contracts or customers to terminate or modify
their relationship with Microstrategy. I don’t see how it can be much
clearer.
04-1572 23
State Court Decision, at 18-19.
Upon review of the district court, this court perceives no invalidating ambiguity
under Virginia law. The contract is not ambiguous on its face. Rather the language
prohibits former employees from taking any action that drives MicroStrategy customers
away altogether or prompts a MicroStrategy customer to buy less (but still some) from
the company. The words “influence,” “modify,” and “relationship” in context convey this
meaning. Under the clause, an employee promised to refrain from “influencing”
MicroStrategy “employees, agents, contractors, or customers.” The term “influencing”
conveys the meaning of altering or affecting the business conduct of the named parties.
The term “modify,” particularly when placed next to the words “terminate or,” conveys
the concept of altering or affecting business conduct in some way short of complete
termination of relationships with MicroStrategy. Finally, the term “relationship” in this
context conveys the meaning of business conduct, whether that of an employee, agent,
contractor, or customer, as specified earlier in the contractual clause. The court
perceives no fatal ambiguity in this broad, but straight-forward terminology. Moreover,
the “direct or indirect” clause does not render the claim ambiguous. See Foti, 220 Va.
at 434 (upholding a solicitation clause that prohibited former employees from “soliciting
and accepting employment directly or indirectly from the appellant’s clients.”) (emphasis
added).
In sum, this court concludes that the district court erred in finding the non-
solicitation clause invalid and unenforceable as a matter of Virginia law. This court
accordingly remands this aspect of the tortious interference with contract claim to the
district court for further proceedings. This court is aware that MicroStrategy will have
04-1572 24
difficulty in showing any damages associated with this claim. Nonetheless this court
remands to permit the district court to consider this issue further.
The Confidentiality Clause
The confidentiality clause in MicroStrategy’s employee contracts reads:
I agree that I have no right to use for the benefit of myself or anyone other
than MicroStrategy, any of the Confidential Information of MicroStrategy or
MicroStrategy’s Business Partners of which I become informed during my
employment, whether or not developed by me. . . . Upon termination of
my employment, I shall promptly deliver to MicroStrategy all Confidential
Information which is in my possession or under my control.
The district court allowed the confidentiality clause claim to go to trial, but, at the close
of MicroStrategy’s case in chief, granted JMOL to Business Objects.
Under Virginia law, a party may sue for tortious interference with contract
because “the right to performance of a contract and the right to reap profits therefrom
are property rights which are entitled to protection in the courts.” Chaves v. Johnson,
230 Va. 112, 120 (1985) (quoting Worrie v. Boze, 198 Va. 533, 536 (1956)). However,
the plaintiff must show:
(1) the existence of a valid contractual relationship or business
expectancy; (2) knowledge of the relationship or expectancy on the part
of the interferor; (3) intentional interference inducing or causing a breach
or termination of the relationship or expectancy; and (4) resultant damage
to the party whose relationship or expectancy has been disrupted.
Id. (citing Calbom v. Knudtzon, 65 Wash. 2d 157, 162-63 (1964)). MicroStrategy’s
tortious interference claim is deficient in the fourth element. The district court
determined that MicroStrategy did not provide sufficient evidence to allow a reasonable
jury to conclude that Business Objects’ acts were the proximate cause of any damage.
As noted earlier, MicroStrategy did not account for other potential causes for its loss of
business and Business Objects’ gain in business over the same period (e.g.,
04-1572 25
MicroStrategy’s significant financial problems and Business Objects’ introduction of new
products).
“The proximate cause of an event is that act or omission which, in natural and
continuing sequence, unbroken by an efficient intervening cause, produces the event,
and without which that event would not have occurred.” Atkinson v. Scheer, 256 Va.
448, 454 (1998) (quoting Beale v. Jones, 210 Va. 519, 522 (1970)). “[W]hen, as here,
the defendant asserts the possibility of another cause for the plaintiff’s injuries, the
plaintiff’s burden remains that of proving by a preponderance of the evidence that the
defendant's acts were a proximate cause of the plaintiff’s injuries.” Honsinger v. Egan,
266 Va. 269, 275-76 (2003) (citing Norfolk & W. Ry. Co. v. Poole’s Adm’r, 100 Va. 148,
154 (1902)). Thus, to show proximate cause, MicroStrategy need not exclude every
other possible cause of its loss of business and Business Objects’ gain in business. Id.
(citing Wooldridge v. Echelon Serv. Co., 243 Va. 458, 461 (1992)). However, “[w]here
the evidence shows that any one of several things may have caused the injury, for
some of which defendant is not responsible, and leaves it uncertain as to what was the
real cause, then plaintiff has failed to establish his case.” Chesapeake & O. Ry. Co. v.
Seay, 195 Va. 566 (1954) (quoting Kenny Co. v. Dennis, 167 Va. 417 (1937)).
In this case, the record shows multiple causes of MicroStrategy’s loss of
business and Business Objects’ gain in business. Therefore, the district court correctly
concluded that MicroStrategy must demonstrate the amount of damages attributable to
Business Objects with reasonable certainty. See Techdyn Sys. Corp. v. Whittaker
Corp., 245 Va. 291, 296 (1993) (commenting that where there is evidence of damages
from multiple causes, the plaintiff must show the share attributable to the defendant with
04-1572 26
reasonable certainty) (citations omitted); Hale v. Fawcett, 214 Va. 583, 586 (1974)
(holding that summary judgment should not have been entered where the proof was too
uncertain to allow a jury to apportion the damages); Panther Coal Co. v. Looney, 185
Va. 758, 771-72 (1946) (no recovery where the plaintiff has not shown to a reasonable
certainty what share of the damages were caused by the defendant). Based on the
evidence presented at trial, the district court properly concluded that MicroStrategy did
not meet this burden in its case in chief.
MicroStrategy’s evidence at trial emphasized that it suffered a loss in business
during the same period that Business Objects obtained new business. From this
temporal connection, MicroStrategy wanted the jury to infer that the purported tortious
acts by Business Objects were the sole cause of its losses. Accordingly it sought an
award of damages for the entire value of the business gained by Business Objects.
Yet, the record contradicts this presentation. For example, MicroStrategy’s Chief
Operating Officer (COO) admitted at trial that the “principal determination or principal
criteria [in convincing a new customer to buy software] is does the software actually
provide value, does it do what the customer needs it to do technically.” This testimony
suggests that Business Objects’ success during this period may have been partly or
wholly attributable to its innovative products. In addition, the COO’s testimony further
suggests that MicroStrategy’s loss of sales during this period may be attributable in part
to the significant financial problems occasioned by its accounting errors. This testimony
coupled with other entries in the record show that, as the district court correctly
perceived, a reasonable jury would not be able to infer that the torts caused the damage
alleged by MicroStrategy. The record does not support the vast inference
04-1572 27
MicroStrategy invited. Of course, this causation problem springs from the exclusion of
MicroStrategy’s expert reports and non-expert damages theories. This court has
already determined that the district court properly excluded that evidence under
Daubert.
In brief, because MicroStrategy had the burden to prove causation and damages
by preponderant evidence, this court finds that the district court properly granted JMOL
to Business Objects at the close of MicroStrategy’s case in chief. See Carr v. Citizens
Bank & Trust Co., 228 Va. 644 (1985) (“Where the loss results from several causes, the
plaintiff must show within a reasonable degree of certainty the amount chargeable
against a particular defendant. If the proof is too uncertain to allow a jury to apportion
the part for which the defendant is responsible, the issue should not be submitted to the
jury.”) (internal citation omitted).
V.
MicroStrategy’s third business tort claim involves violation of the Computer Fraud
and Abuse Act, 18 U.S.C. § 1030. The district court dismissed this claim on summary
judgment because, again, MicroStrategy failed to show the amount of damage it
suffered with reasonable certainty or a causal connection between the damages it
suffered and the actions of Business Objects. Partial Summary Judgment Order, slip
op. at 6. MicroStrategy does not challenge this grant of partial summary judgment on
appeal. Thus, this court does not address the propriety of this grant.
VI.
MicroStrategy’s final business tort claim involves conspiracy to willfully and
maliciously injure MicroStrategy in its trade, business, profession, and reputation (the
04-1572 28
conspiracy claim) per Va. Code § 182.499. MicroStrategy pled this claim as predicated
on a misappropriation of trade secrets. Partial Summary Judgment Order, slip. op. at
10. Because the Virginia Uniform Trade Secrets Act (VUTSA), Va. Code § 59.1-341(A),
preempts claims predicated on a misappropriation of trade secrets, the district court
granted summary judgment for Business Objects. This court agrees that the VUTSA
preempts MicroStrategy’s claim as pled.
The district court’s interpretation of the VUTSA implicates the meaning of the
term “other laws” in the preemption clause. Specifically, the VUTSA’s preemption
clause reads:
A. Except as provided in subsection B of this section, this chapter
displaces conflicting tort, restitutionary, and other law of this
Commonwealth providing civil remedies for misappropriation of a trade
secret.
B. This chapter does not affect:
1. Contractual remedies whether or not based upon
misappropriation of a trade secret; or
2. Other civil remedies that are not based upon misappropriation of
a trade secret; or
3. Criminal remedies, whether or not based upon misappropriation
of a trade secret.
Va. Code § 59.1-341 (emphasis added). The question before this court is simply
whether or not the district court properly concluded that “other law” includes statutory
causes of action. See Partial Summary Judgment Order, slip op. at 11 (citing Smithfield
Ham & Prods. Co. v. Portion Pac, Inc., 905 F.Supp. 346, 348-49 (E.D. Va. 1995)). This
court reviews the district court’s interpretation of VUTSA without deference. Warner-
Lambert Co. v. Apotex Corp., 316 F.3d 1348, 1355 (Fed. Cir. 2003) (citing Waymark
Corp. v. Porta Sys. Corp., 245 F.3d 1364, 1366 (Fed. Cir. 2001)).
“The starting point of every case involving construction of a statute is the
language itself.” Warner-Lambert, 316 F.3d at 1355 (quoting Blue Chip Stamps v.
04-1572 29
Manor Drug Stores, 421 U.S. 723, 756 (1975)). “Moreover, we ‘give effect, if possible,
to every clause and word of [the] statute.’” Id. (quoting United States v. Menasche,
348 U.S. 528 (1955)). However, words of a statute are not to be interpreted in isolation;
rather a court must look to the provisions of the whole law and to its object and policy.
Id.; BlackLight Power, Inc. v. Rogan, 295 F.3d 1269, 1273 (Fed. Cir. 2002).
In this case, the VUTSA contains two sections that are to be read together in
addressing the extent to which the act preempts other forms of relief. Section A broadly
states that, except as provided in subsection B of this section, this chapter displaces
conflicting tort, restitutionary, and “other law” of this Commonwealth providing civil
remedies for misappropriation of a trade secret. See Va. Code § 59.1-341(A).
Section B then proceeds to exclude all contractual and criminal remedies, whether or
not based upon misappropriation of a trade secret, and those civil remedies that are not
based upon misappropriation of a trade secret. See Va. Code § 59.1-341(B). When
read together, sections A and B preempt all claims for relief, including both common law
and statutory causes of action, if they provide a civil remedy for misappropriation of
trade secrets unless they are contractual or criminal in nature. The district court
properly analyzed this language in its opinion.3
3
Contrary to this court’s holding, one state court has held that the VUTSA
does not preempt a statutory conspiracy claim. See Lockheed Martin Fed. Sys., Inc. v.
Cincinnati Bell Info. Sys., Inc., 46 Va. Cir. 228, 1998 WL 972282 (Va. Cir. Ct. 1998). In
Lockheed Martin, the court, without any explanation, stated “a claim for civil conspiracy
under 18.2-499-500 of the Code of Virginia is not preempted by the Uniform Trade
Secrets Act.” Lockheed Martin, 1998 WL 972282, at *1. Lockheed Martin reached its
conclusion in one sentence. This sketchy conclusion gives this court very little
reasoning to consider and respect in its analysis. See Derungs, 374 F.3d at 433. To
the extent that MicroStrategy relies on Lockheed Martin, this court concludes that the
Virginia Supreme court would rule otherwise if faced with this issue.
04-1572 30
The district court also properly concluded that the preemption clause barred
MicroStrategy’s claim as pled. Specifically, MicroStrategy argued that even if the
VUTSA preempts statutory causes of action based upon misappropriation of trade
secrets, courts have allowed parties to proceed with alternative claims until and unless
the court can determine whether or not the facts demonstrate that misappropriation of
trade secrets actually occurred. See Stone Castle Fin., Inc. v. Friedman, Billings,
Ramsey & Co., 191 F. Supp. 2d 652, 659 (E.D. Va. 2002) (“[U]nless it can be clearly
discerned that the information in question constitutes a trade secret, the Court cannot
dismiss alternative theories of relief as preempted by the VUTSA.”); Smithfield Ham,
905 F.Supp. at 351 (“Because Plaintiff has alleged two distinct common law theories of
recovery which do not depend upon the misappropriation of a trade secret allegations,
those claims are not preempted by the provisions of the VUTSA.”). This court need not
address such a theory, however, as the facts of this case are quite different from those
in Stone Castle and Smithfield Ham. MicroStrategy specifically predicated its
conspiracy claim on a misappropriation of trade secrets. Partial Summary Judgment
Order, slip. op. at 10. Then, MicroStrategy set forth two theories that both depend upon
the misappropriation of a trade secret, not a misappropriation theory and an
independent and alternative conspiracy theory. Thus, MicroStrategy’s pleading placed
its claim under the heading of a misappropriation of trade secrets. The district court
recognized this distinction, and properly found that, under these facts, the VUTSA
preempted the conspiracy claim.
04-1572 31
VII.
In conclusion, because the district court properly disposed of the patent claim,
the misappropriation of trade secrets claim, and the conspiracy claim, this court affirms
those decisions. However, because the district court improperly determined that the
non-solicitation clause was invalid and unenforceable as a matter of Virginia law, this
court remands one aspect of the tortious interference with contract claim for further
proceedings.
COSTS
Each party shall bear its own costs.
AFFIRMED IN PART, REVERSED IN PART, and REMANDED
04-1572 32
Microstrategy, Inc. v. Business Objects, s.a.
Court: Court of Appeals for the Federal Circuit
Date filed: 2005-11-17
Citations: 429 F.3d 1344
Copy Citations