Damages in Trade Secrets Misappropriations Case Expected to Reach $10 Million Reports Law.Com

After a Los Angeles federal jury found that a Houston-based urologist and others stole trade secrets from Dr. James Elist, the urologist who invented the first FDA-cleared cosmetic penile implant, Partner Ryan Baker told Law.com in a June 20, 2023 story that damages could reach $10 million. Baker said the jury was limited to finding that misappropriation occurred and that the court will decide the amount of damages later based on a hypothetical reasonable royalty analysis.

“The idea is [Dr. Cornell] already let the horse out of the barn,” Baker said. “The main issue from our perspective is we have these things that were trade secrets that would have had an infinite life as long as we could keep them confidential.” A jury of eight in the Central District of California found that defendants Cornell and all the other defendants misappropriated trade secrets, including ‘voids of space within the silicone body of the penile silicone implant to add softness and elasticity,’ according to the verdict form reported Law.com.

Disgorgement of profits was not possible because, prior to any FDA clearance, plaintiffs obtained an injunction preventing Cornell’s company from further commercializing its implant, Baker told Law.com. Instead of lost profits or disgorgement, plaintiffs will seek royalty fee damages based on a hypothetical license – the fees defendants would have paid if they had entered into a licensing agreement with Elist and his company, International Medical Devices Inc

“In this ‘but for’ world, our expert witness will come up with some hypothetical damages figure,” said Baker. Under the California Uniform Trade Secrets Act, the judge will decide the appropriate reasonable royalty..