LightLab Imaging, Inc. v. Axsun Technologies, Inc.

Summary

The Supreme Judicial Court of Massachusetts reviewed a judgment involving breach of contract, trade secret misappropriation, tortious interference, unjust enrichment, and G. L. c. 93A violations arising from the development and disclosure of tunable lasers for optical coherence tomography systems. The court affirmed the exclusion of speculative expert testimony concerning future lost profits and the denial of permanent injunctive relief absent proof of likely recurrence. It directed that the final judgment include an additional declaration concerning the parties' contractual sales restrictions.

Holdings

1. The trial judge did not abuse her discretion by excluding the expert's opinion concerning lost profits after April 28, 2014. General acceptance of the discounted-cash-flow method did not end the Daubert-Lanigan inquiry, and the opinion was properly excluded because its use of an unvalidated and untestable 'first mover advantage' methodology and its factual assumptions rendered it unreliable and speculative.
2. The trial judge properly denied permanent injunctive relief because LightLab relied on past misconduct but failed to prove a reasonable likelihood that the defendants would use or disclose the claimed trade secrets in the future.
3. Because LightLab requested declaratory relief and prevailed on its motion for summary judgment concerning contract interpretation, it was entitled to a declaration that Section 3 of the agreement barred Axsun from supplying tunable lasers to Volcano in all fields of use, not only human coronary artery imaging, during the period of LightLab's exclusive right.

Questions Presented

1. Whether the trial judge abused her discretion by excluding expert testimony concerning lost profits after the expiration of the parties' contract because the methodology was unreliable under the Daubert-Lanigan standard and the opinion was speculative.
2. Whether the trial judge abused her discretion by denying permanent injunctive relief against future use or disclosure of alleged trade secrets where LightLab proved past misappropriation but did not show a reasonable likelihood of recurrence.
3. Whether LightLab was entitled to a declaration reflecting the contract-interpretation ruling that Axsun's exclusivity provision barred supplying tunable lasers to Volcano in all fields of use during the period of LightLab's exclusive right.

Disposition

affirmed