Tuesday, January 09, 2007

SPS Tech versus Motorola - Trade Secrets

Broward, Fla., Circuit Judge Leroy Moe ruled Monday that Motorola willfully violated court orders during a $10 billion trade secrets trial late last year. The ruling could expose the electronics giant to millions in fines, attorney fees and trial costs.

Judge Moe agreed with lawyers for SPS Technologies, which sued Motorola, that during the eight-week trial which ended with a hung jury in November, Motorola placed experts on the stand who previously had read other witnesses' testimony. That violated the witness sequestration order he imposed at the start of the trial and prejudiced the plaintiff's case, he said.

But Moe rejected SPS Technologies' motion for a directed verdict in the trade secrets case.

During Monday's hearing, Moe said he "almost threw up" during the trial when Motorola's expert witnesses acknowledged they had read the testimony of plaintiff experts before going on the stand. He said this action was prejudicial and that "sanctions are in order."

The SPS attorneys asked Moe to fine Motorola $118 million -- $100 million in sanctions, $11 million in attorney fees and $7 million in costs. The amount of attorney fees, costs and sanctions to be levied against Motorola will be determined in a later hearing.

But Motorola's attorney, Dinah Stein of Miami, argued at the hearing that her client wasn't at fault for the violations of the sequestration order. She said the rule was violated through the inadvertent actions of Motorola's trial counsel, who did not think the defense was violating the rule.

Now-defunct SPS Technologies of Fort Lauderdale, Fla., sued Schaumburg, Ill.-based Motorola in 2002, claiming that Motorola stole trade secrets to create a vehicle-tracking device. SPS alleged that Motorola stole the technology from the smaller company after the two companies broke off negotiations in 2000 to develop a joint venture.

Juan Cantor and Roberto La Rocca, the two principals of SPS, claim they spent six years developing the technology. They said they came up with the idea after a number of the Cantor family's security trucks were broken into in Venezuela. The plaintiff sought at least $10 billion in damages.

Publicly traded Motorola reported $10.6 billion in revenues in the third quarter of 2006.

The trial started in early October. Judge Moe ordered the sequestration of witnesses on Oct. 9, at Motorola's request.

Prominent Stuart litigator Willie Gary was lead counsel for SPS during the trial. Ed Moss of Shook Hardy & Bacon in Miami was one of a number of attorneys who represented Motorola.

After the sequestration rule went into effect, Moe ruled that one of Motorola's experts on damages could not remain in the courtroom while one of SPS' experts testified. Moe also denied SPS' request to have one of its experts remain in the courtroom after he testified to advise attorneys on expert testimony.

Yet Motorola's damages expert Daniel McGavock and trial witness Douglass Locke both admitted during the trial that they read the testimony of SPS' witnesses.

On Monday, SPS attorney Manny Socias, of Gary Williams Parenti Finney Lewis McManus Watson & Sperando in Orlando, Fla., said the trial was "fundamentally tainted by violations of the sequestration rule." Gary, his Stuart, Fla.-based partner, called it an "in-your-face violation."

Motorola "violated you [Judge Moe] in the worst way and I don't care who they are or how big they are, they shouldn't have the right to get away with it," Gary said. A sanction of $100 million is the only way to get the message across to the defendant, he argued.

Stein, of Hicks & Kneale, said if Motorola had willfully violated the rule, the company wouldn't have asked McGavock on direct examination if he had read testimony of SPS experts. "This is not the action of a party trying to deceive the court or obtain an unfair judgment," Stein said Monday.

Stein also said that the defense attempted to inform Moe that Locke also had read testimony but Moe said he didn't want to hear it.

In addition, she contended that the testimony of Motorola's witnesses was not influenced by their reading the other side's testimony. She said the plaintiff never compared the Motorola witnesses' depositions with their trial testimony to determine if their statements changed.

But Socias argued that the violations of the sequestration rule were the fault of Motorola and not just the fault of the company's attorneys. He said Motorola had a number of attorneys in the courtroom, including its own in-house counsel.

Socias asked Moe to issue a directed verdict holding Motorola liable in the trade secrets case, then have just the damages portion of the case proceed to the jury.

Moe denied the plaintiff's motion for a directed verdict. A new trial could begin as early as March.

Regarding attorney fees and costs, Moe said he would attempt to separate out the costs arising from Motorola's violation of his orders, so that the company wouldn't have to pay attorney fees and costs for the entire trial.

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