Model Train Trade Secrets Verdict Falls Because of Improper "Expert" Comparison

Case: Mike's Train House v. Lionel, L.L.C. (12/14/06 - 6th Cir. No. 05-1095)

The One Sentence Summary: An "expert" should not have been allowed to testify about comparisons of trade secrets using a method invented for the litigation.


What They Were Fighting About: The jury awarded trade secret damages for misappropriation of trade secrets regarding model train designs.

Sixth Circuit Holdings:

• District court failed in its duty under Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993), to be a gate-keeper for evidence by allowing expert testimony as to copying where the methodology of comparison was flawed and invented for the litigation.
• An expert should not have been allowed to testify about hearsay opinions of another expert who did not testify at trial.
• Admission of the expert testimony was not harmless error.
• Plaintiff was not required to identify the specific elements of the design drawings at issue that constituted trade secrets because the combination of elements in the drawings were trade secrets under Michigan law.
• The district court properly admitted documents about Korean judgments and investigations under exceptions to the hearsay rules.
• A Michigan law prohibiting joint and several liability for tort actions applied to the award of damages on the trade secret claim.
• The jury should not have been allowed to award unjust enrichment damages that were duplicative of lost profit damages.