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MSC. Software Corp. v. Altair Engineering Inc.

United States District Court, E.D. Michigan, Southern Division

November 14, 2016

MSC. SOFTWARE CORPORATION, Plaintiff,
v.
ALTAIR ENGINEERING, INC., Defendant.

         MEMORANDUM AND ORDER OVERRULING MSC'S OBJECTIONS TO THE SPECIAL MASTER'S SEPTEMBER 8, 2016 REPORT AND RECOMMENDATION (DOC. 1149) AND ADOPTING REPORT AND RECOMMENDATION IN PART (DOC. 1148) AND DENYING MSC'S MOTION TO COMPEL DISCOVERY AND/OR FOR LEAVE TO OBTAIN DISCOVERY (DOC. 1127) AND ADOPTING SPECIAL MASTER'S RECOMMENDATIONS REGARDING THE CHARTS AND DENYING MSC'S MOTION FOR RECONSIDERATION (DOC. 1142)

          AVERN COHN UNITED STATES DISTRICT JUDGE.

         I. Introduction

         This is a trade secret dispute tried to a jury. The Court set aside a jury's $26, 100, 000.00 verdict in favor of MSC as excessive and against the great weight of the evidence, and ordered a new trial on the issue of damages for breach of confidentiality/misappropriation of three MSC-owned technical trade secrets (the three “TTS”). (Doc. 925). The jury's liability finding - that the TTS were misappropriated - was not disturbed. Subsequently, the Court granted, on recommendation of the Special Master, Altair's motion for partial summary judgment that the TTS had been removed from MotionSolve. This motion was directed to establishing temporal limitations on MSC's damages as a result of the misappropriation. (Doc. 1133). While briefing on the removal motion was ongoing, the Court directed the parties to complete two charts (attached) in an attempt to appreciate how MotionSolve performed with and without the TTS. See Doc. 1120. In response to the Court's directive, MSC filed a motion to compel and/or for leave to obtain discovery of information it says it needed from Altair in order to complete its version of the charts. (Doc. 1127). MSC also filed a motion for reconsideration of the Court's order on the removal issue. (Doc. 1142). The Court referred the motions, as well as the papers relating to the charts to the Special Master for a report and recommendation. (Doc. 1140). The Special Master issued a report and recommendation (R&R) (Doc. 1148), recommending:

1. That MSC's motion to compel be denied or that a protocol for testing MotionSolve with and without the TTS be agreed upon and conducted by the parties.
2. That MSC's Chart A be stricken and the Court take no action regarding MSC's challenges to Altair's version of the charts.
3. That MSC's motion for reconsideration regarding removal of the TTS be denied.

         Before the Court are MSC's objections to the R&R (Doc. 1149). For the reasons that follow, the R&R will be adopted in part. MSC's motion to compel or for leave to obtain discovery will be denied. The Special Master's recommendations as to the charts will be adopted. MSC's motion for reconsideration of the removal order will be denied.

         II. Background

         On November 13, 2014, the Court entered a Decision and Order Granting Defendants' Motion for Judgment as a Matter of Law and New Trial or Remittitur on Damages. (Doc. 925 (sealed), Doc. 928 (redacted). The Court set aside the jury's verdict in favor of MSC and granted Altair a new trial on the issue of damages for misappropriation of the TTS.

         On January 12, 2015, the Court held a status conference to discuss the future course of the case. During the conference, MSC argued it was entitled to additional discovery as a consequence of limitations imposed during the lead up to the initial trial. Following the status conference, the Court issued an order which states in relevant part: “The Court intends to appoint a new special master to assist in discovery issues relating to the three features[TTS]” (Doc. 944). The order also set benchmarks for discovery relating to the features (technical issues) and disclosure of the parties' financial information. All of this was to ensure that MSC had ample opportunity to obtain discovery of the information it says it needed for the new trial on damages, including information it says it did not have in the first trial.

         On January 22, 2015, the Court appointed a Special Master to manage, supervise and resolve discovery disputes. (Doc. 947). During the progress of the case, additional matters were referred to the Special Master such as the motions which form the basis of the R&R now before the Court.

         During the period the Special Master managed discovery, the time limits for completing discovery were extended four times. See Docs. 964, 966, 1015, 1058.

         The Court during the discovery period appointed a Technical Advisor to assist in the defining the TTS. See Doc. 1001. After extensive briefing by the parties, the Court adopted the definition of the TTS submitted by Altair and recommended by the Technical Advisor. See Docs. 1081, 1082, 1103.

         As described above, Altair moved for partial summary judgment on the grounds that the TTS had been removed from MotionSolve at various times and were no longer part of the source code for MotionSolve. (Doc. 998). The Court granted the motion finding as a consequence of the removal there are temporal limitations regarding MSC's damages as a result of the misappropriation. (Doc. 1133).

         During consideration of the removal motion, the Court directed the parties to complete charts it had prepared in an attempt to know how MotionSolve performed with and without the TTS. See Doc. 1120. Particularly, Chart A, required a definition of the TTS and their placement in MotionSolve's source code, including the date of insertion and removal, and alternate locations, if any, within the source code. The second chart, Chart B, required the parties to identify how each TTS affected the performance of the MotionSolve code before the misappropriation of the trade ...


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