Mylan v. Zydus, No. S0041-09 CnC (Crawford, J., July 10, 2013)

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
                                                       STATE OF VERMONT

SUPERIOR COURT                                                                                         CIVIL DIVISION
Chittenden Unit                                                                                        Docket No.: S0041-09 CnC

MYLAN TECHNOLOGIES, INC.
and MYLAN INC.
      Plaintiffs

           v.

ZYDUS NOVELTECH, INC., SHARAD K. GOVIL,
CADILA HEALTHCARE, LTD., PANKAJ PATEL and
SUNIL ROY
     Defendants

    DECISION ON PLAINTIFFS’ MOTION FOR RECONSIDERATION OF THE COURT’S
                      MARCH 20, 2013 DISCOVERY ORDER

        The Mylan plaintiffs (collectively, “Mylan”), seek reconsideration of the court’s March
20, 2013 decision on defendants Zydus Noveltech, Inc. (Zydus) and Dr. Govil’s March 9, 2012
motion to compel.1 In that decision, the court ordered Mylan to produce, among other things:
“laboratory notebooks, agenda and minutes of monthly R&D meetings, regulatory submissions
and communications with FDA including ANDA filing and pre-ANDA communications with the
FDA, and batch production records for the drug products at issue in this case” as well as
“documents that relate to Dr. Govil’s participation in the research and development of the 150
trade secrets to the extent that his participation involved the results of best candidate drugs for
transdermal delivery, agenda and minutes of monthly R&D meetings, and research and
development techniques.” Decision on Zydus and Dr. Govil’s Mot. to Compel at 7 (filed Mar.
21, 2013). At the time the court ruled on defendants’ motion to compel, the court understood
that Mylan was claiming that about 150 of its trade secrets were misappropriated. In its motion
to reconsider, Mylan says that it served a “Second Amended Trade Secret Identification” on
January 31, 2013, in which Mylan reduced its list of trade secrets to only nine secrets pertaining
to two drug products: clonidine and estradiol (once a week).

       The Second Amended Trade Secret Identification is attached to Zydus and Dr. Govil’s
opposition as Exhibit X to attorney Brian Beck’s affidavit, and is sealed pursuant to the court’s
May 15, 2013 entry. The Second Amended Trade Secret Identification states that it is “distinct
from, and does not list, products that are the subject of the causes of action relating to Defendant
Govil’s non-competition obligation, including but not limited to Fentanyl.”2 The court has


1
 Defendants’ March 9, 2012 motion to compel was argued on June 27, 2012. There was some delay in deciding the
motion because the court was for a time under the impression that the parties had resolved their discovery disputes.
2
 The court therefore understands that the shorter list of items in the Second Amended Trade Secret Identification
applies primarily to Mylan’s Count Four (misappropriation of trade secrets), and the longer list of about 150 items
reviewed the Second Amended Trade Secret Identification and compared it to Mylan’s
identification of trade secrets in Exhibit C to Koray J. Bulut’s May 20, 2011 affidavit, as well as
Mylan’s supplemental identification dated November 28, 2011.3 Without describing the highly
confidential specifics in the Second Amended Trade Secret Identification, the court believes that
it is fair to say that at least some of the alleged trade secrets in that document would fit in to one
or more of the categories of alleged trade secrets in the May and November 2011 documents.

        Mylan now requests that the court alter its March 20, 2013 order in two ways: (1) to limit
the order to the nine trade secrets set forth in Mylan’s Second Amended Trade Secret
Identification, and (2) to limit the scope of the discovery order to documents created during Dr.
Govil’s employment with Mylan, which ended with his resignation on September 25, 2006.
Zydus and Dr. Govil oppose Mylan’s motion, arguing that: (1) the motion is procedurally
improper; (2) documents concerning Mylan’s estradiol (twice-weekly), lidocaine, nitroglycerin,
and fentanyl products remain relevant; and (3) technical documents from after September 2006
remain relevant. In a reply filed on May 15, 2013, Mylan maintains that its motion is
procedurally proper, and that the court’s March 20, 2013 decision should be altered as Mylan
requests.

I. Procedure

         Zydus and Dr. Govil contend that Mylan’s motion is procedurally improper, arguing that
nothing has changed since the motion was decided that would justify reconsideration. Opp’n at
12 (filed Apr. 24, 2013). Defendants maintain that Mylan made a decision to re-identify its trade
secrets before the court decided the motion to compel, and that Mylan cannot now contend that
there is “new evidence” justifying reconsideration because Mylan had more than six weeks (from
January 31, 2013, the date it served the Second Amended Trade Secret Identification, to March
20, 2013, the date of the court’s decision on the motion to compel) to notify the court that
Mylan’s list of claimed trade secrets had been reduced to nine. Id. at 1.4 Mylan replies by noting
that it did not amend its trade secret identification until well after briefing and argument on the
motion to compel was completed, and therefore it was impossible for Mylan to have
“discovered” its Second Amended Trade Secret Identification in time to argue the relevance of
the streamlined identification in briefing or at oral argument on the motion to compel. Reply at 3
(filed May 15, 2013).



applies to the majority of the remaining counts, including Count One (breach of contract), Count Two (breach of the
covenant of good faith and fair dealing), and Count Three (tortious interference with contract).
3
  The supplemental identification is attached to Zydus and Dr. Govil’s opposition as Exhibit S to attorney Brian
Beck’s affidavit. That document is also designated “highly confidential,” and the court will order it sealed.
4
 According to defendants, Mylan has no grounds to oppose producing the more expansive discovery because Mylan
amended its trade secret identification without a showing of good cause. It is true that in in its October 26, 2011
Decision on Pending Motions, the court stated: “Trade secrets which are not identified in advance will not be the
subject of a claim at trial. Reasonable amendment to the list of secrets will be allowed for good cause as discovery
develops.” Decision at 5. In that statement, the court was concerned with amendments to add to the list of trade
secrets. In any case, the court concludes that there is good cause to pare down the list, both because Mylan is the
master of its action against defendants, and because reducing the size of the list will help focus the misappropriation
claim.

                                                          2
         In Vermont, “[u]ntil final decree the court always retains jurisdiction to modify or rescind
a prior interlocutory order.” Kelly v. Town of Barnard, 155 Vt. 296, 307 (1990) (quoting
Lindsay v. Dayton-Hudson Corp., 592 F.2d 1118, 1121 (10th Cir. 1979)). Of course, “[m]otions
for reconsideration serve a limited function: to correct manifest errors of law or fact or to present
newly discovered evidence.” Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d
1264, 1269 (7th Cir. 1996) (citation omitted). Here, there is no newly discovered “evidence”—
the new information now before the court is that Mylan’s claim has changed insofar as Mylan is
now claiming the misappropriation of only nine trade secrets. The court’s statement in its March
2013 decision that Mylan is claiming the misappropriation of about 150 trade secrets is therefore
erroneous. The court concludes that, if there is cause to limit the scope of discovery due to
Mylan’s streamlined trade-secrets-misappropriation claim, then the court has discretion to do so.
See Wesco, Inc. v. Sorrell, 2004 VT 102, ¶ 18, 177 Vt. 287 (noting that “discovery rulings are
inherently fluid because they fall within the trial court’s discretion to revisit and alter as the
litigation unfolds”).

II. Relevance of documents concerning Mylan’s estradiol (twice-weekly), lidocaine,
nitroglycerin, and fentanyl products

        As stated above, Mylan has reduced its list of trade secrets to only nine secrets pertaining
to two drug products: clonidine and estradiol (once a week). Mylan asserts that documents
relating to trade secrets that are no longer the foundation for Mylan’s trade-secrets-
misappropriation claim are not relevant. Mot. at 5. Mylan therefore seeks to limit the court’s
production requirement to clonidine and estradiol (once a week). Zydus and Dr. Govil contend
that documents concerning four of Mylan’s other products—estradiol (twice-weekly), lidocaine,
nitroglycerin, and fentanyl—might no longer be relevant to any trade secret misappropriation
claim, but that those documents are relevant for other reasons. Specifically, defendants maintain
that the documents are relevant to: (1) Mylan’s credibility and Zydus’s unfair competition
counterclaim; (2) enforceability of a Trade Secrets and Invention Agreement that Dr. Govil
signed in 1992 when he commenced his employment with Bertek, Inc.; and (3) damages and
remedies.

       A. Whether documents concerning Mylan’s other products are relevant to Mylan’s
       credibility and to Zydus’s unfair competition counterclaim

        Zydus and Dr. Govil contend that they are entitled to documents concerning Mylan’s
other products in order to test whether Mylan ever had a good faith basis for asserting the 150
trade secrets that it did prior to January 2013. Defendants expect the documents to show that
Mylan never recognized the 150 categories of information as trade secrets, and that such a
showing would: (1) undermine Mylan’s credibility; (2) support Zydus’s unfair competition
counterclaim; and (3) support sanctions against Mylan.

         The court does not find defendants’ argument in favor of relevancy as a means to
undermine Mylan’s credibility to be persuasive. It is true that, in a June 16, 2010 Ruling on
Pending Motions, this court stated: “Should Mylan at trial change its claims as to what constitute
its trade secrets, by adopting claims that its trade secrets look more like Defendants’ than those
previously asserted, that will be relevant to the credibility of its claims.” Plainly Mylan has

                                                 3
changed what it claims to be its trade secrets, but Zydus and Dr. Govil have not shown that the
nine secrets that Mylan is presently asserting look more like defendants’ secrets than the 150
secrets that Mylan previously asserted.

         Some context is necessary to understand the parties’ arguments about the relevancy of
documents concerning Mylan’s other products to Zydus’s unfair competition counterclaim. In
Count Three of their counterclaims, Zydus and Dr. Govil allege that Mylan engaged in unfair
competition because it initiated and maintained this action without probable cause, with no good-
faith basis, with knowledge that the allegations and claims are without foundation, and with the
knowledge and intent to burden and disrupt Zydus’s business. Countercl. ¶ 141 (filed Jan. 10,
2011). Mylan sought dismissal of Count Three in a motion filed February 3, 2011, arguing that
filing a lawsuit was an insufficient basis for a common-law unfair competition claim, and that the
claim is barred by the Noerr-Pennington doctrine. The court denied Mylan’s motion to dismiss,
reasoning that Zydus and Dr. Govil had stated a claim because instituting groundless litigation
against a competitor can be unfair competition. Ruling on Mot. to Dismiss Countercls. at 7 (filed
May 17, 2011). After discussing the Noerr-Pennington doctrine,5 the court concluded that the
allegations in the counterclaim would be adequate to survive dismissal, since, if proven, those
facts would show that Mylan was not entitled to Noerr-Pennington immunity under the sham
litigation exception. Id. at 10. The court also rejected Mylan’s contention that its prior success
on a summary judgment motion filed by Zydus and Dr. Govil proved that Mylan’s claims were
not baseless, reasoning that surviving summary judgment does not establish conclusively that a
suit is not a sham. Id. at 12.

        Zydus and Dr. Govil argue that, if the documents concerning Mylan’s other products
show that Mylan never recognized the 150 categories of information as trade secrets, then that
would be direct evidence that Mylan filed and maintained an objectively and subjectively
baseless lawsuit. Mylan replies that discovery into any of the alleged trade secrets other than the
nine that Mylan has now identified cannot be relevant to defendants’ unfair competition claim
because the “sham” exception to the Noerr-Pennington doctrine requires that defendants prove
that Mylan’s entire complaint is a sham—an impossibility because even if some of the now-
abandoned secrets were not trade secrets, the remaining nine secrets would still be in play with
respect to the misappropriation claim. Moreover, Mylan says several of its other claims have
already survived a motion for summary judgment by defendants.

       Assuming, without deciding, that a single baseless claim in a complaint could serve as
grounds for a sham litigation claim, the court concludes that the discovery defendants seek
would not help them prove that Mylan’s misappropriation claim was a sham. The success of
Mylan’s misappropriation claim does not depend upon how many alleged secrets might have
been misappropriated. Here, as stated above, at least some of the alleged trade secrets in
Mylan’s Second Amended Trade Secret Identification were alleged (albeit at a greater level of
generality) in Mylan’s earlier identifications. Even if many of the secrets that Mylan has since

5
  Named after Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), and
United Mine Workers v. Pennington, 381 U.S. 657 (1965), the doctrine—as expanded by California Motor
Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972)—“provides that the First Amendment right to petition the
government protects litigants from liability for filing lawsuits, unless the lawsuits are found by a court to be
‘shams.’” Ruling on Mot. to Dismiss Countercls. at at 8.

                                                       4
dropped from its claim were proven not to be trade secrets, that would not render Mylan’s entire
misappropriation claim baseless because there are some alleged trade secrets that have been a
part of the claim since early in this case.

        The court also concludes that discovery into the other products and the now-abandoned
alleged secrets would not be relevant to any sanctions claim against Mylan. It is true that the
court in Compuware Corp. v. Health Care Service Corp. sanctioned the plaintiff for failing to
specifically identify its allegedly misappropriated trade secrets until less than two weeks before
the close of discovery. No. 01 C 0873, 2002 WL 485710, at *8 (N.D. Ill. Apr. 1, 2002).
However, that determination did not depend on the strength or weakness of any purported trade
secrets that the plaintiff ultimately abandoned.

       B. Whether documents concerning Mylan’s other products are relevant to the
       enforceability of the 1992 Trade Secrets and Invention Agreement

        Some additional background is necessary to understand this aspect of defendants’
relevancy argument. According to the allegations in Mylan’s first amended complaint, Mylan
Technologies, Inc. was formerly known as Bertek, Inc. and is a wholly-owned subsidiary of
Mylan, Inc. First Am. Compl. ¶ 2 (filed Nov. 30, 2009). Mylan alleges that “[a]t the
commencement of his employment with Bertek in 1992, Govil signed a Trade Secrets and
Invention Agreement (the ‘Trade Secrets Agreement’)” and that “Govil’s obligations under the
Trade Secrets Agreement were transferred to [Mylan Technologies, Inc.] by virtue of the
acquisition of Bertek in 1993.” Id. ¶ 20.

      The Trade Secrets and Invention Agreement is attached as Exhibit A to the first amended
complaint, and includes the following language:

       The Employee shall not for a period of five (5) years after the termination of his
       employment with the Company, regardless of time, manner, or cause of such
       termination, directly or indirectly own, manage, control, be employed by,
       participate in or be or become associated in any way with any business or branch
       thereof engaged in the sale, production, manufacture, use, promotion, or
       development of any product or process . . . the same as or similar to any other
       products or processes of the Company which now or may during the term of the
       Employee’s employment by the Company constitute trade secrets or confidential
       information of the Company.

In Count One of its complaint, Mylan alleges that Dr. Govil breached the Trade Secrets
Agreement by becoming associated with Zydus, by failing to return records upon his resignation,
and by using and divulging Mylan’s confidential information and trade secrets. Id. ¶ 52. As
noted above, the Second Amended Trade Secret Identification states that it is “distinct from, and
does not list, products that are the subject of the causes of action relating to Defendant Govil’s
non-competition obligation, including but not limited to Fentanyl.” Thus, although Mylan no
longer claims that all 150 items on its earlier disclosures are trade secrets, it does maintain that
those items are all at least confidential.



                                                 5
       Zydus and Dr. Govil note that a restrictive covenant against competitive employment is
not enforceable if it is “unnecessary for protection of the employer.” Vt. Elec. Supply Co. v.
Andrus, 132 Vt. 195, 198 (1974). They intend to argue that the Trade Secrets Agreement is
unenforceable because it was unnecessary for Mylan’s protection. To prove that the Trade
Secrets Agreement was unnecessary for Mylan’s protection, defendants seek to discover and
present evidence that Mylan’s products do not in fact embody trade secrets or otherwise
confidential information. Mylan replies that the technical specifics of products that are not part
of Mylan’s misappropriation claim are irrelevant because (1) the non-competition provision does
not require a showing of actual use, and (2) the production of technical documents will not speak
to whether or not the information qualifies as “confidential.”

        Trade secrets and confidential information are legitimate interests of an employer and
may be protected through a noncompetition agreement. See Sys. & Software, Inc. v. Barnes,
2006 VT 95, ¶ 5, 178 Vt. 389 (noncompetition agreements may be enforced to protect trade
secrets and confidential customer information, among other things). As the 11th Circuit has
explained:

       [A]n item may be considered confidential in the context of a business relationship
       without rising to the level of a trade secret. A confidential relationship is
       distinguished by the expectations of the parties involved, . . . while a trade secret
       is identified through rigorous examination of the information sought to be
       protected.

Roboserve, Ltd. v. Tom’s Foods, Inc., 940 F.2d 1141, 1456 (11th Cir. 1991). Here, the 1992
Trade Secrets and Invention Agreement sought to protect both “trade secrets” and “confidential
information.” Even if none of the 150 items Mylan originally put forth constitute trade secrets, it
would still have a legitimate interest in protecting those items if they constitute confidential
information. “Rigorous examination” of the technical information that defendants seek from
Mylan is not necessary to make that determination.

       C. Whether documents concerning Mylan’s other products are relevant to damages
       and remedies

        Finally, defendants contend that Mylan’s decision to seek contract damages for all six
drug products puts at issue documents regarding those drugs—particularly FDA correspondence.
Defendants say that the technical documents “will indicate the extent to which lost profits are
attributable to Dr. Govil’s use of confidential Mylan information, which is protectable, and to
which lost profits are attributable merely to Dr. Govil’s ordinary competition, which is not
protectable.” Opp’n at 22. Defendants also say that regulatory submissions and FDA
correspondence regarding products that are not on the market are highly probative of whether
and when these products will even make it onto the market: “If Mylan makes no profit off of
products because they are never approved by the FDA, it obviously cannot claim any damages
for them from a breach of a noncompete agreement.” Id.

      Mylan maintains that it would be Dr. Govil’s contributions to the development of
Zydus’s products—not Mylan’s—that would reveal the extent of his contributions. As for filings

                                                 6
and communications with the FDA, Mylan says that it can provide information as to the status of
its “unlaunched” products, and thus it is unnecessary to produce ANDA filings and other highly
confidential material.

        Defendants are correct insofar as they assert that Mylan cannot recover as damages any
lost profits attributable to the fact that Dr. Govil has been applying his general skills and
knowledge to benefit one of Mylan’s competitors. See Reed, Roberts Assocs., Inc. v. Strauman,
353 N.E.2d 590, 593 (N.Y. 1976) (“[N]o restrictions should fetter an employee’s right to apply
to his own best advantage the skills and knowledge acquired by the overall experience of his
previous employment.”). Thus it seems natural that defendants might seek to prove that Dr.
Govil’s contributions to Zydus’s development of the drug products at issue were limited to the
use of his acquired general expertise and knowledge of management of a transdermal drug
company. However, defendants have not explained—nor is it obvious to the court—why such
proof might require reference to the technical details of the four products that Mylan has dropped
from its misappropriation claim. As for the FDA correspondence that defendants seek, it appears
to be unnecessary in light of Mylan’s willingness to supply information as to whether and when
its “unlaunched” products might make it to the market.

III. Relevance of Mylan’s documents postdating Dr. Govil’s resignation from Mylan in
September 2006

        Mylan’s position is that documents and materials postdating Dr. Govil’s departure from
Mylan in September 2006 are not relevant to Mylan’s claims. As to its misappropriation claim,
Mylan observes that Dr. Govil could not have misappropriated information that postdates his
departure. Mylan also asserts that the documents are not relevant to its efforts to protect the
secrecy of its confidential information and trade secrets. Zydus and Dr. Govil concede that
documents postdating Dr. Govil’s departure from Mylan are not necessary to define Mylan’s
allegedly misappropriated trade secrets, but that such documents remain relevant to the value of
the alleged trade secrets, and also to damages and remedies.

       A. Whether Mylan’s technical documents postdating Dr. Govil’s departure are
       relevant to the value of the alleged trade secrets

       Defendants point to the following passage from the Restatement to support the
proposition that the documents are relevant to the value of Mylan’s alleged trade secrets:

       The value of information claimed as a trade secret may be established by direct or
       circumstantial evidence. Direct evidence relating to the content of the secret and
       its impact on business operations is clearly relevant. . . .

       The plaintiff’s use of the trade secret in the operation of its business is itself some
       evidence of the information’s value. Identifiable benefits realized by the trade
       secret owner through use of the information are also evidence of value. . . .

Restatement (Third) of Unfair Competition § 39 cmt. e. Defendants suspect—and seek to
discover and prove—that Mylan has changed its formulation for clonidine and estradiol (once a

                                                  7
week), or has found acceptable alternatives to its alleged trade secrets, and that Mylan does not
use its alleged trade secrets in a marketed product. Defendants say that such proof would be
highly probative of the value of the alleged trade secrets, and that the most useful documents to
determine whether Mylan still uses its alleged trade secrets are the post-2006 documents.

        Mylan asserts that the documents have no bearing on whether the alleged trade secrets are
valuable, arguing that whether the trade secrets at issue have been continuously used by Mylan
since Dr. Govil’s departure is irrelevant to their status as trade secrets. In support, Mylan also
cites the Restatement (among other things), which states that its definition of a “trade secret”
“contains no requirement that the information afford a continuous or long-term advantage.” Id.
§ 39 cmt. d. Mylan also argues that, even if it no longer uses the trade secrets it is alleging, those
secrets are still valuable as “negative” information insofar as they might prove that a certain
process will not work.

        Vermont has adopted the Uniform Trade Secrets Act, and therefore Vermont’s definition
of a “trade secret”6 is broader than the common law definition:

           The definition of “trade secret” contains a reasonable departure from the
           Restatement of Torts (First) definition which required that a trade secret be
           “continuously used in one’s business.” The broader definition in the proposed
           Act extends protection to a plaintiff who has not yet had an opportunity or
           acquired the means to put a trade secret to use. The definition includes
           information that has commercial value from a negative viewpoint, for example the
           results of lengthy and expensive research which proves that a certain process will
           not work could be of great value to a competitor.

Comment, Unif. Trade Secrets Act § 1. It is therefore true that, in order for Mylan to prove that
its information is a trade secret, Mylan does not need to prove that it has continuously used that
information, or even that it has used the information at all in its operations. See Learning Curve
Toys, Inc. v. PlayWood Toys, Inc., 342 F.3d 714, 727 (7th Cir. 2003) (“It is irrelevant under
Illinois law that PlayWood did not actually use the concept in its business.” (citing Syntex
Opthalmics, Inc. v. Tsuetaki, 701 F.2d 677, 683 (7th Cir. 1983))). Of course, if Mylan is using
the alleged trade secrets in the operation of its business, the Restatement makes clear that that
would be “some evidence” of the information’s value. In other words, Mylan does not need to
prove that it uses or ever used the information, but such proof might weigh in favor of finding
that the information has value.

6
    Section 4601(3) of Title 9 defines a “trade secret” as:

           [I]nformation, including a formula, pattern, compilation, program, device, method, technique, or
           process, that:

           (A) derives independent economic value, actual or potential, from not being generally known to,
           and not being readily ascertainable by proper means by, other persons who can obtain economic
           value from its disclosure or use; and

           (B) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.


                                                              8
       Is it relevant that Mylan might not currently be using that information, or that Mylan has
never used it? In other words, would that proof be “some evidence” of the information’s lack of
value? Or is such proof irrelevant in all respects—not just irrelevant insofar as Mylan’s burden
to prove that its information is a trade secret?

         The court concludes that it is irrelevant whether Mylan still uses its alleged trade secrets.
It is true that “obsolete information cannot form the basis for a trade secret claim because the
information has no economic value.” Fox Sports Net N., L.L.C. v. Minn. Twins P’ship, 319 F.3d
329, 336 (8th Cir. 2003). However, proof that Mylan is no longer using its alleged trade secrets
does not tend to prove that the secrets are valueless. Even if Mylan has recently made advances
that render its alleged trade secrets obsolete as to Mylan, Mylan’s earlier generations of
technology can still have independent economic value if they are not generally known to or
readily ascertainable by proper means by other persons who can obtain economic value from that
information. See Dow Corning Corp. v. Jie Xiao, 283 F.R.D. 353, 361 (E.D. Mich. 2012) (“The
later generations of fluid-bed technology do not determine whether the first generation
technology has ‘no economic value.’”).

       B. Whether Mylan’s documents post-dating Dr. Govil’s departure are relevant to
       damages and remedies

       Zydus and Dr. Govil assert that the post-2006 documents are relevant to: (1) damages on
Mylan’s contract claims; (2) damages on Mylan’s trade secrets misappropriation claim; and (3)
Mylan’s demand for injunctive relief. Mylan’s reply addresses only the first alleged category of
relevance.

        The court begins with the relevance of the post-2006 documents to Mylan’s demand for
injunctive relief. Defendants say that there can only be irreparable harm from the risk of
exposure of a trade secret if Mylan still gains value from the trade secret. According to
defendants, “[i]f Mylan can only prove the past use of a now defunct trade secret, it would only
be entitled to monetary damages for that past use.” Opp’n at 28.

        Vermont law explicitly contemplates injunctive relief for the actual or threatened
misappropriation of trade secrets. See 9 V.S.A. § 4602(a) (“Actual or threatened
misappropriation may be enjoined.”). Thus, one of the elements of relief that Mylan seeks is an
order “enjoining Defendants and all others acting in privity or in concert with them, from directly
or indirectly developing or selling any product that incorporates Plaintiffs’ trade secrets.” First
Am. Compl. at 20. As mentioned above, defendants seek Mylan’s current technical documents
to attempt to prove that Mylan is no longer using any of its alleged trade secrets, on the theory
that if Mylan is not currently gaining any value from any of those alleged secrets, then Mylan
cannot be irreparably harmed from their exposure. The court rejects this argument. As one
authority explains:

       The issuance of a permanent injunction does not require proof of irreparable harm
       or the absence of inadequate remedy at law. The enactment of the statute granting
       the court power to issue an injunction in a trade secret case as part of a final

                                                  9
           judgment by implication assumes that no such showing is needed or else the
           statutory provision would not have been enacted.

1 Melvin F. Jager, Trade Secrets Law § 7:12 (WL updated Apr. 2013); see also Union Nat’l Life
Ins. Co. v. Tillman, 143 F. Supp. 2d 638, 641–42 (N.D. Miss. 2000) (“[T]o be awarded an
injunction under [the Mississippi Uniform Trade Secrets Act], [plaintiff] need not demonstrate
irreparable injury; a violation of the Act itself constitutes irreparable injury.”); Boeing Co. v.
Sierracin Corp., 738 P.2d 665, 681 (Wash. 1987) (rejecting argument that a finding of
irreparable harm must be entered in order to support injunction against trade secret
misappropriation, and noting that “[t]o allow Sierracin in this case to continue to manufacture
cockpit windows after deciding that it had misappropriated the information from Boeing would
permit Sierracin to profit from its own wrongful conduct”).

        The court next turns to whether Mylan’s post-2006 documents are relevant to Mylan’s
damages claim for defendants’ alleged misappropriation. Defendants say that, pursuant to
9 V.S.A. § 4603(a),7 damages for such a claim can be calculated based on defendants’ alleged
unjust enrichment, Mylan’s lost profits, or a reasonable royalty.8 For all three types of damages,
defendants say that Mylan’s post-2006 technical documents are probative of whether the alleged
trade secrets are incidental to the product. As to unjust enrichment, defendants say:

           Evidence about whether alternatives exist to the use of the trade secrets, or how
           important the alleged trade secrets are to their products, is relevant to what
           fraction of Zydus Noveltech’s (currently nonexistent) profits can be attributed to
           trade secret misappropriation. Mylan cannot claim that all of Zydus Noveltech’s
           eventual profits are a result of trade secret misappropriation if the misappropriated
           trade secrets provided little assistance to Zydus Noveltech’s development.

Opp’n at 27. Defendants also argue that “[t]he same evidence is relevant to what fraction of any
lost profits Mylan alleges it has suffered or will suffer can be attributed to trade secret
misappropriation.” Id. Finally, they say that the information “is certainly relevant to what
royalty Mylan can obtain for any alleged trade secret misappropriation.” Id.




7
    Section 4603 provides as follows:

           (a) Except to the extent that a material and prejudicial change of position prior to acquiring
           knowledge or reason to know of misappropriation renders a monetary recovery inequitable, a
           complainant is entitled to recover damages for misappropriation. Damages can include both the
           actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that
           is not taken into account in computing actual loss. In lieu of damages measured by any other
           methods, the damages caused by misappropriation may be measured by imposition of liability for
           a reasonable royalty for a misappropriator’s unauthorized disclosure or use of a trade secret.

           (b) If malicious misappropriation exists, the court may award punitive damages.

8
 See generally Annotation, Proper Measure and Elements of Damages for Misappropriation of Trade Secret,
11 A.L.R. 4th 12 (1982).

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        The court understands defendants’ argument to be that they need discovery into Mylan’s
current trade secrets in order to show that fewer than all of Mylan’s claimed damages were
caused by any misappropriation. The court also understands that it is possible that, since
September 2006, Mylan has found new ways to manufacture its products that make some or all
of the nine alleged trade secrets in the Second Amended Trade Secret Identification less
important to Mylan’s operations. However, the court fails to see how proof that Mylan has
found alternatives to the nine trade secrets might shed light on what portion of Zydus’s gains or
Mylan’s losses are attributable to the alleged misappropriation of those secrets. How much
assistance the allegedly misappropriated trade secrets provided to Zydus’s development efforts
would seem to be a separate issue than the question of where Mylan’s development has gone
since 2006. The same conclusion applies to defendants’ argument about the relevance of the
post-2006 documents to Mylan’s contract claims.

                                            ORDER

       Mylan’s supplemental identification—attached to Zydus and Dr. Govil’s opposition (filed
Apr. 24, 2013) as Exhibit S to attorney Brian Beck’s affidavit—shall be sealed.

       Mylan’s motion for reconsideration (filed April 9, 2013) is granted. The court’s March
20, 2013 order is modified as follows:

        Mylan shall produce laboratory notebooks, agenda and minutes of monthly R&D
meetings, regulatory submissions and communications with FDA including ANDA filing and
pre-ANDA communications with the FDA, and batch production records for clonidine and
estradiol (once a week). Mylan shall not be required to produce any such documents created
after September 25, 2006.

        Mylan shall produce documents that relate to Dr. Govil’s participation in the research and
development of the nine trade secrets at issue to the extent that his participation involved the
results of best candidate drugs for transdermal delivery, agenda and minutes of monthly R&D
meetings, and research and development techniques.

Mylan shall produce the documents described above within 30 days of this order.

Dated at Burlington this ___ day of June 2013.

                                                      ______________________________
                                                      Geoffrey W. Crawford
                                                      Superior Court Judge




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