Nanometrics, Incorporated v. Optical Solutions, Inc.

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 NANOMETRICS, INCORPORATED, et Case No. 18-cv-00417-BLF al., 8 Plaintiffs, ORDER REGARDING 9 NANOMETRICS, INC.’S MOTIONS IN v. LIMINE 1-5 10 OPTICAL SOLUTIONS, INC., et al., Re: ECF Nos. 162, 163, 164, 165, 166 11 Defendants.

12 OPTICAL SOLUTIONS, INC., et al., 13 Cross-Plaintiffs, 14 v.

15 NANOMETRICS, INCORPORATED, et al., 16 Cross-Defendants. 17 18 On October 20, 2023, the Court held a pretrial conference in this action, during which it 19 issued oral rulings on Plaintiff and Cross-Defendant Nanometrics, Inc.’s (“Nanometrics”) motions 20 in limine. The Court here expands upon those oral rulings. 21 I. NANOMETRICS’S MOTIONS IN LIMINE 22 Nanometrics filed five motions in limine. See ECF Nos. 162–66. Defendant and Cross- 23 Plaintiff Optical Solutions, Inc. (“Optical”) opposed all five motions. See ECF Nos. 178–82. The 24 Court considers each motion in limine in turn. 25 A. Nanometrics’s Motion in Limine No. 1 to Exclude Bradley Piccirillo from Testifying as an Expert Witness (ECF No. 162) 26 In its first motion in limine, Nanometrics moves to exclude expert testimony from Bradley 27 Piccirillo—Optical’s founder, president, and sole owner—opining that (1) Optical was able to 1 design and manufacture 25-micron optical lenses that met Nanometrics’s specifications; (2) 2 Optical could have designed and manufactured optical lenses that met the supposedly less 3 challenging technical specification that Nanometrics ultimately used for its 25-micron lenses; (3) 4 feasibility studies in general, and the specifications that Nanometrics provided to Optical in 5 particular, are not fixed or absolute specifications that Optical was required to meet; (4) prototype 6 optical lenses are not intended to be shared with third parties, and it was Nanometrics’s standard 7 process not to share prototypes with customers until internal testing was complete; and (5) Optical 8 would have earned 80% profit margins on all optical lenses Optical would have built and sold to 9 Nanometrics. See MIL 1, at 1–2, ECF No. 162. Nanometrics argues that Mr. Piccirillo’s expert 10 report does not disclose any methodology, testing, results, or damages calculations in support of 11 opinions 1, 2, and 5, and that he is not qualified to testify to opinions 3 and 4 as an industry norms 12 expert about the use of feasibility studies and prototype optical lenses because Nanometrics was 13 Optical’s only optics customer in the semiconductor industry. See id. at 2–5. Nanometrics also 14 argues that Mr. Piccirillo should be excluded from testifying as an expert because he has a direct 15 financial interest in the outcome of the litigation. See id. at 5. 16 Optical counters that Mr. Piccirillo’s practical experience in the semiconductor industry 17 qualifies him as an expert, and that any disputes regarding his qualifications go to the weight of 18 his testimony, rather than its admissibility. See Opp’n to MIL 1, at 2–3, ECF No. 178. 19 Federal Rule of Evidence 702 permits a witness to testify as an expert if “(a) the 20 [witness’s] scientific, technical, or other specialized knowledge will help the trier of fact to 21 understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient 22 facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert 23 has reliably applied the principles and methods to the facts of the case.” Fed. R. Evid. 702(a)–(d). 24 Further, an amended version of Rule 702 will go into effect on December 1, 2023—absent action 25 from Congress following the Supreme Court’s provision of proposed amendments—under which a 26 party proffering an expert will have to demonstrate to the court that elements (a) through (d) are 27 more likely than not to be true, and Rule 702(d) will require “the expert’s opinion [to] reflect[] a 1 Bush & Kayla M. Kuhn, Proposed Amendments to Federal Rule of Evidence 702 and Their 2 Impact on Expert Discovery, American Bar Association, https://www.americanbar.org/groups/tort 3 _trial_insurance_practice/ publications/the_brief/ 2022- 23/winter/proposed-amendments-federal- 4 rule-evidence-702-and-their-impact-expert-discovery/ (June 14, 2023). 5 As the Court noted during the pretrial conference, Mr. Piccirillo’s expert report does not 6 provide any methodology in support of his opinions. See Decl. of Ryan C. Stevens in Supp. of 7 Nanometrics’ Mots. in Limine Nos. 1–5 (“Stevens Decl.”), Exh. 1 (“Piccirillo Report”), ECF No. 8 167-1. Nor can the Court credit Mr. Piccirillo’s statement that he has a “unique ability to 9 understand the science of optics.” Id. at 1. Without a description of Mr. Piccirillo’s methodology, 10 the Court cannot determine whether his opinions are the “product of reliable principles and 11 methods,” see Fed. R. Evid. 702(c), or whether he “reliably applied the principles and methods to 12 the facts of the case,” see id. at 702(d). The amended version of Rule 702(d) requiring an opinion 13 to “reflect a reliable application of the principles and methods” used by the witness—which would 14 be in force by the time this case goes to trial on December 4, 2023—would apply with even 15 greater force. Accordingly, Mr. Piccirillo is not entitled to the Court’s imprimatur as a qualified 16 expert regarding Optical’s ability to manufacture lenses that would have met certain specifications 17 (opinions 1 and 2) or the profit margin that Optical would have enjoyed had it continued to build 18 and sell optical lenses to Nanometrics (opinion 5). See Daubert v. Merrell Dow Pharms., Inc., 43 19 F.3d 1311, 1319 (9th Cir. 1995) (“[These materials] either explain the methodology the experts 20 followed to reach their conclusions nor point to any external source to validate that methodology . 21 . . [and] that's not enough.”). 22 As for Mr. Piccirillo’s assertions regarding his understanding of the semiconductor 23 industry’s treatment of feasibility studies and prototype optical lenses (opinions 3 and 4), the 24 Court finds that Mr. Piccirillo’s report does not put forward any factual basis for his conclusions. 25 See Piccirillo Report 3–4. Specifically, although the report states that Mr. Piccirillo’s “entire 26 professional career has been related to optics design and manufacturing solutions,” see id. at 1, it 27 does not provide a basis for Mr. Piccirillo’s understanding of the broader semiconductor industry. 1 that Optical has established a sufficient basis to qualify Mr. Piccirillo as an expert. See Daubert, 2 43 F.3d at 1316 (“Our task, then, is to analyze not what the experts say, but what basis they have 3 for saying it.”). 4 For these reasons, the Court will grant Nanometrics’s motion in limine to exclude Mr. 5 Piccirillo from offering expert testimony on the five opinions identified above. This decision does 6 not preclude Optical from offering Mr. Piccirillo as a percipient witness testifying about much of 7 the same information or as a lay witness offering an admissible opinion under Rule 701. 8 B. Nanometrics’s Motion in Limine No. 2 to Exclude Richard Trissel from Testifying as an Expert Witness (ECF No. 163) 9 In its second motion in limine, Nanometrics seeks to exclude expert testimony from 10 Richard Trissel—an optical lens designer who designed the 25-micron lens at issue in this case— 11 opining that (1) his 25-micron optical lens design met Nanometrics’s requirements; (2) Optical’s 12 25-micron lenses, as manufactured, met Nanometrics’s feasibility study specifications based on 13 Optical’s existing test capabilities; (3) Optical would have been able to ship prototype lenses to 14 Nanometrics sooner than it did, if Nanometrics had provided a “properly functioning lateral color 15 bench”; (4) the feasibility study was “intended” to be used to generate final specifications; and (5) 16 the prototype lenses were “intended for internal use only, and were not intended for use with third 17 parties.” See MIL 2, at 1, ECF No. 163 (quoting Stevens Decl., Exh. 5 (“Trissel Report”), at 1–3). 18 Nanometrics argues that this testimony should be excluded because Mr. Trissel’s report does not 19 identify any methodology or analysis to support these opinions, and because Mr. Trissel was 20 deposed and testified that he did not consider any documents in reaching the conclusions stated in 21 his report. See id. at 1–2; see also Stevens Decl., Exh. 6 (“Trissel Dep.”), at 11:6–8. Optical 22 counters that Mr. Trissel’s education and experience as an optical designer qualify him as an 23 expert, and that his report explains the steps he took to design and test his 25-micron lens design. 24 See Opp’n to MIL 2, at 1, ECF No. 179. 25 As stated at the pretrial conference, the Court reserves its decision on the admissibility of 26 Mr. Trissel’s opinion that his 25-micron optical lens design met Nanometrics’s requirements 27 (opinion 1) until it receives evidence on November 17, 2023, regarding the question of whether 1 Mr. Trissel can demonstrate that his opinion on the design demonstrates a reliable application of 2 methodology. 3 With regard to Mr. Trissel’s opinion that Optical’s prototype lenses met Nanometrics’s 4 specifications based on Optical’s existing test capabilities (opinion 2), see Trissel Report 3, the 5 Court notes that the opinion inherently admits that Mr. Trissel was not able to test whether 6 Optical’s lenses fully met the required design specifications. Nor does Mr. Trissel provide any 7 explanation of what tests he did in fact conduct. See generally Trissel Report. Because Mr. 8 Trissel has not explained how he arrived at his conclusion or presented any data supporting his 9 opinion, the Court will exclude this testimony. See Cabrera v. Cordis Corp., 134 F.3d 1418, 10 1420–21 (9th Cir. 1998) (“[T]he expert must explain precisely how [he] went about reaching [his] 11 conclusions and point to some objective source . . . to show that [he has] followed the scientific 12 method, as is practiced by (at least) a recognized minority of scientists in [his] field.”) (alterations 13 in original) (citations omitted). 14 Similarly, Mr. Trissel’s report provides no basis for his opinion that Optical would have 15 been able to ship prototype lenses to Nanometrics sooner than it did, if Nanometrics had provided 16 a “properly functioning lateral color bench” (opinion 3). See Trissel Report 3. Further, Mr. 17 Trissel testified at his deposition that he had never used a lateral color test bench prior to working 18 with the one provided by Nanometrics for the 25-micron lenses. See Trissel Dep. 152:10–19. 19 Because Mr. Trissel has not provided a basis for his opinion on the functioning of Nanometrics’s 20 lateral color bench, the Court will exclude his testimony regarding this opinion. See Cabrera, 134 21 F.3d at 1420–21. 22 Lastly, Mr. Trissel’s two opinions regarding Nanometrics’s intent—i.e., that the feasibility 23 study was “intended” to be used to generate final specifications, and the prototype lenses were 24 “intended for internal use only, and were not intended for use with third parties” (opinions 4–5)— 25 are based on pure speculation and are therefore not the proper subject of expert testimony. See 26 Daubert, 43 F.3d at 1319 (“Indeed, no understandable scientific basis is stated. Personal opinion, 27 not science, is testifying here.”) (citation omitted). 1 Mr. Trissel from testifying as an expert on the second through fifth challenged opinions, and it 2 will reserve its decision on the first challenged opinion until it has received evidence on Mr. 3 Trissel’s reliable application of design principles. 4 C. Nanometrics’s Motion in Limine No. 3 to Exclude References to Nanometrics’ Size or Merger, or Either Party's Financial Means or Ability to Fund 5 Litigation or Damage Awards (ECF No. 164) 6 In its third motion in limine, Nanometrics seeks to exclude references to its size, public 7 company status, market capitalization, corporate transactions, or revenue, or to the parties’ 8 respective financing of litigation or ability to pay any damage award. See MIL 3, at 1, ECF No. 9 164. Nanometrics argues that such evidence is inadmissible under Federal Rules of Evidence 401, 10 402, and 403, and that such evidence would constitute an improper attempt to garner juror 11 sympathy based on a “David v. Goliath” argument unrelated to the merits of the action. See id. at 12 1. Optical responds that it agrees that no testimony or exhibits should be introduced that discuss 13 the parties’ abilities to pay for litigation or any potential damages award; that it will refer to 14 Nanometrics as “Nanometrics” and will not refer to Nanometrics’s merger or name change, but 15 should not be precluded from introducing an exhibit merely because it references Nanometrics’s 16 current legal entity name; that it will designate select pages from public securities filings, rather 17 than seek to introduce the entirety of such filings; and that it would be “impossible to completely 18 avoid discussing the size disparity when providing basic background information to the jurors to 19 understand the case.” See Opp’n to MIL 3, at 1, ECF No. 180. 20 Given Optical’s response, the only remaining dispute addressed at the pretrial conference 21 concerned the admissibility of evidence relating to the size disparity between the parties. As the 22 Court stated at the conference, it will grant Nanometrics’s motion in limine, including with respect 23 to evidence of the parties’ size disparity. Any relevance of the difference in the parties’ sizes is 24 substantially outweighed by the risk of unfair prejudice to Nanometrics of appearing as a 25 “Goliath” to Optical’s “David.” See, e.g., HTC Corp. v. Tech. Props. Ltd., No. 5:08-cv-00992, 26 2013 WL 4782598, at *6 (N.D. Cal. Sept. 6, 2013) (“The court finds that the probative value of 27 evidence related to [defendant’s] size, wealth, or overall revenues is substantially outweighed by 1 does not preclude Optical from introducing evidence regarding its own character as a small 2 company, or regarding Nanometrics’s treatment of Optical. What Optical may not do is engage in 3 or invite a comparison of the two companies’ sizes. The Court further clarifies that Optical is not 4 precluded from seeking to introduce otherwise admissible testimony solely because it bears a 5 different name for Nanometrics. 6 D. Nanometrics’s Motion in Limine No. 4 to Exclude Evidence and Argument Related to Intellectual Property Misappropriation or Breach of 7 Confidentiality Agreements (ECF No. 165) 8 In its fourth motion in limine, Nanometrics seeks to exclude evidence and argument that it 9 allegedly breached any confidentiality agreement or improperly used or distributed any proprietary 10 or trade secret information. See MIL 4, at 1, ECF No. 165. Nanometrics argues that such 11 evidence would be inadmissible under Federal Rules of Evidence 401, 402, and 403 because there 12 are no claims for theft of trade secrets, misappropriation of intellectual property or trade secrets, or 13 breach of any confidentiality agreements, and that any evidence or argument on these topics is 14 irrelevant, inflammatory, and prejudicial to Nanometrics, and likely to confuse the jury. See id. 15 Optical responds that it objects to the motion to the extent that Nanometrics is attempting to both 16 introduce evidence suggesting Optical’s fault in not sharing certain design information and then 17 preclude Optical from offering evidence to explain its rationale. See Opp’n to MIL 4, at 2, ECF 18 No. 181. 19 The Court will accordingly deny Nanometrics’s motion in limine to the extent Optical 20 seeks to introduce evidence related to Nanometrics’s alleged breach of a confidentiality agreement 21 or improper used or distribution of any proprietary or trade secret information in order to rebut 22 evidence that Optical was at fault for failing to provide Nanometrics with design specifications. 23 The Court will otherwise grant the motion in limine, such that Optical may not in its case-in-chief 24 elicit testimony regarding Nanometrics’s misappropriation of trade secrets of violation of a non- 25 disclosure agreement, on the ground that any relevance of such testimony would be substantially 26 outweighed by the danger of unfair prejudice to Nanometrics, jury confusion as to the claims at 27 issue, and an undue delay in the presentation of the case. See Fed. R. Evid. 403. E. Nanometrics’s Motion in Limine No. 5 to Exclude Evidence and Argument 1 Related to Bradley Piccirillo’s Purchase of Opticraft (ECF No. 166) 2 In its fifth and final motion in limine, Nanometrics seeks to exclude any evidence of Mr. 3 Piccirillo’s personal purchase of Opticraft, Inc. (“Opticraft”) and any argument that Optical should 4 be compensated for the purchase. See MIL5, at 1, ECF No. 166). Nanometrics argues that such 5 evidence and argument should be excluded under Federal Rules of Evidence 401, 402, and 403 6 because Mr. Piccirillo personally—and not Optical—purchased Opticraft, so that any damages 7 suffered by him personally are not recoverable by Optical and are not relevant to the issues to be 8 decided by the jury. See id. Optical counters that Nanometrics seeks to “invade and supplant the 9 equitable discretion of this Court in fashioning an appropriate equitable remedy on [Optical’s] 10 promissory estoppel claim,” and that because Mr. Piccirillo is the sole owner of both Optical and 11 Opticraft, the Court would have equitable discretion to order a remedy based on Mr. Piccirillo’s 12 purchase of Opticraft. See Opp’n to MIL 5, at 2, ECF No. 182. 13 The Court is not inclined to permit Optical—or Mr. Piccirillo—to both enjoy the benefits 14 of the personal, rather than company, purchase of Opticraft and avoid the burdens of the decision. 15 Given that Mr. Piccirillo’s personal purchase of Opticraft is not relevant to the breach of contract 16 claim that Optical will be trying to a jury, the Court finds that any relevance of the evidence of the 17 purchase is substantially outweighed by the danger of unfair prejudice to Nanometrics and 18 confusion of the jury as to the claims before it. See Fed. R. Evid. 403. Accordingly, the Court 19 will grant Nanometrics’s motion in limine to exclude evidence relating to Mr. Piccirillo’s purchase 20 of Opticraft and argument regarding Optical’s right to compensation from Nanometrics for that 21 purchase. Should any portion of Optical’s promissory estoppel claim remain—i.e., should any 22 portion of Optical’s claim for relief not have an adequate remedy at law—Optical may request to 23 introduce such evidence to the Court. 24 II. ORDER 25 For the foregoing reasons, the Court hereby ORDERS as follows: 26 1. Nanometrics’s Motion in Limine No. 1 to exclude Bradley Piccirillo from testifying 27 as an expert witness is GRANTED. Mr. Piccirillo may not present expert 1 a. Optical’s ability to design and manufacture 25-micron optical lenses that 2 met Nanometrics’s specifications; 3 b. Optical’s ability to design and manufacture optical lenses that met the 4 allegedly less challenging technical specification that Nanometrics 5 ultimately used for its 25-micron lenses; 6 c. Whether the semiconductor industry would consider feasibility studies, 7 including the specifications that Nanometrics provided to Optical, are fixed 8 or absolute specifications that Optical was required to meet; 9 d. Whether prototype optical lenses are not intended to be shared with third 10 parties, and whether it was Nanometrics’s standard process not to share 11 prototypes with customers until internal testing was complete; and 12 e. Whether Optical would have earned 80% profit margins on all optical 13 lenses Optical would have built and sold to Nanometrics. 14 2. Nanometrics’s Motion in Limine No. 2 to exclude Richard Trissel from testifying 15 as an expert witness is RESERVED IN PART as to Mr. Trissel’s opinion on 16 whether his design for Optical’s 25-micron lenses met Nanometrics’s design 17 specifications, and otherwise GRANTED, such that Mr. Trissel may not provide 18 expert testimony regarding: 19 a. Whether Optical’s 25-micron lenses, as manufactured, met Nanometrics’s 20 feasibility study specifications based on Optical’s existing test capabilities; 21 b. Whether Optical would have been able to ship prototype lenses to 22 Nanometrics sooner than it did, if Nanometrics had provided a “properly 23 functioning lateral color bench”; 24 c. Whether the feasibility study was “intended” to be used to generate final 25 specifications; and 26 d. Whether the prototype lenses were “intended for internal use only, and were 27 not intended for use with third parties.” 1 public company status, market capitalization, corporate transactions, or revenue, or 2 to the parties’ respective financing of litigation or ability to pay any damage award, 3 is GRANTED, such that Optical may introduce evidence regarding its own size and 4 Nanometrics’s treatment of Optical, but may not introduce evidence relating to any 5 size disparity between the parties. 6 4. Nanometrics’s Motion in Limine No. 4 to exclude evidence and argument related to 7 intellectual property misappropriation or breach of confidentiality agreements is 8 GRANTED IN PART and DENIED IN PART. Optical may not introduce such 9 evidence in its case-in-chief, but may introduce evidence on these topics to rebut 10 evidence that Optical was at fault in failing to provide design specifications to 11 Nanometrics. 12 5. Nanometrics’s Motion in Limine No. 5 to exclude evidence related to Mr. 5 13 Piccirillo’s purchase of Opticraft and argument that Optical is entitled to 14 compensation for the purchase is GRANTED. Should Optical’s promissory 3 15 estoppel claim survive the presentation of this case to the jury, Optical may raise 16 the issue of introducing such evidence to the Court.

Z 18 IT IS SO ORDERED. 19 Dated: October 30, 2023 20 21 Ailillnfaccian eth Labson Freeman United States District Judge 23 24 25 26 27 28