Dr. Ruthie Harper and PLLG, LLC v. Wellbeing Genomics Pty Ltd. ( 2018 )


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  •                                                                                           ACCEPTED
    03-17-00035-CV
    21631643
    THIRD COURT OF APPEALS
    AUSTIN, TEXAS
    1/5/2018 11:20 AM
    JEFFREY D. KYLE
    CLERK
    No. 03-17-00035-CV
    FILED IN
    IN THE THIRD COURT OF APPEALS        3rd COURT OF APPEALS
    AUSTIN, TEXAS
    AUSTIN, TEXAS
    1/5/2018 11:20:33 AM
    JEFFREY D. KYLE
    Clerk
    DR. RUTHIE HARPER AND PLLG, LLC,
    Appellants,
    v.
    WELLBEING GENOMICS PTY LTD.,
    Appellee.
    On Appeal from the 98th Judicial District Court
    Travis County, Texas, Cause No. D-1-GN-14-002452
    SUPPLEMENTAL BRIEF OF APPELLEE WELLBEING GENOMICS PTY LTD.
    FILED IN RESPONSE TO THE COURT’S REQUEST AT ORAL ARGUMENT
    Robert W. Kantner
    State Bar No. 11093900
    JONES DAY
    2727 North Harwood Street
    Dallas, Texas 75201-1515
    Telephone: (214) 969-3737
    Facsimile: (214) 969-5100
    rwkantner@jonesday.com
    ATTORNEY FOR APPELLEE
    NAI-1503303499v1
    TABLE OF CONTENTS
    PAGE
    Record References ...................................................................................................iv
    Introduction ...............................................................................................................1
    Factual Background ..................................................................................................1
    A.        Defendants’ Access to Trade Secret No. 1...........................................1
    B.        Defendants’ Misappropriation of Trade Secret No. 1 and
    PLLG’s Breach of Confidentiality Agreement ....................................4
    Argument...................................................................................................................6
    A.        Proof of Access to Trade Secret No. 1 by Harper and PLLG .............. 6
    1.        Standard of Proof of Access to Trade Secrets ...........................6
    2.        Wellbeing’s Evidence of Access to Trade Secret No. 1 by
    Harper and PLLG .....................................................................13
    B.        Proof of Use or Disclosure of Trade Secret No. 1 by Harper and
    by PLLG .............................................................................................16
    1.        Standard of Proof of Use or Disclosure of a Trade Secret ......16
    2.        Wellbeing’s Evidence of Use of Trade Secret No. 1 by
    Harper and PLLG .....................................................................22
    C.        This Court Should Not Reverse the Judgment Based on Either
    Harper’s or PLLG’s Allegation of No Evidence or Insufficient
    Evidence of their Access to and Use/Disclosure of Trade Secret
    No. 1 ...................................................................................................25
    Conclusion and Prayer ............................................................................................26
    Certificate of Service ..............................................................................................28
    NAI-1503303499v1                                             -i-
    TABLE OF AUTHORITIES
    Page
    CASES
    Bishop v. Miller,
    
    412 S.W.3d 758
    (Tex. App. – Houston [14th Dist.] 2013, no pet.) .......19, 20, 21
    Cain v. Bain,
    
    709 S.W.2d 175
    (Tex. 1986) ..............................................................................25
    Electro-Miniatures Corp. v. Wendon Co., Inc.,
    
    771 F.2d 23
    (2nd Cir. 1985) .........................................................................11, 12
    GlobeRanger Corp. v. Software AG United States of America, Inc.,
    
    836 F.3d 477
    (5th Cir. 2016) ........................................................................17, 21
    Leggett & Platt, Incorporated v. Hickory Springs Manufacturing
    Company,
    
    285 F.3d 1353
    (Fed. Cir. 2002) ....................................................................10, 12
    Pioneer Hi-Bred Inc. v. Holden Foundation Seeds,
    
    35 F.3d 1226
    (8th Cir. 1994) ........................................................................11, 12
    Sokol Crystal Products v. DSC Communications Corp.,
    
    15 F.3d 1427
    (7th Cir. 1994) ........................................................................11, 12
    Spear Marketing, Inc. v. Bancorpsouth Bank,
    
    2014 WL 2608485
    (N.D. Tex. June 11, 2014), aff’d. 
    791 F.3d 586
       (5th Cir. 2015).................................................................................................8, 10
    Stratienko v. Cordis Corp.,
    
    429 F.2d 592
    (6th Cir. 2005) ..............................................................................10
    SW Energy Production Co. v. Berry-Helfand,
    
    491 S.W.3d 699
    (Tex. 2016) ..............................................................................16
    NAI-1503303499v1                                         -ii-
    TABLE OF AUTHORITIES
    (continued)
    PAGE
    Transp. Ins. Co. v. Moriel,
    
    879 S.W.2d 10
    (Tex. 1994).................................................................................25
    Wellogix, Inc. v. Accenture, L.L.P.,
    
    716 F.3d 867
    (5th Cir. 2013) ............................................... 6, 7, 8, 10, 12, 18, 21
    NAI-1503303499v1                                     -iii-
    RECORD REFERENCES
    Appellee will use the same record reference designations as it did in its Brief
    of Appellee.
    NAI-1503303499v1                          -iv-
    INTRODUCTION
    At the conclusion of the two week trial of this case, the jury found that
    Wellbeing Genomics Pty Ltd. (“Wellbeing”) had proven that it had a trade secret
    in a grouping of DNA sequence variants (also called “SNPs”) into one or more
    skin-related categories (“Trade Secret No. 1”). The jury also found that Dr. Ruthie
    Harper and PLLG, LLC (“PLLG”) had misappropriated Trade Secret No. 1 and
    that PLLG had breached the confidentiality provision of its Exclusive Distributor
    Agreement with Wellbeing (PX019-0003-4) by misusing the information in Trade
    Secret No. 1. 1CR2975, 2978-9 and 2980. Wellbeing elected to recover against
    PLLG based on the contract claim. 1CR3267-8
    This Supplemental Brief is provided – at the Court’s invitation – to address
    questions posed by the Court during oral argument, namely what standard the
    Court should use to evaluate whether there is any evidence or sufficient evidence
    to support the jury’s conclusion that Harper and PLLG had access to Trade Secret
    No. 1 and used or disclosed Trade Secret No. 1 without Wellbeing’s permission.
    FACTUAL BACKGROUND
    A.      Defendants’ Access to Trade Secret No. 1
    On appeal, Harper and PLLG assert that there is no evidence or insufficient
    evidence they ever received or had access to Trade Secret No. 1. For example, in
    their opening brief, Harper and PLLG asserted: “The record is crystal clear that
    Dr. Harper had never been provided anything like Slide 17 until trial.” App.
    NAI-1503303499v1                         -1-
    Br. 31.       The slide 17 to which Harper and PLLG refer was one of the
    demonstrative slides that Wellbeing’s technical expert, Dr. Michael Metzker,
    presented to the jury to illustrate Trade Secret No. 1:
    STIP00073 (Metzger Slide No. 17) (App. 2).
    What is an rs number? The National Center for Biotechnology Information
    (“NCBI”) assigns to each SNP that is identified a unique identifier called an rs
    number. Rs stands for “reference SNP.” Basically, the rs number provides the
    address of a particular SNP in the human genome. 4RR 111; 7RR 31. Therefore
    the rs numbers in Metzker Slide No. 17 disclose the SNPs Wellbeing used in its
    test. At a time when PLLG was selling Wellbeing’s DNA test under the tradename
    NAI-1503303499v1                          -2-
    SKINSHIFT (6RR11), David Urman – who worked for Harper and PLLG – wrote
    to a potential new distributor as follows:
    SKINSHIFT is the first company to identify 16 SNPs that are
    relevant to skin health categories. Additional SNPs are being
    discovered as we speak. The location of all of these SNPs will
    not be disclosed and will be treated as a trade secret.
    PX 46 (Emphasis added).
    In response to Harper’s and PLLG’s contention that there is no evidence that
    they had access to Trade Secret No. 1, Wellbeing has cited the factual testimony of
    Stefan Mazy, the founder of Wellbeing and developer of Trade Secret No. 1, and
    the expert testimony of Dr. Metzker. Both Mazy and Metzker testified that the
    data cards Wellbeing provided to Harper and PLLG confidentially for each of the
    genes in Trade Secret No. 1 cited a small number of scientific articles (or
    references) that provided the rs numbers in Trade Secret No. 1. See, e.g., citations
    to articles on the data cards at PX21-006, 9, 12 and 25, articles at PX2-448 and
    525-7, Mazy’s testimony at 5RR7-11 and Metzker’s testimony at 7RR21 and 42-
    45.
    The number of DNA variants in Wellbeing’s Trade Secret No. 1 (fifteen)
    (one is used twice) is a very small percentage of the DNA variants found in
    humans on average (3.5 million). 7RR32. The average number of SNPs – DNA
    variants that appear in 1% or more of the population (7RR23-24) – is smaller than
    3.5 million; but it is far larger than the number of SNPs in Trade Secret No. 1.
    NAI-1503303499v1                             -3-
    After all, Mazy testified that he considered 6,000 genes, each of which contain
    500-1,000 SNPs, and closely evaluated 200 of them before selecting twelve for
    Trade Secret No. 1.     As a result, Mazy analyzed thousands of SNPs before
    selecting fifteen (one to be used twice) for Trade Secret No. 1. PX26; 4RR83-86.
    Moreover, Mazy showed the jury a huge stack of the articles he read and still had
    at trial (20% of the total) that he relied upon to evaluate whether particular SNPs
    were associated with the skin health categories he had chosen. PX2; 4RR117-119.
    The number of articles cited on the data cards Wellbeing provided to Harper and
    PLLG is a very small fraction of the articles Mazy read. PX2.
    Harper and PLLG had a test panel of SNPs by April 22, 2014 (PX 112) –
    about three months after Dr. Linda DiBella started work on the panel for them.
    (9RR 70-71). In contrast, looking for SNPs for a panel from scratch is like looking
    for proverbial needles in a haystack. That is why it took Mazy three years to
    develop Trade Secret No. 1. 4RR77.
    B.      Defendants’ Misappropriation of Trade Secret No. 1 and PLLG’s
    Breach of Confidentiality Agreement.
    On appeal, Harper and PLLG also argue that there is no evidence or
    insufficient evidence that either of them used or disclosed Wellbeing’s Trade
    Secret No. 1. Harper argues that she did not use Trade Secret No. 1 to prepare
    patent applications on “Methods of Skin Analysis and Uses Thereof.” PX153 and
    149. PLLG argues that it developed its DNA test independently.
    NAI-1503303499v1                        -4-
    Wellbeing has responded to Harper’s contention by citing Dr. Metzker’s
    testimony that Harper used Trade Secret No. 1 to prepare her patent applications
    and that Harper’s PCT application, which was published, disclosed Trade Secret
    No. 1. 7RR71, 143. Metker’s conclusions are supported by the fact that David
    Urman, who worked for Harper and PLLG, sent Wellbeing data cards and
    “extended” data cards to Harper’s patent attorney. PX291 and 295. Indeed, one of
    the Wellbeing extended data cards that Urman sent to Harper’s patent attorney was
    copied into the PCT application. PX22, 153-0065-72. Metzker’s opinions are also
    supported by the facts that the PCT application disclosed eleven of the twelve
    genes and eight of the fifteen SNPs in Trade Secret No. 1. 1 PX159; 7RR-51, 143
    and 147. Harper did not object to Metzker’s testimony.
    Wellbeing has responded to PLLG’s argument about the development of its
    SNP panel by citing the fact that Harper emailed to DiBella, whom PLLG hired to
    develop the SNP panel, Wellbeing data cards (one modified to add the rs number)
    and Wellbeing’s list of its SNP functions. PX83. Wellbeing also relies on Dr.
    Metzker’s testimony that DiBella, who had never previously created a DNA test,
    used Wellbeing’s Trade Secret No. 1 to develop PLLG’s DNA test. 7RR21-22.
    Metzker cited the fact that the original test panel Harper sent to Qivana, LLC to
    give to the new lab, Sorenson Genomics, had eight of Wellbeing’s fifteen SNPs
    and Wellbeing had used one of those SNPs twice. PX112; 7RR64. Some of the
    NAI-1503303499v1                       -5-
    Wellbeing SNPs were dropped – but only because Sorenson could not quickly
    obtain the reagents needed to test for those SNPs. 7RR147-148; see also PX141.
    Again, no objection was made to Metzker’s testimony.
    ARGUMENT
    A.      Proof of Access to Trade Secret No. 1 by Harper and PLLG.
    1.         Standard of Proof of Access to Trade Secrets.
    No one decision provides one specific standard for proof of access to a trade
    secret; but several courts have addressed the issue of the sufficiency of the
    plaintiff’s proof of a defendant’s access to trade secrets in issue under Texas law.
    In Wellogix, Inc. v. Accenture, L.L.P., 
    716 F.3d 867
    (5th Cir. 2013), Plaintiff
    Wellogix, Inc. (“Wellogix”) developed software that allowed oil companies to
    “plan, procure, and pay for complex services” online. The software included
    “dynamic templates” that adjusted cost and supply estimates based on “intelligence
    built into” the underlying source code.           
    Id., at 873.
      The Court of Appeals
    concluded that Wellogix had presented sufficient evidence to support the jury’s
    finding that Defendant Accenture, LLP (“Accenture”) had improperly acquired
    Wellogix’s trade secrets, based on the following evidence:
    Wellogix showed:      that it entered into six confidential
    agreements with Accenture; that through the marketing
    agreements, Accenture had access to Wellogix trade secrets;
    that Accenture also had access to Wellogix trade secrets
    uploaded to the confidential eTrans portal; and that an
    Accenture email referenced ‘harvesting IP from Wellogix.’
    NAI-1503303499v1                            -6-
    
    Id., at 876.
            The Court of Appeals rejected Accenture’s argument that the
    testimony of Kendyl Roman, Wellogix’s expert, was insufficient evidence that
    Wellogix’s trade secrets were available on Wellogix’s eTrans portal – to which
    Accenture had access. Roman had testified that – based on his experience in the
    software industry – he believed it likely that companies working together on a pilot
    project – like Wellogix and Accenture – would share documents containing trade
    secrets on an online portal.          Roman also relied on a contractor’s deposition
    testimony that information “resembling” Wellogix’s trade secrets was on the
    eTrans portal. The Court of Appeals concluded that Roman’s testimony was
    sufficient evidence of access:
    Given that ‘an expert is permitted wide latitude to offer
    opinions,’ 
    Daubert, 509 U.S. at 592
    , 
    113 S. Ct. 2786
    , and that,
    as discussed below, Roman’s testimony was sufficiently
    ‘reliable’ and “relevant,’ the jury was reasonable in crediting
    his testimony.
    
    Id. The Court
    of Appeals also rejected two other contentions by Accenture
    based on the testimony of Wellogix CEO Ike Epley. First, Accenture contended
    that Epley’s testimony that one of Wellogix’s pilot project partners, Trade Rangers,
    “had access” to Wellogix’s source code did not support the “inferential leap” that
    Accenture had such access. Second, Accenture contended that Epley’s testimony
    that the code was behind a firewall showed that it was not possible for Accenture
    NAI-1503303499v1                             -7-
    to access the trade secrets in the software. The Court of Appeals concluded that
    Accenture’s involvement in the Trade Ranger pilot project as a consultant and
    implementer supported the inference that Accenture could have accessed
    Wellogix’s source code through the pilot project. As for the firewall, the Court of
    Appeals stated that the jury could have inferred that Accenture “otherwise had
    access to” the code – for example by entering into confidentiality agreements.
    Finally, the Court of Appeals rejected Accenture’s reliance on the testimony
    of Wellogix’s corporate representative, John Chisholm, that Wellogix never gave
    Accenture access to source code, stating: “we decline to assume ‘jury functions’
    by weighing Chisholm’s credibility against Epley’s.” 
    Id., at 876-877.
    In Spear Marketing, Inc. v. Bancorpsouth Bank, 
    2014 WL 2608485
    (N.D.
    Tex. June 11, 2014), aff’d. 
    791 F.3d 586
    (5th Cir. 2015), the District Court found
    sufficient evidence of access but granted summary judgment to the defendants
    because there was insufficient evidence of use. Like Wellogix, Spear involved
    trade secrets in software – a program called VaultWorks that Plaintiff Spear
    Marketing, Inc. (“SMI”) designed to help banks reduce the amount of cash – a
    nonearning asset – they hold in bank branches, ATMs and central vaults. SMI had
    licensed VaultWorks to Defendant BancorpSouth Bank (“BancorpSouth”). On
    April 6, 2010, SMI’s President, Bill Spear contacted co-Defendant Argo Data
    Resource Corporation (“ARGO”) to see if ARGO wanted to purchase SMI or enter
    NAI-1503303499v1                         -8-
    into a partnership with SMI. Subject to an agreement to treat SMI’s disclosure to
    ARGO confidentially, SMI presented a demonstration of its technology to ARGO
    via an internet-telephone conference call involving Bill Spear and Todd Robertson,
    ARGO’s Vice President and other representatives of ARGO.
    Defendants BancorpSouth and ARGO moved for summary judgment. They
    contended that there was no evidence that they had used SMI’s trade secrets in
    connection with ARGO’s development of a competing program referred to as CIO.
    SMI responded by arguing that the motion should be denied because there was
    evidence of defendants’ access to VaultWorks and because there were similarities
    between CIO and VaultWorks. The District Court found there was a genuine issue
    of material fact as to access.       The evidence the District Court cited may be
    summarized as follows:
    1.   Defendants’ implementation    of   ARGO’s     CIO    at
    BancorpSouth, including:
    a.    Emails between Defendants with VaultWorks’
    screen-shots displaying cash data from certain
    BancorpSouth branches;
    b.    ARGO’s Project Status Reports detailing the
    progress of CIO’s implementation at BancorpSouth; and
    c.     An agenda for the CIO Kick-Off Meeting with
    slide containing screen-shots of VaultWorks.
    2.   Discussions between Bill Spear and Todd Robertson:
    NAI-1503303499v1                           -9-
    a.    Robertson’s internal email summarizing what he
    learned from Spear’s demonstration on April 6, 2010;
    and
    b.   Spear’s declaration about information conveyed to
    Robertson.
    
    Id., at 8.
    Based on this evidence, the District Court decided that SMI had raised a
    genuine dispute regarding whether Defendants accessed “at least some” of SMI’s
    trade secrets:
    A reasonable juror could find that ARGO had access to certain
    trade secrets connected to VaultWorks through BancorpSouth’s
    somewhat detailed demonstration at the CIO Kickoff Meeting
    and Spear’s declaration concerning his unrecorded
    demonstration of VaultWorks. The VaultWorks screen-shots
    also arguably gave ARGO access to certain trade secrets
    identified by SMI. Admittedly, the evidence of Defendants’
    access to SMI’s specific trade secrets is hardly clear or
    concrete. But it seems sufficient at this point, given the
    somewhat relaxed evidentiary standard courts employ when
    analyzing the access element of this test.
    
    Id. Courts applying
    the trade secret law of other states agree with Wellogix and
    Spear Marketing that circumstantial proof of access to trade secrets is sufficient.
    See, e.g. Stratienko v. Cordis Corp., 
    429 F.2d 592
    , 601 (6th Cir. 2005). (“In the
    case at bar, we assume that Dr. Stratienko produced sufficient evidence of access:
    Cordis’ declarations demonstrate that Cordis, the entity that developed the Vista
    Brite 1G Catheter, had access to the information.”); Leggett & Platt, Incorporated
    NAI-1503303499v1                            -10-
    v. Hickory Springs Manufacturing Company, 
    285 F.3d 1353
    , 1361 (Fed. Cir. 2002)
    (“L&P’s evidence indicates that Hickory too had access to L&P’s trade secrets
    through L&P’s former employee Robert Hagemeister . . . . Hagemeister is a
    veritable repository of information on L&P products and designs. When hired by
    Hickory to design directly competing products, Hagemeister would be hard pressed
    to avoid disclosing such information.”); Sokol Crystal Products v. DSC
    Communications Corp., 
    15 F.3d 1427
    , 1430 (7th Cir. 1994). (“ . . . [T]he simple
    fact that Sokol shipped its product to DSC would likely be sufficient evidence to
    sustain the jury’s verdict” [that DSC had access to Sokol’s trade secret]); Pioneer
    Hi-Bred Inc. v. Holden Foundation Seeds, 
    35 F.3d 1226
    , 1233 (8th Cir. 1994)
    (“Pioneer presented no direct evidence regarding how Holden obtained
    H3H/H43527.        However, ‘direct evidence of industrial espionage are rarely
    available and not required.”); and Electro-Miniatures Corp. v. Wendon Co., Inc.,
    
    771 F.2d 23
    , 26 (2nd Cir. 1985) (“It is true, as [Defendant] Wendon emphasizes,
    that [Plaintiff] EMC failed to establish the precise nature of the drawings Wendon
    acquired…. However, from the evidence, the jury might reasonably have inferred
    that Wendon had access to other drawings besides those it admitted receiving or to
    other sources of information about EMC’s trade secrets.”)
    The cases cited above support at least the following standards for evaluation
    of the sufficiency of evidence of a defendant’s access to trade secrets:
    NAI-1503303499v1                         -11-
    1.   The plaintiff does not have to provide direct evidence
    that it delivered or made available all of the elements of a
    combination trade secret to the defendant in one
    document. See Wellogix, Speer and Pioneer Hi-Bred.
    2.   A finding of access may be based on circumstantial
    evidence such as the defendant’s inability to develop the
    technology in question without access to plaintiff’s trade
    secret(s) and/or a defendant’s development of the
    technology in question after gaining access to the
    plaintiff’s trade secrets. See Speer Marketing.
    3.   It is sufficient that the plaintiff proves the defendant
    likely had access to some of the trade secret information
    by virtue of the parties working together on a project.
    See Wellogix, Speer and Electro-Miniatures.
    4.   A defendant’s use of data and documents generated by or
    relating to the trade secret(s) while working on a similar,
    competitive product will support a finding that the
    defendant had access to the trade secret(s). See Speer
    Marketing.
    5.   Indeed, a defendant’s hiring of a former employee of the
    plaintiff who knows the trade secret(s) is sufficient. See
    Leggett & Platt.
    6.   Or the defendant’s receipt of the plaintiff’s product may
    be sufficient. See Sokol.
    7.   The court should not assume the jury’s function of
    weighing the credibility of witnesses. See Wellogix.
    8.   An expert who has reviewed the file and whose opinion
    is deemed reliable should be given great latitude to testify
    about access. See Wellogix.
    NAI-1503303499v1                             -12-
    2.         Wellbeing’s Evidence of Access to Trade Secret No. 1 by Harper
    and PLLG
    Wellbeing presented evidence of access to Trade Secret No. 1 by Harper and
    PLLG, including the following.
    1.   Mazy provided data cards for each of the genes in Trade
    Secret No. 1 to Harper and PLLG. Each of the twelve
    data cards cited a small number of references that
    provided the rs numbers in Trade Secret No. 1. Indeed,
    one reference cited two rs numbers in its title. PX21;
    5RR7-11. The rs numbers identify particular SNPs.
    7RR31
    2.   PLLG included eight of Wellbeing’s SNPs in the SNP
    panel if sent to Qivana to give to its lab, Sorenson. PX
    112. The title of the first reference on Wellbeing’s data
    card for the GPX1 gene was “The Mn-superoxide
    dismutase single nuecleotide polymorphism rs 4880 and
    the glutathione peroxidase 1 single nucleotide
    polymorphism rs 1050450 are associated with aging and
    longevity in the oldest old.” PX21-0006. (App. 4)
    Wellbeing uses the SNP represented by rs 1050450 with
    regard to the GPX1 gene in two skin health categories:
    Firmness and Elasticity and Free Radical Damage.
    Wellbeing uses the SNP represented by rs4880 with
    regard to the SOD2 gene. Therefore, the article was also
    listed by Wellbeing as a reference on Wellbeing’s data
    card for the SOD2 gene. PX-0025 Both of these SNPs
    were included in the panel of SNPs PLLG submitted to
    Qivana to give to Sorenson.           PX112     The SNP
    represented by rs 1050450 was eliminated from Harper’s
    “new” test, but only because Sorenson could not find a
    reagent needed to test for it. PX141
    3.   Mazy also cited references in Wellbeing’s data cards that
    did not state the rs number in question in the title but did
    provide the rs number in the body of the article. For
    example, Mazy cited an article titled: “Leptin-Receptor
    Polymorphisms Relate to Obesity through Blunted
    NAI-1503303499v1                             -13-
    Leptin-Mediated Sympathetic Nerve Activation in a
    Caucasian Male Population.” PX 2-0448; 5RR8; App. 5
    This article is a reference in the data card for the LEPR
    gene. PX 21-00009 The article refers to three SNPs –
    represented by rs 1137100, rs 115701 and rs 179183.
    PX2-0450       The first SNP is used by Wellbeing.
    STIP00073 The second SNP was included in PLLG’s
    “new” test. PX112
    4.   Another article Mazy cited was titled: “Two newly
    identified genetic determinants of pigmentation in
    Europeans.” PX2-0505-7 (App. 6) It is a reference cited
    on Wellbeing’s data card for the ASIP gene. PX2-0012
    The article is only two and a half pages long. In a table
    on page 2, the article cites two and only two SNPs with
    respect to the ASIP gene – SNPs represented by rs
    1015362 and rs 4911414. PX2-0506 These are the two
    SNPs Wellbeing uses with respect to the ASIP gene.
    PLLG included both SNPs in the SNP panel it sent to
    Qivana to give to Sorenson. PX112
    5.   Mazy cited additional examples of disclosures in the
    references of rs numbers for SNPs used in Wellbeing
    SkinDNA™ Test (5RR9-11) and further examples can be
    found in other articles. PX 2.
    6.   In at least one instance, there is direct evidence Harper or
    DiBella obtained an rs number for a Wellbeing SNP from
    a data card provided by Wellbeing.                 Plaintiff’s
    Exhibit 178 was a screen shot of SNP information for the
    MMP-1 gene taken from the NCBI database that Mazy
    provided to Harper. It highlighted rs 1799750, a SNP
    Wellbeing used in its test. When Harper sent the
    extended data card for the MMP-1 to DiBella, who
    prepared a SNP panel for PLLG, Harper added this rs
    number to it. PX83
    7.   Moreover, Harper asked for Mazy’s scientific references.
    On November 7, 2012, Harper wrote to Urman: “When
    we get the info from Stefan on SNPs, we want to
    complete journal articles so we are more informed about
    NAI-1503303499v1                             -14-
    them than anyone else . . . .” PX73 Urman understood
    that Harper was referring to the articles cited in
    Wellbeing’s data cards. 6RR20 One day later, Urman
    wrote to Mazy: “Good morning! Can you get us the
    article for all of the SNPs that support the data cards?”
    PX99
    8.    On average a human has 3.5 million DNA variants.
    SNPs are DNA variants that occur in 1% or more of the
    population. 7RR23-24. Each gene has between 500 and
    1,000 SNPs. PX26. Mazy testified that he considered
    6,000 genes and closely evaluated 200 of them before
    choosing twelve genes for Trade Secret No. 1. 4RR83-
    86. Therefore, Mazy considered thousands of SNPs.
    Moreover, Mazy showed the jury a huge stack of articles
    he read and still had at trial (20% of the total he read) that
    he relied upon to evaluate whether particular SNPs were
    associated with the skin health categories he had chosen.
    PX2; 4RR 117-119.
    9.    The number of articles cited in the data cards was far
    smaller than the number of articles Mazy had read to
    develop his test. PX2; 4RR117-119. Moreover the data
    cards grouped the articles by gene. PX21 The fact that
    the DNA panel PLLG sent to Qivana contained eight of
    Wellbeing’s SNPs is not a coincidence.
    10.   Harper and DiBella prepared a test panel of SNPs in
    three months. 9RR70-71. It took Mazy three years to
    develop Trade Secret No. 1. 4RR77
    Dr. Metzker testified that Harper misappropriated Trade Secret No. 1 –
    based not only on the above-cited evidence (7RR21, 49-52, 57-61, 64-65, and 70-
    72), but also his opinions that neither Harper nor DiBella was qualified to develop
    a DNA test and certainly would not have been able to develop a DNA test in three
    NAI-1503303499v1                              -15-
    months without Trade Secret No. 1. 7RR53-57 and 65-69. Harper and PLLG did
    not object to the admission of Metzker’s opinions at trial.
    B.      Proof of Use or Disclosure of Trade Secret No. 1 by Harper and by
    PLLG.
    1.         Standard of Proof of Use or Disclosure of a Trade Secret.
    The District Court charged the jury on “use” of a trade secret as follows:
    “Use” means a commercial use by which a person seeks to
    profit from the trade secret. Merely receiving trade secret
    information does not constitute “use” of a trade secret.
    Misappropriation does not require that the person use the trade
    secret in exactly the form in which the person received it;
    however, it must be substantially derived therefrom. There is
    no misappropriation when the contribution of the trade secret is
    slight and the person’s process can be said to have been derived
    from other sources.
    (ICR2980)
    This instruction was correct – and is not challenged on appeal by Harper or
    PLLG. In SW Energy Production Co. v. Berry-Helfand, 
    491 S.W.3d 699
    (Tex.
    2016), the Supreme Court stated that “use” of a trade secret means “’commercial
    use by which the offending party seeks to profit from the use of the trade secret.’”
    
    Id., at 722
    (quoting Global Water One, Inc. v. Atchley, 
    244 S.W.3d 924
    , 930 (Tex.
    App. – Dallas 2008, pet. denied). The Supreme Court added that “use” of a trade
    secret includes relying on the trade secret “’to assist or accelerate research or
    development.’” 
    Id. (quoting RESTATEMENT
    (THIRD) OF UNFAIR COMPETITION § 40
    comt. c)
    NAI-1503303499v1                             -16-
    In GlobeRanger Corp. v. Software AG United States of America, Inc., 
    836 F.3d 477
    (5th Cir. 2016) (applying Texas law), the Court of Appeals commented on
    the above statements by the Texas Supreme Court in Southwestern Energy as
    follows:
    Southwestern Energy thus removes any doubt that Texas
    follows this principle of “traditional trade secret law,” which
    recognizes that if the concept of use “were not flexible enough
    to encompass modified or even new products that are
    substantially derived from the trade secret of another, the
    protections the law provides would be hollow indeed.”
    
    Id., at 498-499.
    In GlobeRanger, the Court of Appeals held that GlobeRanger Corp.
    (“GlobeRanger”) had provided sufficient evidence to show that Software AG US
    of America, Inc. (“Software AG”) had used GlobeRanger’s Navy Solution, a radio
    frequency identification (“RFID”) technology, to develop its own product. The
    Court of Appeals cited the following evidence:
    Software AG accessed implementations of the Navy Solution;
    received confidential system keys under the pretense of
    maintenance; acknowledged trying to replicate GlobeRanger’s
    functionality and obtained confidential source code from a
    former GlobeRanger employee in order to figure out how the
    technology worked, all while it was in the process of making its
    own product to perform similar functions.
    
    Id., at 499.
    In short, the Court of Appeals accepted evidence of defendant’s access
    to plaintiff’s trade secrets while developing a competing product to perform similar
    NAI-1503303499v1                             -17-
    functions. It did not require evidence that defendant’s product was the same as or
    even substantially similar to plaintiff’s product.
    Moreover, in GlobeRanger, the Court of Appeals cited its prior decision on
    this point in Wellogix, Inc. v. Accenture, 
    L.L.P., supra
    (applying Texas law).
    Wellogix presented evidence that Accenture and its partner, SAP, had been able to
    access Wellogix’s dynamic templates source code that had been uploaded to a
    confidential eTrans portal. The Court of Appeals cited that evidence and an
    Accenture document stating that its software had to have similar or better
    technology than Wellogix and other Accenture documents referencing Wellogix’s
    templates as supporting the jury’s conclusion that Accenture used Wellogix’s trade
    secrets. 
    Id., at 877.
    In Wellogix, the Court of Appeals also addressed Accenture’s arguments
    that: (1) its templates lacked “dynamic” features and therefore were “nothing like
    Wellogix’s;” and (2) “Wellogix doesn’t own the concept of templates.” Similarly,
    PLLG has argued that its DNA test looks different than Wellbeing’s DNA test,
    which utilizes Trade Secret No. 1, and that Wellbeing does not own the concept of
    DNA testing to determine skin treatments. In Wellogix, the Court of Appeals
    rejected these arguments:
    However, the standard for finding “use” is not whether
    Accenture’s templates contained Wellogix trade secrets, but
    whether Accenture “rel[ied] on the trade secret[s] to assist or
    accelerate research or development of its templates. HAL, 500
    NAI-1503303499v1                             -18-
    F.3d at 451 (quoting RESTATEMENT (THIRD) OF UNFAIR
    COMPETITION § 40). A jury could “legitimate[ly] infer[,]”
    
    Reeves, 530 U.S. at 150
    , 
    120 S. Ct. 2097
    , on the basis of, for
    example, the Accenture email suggesting that the company
    should “[u]se Wellogix for content,” that Accenture “rel[ied]”
    on Wellogix’s templates to develop its own. See 
    HAL, 500 F.3d at 451
    .
    
    Id., at 877-8.
    A Texas Court of Appeals has also considered this sufficiency of evidence
    of use of a trade secret question. In Bishop v. Miller, 
    412 S.W.3d 758
    (Tex. App. –
    Houston [14th Dist.] 2013, no pet.), Plaintiffs William Bishop and Pinnacle Potash
    International, Ltd. (“Pinnacle”) asserted that thirteen pieces of information on a list
    of Bishop’s technical plans for mining for potassium in a region of Utah known as
    The Ten Mile Area were trade secrets. Bishop and Pinnacle further asserted that a
    compilation of one or more of those items was also a trade secret. The jury found
    that three of the items and a compilation of them were trade secrets and that those
    trade secrets were misappropriated by Defendants E. Barger Miller and Reunion
    Potash Company (“Reunion”).
    Regarding use, the Court of Appeals found there was evidence that Reunion
    had “used” Bishop’s trade secrets in two ways. First, Miller used the trade secrets
    to attempt to entice a third party into investing money in Reunion to develop the
    subject mining leases. Second, Reunion used the trade secrets to develop an
    NAI-1503303499v1                            -19-
    Operating Plan for the development of the one acre. The Court of Appeals’
    comments on the latter finding are most relevant to Wellbeing’s case.
    Bishop conceded that Reunion’s Operating Plan did not copy his plan, which
    was based on his trade secrets, “in toto”; but Bishop asserted that Reunion’s
    Operating Plan was “very similar” to his and used “major pieces of his plan.” 
    Id., at 773.
    Bishop’s technical expert witness, Kenneth Mills, broke Bishop’s plan into
    twenty-one component parts and concluded that Reunion’s Operating Plan
    incorporated fifteen of those components, and either modified or discarded the
    remaining six components. Mills further testified that without the “Bishop Plan”
    Reunion’s modifications would never have been done. 
    Id., at 774.
    Regarding Bishop’s testimony, the Court of Appeals observed that the
    unauthorized use of a trade secret “need not extend to every aspect or feature of the
    trade secret; use of any substantial portion of the secret is sufficient to subject the
    actor to liability.” 
    Id. (quoting RESTATEMENT
    (THIRD)           OF   UNFAIR COMPETITION
    § 40 comt. c) Regarding Mills’ testimony, the Court of Appeals stated:
    (“[T]he actor need not use the trade secret in its original form.
    Thus, an actor is liable for using the trade secret with
    independently created improvements or modifications if the
    result is substantially derived from the trade secret.”).
    
    Id. (again quoting
    comment c.)
    The Court of Appeals noted that the three trade secrets found by the jury
    were among the components of the Bishop Plan that Reunion had modified, but the
    NAI-1503303499v1                              -20-
    Court cited Mills’ testimony that the modifications in Reunion’s Operating Plan
    would never have been made if not for Reunion’s use of Bishop’s trade secrets as
    supporting the jury’s finding of misappropriation. 
    Id., n. 20.
    In the end, the Court of Appeals concluded that the similarities between
    Bishop’s and Reunion’s plans and Mills’ testimony regarding Reunion’s
    modifications was sufficient evidence to support the jury’s finding of
    misappropriation stating: “The evidence was such that reasonable and fair minded
    people could reach the verdict the jury reached in this case.” 
    Id., at 775.
    In conclusion, with regard to evaluating a defendant’s alleged use of a trade
    secret GlobeRanger, Wellogix, and Bishop offer the following standards:
    1.   “Use” of a trade secret means any commercial use by
    which a person seeks to profit from the trade secret. See
    GlobeRanger. See also Southwestern.
    2.   A plaintiff need not introduce direct evidence of a
    defendant’s use of a trade secret. Evidence, even
    circumstantial evidence, of a defendant’s access to the
    alleged trade secret and intention to develop similar
    technology will suffice. See GlobeRanger.
    3.   A defendant’s product need not contain the trade secret.
    If the defendant relied upon the trade secret to assist or
    accelerate its research, that is a use that supports a
    finding of misappropriation. See Wellogix.
    4.   Unauthorized use need not extend to every aspect, feature
    or component of a trade secret. It is sufficient if the
    defendant’s technology or product is substantially
    derived from the plaintiff’s trade secret(s). See Miller.
    NAI-1503303499v1                            -21-
    The District Court’s charge to the jury on the definition of “use” of a trade
    secret conforms to these standards.
    2.         Wellbeing’s Evidence of Use of Trade Secret No. 1 by Harper and
    PLLG.
    a.   Evidence of Use of Trade Secret No. 1 by Harper
    Wellbeing presented evidence Harper used Trade Secret No. 1 to prepare her
    patent applications, including the following:
    1.    Harper had access to Trade Secret No. 1. See above.
    2.    David Urman, who worked for Harper and PLLG, sent
    Wellbeing data cards and “extended” data cards to
    Harper’s patent prosecution counsel. PX291 and 295.
    3.    Wellbeing’s “extended” data card for the MMP-1 gene
    was inserted into Harper’s provisional patent application
    and Harper’s PCT application (minus Mazy’s citations to
    scientific articles.) PX22 and 153-0065-72, 159-0041.
    4.    Harper’s PCT patent application disclosed eleven of the
    twelve genes in Trade Secret No. 1 PX159; 7RR51.
    5.    Harper’s PCT application disclosed twelve of the fifteen
    SNPs in Trade Secret No. 1. 7RR143. Table 2 alone
    disclosed eight of the SNPs in Wellbeing’s test.
    6.    Harper’s PCT application disclosed the Wellbeing SNPs
    it disclosed in the same skin health categories as Trade
    Secret No. 1. 7RR146. There were many other skin
    health categories that Wellbeing or Harper and PLLG
    could have used. 4RR109; 7 RR 33-34.
    Based upon these facts and his review of all of the documents produced in
    the case and all of the testimony in the case, Dr. Metzker testified that Harper’s
    patent applications contained and disclosed Wellbeing’s Trade Secret No. 1 and
    NAI-1503303499v1                           -22-
    that the publication of Harper’s PCT application destroyed Trade Secret No. 1.
    7RR71, 143. Harper and PLLG did not object to the admission of this testimony
    by Metzker.
    Moreover Harper and PLLG used Harper’s provisional patent application to
    obtain an Exclusive Distribution Agreement with Qivana. At the outset of the
    parties’ negotiations, Urman sent Harper’s provisional patent application to
    Qivana. PX57; 8RR127. Justin Banner, a founder of and key decision-maker for
    Qivana testified he was looking for a unique skin care product for Qivana to
    distribute. Banner further testified that in order to obtain a patent one has to have
    something that is unique. Therefore, Banner concluded that PLLG likely had a
    unique skin care product line – exactly what Qivana was looking for. 8RR127.
    Ultimately, Qivana licensed Harper’s patent-pending technology as part of its
    agreement with PLLG. PX128-002 and 3-5.
    b.   Evidence of Use of Trade Secret No. 1 by PLLG.
    Wellbeing presented evidence of PLLG’s use of Trade Secret No. 1 to
    develop its SNP panel for a DNA test, including the following:
    1.   PLLG had access to Trade Secret No. 1. See above.
    2.   PLLG hired Dr. Linda DiBella to help develop a SNP
    panel for its DNA test. 10RR25. Harper sent Wellbeing
    data cards and a list of each gene in Trade Secret No. 1
    and its function to DiBella. PX83.
    3.   DiBella had no prior experience developing a DNA test.
    9RR70.
    NAI-1503303499v1                          -23-
    4.    DiBella started work on an SNP panel on January 18,
    2014. 9RR70-71. By April 22, 2014, DiBella had
    prepared a SNP panel. PX112.
    5.    PLLG sent the SNP panel DiBella prepared to Qivana to
    give to the new testing laboratory run by Sorenson
    Genomics, LLC. PX112.
    6.    The SNP panel that PLLG sent to Qivana to give to
    Sorenson included eight of the fifteen SNPs in Trade
    Secret No. 1. STIP00073; PX112.
    7.    The reason some of those SNPs did not end up in the
    SNP panel Sorenson used is that Sorenson found many of
    the reagents it needed to use to identify the SNPs were
    not readily available. 7RR147-148. For example, in one
    email Lars Mouritsen, the Chief Scientific Officer of
    Sorenson, sent to Harper and Urman shortly after
    receiving PLLG’s proposed SNP panel, Mouritsen listed
    three Wellbeing SNPs for which reagents were not
    immediately available. PX141.
    8.    In total, DiBella spent about 100 hours on PLLG’s SNP
    panel. 9RR71. In contrast, Mazy spent thousands of
    hours over three years to develop Wellbeing’s SNP panel
    which is Trade Secret No. 1. 4RR77-78.
    9.    Harper, PLLG and DiBella did not produce detailed work
    papers like Mazy did. PX1, 2, 4 and 7.
    Based on this evidence, Dr. Metzker testified that PLLG had used Trade
    Secret No. 1 to develop its SNP panel. Specifically, Metzker testified that PLLG
    used Trade Secret No. 1 as the “starting point” to develop its test panel. 7RR149.
    PLLG did not object to this testimony by Metzker.
    NAI-1503303499v1                      -24-
    C.      This Court Should Not Reverse the Judgment Based on Either Harper’s
    or PLLG’s Allegation of No Evidence or Insufficient Evidence of their
    Access to and Use/Disclosure of Trade Secret No. 1.
    Per the standards established by the above-cited cases, there is plenty of
    evidence to support the jury’s findings that Harper and PLLG misappropriated
    Wellbeing’s Trade Secret No. 1. The evidence summarized above, including the
    opinion testimony of Wellbeing’s technical expert, Dr. Metzker, was admitted
    without objection by Harper and PLLG.         The evidence is far more than the
    proverbial scintilla of evidence because it was sufficient to enable reasonable and
    fair minded people to conclude Harper and PLLG misappropriated Trade Secret
    No. 1. Transp. Ins. Co. v. Moriel, 
    879 S.W.2d 10
    , 25 (Tex. 1994). During oral
    argument, Harper’s and PLLG’s counsel argued that in addition to their no
    evidence contentions they also asserted that the evidence was insufficient. As this
    Court well knows, it “must consider and weigh all the evidence, and should set
    aside the verdict only if it is so contrary to the overwhelming weight of the
    evidence as to be clearly wrong and unjust. Cain v. Bain, 
    709 S.W.2d 175
    , 176
    (Tex. 1986). That is not the case here. Indeed, while Harper’s and PLLG’s expert,
    Dr. Carlos Bustamante, contested Wellbeing’s contention that Trade Secret No. 1
    was in fact a trade secret, he did not contest Wellbeing’s contentions that Harper
    and PLLG had access to and used and disclosed Trade Secret No. 1.
    NAI-1503303499v1                       -25-
    CONCLUSION AND PRAYER
    For the above reasons, and for the reasons stated in Wellbeing’s Brief of
    Appellee, this Court should affirm the Judgment of the District Court.
    NAI-1503303499v1                       -26-
    Respectfully submitted,
    /s/ Robert W. Kantner
    State Bar No. 11093900
    rwkantner@jonesday.com
    JONES DAY
    2727 North Harwood Street
    Dallas, Texas 75201-1515
    Telephone: (214) 220-3737
    Facsimile: (214) 969-5100
    ATTORNEY FOR APPELLEE
    WELLBEING GENOMICS PTY LTD.
    NAI-1503303499v1   -27-
    CERTIFICATE OF SERVICE
    On January 5, 2018, I electronically filed this brief with the Clerk of the
    Court using the eFile.TXCourts.gov electronic filing system which will send
    notification of such filing to the following (unless otherwise noted below).
    Marcy Hogan Greer                          William T. (“Tommy”) Jacks
    State Bar No. 08417650                     State Bar No. 10452000
    mgreer@adjtlaw.com                         jacks@fr.com
    ALEXANDER DUBOSE JEFFERSON &               David S. Morris
    TOWNSEND LLP                               State Bar No. 24032877
    515 Congress Avenue, Suite 2350            dmorris@fr.com
    Austin, Texas 78701-3562                   FISH & RICHARDSON P.C.
    Telephone: (512) 482-9300                  111 Congress Avenue, Suite 810
    Facsimile: (512) 482-9303                  Austin, Texas 78701
    Telephone: (512) 472-5070
    Facsimile: (512) 320-8935
    Attorneys for Appellants
    /s/ Robert W. Kantner
    Robert W. Kantner
    NAI-1503303499v1                        -28-