i am thank you good morning my name is inner valentine i represent the appellant in the case of c s i technology who is the plaintiff in the underlying case may please the court i'm going to start with the issue of prevailing party because regardless of how some of the other issues are resolved on this appeal is the prevailing party in this action after a lengthy trial the jury found u to be in breach of the contract with c s i the jury awarded damages special damages in the amount of four hundred and twenty one thousand dollars in general damages in the amount of five hundred thirty two thousand four hundred dollars but in granting us my eyes j m o l the court too narrowly read the terms of the agreement and substituted its opinions for the jury and i want to talk about some of those damages issues in a moment  but regardless of how those damages issues are resolved she is sized the prevailing party under colorado law colorado law governs this contract and the supreme court has precedent on schooling and that's the case of spencer versus the city of aurora and spencer the issue was who is the prevailing party when the defendant is found to be in breach but the plaintiff was not awarded damages that's the same circumstance that we have here and spencer the lower court found that the defendant the breaching party to be the prevailing party because the plaintiff did not obtain damages just as you are my is arguing here affirmed that however the colorado supreme court reversed that ruling the colorado supreme court found that award of damage is was not required specifically the court held that a party that prevails on liability and whose favor the verdict is entered is the prevailing party for purposes of the of attorneys fees provision even if know even if there's no award of damages and that's exactly th at the case we have here and the court was very clear and precise on that point it says it is the determination of culpability not the amount of damages the determines who is the prevailing party went on and said the jury verdict regarding that liability on the breach of contract claims not the jury's attribution of damages controlled the issue of attorney's fees now while other states may do things different the law in colorado on this point is clear and the rule makes good sense because it would not be good policy to allow a party found to be in breach of an agreement to obtain the benefit of the breach through a fee shifting provision merely because damages were damages issue for the trade secret claim and i thought you were talking about damages right now and you were talking about colorado law it seemed to make sense to me that this claim was under the informed trade secrets act in the jury was being instructed using the california i think jury instructions if i recall correctly for the trade secret claim it was under the california uniform trade secret act it was california law that applies but the contract has a colorado law provision and on the issue of who is the prevailing party in the and interpret in the contract the court has to apply colorado law for a loss is that true for action as well i mean because i'm just trying to figure out on the question because you're arguing on appeal that the colorado law also governs the question of whether g s i suffered an actual loss which is the term that appears in the california statute so i was just getting confused and i don't know if you can help me out there well for that for the loss of damage or for that for the trade secret claim we are using california law and so i guess specifically for actual loss when you were having to review what happened here regarding what you are arguing regarding actual loss are we in california law or colorado for that for the actual law on the trade secret claim actual loss or actual loss the actual loss comes from the uniform trade secret act of california correct what i think our argument on appeal was that the court improperly took away that actual os found actual loss to be lost profits and said lost profits were waived and we've made we've made an argument there under the contract but that but i thought you were arguing colorado law are you not arguing colorado law with respect to so in terms of the prevailing party applying the principles of spencer g s i remains the prevailing party whether it's alternately determine whether damages are in in its favor or not in this case the contract was the cornerstone of the of the trial you in my eyes opened an opening statement stated that this is a contract case the issues related to the contract a couple months already of the days and that you contract negotiators were on the stand for the better part of a week the jury found you in my breach the contract the jury rejected each of us my eyes affirmative defenses and you my prevailed on none and the jury awarded damages in g s eyes favor well the district court took those damages away it let the verdict stand very specifically in fact it confirmed the established liability and it would not upset the jury verdict on liability it found that there was substantial evidence existed to support the breach of not of the non compete provision and it found that you will my did not challenge the verdict with respect to the breach of ownership and that that that should stand as well and was included in the verdict it didn't disturb to the jury's rejection of all of us buys affirmative defenses so no other party received an award and you'll know i did not have a counterclaim so significantly it was u m i that proposed california law in the first place because that's where you all my resides and perhaps now it it regrets that it picked picked colorado law but when the parties picked that law they agreed to follow the law of that state in the supreme court is clear on who is the prevailing party in this case it's case in colorado in which a party found to be in breach was found to be the prevailing party much less awarded attorney's fees in the absence of a successful counter claim and you and i did not have a counter claim in this case trial courts in the best position to determine who is the prevailing party i do acknowledge that  to i do want to move on to an issue of damage though because it affects this prevailing party as well again regardless of how the damages plays out she sighs the prevailing party under spencer however the district court also erred in vacating the jury's award both respect with respect to gain rule damages and with respect to special damages and a minute i'm going to talk about general damages for a minute with respect to general damages the jury awarded five hundred thirty two thousand four hundred dollars which represented the amount g s i paid as part of the contract to u m i that's classic contract damages the here is whether there was a waiver and waiver requires an intentional relinquishment of a known right here all of the parties you want my and the corps understand understood i was pursuing the amount of money it paid to to us my as part of the contract as part of its damages and in fact that's the amount that the jury awarded elicited testimony at trial and it presented evidence in the amounts paid in both through witness testimony and in the form of demond of exhibits the invoices and payments of those amounts jeus i never waived or said that it would not see return of the amount that was paid that it paid to u m i as part of the trial it was our getting closing argument well let me let's go over that because i want to make sure i understand that because when i think we're supposed to interpret the record as a whole and it seems like on a number of occasions throughout the record you stated that yes i was not seeking general damages there are there are places in the record where we said we were not seeking and then being high like a few of them for you and so that we can get this in context i think it said as c r three forty one when you my proposed the jury instruction on general damages for breach of an open court stating we don't claim general damages breach of cat contract and this is where i think just i was seeking to preserve general damages claim for the trade secret misappropriation but ended up waiving it for the contract claim and then it you are nineteen you didn't provide at least from what i could see or seek jury instruction on channel damages for the breach of contract claim so my question because i know there's a lot at stake here why doesn't that constitute waiver we don't think it constitutes waiver because in the kind again you've talked about the context of the entire case in the context of this case it was clear that we were seeking  the return of the contract price as part of our damages and what what you say that i won't go in each one of but in the context of those statements there's also a statement that we are seeking contract damages and you are my acknowledged that itself even in its in its brief and it's certainly knowledge that at the time that was being discussed below if in fact in the true in the in the charge conference you  acknowledged that this it says unless they can prove a violation of the confidentiality provision and i think they're limited only to the amount under the contract which was five hundred forty thousand dollars you're limited to the price of the contract that said e r one sixty six one sixty one n one sixty six and even in their in their brief they they stay continue to state that this provision effectively limited either party to general damages meaning the value of the contract so in the context of the discussion of general damages it was clear that we were seeking return of the contract price and again if it's relinquished of a known right we made it clear we were not only were we not relinquishing those rights we were in fact seeking them and that was acknowledged by you a to move on to add that to a trade secret issue before i reserve the rest of my time and this has to do with the trade secret damages and specifically that the district court improperly instructed the jury they could not recover lost profits for you in my eyes trade secret misappropriation so with respect to that this has to do with with jury instructions with respect to the damages associated with misappropriation of trade secrets the court first specifically instructed the jury that it could oborne lost profits as actual loss and then in the middle of deliberations and instructed the jury that it could not last profits as a usual remedy for misappropriation of trade secrets in the jute jury was originally instructed on that and that was jury instruction twenty six however the court then imposed its view that lost profits were special damages and excluded from the contract and excluded from the contract to instruct the jury that actual loss is any loss excluding any g s side lost profits or unjust enrichment so the new instructions which were twenty six point one and twenty six point two were directly contradictory to the original instructions so in essence the instructions amounted to the court saying you may award loss profits so long as you don't award lost profits and this led to jury confusion the jury found for c s i and found that there was a a misappropriation of trade secret against you on my and found liability in that and that there was an actual loss but awarded by an expert well through first first through witnesses but also through an expert the profits were a profit it would have obtained in gaining a contract with cisco systems which was the purpose of of the end of the contract that was your evidence of lost profits yes and i'm going to i want to reserve i think the rest of my time but i will i will just point out that the los profits it was improper for the court to jump to the conclusion that lost profits were more consequential or special because lost profits is not an absolute is not limitation of liability was not an absolute bar on lost profits and we've cited the penn crow case which is a tenth circuit case with a very similar situation in which judge course then sitting at the tenth circuit explain the difference and said lost profits can be either benefit of the bargain direct damages or consequential damages and in this case and we've brief this we believe they were direct images and it was improper for the court to take it away and i'm going to reserve the balance of my morning honors and thank you for this opportunity my name is robert reac and i represent united memories who is the defendant below and it was the appellee and cross appellant today at first like to address quickly a couple of the issues raised by my counterpart and then make our case which is primarily why we're here on appeal is that we were the prevailing party in this case first on the issue of  whether or not the law applies it is very clear to watch that what we had here was a contract it was the sole relationship between the parties had a fully integrated integration clause which said that no agreements or other means outside were required it had because it was between a very large company a very small company in colorado which only had seven of ten employees it had a very serious and important risk sharing provisions in it one was a limitation of liabilities provision very importantly and that one because for a big company to work with a small company has to be protected this is a meager contract it was for five hundred thousand dollars w work not for some innovative product but to make a copy of a craigslist and commodity product that was on the market by a big micron company the risk sharing is really important because it two features one was a limitation the other was the fee shifting in this case which is a deterrence to bringing massive and usual frivolous ridiculous pointless litigation against either one of the companies and fortune that's what happened here while the contract was only nine months and duration was terminated fully performed by both parties yes i paid my performed all that was necessary to complete the design five years later when you know my is the is competing for this massive contract from cisco with g s s i all of a sudden there's a law suit for forty million dollars and special on consequential damages against this little company by g s a the problem was the contract limited that it said that there were not permitted to be any special consequential damages under any claim but violation of the non disclosure portion which was the confidentiality provision which only related as in all contracts to information provided by one party to the other democrats the relationship it did not refer to created during the relationship and the contract that was handled by other provisions of the contract such as the patent provision and the ownership pr limited everything else under this agreement limited torts contracts any cause of action including misappropriation of trade secrets to general damages only just so i could have gone somewhere else to get this design it enough to use our little company but they chose to do and they chose to abide by that provision and as a result the only damages affordable under this contract for any other claim  general damages now what happened there they waive them but not just wave them they affirmatively disclaimed them not the beginning of the case but right before trial after virtually millions of dollars had been spent to defend this case from all timid bankruptcy the record shows that this little company was only making a million dollars a year max but had a forty million dollars threat against it the eve of trial they object to our jury instruction on general damages saying we are not seeking general dentist rich contract no and the judge asked them in open court they also said we are not seeking them there is no question this case the judge was right at the trial level disagree well was right they way they waived an affirmative disclaim general so what's that leave us with these with only two things general damages only for the misappropriation of trade secrets which the jury found there was zero because they found that there was no loss at all because there was no evidence of loss at all and the judge reversed the jury's determination on the breach of confidentiality provision because there was no disclosure on the record of any information from just audio on my at all and he went in very great detail to go through the record to show that that was the case right now mr paul kind said that they did produce evidence loss well the only evidence they produced was barred by the court what they did was said that the only loss was this this  attempting to get a contract between not you know my but these two big companies the other defendant and and yes i the contract with cisco the problem is that contract was awarded in two thousand and twelve even of the best information a trial i guess aside the big come to compete with them never had any information from you know my until two thousand and thirteen so judge greer all ruled on summary judgment that the contract award of the contract between you and i and i a psych would not be the basis for damages now the problem was that was all their expert hat and so they put it on a trial we objected to it we moved to strike it on the basis of the judge's summary judgment order and when it came to the jury instructions the judge agreed and he amended the jury instruction and we'll get to that a minute or two to show that he had granted summary judgment on that element of the case evidence so what we have here really is a case that was pointless it was pointless there were fourteen claims including i trust rico unfair competition fraud all these claims some of them frivolous some of them ridiculous none of them with a point because none of them were basis for damages not a single one and if you think about it your honor if they had case they thought they had which is reach of the trade secrets the most they could recover was five hundred twenty one thousand dollars my little client could have paid them that twenty five hundred twenty five thousand dollars and walked away and said they had to spend millions in defense because of this forty million dollar claim that had no basis whatsoever n and so the conclusion of that is that this is exactly what the contract was intended to protect and it is under colorado law it is colorado controls here and despite what my colleague on the other side spencer does not control klein controls anderson controls those cases or in our brief spencer was a case in which the plaintiff won because had two claims  contract and one was to enforce the contract settlement agreement and if a defendant breached both at trial the point of one both but the court said you cannot damages for the breach of the settlement agreement because you collected damages for breach of the actual agreement and therefore the defendant said well then i should get my attorney's fees because you didn't win on the breach of the some agreement only on the main agreement and the court said no wait a minute they did when they won damages they brought two claims you can plead in the alternative and also they were intelligent force of an agreement spencer has nothing to do with this case  stands for the proposition to be tried to enforce a settlement agreement and you do it you can still collect your chinese fees kline which came out after we brief this case which is a very important case  to just cite to for a minute because it's not in our briefs it came out later we filed a supplemental letter mine is on all fours with this case and it's very instructive of colorado law it does not rely on spencer because fencer is not the case but in that case the court found that the defendant was entitled to their attorneys fees and costs because number one the defendant defeated the claims against them except for one dollar in that case the jury did find a bridge but awarded only nominal damages yet the court said that was a principle in the case the defendant was successful in under colorado law and order to obtain a breach of contract damages as a requisite element they also said the fed it was stood plaintiff's litigious on slot and ultimately defeated playing his goal of forcing them out of business that's what happened here so that i don't have a money judgment or an injunction or rescission of the contract or whatever that it is it's different for a plaintiff and defendant and particularly want to plaintiffs is larger brings that onslaught of litigation that has to defend that's important on the prevailing party and klein found a defendant the party also said the plaintiffs lost on the predominant part of the claim i think it's clear in our brief and i've explained the only real claim here the only real claim any potential for them was breach of the confidentiality provision that's the only one that could get special or consequential forty million dollars in damages sony one the others are limited to general which they waived and so w it and they and they agreed there was nothing they never responded judge very well thoroughly went through the record in detail you've seen that in the underlying opinion there was no breach of confidentiality therefore there was no basis for this forty million dollar attempted judgment and to add insult to injury the forty million dollars he had ruled was unavailable in summary judgment because i relied solely and exclusively on a bid for a contract that occurred before any disclosure of information ever occurred honor i have only two comments i'll try to reserve a few minutes my first comment is that the judge as judges have to do had to correct it during trial his original instruction over objection did say that for breach of the trade secret agreement there could be lost profits and unjust enrichment that was wrong those especially consequential damages the contract limited that during the course of trial and in the response on the verdict form it only allowed the jury to put in general damages even though he had said lost profits and unjust enrichment jurors pretty smart here they came back and said well we don't understand what what are the general damages then that we need to identify and that raised with the judge the concept that he realized he had made a mistake in the original instruction and he gave two corrective ones where he used the right standard the standard under trade secret law which is any actual loss but not because of the contract you had between you lost profits or unjust enrichment and the actual loss wide open any actual loss was acceptable under that as general damages the problem was there was absolutely no evidence of the judge felt not single scintilla of evidence that there was any loss to g s i from any disclosure of these four trade secret schematics out of six hundred of them none the jury could put a value on them there was no evidence and they couldn't get because of a summary judgment order damages otherwise finally your honor i think it's very important understand because in a contest of these cases the record i think will lay this out that what we really had here and why the jury found agreement they contested twenty five may contain trade secret information created during the course of the relationship the jury found that for may have trade secret information created in the course of relationship we believe there is no evidence for that the jury is wrong but even if you accept that it was explained to the jury fully in the course of the proceedings that those four had no value a dram is explained has thirty two layers approximately twenty five components on each layer over six hundred components and it has a thing called a layout that tells how to put those together as a blueprint the layout importantly was never disclosed to anyone it was never said to be a trade secre and never disclosed to anyone at all so what you have is an example i'd like to give you if you go into a store looking for a puzzle of the nation's capital and the guy who's behind the counter says also you fo pieces of cardboard of irregular shape for pieces of that puzzle but there's no picture on what's the value and the jury and everyone in that courtroom the judge realize there is no value you can't do anything four pieces of cardboard of irregular shape you couldn't do very much with even one hundred of those irregular shape you need to have them all and you'd have most importantly the picture so you know how to put those parts together all the parts belong to the picture was created for g s i was never disclosed anyone for that basis the witnesses testified that the individual components that were found to be trade secrets had no value that's the record evidence and that's what the judge found that there was no proof by g s side as to how those four supposed components with some trade secrets had some value in your eyes i'd like to  thank you i realize i have limited time someone to try to get some of the high points so first on the motion for summary judgment that counsel keeps referring to that was brought by different party that is no longer part of this appeal and it related to them it did not relate to to us my with respect to the confidentiality provision and this is this is in our breeze but i just want to underscore it the key argument here that you are my keeps making is that there was no breach of confidentiality and that the court below agreed with them the point is is that the court read the confidentiality provision way too narrowly and did not require the strict requirement that something actually be physically handed over from g s side to us my the entire purpose of the agreement was for you on my to create confidential new technology schematics for g s side those documents were marked confidential by you in my when they were turned over to g s side those dogs those documents those schematics were own by g s side as part of the contract everyone understood that you are my acknowledges that the that work product the work product of the contract that's the confidential information and when you am i took that that information and it wasn't just for puzzle pieces they turned over the entire i that is the confidential information that was improperly turned over to to i assess that breach the contract and breach the confidentiality provision  with respect to the cases that you and that you or my as has discussed with respect to prevailing party i mean let's let's break these down a little bit one of them did come out after the briefing several of them they've cited in their final brief which should have been cited in the earlier brief but every one of those cases that they're using to say that that defendant was a prevailing party are cases where there is a counter claim that defendant had a counter claim in the defendant obtained damages as a result of that counterclaim monetary damages so in that situation of course the defendant is the prevailing party that's not the case we have here in the winchester case the defendant out of counter claim in one almost a million dollars in the will or case the defendant's award was six times greater than the plaintiffs in the planning partner's case the judgment was reduced by the amount of the can't counter claim but it was also greater in the klein case the new case and we've submitted our own letter on that and distinguish it for other reasons as well the counter claim there was a counter claim in the plaintiffs owed more money on the counter claim to the defendant than vice versa those are the circumstances under which the party that defendant in those parties was found to be the prevailing party but we don't have that in this situation we have a situation where we where g i was deemed to be the proof what was the verdict was up held by the district court with respect to the breach of contract and the unfair in the misappropriation of trade secret claims mean in judge gray wall and he you know he wrestled with that but he came to that conclusion that u m i and there's a quote from him in his order u m i was found liable on the two claims that dominated this litigation jury verdict of breach of contract and a misappropriation of trade secret and under spencer is the prevailing party whether whether damages are reinstated or not and should be deemed a prevailing party know i think that to go back to a question that you asked your honor about the standard we believe the standard for judge rule here was abuse of discretion and we believe in this one instance he did abused his discretion because he used a different standard for pla for the plaintiffs he said correctly they're not the prevailing party because they receive no benefit whatsoever from this litigation which is what colorado law says in particular the cline case whichever side he was most recent when it came to watch the applied you didn't win on every issue which is not the standard that's not the standard for defendant the defendant is whether they avoid liability in any form and what i must say is this this isn't a philosophical discussion i don't think we should have about whether if someone has a technical brief breach of a contract that they shouldn't get their attorney's fees that's not the question here the question is one of contract law and these parties because the on evening bargaining position between them agreed in the contract that the person who prevailed on a dispute would get their attorneys fees that's what was agreed upon here and if we can't enforce that kind of a contract think of the door it opens and a large company could do with these guys did and bring massive massive lawsuits against a small company to no end to no benefit they didn't ever intend to claim general damages for any of this except for the misappropriation trade secrets which didn't go anywhere no one used those trade secrets f but they put a small company in danger of bankruptcy even in defending itself because of a claim that just wasn't there and of contracts mean anything to us when we share risk we have to share risk if they had one i'll guarantee you if they had one some kind of benefit they'd see in your trying to stock us for all their attorneys fees which are much higher than ours they're bigger company i know a lot more claims against us and another company but we are here because we entered into a contract a small contract that limited their ability to bring this massive slew of the litigation against us and the only deterrent was if you don't prevail you have to pay us the attorneys fees you cost us we're not seeking some benefit here we lost a lot of other things in this litigation we lost pets effort we lost business we lost everything being a defend in this case what we're asking for is that the court make us whole under the contract because the contract said if you are faced with this kind of litigation and the other party does not prevail against you and get the benefit of it you at least get back the cost fees you spent to to to maintain your position and to defend that case under colorado law that is what happened here that is klein that is andersen which is a supreme court case that's above all of these that says that you cannot win if you do not have a benefit from that litigation and we are on here appeal simply because nothing this litigation the slew resulted in nothing for them zero but it cost us dramatically but that was between the parties that was put in the agreement it was part of what the bargain was and we are entitled to have a rematch and for attorneys fees and costs to make up for that thank you very much thank you both for your arguments here today mr valentine mr reac the matter of just say g s high technology versus united memories in into grade silicone solution is now cemented the final case on our calendar  frederick gardner versus commissioner of internal revenue has been submitted on the briefs so that concludes our docket for today and this week we are a chart thank you very much