Title: Lightlab Imaging, Inc. v. Axsun Techs., Inc.
Citation: N/A
Docket Number: SJC-11374
State: Massachusetts
Issuer: Massachusetts Supreme Court
Date: July 28, 2014

NOTICE:  All slip opinions and orders are subject to formal 
revision and are superseded by the advance sheets and bound 
volumes of the Official Reports.  If you find a typographical 
error or other formal error, please notify the Reporter of 
Decisions, Supreme Judicial Court, John Adams Courthouse, 1 
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SJC-11374 
 
LIGHTLAB IMAGING, INC.  vs.  AXSUN TECHNOLOGIES, INC., 
& another.1 
 
 
Suffolk.      December 2, 2013. - July 28, 2014. 
 
Present:  Ireland, C.J., Spina, Cordy, Botsford, Gants, Duffly, 
& Lenk, JJ. 
 
 
Contract, Performance and breach, Implied covenant of good faith 
and fair dealing, Interference with contractual relations, 
Construction of contract.  Unlawful Interference.  Trade 
Secret.  Unjust Enrichment.  Consumer Protection Act, 
Unfair act or practice.  Evidence, Expert opinion.  
Witness, Expert.  Damages, Future damages, Loss of profits.  
Declaratory Relief.  Injunction.  Practice, Civil, 
Injunctive relief. 
 
 
 
 
Civil action commenced in the Superior Court Department on 
January 7, 2009.  
 
 
The case was tried before Margaret R. Hinkle, J.; a motion 
for summary judgement was heard by her; and entry of final 
judgment was ordered by Peter M. Lauriat, J. 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review. 
 
 
 
Kenneth R. Berman (Cynthia M. Guizzetti with him) for the 
plaintiff. 
 
William F. Lee (Felicia H. Ellsworth & Laurence A. Schoen 
with him) for the defendants. 
 
1 Volcano Corporation. 
                     
2 
 
 
 
 
SPINA, J.  The plaintiff, Lightlab Imaging, Inc. 
(LightLab), prevailed in much of the litigation below, which 
involved claims of breach of contract and the covenant of good 
faith and fair dealing, tortious interference with contractual 
and advantageous business relations, misappropriation of trade 
secrets and confidential information, unjust enrichment, and 
violations of G. L. c. 93A.  LightLab appeals from three aspects 
of the judgment pertaining to relief.  First, the judge excluded 
opinion testimony from LightLab's expert economist on the 
question of future lost profits for twenty years beyond the term 
of the parties' contract based on yet-to-be conceived future 
products.  Second, the judge denied permanent injunctive relief 
that LightLab sought for protection against future 
misappropriation of its trade secrets where, although LightLab 
had established past misappropriation, it offered no proof of a 
likely reoccurrence.  Third, the judge who entered the amended 
final judgment declined to include in that judgment a 
declaration of LightLab's contract rights that mirrored the 
language of the order for summary judgment concerning contract 
interpretation.  We affirm, but order the inclusion of the 
declaration sought by LightLab. 
 
1.  Background.  The trial of this action was conducted in 
multiple phases.  We summarize the various phases. 
3 
 
 
a.  Liability phase.  The liability claims, except for the 
G. L. c. 93A claim and certain of the trade secret claims, were 
tried to a jury.  The jury could have found the following facts 
at the liability phase.  LightLab has manufactured and sold 
optical coherence tomography (OCT) systems since 2001, and until 
recently it was the only company to do so.  OCT technology is 
used to image human coronary arteries for diagnosis and 
treatment.  OCT systems are based on computer analysis of images 
produced by reflections generated by specialized lasers. 
 
Volcano Corporation (Volcano) is a competitor of LightLab, 
but it relies on an imaging system based on intra vascular 
ultrasound (IVUS) technology.  IVUS systems have dominated the 
market because of limitations in OCT laser technology, 
notwithstanding the poorer image quality of ultrasound systems.  
The limitations in early OCT laser systems were due to the 
occlusion of blood vessels during imaging, which presented 
certain risks to patients. 
 
Axsun Technologies, Inc. (Axsun), is a leading manufacturer 
of industrial lasers.  In early 2007, LightLab and Axsun entered 
into a joint development relationship to develop a tunable laser 
that would overcome the limitations in existing OCT technology.  
LightLab shared with Axsun, pursuant to an October 12, 2007, 
confidentiality agreement, its specifications, techniques to 
4 
 
adapt lasers for OCT use, OCT laser performance testing methods, 
and other confidential information about OCT technology. 
 
By April, 2008, they had developed the Version 5 laser, 
giving rise to a second confidentiality agreement, dated April 
29, 2008.  The second agreement gave LightLab exclusive rights 
(conditioned on LightLab's fulfilment of its Minimum Purchase 
Volume obligation) to Axsun's OCT lasers together with a 
specific ban on sales of all lasers to Volcano, for six years 
until April 29, 2014, with nonexclusive supply rights 
thereafter.  By December, 2008, the Version 6 laser was 
developed.  On December 24, representatives of Axsun and 
LightLab orally agreed that the April 29 agreement would be 
modified in writing by substituting the Version 6 laser for the 
Version 5 laser.  These developments were technological 
breakthroughs that overcame the earlier limitations in OCT 
technology and gave LightLab a valuable competitive edge in the 
field of imaging human coronary arteries. 
 
In the meantime, Volcano perceived OCT technology as a 
significant threat to its IVUS business.  It was trying to 
develop an OCT system but lacked an adequate laser.  In mid-
2008, after the Version 5 laser was developed, Axsun sought to 
be acquired.  Having learned from LightLab of Volcano's desire 
to develop an OCT system, Axsun secretly offered itself for sale 
to Volcano in August, 2008.  Volcano recognized this as an 
5 
 
opportunity to "leap-frog" LightLab.  It developed a plan to 
"stall" LightLab. 
 
During negotiations with Axsun, Volcano insisted on 
examining LightLab's laser specifications.  Axsun initially 
resisted, citing its confidentiality agreements with LightLab, 
but relented after Volcano agreed to indemnify Axsun against 
liability to LightLab.  Following due diligence, Axsun divulged 
LightLab's specifications for the Version 5 and Version 6 lasers 
to Volcano, and provided Volcano with a tunable laser prototype 
called "Alpha 6."  Volcano's head of OCT development viewed the 
specifications and tested the Alpha 6 laser. 
 
LightLab first learned of Axsun's involvement with Volcano 
on December 23, 2008, when Volcano publicly announced its 
acquisition of Axsun.  Volcano stated in its announcement that 
it could leverage Axsun's advanced tunable laser technology 
know-how to accelerate its OCT product development and gain a 
competitive advantage in the field of invasive imaging.  Volcano 
intended to use the same Axsun engineers who worked with 
LightLab to develop a tunable laser for its OCT systems.  
Shortly after making its public announcement Volcano threatened 
to terminate LightLab's laser supply.  After Axsun agreed orally 
with LightLab on December 24 to modify their April 29, 2008, 
agreement to cover sales of Version 6 lasers, Volcano directed 
Axsun not to communicate with LightLab.  Axsun thereafter 
6 
 
refused to discuss with LightLab further joint development or 
tell LightLab how it would protect LightLab's confidential 
information. 
 
LightLab filed the instant action on January 7, 2009.  On 
January 8, Volcano instructed Axsun to download its technology 
and make recommendations on OCT laser specifications to Volcano.  
LightLab obtained a preliminary injunction on January 8, that 
prevented Axsun from doing so.  Volcano employees gained access 
to a university research laboratory and, unbeknownst to 
LightLab, downloaded data from a LightLab OCT system that was 
being used in a clinical trial.  Volcano also moved its OCT 
development staff to Axsun's facility and appointed Axsun's 
chief laser engineer, who had worked closely with LightLab, to 
oversee Volcano's laser development program.  Volcano induced 
Axsun to supply Version 5 lasers to LightLab during 2009, rather 
than Version 6 lasers. 
 
In response to special questions the jury found that: 
a. 
the Alpha 6 laser, and the Version 5 and Version 6 laser 
specifications, were LightLab trade secrets that Axsun and 
Volcano had misappropriated and used; 
 
b. 
Axsun committed a breach of the confidentiality clause in 
its contract with LightLab by giving the Alpha 6 laser and 
the Version 5 and Version 6 laser specifications to 
Volcano; 
 
c. 
Axsun committed a breach of the the exclusivity provision 
of its contract with LightLab by giving the Alpha 6 laser 
to Volcano; 
 
7 
 
d. 
Volcano tortiously interfered with LightLab's contract with 
Axsun; 
 
e. 
Volcano tortiously interfered with LightLab's advantageous 
business relationship with Axsun; 
 
f. 
the April 29, 2008, contract between LightLab and Axsun, as 
orally modified on December 24, 2008, required Axsun to 
deliver Version 6 lasers rather than Version 5 lasers to 
LightLab; 
 
g. 
Volcano was unjustly enriched by LightLab's trade secret 
information; 
 
h. 
Axsun committed a breach of the implied covenant of good 
faith and fair dealing it owed to LightLab. 
 
 
b.  Damages phase.  After the jury returned its verdict on 
February 4, 2010, in favor of LightLab on issues of liability, 
the damages phase of the trial was scheduled to begin on April 
7, 2010.  The judge conducted a three-day voir dire of Roy 
Weinstein, LightLab's designated expert on the issue of lost 
profits damages.  After the hearing, she excluded Weinstein's 
opinion of lost profits beyond April 28, 2014 (the expiration 
date of the April 29, 2008, agreement between LightLab and 
Axsun), as well as Weinstein's opinion on LightLab's lost 
profits for any future generation (post Version 6) LightLab 
product containing an Axsun laser.  She did not preclude his 
opinion as to other aspects of lost profits, but cautioned that 
a proper foundation would be required as to his use of so-called 
"Revenue Reduction Percentage Factors" and related matters.  She 
also indicated that she would have to be satisfied as to the 
reliability of information provided by Warren Clark, III, 
8 
 
LightLab's chief financial officer, before such information 
could be used as a basis for Weinstein's opinion. 
 
The judge explained that she excluded Weinstein's opinion 
as to lost profits after April 28, 2014, because it was not 
based on a demonstrated reliable methodology capable of being 
validated and tested, particularly as to quantification of a 
"first mover" advantage.  She also concluded that his opinon was 
too speculative and conjectural as a matter of law.  She based 
this on (1) the absence of approval of LightLab's product by any 
regulators in the United States, Japan, South Korea, or China; 
(2) the purely speculative assumption that LightLab would be the 
market leader in OCT technology through 2038; (3) LightLab's 
lack of success in obtaining financing; (4) the absence of 
evidence that the defendants' conduct caused a loss of sales for 
LightLab anywhere in the world; and (5) LightLab's inability to 
identify with precision the nature of any new product for which 
it sought future lost profits damages.  In light of this ruling, 
LightLab determined that it could not proceed with evidence of 
lost profits at the damages trial, but that it would proceed 
with evidence of other damages.  It made an offer of proof as to 
lost profits damages to preserve its appellate rights.  On April 
7, 2010, the parties stipulated that LightLab was entitled to 
nonlost profits damages in the amount of $200,000 for sixty 
9 
 
nonconforming (non-Version 6) lasers supplied by Axsun during 
2009.  These developments obviated the need for a damages trial. 
 
c.  Injunctive relief phase.  The judge next conducted a 
jury-waived trial to determine whether LightLab was entitled to 
permanent injunctive relief to prevent use or disclosure by 
Axsun and Volcano of asserted trade secrets and confidential 
methods and documents described in items 1-5 of its thirty-item 
"trade secret list."  This list was distinct from the trade 
secrets presented to the jury during the liability phase, 
namely, the Version 5 and Version 6 specifications and the Alpha 
6 prototype.  LightLab's claims for permanent injunctive relief 
were based in common law and G. L. c. 93, § 42.  Without 
expressly deciding whether items 1-5 were trade secrets or 
confidential information, the judge determined that "[t]here is 
no direct evidence that either defendant has threatened to use 
or disclose any trade secret set forth in [i]tems 1-5.  Instead, 
LightLab primarily relies upon the jury's findings on 
misappropriation [Version 5 and Version 6 specifications and the 
Alpha 6 prototype -- not included here] and the defendants' 
prelitigation conduct as circumstantial evidence that Axsun and 
Volcano intended to commit 'further wrongs.'  However, that 
evidence falls short of meeting LightLab's burden of proof.  The 
circumstances surrounding [the prelitigation conduct] were 
materially different.  The inference which LightLab urges be 
10 
 
drawn that the defendants intend to use alleged trade secrets in 
[i]tems 1-5 . . . is essentially conjecture."  The judge 
concluded her written decision on this phase of the litigation 
by saying "LightLab has not proven by a preponderance of the 
credible evidence that the defendants have used or disclosed or 
presently intend to use or disclose the purported trade secrets 
and confidential information in [i]tems 1-5 so as to warrant 
permanent injunctions." 
 
Consideration of the remaining items on the Trade Secret 
List arose on the defendants' renewed motion for summary 
judgment, which was decided after the trial on items 1-5.  
Although the judge acknowledged that in the earlier motion for 
summary judgment she had ruled that "use" is an essential 
element of trade secret misappropriation claims under 
Massachusetts law, she considered evidence of the defendants' 
intent to use the alleged trade secrets in deciding the renewed 
motion for summary judgment.  She addressed the items in four 
groupings, some of which overlapped.  The judge concluded, as 
she did in her ruling after the jury-waived trial on items 1-5, 
that any evidence of the defendants' prelitigation use of items 
in the first and third groups, alone, did not warrant an 
inference of likely further use of the items.  To infer 
otherwise, she reasoned, would be mere conjecture. 
11 
 
 
LightLab relied on an Axsun patent application as proof of 
use of the items in the second group.  The judge determined that 
there was insufficient credible evidence that Axsun used or 
disclosed LightLab's alleged trade secrets in its patent 
application.  She relied in part on her findings as to a similar 
argument raised in the trial on items 1-5.  In that proceeding 
she had credited the testimony of Axsun's director of advanced 
products and technology to the effect that Axsun had not used 
information obtained from LightLab in its patent application but 
instead relied on its own concepts.  The judge thus concluded 
that there was insufficient evidence of use of the items in the 
second group to establish misappropriation. 
 
Addressing the items in the fourth group, which LightLab 
argued should be protected because of Volcano's stated intent to 
use all the confidential information and trade secrets LightLab 
gave to Axsun, the judge noted that the argument was not 
supported by affidavit, and LightLab's unsworn assertions could 
not support an inference that LightLab either gave Axsun these 
alleged trade secrets or that Axsun's OCT know-how was informed 
by the alleged trade secrets.  Finally, the judge determined 
that Volcano's stated intent to leverage Axsun's OCT technical 
knowledge, alone, was not sufficient to support a reasonable 
inference that it in fact acted on that intent.  The judge thus 
12 
 
allowed the defendants' renewed motion for summary judgment as 
to the remaining items on LightLab's trade secret list. 
 
d.  General Laws c. 93A phase.  The final phase of the 
litigation concerned issues arising under G. L. c. 93A, § 11.  
After a hearing, the judge adopted the findings of the jury from 
the liability phase.  She further found that both Axsun and 
Volcano had committed wilful or knowing violations of G. L. 
c. 93A, § 2.  She assessed pursuant to G. L. c. 93A, § 11, 
double damages against each defendant based on the parties' 
stipulation of monetary damages in the amount of $200,000, for 
total damages of $600,000, with interest, plus reasonable 
attorney's fees and costs.  The parties stipulated to the amount 
of $4.5 million in attorney's fees and costs.  These amounts 
have been paid. 
 
e.  Amended final judgment.  The amended final judgment 
reflected the jury's verdict on LightLab's claims and the 
stipulation as to damages, together with statutory interest 
thereon.  It also reflected the decision on the G. L. c. 93A 
claim and order for punitive damages, together with the award of 
attorney's fees and costs. 
 
The amended final judgment awarded LightLab permanent 
injunctive relief for the trade secrets the jury found had been 
misappropriated, namely, specifications for the Version 5 and 
Version 6 lasers, and the Alpha 6 prototype.  In addition, Axsun 
13 
 
and Volcano were enjoined from merging before certain prescribed 
dates contained in the exclusivity and confidentiality 
provisions of the April 29, 2008, agreement between Axsun and 
LightLab; and both defendants were ordered to return or destroy 
all documents Axsun received from LightLab containing alleged 
trade secrets. 
 
The amended final judgment included a declaration that: 
"1.  Under the Axsun-LightLab Tunable Laser 
Development and Supply Agreement, First Amendment, dated 
April 29, 2008 (the 'Contract'), as modified, Axsun is to 
deliver to LightLab tunable lasers conforming to LightLab 
Purchase Order No. 209-1009, dated January 6, 2009, and the 
Version 6.0 specification referenced therein. 
 
"2.  The term 'Laser' as used in the Contract means 
all Axsun's tunable lasers for use in optical coherence 
tomography imaging systems." 
 
 
The judge who entered final judgment denied LightLab's 
motion requesting that the amended final judgment include a 
declaration that paragraph 3 (ii) of the agreement dated April 
29, 2008, bars sales of "Lasers" to Volcano Corporation and 
Terumo Corporation, regardless of the field of use for which the 
"Lasers" are intended, consistent with the earlier decision on a 
motion for summary judgment concerning contract interpretation. 
 
2.  Exclusion of expert testimony.  The plaintiffs argue 
that the judge erred in excluding Weinstein's opinion testimony 
as to lost profits after April 28, 2014, because the methodology 
he used did not meet the requirements of Daubert v. Merrell Dow 
Pharms., Inc., 509 U.S. 579 (1993), and Commonwealth v. Lanigan, 
14 
 
419 Mass. 15 (1994).2  Specifically, they assert that Weinstein 
used the discounted cash flow (DCF) method to calculate lost 
profits, "probably the most common method used to calculate a 
plaintiff's lost profits."  R.F. Reilly & R.P. Schweihs, 
Handbook of Advanced Business Valuation 274 (2000).  They argue 
that because Weinstein's opinion was based on a generally 
accepted methodology, the judge's gatekeeping role should have 
ended, and the matter given to the jury to weigh upon 
consideration of the opinion after being subjected to cross-
examination, contrary evidence, and instruction on the burden of 
proof.  See Daubert, 509 U.S. at 596.  The defendants also 
contend that the judge erred in her ruling that Weinstein's 
opinion is too speculative as a matter of law.  We review the 
judge's decision to exclude Weinstein's opinion as to lost 
profits after April 28, 2014, under the abuse of discretion 
standard.  See Canavan's Case, 432 Mass. 304, 311-312 (2000). 
 
The defendant asserts that a Daubert-Lanigan inquiry should 
end once a determination has been made that an expert's 
methodology is generally accepted.  This is not entirely 
correct.  Faced with a proffer of expert3 testimony, the trial 
 
2 In Commonwealth v. Lanigan, 419 Mass. 15, 26 (1994), "[w]e 
accept[ed] the basic reasoning of the Daubert [v. Merrill Dow 
Pharms., Inc., 509 U.S. 579 (1993),] opinion because it is 
consistent with our test of demonstrated reliability." 
 
3 The principle in Daubert is not limited to expert 
scientific knowledge, but applies to all technical or 
                     
15 
 
judge "must rule first on any challenge to the validity of any 
process or theory underlying a proffered opinion.  'This entails 
a preliminary assessment of whether the reasoning or methodology 
underlying the testimony is scientifically valid and of whether 
that reasoning or methodology properly can be applied to the 
facts in issue'" (emphasis added).  Lanigan, 419 Mass. at 26, 
quoting Daubert, 509 U.S. at 592-593.  "[N]othing in either 
Daubert or the Federal Rules of Evidence requires a district 
court to admit opinion evidence that is connected to existing 
data only by the ipse dixit of the expert."  Canavan's Case, 432 
Mass. at 315, quoting Kumho Tire Co. v. Carmichael, 526 U.S. 
137, 157 (1999).  Indeed, the United States Supreme Court noted 
that "scientists typically distinguish between 'validity' (does 
the principle support what it purports to show?) and 
'reliability' (does application of the principle produce 
consistent results?) . . . .  Although 'the difference between 
accuracy, validity, and reliability may be such that each is 
distinct from the other by no more than a hen's kick,' our 
reference here is to evidentiary reliability -- that is, 
trustworthiness."  (Citations omitted.)  Daubert, 509 U.S. at 
590 n.9.  Thus, reliability is as much a part of the broader 
determination of admissibility of the expert's opinion as it is 
of the determination as to the reliability of the methodology 
specialized knowledge appropriate for expert testimony.  Kumho 
Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999). 
                                                                  
16 
 
employed, and trial judges "have considerable leeway in deciding 
in a particular case how to go about determining whether 
particular expert testimony is reliable."  Kumho Tire Co., 526 
U.S. at 152. 
 
Here, the aspect of Weinstein's opinion that the judge 
singled out as lacking a demonstrated reliable methodology 
capable of being validated and tested was quantification of the 
"first mover advantage."  LightLab argues that first mover 
advantage is not a loss-quantifying methodology, but an 
assumption about market behavior, supported by Weinstein's 
professional observations and scholarly articles that he drew on 
to evaluate the reasonableness of Clark's projections.  The only 
support cited by LightLab is Bilsky v. Kappos, 130 S. Ct. 3218, 
3254 (2010) (Stevens, J., concurring in the judgment), a patent 
application case, where Justice Stevens said in a concurring 
opinion that "firms that innovate often capture long-term 
benefits from doing so, thanks to various first mover 
advantages."  That case did not involve lost profits, and 
Justice Stevens also observed, "Concededly, there may be some 
methods of doing business that do not confer sufficient first-
mover advantages."  Id. at 3254 n.51 (Stevens, J., concurring in 
the judgment).  Significantly, Weinstein acknowledged that 
nothing in the economic literature supports quantifying lost 
profits based on first mover advantage.  Weinstein gave 
17 
 
conflicting and inconsistent testimony on this point, including 
statements in his affidavit, about whether "first mover 
advantage" was part of the economic theory he used to arrive at 
his opinion on lost profits, or whether it was an assumption he 
used to evaluate the reasonableness of Clark's projections.  The 
judge determined here that Weinstein's use of the first mover 
advantage principle was part of his methodology.  We defer to 
that determination.  Her conclusion that Weinstein's use of 
first mover advantage in his methodology rendered that 
methodology incapable of being validated and tested was well 
within her discretion.  Her conclusion that Weinstein's 
methodology for determining lost profits failed to satisfy the 
Daubert-Lanigan analysis was not an abuse of discretion. 
 
The plaintiffs also challenge the judge's separate and 
distinct conclusion that Weinstein's opinion was "too 
speculative and conjectural as a matter of law."  This part of 
her analysis is independent of, and different from, the Daubert-
Lanigan analysis, as the judge observed.  It has long been a 
part of our common law of evidence that although "courts are not 
to determine which side of a [technical] dispute is sound where 
each side is supported by reason and logic[,] . . . an opinion 
given by an expert will be disregarded where it amounts to no 
more than mere speculation or a guess from subordinate facts 
that do not give adequate support to the conclusion reached."  
18 
 
(Citations omitted.)  Sevigny's Case, 337 Mass. 747, 751 (1958).  
See Daubert, 509 U.S. at 596.  A judge's discretion in excluding 
such opinion testimony "is often applied in the context of 
expert prediction of profits to be made from startup business 
ventures."  Van Brode Group, Inc. v. Bowditch & Dewey, 36 Mass. 
App. Ct. 509, 520 (1994).  We address the five factors cited by 
the judge in support of her conclusion that Weinstein's opinion 
was too speculative. 
 
a.  The conclusion that Weinstein assumed LightLab would be 
the market leader in OCT technology through 2038 is erroneous.  
He did not make that assumption.  What he did assume, however, 
was that LightLab would be growing its customer base only until 
2014, when its contract with Axsun expired, at which point it 
would level off, and profits would decline until 2038, and 
become negligible.  There are at least two obvious flaws in this 
assumption.  The first is that Weinstein assumed, without 
foundation, that beginning in 2014 each OCT customer of LightLab 
would replace the LightLab OCT product it had acquired with a 
new LightLab OCT product every six years, until 2038.  Weinstein 
had not conducted a market study to support this assumption, nor 
did he evaluate likely products of potential future competitors.  
This dubious assumption about brand loyalty is further weakened 
by the fact that Axsun is free to sell lasers to LightLab's 
coronary imaging competitors after April 28, 2014.  Second, from 
19 
 
the time LightLab was formed in 1999, until the time of the 
damages phase of the trial in April 2010, LightLab never turned 
a profit.  It had no track record of profitable sales even of 
its existing OCT products.  Where there was no profit even 
during the contract term with Axsun, there is no reason to 
believe sales would be profitable after the contract ended. 
 
b.  The judge pointed to the fact that LightLab could 
identify no lost sales resulting from the defendants' conduct.  
LightLab counters by saying lost sales had not been anticipated 
before Weinstein was expected to testify, as the impact of 
losing the development relationship with Axsun was not expected 
to be felt until later.  Lost sales can be highly probative of 
lost profits caused by a party's misconduct, and the absence of 
lost sales may be highly probative of the speculative nature of 
a claim of damages.  Cf. Northern Assocs., Inc. v. Kiley, 57 
Mass. App. Ct. 874, 886 (2003) (testimony on lost profits claim 
correctly excluded as speculative where expert did not identify 
any lost clients).  Moreover, the implication of damages not 
being felt until the end of LightLab's development relationship 
with Axsun is that there can be no damages after 2014 because 
there is no contractual relationship or guarantee extending such 
a relationship beyond 2014.  After April 28, 2014, Axsun is free 
to discontinue any OCT development relationship with LightLab.  
Absent damages before that date, it makes no sense that there 
20 
 
would be damages after that date.  Finally, the absence of any 
evidence of lost sales, together with evidence that LightLab's 
OCT sales in 2009, after Volcano acquired Axsun, exceeded 
LightLab's projections, support the judge's reasoning that 
Weinstein's opinion is grounded in speculation. 
 
c.  The judge cited the lack of regulatory clearance in the 
United States, Japan, South Korea, and China for LightLab's 
latest product as evidence of the speculative nature of 
Weinstein's opinion.  LightLab argues that, among other 
witnesses, a former chief counsel of the Food and Drug 
Administration would have testified that LightLab was positioned 
to receive the regulatory clearances in the United States for 
LightLab's current model in 2010 and 2011 and that there were no 
obstacles to their issuance.  The judge declined to continue the 
damages trial to await this clearance.  Although a jury might 
have accepted the testimony about the likelihood of LightLab 
obtaining regulatory clearance in the United States for its 
current model OCT product, clearances for future products, as 
yet undeveloped, remained speculative.  They were an important 
aspect of LightLab's claim for lost profits.  The level of 
speculation as to regulatory clearances after 2014 is profound. 
 
d.  LightLab argues that its chief executive officer and 
chief financial officer would have testified that LightLab had 
access to sufficient funding from its parent company for its 
21 
 
business expansion.  However, it had not received any guarantee 
that such funding would continue beyond 2010.  The record 
supports the judge's conclusion that availability of needed 
funding for LightLab's long-term development was speculative, 
and inasmuch as Weinstein's opinion of lost profits depended on 
such funding, his opinion was similarly speculative. 
 
e.  The judge did not err in concluding that Weinstein's 
inability to identify "precisely the type of hypothetical new 
product" for which LightLab seeks damages was a factor that 
contributed to the speculative nature of his opinion.  Weinstein 
acknowledged that he had not been provided with any information 
concerning the direction LightLab would have pursued in 
developing next generation OCT products.  Warren Clark, who 
supplied Weinstein with forecasts of LightLab's profitability 
through 2014, was similarly uninformed.  Moreover, Weinstein had 
no information concerning other contingencies, such as whether 
LightLab's physical plant, sales team, and distribution 
structure could support a future system. 
 
LightLab has cited no case in which an expert was permitted 
to testify about future lost profits based on an as-yet 
uninvented product.  The case of DSC Communications Corp. v. 
Next Level Communications, 107 F.3d 322, 329 (5th Cir. 1997), 
cited by LightLab, involved expert testimony about a product 
that had been invented but not yet marketed.  In that case the 
22 
 
plaintiff had a strong history of profitable sales, and its 
forecasted profits were supported by "intensive market 
research."  Id.  Here, there is no history of profitable sales, 
only losses; and there has been no market research. 
 
Where LightLab had no history of profitable sales and could 
point to no lost sales, where Weinstein's opinion depended on 
as-yet undeveloped new products, where LightLab had no 
regulatory clearance for its future products, and where it had 
no guaranteed funding needed to launch a sales and marketing 
infrastructure for its new products, we conclude that the judge 
did not abuse her discretion in determinating that Weinstein's 
opinion should be excluded as grounded in speculation. 
 
Before leaving this subject, we express our concern that 
traditional lost profits analysis as a measure of damages may 
not be an adequate model for analyzing harm caused by 
misappropriation of the trade secrets of a "start-up" business.  
Such businesses often operate for years without profit.  This 
fact should not render them "damage proof."  In this case 
LightLab recovered other significant damages and attorney's 
fees.  We recognize that other theories of damages may lend 
themselves to misappropriation of trade secret cases and that 
such theories may be ripe for testing in our courts.  See, e.g., 
Ritchey & McCallum, Enforcement of Trade Secret Rights and 
23 
 
Noncompetition Agreements, at 23-32 (American Bar Association 
2002). 
 
3.  Denial of permanent injunctive relief.  LightLab argues 
that the judge erred in declining to issue permanent injunctions 
to protect its trade secrets.  Specifically, LightLab contends 
that the judge applied a "use" test to each specific secret on 
its thirty-item trade secret list in deciding whether a 
permanent injunction should issue.  We are satisfied that the 
judge in fact considered whether the defendants intended to use 
or disclose the claimed trade secrets, and that she correctly 
applied the law. 
 
Trial judges have broad discretion to grant or deny 
injunctive relief, Johnson v. Martignetti, 374 Mass. 784, 794 
(1978), and we review a judge's decision for an abuse of that 
discretion.  See Curtiss-Wright Corp. v. Edel-Brown Tool & Die 
Co., 381 Mass. 1, 11 (1980).  A permanent injunction should not 
be granted to prohibit acts that there is no reasonable basis to 
fear will occur.  See Lydia E. Pinkham Med. Co. v. Gove, 303 
Mass. 1, 14 (1939).  See also Shaw v. Harding, 306 Mass. 441, 
449-450 (1940).  Here, LightLab relied exclusively on the 
defendants' past conduct, without showing any likelihood that it 
would reoccur.  Having been stopped in their tracks, it appeared 
to the judge that the defendants had learned their lesson and 
probably would not reoffend.  This would not have precluded 
24 
 
LightLab from returning to court should the need arise again.  
There has been no showing that the judge abused her discretion. 
 
4.  Declaratory relief.  Having requested declaratory 
relief and having prevailed on its motion for summary judgment 
on the interpretation of its contract with Axsun, LightLab was 
entitled to a declaration to the same effect.  See Boston v. 
Massachusetts Bay Transp. Auth., 373 Mass. 819, 829 (1977).  
Thus, because the rights of the parties were not declared, we 
order that the amended judgment be modified to include a 
declaration as follows: 
"It is further ORDERED, ADJUDGED, and DECLARED that Section 
3 of the Asxun-LightLab Tunable Laser Development and 
Supply Agreement (First Amendment), dated April 29, 2008 
(the Agreement), bars Axsun Technologies, Inc., from 
supplying tunable lasers to Volcano Corporation in all 
fields of use, and not just in the field of human coronary 
artery imaging, during such periods of time that LightLab 
Imaging, Inc.'s exclusive right described in Section 3(i) 
of the Agreement is in effect." 
 
As so modified, the judgment of the Superior Court is affirmed. 
 
 
 
 
 
 
 
So ordered.