Court Opinion

ID: 7374910
Source: CourtListenerOpinion
Date Created: 2022-07-28 22:01:38.460186+00
Date Added: 2024-06-11T16:21:04.452153
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
Nos. 20-2953, 20-3213, & 21-2033
REXA, INC.,
                                                 Plaintiff-Appellant,
                                 v.

MARK V. CHESTER and MEA INC.,
                                              Defendants-Appellees.
                    ____________________

        Appeals from the United States District Court for the
          Northern District of Illinois, Eastern Division.
          No. 1:17-cv-08716 — Charles P. Kocoras, Judge.
                    ____________________

    ARGUED FEBRUARY 15, 2022 — DECIDED JULY 28, 2022
                ____________________

   Before WOOD, HAMILTON, and BRENNAN, Circuit Judges.
    BRENNAN, Circuit Judge. Mark Chester, then an engineer
for a company called Koso America, Inc., participated in a
2002 project aimed at creating a new valve for an actuator—a
machine component that produces motion. If successful, the
project would have eliminated the need for Koso to pay roy-
alties to another ﬁrm. But the project failed to accomplish that
goal. Instead, it yielded an experimental prototype of another
2                            Nos. 20-2953, 20-3213, & 21-2033

actuator, which Koso shelved due to the improbability of
commercial success. Chester left Koso the next year.
    More than a decade after he worked on the 2002 project,
Chester and his employer, MEA Inc., built a commercially
successful actuator and ﬁled a related patent application. Ul-
timately, the patent oﬃce allowed portions of their claims.
But REXA, Inc., a company aﬃliated with Koso, sued Chester
and MEA for misappropriation of trade secrets and breach of
an implied contractual obligation to assign patent rights.
REXA alleged that Chester and MEA’s actuator incorporated
and disclosed conﬁdential designs contained within the pro-
totype that Koso had developed and then abandoned. Follow-
ing discovery, all parties moved for summary judgment. The
district court granted summary judgment to the defendants,
Chester and MEA, on all claims. REXA appealed.
    We ﬁrst consider whether the district court properly
granted summary judgment to the defendants. Then, we ana-
lyze whether the court abused its discretion in awarding
Chester and MEA approximately $2.357 million in attorneys’
fees, which they requested as a sanction for REXA’s litigation
conduct.
                               I
                              A
    An actuator is a part of a machine that converts energy,
like electricity or water pressure, into linear or rotary move-
ment. Examples include an electric motor or an automatic
door closer. Hydraulic actuators, often used in the oil and gas
industry, regulate the ﬂow of working ﬂuids such as oil.
   In 1993, Koso America purchased the assets of Rexa Cor-
poration, which made hydraulic actuators. Since the early
Nos. 20-2953, 20-3213, & 21-2033                             3

1990s, the Rexa/Koso entities have manufactured the Xpac ac-
tuator, a leading self-contained electro-hydraulic actuator. In
2014, Koso underwent a corporate reorganization, which cre-
ated REXA, Inc. The purpose of the reorganization was to
“transfer the Actuator Business to a separate corporation op-
erated under a diﬀerent name.” As relevant here, Koso trans-
ferred “all of the assets comprising the Actuator Business” to
REXA, including “[a]ll contracts … and intellectual property
reasonable or necessary to the conduct of the Actuator Busi-
ness.”
    Chester’s employment with Koso. Koso hired Chester as a
Massachusetts-based project engineer in 1998, and he was
later promoted to a management role. He primarily worked
on existing Xpac actuators. Chester’s business card and W-2
forms stated that he worked for Koso, though he never en-
tered into a formal employment agreement.
     In 2000, certain Koso employees, including Chester, re-
ceived a Bonus Letter stating that they would be entitled to a
bonus if the company was sold and their employment ended
as a result of the sale. That letter was gratuitous; employees
who received it were not required to give any consideration
for this beneﬁt, and Koso’s board of directors had sole discre-
tion to determine whether and when to pay bonuses. Some
employees received a Severance Plan containing a document,
titled “Conﬁdentiality, Nonsolicitation, Non-Competition
and Assignment Agreement.” But REXA has not shown that
Chester received the Conﬁdentiality Agreement.
   The 2002 project (RFD 02-122). Beginning in July 2002,
Chester participated in a project—detailed in Request for De-
sign (“RFD”) 02-122—that investigated potential alternate
valves for the Xpac actuator. The RFD stated: “The existing
4                            Nos. 20-2953, 20-3213, & 21-2033

ﬂow matching valve still has three years remaining on the pa-
tents and thus the royalty. A new design would eliminate the
payment and provide a new patent valve that is owned by
[Koso].” Chester’s supervisor approved the project, which an-
ticipated a design and manufacturing cost of $100 per unit.
    Ken Enos, Koso’s Director of Engineering, reported to
Chester on project-related matters. For several weeks, Chester
and Enos sought to create a replacement ﬂow matching valve,
as contemplated by the RFD, but they did not succeed. In time
though, Chester and Enos created a prototype of an actuator.
The prototype modiﬁed the existing Xpac actuator by replac-
ing the ﬂow matching valve with two solenoid, or electrically
operated, valves. The fully assembled prototype also required
modiﬁcations to the Xpac actuator’s manifold, tubing, circuit
board, and coding.
     At Enos’s request, a Koso engineer modiﬁed existing
computer code to add instructions for opening and closing the
solenoid valves. Koso employees neither presented nor
discussed that code with Chester, and he never saw it. Addi-
tionally, Enos created only one (unoﬃcial) sketch of the pro-
totype, and it did not have a “conﬁdential” label before this
litigation commenced. REXA has not identiﬁed evidence that
Chester ever saw it.
   By mid-August 2002, Koso formally terminated the RFD
02-122 project, and the actuator prototype was disassembled.
No information concerning the project was used in any later
REXA commercial product or strategic plan. Chester was
never instructed that Koso viewed the shelved RFD 02-122
project as a trade secret. And REXA has not presented evi-
dence that any Koso employees were told that they had any
conﬁdentiality obligations for that project.
Nos. 20-2953, 20-3213, & 21-2033                             5

    The Hawk actuator and the patent application. Chester re-
signed from Koso in July 2003. Over the next several years, he
worked on designing actuators for several of Koso’s compet-
itors. In 2012, Chester joined Illinois-based MEA Inc. as a
senior engineer. At that time, MEA was manufacturing and
selling self-contained electro-hydraulic actuators that used
solenoid valves to hold the position of the actuator in place
under load.
   Chester began working on a new actuator prototype, later
known as the Hawk. Like many of MEA’s products, the Hawk
uses solenoid valves to hold the actuator in position under
load. Over several months in 2013, Chester and other MEA
employees developed a working prototype of the Hawk actu-
ator, including by writing the software that would run it.
Chester and MEA then ﬁled a patent application, which was
based on the speciﬁc components and performance of the
Hawk, with the United States Patent and Trademark Oﬃce
(“PTO”) in October 2014.
    In January 2017, the PTO largely rejected the claims as-
serted in the patent application. According to the PTO, the use
of solenoid valves to hold an actuator piston in a speciﬁc po-
sition was already disclosed in prior art. MEA then amended
its application to require a motor that can “accelerate from
zero to maximum revolutions per minute (RPM) under full
load.”
    In March 2018 (while this litigation was pending) the PTO
issued a notice of allowance in connection with the amended
patent application. That notice explained that the invention’s
improvement “comprises a hydraulic actuator system with a
motor driven pump, wherein the motor can accelerate from
zero to a maximum revolutions per minute under load for the
6                                  Nos. 20-2953, 20-3213, & 21-2033

purpose of preventing no momentary backwards movement
of the actuator.”
                                    B
   REXA sued Chester and MEA in the United States District
Court for the Northern District of Illinois, alleging misappro-
priation of trade secrets against both defendants (Count I) and
breach of an implied-in-fact contract against Chester (Count
IV). 1 During contentious discovery, the defendants accused
REXA of improper conduct by (1) combining the 2000 Bonus
Letter with a Conﬁdentiality Agreement labeled as Appendix
B to that letter and questioning Chester about those docu-
ments at his deposition; and (2) using “REXA” in pleadings
and discovery responses as a purported shorthand for
“Koso.”
    First, Chester and MEA alleged that REXA manipulated
the Bonus Letter (which Chester received) by producing it at-
tached to the Severance Plan and Appendix B Conﬁdentiality
Agreement (which he did not receive). Appendix A to the Sev-
erance Plan, which listed Koso employees who were oﬀered
the Plan, was not included. Chester was not among those em-
ployees listed on Appendix A. After examining the evidence,
the district court agreed with Chester and MEA that by “sep-
arating Appendix A from the Severance Plan and producing
it elsewhere among the discovery documents, REXA at-
tempted to conceal from Chester clear evidence that he had

    1 REXA also brought claims of conversion (Count II) and unfair com-
petition (Count III) against Chester and MEA. The district court ruled that
those two claims depended on the trade secret allegations and were
preempted. REXA does not challenge that ruling on appeal.
Nos. 20-2953, 20-3213, & 21-2033                               7

never received either the Severance Plan or the Assignment
Agreement.”
   Second, Chester and MEA contended that REXA’s use of
“REXA” to refer to “Koso”—in pleadings and throughout dis-
covery—was intentionally misleading because it gave the im-
pression that Chester had an employment relationship with
REXA. But Chester maintained he was never employed by
REXA. The district court agreed. The court found that REXA
had “regularly, and falsely, described itself as Chester’s em-
ployer during his employment at Koso.”
   Following discovery, the parties ﬁled cross motions for
summary judgment. The district court ruled for the defend-
ants, dismissing each of REXA’s claims with prejudice. REXA
appealed those rulings, but matters concerning fees and costs
remained with the district court.
    Chester and MEA sought $2,187,071.12 in attorneys’ fees
as a sanction against REXA for litigation misconduct. REXA
opposed the fee petition, arguing that it had not committed
misconduct and objecting to a wide array of billing entries in
the invoices submitted by Chester and MEA as excessive and
unnecessary. The district court granted Chester and MEA’s
request for attorneys’ fees, invoking its inherent authority to
sanction misconduct. REXA’s objections to certain time en-
tries were overruled. After the parties stipulated that $170,000
should be added to the previously requested award of attor-
neys’ fees to account for the subsidiary fee litigation, the dis-
trict court entered an amended judgment awarding Chester
and MEA $2,357,071.12 in fees. REXA renewed its earlier no-
tices of appeal.
8                              Nos. 20-2953, 20-3213, & 21-2033

                                 II
     We ﬁrst consider the district court’s grant of summary
judgment to the defendants on REXA’s claim for misappro-
priation of trade secrets in Count I. Our review is de novo.
Med. Protective Co. of Fort Wayne, Ind. v. Am. Int’l Specialty Lines
Ins. Co., 911 F.3d 438, 445 (7th Cir. 2018). Because summary
judgment was granted to Chester and MEA, we construe the
facts in the light most favorable to REXA and draw all reason-
able inferences in its favor. See id.; Gill v. Scholz, 962 F.3d 360,
363 (7th Cir. 2020) (citation omitted). “An inference is not rea-
sonable if it is directly contradicted by direct evidence pro-
vided at the summary judgment stage, nor is a ‘conceivable’
inference necessarily reasonable at summary judgment.”
MAO-MSO Recovery II, LLC v. State Farm Mut. Auto. Ins. Co.,
994 F.3d 869, 876 (7th Cir. 2021) (citation omitted). Summary
judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is en-
titled to judgment as a matter of law.” FED. R. CIV. P. 56(a). We
may aﬃrm a district court’s grant of summary judgment on
any basis that is apparent from our review of the record, pro-
vided that the issue was raised and the losing parties had a
fair opportunity to contest it in the district court. Dibble v.
Quinn, 793 F.3d 803, 807 (7th Cir. 2015).
    REXA brought its claim for misappropriation of trade se-
crets under the Illinois Trade Secrets Act (“ITSA”), 765 ILL.
COMP. STAT. 1065/1, et seq. To prevail on such a claim, the
plaintiﬀ must demonstrate “that the information at issue was
a trade secret, that it was misappropriated and that it was
used in the defendant’s business.” Learning Curve Toys, Inc. v.
PlayWood Toys, Inc., 342 F.3d 714, 721 (7th Cir. 2003) (citations
omitted). The statute deﬁnes a trade secret as:
Nos. 20-2953, 20-3213, & 21-2033                                 9

       information, including but not limited to, tech-
       nical or non-technical data, a formula, pattern,
       compilation, program, device, method, tech-
       nique, drawing, [or] process … that: (1) is suﬃ-
       ciently secret to derive economic value, actual or
       potential, from not being generally known to
       other persons who can obtain economic value
       from its disclosure or use; and (2) is the subject
       of eﬀorts that are reasonable under the circum-
       stances to maintain its secrecy or conﬁdential-
       ity.
765 ILL. COMP. STAT. 1065/2(d). There is also a speciﬁcity re-
quirement inherent in a claim for misappropriation of trade
secrets; a plaintiﬀ must show “concrete secrets” rather than
“broad areas of technology.” Life Spine, Inc. v. Aegis Spine, Inc.,
8 F.4th 531, 540 (7th Cir. 2021) (quoting Composite Marine Pro-
pellers, Inc. v. Van Der Woude, 962 F.2d 1263, 1266 (7th Cir.
1992)).
    As relevant here, misappropriation under the ITSA in-
volves the “disclosure or use of a trade secret of a person with-
out express or implied consent” by another person who, at the
time, knew or had reason to know that knowledge of the trade
secret was either “acquired under circumstances giving rise
to a duty to maintain its secrecy or limit its use” or “derived
from or through a person who owed a duty to the person
seeking relief to maintain its secrecy or limit its use.” 765 ILL.
COMP. STAT. 1065/2(b). A misappropriation may also occur
when a person produces “modiﬁed or even new products that
are substantially derived from the trade secret of another.”
Mangren Rsch. & Dev. Corp. v. Nat’l Chem. Co., 87 F.3d 937, 944
(7th Cir. 1996) (citations omitted). When there is no genuine
10                                 Nos. 20-2953, 20-3213, & 21-2033

dispute about one or more elements of a claim for misappro-
priation, summary judgment is appropriate.
                                    A
    A focal point of the parties’ dispute is whether REXA ever
identiﬁed a trade secret with suﬃcient speciﬁcity to support
a claim under the ITSA. REXA asserts the “2002 Designs,” in-
cluding the actuator prototype, qualify as trade secrets and
were maintained as such. Chester and MEA respond that the
term “2002 Designs” is vague and fails to suﬃciently describe
a concrete concept, as required for trade secret protection.
Several aspects of the 2002 actuator prototype, Chester and
MEA urge, were well known in the actuator industry, pre-
cluding trade secret protection for that prototype. REXA
counters that the trade secret “was not the solenoid valves but
their use in conjunction with other components to create a
new and previously unknown actuator.”
    Case law requires a high level of speciﬁcity when a plain-
tiﬀ makes a claim for misappropriation of a trade secret. Life
Spine, 8 F.4th at 540; Composite Marine, 962 F.2d at 1266. When
a plaintiﬀ presents complex or detailed descriptions of meth-
ods and processes but fails to isolate the aspects that are un-
known to the trade, no trade secret has been identiﬁed. IDX
Sys. Corp. v. Epic Sys. Corp., 285 F.3d 581, 583–84 (7th Cir.
2002). 2 Our court has emphasized that “a plaintiﬀ must do
more than just identify a kind of technology and then invite

     2 Although  IDX involved a claim for misappropriation of a trade se-
cret under Wisconsin law, the statute at issue was materially identical to
the ITSA, and federal courts have properly cited IDX in applying Illinois
trade secret law. See, e.g., NEXT Payment Sols., Inc. v. CLEAResult Consult-
ing, Inc., 2020 WL 2836778, at *10–11 & n.5, 15 (N.D. Ill. May 31, 2020).
Nos. 20-2953, 20-3213, & 21-2033                               11

the court to hunt through the details in search of items meet-
ing the statutory deﬁnition.” Id. at 584 (citing Composite Ma-
rine, 962 F.2d at 1266). The key task for a plaintiﬀ is to present
a speciﬁc element, or combination of elements, that is un-
known to the trade and was allegedly misappropriated.
    Applying that framework, we agree with Chester and
MEA that REXA has failed to identify a concrete trade secret,
as it must, to defeat summary judgment. IDX considered and
rejected an argument similar to the one REXA advances.
There, the plaintiﬀ alleged that certain aspects of billing soft-
ware which the defendants had misappropriated qualiﬁed as
trade secrets. In support, the plaintiﬀ, IDX, submitted “a 43-
page description of the methods and processes underlying
and the inter-relationships among various features making
up IDX’s software package.” Id. at 583. Our court noted that
IDX’s “tender of the complete documentation for the software
leaves mysterious exactly which pieces of information are the
trade secrets.” Id. at 584. Without information suﬃcient to
separate “the trade secrets from the other information that
goes into any software package,” the court could not deter-
mine “[w]hich aspects are known to the trade, and which are
not.” Id. Thus, in IDX this court aﬃrmed the district court’s
grant of summary judgment to the defendants on the claims
for misappropriation of trade secrets. Id. at 584, 587.
    Similarly, REXA broadly contends that the “2002 Designs”
were trade secrets that Chester and MEA misappropriated.
REXA tells us that Koso kept a sketch of the 2002 actuator pro-
totype (contained within the design ﬁle), the source code, and
testing results—though not the prototype itself. Without
greater speciﬁcity, REXA has not identiﬁed the trade secrets.
IDX, 285 F.3d at 584. For this reason, the defendants are
12                            Nos. 20-2953, 20-3213, & 21-2033

entitled to summary judgment. Id. at 584, 587; see also TLS
Mgmt. & Mktg. Servs., LLC v. Rodríguez-Toledo, 966 F.3d 46, 54
(1st Cir. 2020) (citing IDX, 285 F.3d at 584).
     REXA’s claim also fails for lack of an identiﬁable trade se-
cret because the company concedes that several aspects of the
shelved 2002 actuator prototype were and are widely known
in the hydraulic-actuator industry. Under the ITSA, infor-
mation is not suﬃciently secret to qualify for protection when
it is “within the realm of general skills and knowledge” in the
relevant industry. Comput. Care v. Serv. Sys. Enters., Inc., 982
F.2d 1063, 1072 (7th Cir. 1992) (citation omitted). As REXA
acknowledges, the Xpac actuator is publicly available and
therefore not a trade secret, as anyone is permitted to copy it.
And REXA further admits that the use of solenoid valves to
hold an actuator in place was known in the industry before
2002. So, neither the Xpac actuator nor the use of solenoid
valves to hold an actuator in place under load qualiﬁes as a
trade secret.
    No other aspect of the 2002 actuator prototype has been
identiﬁed with suﬃcient speciﬁcity to defeat summary judg-
ment. It is not our responsibility to “hunt through the details
[of the 2002 actuator prototype] in search of items meeting the
statutory deﬁnition” of a trade secret. TLS Mgmt. & Mktg.
Servs., 966 F.3d at 54; IDX, 285 F.3d at 584. Even if it were,
REXA’s trade secret claim would still fall short.
    REXA does not dispute that the actuator prototype was an
Xpac actuator with two solenoid valves and modiﬁcations to
the manifold, tubing, circuit board, and coding. At the same
time, REXA fails to identify evidence showing that the mani-
fold, tubing, or circuit board were part of any purported trade
secret. That leaves only the source code (in combination with
Nos. 20-2953, 20-3213, & 21-2033                              13

the publicly available Xpac and the widely known use of so-
lenoid valves to hold an actuator in place under load). As the
defendants note, REXA does not argue the source code was
the key ingredient supporting the existence of a trade secret
within the prototype.
    So, we conclude that no reasonable jury could ﬁnd that
REXA has identiﬁed a trade secret under the ITSA. Neverthe-
less, we consider whether—if a trade secret had been identi-
ﬁed with suﬃcient speciﬁcity—there would be a genuine
issue of material fact as to its alleged misappropriation.
                               B
    REXA alleges that its trade secrets were misappropriated
twice: when Chester and MEA ﬁled the patent application,
and when Chester incorporated the “2002 Designs” into the
Hawk actuator. The defendants counter that Chester could
not have misappropriated anything qualifying as a trade se-
cret because he never saw Enos’s sketch of the prototype, the
source code, or the test results. In reply, REXA argues that
Chester’s lack of access to these key documents is irrelevant
because he retained knowledge of the 2002 prototype in his
mind and later misappropriated that knowledge. Recall that
to prove misappropriation, REXA must show the “disclosure
or use of a trade secret” by Chester and MEA and that they
knew the trade secret had been either “acquired under cir-
cumstances giving rise to a duty to maintain its secrecy or
limit its use” or “derived from or through a person who owed
a duty to the person seeking relief to maintain its secrecy or
limit its use.” 765 ILL. COMP. STAT. 1065/2(b).
    Filing the patent application. We first consider if a genuine
fact dispute exists about whether, when Chester and MEA
14                                  Nos. 20-2953, 20-3213, & 21-2033

filed the patent application, they misappropriated a trade
secret. REXA primarily argues that Chester admitted at his
deposition that the 2002 actuator prototype met nearly all the
limitations of allowed claim 3 of the patent application.3
REXA further asserts that Chester testified he expected the
2002 prototype to meet the final limitation—having a motor
that could accelerate to maximum RPM under load—as well.
In other words, REXA contends, Chester believed the 2002
prototype had every feature described in the portion of the
amended patent application that the PTO ultimately allowed.
To REXA, it follows that “not only was there evidence suffi-
cient for a factfinder to conclude that [the patent application]
both disclosed and attempted to patent the 2002 Designs, but
in fact there could not plausibly be any other conclusion.”
    Despite these assertions, Chester’s testimony—together
with reasonable inferences—does not support the conclusion
that the patent application disclosed the “2002 Designs.”
REXA’s key premise is incorrect, as it mischaracterizes Ches-
ter’s testimony. At his deposition, Chester was asked, “Could
the motor of the prototype accelerate to maximum RPM un-
der load?” He responded, “Unknown, as it was not tested.”
Although Chester also testiﬁed he would have expected the
prototype to meet that limitation, he was speculating. So,
based on Chester’s statement alone, we do not presume that
the prototype would have met the ﬁnal limitation. See, e.g.,

     3Under the Patent Act, an application for a patent must include “one
or more claims particularly pointing out and distinctly claiming the sub-
ject matter which the inventor or a joint inventor regards as the invention.”
35 U.S.C. § 112(b); Nautilus, Inc. v. Biosig Instruments, Inc., 572 U.S. 898,
901–02 (2014). A limitation delineates and narrows the scope of a claim.
See ABS Glob., Inc. v. Inguran, LLC, 914 F.3d 1054, 1075–76 (7th Cir. 2019).
Nos. 20-2953, 20-3213, & 21-2033                                15

Consolino v. Towne, 872 F.3d 825, 830 (7th Cir. 2017) (“[S]pecu-
lation is not enough to create a genuine issue of fact for the
purposes of summary judgment.”). Had Chester’s testimony
been based on his personal knowledge, a disputed question
of fact would exist about whether the motor of the 2002 pro-
totype could have accelerated to maximum RPM under load.
    Yet, even if the 2002 prototype had met every limitation of
the patent application’s allowed claim 3, REXA’s allegations
of misappropriation would still rest on a series of untenable
inferences. Critically, it is undisputed that eleven years
passed between when Chester ﬁrst worked on the actuator
prototype for Koso, and when he started work at MEA on the
designs that would later underlie the patent application. As
we noted earlier, there is also no dispute that Chester did not
see Enos’s sketch of the 2002 prototype, the source code, or
the test results. Chester never saw or physically took any doc-
umentation with him. But REXA asks the court to infer that
he somehow retained and preserved for eleven years the
knowledge from his work on the shelved 2002 actuator proto-
type.
    Although Chester would have recognized that this
knowledge was commercially valuable, according to REXA he
chose to do nothing with it for the entire period before 2013.
During this time Chester worked for multiple companies that
competed with REXA in the actuator industry. Then, in 2013,
Chester supposedly decided to misappropriate his encyclope-
dic knowledge of the 2002 actuator prototype.
    Simply put, these inferences are barely “conceivable” and
certainly not “reasonable,” so they will not be drawn at sum-
mary judgment. MAO-MSO Recovery II, LLC, 994 F.3d at 876;
see also Riley v. City of Kokomo, 909 F.3d 182, 192 (7th Cir. 2018)
16                                  Nos. 20-2953, 20-3213, & 21-2033

(declining to draw an unreasonable inference at summary
judgment). REXA has not directed us to a case where a court
inferred that the misappropriation of trade secrets could plau-
sibly have occurred despite a lack of evidence concerning the
defendant’s seizure or possession of documents. We also have
not located such a case. Even more, the eleven-year gap ren-
ders the inferences that REXA asks us to draw exceptionally
unreasonable. 4
    The Design of the Hawk Actuator. Next, we consider whether
Chester misappropriated a trade secret (assuming its exist-
ence) when he contributed to the Hawk’s design. The parties
agree that there are signiﬁcant diﬀerences between the 2002
prototype, which REXA admits had no prospect of commer-
cial success, and the valuable Hawk actuator that Chester and
MEA developed and sold.
   As discussed above, a central innovation of the Hawk is
the inclusion of a motor that can accelerate from zero to max-
imum RPM under load. Indeed, that feature was essential to
the PTO’s decision to allow claim 3 of the amended patent

     4 REXA’s Massachusetts authorities, which relate primarily to defend-

ants’ violations of implied contractual obligations, involve no comparable
gap between a defendant’s employment with the plaintiff and the alleged
misappropriation. In Jet Spray Cooler, Inc. v. Crampton, the defendants im-
mediately began to use information they obtained while employed by the
plaintiffs, and they made significant sales to the plaintiffs’ largest custom-
ers within two years. 282 N.E.2d 921, 923–24 (Mass. 1972). Similarly, in
Whipps, Inc. v. Ross Valve Mfg. Co., the individual defendant used his for-
mer employer’s confidential information within six months of leaving that
employer. 2014 WL 1874754, at *2–3 (D. Mass. May 8, 2014). Neither of
these out-of-state cases addresses the sizable time gap here, nor does ei-
ther decision hold that a defendant misappropriates trade secrets simply
by retaining information in his mind.
Nos. 20-2953, 20-3213, & 21-2033                            17

application. Yet it is unknown whether the 2002 prototype
could accelerate from zero to maximum RPM under load.
Moreover, the patent application’s allowable claims require
that the “motor coupled to the pump starts milliseconds prior
to opening the solenoid valve and said motor coupled to the
pump stops milliseconds after closing the solenoid valve.” By
contrast, REXA admits that in the 2002 prototype the motor
stopped before the solenoid valves closed. The 2002 prototype
was not tested for, or simply did not have, the features of the
patent application that made the Hawk both a non-obvious
improvement over prior art and commercially valuable.
Chester and MEA therefore could not have misappropriated
trade secrets contained within the 2002 prototype.
    The Hawk actuator also does not use the manifold, tubing,
or computer source code that were part of the 2002 prototype.
Notably, the source code that Koso engineers wrote for the
2002 prototype was crucial to its operation but absent from
the Hawk. In the district court, REXA agreed with the propo-
sition that the code was “integral to the [prototype]—without
the code the [prototype] would not function.” Again, though,
no such code was present in the Hawk. REXA asks us to infer
that Chester retained knowledge of the 2002 source code—
which he never saw—for eleven years and then deployed that
exact code when building the Hawk. That inference is mani-
festly unreasonable, so we decline to draw it for purposes of
summary judgment.
    Without evidence that either Chester or MEA used the
source code, REXA must identify “the essential secret ingre-
dient” that was misappropriated. Mangren, 87 F.3d at 944. But
it has not done so. Given the signiﬁcant diﬀerences between
the 2002 actuator prototype and the Hawk actuator—as well
18                            Nos. 20-2953, 20-3213, & 21-2033

as the passage of many years between the development of
each device—we agree with the district court. As a matter of
law, Chester and MEA developed the Hawk and ﬁled the pa-
tent application without disclosing or using any trade secret
belonging to Koso.
    Chester’s deposition testimony also supports our conclu-
sion. Asked when he ﬁrst conceived of the invention de-
scribed in the patent application, he responded that the Hawk
was “based on a lifetime of work in hydraulics” and was an
“incremental process” dating back to 1976. REXA does not
point to anything that contradicts Chester’s assertions about
the way in which the idea for the Hawk came together. It oc-
curred gradually and through the application of accumulated
knowledge—not in one fell swoop that transplanted a shelved
prototype on which Chester had brieﬂy worked eleven years
earlier. There is thus no genuine dispute of material fact as to
misappropriation of a trade secret under the ITSA. Summary
judgment was properly granted to Chester and MEA on that
claim.
                               III
    REXA also challenges the district court’s grant of sum-
mary judgment to Chester on Count IV, REXA’s claim for
breach of an implied-in-fact contractual obligation to assign
any patent rights in connection with the patent application. In
evaluating such a claim, federal courts “apply state-law prin-
ciples of contract formation to determine whether an implied
contract existed.” Farmers Edge Inc. v. Farmobile, LLC, 970 F.3d
1027, 1031 (8th Cir. 2020) (citing Teets v. Chromalloy Gas Turbine
Corp., 83 F.3d 403, 407 (Fed. Cir. 1996)). The parties agree that
REXA’s claim for breach of an implied-in-fact contract arises
Nos. 20-2953, 20-3213, & 21-2033                              19

under the common law of Massachusetts, where Koso em-
ployed Chester.
    Massachusetts law provides that if an employer “contem-
plates the discovery of an invention” and contracts with an
employee to build it such that the employee “must have rea-
sonably understood that such inventions as resulted from his
performance of the contract should belong to the employer,”
the employee has “an implied obligation to assign any pa-
tents … for said inventions to his employer.” Nat’l Dev. Co. v.
Gray, 55 N.E.2d 783, 787 (Mass. 1944) (citations omitted). Sub-
sequent cases have extended that proposition. When an em-
ployee—even if hired in a general capacity—is speciﬁcally
“directed during the course of his employment to develop or
perfect new or existing machinery or processes, his employer
becomes the owner of resulting inventions and may compel
the assignment of patents taken in the employee’s name.”
Steranko v. Inforex, Inc., 362 N.E.2d 222, 233–34 (Mass. App. Ct.
1977); see also Silica Tech, L.L.C. v. J-Fiber, GmbH, 2009 WL
2579432, at *13 (D. Mass. Aug. 19, 2009) (same).
                               A
    First, we consider whether REXA may recover against
Chester for breach of an implied-in-fact contract, notwith-
standing that REXA never employed him. The district court
said “no.” The court understood Massachusetts common law
to dictate that an employee’s implied-in-fact contractual obli-
gation to assign patent rights may not be transferred to a
successor corporation. So, according to the court, “any obliga-
tions owed by Chester to Koso were not and could not be
transferred to REXA.” REXA challenges that conclusion.
20                                Nos. 20-2953, 20-3213, & 21-2033

    We cannot endorse the district court’s analysis about the
transferability of any implied-in-fact contractual obligation
under Massachusetts law. It appears the district court relied
exclusively on a case from the Massachusetts Superior Court,
Securitas Sec. Servs. USA, Inc. v. Jenkins, 2003 WL 21781385
(Mass. Super. Ct. July 18, 2003). There, a successor corporation
acquired the defendant’s former employer and attempted to
enforce a non-competition provision of the employment
agreement between the defendant and his former employer.
See id. at *1–3. The state trial court concluded that because the
defendant did not consent to the assignment of his employ-
ment agreement to the successor corporation, that assignment
was not valid or enforceable. See id. at *5–6.
    The district court’s reliance on Securitas was misplaced.
REXA is correct that the question of whether an employer’s
rights under a written employment agreement may be as-
signed without the employee’s consent is materially distinct
from whether an implied-in-fact contractual obligation re-
garding intellectual-property rights may be so assigned. The
concerns that weigh against permitting a successor corpora-
tion to enforce a contract for employment, a personal service,
do not necessarily apply to an implied contractual right to as-
sign intellectual property. Chester and MEA do not suﬃ-
ciently account for the diﬀerences between employment and
intellectual-property rights. Notably, in other cases involving
similar allegations, courts and parties have assumed that suc-
cessors-in-interest may enforce the type of implied-in-fact
contractual right at issue here. 5

     5
     See Farmers Edge, 970 F.3d at 1029–30 (analyzing, on the merits, a
breach-of-contract claim predicated on an implied intellectual-property
provision, although the plaintiff corporation was a successor-in-interest
Nos. 20-2953, 20-3213, & 21-2033                                    21

    Yet, we decline to hold that as a matter of Massachusetts
law, an implied-in-fact obligation to assign patent rights may
be transferred to a successor-in-interest. After all, state courts
are the “ultimate expositors” of their own laws. Smart Oil, LLC
v. DW Mazel, LLC, 970 F.3d 856, 863 (7th Cir. 2020) (citation
omitted). “[A] federal court sitting in diversity must proceed
with caution in making pronouncements about state law,” es-
pecially given that such pronouncements “inherently involve
a signiﬁcant intrusion on the prerogative of the state courts to
control that development.” Lexington Ins. Co. v. Rugg & Knopp,
Inc., 165 F.3d 1087, 1092 (7th Cir. 1999) (citations omitted).
Here, there is no need to resolve the Massachusetts state-law
issue concerning the transferability of implied-in-fact obliga-
tions to assign patents. Instead, we adjudicate REXA’s im-
plied-in-fact contractual claim by applying a requirement
common to all such claims.
                                  B
    As a general rule, “an individual owns the patent rights to
the subject matter of which he is an inventor, even though he
conceived it or reduced it to practice in the course of his em-
ployment.” Banks, 228 F.3d at 1359. But there are exceptions.
In the archetypal case involving an inventor’s breach of an im-
plied-in-fact contractual obligation, an employer may be enti-
tled to ownership rights associated with “the inventions of
employees hired to direct or to engage in inventive research.”
Steranko, 362 N.E.2d at 233 (citations omitted). Also, when an
employee is speciﬁcally “directed during the course of his

rather than the company for which the individual defendants had
worked); Banks v. Unisys Corp., 228 F.3d 1357, 1358–59 (Fed. Cir. 2000)
(same).
22                            Nos. 20-2953, 20-3213, & 21-2033

employment to develop or perfect new or existing machinery
or processes, his employer becomes the owner of resulting in-
ventions and may compel the assignment of patents taken in
the employee’s name.” Id. at 233–34. By adhering to this rule,
Massachusetts follows the law of many other states. See, e.g.,
Teets, 83 F.3d at 408 (“Even if hired for a general purpose, an
employee with the speciﬁc task of developing a device or pro-
cess may cede ownership of the invention from that task to
the employer.”) (applying Florida law); Goodyear Tire & Rub-
ber Co. v. Miller, 22 F.2d 353, 356 (9th Cir. 1927) (applying fed-
eral common law).
    The pertinent question is whether the employer “speciﬁ-
cally directed” the employee to create the invention at issue.
Farmers Edge, 970 F.3d at 1032; Teets, 83 F.3d at 408. “The pri-
mary factor courts consider in determining whether an em-
ployed to invent agreement exists is the speciﬁcity of the task
assigned to the employee.” Farmers Edge, 970 F.3d at 1032
(quoting Skycam LLC v. Bennett, 900 F. Supp. 2d 1264, 1276
(N.D. Okla. 2012)). In Skycam, the court correctly reasoned
that if the employee was not employed or speciﬁcally directed
“to invent the entirety” of the system described in a claim of
the patent application for which assignment is sought, the em-
ployer “is not entitled to ownership of the invention described
therein.” 900 F. Supp. 2d at 1277.
    To determine whether the specific goal of the RFD 02-122
project was to invent the 2002 actuator prototype—whatever
its similarities to the Hawk actuator described in allowed
claim 3 of the patent application—we look first to the docu-
ment originating the project and delineating its scope. The
RFD states that “[t]he existing flow matching valve still has
three years remaining on the patents and thus the royalty. A
Nos. 20-2953, 20-3213, & 21-2033                            23

new design would eliminate the payment and provide a new
patent valve that is owned by [Koso].” Koso anticipated that
the new valve would be designed and manufactured at a cost
of approximately $100 per unit. Nothing in the RFD contem-
plates either the invention of a new actuator or the use of so-
lenoid valves in an actuator. REXA did not direct Chester to
invent anything remotely resembling the 2002 actuator proto-
type, much less the Hawk—an actuator that uses solenoid
valves to hold itself in position under load, and which re-
quires a motor that can accelerate from zero to maximum
RPM under full load. So, REXA is not entitled to ownership
of the invention described in the allowed claims of the patent
application. See Farmers Edge, 970 F.3d at 1032; Skycam, 900 F.
Supp. 2d at 1277.
    The RFD’s focus on the design of a replacement ﬂow
matching valve is also consistent with the deposition testi-
mony of Chester, who was familiar with the project’s scope.
Chester testiﬁed: “We were simply looking to modify the ex-
isting Xpac to avoid the royalties … there was never any in-
tention to come up with any kind of new product. We were
simply looking to modify the existing one to get around the
royalties.” REXA does not identify contrary testimony. And
whether solenoid valves were technically considered part of
Koso’s “Actuator Business,” as REXA contends, is not relevant
to the critical question of whether the 2002 actuator prototype
was something that Koso “speciﬁcally directed” Chester to in-
vent. Farmers Edge, 970 F.3d at 1032; Teets, 83 F.3d at 408.
   REXA’s primary response to the argument that Chester
was tasked with designing a replacement valve, rather than
an actuator, is that it was waived or forfeited when not pre-
sented to the district court at summary judgment. But MEA
24                            Nos. 20-2953, 20-3213, & 21-2033

wrote: “The RFD 02-122 page describes a request to generate
new valves, not a new actuator, to be designed and manufac-
tured at a cost of $100 per valve in an initial quantity of 2,000
per year.” For his part, Chester incorporated MEA’s argu-
ments at summary judgment. Chester also cited to the district
court his own testimony about the scope of the RFD 02-122
project. The project sought, he said, only to avoid the royalties
associated with the ﬂow matching valve that Koso was using
in its existing Xpac actuators. Thus, we conclude the argu-
ment was not waived or forfeited. Regardless, we may aﬃrm
the grant of summary judgment to Chester and MEA on any
properly preserved basis we ﬁnd in the record. Dibble, 793
F.3d at 807.
    The evidence establishes that Chester was not speciﬁcally
directed to develop an actuator, much less the entirety of the
system described in allowed claim 3 of the patent application.
Rather, any direction Koso provided Chester on the RFD 02-
122 project was to develop a replacement ﬂow matching
valve. Those eﬀorts were not successful, and they are unre-
lated to any portion of the patent application. So, Chester did
not owe Koso an implied contractual obligation to assign the
intellectual-property rights related to the patent application.
Because no reasonable jury could ﬁnd otherwise, we aﬃrm
the district court’s grant of summary judgment to Chester on
the implied-in-fact contractual claim under Massachusetts
law.
                               C
    Next, we address REXA’s allegation that Chester breached
an implied contractual duty to maintain the secrecy of conﬁ-
dential information. This is not an independent cause of ac-
tion or claim for relief. By the terms of REXA’s operative
Nos. 20-2953, 20-3213, & 21-2033                              25

pleading, this allegation must be part of Count IV, its claim
for breach of an implied contract on patent rights. In other
words, REXA suggests that if Chester misappropriated a
trade secret, he also breached an implied obligation to main-
tain the underlying information as conﬁdential. REXA does
not argue that it pleaded an implied obligation to maintain
conﬁdential information on any other basis.
     The defendants contend that the ITSA preempts recovery
for the breach of an implied contractual duty to maintain the
secrecy of conﬁdential information. According to the statute,
it is “intended to displace conﬂicting tort, restitutionary, un-
fair competition, and other laws of this State providing civil
remedies for misappropriation of a trade secret.” 765 ILL.
COMP. STAT. 1065/8(a). Through the ITSA, Illinois “abolished
all common law theories of misuse of such information.” Com-
posite Marine, 962 F.2d at 1265. “Unless defendants misappro-
priated a (statutory) trade secret, they did no legal wrong.” Id.
    Illinois courts “have read the preemptive language in the
ITSA to cover claims that are essentially claims of trade secret
misappropriation.” Spitz v. Proven Winners N. Am., LLC, 759
F.3d 724, 733 (7th Cir. 2014) (citation omitted). That is, con-
sistent with the law of other jurisdictions, the ITSA forecloses
claims “when they rest on the conduct that is said to misap-
propriate trade secrets.” Hecny Transp., Inc. v. Chu, 430 F.3d
402, 404–05 (7th Cir. 2005) (citations omitted). In Spitz this
court held that the plaintiﬀ’s “quasi-contract” theories of un-
just enrichment and quantum meruit were preempted by the
ITSA because they were essentially claims of trade secret mis-
appropriation. 759 F.3d at 733.
    Likewise, REXA asserts that Chester breached an “im-
plied-in-fact obligation to maintain the conﬁdentiality of the
26                             Nos. 20-2953, 20-3213, & 21-2033

2002 Designs” when he incorporated them into his own in-
ventions. This assertion is “essentially [a claim] of trade secret
misappropriation.” Id. Chester and MEA raised the preemp-
tion issue in their brief. Yet, REXA fails to explain how its im-
plied-conﬁdentiality allegations, which are part and parcel of
the claim for breach of an implied contract pleaded in Count
IV, diﬀer materially from those underlying a trade secret
claim. Those allegations are thus precluded by the ITSA,
which establishes the standard for proving allegations of mis-
appropriation.
                                IV
    REXA also challenges the district court’s award of attor-
neys’ fees to Chester and MEA. This presents two questions
for us. First, we consider whether the district court abused its
discretion in ﬁnding that REXA committed litigation miscon-
duct, for which the court imposed attorneys’ fees as a
sanction. Second, we analyze whether the court abused its
discretion by awarding approximately $2.357 million in fees.
                                 A
    Start with the district court’s decision to sanction REXA
for litigation misconduct. “We review a district court’s impo-
sition of sanctions under its inherent authority for an abuse of
discretion.” Tucker v. Williams, 682 F.3d 654, 661 (7th Cir. 2012)
(citing Chambers v. NASCO, Inc., 501 U.S. 32, 55 (1991)). Under
that standard, “the district court’s decision is to be overturned
only if no reasonable person would agree with the trial court’s
ruling.” Aldridge v. Forest River, Inc., 635 F.3d 870, 875 (7th Cir.
2011); accord Lange v. City of Oconto, 28 F.4th 825, 842 (7th Cir.
2022). A court may abuse its discretion if it bases its decision
“on an erroneous view of the law or a clearly erroneous
Nos. 20-2953, 20-3213, & 21-2033                             27

evaluation of evidence.” Harrington v. Duszak, 971 F.3d 739,
741 (7th Cir. 2020) (citation omitted).
    Before imposing sanctions for litigation misconduct, the
district court must make a ﬁnding of “bad faith, designed to
obstruct the judicial process, or a violation of a court order.”
Fuery v. City of Chicago, 900 F.3d 450, 463–64 (7th Cir. 2018)
(quoting Tucker, 682 F.3d at 662). “Mere clumsy lawyering is
not enough.” Id. at 464. When ﬁndings of bad faith are
properly made, district courts have inherent authority to
award attorneys’ fees as a sanction. Chambers, 501 U.S. at
45-47.
    REXA contends the district court’s finding of litigation
misconduct was unsupported and thus an abuse of discretion.
Before concluding that REXA had committed misconduct, the
district court found the following facts:
       •   Appendix A, the list of Koso employees who
           were offered the Severance Plan, was pro-
           duced in a deceptive manner. The list was
           detached from the Severance Plan to which
           it was originally attached, and it was pro-
           duced nearly 100 pages away from the Bo-
           nus Letter.
       •   Appendix B, the Conﬁdentiality Agreement,
           was produced as an attachment to the Bonus
           Letter. Chester never received the Conﬁden-
           tiality Agreement.
       •   Geoﬀrey Hynes, REXA’s president, testiﬁed
           that he may have “connected” the Severance
           Plan and its Appendix B Conﬁdentiality
           Agreement to the Bonus Letter.
28                             Nos. 20-2953, 20-3213, & 21-2033

REXA forthrightly acknowledges that “all of these facts are
true.” Nevertheless, REXA argues, the district court abused
its discretion in declining to accept REXA’s assertion that all
documents were produced as they were kept in the ordinary
course of business.
    We disagree. In the district court’s view, it was exceed-
ingly unlikely that the unusual, suspicious alignment of
REXA’s ﬁles had occurred in the absence of any manipulation
by REXA or its attorneys. Importantly, the district court is
closer to the litigation and more familiar with the details of
the dispute at issue than we are. See, e.g., Fuery, 900 F.3d at 452
(“[W]e leave much of the trial refereeing to those on the
ﬁeld—the district courts.”); Methode Elecs., Inc. v. Adam Techs.,
Inc., 371 F.3d 923, 925 (7th Cir. 2004) (“We review the grant of
sanctions with deference because of the familiarity of the trial
court with the relevant proceedings.”). On appeal, REXA has
not given us any reason—aside from bare assertions—to over-
turn the district court’s ﬁndings. We cannot say that “no rea-
sonable person would agree with the trial court’s ruling.”
Aldridge, 635 F.3d at 875. Thus, the district court did not abuse
its discretion when it found that REXA had committed litiga-
tion misconduct.
     Like the district court, we are disturbed by the conduct of
REXA’s counsel in the use of exhibits at Chester’s deposition.
It is undisputed that REXA created a combined exhibit, which
contained both the Bonus Letter and the Appendix B Conﬁ-
dentiality Agreement. The Bonus Letter and Appendix B were
given consecutive Bates numbers in the combined document.
Even if we were to accept REXA’s dubious assertion that the
ﬁles were kept this way in the ordinary course of business, its
creation of the combined exhibit was dishonest.
Nos. 20-2953, 20-3213, & 21-2033                                            29

    REXA acknowledges that it used the combined exhibit to
question Chester at his deposition. REXA tried to get Chester
to admit that he had received the Appendix B Conﬁdentiality
Agreement. These facts are highly suggestive of litigation
misconduct. On appeal, REXA is unrepentant, asserting “[i]t
would have been remiss if REXA’s attorneys had failed to ask
Chester to conﬁrm or deny” the assertion made by REXA’s
former president that he had presented Chester with the Ap-
pendix B Conﬁdentiality Agreement. But such sharp tactics—
manipulating documents in an attempt to mislead a witness—
are improper, and they support a trial court’s decision to sanc-
tion the responsible party. 6 Once REXA’s tactics were discov-
ered, the district court was well within its discretion to decide
that litigation misconduct had been committed and to exer-
cise its inherent authority by imposing a penalty.
    In its reply brief, REXA also argues that the district court
was precluded from ﬁnding that REXA had committed litiga-
tion misconduct without ﬁrst holding an evidentiary hearing.
But REXA waived this argument by failing to mention it in
the company’s opening brief on appeal. See White v. United
States, 8 F.4th 547, 552–53 (7th Cir. 2021) (citations omitted).

    6 See Ramirez v. T&H Lemont, Inc., 845 F.3d 772, 776, 778–79 (7th Cir.
2016) (litigation misconduct during discovery, including a litigant’s “at-
tempts to deceive his opponent,” supports the severe sanction of dismissal
with prejudice under the district court’s inherent authority—even when
the misconduct is shown only by a preponderance of the evidence); cf.
Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178, 1184, 1186 (2017) (the
concealment of records requested by an opposing litigant during discov-
ery supports sanctions under the trial court’s inherent authority); Martin
v. Redden, 34 F.4th 564, 566–68 (7th Cir. 2022) (per curiam) (a litigant’s sub-
mission of a falsified document to the court supports the severe sanction
of dismissing his case with prejudice).
30                             Nos. 20-2953, 20-3213, & 21-2033

The argument also lacks merit. A district court’s decision not
to hold a hearing is reviewed for abuse of discretion, Elustra
v. Mineo, 595 F.3d 699, 710 (7th Cir. 2010), and a court “has
discretion to deny an evidentiary hearing if the [a]ppellants
cannot show that an evidentiary hearing would have an artic-
ulable bearing on the material issues in dispute.” Sullivan v.
Running Waters Irrigation, Inc., 739 F.3d 354, 359 (7th Cir. 2014).
Moreover, a court does not abuse its discretion by not con-
ducting “an evidentiary hearing that would only address ar-
guments and materials already presented to the court in the
parties’ brieﬁngs.” Royce v. Michael R. Needle P.C., 950 F.3d
481, 487 (7th Cir. 2020) (citations omitted) (making this obser-
vation in the context of a challenge to the appropriate amount
of fees).
    REXA did not request an evidentiary hearing in the dis-
trict court, and it has not explained how a hearing would have
aﬀected the court’s assessment of the dispute. The parties’
contentions on REXA’s discovery misconduct were presented
in their summary judgment briefs. REXA thus cannot use the
lack of an evidentiary hearing to overturn the ﬁnding of liti-
gation misconduct on appeal.
    Though the district court had a sound basis to ﬁnd litiga-
tion misconduct, we agree with REXA that its use of “REXA”
to refer to Koso, in pleadings and other litigation ﬁlings, is in-
suﬃcient to support that ﬁnding. As discussed in Section
III.A, we decline to hold that the diﬀerences between these
two corporate entities are dispositive of REXA’s claim against
Chester for breach of an implied-in-fact contractual obliga-
tion. Unlike the district court, we are not convinced that
REXA’s use of more precise nomenclature would have obvi-
ated the need for this lawsuit to proceed through discovery.
Nos. 20-2953, 20-3213, & 21-2033                              31

REXA’s manipulation of documents and attempts to mislead
Chester at his deposition, rather than the use of “REXA” as
purported shorthand for “Koso,” is suﬃcient to support the
district court’s ﬁnding of litigation misconduct and sanctions.
                               B
    Last, we consider whether the district court abused its dis-
cretion in awarding the full amount of the attorneys’ fees that
Chester and MEA requested, which totaled approximately
$2.357 million. Attorneys’ fees that are imposed as a sanction
pursuant to a trial court’s inherent authority “may go no fur-
ther than to redress the wronged party for losses sustained,”
and the court “may not impose an additional amount as pun-
ishment for the sanctioned party’s misbehavior.” Goodyear
Tire & Rubber Co. v. Haeger, 137 S. Ct. at 1186 (internal quota-
tion marks and citations omitted). We review the court’s
award of fees for reasonableness. See Hunt v. Moore Bros., Inc.,
861 F.3d 655, 661 (7th Cir. 2017); Rexam Beverage Can Co. v. Bol-
ger, 620 F.3d 718, 738 (7th Cir. 2010).
    In examining fee awards, we apply a “highly deferential
abuse of discretion standard.” Pickett v. Sheridan Health Care
Ctr., 664 F.3d 632, 639 (7th Cir. 2011) (quoting Est. of Borst v.
O’Brien, 979 F.2d 511, 514 (7th Cir. 1992)). A district court is
accorded signiﬁcant deference in matters concerning attor-
neys’ fees because (1) the trial court possesses a superior un-
derstanding of the factual matters at issue; (2) that superior
understanding outweighs the need for uniformity in fee
awards; and (3) it is important to avoid, wherever possible,
expending the resources associated with conducting a “sec-
ond major litigation” concerning fees. Id. (citing Spellan v. Bd.
of Educ. for Dist. 111, 59 F.3d 642, 645 (7th Cir. 1995)).
32                              Nos. 20-2953, 20-3213, & 21-2033

     At the same time, our court has acknowledged that limits
exist on a district court’s discretion in calculating and award-
ing attorneys’ fees. Under our case law, a court’s latitude in
this area is “not unlimited” and the court “still bears the re-
sponsibility of justifying its conclusions.” Sottoriva v. Claps,
617 F.3d 971, 975 (7th Cir. 2010). The court’s explanation for
the amount of fees it awards “may be concise … but it must
still be an explanation—that is, a rendering of reasons in sup-
port of a judgment—rather than a mere conclusory state-
ment.” Id. at 976 (citation omitted).
    “When substantial fees are at stake, the district court must
calculate the award with greater precision.” Schlacher v. L.
Oﬀs. of Phillip J. Rotche & Assocs., P.C., 574 F.3d 852, 857 (7th
Cir. 2009) (citing Vukadinovich v. McCarthy, 59 F.3d 58, 60 (7th
Cir. 1995)). Requiring a greater degree of formality in cases
where the stakes are higher “is a general principle of the law”
that applies to attorneys’ fees. Vukadinovich, 59 F.3d at 60. In a
sizable case such as this, the stakes involved in calculating
and awarding attorneys’ fees are higher than usual, and so is
the corresponding burden on the trial court to wade through
the details of the fee application. In re Cont’l Ill. Sec. Litig., 962
F.2d 566, 570 (7th Cir. 1992).
   REXA made numerous objections to the fees claimed by
Chester and MEA. The district court summarily overruled
each of these objections and entered judgment for the defend-
ants in the full amount of attorneys’ fees and costs they had
requested—$2,357,071.12. We consider the district court’s ex-
planation, given the substantial sum of fees at issue.
   In its opposition to Chester and MEA’s fee petition, REXA
objected to what it categorized as the following groups of bill-
ing entries:
Nos. 20-2953, 20-3213, & 21-2033                             33

       •   Time spent performing duplicative tasks;
       •   Time spent preparing and ﬁling unneces-
           sary motions;
       •   Time spent conducting redactions of conﬁ-
           dential information;
       •   Billing entries containing vague narrative
           descriptions; and
       •   Billing entries reﬂecting excessive time
           billed by partners for tasks that associates
           could have performed.
The district court did not address any of these speciﬁc objec-
tions. Instead, it concluded that any and all time the defend-
ants’ attorneys spent litigating this case “was necessitated by
the unreasonable demands of [REXA’s] counsel in the ﬁrst in-
stance.” Finding that REXA’s attorneys’ fees were equal to or
exceeded those incurred by Chester and MEA, the district
court “reject[ed] both [REXA’s] arguments and its calculus.”
    Based on the record before us, we conclude that the district
court did not adequately justify its decisions on each of
REXA’s discrete objections to the defendants’ fee petition. See
Sottoriva, 617 F.3d at 976. Given the sizable fee award, it was
necessary to consider each of these objections. So, too, was an
examination required of the reasonableness of the hours that
defense counsel expended—and the dollar amounts
claimed—for defending against the lawsuit at each stage of
the case.
    Setting aside whether the district court’s explanation
might have been suﬃcient to support a small or moderately
sized fee award, it is not an adequate basis on which to sustain
34                            Nos. 20-2953, 20-3213, & 21-2033

the substantial sum of fees the court awarded. Cf. Schlacher,
574 F.3d at 857–59 (aﬃrming the suﬃciency of the district
court’s explanation for awarding $6,500 of the $12,495 in fees
the plaintiﬀs had sought, while noting that “greater detailed
ﬁndings in calculating the fee award might have been re-
quired in a higher-stakes case”). Because Chester and MEA
petitioned the district court for more than $2 million in attor-
neys’ fees, it was incumbent on the court to make speciﬁc ﬁnd-
ings about each of REXA’s objections to the fee petition.
    For instance, the court should have addressed REXA’s
contentions that Chester and MEA improperly petitioned for
fees associated with time their attorneys spent performing du-
plicative tasks and preparing unnecessary motions. See id. at
858 (“[O]verstaﬃng cases ineﬃciently is common, and district
courts are therefore encouraged to scrutinize fee petitions for
duplicative billing when multiple lawyers seek fees.”). Like-
wise, REXA’s objection that Chester and MEA sought reim-
bursement at partner rates for associate-level tasks warranted
the trial court’s review. The court’s orders do not disclose any
such analysis, so we cannot determine whether, or to what
extent, it considered those speciﬁc objections. We hold there-
fore that “the district court’s ruling was not suﬃciently ex-
plained.” Sottoriva, 617 F.3d at 976. A remand is necessary so
that the court may give a more fulsome explanation.
    On remand, the district court should keep in mind that it
may award fees pursuant to its inherent authority to sanction
misconduct in an amount suﬃcient to compensate the de-
fendants for the losses they sustained as a result of REXA’s
manipulation of documents and its attempts to mislead Ches-
ter. See Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. at 1186.
When engaging in this analysis, the court should consider
Nos. 20-2953, 20-3213, & 21-2033                                  35

each objection listed in the parties’ joint statement on the fee
petition. Although the court “need not undertake a line-by-
line inquiry” of Chester and MEA’s billing statements, Nichols
v. Ill. Dep’t of Transp., 4 F.4th 437, 444 (7th Cir. 2021), it should
review representative billing entries related to each speciﬁc
objection made by REXA. Oral or written ﬁndings, as to each
objection, will assist in this task. Based on its analysis of those
representative entries, the court may reach a conclusion as to
whether any portion of the requested fees is excessive. If the
fees are excessive in any respect, such as because the attorneys
engaged in overlapping work that was ineﬃcient, a reduction
in fees is warranted. See Schlacher, 574 F.3d at 858–59. Should
the district court conclude a reduction in the fee award is war-
ranted, it should explain its choice to apply a discount in that
amount.
    Our decision today does not mean that awarding $2.357
million in attorneys’ fees—or awarding the full amount re-
quested by the prevailing party when a large sum is at stake—
is necessarily an abuse of discretion, regardless of context. Ra-
ther, we conclude that more explanation to support the ruling
on fees is required here. The court must address what amount
of fees are traceable to the litigation misconduct, and it may
not impose an additional amount as punishment. Haeger, 137
S. Ct. at 1186.
                                 V
    For these reasons, we AFFIRM the district court’s grant of
summary judgment to Chester and MEA on REXA’s claim for
misappropriation of trade secrets and to Chester on REXA’s
claim for breach of an implied-in-fact contract. The portion of
the judgment awarding attorneys’ fees to Chester and MEA is
36                       Nos. 20-2953, 20-3213, & 21-2033

VACATED, and this case is REMANDED for proceedings con-
sistent with this opinion.