Case: 1:19-cv-07092 Document #: 212 Filed: 03/15/21 Page 1 of 65 PageID #:14988
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`MEMORANDUM OPINION and ORDER
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`Life Spine, Inc. (“Life Spine”) brings this lawsuit pursuant to the court’s
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`No. 19 CV 7092
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`Magistrate Judge Young B. Kim
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`March 15, 2021
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`LIFE SPINE, INC.,
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`AEGIS SPINE, INC.,
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`v.
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`Plaintiff,
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`Defendant.
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`diversity jurisdiction against Aegis Spine, Inc. (“Aegis”), a former distributor of one
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`of its proprietary surgical devices, alleging that Aegis used its access to Life Spine’s
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`confidential and trade secret information to create knock-off surgical devices that
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`compete directly with Life Spine’s products in violation of its legal obligations.
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`Before this court is Life Spine’s motion for a preliminary injunction, in which it
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`seeks an order preventing Aegis from developing, manufacturing, marketing,
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`distributing, or selling its competing line of surgical devices pending trial. (R. 122.)
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`For the following reasons, the motion is granted:
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`Procedural History
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`Life Spine brought this action on October 28, 2019, and six weeks later the
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`parties consented to this court’s jurisdiction. See 28 U.S.C. § 636(c); (R. 1; R. 43).
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`Shortly thereafter Life Spine filed its amended complaint, alleging that Aegis had
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`breached three separate contracts, violated federal and state trade secrets laws,
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`breached its fiduciary duties, engaged in acts of fraud and misrepresentation, and
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`committed conversion. Life Spine also seeks a declaratory judgment holding that
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`Aegis’s line of competing surgical devices belongs to Life Spine. (R. 45.) Aegis
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`moved to dismiss seven of the amended complaint’s thirteen counts. (R. 46.)
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`On March 17, 2020, this court granted Aegis’s motion to dismiss in part,
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`dismissing two counts alleging breach of the parties’ Loaner and Confidentiality
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`Agreements, after concluding that the parties’ subsequent Distribution and Billing
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`Agreement (“DBA”) replaced those agreements. (R. 70, Mem. Op. at 6-10.) The
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`court also limited the scope of Counts VI (fraudulent misrepresentation) and VIII
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`(fraudulent inducement) to the five alleged fraudulent statements identified in the
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`opinion. (Id. at 18-21.) In all other respects, the court denied the motion to dismiss.
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`After engaging in several months of preliminary injunction discovery, Life
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`Spine filed its motion for a preliminary injunction on August 28, 2020. (R. 114.)
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`After the motion was fully briefed, the court held a nine-day hearing ending on
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`November 3, 2020, at which eleven witnesses, including one expert witness,
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`testified.1 The parties also submitted numerous exhibits in support of their
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`positions, including designated deposition excerpts from an additional four
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`witnesses, as well as dueling, post-hearing proposed findings of fact and conclusions
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`of law. Based on the testimony and documentary evidence presented at the
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`hearing, the court makes the following findings:
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`1 Because of travel and facility restrictions related to the COVID-19 pandemic, the
`hearing took place by video.
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`2
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`Facts
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`“When a motion for preliminary injunction is presented to a court in advance
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`of hearing on the merits, [the court] is called upon to exercise its discretion upon the
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`basis of a series of estimates.” Arjo, Inc. v. Handicare USA, Inc., No. 18 CV 2554,
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`2018 WL 5298527, at *1 (N.D. Ill. Oct. 25, 2018) (internal quotation and citation
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`omitted). The court’s factual findings at this stage are inherently preliminary and
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`may be modified after a trial on the merits. Id.; see Tech. Pub. Co. v. Lebhar-
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`Friedman, Inc., 729 F.2d 1136, 1139 (7th Cir. 1984) (“A factual finding made in
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`connection with a preliminary injunction is not binding on the court in the trial on
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`the merits[.]”). With that in mind, the court provides the following factual
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`recitation pursuant to Federal Rules of Civil Procedure 52(a)(2) and 65. This
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`statement of facts is based on the testimony and evidence presented at the hearing,
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`and where necessary, the court’s assessment of witnesses’ credibility.
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`A.
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`Life Spine’s ProLift Expandable Cage
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`Life Spine is a company based in Huntley, Illinois, that designs, develops,
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`and sells medical devices that are surgically implanted for the treatment of spine
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`disorders. (Tr.2 54-56.) Life Spine’s best-selling device is the ProLift Expandable
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`Spacer System (“ProLift”), which is made up of a small implant―more commonly
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`referred to as a “cage” in the industry―and an installer. (Tr. 55, 60-61, 64-66.) The
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`ProLift cage is designed to be inserted into the spine of patients suffering from
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`2 All citations to “Tr.” in this opinion refer to the transcript from the preliminary
`injunction hearing or designated deposition transcripts that were entered into
`evidence. “PX” refers to Plaintiff’s exhibits and “DX” refers to Defendant’s exhibits.
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`3
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`degenerative disc disease. The ProLift installer attaches to the ProLift cage and is
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`used to insert the cage into the patient’s spine and then expand the cage to restore
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`spinal disk height. (Tr. 64-66.) Expandable cages like the ProLift represent a
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`significant advancement from static cages, which maintain a fixed height, because
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`expandable cages reduce the amount of trauma in a patient’s tissue, shorten the
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`duration of surgery, and reduce the patient’s recovery time. (Tr. 61-64, 262.)
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`Life Spine spent more than three years designing and developing the ProLift,
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`beginning in late 2012 and ultimately receiving 510(k) clearance from the FDA to
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`market the cage in March 2016.3 (Tr. 69, 88, 568-69; DX 14.) The development
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`process took more than three years from design to regulatory clearance because
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`expandable cages are complex devices comprised of multiple small components and
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`requiring precise engineering to ensure that they maintain their strength and
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`integrity over the course of potentially decades of intense spinal pressure. (Tr. 69-
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`70, 1184.) Life Spine engineers started the ProLift design process by studying
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`publicly available information about existing expandable cages through the
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`internet. Life Spine engineers also studied existing patents, which typically include
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`drawings showing a device’s features and components. (Tr. 555, 558-59.) Several of
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`the patents for expandable cages show devices that feature an upper endplate,
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`lower endplate, base ramp, nose ramp, and screw that is used to expand the cage,
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`3 Before a company can introduce a new medical device into interstate commerce it
`must seek clearance from the FDA. The 510(k)-approval process allows a company
`to gain that clearance by showing that its device is “substantially equivalent” to an
`already-approved predicate device out in the market. See 21 U.S.C. § 360(k);
`Medtronic, Inc. v. Lohr, 518 U.S. 470, 478 (1996).
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`4
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`and Life Spine included these same features in its design of the ProLift. (Tr. 557-
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`58, 561-62.)
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`After reviewing public information about existing expandable cages, Life
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`Spine’s engineering team embarked on a process of trial and error to ensure the
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`device could meet FDA-required performance standards. (Tr. 581-82; DX 86 at
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`17998.) The process resulted in multiple redesigns after failed testing to adjust the
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`device’s components and subcomponents, sometimes by mere
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`fractions of
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`millimeters, to ensure those components interacted in a way that produced a high-
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`quality device that could meet FDA testing requirements. (Tr. 627-28, 1476-77.)
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`The design history file4 for the ProLift includes about 30 sets of engineering
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`drawings reflecting each modification made to the device over time. (Tr. 626.) In
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`November 2015 Life Spine applied to the FDA for 510(k) approval for the ProLift,
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`listing two predicate devices designed by other companies. (DX 92; DX 93.) The
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`FDA approved its application in March 2016. (DX 14.)
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`Life Spine maintains protections to prevent what it considers to be trade
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`secrets and confidential information related to the ProLift design from being
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`discovered or made public. In particular, Life Spine considers the precise
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`dimensions and measurements of the ProLift components and subcomponents and
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`their interconnectivity to be trade secrets. Those specifications can only be
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`discovered by a third party if that third party has unfettered access to both the
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`ProLift and specialized measurement equipment. (Tr. 159-60, 1449, 1453-54, 1460-
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`4 A design history file captures and categorizes all changes made to a device over
`the course of the development process. (Tr. 626.)
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`5
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`62.) To protect what it considers to be confidential and trade secret information,
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`before allowing any third party to have prolonged or unsupervised access to the
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`ProLift and before providing a third party with detailed information about the
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`ProLift, Life Spine requires the third party to sign a confidentiality agreement.
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`(Tr. 74, 148, 1111-12.) Although Life Spine displays the ProLift at industry
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`conventions, it allows third parties to hold or interact with the ProLift only while
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`being supervised by a Life Spine employee. (Tr. 923-27.) The precise dimensions of
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`the ProLift’s components and subcomponents are not included in Life Spine’s
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`marketing materials. (Tr. 1106, 1465-66.)
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`Nor are the precise dimensions of ProLift’s components and subcomponents
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`discernible from patent materials. (Tr. 619-20, 1462.) Life Spine received a patent
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`for the original ProLift from the United States Patent and Trademark Office
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`(“USPTO”) in October 2017. (DX 32.) Life Spine’s patent includes drawings and
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`figures that show the components of the ProLift, including its endplates, wedges,
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`and dovetailed grooves and how they interact. (Tr. 613-14; DX 32.) However, the
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`patent does not include the precise dimensions or measurements of those
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`components. (Tr. 619-20, 1462.)
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`B.
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`Aegis’s Relationship with L&K Biomed, Inc.
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`Aegis is a medical device company based in Englewood, Colorado. For more
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`than 10 years, Aegis has marketed and sold medical devices to treat spinal
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`conditions. (Tr. 254-55, 1539.) Aegis currently sells an expandable cage called the
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`“AccelFix-XT,” which is the focus of this litigation, along with devices called
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`6
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`“CastleLoc,” “PathLoc,” “PEEK” and other static cages, and various plates, screws,
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`and rods. (Tr. 1376-77, 1538-39.)
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`Aegis is a subsidiary of L&K Biomed, Inc. (“L&K”), a South Korea-based
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`medical device company. L&K is a designer, developer, and manufacturer of
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`devices used in spine surgeries and is a direct competitor of Life Spine in the
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`medical device market. (Tr. 154, 1642.) L&K is also the majority shareholder of
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`Aegis’s stock and Aegis employees provide information to L&K on its request.
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`(Tr. 239; Cha Dep. Tr. 74.) Several current and former Aegis employees have
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`worked for L&K, including: Aegis’s current CEO, Tony Ahn; Aegis’s current
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`Director of Research and Development (“R&D”), Jack Lee; and Aegis’s former
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`Marketing Director, Alex Kang, who is now employed at L&K. (Tr. 239-40.)
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`C.
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`L&K’s Decision to Develop an Expandable Cage
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`In April 2016 Aegis sold static cages on behalf of L&K but did not have an
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`expandable cage product in its inventory to offer to customers. Around that time
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`Aegis informed L&K that it was important to develop an expandable cage product
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`because the market for it was rapidly expanding in the United States. (Tr. 259-60;
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`PX 253-1A at L&K 1754.) L&K agreed that it needed to develop an expandable
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`cage to replace its static PEEK cage, because expandable cages could command
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`higher prices than static cages. (Tr. 1618-19; PX 253-1A at L&K 1758.) L&K
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`acknowledged that its “lack of information on expandable cage” posed a significant
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`challenge to its design process, as did its lack of experience with expandable cages.
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`(Tr. 1620-21; PX 253-1A at L&K 1761.) L&K opened a design history file and began
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`7
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`a patent review process headed by Sang-Soo Lee, a patent attorney and engineer
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`employed by L&K in South Korea. (PX 253-2A.)
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`When L&K initiated the design process for its expandable cage, Aegis’s
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`current R&D Director, Jack Lee, was employed as L&K’s R&D Director. In his
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`R&D role for L&K, Jack Lee approved Aegis’s request to have L&K develop an
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`expandable cage, approved the development plan, and served as the Project
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`Manager for the expandable cage development. (Tr. 645, 653; PX 253-2A at L&K
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`1773-74.) In the design history file L&K noted that it expected the process from
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`design of the expandable cage through regulatory clearance to take more than two
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`years and projected a launch date for the product in the second half of 2018.
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`(PX 253-2A at L&K 1771-72.) Despite this projection, there was a delay in the
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`project from spring 2016 through spring 2018. (Tr. 1622.)
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`D.
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`Aegis’s Relationship with Life Spine
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`On October 16, 2017, Aegis CEO Ahn met with L&K’s chairman at Aegis’s
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`Colorado office. The two discussed plans to develop an expandable cage and Ahn
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`reiterated the importance of having an expandable cage to sell in the United States,
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`where the market for such devices continued to grow. (Tr. 254-56, 267.) The
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`following day, Alex Kang, Aegis’s then Marketing Director, contacted Mariusz
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`Knap, Life Spine’s Vice President of Marketing and Business Development.
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`(Tr. 131-32; PX 13.) They agreed to meet in person at the North American Spine
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`Society (“NASS”) conference, and at that meeting Kang proposed to Knap that Aegis
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`serve as a distributor of the ProLift. (Tr. 131-32, 251-52.) Kang represented to
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`8
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`Knap that Aegis was interested in a long-term distribution relationship with Life
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`Spine. (Tr. 138.)
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`Two months later Kang asked Knap to send him a ProLift device for
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`demonstration purposes, explaining that he had surgeon customers who wanted to
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`examine it. (Tr. 132; PX 4.) Knap informed Kang that before that could happen,
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`and before Life Spine would share detailed information about the ProLift, Aegis
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`would have to sign Confidentiality and Loaner Agreements, both of which are
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`standard in the expandable cage industry.5 (Tr. 132; Kang Dep. Tr. 79-80.) The
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`Confidentiality Agreement included language allowing Aegis to use Life Spine’s
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`confidential information only “in furtherance of a business relationship or
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`transaction between” Life Spine and Aegis and that Aegis could not share that
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`confidential information with third parties. (PX 5 §§ 1-2.) The Loaner Agreement
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`prohibited Aegis from showing the device to anyone who intended to use it “for
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`purposes of reverse engineering, copying, or other activities” in order to compete
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`with Life Spine. (PX 6 § 3(c).) Kang signed these agreements on Aegis’s behalf.
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`(Tr. 136-38.)
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`After Kang signed the Confidentiality and Loaner Agreements, Life Spine
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`provided Aegis with a ProLift set that included the expandable cage and installer,
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`and Aegis used that set in a demonstration for a surgeon. (Tr. 277-78.) Kang asked
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`5 Like Life Spine, Aegis requires third parties to sign similar agreements before it
`allows others access to its devices, and its employees have acknowledged that it
`does so because it would be irreparably harmed if others were to gain access to its
`confidential information and use it to steal trade secrets or reverse engineer its
`products. (Tr. 510; Cha Dep. Tr. 53.)
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`9
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`Knap not to attend the demonstration. (Tr. 277; PX 4 at Aegis 3246-47.) During
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`the demonstration Kang told the surgeon that Aegis and L&K were working
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`together to develop an expandable cage and asked for his assistance with the
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`project. The surgeon agreed to help. (Tr. 279.)
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`On January 25, 2018, Life Spine and Aegis entered into a DBA, authorizing
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`Aegis to solicit sales of the ProLift from a list of surgeons, including the surgeon
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`who attended Kang’s demonstration and an additional surgeon who had agreed to
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`help Aegis and L&K in developing an expandable cage to compete with the ProLift.
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`(Tr. 267, 278-79; PX 1, DBA § 2(a).) At the time the parties entered into the DBA,
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`Aegis did not disclose to Life Spine that it was assisting L&K in its efforts to
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`develop a competing expandable cage or that it had recruited surgeons from its
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`customer list under the DBA to contribute to L&K’s expandable cage development
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`process. (Kang Dep. Tr. 43-44.)
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`Under the terms of the DBA, Aegis made numerous promises to Life Spine in
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`exchange for the right to distribute the ProLift. For example, in the DBA’s
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`inventory clause, Aegis agreed that it would “maintain custody and/or control of
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`each” ProLift device that Life Spine provided it and that Aegis would serve in a
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`“fiduciary capacity” and as “trustee” of Life Spine’s property rights in the ProLift.
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`(PX 1, DBA § 3(a).) Aegis further agreed not to “attempt” and to “prevent its
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`employees and contractors from attempting” to: discover the “ideas” or “design”
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`elements underlying the ProLift; “create derivative works” from or “reverse
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`10
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`engineer” the ProLift; or “copy the design, knowledge, functionality, or otherwise” of
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`the ProLift “in any way.” (Id. § 8(b).)
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`The DBA also includes protections for Life Spine’s confidential information.
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`In describing the scope of protected “confidential information,” the DBA makes clear
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`that such information:
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`may include but is not limited to copyright, trade secrets or other
`proprietary information, techniques, processes, schematics, software
`source documents, pricing and discount lists and schedules, customer
`lists, contract terms, customer leads, financial information, sales and
`marketing plans, and information regarding the responsibilities, skills
`and compensation of employees.
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`(Id. § 7(a).) Aegis agreed not to use Life Spine’s confidential information “for any
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`purpose other than required for performance” of its obligations under the DBA.
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`(Id.) Aegis further agreed not to make Life Spine’s confidential information
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`available to any third party without Life Spine’s prior written consent. (Id. § 7(b).)
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`The DBA also includes a provision requiring Aegis to ensure that its employees
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`understood these obligations and to “take appropriate action by instruction,
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`agreement, or otherwise with [its] employees to satisfy its obligations under this
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`Agreement with respect to the use, copying, modification, protection, and security of
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`Confidential Information.” (Id.) Further, the DBA includes a survival clause
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`pertaining to the obligations described above, expressly stating that these duties
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`“will survive the expiration or termination of this Agreement.” (Id. § 15(h).)
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`Despite expressly agreeing that Aegis’s employees understood the obligations
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`set forth in the DBA, Kang did not give Ahn a copy of the DBA or explain to him his
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`obligations under the agreement. (Tr. 511-12.) Nor did anyone explain to Jack Lee,
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`11
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`the former L&K’s R&D Director who eventually moved to the United States to serve
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`as Aegis’s R&D Director, the legal obligations that the DBA imposed on Aegis, and
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`he testified that he never read the agreement. (Tr. 656-57.)
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`E.
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`The Expandable Cage Kickoff Meeting
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`Shortly after Aegis and Life Spine entered into the DBA, Jack Lee moved
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`from South Korea to Colorado to serve as Aegis’s R&D Director. (Tr. 290, 638.)
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`Sang-Soo Lee, who had worked under Jack Lee during his tenure at L&K, became
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`L&K’s new R&D Director. (Tr. 663.) After Jack Lee arrived in Colorado, he had a
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`video conference with Sang-Soo Lee to prepare for an upcoming meeting about the
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`expandable cage development and Sang-Soo Lee gave Jack Lee materials to use
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`during the meeting. (Tr. 663-64.) Those materials included patents for several
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`expandable cages, including the ProLift patent. (PX 31.)
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`On March 17 and 18, 2018, Aegis held an “Expandable Cage Kickoff Meeting”
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`at a hotel outside Denver. (Tr. 289, 662.) Present at the meeting were Aegis
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`employees and three surgeons who had agreed to assist Aegis in developing an
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`expandable cage (“the surgeon consultants”). (Tr. 267-68, 294.) During the meeting
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`Jack Lee made presentations on several topics related to the plan to develop an
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`expandable cage―what is now sold by Aegis as AccelFix-XT―that would compete
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`with the ProLift. (Tr. 289, 292, 662.) Aegis brought a ProLift set to the kickoff
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`meeting for the surgeon consultants to examine, and they in fact examined the set.
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`(Tr. 300-01; Cha Dep. Tr. 121-22.) Aegis identified the ProLift as a competing
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`device to its future expandable cage.
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`12
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`F.
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`Aegis’s Disclosure of ProLift Information to L&K
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`After Aegis signed the DBA, it asked Life Spine to design a custom installer
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`for Aegis’s customers that included a custom feature. Life Spine’s Director of
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`Marketing, Jim Fried, sent Kang at Aegis an email including a picture of and
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`details about the custom installer. (PX 71.) Kang forwarded the email to Sang-Soo
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`Lee at L&K, despite knowing that Life Spine considered the information to be
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`confidential. (Kang Dep. Tr. 136; PX 71.) In that email to Sang-Soo Lee, Kang said
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`he would send L&K another email “after checking all the . . . specifications” of the
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`custom installer. (PX 71.) Sometime after sending this email Kang left Aegis and
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`went to work for L&K in South Korea, but he continued to use his Aegis email
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`address when corresponding with Life Spine about the ProLift. (Kang Dep. Tr. 141;
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`PX 88.) He also blind-copied Sang-Soo Lee at L&K when corresponding with Life
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`Spine about the ProLift using his Aegis email address. (Tr. 1645; PX 88.)
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`Aegis also shared with L&K ProLift information it obtained from the surgeon
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`consultants it hired to assist Aegis and L&K in developing the AccelFix-XT. On the
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`first day of the Expandable Cage Kickoff Meeting, the surgeon consultants entered
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`into agreements that allowed them to consult with both Aegis and L&K on the
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`design process for the AccelFix-XT. (Tr. 304-05; PX 32-35.) The surgeon
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`consultants purchased and used the ProLift in surgeries, then provided feedback to
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`Aegis and L&K about the ProLift’s surgical performance. (Tr. 683-84, 721-23.)
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`Aegis and L&K incorporated that feedback into their design process. For example,
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`after assessing how the ProLift performs during surgical implantation, the surgeon
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`consultants recommended changing the insertion shape and teeth angle of the
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`AccelFix-XT.
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` (Tr. 678-83.)
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` Jack Lee forwarded that input to L&K and
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`recommended that it incorporate the advice into future designs. (PX 60A; PX 60B.)
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`He also sought the surgeon consultants’ feedback on which instruments to include
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`in the AccelFix-XT instrument set, and they provided their opinions based on their
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`use of ProLift instrument sets during surgeries. (Tr. 707-10; PX 66; PX 68.) One
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`surgeon consultant shared with Aegis his thoughts on the ProLift’s torque
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`technique and gave suggestions for re-designing the AccelFix-XT’s installer based
`
`on his experience using the ProLift. (Tr. 720-23; PX 58; PX 90.) Similarly, another
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`surgeon consultant recommended modifying the AccelFix-XT installer to solve an
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`issue he was having with the ProLift installer. (PX 120.) Aegis shared this
`
`feedback with L&K. Aegis considers these two surgeon consultants to be key
`
`designers of the AccelFix-XT and both consultants are identified as its inventors in
`
`the design patent application filed with the USPTO. (Inzitari Dep. Tr. 173-74,
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`Tr. 538; PX 168.)
`
`G.
`
`Aegis’s Shipment of the ProLift Devices to L&K
`
`
`
`Aegis CEO Ahn admits that in May 2018 he sent a ProLift cage to L&K in
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`South Korea, and in June 2018 he sent L&K both a ProLift cage and a ProLift
`
`installer. (Tr. 311-12.) He did so at the request of Sang-Soo Lee, who said that
`
`seeing the devices would be helpful to L&K’s development of the AccelFix-XT.
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`(Tr. 314, 1662.) Sang-Soo Lee had previously only seen images of the expandable
`
`cages on the internet, and he wanted to see the “real product.” (Tr. 1597.) Ahn
`
`
`
`14
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`

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`Case: 1:19-cv-07092 Document #: 212 Filed: 03/15/21 Page 15 of 65 PageID #:15002
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`neither sought Life Spine’s permission to share the ProLift with L&K nor informed
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`Life Spine that he had done so after the fact. (Tr. 312.)
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`
`
`The hearing evidence is murky regarding what happened to the ProLift cages
`
`and installer that Ahn sent to L&K. Sang-Soo Lee testified that he did not see the
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`ProLift cage that Ahn sent in May 2018, and that he only learned about the device’s
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`arrival “later.” (Tr. 1660.) As for the ProLift cage and installer Ahn sent in June
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`2018, Sang-Soo Lee testified that after requesting this shipment he decided not to
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`open the package box when it arrived, because he did not want L&K to have to pay
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`for it. (Tr. 1597-98.) He testified that L&K returned the unopened box with the
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`cage inside, but he did not identify to whom he gave the box, could not say whether
`
`anyone else opened the box after he handed it off to someone else at L&K, and could
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`not produce shipping records showing that the box was in fact returned to Aegis.
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`(Tr. 1597, 1599, 1663-64.) As for the installer, Sang-Soo Lee testified that he “saw”
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`the ProLift installer but did not measure, test, or photograph it, and that he gave it
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`to L&K’s R&D department to be returned to Aegis. (Tr. 1599.) No other witnesses
`
`testified at the hearing as to what happened to the ProLift cages and installer Aegis
`
`sent to L&K.
`
`
`
`In August 2019 Aegis informed Life Spine’s corporate compliance officer and
`
`Manager of Contracting Operations, Jenn Jesse, for the first time that it could not
`
`return one of the consigned ProLift cages because, according to Aegis, it had
`
`received an empty box for that cage. (Tr. 891, 911-12.) This raised a red flag for
`
`Jesse, who in the course of her 10 years at Life Spine had never heard of a
`
`
`
`15
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`

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`Case: 1:19-cv-07092 Document #: 212 Filed: 03/15/21 Page 16 of 65 PageID #:15003
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`distributor claiming that Life Spine shipped an empty product box. (Tr. 915-16.)
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`Jesse asked to see a photo of the empty box, and what Aegis sent did not alleviate
`
`her concern. (Tr. 914-15.) The photo showed that someone had affixed a second
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`anti-tampering sticker over the box’s original anti-tampering sticker, which
`
`indicated to Jesse that someone was trying to hide the fact that the box had been
`
`opened. (Id.; PX 147.)
`
`
`
`Aegis also failed to return several ProLift installers that remain in its
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`possession. (Tr. 910-11; PX 235.) After receiving the ProLift installer from Aegis in
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`June 2018, Sang-Soo Lee emailed Jack Lee to inform him that L&K was copying the
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`basic design of the ProLift installer for the AccelFix-XT. (PX 65 at Aegis 16658.)
`
`Materials from a meeting a few months later show that L&K designed the AccelFix-
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`XT installer to allow “compatibility with” the ProLift. (PX 76 at Aegis 11740.)
`
`H.
`
`L&K’s Possession of ProLift Testing Data
`
`
`
`Aegis’s witnesses also struggled to explain how L&K came to be in possession
`
`of ProLift testing data. In order to receive clearance from the FDA to sell an
`
`expandable cage, the applicant company must meet the FDA’s rigorous testing
`
`requirements for both static shear and dynamic shear compression. (Tr. 595, 631-
`
`32, 1476-77.) A static shear compression test measures how much load the device
`
`can withstand on a one-time basis before breaking or deforming, while a dynamic
`
`shear compression test determines whether the device can withstand 5 million
`
`cycles of multiple load forces in repetition without breaking. (Tr. 1478-79.) Life
`
`Spine performed shear compression tests on multiple ProLift specimens during its
`
`
`
`16
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`

`

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`design process and submitted the results to the FDA. (Tr. 1485.) Life Spine
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`considers the results of its shear compression testing to be confidential trade secrets
`
`because the FDA does not disclose or publish test results submitted in connection
`
`with a 510(k) application. (Tr. 1485.) If a competitor were to access Life Spine’s
`
`shear compression testing data, it would allow the competitor to short-cut the trial-
`
`and-error testing process by giving it a starting load number that it knows will
`
`satisfy the FDA. (Tr. 1486.) Life Spine never shared its testing data publicly or
`
`with Aegis. (Tr. 625, 1485.)
`
`
`
`Despite never having received ProLift testing data from Life Spine, Aegis and
`
`L&K somehow obtained that information. On October 4, 2018, L&K and Aegis held
`
`a meeting to discuss progress on the AccelFix-XT’s development. The materials
`
`from the meeting include a reference to the result a shear compression test for the
`
`ProLift. (PX 74 at 11718.) The result reflected in that document is similar to the
`
`static shear compression test result that Life Spine achieved for the ProLift. No
`
`witness for Aegis explained where the number for the ProLift test result came from
`
`or how it came to be included in the meeting materials. Sang-Soo Lee testified that
`
`he did not know “how that information came about.” (Tr. 1668.) Life Spine also
`
`submitted evidence that an employee of L&K’s R&D team sent an email
`
`representing that L&K kept its “ProLift Data” and its “AccelFix test data” in
`
`separate folders on its computer system, but Aegis never produced this data or the
`
`folders referenced in the email in discovery. (PX 101 at L&K 388.)
`
`
`
`17
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`Case: 1:19-cv-07092 Document #: 212 Filed: 03/15/21 Page 18 of 65 PageID #:15005
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`I.
`
`
`
`AccelFix-XT’s Design History File
`
`The design history file L&K maintained for the AccelFix-XT reflects that in
`
`late 2018 L&K executives were disappointed with its prototype’s repeated testing
`
`failures. L&K had been working with an outside contractor to design and develop
`
`its expandable cage, but on December 18, 2018, it decided to bring the design
`
`process in-house and start from scratch. (Tr. 1672-75, 1198; PX 253-4A at L&K
`
`1940-42.) Three months later, in March 2019 L&K submitted its application to the
`
`FDA for 510(k) approval for the AccelFix-XT cage. (Tr. 1675-76.) Although the
`
`design history file for a medical device is supposed to record each step taken in the
`
`design process, documentation in the AccelFix-XT design history file from the period
`
`from January 2019 through April 2019 is sparse. (Tr. 1199-1202.) In fact, L&K did
`
`not add a single document to the design history file between January 28, 2019, and
`
`April 17, 2019. (Tr. 1670.)
`
`
`
`During that time, L&K redesigned the AccelFix-XT to change a square
`
`component to a dovetail feature in such a way that its key measurements are
`
`essentially identical to the ProLift dovetail feature. (Tr. 1173.) In fact, the
`
`redesigned dovetail connection matches the ProLift dovetail connection down to a
`
`fraction of a millimeter. (Id.) (Tr. 1173.) Put another way, the measurements of
`
`the two devices’ dovetail radii differ by a size less than