No Double Disgorgement: Third Circuit Bars Duplicate Profit Awards Across Overlapping Trade‑Secret and Unfair‑Competition Claims; Clarifies Rule 50 Forfeiture and “Use” Proof Under the DTSA

Introduction

In Harbor Business Compliance Corp v. Firstbase IO Inc, a precedential decision, the Third Circuit confronted a modern trade-secrets dispute born from a short-lived white‑label partnership to build and scale nationwide registered-agent and compliance software. After the relationship soured and Firstbase took the product in-house, Harbor sued for breach of contract, trade-secret misappropriation under the Defend Trade Secrets Act (DTSA) and Pennsylvania Uniform Trade Secrets Act (PUTSA), and common-law unfair competition.

A jury awarded Harbor over $27 million in compensatory and punitive damages across claims. Post‑trial, Firstbase sought judgment as a matter of law (JMOL), a new trial, and remittitur. The Third Circuit:

• Affirmed the denial of JMOL on trade‑secret misappropriation and unfair competition (holding the evidence of “use” sufficient),
• Held Firstbase forfeited (but did not waive) a Rule 50 sufficiency challenge to the protectability element by failing to raise it with requisite specificity in its Rule 50(a) motion,
• Affirmed the denial of a new trial (both on weight-of-the-evidence and expert testimony issues), and
• Vacated in part for remittitur, ordering a conditional reduction of $11,068,044 to eliminate an impermissible duplicate disgorgement of profits across overlapping tort theories.

The ruling sets important guideposts on four fronts: (1) the nonreviewability of forfeited Rule 50 issues absent exceptional circumstances, (2) what suffices as circumstantial “use” of trade secrets under the DTSA/PUTSA, (3) the treatment of expert testimony foundations under FRE 703/705, and (4) the prohibition on double recovery of disgorged profits across overlapping claims, with a practical roadmap for identifying duplication from the record.

Summary of the Judgment

• Rule 50(a)/(b): Firstbase forfeited its challenge to the sufficiency of the evidence on protectability of trade secrets and on the unfair‑competition claim by failing to specify those grounds in its Rule 50(a) motion; the court declined to reach those fact‑bound arguments under the narrow “exceptional circumstances” exception.
• Trade‑secret “use”: The evidence permitted a reasonable jury to find “use” via circumstantial proof—internal communications indicating intent to leverage Harbor’s materials and an accelerated post‑termination nationwide rollout—constituting “plus factors” beyond mere similarities and defeating a reverse‑engineering defense at the JMOL stage.
• New trial (Rule 59): The verdict was not against the great weight of the evidence; at minimum, the jurisdictional database (with experience‑based annotations) could be found protectable. Any expansion of the expert’s trial testimony was harmless under FRE 703/705 and cured by cross-examination and instruction.
• Remittitur: The jury double-counted disgorgement. It awarded $14,757,399 (100% of Firstbase’s profits) for unfair competition and $11,068,044 (75% of the same profits) for trade-secret misappropriation—a second disgorgement of the same profits. The Third Circuit ordered a conditional remittitur of $11,068,044, the overlapping amount, leaving the maximum recoverable profits at $14,757,399, with Harbor’s option for a new trial limited to trade‑secret damages.

Analysis

Precedents Cited and Their Influence

• Rule 50 standards and specificity:
  • Kars 4 Kids Inc. v. America Can! (3d Cir. 2021) and Lightning Lube, Inc. v. Witco Corp. (3d Cir. 1993) supplied the JMOL standards: JMOL lies only if no reasonable jury could find liability when viewing the record favorably to the verdict.
  • Lightning Lube and Fineman v. Armstrong World Indus., Inc. (3d Cir. 1992) also required that Rule 50(a) motions be sufficiently specific to alert the nonmovant and allow cure; Brokerage Concepts, Inc. v. U.S. Healthcare, Inc. (3d Cir. 1998) assessed specificity against the record’s context, not just text.
  • Dowdell (3d Cir. 2023), Hamer (U.S. 2017), Barna (3d Cir. 2017), Brown v. Philip Morris (3d Cir. 2001), and Bagot (3d Cir. 2005) clarified the waiver/forfeiture divide and the narrow exception for reviewing forfeited issues (pure questions of law or public importance). The court treated Firstbase’s omission as forfeiture, not waiver, and declined review because the challenge was fact‑intensive.
• Trade secrets—definitions and “use”:
  • Oakwood Laboratories LLC v. Thanoo (3d Cir. 2021) framed misappropriation by “use” broadly, including assisting or accelerating development, and endorsed circumstantial evidence of access plus similarity, while requiring plaintiffs to negate independent development where raised.
  • Mallet & Co. v. Lacayo (3d Cir. 2021) confirmed that compilations of public information can be protectable if the unique combination confers competitive value (drawing also on AirFacts, Inc. v. de Amezaga (4th Cir. 2018)), and that the mere possibility of reverse engineering is not a defense; accelerated launch is probative circumstantial evidence.
  • Moore v. Kulicke & Soffa (3d Cir. 2003) reiterated that plaintiffs must overcome asserted independent development to prove “use.”
• Unfair competition:
  • Goebel Brewing Co. v. Esslingers, Inc. (Pa. 1953) and Granite State Ins. v. Aamco Transmissions (3d Cir. 1995) addressed Pennsylvania’s flexible, largely common‑law unfair competition framework, often anchored in “passing off” but extended to commercial torts such as trade-secret misappropriation.
• New trial standards and evidentiary rulings:
  • Greenleaf v. Garlock (3d Cir. 1999); Leonard v. Stemtech Int’l (3d Cir. 2016); Springer v. Henry (3d Cir. 2006); Delli Santi (3d Cir. 1996); and Mihalchak (3d Cir. 1959) furnished the highly deferential standard for weight-of-the‑evidence new trials—reserved for clear miscarriages of justice.
  • Montgomery Ward & Co. v. Duncan (U.S. 1940) recognized that improperly admitted evidence may justify a new trial.
  • FRE 703/705, Stecyk v. Bell Helicopter Textron (3d Cir. 2002), and Hill v. Reederei F. Laeisz (3d Cir. 2006) underscored that experts may rely on (and be examined about) underlying facts; cross‑examination and instructions can cure surprise and render any nondisclosure harmless.
• Remittitur and double recovery:
  • Spence v. Board of Education (3d Cir. 1986), Evans v. Port Authority (3d Cir. 2001), Gumbs v. Pueblo Int’l (3d Cir. 1987), Starceski v. Westinghouse Electric (3d Cir. 1995): remittitur lies where an award is unsupported or excessive; the correct measure is the maximum amount the jury could reasonably award.
  • Fineman (3d Cir. 1992) reiterated that repackaging a single loss under multiple theories does not permit multiple recoveries.
  • SEC v. Teo (3d Cir. 2014) addressed sustaining a general verdict where at least one theory is adequately supported; here, special interrogatories confirmed at least one protectable trade secret, supporting the general verdict.
  • Cortez v. Trans Union, LLC (3d Cir. 2010) required offering a new trial option when a court reduces an award via remittitur.

Legal Reasoning

1) Rule 50 Forfeiture vs. Waiver—Specificity Matters

Firstbase’s Rule 50(a) motion said “insufficient evidence as to all claims,” but developed only two issues: breach‑of‑contract invoicing and lack of misappropriation (focusing on “access” and “substantial similarity”). The court held that did not put Harbor on notice to cure proof on protectability or on unfair competition. Because Firstbase did not intentionally relinquish those arguments, they were forfeited, not waived. The Third Circuit declined review: the arguments were deeply fact‑bound and thus did not fit the narrow exception allowing review of forfeited issues in civil cases.

2) Sufficient Circumstantial Proof of “Use” of Trade Secrets

The court assumed protectability for JMOL purposes (given forfeiture) and examined “use.” Applying Oakwood, it accepted a broad understanding of “use,” including leveraging another’s confidential know‑how to accelerate development. Beyond similarities between Harbor’s materials and Firstbase’s product (which alone might not rule out independent development), the court identified powerful “plus factors”:

• Internal messages contemporaneous with the split, stating that Firstbase had coaxed Harbor to share annual‑deadline data “to build the reminders logic ourselves,” and “the more we can get from them the better” if going independent; and
• Rapid, nationwide expansion shortly after taking the system in‑house, consistent with accelerated development attributable to Harbor’s materials.

These facts, combined with access, allowed a reasonable jury to find “use.” The court rejected the proposition that invoking reverse engineering defeats “use” at JMOL: the possibility of reverse engineering is not a defense; defendants must substantiate independent development, and here, the record permitted the jury to infer otherwise.

3) Unfair Competition Rises and Falls with the Predicate Tort

Because the unfair‑competition claim was predicated on trade‑secret misappropriation and the court affirmed liability on that tort, the unfair‑competition verdict also stood.

4) New Trial—No Miscarriage of Justice; Expert Testimony Harmless

On weight of the evidence, the court found no miscarriage of justice. Even setting aside other asserted secrets, the “jurisdictional database”—a curated, updated, experience‑infused compilation replete with practical filing tips—could reasonably be found to have independent economic value not readily ascertainable by proper means, aligning with Mallet’s “compilation” doctrine. A special interrogatory naming that database as a misappropriated secret anchored the general verdict.

Regarding expert testimony, the district court allowed Dr. Valerdi to opine under FRE 703/705, and any expansion beyond his report/deposition was harmless: the jury was instructed on the video, Firstbase cross‑examined extensively, and the defense expert offered counter‑opinions. Those safeguards mitigated surprise and obviated prejudice.

5) Remittitur—No Double Disgorgement of the Same Profits

The centerpiece of the opinion is its damages ruling. Harbor’s expert calculated Firstbase’s total profits from the challenged conduct as $14,757,399 and presented the same disgorgement figure for both trade‑secret and unfair‑competition claims. The jury then awarded:

• $14,757,399 on unfair competition—100% of profits, and
• $11,068,044 on trade secrets—exactly 75% of the same profits (mirroring the jury’s finding that 6 of 8 identified trade secrets were misappropriated).

This arithmetic showed the jury disgorged the same profits twice under two overlapping theories. The court rejected the notion that failure to object before the jury’s release foreclosed relief or that the verdict form/instructions (which did not constrain remedies) insulated the duplication. Reviewing the record, including the expert’s slides and the distinctive profit number, the court held the only reasonable reading was double recovery. Under Fineman, a single set of profits cannot be disgorged twice merely because two legal labels apply. Applying Evans/Gumbs, the court set the maximum reasonable recovery as the single disgorgement of $14,757,399 and ordered a conditional remittitur of the overlapping $11,068,044, with Harbor’s option for a new trial limited to trade‑secret damages.

Impact

A. Damages Architecture: Stop Double Counting at the Source

• Design verdict forms and jury instructions that:
  • Segregate damages by claim,
  • Require the jury to specify the type of damages awarded (e.g., disgorgement vs. lost profits vs. compensatory losses), and
  • State expressly that the plaintiff may not recover the same profits twice under overlapping theories.
• Experts should present alternative, non‑duplicative damages frameworks and clearly map which dollars correspond to which injury to minimize post‑verdict remittitur risk.

B. Proof of “Use”: The Power of Plus Factors

• Internal communications acknowledging leverage of a counterparty’s materials and a rapid go‑to‑market after access are potent circumstantial evidence of “use.”
• Defendants should preserve and present contemporaneous development records (version control, design documents, ticketing, time‑stamped commits) to substantiate independent development; merely asserting that a process could be reverse engineered is insufficient.

C. Compilations as Trade Secrets

• Curated databases that combine public inputs with proprietary annotations, heuristics, and process‑improving insights can be protectable if kept secret and valuable; document the time, expense, and performance benefits embedded in such annotations.
• Maintain robust confidentiality measures (access controls, NDAs, need‑to‑know protocols) and track disclosures during partnership negotiations and integrations.

D. Preservation: Rule 50(a) Is Not a Placeholder

• Raise every element‑specific sufficiency ground with particularity in Rule 50(a): protectability, misappropriation, damages, and any claim‑specific elements (e.g., unfair competition). “As to all claims” won’t do. Absent exceptional circumstances, forfeited sufficiency issues are unreviewable on appeal.

E. Expert Management Under FRE 703/705

• Courts will often deem late‑breaking expert elaborations harmless where the foundation can be probed on cross‑examination and jurors are instructed appropriately. To exclude, show concrete prejudice, not mere surprise.
• When offering experts in software/trade‑secrets cases, anticipate and disclose opinions on “who did what and when,” or cabin the expert to technical comparisons; ambiguity invites admission with limiting instructions rather than exclusion.

Complex Concepts Simplified

• Trade secret (DTSA/PUTSA): Information that derives economic value from not being generally known and is subject to reasonable secrecy measures. This can include non‑obvious compilations of public data if the combination and curation confer a competitive edge.
• Misappropriation by “use”: Exploiting another’s secret to develop, refine, or accelerate your product. It’s not limited to verbatim copying.
• Reverse engineering: Lawful derivation of a product’s functionality from the product itself. The defense requires evidence of actual independent derivation; merely asserting it was possible won’t defeat liability.
• Rule 50(a)/(b) vs. Rule 59: Rule 50 seeks judgment as a matter of law for insufficient evidence; specificity is mandatory. Rule 59 allows a new trial if the verdict is against the weight of the evidence or if prejudicial error occurred; the standard is deferential to the jury.
• Remittitur: A court’s reduction of an excessive or unsupported verdict to the maximum amount a reasonable jury could award, offered conditionally with a new‑trial option.
• Double recovery: Collecting the same dollars twice under different labels (e.g., disgorging a single pool of profits under two overlapping torts). Courts prohibit this.
• General verdict vs. special interrogatories: A general verdict announces liability without detail. Special interrogatories can validate a general verdict by confirming at least one sound factual theory (e.g., that a particular item was a misappropriated trade secret).
• FRE 703/705: Experts may base opinions on case facts and state opinions without first laying all the factual foundations—those are tested on cross‑examination.

Conclusion

Harbor v. Firstbase is a practical blueprint for modern trade‑secrets litigation. Substantively, it confirms that “use” can be proven by circumstantial “plus factors” like internal admissions and rapid deployment post‑access; compilations enriched by experience‑based annotations can be protectable. Procedurally, it is a sharp reminder that Rule 50(a) must be issue‑specific, or appellate review may be foreclosed. Evidentiary‑wise, expert opinion foundations are commonly policed through cross‑examination and limiting instructions rather than exclusion.

Most notably, the decision lays down a clear, precedential warning on damages: juries may not disgorge the same profits twice under overlapping torts, and appellate courts will reconstruct the record—down to the math—to excise duplication through conditional remittitur. For counsel, the message is clear: build clean, non‑overlapping damages models; craft verdict forms and instructions that forestall duplication; and preserve every element-specific challenge at Rule 50(a). For businesses, especially in white‑label and integration contexts, the case underscores the importance of confidentiality regimes, careful sharing of workflows and databases, and audit‑ready evidence of independent development.