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Barranco v. 3D Systems Corp.

United States District Court, D. Hawaii

March 30, 2018

3D SYSTEMS CORPORATION, a Delaware corporation, 3D SYSTEMS, INC., a California corporation, ABRAHAM REICHENTAL, DAMON GREGOIRE, Defendants.


          Leslie E. Kobayashi, United States District Judge.

         Following a jury trial, this matter came on for a one-day bench trial on the issue of equitable accounting on November 20, 2017. Plaintiff/Counterclaim Defendant Ronald Barranco (“Plaintiff” or “Barranco”) was represented by Mark Poe, Esq., and Patrick Shea, Esq. Defendants/Counterclaimants 3D Systems Corporation and 3D Systems, Inc. (“Defendants” or “3D Systems”), were represented by Thomas Benedict, Esq., Dawn T. Sugihara, Esq., and Nikole Setzler Mergo, Esq. The Court, having considered the declarations and evidence admitted into evidence, the testimony at trial, and the arguments of counsel, makes the following Findings of Fact and Conclusions of Law and Decision pursuant to Fed.R.Civ.P. 52. Any finding of fact that should more properly be deemed a conclusion of law and any conclusion of law that should more properly be deemed a finding of fact shall be so construed.


         Plaintiff originally filed his Complaint on August 23, 2013, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1332 and venue pursuant to 28 U.S.C. § 1391(b). [Dkt. no. 1.] Plaintiff alleged claims against 3D Systems for breach of contract (“Count I”), breach of employment agreement (“Count II”), breach of the implied covenant of good faith and fair dealing (“Count III”), fraud (“Count IV”), negligent misrepresentation (“Count V”), unjust enrichment (“Count VI”), and rescission (“Count VII”). Plaintiff's claims arose from a Purchase and Sale Agreement (“PSA”) regarding certain web domains.[1] [Id.]

         On August 19, 2014, Defendants filed counterclaims, and on September 8, 2014, filed amended counterclaims. [Dkt. nos. 89, 101.] On November 5, 2014, Defendants filed their Amended Counterclaims Against Plaintiff (“Second Amended Counterclaims”). [Dkt. no. 118.] In the PSA, Barranco agreed not to compete with 3D Systems for a five-year period (“Non-Compete Provision”). [PSA at § 6.] Defendants' Second Amended Counterclaims alleged breach of contract for violation of the Non-Compete (“Non-Compete Counterclaim”) and for failure to completely convey all of the assets purchased under the PSA (“Failure to Convey Counterclaim”).

         On March 17, 2014, Plaintiff's Count II was dismissed. [Order Denying Defs.' Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(2) or, in the Alternative, to Transfer Pursuant to 28 U.S.C. § 1404 (“3/17/14 Order”), dkt. no. 37.[2] On January 30, 2015, Counts IV, V, and VII were dismissed. Plaintiff's remaining claims were Counts I, III, and VI. [Order Granting in Part and Denying in Part Defs.' Motion for Summary Judgment on All Claims Against Them (“1/30/15 Order”), dkt. no. 140.[3]

         On May 17, 2016, a jury trial commenced. [Minutes, dkt. no. 250.] On May 26, 2016, the case went to the jury. [Minutes, dkt. no. 278.] On May 27, 2016, the jury reached a verdict in favor of Defendants on all claims brought by Plaintiff. [Special Verdict Form, dkt. no. 282.] The jury found for Defendants on their Non-Compete Counterclaim against Plaintiff. [Id.] Specifically, the jury answered “yes” to the following question: “Did Barranco breach his promise not to engage in competition with 3D Systems for five years after signing the PSA?” [Id. at 6.] The jury also found 3D Systems did not “promise to invest substantial resources into the Primary Domains.”[4] [Id. at 2.]

         Plaintiff was granted judgment as a matter of law on the Failure to Convey Counterclaim after Defendants conceded they had not offered sufficient evidence of actual damages. [EO: Court Ruling Regarding the Remaining Issues in this Case, filed 6/22/16 (dkt. no. 287) (“6/22/16 EO Ruling”).] On May 9, 2017, this Court denied Plaintiff's oral motion for judgment as a matter of law on Defendants' Non-Compete Counterclaim. [Order Denying Pltf.'s Oral Motion for Judgment as a Matter of Law (“5/9/17 Order”), dkt. no. 300.[5] The 5/9/17 Order concluded the jury's verdict was supported by evidence showing Barranco violated the Non-Compete Provision. 2017 WL 1900970, at *4. Under its terms, Barranco could breach the Non-Compete Provision by developing a competing product, or assisting another entity in developing or providing a competing product. Id. Therefore, the jury's verdict did not require support from evidence showing the violation of the Non-Compete Provision caused Plaintiff to be benefitted, or Defendants to be harmed. See id. at *4-5. The Court also found the issues related to the Non-Compete Counterclaim were “complex enough to merit an equitable accounting, ” and an equitable accounting to determine recovery, rather than a jury finding to determine damages, was appropriate. Id. at *4-5.

         The jury made no finding as to which particular conduct or incidents breached the Non-Compete Provision. At the November 20, 2017, non-jury trial, Defendants argued the jury's finding of liability on the Non-Compete Counterclaim was based on “the website that [Barranco] developed for [Christopher] Breault”; “the divulgement of the Quickparts technology”; and “the online quoting engine that Mr. Barranco developed.” [Trans. of Non-Jury Trial (“11/20/17 Trans.”), filed 12/5/17 (dkt. no. 386), at 131.] In closing arguments at the jury trial, Defendants identified the same three bases for finding liability on their Non-Compete Counterclaim. [Trial - Day 5 Trans. (“Day 5 Trans.”), filed 10/13/17 (dkt. no. 340), at 77.]

         Based on the jury's finding of a breach of the Non-Compete Provision and pursuant to the PSA, Defendants are entitled to “an equitable accounting of earnings, profits and other benefits arising from such violation.” [PSA at § 6(f).] The sole issue remaining for adjudication is the recovery due Defendants because of Plaintiff's violation of the Non-Compete Provision.

         For the non-jury trial, in lieu of direct testimony, Defendants presented the declarations of Michael White; Anand Parikh; Ronald Hollis, Ph.D.; and Andrew Johnson. [Dkt. nos. 373-76.] In lieu of direct testimony, Plaintiff presented his declaration and the declaration of James Ketner. [Dkt. nos. 369-70.] Plaintiff sought to present the declaration Tory Sirkin, but that declaration was stricken. [Minutes, filed 11/20/17 (dkt. no. 383).] The Court also heard live testimony from Plaintiff, Dr. Hollis, Mr. Johnson, and Mr. Ketner. Mr. White, Mr. Parikh, and Mr. Sirkin did not provide live testimony. [Id.] All exhibits indicated by stipulation, were admitted as evidence. [Dkt. no. 380.]

         Plaintiff argued Defendants' recovery should be zero because some of the conduct at issue did not violate the Non-Compete Provision, and because none of the conduct caused him to receive any earnings, profits, or other benefits. Defendants sought to recover $5, 000, 000 as the inherent value of the technology Plaintiff accessed, as well as disgorgement of the entirety of Plaintiff's salary and all consideration paid to Plaintiff pursuant to the PSA.


         I. Testimony and Exhibits

         1. 3D printing is a process whereby three-dimensional solid objects are created through a process called additive manufacturing. Both stereolithography and laser sintering are additive manufacturing processes used in three-dimensional printing. [Direct Testimony of Ron Barranco (“Barranco Decl.”), filed 11/17/17 (dkt. no. 369), at ¶ 7.] 3D printing contrasts with traditional “subtractive” manufacturing processes, in which a final part is formed by subtracting from a solid block of material, through cutting, grinding, or other subtractive processes. [Id.]

         2. In 1998, Barranco launched the website domain name (“SLAC”). [Id. at ¶ 3.] ¶ 2009, Barranco launched the website domain name (“LSCOM” or “”). [Id. at ¶ 4.] The purpose of SLAC and LSCOM (collectively “Primary Domains”) was to allow consumers to have a 3D object created through additive manufacturing processes. Through the Primary Domains, a consumer with a design for an object can obtain a quote for the manufacturing of the item and have the object made using 3D printing techniques. [Id. at ¶¶ 3-4.]

         A. The Evolution of 3D Systems' Parts Business

         3. In December 2007, 3D Systems hired Michael White to create a website that would allow for the instant online quotation (“IOQ”) and ordering of 3D printed parts. [Decl. of Michael White (“White Decl.”), filed 11/17/17 (dkt. no. 376), at ¶ 19.] At the time, less than five (5) sites in the world were able to accomplish that task. [Id.]

         4. From December 2007 to mid-2008, Mr. White worked to build and improve the website. [Id. at ¶¶ 20-23.] 3D Systems launched the new internal quoting tool in June/July 2008. [Id. at ¶ 21.] In October 2009, 3D Systems' parts service was rebranded as [Id. at ¶ 23.]

         5. In April 2010, 3D Systems acquired a company called DPT-Fast, which was one of the first companies to quote, and take orders for, rapid prototyping parts online. [Id. at ¶ 24.]

         B. Quickparts Technology

         6. In 1999, Dr. Hollis founded Quickparts and served as its president and chief executive officer (“CEO”). Quickparts was the industry standard and market leader for the acquisition of custom manufactured parts in the 3D printing market. [Decl. of Ronald L. Hollis (“Hollis Decl.”), filed 11/17/17 (dkt. no. 373), at ¶ 6.]

         7. In 2008, Dr. Hollis was awarded a United States patent for the invention of Instantaneous Quotation System for Custom-Manufactured Parts, U.S. Patent No. 7, 305, 367, known as “QuickQuote.” [Id. at ¶ 10.] With the QuickQuote technology, Quickparts was able to provide product designers with an instant online quote for the manufacturing of the designers' custom parts from prototype to production. By having an internet interface, Quickparts expanded the market for 3D printer users by making it easy for everyone to experience the power of additive manufacturing. [Id. at ¶¶ 10-11.]

         8. In February 2011, 3D Systems acquired Quickparts, purchasing all of Quickparts' outstanding shares in a cash transaction, paying $15.9 million, net of cash acquired, at closing, and a deferred payment of $7.2 million. [Id. at ¶ 1; Johnson Decl. at ¶ 16; Decl. of Anand Parikh (“Parikh Decl.”), filed 11/17/17 (dkt. no. 375), at ¶ 20.] The annual revenue of Quickparts at the time of the acquisition was $24 million. [Johnson Decl. at ¶ 18.]

         9. Quickparts is an additive manufacturing e-commerce system. The Quickparts website used patented technology to generate instant online price quotes for custom manufactured parts based on volume and geometry (“QP Technology”). 3D Systems acquired Quickparts to improve the instant online quoting process it had been developing since 2007. [White Decl. at ¶¶ 19-28.] The QP Technology was superior to the quoting technology 3D Systems had developed internally through and had acquired through the acquisition of DPT-Fast in 2010. [Johnson Decl. at ¶ 19; White Decl. at ¶ 28.]

         10. At the time of acquisition, Quickparts was the most valuable intellectual capital 3D Systems had for its online parts business, due to the QP Technology. [White Decl. at ¶ 30; Parikh Decl. at ¶ 24.]

         C. The PSA and Non-Compete Provision

         11. On April 18, 2011, Barranco and 3D Systems executed the PSA, which was effective on April 19, 2011, for the purchase of the Primary Domains by 3D Systems. [PSA at § 1; Johnson Decl. at ¶ 28.] In consideration for the PSA, Barranco granted 3D Systems entitlement to: title and possession of the Primary Domains; the instant online quoting system used by the Primary Domains; customers and customer lists; and existing license and royalty agreements. [PSA at § 1.] 3D Systems also received Barranco's promises under the Non-Compete Provision. [PSA at § 6.]

         12. In consideration for the PSA, 3D Systems promised Barranco: an immediate cash payment of $250, 000.00 (“Up Front Payment”); [PSA at § 1; Johnson Decl. at ¶ 30;] royalty payments based on sales generated by the Primary Domains (“Royalty Payments”); [PSA at § 3;] and a right to exercise a buyout, which would terminate the right to Royalty Payments and grant entitlement to a lump sum payment (“Buyout”), [id. at § 4].

         13. The Royalty Payments were calculated as fifty percent of revenue not generated by 3D Systems and received through the Primary Domains, and five percent of revenue generated by 3D Systems and received through the Primary Domains. [Id. at § 3.]

         14. Mr. Sirkin testified he leased LSCOM from Barranco in 2009. [Trial - Day 2 Trans. (“Day 2 Trans.”), filed 10/13/17 (dkt. no. 337), at 110.] Because Barranco had generated the sales from LSCOM, 3D Systems paid him fifty percent of the LSCOM royalties. 3D Systems generated the sales from SLAC, and paid Barranco five percent of the gross SLAC sales. [Stipulation Regarding Royalty Payments, filed 5/26/16 (dkt. no. 275).]

         15. The Royalty Payments totaled $210, 996.02. [Johnson Decl. at ¶ 44.] Of this total, from April 2011 to February 2016, $177.799.29 were from LSCOM, and $28, 893.21 were from SLAC. An additional, combined total of $3, 403.52 was paid for the period March 2016 to August 2016. [Id. at ¶ 32.]

         16. The PSA provided the amount owed under the Buyout would be calculated as the net present value of the next five years of royalty payments, assuming the royalty payments remained at the average level of the previous two years. [PSA at § 4.]

         17. On August 10, 2016, Barranco exercised the Buyout. [Johnson Decl. at ¶ 34.] 3D Systems issued Barranco a check in the amount of $120, 818.00 (“Buyout Payment”). [Id.] The Buyout Payment was calculated based on royalty payments during the period from August 2014 to July 2016. In that period, the average annual royalties were $4, 666.00 from SLAC and $20, 729.00 from LSCOM. The total Buyout Payment consisted of $22, 597.00 attributable to SLAC, and $98, 221.00 attributable to LSCOM. [Johnson Decl., Exh. 5 at 4 (spreadsheet calculating Buyout Payment).[6]

         18. Barranco did not cash the check tendering the Buyout Payment. However, the amount of the Buyout Payment is still owed pursuant to the PSA. [11/20/17 Trans. at 92-93.]

         19. The PSA contains the Non-Compete Provision which prohibited Barranco from 1) engaging in any competition; or 2) becoming an employee, agent or consultant of, or acquiring or having any proprietary or other equity interest in, or otherwise participating or assisting in, the business of any person, firm or business that engaged in competition for five years from the effective date of the PSA. [PSA at § 6.]

         20. Under the Non-Compete Provision, “‘Competition' means the development, design, offering, marketing, sale or provision of services and products that have been developed, designed, offered, marketed, sold or otherwise provided by the [purchased web] Domains prior to the Effective Date.” [Id.]

         21. The Non-Compete Provision prohibited more than just monetization of a competing product; among other things, it prohibited the development and design of competing products and services. [Id.; 11/20/17 Trans. at 92.]

         22. The Non-Compete Provision specifically contemplated Barranco's employment and incorporated by reference his separate employment agreement: “provided that Mr. Barranco may provide services under his respective employment agreement with 3D Systems without violating this covenant.” [PSA at § 6(b).]

         23. The confidentiality portion of the Non-Compete Provision governed Barranco's disclosure of “any secret or confidential information . . . of or belonging to the Acquired Assets.” [Id. at § 6(e).] The Acquired Assets were the LSCOM and SLAC web domains. [Id., Exh. A (listing Acquired Assets).]

         24. Before agreeing to the Non-Compete Provision, the parties considered factors including the consideration exchanged for the Acquired Assets, Barranco's access to confidential information relating to the Acquired Assets, and 3D Systems' interest in protecting the value of the Acquired Assets. [PSA at § 6(c).]

         25. In the Non-Compete Provision, Barranco promised 3D Systems he would not compete directly or indirectly, such as by participating or assisting in the business of any person or entity engaged in competition with 3D Systems. [Id. at § 6(b).] Barranco was aware when he executed the PSA that he had an affirmative obligation not to compete with 3D Systems and could not develop products that could compete with 3D Systems for a period of time. [Trial - Day 1 Trans. (“Day 1 Trans.”), filed 10/13/17 (dkt. no. 336), at 162.]

         26. Violation of the Non-Compete Provision entitles 3D Systems “to preliminary and injunctive relief as well as to an equitable accounting of earnings, profits and other benefits arising from such violation.” [Id. at § 6(f).]

         27. The equitable accounting remedy is “not exclusive, ” and is cumulative with 3D Systems' other rights and remedies “at law, in equity, by contract or otherwise.” [Id. at § 6(g).]

         28. The Non-Compete Provision expired on April 18, 2016. [Id. at § 6(b).]

         D. Significance of the Non-Compete Provision to the PSA

         29. Mr. Johnson is the vice president and chief legal officer of 3D Systems. [Johnson Decl. at ¶ 2.] Johnson drafted the PSA on behalf of 3D Systems. [Trial - Day 3 Trans. (“Day 3 Trans.”), filed 10/13/17 (dkt. no. 338), at 32.]

         30. Johnson stated 3D Systems would not have entered into the PSA with Barranco, nor would it have paid him the consideration thereunder, without the Non-Compete Provision. [Johnson Decl. at ¶ 31.] Johnson testified the critical part of the Non-Compete Provision for 3D Systems was not “just sales, ” and explained:

if you're working for us or if you sell us a business or assets, we are asking for a covenant that you're not developing, you're not designing things that are competitive with 3D Systems. To buy something and to have him competing by working against us on the side completely negates a huge part of the value that we've paid for.

[Day 3 Trans. at 70.]

         31. Johnson testified that, in negotiating the PSA, Barranco never objected to or asked questions about the Non-Compete Provision. [Id.]

         32. Damon Gregoire is the chief financial officer and senior vice president of 3D Systems. [Day 2 Trans. at 61.] Mr. Gregoire stated that, in negotiating the PSA, 3D Systems concluded the Primary Domains were not “worth nearly what [Barranco] thought.” [Id. at 79.] Despite this, the deal went through because 3D Systems reduced its exposure to the risk that the Primary Domains would not generate sufficient earnings. Over the course of negotiations, the up front consideration was reduced, and most of 3D Systems' obligation consisted of royalties, contingent on future sales. [Id. at 76 (“ultimately the way the deal was done was based on a small upfront payment and royalties so there is not a lot of risk to it”); id. at 77 (“So we didn't have the information to evaluate [the Primary Domains] as a business . . . if you base it on a very small upfront royalty, again, that lowers your risk.”); id. at 104-05 (“it's a small upfront payment . . . $250, 000, and we were paying royalties going forward. So if they don't deliver, [we] are not paying.”).]

         E. Value of the QP Technology

         33. Dr. Hollis, founder of Quickparts and inventor of Quickquote, opined that the value of the QP Technology was $5, 000, 000. [Hollis Decl. at ¶ 20; 11/20/17 Trans. at 63-65.]

         34. In quantifying the value of the QP Technology, Dr. Hollis considered the following factors: the total amount spent for research, development, and technology; and a premium of two to three times that amount, representing the brain power and innovation required to develop the code. [Hollis Decl. at ¶ 17.]

         35. Because of its deal to acquire Quickparts, 3D Systems retained Houlihan Lokey Financial Advisors, Inc. (“Houlihan Lokey”) to perform a confidential valuation of the assets of Quickparts as of February 22, 2011 (“Valuation Date”). [11/20/17 Trans. at 102-03.]

         36. Houlihan Lokey is an international investment bank that provides advisory services in the areas of mergers and acquisitions, capital markets, financial restructuring and valuation. [Johnson Decl. at ¶ 20.] ¶ 2010, the firm was ranked the number one mergers and acquisitions (“M&A”) advisor for United States transactions. [Id.]

         37. Houlihan Lokey's report, entitled “Valuation Analysis of Certain Assets of, Inc. as of February 22, 2011, ” was generated as a result of 3D Systems' retention and assignment. [11/20/17 Trans. at 102-03; Johnson Decl., Exh. 3 (“Houlihan Lokey Report”).]

         38. The intangible assets included in the Houlihan Lokey analysis of Quickparts consisted of trade names, trademarks, customer relationships, non-compete agreements, backlog and developed technology (“Intangible Assets”). [Houlihan Lokey Report at 4.]

         39. The technology Quickparts developed was one of the Intangible Assets Houlihan Lokey evaluated. [Id. at 27.] The Quickparts technology Houlihan Lokey valued was the QP Technology, namely the Quickquote technology used to generate instant quotes to customers and potential customers. [Id.; Johnson Decl. at ¶ 22.]

         40. Houlihan Lokey opined that, as of February 22, 2011, the fair value of the QP Technology was $4.73 million. [Johnson Decl. at ¶¶ 24-26; Houlihan Lokey Report at 7, 53.] Houlihan Lokey valued the total of Quickparts' Intangible Assets, including the QP Technology, at $12.27 million. [Houlihan Lokey Report at 7.]

         41. 3D Systems used Houlihan Lokey's conclusions for financial reporting purposes and to assist the management of 3D Systems in allocating the purchase price among the acquired assets of Quickparts. [Johnson Decl. at ¶ 21.]

         42. The QP Technoloy is a labor-saving technology. 3D Systems told Houlihan Lokey that the QP Technology would allow it to avoid the salary expense of sixteen 3D Systems employees who would otherwise “manage its quoting activities.” [Houlihan Lokey Report at 52.] Houlihan Lokey derived its valuation of $4.37 million as the net present value of the expected salary savings, adjusted for taxes. [Id. at 53.]

         43. Houlihan Lokey used a discount rate of 23%, meaning that the salary savings occurring in future years were calculated to have a present value worth 23% less for each year farther out in the future that the benefit occurs. [Id.] Houlihan Lokey stated the QP Technology, which it evaluated on February 22, 2011, “undergoes approximately 20% worth of updates annually. As such, by 2018, the [value of the QP Technology] is estimate to be de minimis.” [Id. at 52.]

         44. At the time of the Quickparts acquisition, 3D Systems valued the QP Technology at $4.73 million. [Johnson Decl. At ¶ 25.]

         F. Violations of the Non-Compete Provision Barranco's Use of Private Email

         45. In an email to Sirkin sent August 3, 2011 (“8/3/11 Email”), Barranco discussed technical details of the LSCOM website. [Trial Exh. 291 at 1.]

         46. Barranco added to the 8/3/11 Email: “PS; do not send any email to any longer. This can be monitored by 3D. NO, they cannot monitor LSCOM.” [Id. (emphasis in original).]

         Breault's Pro SLA website

         47. Mr. Breault no longer managed the SLAC web domain after Barranco sold it to 3D Systems. Barranco offered to help Mr. Breault get a new website so he could start making money again. [Day 2 Trans. at 51.] Thereafter, Barranco provided Mr. Breault $5, 200.00 to build a website named Pro SLA so Mr. Breault could “get back involved in doing prototyping.” [Id. at 58.]

         48. Mr. Breault understood SLA to mean stereolithography. [Id. at 10.] Barranco testified that SLAC is short for “SLA” dot com, which in turn is short for “” [Day 1 Trans. at 18.] The Pro SLA website was competitive to 3D Systems with respect to stereolithography.

         The QP Emails

         49. Mr. Johnson testified that Barranco, as an employee of 3D Systems, had or was given access to the QP Technology, which was copyrighted, highly confidential and proprietary to 3D Systems. [Johnson Decl. at ¶ 42.] 3D Systems would never have allowed Barranco access to the QP Technology if he had not agreed to the Non-Compete Provision of the PSA. [Id.]

         50. Sometime prior to February 19, 2012, Barranco obtained and provided the QP Technology to David Pham. [Trial Exh. 319 at 1-3.] Barranco described Mr. Pham, who was not a 3D System employee, as his “personal programmer.” [Day 1 Trans. at 163.]

         51. In emails transmitting the QP Technology to Mr. Pham and to Barranco's son, R.J. Barranco (“QP Emails”), Barranco stated: “using this in my system is a side project to me and not what I am being asked for with my ‘job' . . . I am trying ot [sic] get the QP formula into my system for a different reason than the task assigned to me.” [Hollis Decl., Exh. 1 (QP Emails) at 3;[7] Day 1 Trans. at 184-85.]

         52. The proprietary QP Technology that enabled the Quickquote patent was attached to the QP Emails. [Parikh Decl. at ¶ 14; White Decl. at ¶ 33; Hollis Decl. at ¶ 16; 11/20/17 Trans. at 61-63 (Hollis).] The QP Technology contained in the QP Emails is the most important part of the quoting/ordering process. [Parikh Decl. at ¶ 15; Hollis Decl. at ¶ 16.] The quoting/ordering process will not work without the software code contained in the QP Emails. [Parikh Decl. at ¶¶ 15-17.]

         53. Mr. Johnson testified that Barranco neither had authorization from 3D Systems to share the QP Technology with anyone, including third party non-employees, nor permission to use the QP Technology in a new, more powerful quoting system. [Johnson Decl. at ¶¶ 25, 43.]

         54. As of February 19, 2012, at Barranco's direction, Mr. Pham had done an extensive analysis and provided Barranco with a breakdown of the QP Technology. [QP Emails at 1-3; Trial Exh. 318 at 1.] On February 20, 2012, Mr. Pham explained to Barranco that he could convert the QP Technology into his new system by loading the xml data into a db form and getting prices through the system. [QP Emails at 2.]

         55. In an email on February 21, 2012 (“2/21/12 Email”), Barranco stated: “This is why I gave David [Pham] a second project of slightly less importance which is the inserting the QP formula or converting the QP formula to php so we can actuall [sic] install the formula into our new ‘pricing engine' which David did a nice job of building.” [Trial Exh. 318 at 1.] Barranco testified that Mr. Pham “tunneled” the QP Technology into his server for him and was “instrumental in the transferring of the code that was sent to me through our virtual private network onto our server where I had control of it.” [11/20/17 Trans. at 21.]

         56. The QP Technology was not of or belonging to the Acquired Assets under the PSA. Dr. Hollis testified that 3D Systems acquired the QP Technology from Quickparts in February 2011. [Hollis Decl. at ¶¶ 10-13.]

         New Quoting Engine Development

         57. Mr. Sirkin testified that Barranco developed a new, more powerful quoting engine. [Day 2 Trans. At 144-45.] Mr. Sirkin testified that Barranco intended him “to be able to use his new and more powerful quoting engine” in the 3D printing industry and on the web domains Mr. Sirkin owned. [Day 2 Trans. at 145-46.] Mr. Sirkin testified that, in June and July of 2013, Barranco asked him to test the new quoting engine. [Id. at 146.]

         58. On March 19, 2013, in response to Mr. Sirkin's criticisms that LSCOM's quoting engine, which was originally created by Barranco, was “jacked up” and “buggy, ” Barranco responded: “FYI I haven't been wasting any time on the other one I will show you something cool soon[.]” [Trial Exh. 322 at 1.]

         59. In emails between Barranco and Mr. Sirkin on April 26, 2013 (“4/26/13 Emails”), Barranco agreed he would be able to put IOQ technology into a web domain Mr. Sirkin owned after Barranco filed suit against 3D Systems. [Trial Exh. 324 at 2.] Barranco explained he had multiple sources for “IOQ for rtv molding, ” and among them, “one i copied from QP and Forecasts.” [Id. at 1 (emphasis added).]

         60. On April 27, 2013, Barranco emailed Mr. Sirkin: “This weekend I am working specifically on a version of the new quote system that would eventually be for LSCOM . . . . Do you have access to any [process formulas, such as] the spreadsheet type that sales may use[?]” [Trial Exh. 323 at 1.]

         61. On June 27, 2013, Barranco emailed Mr. Sirkin and Mr. Pham with a subject line of “Test new system” and wrote: “Please take some time and start looking at the new system. . . . I dont ythink u xan beak [sic] anything.” [Trial Exh. 325 at 1.]

         62. On July 9, 2013, Mr. Sirkin, Mr. Pham, and Barranco coordinated a run-through and demonstration of the new quoting system. [Trial Exhs. 326, 327.]

         63. On September 19, 2013, upon receiving a marketing email entitled “Quickparts Now Accepts Common 3D CAD files for online quoting, ” Mr. Sirkin asked Barranco: “Can your new quoting engine do this?” [Trial Exh. 331 at 1.] Barranco responded and provided a list of functions of his new quoting engine. [Id.]

         64. In emails sent September 24 and 25, 2013, Barranco told Mr. Pham, “If ever you thought you could pull off a system . . . now is the time. . . . This is either leased or shelved again, I will have to decide by this weekend.” Mr. Pham replied to Barranco: “i work only on your [new quoting] system night and day man.. [sic] i dont' [sic] even go out on weekends becaues [sic] of this damn thing.” [Trial Exh. 332 at 1.]

         65. In January 2014, discussing a trip to Hawai`i, Mr. Sirkin told Barranco that “[i]t would be awesome to have that trip also include a discussion of our bright future with 3D out of our lives.” [Trial Exh. 334.]

         66. In the 4/26/13 Emails, supra Finding of Fact ¶ 59, Mr. Sirkin asked Barranco: “You think 3D will have an issue with a domain that you supplied IOQ to and that I run and potentially pay you commission on?” [Trial Exh. 324 at 2.] Barranco replied that the existing contract allows him “to lease quote engines to whomever I want., [sic] I just have to split the royalties.” [Id. at 1.]

         67. At the jury trial, Mr. Gregoire, testified that Barranco “had plenty of other ideas and ways to monetize or he thought monetize other web properties, web development or to further things, and we said that would be great. If we decide together to do these, we will split any royalty revenues that the company would get 50/50 with you.” [Day 2 Trans. at 84.]

         G. Mr. Sirkin Cancels ...

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