Our Litigators of the Week are Sullivan & Cromwell's David Tulchin and Thomas White for their work on behalf of medical device maker Micro Systems Engineering.

The duo first parachuted into the case in 2017, four months before trial. Their client was being sued for breach of contract, misappropriation of trade secrets and copyright infringement by Universal Instruments Corp. But six days into trial, Senior U.S. District Judge Gary Sharpe of the Northern District of New York pulled the plug, granting the defense team's Rule 50 motion for judgment as a matter of law.

Universal appealed, tapping an appellate team that included Kannon Shanmugam (then at Williams & Connolly, now at Paul Weiss). But the Sullivan & Cromwell litigators successfully defended their win before the U.S. Court of Appeals for the Second Circuit. Tulchin and White discussed the case with Lit Daily.

Lit Daily: Who is your client and what was at stake?

David Tulchin: Our client is Micro Systems Engineering Inc., an affiliate of a company called Biotronik, which makes pacemakers and defibrillators, primarily in Germany. MSEI is based in Oregon, and makes some of the key internal electronics used in Biotronik's pacemakers and defibrillators.  

The plaintiff was seeking over $62 million and an injunction that would have shut down a crucial part of MSEI's business.

You came into this case in 2017 shortly before trial. What was the lay of the land? How daunting was it to get up to speed?

Tom White: Yes, the client hired us just four months before trial, at a time when the federal district judge in Albany had ruled against MSEI in some respects on cross-motions for summary judgment.  

The case had been pending for four years at that point, so all discovery had been completed and we were presented with a full record involving some very complicated issues. It was a lot to try to understand and digest. But our take on the case was that the complicated technical matters could best be presented if the court and jury were able to understand some of the key historical facts involving the relationship between our client and plaintiff Universal Instruments Corp.

In our view, our client had conducted itself honorably and was entirely within its contractual rights every step of the way. We believed that Universal's claims of copyright infringement, misappropriation and contractual breaches would look quite weak when the historical relationship was fully understood. We were also blessed by having very likeable and smart MSEI executives as our key witnesses.

What were the primary allegations by the plaintiffs, and who represented them at the district court level?

Tulchin: The plaintiff here was Universal Instruments Corp., located in Binghamton, New York—not far from the trial venue (Albany).  

They were represented at trial by a law firm near Albany—Schmeiser Olsen & Watts LLP—which advertised itself as IP law experts. The lawsuit started in 2013, and Universal's principal claims were copyright infringement, misappropriation of trade secrets in software source code, and breach of a license agreement between Universal and MSEI.    

Our client had developed the idea for an automated “test handling system” to test the electronic components it makes. Obviously, testing is critical because it's highly important that none—absolutely zero—of the devices fail. Human lives depend on the 100% reliability of the pacemakers and defibrillators.   

The automated “test handling system” included certain tests developed by MSEI, but also a “handling” system that moved the devices from one test station to another. The “handling” is done with robots that depend on software and it was that software that was at the heart of the dispute.  

MSEI hired Universal to build the first phase of the handling system pursuant to a contract that included a license to MSEI of any pre-existing intellectual property in the system. When MSEI asked for bids for the second phase of the system, Universal's bid was much too high and so MSEI hired another company, Missouri Tooling & Automation (“MTA”), to build that second phase.  

This did not go over well with Universal, to say the least, and it brought suit in 2013, four years after that second contract had been awarded. One of Universal's key claims was that Universal's software was improperly used in the building of the second phase by MTA.

What was the overarching theme of your defense?

White: Our defense focused on the historical facts of how the two companies had worked together under the contract for the first phase of the system. The contemporaneous evidence tended to show that the lawsuit was dreamed up after-the-fact because, during the relevant time, both sides acted as if it was understood that the second phase would be built using technology that Universal had included in the first phase.  

The contractual license, we believed, permitted that use—and the evidence showed that Universal understood what MSEI was doing and made no objection. Indeed, we thought we could demonstrate that Universal knowingly gave up any claim when it obtained final payment for the first phase, and our cross-examinations proved that to be so.

Skilled cross-examinations were key to your success at the district court level. Tell us a bit about your philosophy/approach to cross-examining witnesses.

Tulchin: When crossing a witness, there are two key things: preparation and attentiveness. The examining lawyer must listen closely to the witness—your next question is often a function not of your outline, but of hints and clues the witness invariably sends to you in his answer.

How did you work with co-counsel?  And who were the other key members of your team?

White: We had a great team. Our S&C team was Adam Brebner, who is special counsel at the firm and has handled many intellectual property cases, and two more junior lawyers—Jake Lieberman and Anuja Thatte.  All of them did a tremendous job.

MTA had separate counsel for trial—Howie Kaplan of Kaplan Rice LLP in New York City. We've worked with Howie for years, and he's an outstanding trial lawyer. Andy Rose of Nixon Peabody was local counsel in Albany, and Andy was invaluable throughout the process.

Rather than send the case to the jury, Judge Sharpe granted your motion for judgment as a matter of law. What was your reaction? Were you concerned this would make the outcome more vulnerable on appeal?

White: We were of course very pleased, because in our view that was the just and correct result. Every indication at trial was that the jury was very much with us—but of course you take your victories where you find them.

Universal went for the big guns on appeal, retaining Kannon Shanmugam and Amy Saharia. How did it feel facing off against them?

Tulchin: No different than any other appellate argument. There are tons of good lawyers all over the country, and our operating assumption is that our adversaries will always make a strong presentation. There is no other way to approach an argument.

How did you prepare for oral arguments? Any routines or rituals?

Tulchin: Preparation for oral argument involves two key things: knowing the record, which as trial counsel we did, and being fully prepared for any question that might come your way. This of course means that it's helpful to prepare an outline of your oral argument, but as we all know, the outline rarely gets followed. Instead, the key is being able to answer any question on any subject that comes your way from the panel.

Was it a hot bench?

Tulchin: The Second Circuit judges tend to be well prepared and to be very active. It was no different here.

White: David did a fantastic job at oral argument. He answered the judges' questions directly but was also able to pivot back to the key themes that we wanted to come across.  He was very prepared—and it showed.

What stands out to you about the Second Circuit's decision?

White: What stands out is how meticulously the court set out the key facts and how careful the court was in resolving the issues in our client's favor.