*The Honorable James L. Graham, United States District Judge for the Southern District of Ohio, sitting bydesignation.RECOMMENDED FOR FULL-TEXT PUBLICATIONPursuant to Sixth Circuit Rule 206File Name: 06a0457p.06UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT_________________MIKE’S TRAIN HOUSE, INC.,Plaintiff-Appellee,v.LIONEL, L.L.C.,Defendant-Appellant,KOREA BRASS and YOO CHAN YANG,Defendants. X---->,-------NNo. 05-1095Appeal from the United States District Courtfor the Eastern District of Michigan at Detroit.No. 00-71729—John Corbett O’Meara, District Judge.Argued: June 7, 2006Decided and Filed: December 14, 2006 Before: DAUGHTREY and COLE, Circuit Judges; GRAHAM, District Judge.*_________________COUNSELARGUED: Walter E. Dellinger, Jonathan D. Hacker, O’MELVENY & MYERS, Washington, D.C.,for Appellant. Robert A. Swift, KOHN, SWIFT & GRAF, Philadelphia, Pennsylvania, for Appellee.ON BRIEF: Walter E. Dellinger, Jonathan D. Hacker, Melissa A. Holyoak, O’MELVENY &MYERS, Washington, D.C., Kathleen McCree Lewis, Joseph H. Hickey, Dante A. Stella,DYKEMA GOSSETT, Detroit, Michigan, for Appellant. Robert A. Swift, Robert J. LaRocca,KOHN, SWIFT & GRAF, Philadelphia, Pennsylvania, Harold Z. Gurewitz, GUREWITZ &RABEN, Detroit, Michigan, Jeffrey D. Bukowski, STEVENS & LEE, Reading, Pennsylvania, forAppellee.1No. 05-1095Mike’s Train House v. Lionel, L.L.C.Page 2_________________OPINION_________________R. GUY COLE, JR., Circuit Judge. Defendant-Appellant Lionel, L.L.C., appeals a juryverdict finding it liable for misappropriation of trade secrets and unjust enrichment, and awardingPlaintiff-Appellee Mike’s Train House, Inc. (“MTH”) damages exceeding $40 million. Afterunsuccessfully moving the district court for a new trial and judgment as a matter of law, Lionelappeals the jury verdict, the district court’s evidentiary decisions, the specificity with which MTHidentified its “trade secrets,” the imposition of joint and several liability, and the amount of thedamage award. Lionel also appeals the district court’s order granting MTH’s request for aninjunction. Because Lionel correctly argues that the district court erred in admitting experttestimony and in imposing joint-and-several liability, and because the jury award improperly“double counts” MTH’s damages, we REVERSE the district court’s order denying Lionel’s motionfor a new trial and REMAND this case for further proceedings consistent with this opinion.Because the district court’s injunction is based entirely on the jury’s verdict, we REVERSE thatorder as well.I. BACKGROUNDThis case involves MTH’s claim that Lionel misappropriated MTH’s trade secrets and wasunjustly enriched by that misappropriation. Before MTH brought this claim, the parties wereinvolved in both criminal and civil litigation in South Korea, based on the same underlying events.After several individuals associated with Lionel were convicted of criminal charges, and Lionel andMTH settled the civil suit, MTH filed the instant complaint against Lionel in federal district court.Lionel and MTH are both distributors of O-gauge model trains. The model trains theydistribute are scale replicas of actual trains. Both Lionel and MTH contract with third parties forthe manufacture of their trains and then release the trains for distribution under their own names.“Gauge” refers to the width of the track; collectors tend to collect trains of only one gauge (in thiscase “O gauge”), so that all their trains can operate on the same track. The trains are manufacturedby a process known as zinc die-casting, which is a precise method of construction in which moltenmetal is injected into pre-shaped molds. This method requires extensive design work for theconstruction of a single train; accordingly, designers produce “design drawings,” which contain allthe information necessary to build a die-cast train. About 200 to 300 design drawings are requiredto produce each scale engine. Lionel has been producing O-gauge model trains since the 1930s. In 1987, Lionel hiredMTH, founded by Michael Wolf, to work with Samhongsa, a Korean supplier, to design andmanufacture die-cast trains, for release under Lionel’s name. MTH and Samhongsa designed andproduced several different die-cast trains for Lionel between 1987 and 1993. MTH’s relationshipwith Lionel ended in 1993. Between 1993 and 1998, Lionel used a number of die-castmanufacturers, but none produced high-quality trains at competitive prices. In 1994, Samhongsabegan making O-gauge die-cast trains for resale under MTH’s name, a relationship that continueduntil 2002. Soon-Gap Ahn, one of the leading designers at Samhongsa from 1997-98, assisted indesigning trains for both Lionel and MTH during each company’s relationship with Samhongsa.Ahn testified that Samhongsa designers, subcontract designers, members of various departments atSamhongsa, and other subcontractors had access to all Samhongsa designs and were allowed tomake and retain copies of those designs. Ahn also testified that Korean designers use a commonNo. 05-1095Mike’s Train House v. Lionel, L.L.C.Page 3numbering system in their design drawings to refer to the same parts of the model train. Forexample, engine parts are numbered in the “1000 range” by Korean design companies. During the time that Samhongsa worked for both Lionel and MTH, Samhongsasubcontracted with a company named Korea Brass (“KB”), a supplier of wax castings for modeltrains. KB had been formed in 1984 by Sung-Won Cho, a former Samhongsa employee. In 1998,KB expanded and became a direct supplier and manufacturer of model trains. After Cho and YooChan Yang, KB’s sales agent in the United States, approached Lionel in April 1998, Lionel placedan order with KB to manufacture two die-cast-model-train lines.KB then hired Ahn to design trains that it intended to manufacture for Lionel. Beforedeparting Samhongsa, Ahn copied design drawings for MTH trains onto computer disks; Ahntestified that he took the drawings to work on them at home, and that the other designers actedsimilarly. While working for KB, Ahn hired Bok-Dong Chung, a Samhongsa subcontractor, to assisthim with the drawings for an O-gauge die-cast model train. Ahn testified that he instructed Chungto draw the designs differently from those produced by Samhongsa. In 1999, Lionel distributed the two die-cast trains designed and manufactured by KB. Afterpurchasing
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