AJAXO INC., Plaintiff and Appellant, v. E*TRADE GROUP INC., et al., Defendants and Appellants, 135 Cal. App. 4th 21

Opinion ELIA, J. Introduction Following a seven-week trial, on April 22, 2003, a jury found that E*Trade Group Inc. (E*Trade) had breached a mutual nondisclosure agreement it had with Ajaxo Inc. (Ajaxo) by disclosing protected information to Everypath Inc. (Everypath). The jury assessed $1.29 million in damages against E*Trade for breach of the nondisclosure agreement. In addition, the jury found that Ajaxo was the owner or licensee of a trade secret.

The jury found that E*Trade disclosed that trade secret to Everypath without Ajaxo’s consent, and that E*Trade knew or had reason to know that E*Trade’s knowledge of the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. The jury determined that Ajaxo proved by clear and convincing evidence that E*Trade acted willfully and maliciously in misappropriating Ajaxo’s trade secret. As to Everypath, the jury found that Ajaxo proved that Everypath acquired and used Ajaxo’s trade secret without Ajaxo’s express or implied consent.

Furthermore, the jury found that Ajaxo proved that Everypath knew or had reason to know that Everypath’s knowledge of the trade secret derived from or through a person who owed a duty to Ajaxo to maintain its secrecy. Moreover, the jury found that Ajaxo proved by clear and convincing evidence that Everypath acted willfully and maliciously in misappropriating Ajaxo’s trade secret. Issues on Appeal ~E*Trade’s Issues on Appeal E*Trade raises three issues on appeal. First, E*Trade contends that some of the court’s evidentiary rulings deprived E*Trade of its right to a fair trial.

Second, the court erred in denying E*Trade’s motion for judgment notwithstanding the verdict. Finally, the court abused its discretion in finding that Ajaxo was the “prevailing party” under Civil Code

section 1717. Ajaxo’s Issues on Appeal Ajaxo raises five issues on appeal. First, Ajaxo contends that the court erred in granting E*Trade’s and Everypath’s motion for nonsuit on damages for E*Trade’s and Everypath’s misappropriation of Ajaxo’s trade secret. Second, the court erred in granting E*Trade’s and Everypath’s motion for nonsuit on Ajaxo’s claim for a reasonable royalty. Third, the court’s erroneous grant of nonsuit on damages deprived Ajaxo of an award of exemplary damages. Fourth, the trial court erred in denying Ajaxo injunctive relief.

Finally, the court erred in failing to award attorney fees for pretrial work. Everypath’s Issues on Appeal Assuming that this court finds merit in any of Ajaxo’s contentions on appeal, Everypath raises the following issues. First, Everypath contends that the court erred in denying its motion for judgment notwithstanding the verdict (JNOV) on the jury’s findings that Everypath had willfully and maliciously misappropriated Ajaxo’s trade secret and that Everypath authorized or ratified the willful and malicious misappropriation of Ajaxo’s trade secret.

Second, Everypath contends that the court’s evidentiary rulings denied Everypath its right to a fair trial. We find merit in Ajaxo’s first issue on appeal. Accordingly, we reverse and remand this case to the lower court for a new trial on damages for E*Trade and Everypath’s misappropriation of Ajaxo’s trade secret. We set forth in detail the evidence adduced in the trial.

Facts and Trial Testimony Ajaxo and E*Trade The name “Ajaxo” stands for “Advanced Java Architecture for Extensible Objects.” Sing Koo formed Ajaxo to market a sophisticated stock trading technology called “Wirelessproxy XO,” the development of which was completed by April 1999. Ultimately, among other things, Koo’s Wirelessproxy XO technology allowed its users to buy and sell stock over the Internet using wireless devices, including the new Web-enabled wireless phones. In 1999, Ajaxo was a small six-person company headed by its sole shareholder and investor, Koo.

Koo’s wife, Connie Chun, was Ajaxo’s Director of Marketing. As such, she managed the marketing side of the business. In early September 1999, Chun sent a marketing e-mail to E*Trade. She received a reply from Dan Baca, a senior engineer at E*Trade, on September 10, 1999. Jerry Gramaglia, Chief Marketing Officer at E*Trade, had asked Baca to find a wireless system to allow E*Trade to participate in the Sprint Internet phone launch. Baca testified that E*Trade wanted to be competitive in “the wireless space” and provide wireless access and trading.

Baca emphasized to Ajaxo that E*Trade needed to “beta test” wireless stock trading on Sprint phones using hand-held device markup language (HDML) by October 15, 1999. On the same day as Baca contacted Chun, E*Trade provided Ajaxo a mutual nondisclosure agreement (NDA). Under the terms of the NDA, Ajaxo and E*Trade promised to take all precautions to protect the other’s “proprietary information” and hold it confidential.

The NDA defined “proprietary information” as “including, without limitation, trade secrets, patents, patent applications, copyrights, know-how, processes, ideas, inventions (whether patentable or not), formulas, computer programs, databases, technical drawings, designs, algorithms, technology, circuits, layouts, designs, interfaces, materials, schematics, names and expertise of employees and consultants, any other technical, business, financial, customer and product development plans, supplier information, forecasts, strategies and other confidential information . . . .” The NDA described the penalties for breach of the agreement.

In addition, it required immediate notification if one party believed the other might have released proprietary information. Chun signed the NDA on September 10, 1999, and faxed it to E*Trade the same day. Thereafter, Baca sent two pages of functional specifications to Chun detailing E*Trade’s wireless trading requirements. Chun reviewed the specifications and called Baca. Baca wanted to know if Ajaxo could meet the October 15 deadline for beta testing.

Chun told Baca that she thought they could, but would let him know after she had spoken to the “technical side.” In response to Baca’s request for a technical paper, Chun sent E*Trade a “white paper” overview of the Wirelessproxy XO technology. Over the weekend of September 11-12, 1999, Koo built a prototype application specifically for E*Trade using the Wirelessproxy XO technology “to deliver a look and feel according to [E*Trade’s] functional specification.” On Sunday, September 12, Chun informed Baca by e-mail that they were ready to demonstrate their technology.

The next day, Koo and Chun met with Baca and others at E*Trade. Koo was told that a few people wanted to view the demonstration. Accordingly, rather than using a wireless phone, Koo used a phone emulator on a notebook computer to show the operation of his technology. Koo explained that this was because the screen is bigger than a phone screen. Koo had a personal E*Trade account. Thus, he used his own E*Trade user identification number and his personal E*Trade password to access E*Trade’s Web site in the demonstration.

Then, Koo entered a personal identification number (PIN code) to access the Ajaxo computer through which the Wirelessproxy XO technology works. Koo utilized the PIN code to protect the Ajaxo system from unauthorized access. After Koo and Chun demonstrated that they could complete a stock trade, they logged off and allowed some of the E*Trade personnel to enter their own E*Trade accounts. When it came to entering the Ajaxo PIN code, the E*Trade personnel were not allowed to enter it. Koo entered the code.

After Koo entered the Ajaxo PIN code, E*Trade personnel entered the E*Trade Web site wirelessly through Ajaxo’s technology. Chun described the E*Trade personnel as excited at seeing the Ajaxo demonstration. The E*Trade engineers asked numerous questions. Koo explained to the E*Trade group that his special type of wireless proxy server operates between the E*Trade Web site and the wireless gateway (the server for the wireless device). Using drawings and diagrams, Koo explained how the technology worked and answered many questions from the E*Trade engineers.

Koo testified that a proxy server is nothing new, but his proxy is a “superproxy.” Koo used an analogy to describe in general terms the function served by his superproxy. He analogized it to comparison shopping where one sees a product and wants three price quotes. Using one hand-held device, his system can go to three Web sites, obtain three price quotes, extract data from complicated screens with pictures and graphics, and deliver three quotes to the small mobile device. Thus, Koo explained that his Wirelessproxy XO established “sessions” with servers and delivered select bits of information to small screens.

As Koo explained his technology, he answered E*Trade’s more probing questions about such things as “buffering the cookie” and “how to sustain the session.” He explained “initialization” and “destruction of a session.” The E*Trade engineers asked about Koo’s operating platform, the use of different languages, load balancing, number of transactions and other matters. Koo explained the software and its object-oriented architecture. During the meeting, Pamela Kramer complained that the log-on procedure was cumbersome and asked Koo to develop a log-on system using four digits.

Kramer asked Koo to change the E*Trade application to allow users with multiple accounts to switch accounts. On September 14, 1999, Koo made the changes that E*Trade had requested. The next day Chun called Baca to offer a second demonstration. Koo and Chun arrived at E*Trade that day for another interactive meeting armed with various wireless devices. Koo demonstrated the four-digit login feature. He had tied a four-digit PIN code to a database that included his personal E*Trade user name and password in order to access his proxy server. Baca asked Koo how he had created the login system.

Koo explained to Baca the automatic filing of a form by use of the four-digit PIN code. Baca said that he was not familiar with this automatic form-filling process and asked Koo for the PIN. Koo refused to give Baca the PIN code, because it was tied to Koo’s personal E*Trade account. Koo entered the code, however, and then held up a phone showing four asterisks (****). Subsequently, Koo and Chun had another meeting with Baca during which there were other technical discussions.

At another meeting, E*Trade inquired whether Ajaxo was looking for a “venture partner.” Ajaxo responded that it was not, but proposed terms for E*Trade’s use of Ajaxo’s technology. Ajaxo’s total price for use of its Wirelessproxy XO was $860,000. On September 30, 1999, Chun received an e-mail from Baca with some revised functional specifications. Baca continued to pose technical questions, which Ajaxo answered. The product manager for E*Trade’s wireless application on the business side, Joe Raymond, telephoned Chun on October 12, 1999.

He stated that E*Trade was considering putting their customers on the Ajaxo platform, but E*Trade needed to “have some more in-depth technical conversation so as to ascertain if it would be fair and befitting to put [E*Trade] customers on their platform.” At this time, Raymond knew Ajaxo had successfully demonstrated its capabilities and no other vendor had demonstrated trading capability on a wireless phone.

Raymond testified that E*Trade needed even more information because if the system ever failed, E*Trade’s engineers would have to “troubleshoot.” Chun told Raymond that Ajaxo preferred to have an agreement in place before there were more “technical discussions.” Raymond told Chun that he was working with his in-house attorneys to prepare a counter-proposal in response to Ajaxo’s initial proposal. During the phone call to Chun, Raymond set an October 15 meeting date for E*Trade to obtain more information. Raymond indicated to Chun and Koo that he would be present at the October 15 meeting.

Believing that a contract was soon to be forthcoming, Koo prepared for what he thought was a “technology transfer” meeting because of the “very tight timetable.” Koo printed out from his server a hard copy of the E*Trade prototype programming information. In addition, he used a “Java doc utility” to generate a Java document containing all the “interfaces” that were used in the prototype program. Koo created two binders. One binder contained biographical information about Koo, including his background and his experience.

The other binder contained technical information, plus diagrams illustrating the workings of Ajaxo’s technology. At the October 15 meeting, Koo and Chun expected Raymond to appear with a contract or a counterproposal. Instead, Baca showed up with Dan Miley and Guy Albanese. Baca wanted more information about “user interfaces” and how Ajaxo built an application program. In addition, Baca wanted to know about “data transfers” from a large page to the small screen.

Among other things, Baca posed questions about “device output,” the “cache,” and “commentator.” Koo and the E*Trade personnel engaged in a “deeper level” discussion of the Wirelessproxy model. Koo explained to Baca how the Wirelessproxy XO could overcome problems with the phone memory. According to Koo, at no time did Baca express dissatisfaction with the answers that Koo provided. Baca asked for a copy of Koo’s technical binder. Koo explained, however, that he had prepared only one copy, which he could not give up.

On October 18, Raymond told Chun that Baca needed the technical binder and that a contract was “in the work[s].” The same day, Koo and Chun drove to E*Trade and gave the technical binder to Baca. Baca made a copy of the technical binder and returned the original to Koo. By October 18, Koo had had five face-to-face meetings with E*Trade in which he had explained his technology. As a result, according to Koo, E*Trade had sufficient information to implement Koo’s Wirelessproxy XO technology. In October 1999, Koo performed some maintenance on the security system for the Ajaxo server.

He noticed that there had been 16 unauthorized entries into Ajaxo’s computer. All of these unauthorized entries used the four-digit PIN code Koo had created for the E*Trade demonstration. All the intrusions into the Ajaxo computer occurred between September 15 and September 19, 1999. Subsequently, Koo reported the unauthorized access to the “FBI High-Tech Squad” and the “Security Exchange Commission.” In March 2002, Koo learned that Baca had the four-digit PIN code and had provided it to other members of the E*Trade technical team.

Baca admitted that he had used and given other members of the technical team the four-digit PIN code. In addition, he admitted that he used a phone “emulator” to access Ajaxo’s system. On October 27, E*Trade gave Ajaxo a “letter of intent” stating that it would pay “XXX” for the Wirelessproxy XO technology. Raymond said that the XXX would be specified in a forthcoming formal agreement. E*Trade issued a new document on October 28 entitled “Memorandum of Terms.” E*Trade proposed to pay Ajaxo $100,000 upon signing the letter of intent and $100,000 on December 29, 1999, at the end of the development phase.

Finally, there was an option to pay $200,000 per “device platform.” Koo and Chun agreed to E*Trade’s terms and wanted to sign the agreement. Raymond told them that the document needed to be printed on E*Trade letterhead and that it would be ready for signing the next morning. When Koo returned to E*Trade the next day, he met with Pamela Kramer. Kramer told him that she did not have enough in her budget to meet the terms of the contract and needed to discuss it with her boss. She told Koo and Chun she would visit Ajaxo on November 5, 1999.

When Kramer and Raymond visited Ajaxo on November 5, Kramer told Koo and Chun that E*Trade had decided not to do business with Ajaxo. According to Koo, Kramer told him that Ajaxo was too small to be an E*Trade partner and that since she had learned about the Ajaxo technology she was ready to go out and find somebody in a different league to implement it. According to Chun, Kramer said that with the technology E*Trade had learned from Ajaxo, E*Trade could have another vendor in a different league do the wireless application.

Pursuant to the terms of the NDA, Chun wrote to the chief executive officer (CEO) of E*Trade about what had occurred and Ajaxo’s concerns about the threatened misappropriation of Ajaxo’s technology. Everypath During 1998 and part of 1999, Everypath’s focus was on accessing the Internet with “regular voice telephones.” The Everypath “voice enabling system” aimed to transmit text from a Web site, which was then translated into a voice on a telephone. Around May 1999, Everypath was in contact with E*Trade about developing a demonstration for E*Trade of Everypath’s voice application.

In the fall of 1999, Everypath learned from Guy Albanese at E*Trade that Everypath’s “chances of getting funded by E*Trade would be better if [Everypath] moved from a voice product to a data product.” Moreover, Albanese told Everypath that E*Trade was “leaning more towards data access than voice access of the Internet.” In all of 1999, Everypath had no customers for its voice product. Thus, in the fall of 1999 Everypath shifted in orientation toward data access and left behind the voice product.

However, before the switch from voice to data, in the September/October timeframe, Everypath “did not have a product . . . didn’t have the business . . . didn’t have a team.” The day after Baca met with Koo and Chun for Ajaxo’s second demonstration of its technology, where technical discussions took place about such things as “cookies,” Baca met with Everypath personnel. Guy Albanese referred Everypath to Baca. On the same day, an Everypath employee by the name of Prasad Krothapalli sent an e-mail message to Piyush Goel, one of Everypath’s founders, in which he outlined assignments for his group members.

One of the assignments for an employee by the name of Roopak was “support for session specific cookies with HTTPclient, (one week).” Long-term assignments for Roopak included “support for user name and password,” “persistent cookies,” “bug fixing” and “infrastructure for data cleansing support.” Baca left E*Trade in December 1999 and started work at Everypath on December 15, 1999. E*Trade selected Everypath as its wireless vendor. On December 8, 1999, E*Trade sent Everypath a letter of intent and memorandum of terms for a development agreement. By early 2000, Everypath had a team and had venture capital funding.

Everypath worked with E*Trade to implement a complete wireless solution that met E*Trade’s specification. In March 2000, Everypath and E*Trade entered into an “Application Development and Service Provider Agreement.” E*Trade paid Everypath $40,000 for its product. Arrowpath Before October 1999, E*Trade had an investment arm called E*Trade Ventures. Arrowpath, a limited liability corporation, came into existence in October 1999. Tom Bevilacqua, the managing partner of Arrowpath, testified that E*Trade was one of Arrowpath’s investors.

Arrowpath Venture Fund was the General Partner in a limited partnership called the Ecommerce Fund. E*Trade was a 25 percent contributor to the Ecommerce Fund, which Arrowpath managed. Arrowpath would receive 20 percent of the Ecommerce Fund’s net profits. In turn, E*Trade would receive 50 percent of Arrowpath’s profits from the Ecommerce Fund. Before October 1999, Bevilacqua worked at E*Trade as general counsel. In addition, he took on responsibility for mergers and acquisitions. In October 1999, Bevilacqua left E*Trade as an employee and took the role of managing partner of Arrowpath.

However, Bevilacqua retained the title of Chief Strategic Investment Officer at E*Trade. Jerry Gramaglia, an E*Trade employee, worked for Arrowpath as the “entrepreneur in residence.” From the fall of 1998 until April 2000, Gramaglia was E*Trade’s Chief Marketing Officer. Significantly, Gramaglia’s business card showed that Arrowpath Venture Capital was an “E*Trade Group, Inc., Associated Venture Fund.” According to E*Trade’s “10K” filing with the Securities and Exchange Commission, E*Trade Group Inc. was listed as a member of Arrowpath. In October 1999, Arrowpath had an advisory committee.

One of the members of the advisory committee was E*Trade’s CEO. Arrowpath sought to invest in e-commerce companies and use E*Trade’s resources to improve the value of those companies. Arrowpath provided $3.5 million in investment capital to Everypath in early 2000. In addition, Arrowpath mentioned its investment in Everypath to other investors.

Trial Testimony At trial, Ajaxo’s expert witness Earl Rennison testified that after examining Ajaxo’s technology and Everypath’s technology, he concluded that Everypath’s technology was “almost identical to the processes of Ajaxo’s.” Furthermore, after examining the state of Everypath’s software as it existed at different times, he concluded that Ajaxo’s and Everypath’s software was “basically the same, the same technology.” Rennison reviewed and investigated Everypath’s patent applications and determined that there was one for “automatic form filling," which included Baca as an author.

He opined, “[t]he information that was expressed in this patent was the same information which was communicated in meetings between Ajaxo and E*Trade to Dan Baca of E*Trade.” Rennison opined that Ajaxo’s technology had independent economic value derived from the fact that Ajaxo’s technology was not generally known. Rennison told the jury that in September 1999 there was no other technology that could accomplish “what the Ajaxo Wirelessproxy technology [could] accomplish[].” Rennison described in detail to the jury what he opined was the Ajaxo trade secret.

Moreover, he opined that Ajaxo “had fully communicated the specifics of its trade secret to E*Trade ... in sufficient detail to permit implementation.” Rennison pointed out to the jury that “E*Trade had five hours of meetings with Ajaxo to do a technology drill-down and got very specific detail on the technology.

And so . . . there was clearly ample time for them to understand very clearly about how the technology worked and how to go out and effectively implement that technology.” During his review of the Everypath source code library, Rennison told the jury that he was able to conclude that as of October 11, 1999, Everypath had not “come up with the solution for breaking the cache.” However, four days later it had developed a solution that was identical to the one that Ajaxo used.

Based on his experience, Rennison expressed the opinion that four days was an insufficient time for Everypath to develop the solution for breaking the cache, “without external clues to that information.” Ultimately, Rennison concluded that it would have been very difficult for Everypath to develop independently the wirelessproxy technology in two months. Joe Raymond testified that he began work on E*Trade’s wireless project in August 1999. Around that time, Sprint had just released some “early models” of its Web-enabled telephones.

At that time, he understood that Sprint was intending to release a Web-enabled telephone in January 2000. Raymond analyzed the marketplace to find out “what devices were out . . . in the marketplace at that time and what prospective devices might come into the marketplace in the future.” He gave his reports to Debra Chrapaty, E*Trade’s Chief Media Officer in the Digital Financial Media Division, and Pamela Kramer, E*Trade’s Vice-President of Digital Financial Media. Pamela Kramer testified that E*Trade concluded that they needed to deliver stock trading capability on a wireless platform.

E*Trade realized that it did not have the expertise to develop the technology for the wireless phone trading “in house.” Accordingly, in July or August 1999, E*Trade actively looked for a “partner” to provide the technology. E*Trade first met with Everypath when it was still known as Webonphone. Kramer recalled that there were E*Trade people talking to Everypath before September 1999. Raymond admitted that he introduced Everypath to Arrowpath as a possible investment opportunity, but discovered that Arrowpath was already aware of Everypath.

Raymond understood that Arrowpath knew about Everypath from Tom Bevilacqua. Raymond acknowledged that he had mentioned Ajaxo to the venture group, but discovered from Koo that he was not interested in venture capital funding. Jerry Gramaglia admitted that he had received an e-mail from Everypath in April 1999. Attached to that e-mail was an “executive

summary” of the company Everypath. He forwarded the e-mail to Guy Albanese along with the executive

summary asking him what he thought about Everypath as a company. Pamela Kramer admitted that she spoke with Grace Yang, one of the founding members at Arrowpath, to consider “taking a look” at Everypath. During trial, Ajaxo introduced into evidence print copies of many e-mails sent between various E*Trade personnel, and between E*Trade personnel and Everypath personnel. In addition, Ajaxo introduced other documents that E*Trade personnel had produced. Suffice it to say that during the period that E*Trade was evaluating Ajaxo and learning about Ajaxo’s technology, E*Trade was in contact with Everypath.

Some of the more significant e-mails included the following. On September 14, Raymond sent an e-mail to Kramer concerning Ajaxo. Raymond told Kramer that E*Trade “should leverage any expertise [they] could get [their] hands on.” In reply, Kramer suggested that they should use a company called Spyglass to evaluate other vendors. On September 21, Dennis Lundien e-mailed Raymond. He confirmed that they had agreed to participate in developing investment opportunities with outside companies. Raymond was to be the “point person” by arranging meetings.

On September 24, Lundien e-mailed Raymond requesting that Raymond speak to Kramer about having venture participation at the Digital Financial Media staff meetings. Raymond admitted that the new venture participation that Lundien described in the e-mail was the investment arm of E*Trade looking at new early stage companies. A series of e-mails dated October 12, 1999, confirmed that Raymond intended to meet with Ajaxo on October 15. Albanese, who was doing some of the technical evaluation, sent Raymond an e-mail asking him if he wanted “to discuss the plan of attack” before the meeting with Ajaxo.

Baca e-mailed Raymond and Albanese saying that despite Raymond’s not being able to make the meeting they should go anyway and “drill down on the technical questions and issues.” On October 13, 1999, Raymond learned that Ameritrade and Sprint had forged an agreement that would let their customers trade on line over Sprint’s wireless network. Raymond e-mailed Kramer that they should get “Sprint PCS back in here to get our arrangements in line with the competition.” Raymond admitted that it was about this time that he told Ajaxo that a letter of intent was being prepared.

At the same time, he wanted Baca to “drill down” on the Ajaxo technology. Raymond did not recollect Baca telling him about the technical binder following the October 15 meeting. He recalled a conversation he had with Chun on October 18, however, in which he told Chun that E*Trade was trying to learn more about Ajaxo’s product, but felt they did not have all the answers they needed. Raymond recalled that Ajaxo’s “general feeling” was that until they had a contract, Ajaxo was reluctant to give more technical information.

Raymond denied that he told Ajaxo that E*Trade did not do business with people who were not “team players.” Raymond recalled that as result of this phone conversation, there was “an opening up, a desire to talk further on the part of Ajaxo to bring more information to bear.” Raymond recollected that when Baca returned from the October 15 meeting with Ajaxo, Baca expressed the view that he “did not feel fully comfortable with the Ajaxo solution in a general sense due to lack of thorough information.” Raymond admitted that as of September 24, of the vendors that they had talked to, only Ajaxo could accomplish a wireless trade.

In response to an e-mail Raymond received from Baca on September 24, he translated Baca’s comments as “ ‘Alpha’ launch a week from Friday, Beta launch November 1, full product release January 15.” Raymond explained that this meant that E*Trade needed to keep up with the competition. The next sentence of Raymond’s e-mail indicated that he thought that E*Trade was “ready for such a cycle between the contacts [E*Trade] ha[d] at Ajaxo and [Everypath].” Again, Raymond admitted that he knew at this time that Ajaxo was the only vendor to demonstrate stock trading capability on a wireless phone.

The next sentence of the e-mail said, “Let the games begin.” Raymond identified a “matrix” document he had made in which he assigned certain values to the vendors E*Trade was evaluating. As of November 9, 1999, four days after Kramer told Ajaxo that it was not the right partner for E*Trade, Raymond rated Ajaxo higher than Everypath. A detailed analysis showed that three vendors were still in the running in late November 1999. Ajaxo was still on the list.

Raymond testified, however, Ajaxo was “not giving us what we needed in order to fully evaluate them.” In the analysis Raymond wrote, “What else is there to say regarding Ajaxo? Whereas other companies are open-kimono and willing to do the project . . . at cost, Ajaxo holds their cards close and asks for major bucks to deliver. Still Ajaxo is the only company that has an end-to-end solution that with tweaks, porting of servers, and some documents could be employed today.” Again, Raymond admitted that as of this time only Ajaxo had demonstrated wireless trading capability.

Raymond recalled that around November 12, he had gone to Everypath to review requirements and to talk about the possibility of purchasing into a relationship with Everypath. An e-mail from Mike Scolari at Everypath to Raymond dated November 12, 1999, indicated that Everypath appreciated Raymond and Baca’s reviewing E*Trade’s specifications with Everypath. In addition, Scolari told Raymond that Everypath had been “diligently at work” on a proposal. Scolari asked if he could “come by” and drop off the proposal on Wednesday. Raymond admitted that he reviewed Everypath’s proposal before it was submitted to E*Trade.

An e-mail from Raymond to Baca and Albanese showed that Raymond was in the middle of reading the proposal and “it appeared] that they [had] answered all questions thoroughly and they [were] hitting the sweet spots with many elements.” Raymond’s only concern was Everypath’s ability to deliver. Baca e-mailed Raymond the next day saying that he thought they could as long as they did not hit any snags, but said he would have a better “feel” after the engineering visit. On December 7, 1999, Raymond prepared an analysis of the three remaining vendors for Debra Chrapaty.

Raymond concluded that Ajaxo was too small and Aether was not acceptable for various reasons. This left Everypath as the only possible partner. An agreement went out to Everypath the next day. Initially, e-mails between Baca and Raymond showed only two vendors under consideration, Ajaxo and Wolfe Technology. After the September 15 meeting between E*Trade and Ajaxo, Everypath’s name showed up in e-mails Albanese sent to Raymond and Baca. On September 16, Raymond, Baca and Albanese met with Everypath. Raymond recalled that Scolari and Prakash Iyer were present for Everypath.

Everypath gave a PowerPoint presentation as opposed to a live trading demonstration. In an e-mail dated September 17, 1999, Baca asked Raymond if he was getting close to talking about a contract with Ajaxo. Raymond could not recall if he discussed the issue with Baca. On September 20, Raymond received an e-mail from Baca suggesting that Everypath be considered as a vendor. Raymond suggested to Baca that he set up a meeting with Ajaxo to discuss the nature and terms of an Ajaxo/E*Trade relationship.

Raymond wrote, “Simply indicate that we would like to have them in to discuss the business side of our relationship.” Lisa Chui, Everypath’s senior application engineer, testified that when she started work at Everypath in October 1999 she was working on a voice application. That voice application for E*Trade was never commercially deployed. She remembered that she was told to prepare a voice application demonstration for the “Red Herring” conference. The demonstration was to include only stock quotes and the news. There was no trading functionality.

Her notes reflected that she was to use “static pages” instead of “live pages,” which indicated that this was to be a static demonstration rather than a live demonstration. Chui began work on the E*Trade wireless data application in December 1999 and stopped work on the voice application. When Chui started working on the data application for E*Trade it did not have trading functionality. Chui was introduced to Baca when she started work on the E*Trade application.

A series of e-mails between Baca and Chui indicate that Baca reviewed the E*Trade application Chui was working on, and made recommendations to improve it. Jennifer Gill Roberts, a partner in the Sevin Rosen Investment Fund, confirmed that at a partners meeting on September 13, 1999, the partners decided to make an investment in Everypath. The investment closed in November 1999. Roberts admitted that she spoke with Guy Albanese in September 1999. She was given his name and phone number by Everypath’s CEO. She recollected that Albanese viewed Everypath’s product as a voice and data platform.

After the telephone conversation with Albanese, Roberts prepared a memorandum outlining her rationale for recommending an investment in Everypath. Procedural History Ajaxo filed suit against E*Trade and Everypath on October 27, 2000. Ajaxo’s operative complaint alleged that E*Trade had breached the NDA and that both E*Trade and Everypath had misappropriated Ajaxo’s trade secrets. Ajaxo sought damages, exemplary damages, and equitable relief.

Specifically, with respect to damages, Ajaxo prayed for “[cjompensatory damages for lost profits in the sum of five-hundred thousand dollars ($500,000.00) per month for so long as the misappropriation continues, together with interest as permitted by law. [f] Unjust enrichment damages pursuant to Civil Code

Section 3426.3 according to proof at trial, [f] Reasonable Royalties pursuant to Civil Code

Section 3426.3 according to proof at trial.” Regarding the breach of the NDA, Ajaxo sought damages “in an amount to be proven ... at trial” and “appropriate equitable relief.” The jury trial began on March 5, 2003. The court heard all the parties’ in limine motions. Thereafter, a seven-week jury trial included extensive testimony from 17 witnesses called by Ajaxo, two witnesses called by E*Trade, and one witness called by Everypath. At the end of the plaintiff’s case, E*Trade and Everypath moved for nonsuit on Ajaxo’s misappropriation claim.

The trial court granted a partial nonsuit on the issue of damages for the misappropriation, but allowed the issue of liability to go to the jury. As noted, the jury returned a special verdict in Ajaxo’s favor on the breach of the NDA and the misappropriation of Ajaxo’s trade secret by E*Trade and Everypath. Following the jury trial on the issue of liability and damages for E*Trade’s breach of the NDA, Ajaxo asked the court to award a reasonable royalty and punitive damages against E*Trade and Everypath in connection with the misappropriation claim. Ajaxo’s counsel made an opening statement to the court.

Both E*Trade and Everypath moved for nonsuit. The court granted the motion for nonsuit. Subsequently, the court heard testimony on Ajaxo’s request for a permanent injunction against E*Trade’s and Everypath’s continuing use of Ajaxo’s trade secret. As to E*Trade, Ajaxo sought the injunction under the provisions of the Uniform Trade Secrets Act (Civ. Code, §§ 3426-3426.il), and under the nondisclosure agreement. In a detailed statement of decision, the court denied Ajaxo’s claim for injunctive relief. Thereafter, Ajaxo moved for a new trial on damages, which E*Trade and Everypath opposed.

E*Trade moved for a new trial and for JNOV, which Ajaxo opposed. Similarly, Everypath moved for JNOV regarding the jury’s finding that Everypath had willfully and maliciously misappropriated Ajaxo’s trade secret. Ajaxo opposed the motion. The court denied all the motions. Subsequently, the court determined that Ajaxo was the “prevailing party” for purposes of recovering attorney fees on the contract. The court awarded Ajaxo $605,387 in attorney fees. As noted, all parties have appealed.

Discussion E*Trade’s Issues on Appeal E*Trade contends that the court’s evidentiary rulings deprived E*Trade of its right to a fair trial. Background Among others, E*Trade filed two in limine motions to exclude evidence. One was to exclude evidence of $3.5 million in venture capital funding that Everypath had received beginning in March 2000 (the investment evidence). The second was to exclude evidence of Ajaxo’s communication with the FBI.

The Investment Evidence Below, E*Trade asserted that a company called Arrowpath Venture Capital, which it conceded was an E*Trade affiliate, through its venture capital fund called E*Trade E-Commerce Fund, L.P. made the investment in Everypath months after the alleged misappropriation was purported to have occurred. Thus, E*Trade argued, permitting Ajaxo to introduce E*Trade’s indirect investment in Everypath as evidence of E*Trade’s liability would be prejudicial and misleading.

During the hearing on E*Trade’s motion, Ajaxo’s counsel argued that the investment evidence was “central to the proof in this case of the misappropriation and the motivation therefor.” The court agreed with E*Trade that the investment evidence would be “irrelevant” and “highly prejudicial” unless Ajaxo could establish a direct link between E*Trade’s alleged misappropriation and Arrowpath’s investment.

The court explained: “One of the things the plaintiff has to do in order to show that however the money may have gone from E*Trade to Arrowpath to Everypath, however that was accomplished, you’re going to have to connect the dots, meaning that it’s—the suggestion is being made that there was a misappropriation of trade secrets owned by Ajaxo and that the subsequent monies from the venture capital firm of Arrowpath into Everypath which E*Trade has some kind of interest in, without going into really the relationship, one of the things the plaintiff is going to have to do is show that there was a connection between the misappropriation and the investment, because otherwise it’s irrelevant.

And it’s been my understanding that the position of Ajaxo up to this point has been that Mr. Baca was the one who misappropriated the trade secrets of Ajaxo while he was an E*Trade employee and then he became an Everypath employee.

But the mere fact that he’s an employee of E*Trade at the time he allegedly misappropriates the trade secrets, you’ve got to show some connection that that event, if in fact it happened, that the investment strategy of E*Trade and/or Arrowpath and Everypath, that that was somehow connected, otherwise these can be two totally separate events.” Ajaxo’s counsel represented through a detailed offer of proof that senior E*Trade personnel were involved both in the decision to misappropriate Ajaxo’s trade secret and in Arrowpath’s investment in Everypath.

Ajaxo’s counsel represented to the court that he had and would present evidence at trial establishing the following: “. . .

E*Trade has a business plan looking for emerging high tech companies to invest in. ... . [Bjefore they ever run into Ajaxo they come across a company called [Everypath] and discuss investing in [Everypath] if [Everypath] can deliver the technology it badly needs in the wireless marketplace. . . . [Everypath] is not successful in developing that technology and the time is running out. ... [A] company does come that has the technology. . . . [T]hat company that has the technology is not willing to be purchased by E*Trade as a portfolio company as [Everypath] was willing to be so purchased. . . . there is a discussion among the higher-ups that if the technology of Ajaxo can be delivered to [Everypath], we can then invest in [Everypath], take care of our technological needs, maintain our marketshare and have a very profitable portfolio company all in one fell swoop.

All we have to do then is to get the technology from Ajaxo, transfer it to Everypath and get Ajaxo out of our hair. ... an employee, high-ranking employee at E*Trade that’s its marketing executive goes over to Arrowpath, the investment arm, and ... the managing partner of the investment arm happens to be an executive officer of E*Trade. And E*Trade then proceeds to invest in this new company now called Everypath.

Inquiry: is it relevant to this case of misappropriation to show that investment?” Faced with this offer of proof, the court denied E*Trade’s motion and allowed the evidence concerning Arrowpath’s investment in Everypath to be presented to the jury. Subsequently, E*Trade filed notice of its intention to move for a new trial. In support of its motion for a new trial, E*Trade contended that Ajaxo’s counsel had made a false offer of proof concerning the investment evidence when he represented that Ajaxo would prove a direct link between the investment and E*Trade’s alleged misappropriation.

In its opposition to E*Trade’s motion, Ajaxo argued that even if there was some “theoretical prejudice stemming from the admission of this evidence, it was fully rebutted through E*Trade’s ‘this investment theory is out the window’ closing argument.” The court denied E*Trade’s motion. Ajaxo’s Communications with the FBI According to Koo, in September 1999, an individual accessed Ajaxo’s demonstration program without authorization. At the time Koo discovered that the program had been accessed, he did not know who had accessed the program. Koo stated that he reported this “unauthorized” access to the FBI.

Subsequently, in April 2001, six months after Ajaxo filed this lawsuit, Koo received an e-mail from a third party suggesting that someone may have planted a “worm” on Ajaxo’s server. Koo forwarded this message to the FBI. According to Koo, the FBI advised him that he should “reformat” the server’s hard drive. In so doing, Koo destroyed all the electronic files and data that resided on the server pertaining to the E*Trade application of Ajaxo’s technology as it existed in the fall of 1999. E*Trade filed an in limine motion to exclude this evidence.

E*Trade argued that permitting testimony concerning FBI investigations had significant potential for misleading or confusing the jury. E*Trade based its motion to exclude the FBI evidence on the fact that Ajaxo had successfully blocked E*Trade’s pretrial discovery efforts concerning these communications. Contending that the communications with the FBI were irrelevant, Ajaxo’s former counsel would not allow Koo or Chun to provide complete deposition testimony concerning the issue. Furthermore, Ajaxo had not provided a complete production of documents relating to the communication with the FBI.

After a lengthy hearing, the court denied E*Trade’s in limine motion. The court ruled, “the call to the FBI in 1999 . . . will be admitted, [because] it corroborates and supports, Mr. Koo’s contention that there had been an unauthorized entry into his computer systems.” Regarding the testimony concerning Koo’s contact with the FBI in 2001, the court ruled that the testimony could come in because it explained Koo’s destruction of the electronic source code.

E*Trade argues that the court erred in admitting “highly prejudicial evidence concerning the Arrowpath investment in Everypath and Ajaxo’s communications with the FBI.” In so doing, E*Trade was deprived of a fair trial. E*Trade argues that the court abused its discretion in admitting this evidence. Consequently, E*Trade contends that this court should vacate the judgment and remand the case for a new trial. Evidence Code

section 310 provides; “(

a) All questions of law. (including but not limited to questions concerning ... the admissibility of evidence . . .) are to be decided by the court.” “ ‘Broadly speaking, an appellate court reviews any ruling by a trial court as to the admissibility of evidence for abuse of discretion.’ [Citation.]” (People ex rel. Lockyer v. Sun Pacific Farming Co. (2000) 77 Cal.App.4th 619, 639 [92 Cal.Rptr.2d 115].) “In reviewing the trial court’s exercise of its discretion under Evidence Code

section 352, we do not substitute our judgment for that of the trial court. [Citation.] We may grant relief only when the asserted abuse constitutes a miscarriage of justice, [citation] that is, when in the absence of the improperly admitted evidence a result more favorable to the complaining party would likely have occurred [Citation.].” (Wanland v.

Los Gatos Lodge, Inc. (1991) 230 Cal.App.3d 1507, 1523 [281 Cal.Rptr. 890].) As we have said before, “ ‘[w]hile the concept “abuse of discretion” is not easily susceptible [of] precise definition, the appropriate test has been enunciated in terms of whether or not the trial court exceeded “ ‘the bounds of reason, all of the circumstances before it being considered.. ..’ ” [Citations.]’ [Citation.] ‘A decision will not be reversed merely because reasonable people might disagree. “An appellate tribunal is neither authorized nor warranted in substituting its judgment for the judgment of the trial judge.” [Citations.] In the absence of a clear showing that its decision was arbitrary or irrational, a trial court should be presumed to have acted to achieve legitimate objectives and, accordingly, its discretionary determinations ought not [to] be set aside on review.’ [Citation.]” (Schall v.

Lockheed Missiles & Space Co. (1995) 37 Cal.App.4th 1485, 1488, fn. 1 [44 Cal.Rptr.2d 191].) E*Trade argues that the investment evidence was particularly prejudicial because it allowed Ajaxo “to conjure up the appearance of a circumstantial case against E*Trade.” E*Trade contends that Ajaxo had no witnesses to or other direct evidence of any misappropriation and could prove only a series of communications between the parties, all of which, E*Trade argues, were consistent with its position that it acted properly and was simply evaluating different wireless vendors.

Thus, E*Trade argues, Ajaxo used the investment evidence to supply the essential theory of motive. As a result, E*Trade asserts, “[t]he prejudice was palpable” because it “allowed Ajaxo to present a motive theory to add the false appearance of weight to its entirely circumstantial case.” Fundamentally, E*Trade misunderstands the test for when evidence is more prejudicial than probative. Exclusion of evidence under Evidence Code

section 352 is reserved for those cases where the proffered evidence has little evidentiary value and creates an emotional bias against the defendant. (Bihun v. AT&T Information Systems, Inc. (1993) 13 Cal.App.4th 976, 989 [16 Cal.Rptr.2d 787], overruled on other grounds in Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 664 [25 Cal.Rptr.2d 109, 863 P.2d 179].) Thus, regarding the court’s admission of the investment evidence, based on counsel’s offer of proof, we agree with the trial court that the investment evidence was relevant.

Implicitly, the court weighed the probative value of the evidence against the prejudice to E*Trade and concluded that it was more probative than prejudicial. Even though Arrowpath’s investment in Everypath came after the misappropriation, the evidence was relevant and probative to show that E*Trade and Arrowpath were deeply entangled. That is, the people who made the decision at Arrowpath to invest in Everypath were the same people who were at E*Trade during the time E*Trade had an investment strategy to invest in early stage companies and was looking to find a partner to provide wireless trading technology.

E*Trade fails to explain how this evidence was more prejudicial than probative—that is, how it created an emotional bias against E*Trade. The investment evidence was just one of many relevant facts from which the jury could have concluded that E*Trade had a motive to misappropriate Ajaxo’s trade secret. Accordingly, we conclude that the trial court did not abuse its discretion in admitting the investment evidence. Alternatively, E*Trade seems to be arguing that the trial court abused its discretion in denying E*Trade’s new trial motion.

Below, E*Trade argued that the evidence presented at trial established that Ajaxo’s offer of proof was false. E*Trade asserted that it was entitled to a new trial because its right to a fair trial was jeopardized by the erroneous admission of the prejudicial evidence. As noted, the trial court denied E*Trade’s motion for a new trial. In effect, a motion for a new trial is a new and independent proceeding, in which the trial court can reweigh the evidence and reevaluate the credibility of the witnesses.

The trial court is authorized to disbelieve witnesses and draw inferences from the evidence contrary to the inferences drawn by the jury. (Eltolad Music, Inc. v. April Music, Inc. (1983) 139 Cal.App.3d 697, 705 [188 Cal.Rptr. 858].) The grounds upon which a new trial may be granted are statutory. (Sanchez-Corea v. Bank of America (1985) 38 Cal.3d 892, 899 [215 Cal.Rptr. 679, 701 P.2d 826].) Code of Civil Procedure

section 657 lists seven such grounds. Included within that list is “[i]rregularity in the proceedings of the court, jury or adverse party, or any order of the court or abuse of discretion by which either party was prevented from having a fair trial.” On review, some courts have applied the same standard of review to orders denying new trial as to orders granting new trial, that is, the abuse of discretion test. (See, e.g., Jacoby v.

Feldman (1978) 81 Cal.App.3d 432, 446 [146 Cal.Rptr. 334].) On the other hand, the California Supreme Court has stated that appellate courts in reviewing such an “order denying a new trial, as distinguished from an order granting a new trial, . . . must fulfill our obligation of reviewing the entire record, including the evidence, so as to make an independent determination as to whether the error was prejudicial. [Citations.]” (City of Los Angeles v. Decker (1977) 18 Cal.3d 860, 872 [135 Cal.Rptr. 647, 558 P.2d 545].) Accordingly, we apply this test to the denial of the new trial motion here.

At the outset, we note, however, that we have concluded that the admission of the investment evidence was not “prejudicial” as that term is understood for Evidence Code

section 352 purposes. Furthermore, after reviewing the entire record, we conclude that Ajaxo did not fail in its offer of proof. Specifically, Ajaxo proved that some of the people that made the decision to invest in Everypath were the same people that worked at E*Trade while E*Trade was engaged in its quest for a “partner" to provide wireless trading technology. Ajaxo may not have proved by direct evidence that there was “a discussion among the higher-ups,” but Ajaxo presented enough other evidence from which the jury could make a reasonable inference that such a discussion had taken place.

For instance, the evidence showed that Jerry Gramaglia, E*Trade’s Chief Marketing officer, had asked Baca to find a wireless system to allow E*Trade to participate in the Sprint Internet-phone launch. Once Arrowpath formed, Gramaglia worked for Arrowpath as the “entrepreneur in residence.” Before October 1999, Tom Bevilacqua worked at E*Trade as general counsel. In addition, he took on responsibility for mergers and acquisitions. Bevilacqua left E*Trade in October 1999 to become managing partner at Arrowpath. However, he retained the title at E*Trade of Chief Strategic Investment Officer.

Arrowpath sought to invest in e-commerce companies and use E*Trade’s resources to improve the value of those companies. As early as May 1999, Everypath expressed a desire to become a partner with E*Trade. Around this time, Guy Albanese met with Everypath. A series of e-mails between Albanese and Gramaglia showed that Everypath was a private company that hoped to go public after its technology was ready and adopted by “front runners like E*Trade.” Furthermore, Albanese told Everypath that E*Trade did “IPO’s” and that there was a possibility that E*Trade could invest in Everypath and its patents.

Albanese was the person who told Everypath that it needed to change direction from voice to data. Far from failing to provide the evidence that E*Trade and Arrowpath were inextricably entwined, as noted ante, Ajaxo presented evidence that some of the people who made the decision to invest in Everypath were the same people who worked at E*Trade while E*Trade was actively searching for a vendor to provide wireless trading technology. Adding this evidence to the following evidence, the jury could reasonably have concluded that E*Trade’s misappropriation of Ajaxo’s trade secrets was willful and malicious.

E*Trade was actively looking for a partner to provide wireless trading technology. At a time when Ameritrade and Sprint had forged an agreement, only Ajaxo had demonstrated wireless trading. However, Ajaxo was not interested in E*Trade’s investment, but E*Trade needed the wireless trading to stay competitive. E*Trade wanted to invest in new early stage companies. Accordingly, we reject E*Trade’s assertion that the trial court erred in denying E*Trade’s motion for a new trial.' As regards Ajaxo’s communications with the FBI, again we find no abuse of discretion.

The trial court engaged in a long and detailed evaluation of the relevance of the evidence, including reviewing Koo’s deposition testimony and balanced its probative value against the prejudice to E*Trade. The court noted that the “probative value of all of this is highly relevant to corroborate Mr.

Koo’s position that he believed the system was entered without authorization . . . [a]nd I don’t think it’s prejudicial to the defense, at least it’s not—the probative value is not substantially outweighed by any prejudice to the defense, because the mere fact that somebody reports something to law enforcement is a logical thing for one to do. And somehow that if we invoke the FBI, that that’s going to prejudice the defense? No, I just don’t think it does when you balance it, as I must on a 352 objection, and weigh it against Mr.

Koo and Ajaxo’s right to put their case on.” We reiterate that E*Trade misunderstands the test for when evidence is more prejudicial than probative. We note, again, that exclusion of evidence under Evidence Code

section 352 is reserved for those cases where the proffered evidence has little evidentiary value and creates an emotional bias against the defendant. (Bihun v. AT&T Information Systems, Inc., supra, 13 Cal.App.4th at p. 989, overruled on other grounds in Lakin v. Watkins Associated Industries, supra, 6 Cal.4th 644, 664.) Here, the FBI evidence was relevant to explain why Koo destroyed the source code.

However, notwithstanding E*Trade’s comment that the admission of this evidence “helped Ajaxo create the illusion of circumstantial evidence in support of its claims,” again E*Trade fails to explain how this evidence was more prejudicial than probative, such that it would have created an emotional bias against E*Trade. Accordingly, we reject E*Trade’s contention that the trial court abused its discretion in admitting evidence of Koo’s communications with the FBI. E*Trade asserts that the trial court erred in denying E*Trade’s motion for JNOV.

E*Trade argues that in order to prevail on its claim for misappropriation of trade secrets and breach of the NDA, Ajaxo was required to establish that E*Trade disclosed protected information to Everypath. Unable to do so by direct evidence, Ajaxo attempted to prove E*Trade’s disclosure through inferences based on circumstantial evidence.

However, E*Trade argues, all these inferences were refuted by “voluminous, unequivocal, and uncontradicted evidence that no such disclosure occurred.” Thus, E*Trade argues, under these circumstances, Ajaxo’s inferences do not constitute “ ‘substantial evidence’ ” and are legally insufficient to support the verdict. “Well-settled standards govern judgments notwithstanding the verdict: ‘When presented with a motion for JNOV, the trial court cannot weigh the evidence [citation], or judge the credibility of witnesses. [Citation.] If the evidence is conflicting or if several reasonable inferences may be drawn, the motion for judgment notwithstanding the verdict should be denied. [Citations.] A motion for judgment notwithstanding the verdict of a jury may properly be granted only if it appears from the evidence, viewed in the light most favorable to the party securing the verdict, that there is no substantial evidence to support the verdict.

If there is any substantial evidence, or reasonable inferences to be drawn therefrom in support of the verdict, the motion should be denied. [Citation.] [Citation.] The same standard of review applies to the appellate court in reviewing the trial court’s granting [or denying] of the motion. [Citations.] Accordingly, the evidence . . . must be viewed in the light most favorable to the jury’s verdict, resolving all conflicts and drawing all inferences in favor of that verdict.’ [Citation.]” (Osborn v.

Irwin Memorial Blood Bank (1992) 5 Cal.App.4th 234, 258-259 [7 Cal.Rptr.2d 101].) Thus, in reviewing a denial of a motion for JNOV, we review the evidence in the light most favorable to Ajaxo to determine whether substantial evidence supports the jury verdict. (Flanagan v.

Flanagan (2002) 27 Cal.4th 766, 769 [117 Cal.Rptr.2d 574, 41 P.3d 575].) To put it another way, “ ‘[w]hen a finding of fact is attacked on the ground that there is not any substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence contradicted or uncontradicted which will support the finding of fact.’ [Citations.] []Q ‘It is well established that a reviewing court starts with the presumption that the record contains evidence to sustain every finding of fact.’ [Citations.]” (Foreman & Clark Corp. v.

Fallon (1971) 3 Cal.3d 875, 881 [92 Cal.Rptr. 162, 479 P.2d 362].) We observe that an appellant has a duty to summarize the facts fairly in light of the judgment. (Foreman & Clark Corp. v. Fallon, supra, 3 Cal.3d at p. 881.) “The duty to adhere to appellate procedural rules grows with the complexity of the record.” (Western Aggregates, Inc. v.

County of Yuba (2002) 101 Cal.App.4th 278, 290 [130 Cal.Rptr.2d 436].) In a case such as this, where there are 23 volumes of trial transcript and 32 volumes of appendix and supplemental appendix, we find E*Trade’s recitation of the facts lacking in fairness and completeness. E*Trade’s slanted presentation of the facts reads more like argument. Accordingly, we deem that E’Trade has waived this issue on appeal because of its failure to carry its burden of providing this court with a fair and complete

summary of the evidence. We will address the merits of ETrade’s contention, however, to clarify that circumstantial evidence is not trumped by direct evidence, when the direct evidence consists of denials by E’Trade personnel and Everypath personnel that anyone from ETrade disclosed any protected Ajaxo information to Everypath. A party may rely upon “reasonable inferences” from the evidence to support a verdict. (Hauter v.

Zogarts (1975) 14 Cal.3d 104, 110 [120 Cal.Rptr. 681, 534 P.2d 377].) An “inference” is a deduction of fact that may logically and reasonably be drawn from another fact or group of facts found or otherwise established. (Evid. Code, § 600.) When an inference needs to be drawn from the evidence to prove a fact, we call this circumstantial evidence as opposed to direct evidence. Thus, direct evidence is evidence “that directly proves a fact, without an inference or presumption, and which in itself, if true, conclusively establishes that fact.” (Evid.

Code, § 410.) Formerly, circumstantial evidence was defined as “indirect evidence” in Code of Civil Procedure

section 1832. Circumstantial evidence, when relevant, is as admissible as direct evidence. (Cal. Law Revision Com. com. to repeal of Code Civ. Proc., § 1832, 20 West’s Ann. Code Civ. Proc. (1983 ed.) following §§ 1827-1832, p. 19.) In People v.

Goldstein (1956) 139 Cal.App.2d 146, 152-153 [293 P.2d 495], the Second District Court of Appeal summarized the difference between direct and circumstantial evidence. “Direct evidence is that which is applied to the fact to be proved, immediately and directly, and without the aid of any intervening fact or process: as where, on a trial for murder, a witness positively testifies he saw the accused inflict the mortal wound, or administer the poison. Circumstantial evidence is that which is applied to the principal fact, indirectly, or through the medium of other facts, from which the principal fact is inferred.

The characteristics of circumstantial evidence as distinguished from that which is direct, are, first, the existence and presentation of one or more evidentiary facts; and, second, a process of inference, by which these facts are so connected with the fact sought, as to tend to produce a persuasion of its truth. ...

It has been said that circumstantial evidence, as distinguished from direct evidence, is testimony not based on actual personal knowledge or observation of the facts in controversy, but of other facts from which deductions are drawn, showing indirectly the facts sought to be proved. [Citation.]” Hence, “[t]he term ‘circumstantial evidence’ emphasizes the effect of the evidence-the necessity of drawing inferences from it.” (1 Witkin, Cal. Evidence (4th ed. 2000) Circumstantial Evidence, § 1, p. 322.) Relying on Hicks v. Reis (1943) 21 Cal.2d 654 [134 P.2d 788] (Hicks) and Teich v.

General Mills (1959) 170 Cal.App.2d 791 [339 P.2d 627] (Teich), E*Trade asserts that a party may not rely upon an inference to establish a fact where the inference is refuted by clear evidence establishing the nonexistence of that fact.

In Teich, the plaintiff developed a kit to allow children to make “sun pictures.” (Teich, supra, 170 Cal.App.2d at p. 795.) He presented the kit to the defendant, a cereal manufacturer,. demonstrated its use, and left some samples with the defendant. (Id. at p. 796.) Subsequently, the defendant decided to include a similar product from a different source in its “Trix” cereal line. (Id. at. p. 797.) The plaintiff contended that the defendant had copied the idea and that the defendant owed him money for the reasonable value of his product. (Id. at pp. 794-797.) The defendant denied that it had copied the plaintiff’s product, contending that a third party advertising agency had independently developed a similar product and submitted it to defendant.

At trial, the defendant called as witnesses its employees and those of the advertising agency. They all testified that the advertising agency had independently developed and submitted the product to the defendant. The defendant introduced documentary evidence, including correspondence with the advertising agency, to demonstrate that the advertising agency had submitted its own product to the defendant. (Teich, supra, 170 Cal.App.2d at pp. 799-801.) After the jury returned a verdict for the plaintiff, the trial court granted defendant’s motion for JNOV. The Court of Appeal affirmed.

The court observed that the plaintiff’s testimony concerning the presentation of his product to the defendant, as well as the similarities between the two products, had raised an “inference” that the defendant had copied the plaintiff’s product.

The court explained, however, that this inference had been dispelled by direct evidence to the contrary and was therefore insufficient to support the verdict. (Teich, supra, 170 Cal.App.2d at p. 799.) E*Trade contends that the inferences relied upon by Ajaxo in this case were dispelled by clear, positive and uncontradicted evidence that E*Trade did not disclose any protected information to Everypath. As such, E*Trade asserts, the judgment fails the substantial evidence test. We find E*Trade’s reliance on Teich misplaced.

The “inference” that the Teich court talked about was, in fact, a “presumption.” As Witkin explains it, “[fjormer statutes defined a presumption as a deduction that the law expressly directs to be made from particular facts, and an inference as a deduction that the jury may make from the facts. Because ‘the law’ then meant ‘statutes,’ an unfortunate distinction arose between statutory presumptions and nonstatutory presumptions; the latter had to be classified as ‘inferences.’ ” (1 Witkin, Cal.

Evidence, supra, Burden of Proof and Presumptions, § 48, p. 197.) “Former statutes classified presumptions as a form of ‘indirect evidence,’ and stated that, unless a presumption was controverted, the jury had to find according to the presumption. Under these statutes, the rule became established that presumptions constituted independent evidence, to be somehow weighed against other evidence, and that a verdict or finding could rest upon a presumption even though all of the other evidence was opposed to it.” (1 Witkin, Cal.

Evidence, supra, Burden of Proof and Presumptions, § 49, p. 197, italics added.) A number of cases addressing the nonstatutory presumptions or inferences required the trier of fact to come to a certain conclusion unless the defendant presented some quantum of contrary evidence. These cases came to apply the rule that the inference was dispelled as a matter of law, where the contrary evidence was “clear, positive, uncontradicted, and of such a nature that it can not rationally be disbelieved.” (Blank v. Coffin (1942) 20 Cal.2d 457, 461 [126 P.2d 868]; Leonard v.

Watsonville Community Hospital (1956) 47 Cal.2d 509, 515, 518 [305 P.2d 36]; see, Teich, supra, 170 Cal.App.2d at p. 799.) Witkin emphasizes that these cases apply to the prior law where juries were required to give credit to nonstatutory “presumptions” or “inferences” unless dispelled. (1 Witkin, Cal. Evidence, supra, Burden of Proof and Presumptions, § 52, pp. 201-202.) Both Hicks and Teich apply to the type of inference/presumption that must be overcome, rather than the process a jury uses to connect facts to conclusions.

Neither Hicks nor Teich stands for the proposition that circumstantial evidence fails when there is contradictory direct evidence. We agree with Ajaxo when it points out that E*Trade’s position fails the common sense test. If the law were as E*Trade suggests, then a purely circumstantial evidence case against a criminal defendant would fail if the criminal defendant were to testify, “I didn’t do it.” As noted ante, our review of the record discloses that there was substantial evidence to support the jury verdict that E*Trade willfully and maliciously misappropriated Ajaxo’s trade secrets.

During 1999, only Ajaxo could demonstrate stock trading on a wireless phone. E*Trade learned from Ajaxo how it dealt with the difficult problem of the “cache” and within weeks, too short a time for independent development, Everypath implemented the same solution. When Ajaxo demonstrated its wireless trading capability to E*Trade, E*Trade asked for and was refused the code to access Ajaxo’s server. Subsequently, although Ajaxo refused to give its access code for its server, E*Trade personnel used that access code to access Ajaxo’s server on at least 16 occasions in the fall of 1999.

Within four months after Dan Baca accessed Ajaxo’s server without authorization, he went to work for Everypath. While at Everypath, Baca was involved in testing of Everypath’s trading solution, which an expert testified was “identical” to that of Ajaxo. As paragraph five of the NDA acknowledges, keeping an economic advantage was very important to E*Trade.

The fact that Arrowpath, a company staffed by some of the same people that were involved in E*Trade’s search for a wireless partner, made an investment in Everypath, was strong circumstantial evidence from which the jury could have inferred that E*Trade had an economic motive to misappropriate Ajaxo’s trade secret. Arrowpath sought to invest in e-commerce companies and use E*Trade’s resources to improve the value of those companies. Arrowpath’s “entrepreneur in residence” was an officer at E*Trade during the time that E*Trade was searching for a wireless partner.

This same person, Gramaglia, asked Baca to find a wireless system to allow E*Trade to participate in the Sprint Internet phone launch. Guy Albanese, the person who introduced Everypath to Baca, reported to Gramaglia. Furthermore, the day after Baca met with Koo and Chun for Ajaxo’s second demonstration of its technology, where technical discussions took place about such things as “buffering the cookie” and “how to sustain the session,” Baca met with Everypath personnel.

At this time in Everypath’s development of “their” product, Everypath had only just shifted in orientation toward data access and in the September/October timeframe, Everypath “did not have a product. . . didn’t have the business . . . didn’t have a team.” Yet on the same day as Baca met with Everypath, an Everypath employee by the name of Prasad Krothapalli sent an e-mail message to Piyush Goel, one of Everypath’s founders, in which he outlined assignments for his group members.

One of the assignments for an employee by the name of Roopak was “support for session specific cookies with HTTPclient, (one week).” Long-term assignments for Roopak included “support for user name and password,” “persistent cookies,” “bug fixing” and “infrastructure for data cleansing support”; all things that Baca had learned from Koo. At a time when E*Trade was actively looking for a partner to provide wireless trading technology, Ameritrade and Sprint had forged an agreement. At this time, only Ajaxo had demonstrated wireless trading, but Ajaxo was not interested in E*Trade’s investment.

However, E*Trade needed the wireless trading to stay competitive, and E*Trade wanted to invest in new early stage companies. Finally, even though Everypath had not demonstrated wireless trading capability as of December 1999, E*Trade selected Everypath as its wireless trading vendor partner. In short, E*Trade needed Ajaxo’s technology to stay competitive in the Internet-trading market. Everypath, a company willing to have an E*Trade investment, did not have a similar technology, but it developed the same technology in too short a time for independent development.

E*Trade chose Everypath as its wireless trading partner at a time when it had not even demonstrated “its” product could accomplish a wireless trade, and E*Trade through Arrowpath made a substantial investment in Everypath. Accordingly, we conclude that there was substantial evidence to support the jury verdict that E*Trade willfully and maliciously misappropriated Ajaxo’s trade secrets. Consequently, as to liability, the trial court did not err in denying E*Trade’s motion for JNOV.

With respect to the contract (NDA), in a second line of attack on the trial court’s denial of E*Trade’s motion for JNOV, E*Trade contends that Ajaxo did not present substantial evidence of legally recoverable contractual damages. E*Trade argues that because damages are a separate, essential element of a cause of action for breach of contract, where the plaintiff fails to introduce evidence of damages, the cause of action fails. Background Ajaxo introduced testimony through Koo that Ajaxo licensed its complete technology platform to Infocast, an overseas company, for $700,000.

Infocast had the right to sublicense to other companies with a payment of $350,000 per customer. Ajaxo argued in closing that the $700,000 figure should serve as the basis for a damages award of $1.4 million. This sum represented the loss of two licenses, one to E*Trade and one to Everypath. Further, Koo testified that his development costs were approximately $900,000. Moreover, he had offered to license the Ajaxo technology to E*Trade for $860,000.

E*Trade’s counterproposal offered Ajaxo $100,000 upon signing a letter of intent, plus $100,000 at the end of the development phase; plus $200,000 per device, in addition to an end-user earn-out figure. Ultimately, as noted, the jury awarded Ajaxo $1.29 million in damages for breach of the NDA. Again, we review the evidence in the light most favorable to Ajaxo to determine whether substantial evidence supports the jury verdict of $1.29 million in damages. (Flanagan v.

Flanagan, supra, 27 Cal.4th at p. 769.) First, however, we note that Ajaxo’s theory of recovery on the contract was that E*Trade was unjustly enriched because of its breach of the NDA. We begin with two familiar maxims of jurisprudence: “He who takes the benefit must bear the burden,” and “[f]or every wrong there is a remedy.” (Civ. Code, §§ 3521, 3523.) “One who commits a breach of contract must make compensation therefor to the injured party.

In determining the amount of compensation as the ‘damages’ to be awarded, the aim in view is to put the injured party in as good a position as he would have had if performance had been rendered as promised.” (11 Corbin on Contracts (Interim Edition) § 992, p. 5.) Thus, a jury “must determine what additions to the injured party’s wealth (expected gains) have been prevented by the breach and what subtractions from his wealth (losses) have been caused by it.” (11 Corbin on Contracts, supra, § 992, p. 5.) In this case, we must draw the distinction between damages and restitution.

When the remedy given for breach of contract is money damages, the amount awarded is determined with the purpose of putting the injured party in as good a position as he would have occupied had the contract been performed.

In granting restitution as a remedy for the breach, however, the purpose to be attained may be no more than the restoration of the injured party to as good a position as that occupied by him before the contract was made. (11 Corbin on Contracts, supra, § 996, p. 13.) Sometimes, unjust enrichment is used as a synonym for restitution. “Its primary use, however, should be to state an ultimate fact: ‘because X [here E*Trade] was unjustly enriched [when it failed to uphold the contract], X [E*Trade] must make restitution.’ ” (1 Corbin on Contracts (rev. ed.) § 1.20, • p. 63.) “The remedy of restitution differs from the remedy in damages in that in awarding damages the purpose is to put the injured party in as good a position as he would have occupied, had the contract been fully performed, while in enforcing restitution, the purpose is to require the wrongdoer to restore what he has received and thus tend to put the injured party in as good a position as that occupied by him before the contract was made.

Ordinarily, restitution requires that the defendant shall give something back to the plaintiff; and it may be supposed that the defendant cannot do this unless he has received something of value at the plaintiff’s hands.” (12 Corbin on Contracts (interim ed.) § 1107, p. 24.) With these principles in mind we conclude that restitution requires the return to Ajaxo of “value” or “benefit” that E*Trade received.

Here, assuming that E*Trade had performed on the NDA, i.e., had kept Ajaxo’s trade secrets and proprietary information confidential, Ajaxo would have been in exactly the same position before it entered into the NDA as it would have been after negotiations broke down, except it would have kept its trade secrets and proprietary information away from Everypath. Ajaxo conferred a benefit on E*Trade by giving E*Trade Ajaxo’s trade secrets and proprietary information because, ultimately, E*Trade received technology from Everypath that helped to keep it competitive. Thus, E*Trade was benefited by breaching the NDA.

Accordingly, Ajaxo must be “compensated” for E*Trade’s breach of the NDA, i.e., by E*Trade disgorging its unjust enrichment. Here the evidence presented was that Ajaxo’s development costs for the Wirelessproxy XO were $900,000. There was some discrepancy between Ajaxo’s value of the technology ($860,000) and E*Trade’s counteroffer ($400,000 for one device, not including the user earn out provision.) Further, E*Trade paid Everypath $40,000 for the technology Everypath developed.

Although we cannot know for certain how the jury arrived at $1.29 million in unjust enrichment to E*Trade, it seems that the jury took Koo’s development costs, took the price E*Trade was prepared to pay for Koo’s technology, added them together and threw in a little extra for the end-user earn-out provision. By breaching the NDA, E*Trade gave to Everypath information that, in due course, saved E*Trade a lot of money. E*Trade needed the technology that Ajaxo had developed to stay competitive in the Internet-based stock trading market.

By giving Everypath information about Ajaxo’s technology, E*Trade saved development costs and the cost it proposed to give Ajaxo for its technology. Accordingly, we find that there was substantial evidence in the record to support an award of $1.29 million in restitution. Finally, E*Trade contends that the trial court abused its discretion in finding that Ajaxo was the “prevailing party” under Civil Code

section 1717. Background Following the trial court’s denial of the parties’ various posttrial motions, Ajaxo sought to recover more than $2 million in attorney fees under the prevailing party clause in the NDA. Eventually, the trial court awarded Ajaxo $605,387 in attorney fees.

In the NDA, attorney fees are covered in paragraph five, which states in relevant part: “The Receiving Party acknowledges and agrees that due to the unique nature of the Disclosing Party’s Proprietary Information, there can be no adequate remedy at law for any breach of its obligations hereunder, that any such breach or any unauthorized use or release of any Proprietary Information will allow Receiving Party or third parties to unfairly compete with the Disclosing Party resulting in irreparable harm to the Disclosing Party and therefore, that upon any such breach or any threat thereof, the Disclosing Party shall be entitled to appropriate equitable relief in addition to whatever remedies it might have at law and to be indemnified by the Receiving Party from any loss or harm, including, without limitation, attorney fees, in connection with any breach or enforcement of the Receiving Party’s obligations hereunder or the unauthorized use or release of any such Proprietary Information.” (Italics added.) Civil Code

section 1717 provides: “In any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to other costs.” “[T]he trial court is to compare the relief awarded on the contract claim or claims with the parties’ demands on those same claims and their litigation objectives as disclosed by the pleadings, trial briefs, opening statements, and similar sources.” (Hsu v.

Abbara (1995) 9 Cal.4th 863, 876 [39 Cal.Rptr.2d 824, 891 P.2d 804]; Scott Co. of California v. Blount, Inc. (1999) 20 Cal.4th 1103, 1109 [86 Cal.Rptr.2d 614, 979 P.2d 974].) The trial court makes that dete

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