Background
Ford Motor Company hired Versata Software to develop software for vehicle configuration. After the licensing agreement expired, Ford released its own software and Versata sued for trade secret misappropriation and breach of contract. The district court excluded Versata’s expert testimony on unjust enrichment damages, limited recovery to a reasonable royalty based on licensing history, and reduced the jury’s breach of contract award to three dollars. The Federal Circuit reviewed these rulings on appeal.
The court’s reasoning
The court held that the plain language of the Defend Trade Secrets Act and the Michigan Uniform Trade Secrets Act expressly permits plaintiffs to pursue unjust enrichment damages as a matter of right. The district court erred by categorically precluding this theory and limiting damages solely to the parties’ licensing history. Regarding the breach of contract claim, the court found the jury award of eighty-two million dollars was supported by evidence and calculated with reasonable certainty, rejecting the district court’s finding of speculation. On liability, the court affirmed that neither statute requires proof that the defendant knew of the specific elements of a combination trade secret, only that the defendant acquired the secret under circumstances giving rise to a duty of secrecy.
What it means going forward
The decision clarifies that trade secret plaintiffs may seek unjust enrichment damages in addition to reasonable royalties, potentially increasing recovery in misappropriation cases. It also reinforces that breach of contract damages need only be proven with reasonable certainty, not mathematical certainty, and that combination trade secrets do not require proof of specific knowledge of every component by the accused infringer.
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