Background
Comet Technologies sued XP Power for misappropriating trade secrets under the federal Defend Trade Secrets Act. A jury awarded Comet forty million dollars in damages and a permanent injunction. The district court had instructed the jury that XP bore the burden of proving the secrets were readily ascertainable, a burden that the DTSA places on the plaintiff.
The court’s reasoning
The panel held that the jury instruction incorrectly shifted the burden of proof on the element of ready ascertainability to the defendant. The court found that XP did not invite the error and that the error was not harmless because the jury heard conflicting evidence on whether the secrets could be reverse-engineered. The court also addressed a concurring opinion stating that damages for unjust enrichment and injunctive relief are not mutually exclusive remedies.
The district court erroneously instructed the jury that XP bore the burden of disproving an essential element of Comet’s claims, namely, that its trade secrets were not readily ascertainable by proper means.
Opinion at 3
The dissent
What it means going forward
The judgment is reversed and the case is remanded for a new trial on liability and damages for the misappropriated trade secrets. The ruling clarifies that the burden of proving a trade secret is not readily ascertainable lies with the plaintiff under the DTSA.