Case Explained: COMET TECHNOLOGIES USA, INC., ET AL V. XP POWER, LLC

Court: United States Court of Appeals for the Ninth Circuit

Filed: 2026-07-14

Docket: 5:20-cv-06408-

The Ninth Circuit reversed the district court’s judgment and remanded the case for a new trial on liability and damages regarding three trade secrets (D, E, and L) under the Defend Trade Secrets Act (DTSA). The court held that the district court committed reversible error by instructing the jury that the defendant, XP Power, bore the burden of proving that Comet’s alleged trade secrets were “readily ascertainable by proper means.” Under 18 U.S.C. § 1839(3)(B), the DTSA defines a trade secret as information that derives independent economic value from not being readily ascertainable, placing the burden of proof on the plaintiff to establish this element. The court determined that XP did not invite this error because it made timely and correct objections to the instruction after Comet voluntarily dismissed its state law claims, which had previously treated ready ascertainability as an affirmative defense. Furthermore, the court rejected Comet’s argument that the error was harmless, noting that the jury instructions were not accurate as a whole because “ready ascertainability” is a distinct statutory element from “independent economic value,” and that conflicting expert testimony regarding reverse-engineering potential and damage calculations presented disputes that a properly instructed jury must resolve. Consequently, the judgment awarding $40 million in damages, a permanent injunction, and over $17 million in attorney fees was vacated, and the case will proceed to a new trial where the burden of proving lack of ready ascertainability will correctly rest with Comet.

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