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). 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 the alleged trade secrets were “readily ascertainable by proper means” under an affirmative defense. Under the federal Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1839(3)(B), the plaintiff bears the burden of proving as an essential element of its claim that the information was not readily ascertainable through proper means. The court determined this error was not harmless because the jury instructions were not accurate as a whole, and there was conflicting expert testimony regarding whether the secrets could be reverse-engineered or obtained from public sources, making it impossible to conclude the jury would have reached the same verdict under a correct instruction. As a practical consequence, the judgment awarding $40 million in damages, a permanent injunction, and over $17 million in attorney fees is vacated. The case returns to the district court for a new trial where the burden of proof on “readily ascertainability” will be correctly placed on the plaintiff, Comet Technologies USA, Inc. The panel noted that while it reversed the judgment, it did not reach XP’s challenges to the specific relief awarded in this opinion, though a concurring judge addressed the issue separately, concluding that awarding both damages for unjust enrichment (avoided costs) and injunctive relief does not constitute an impermissible double recovery under the DTSA.

Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.