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Federal Circuit Vacates And Reverses District Court Rulings On Trade Secret And Breach Of Contract Damages
09/15/2026In Versata Software, LLC v. Ford Motor Company, Nos. 2024-1140, 2024-1206, 2024-1234 (Fed. Cir. Sept. 10, 2026), the Federal Circuit addressed appeals by Versata Software, LLC and related entities (collectively, “Plaintiffs”) and a cross-appeal by Ford Motor Company (“Defendant”) arising from a trade secret misappropriation and breach of contract dispute over automotive configuration software. The Court vacated the district court’s judgment on trade secret damages and remanded for a new trial, reversed the reduction of a jury’s $82.26 million breach of contract award, and affirmed the denial of Defendant’s motion for judgment as a matter of law on trade secret liability.
According to Plaintiffs, they developed vehicle configuration software and licensed it to Defendant under a Master Subscription and Services Agreement (“MSSA”). When the MSSA neared expiration and the parties could not agree on renewal terms, Defendant released its own competing software developed during the licensing period. Plaintiffs brought counterclaims alleging misappropriation of three interdependent “combination” trade secrets under the Defend Trade Secrets Act (“DTSA”) and the Michigan Uniform Trade Secrets Act (“MUTSA”), as well as breach of contract under Michigan law.
Prior to trial, the district court excluded Plaintiffs’ damages expert and limited trade secret damages recovery to a reasonable royalty model based solely on the parties’ licensing history, precluding any unjust enrichment theory. The district court nevertheless allowed Plaintiffs to submit a supplemental reasonable-royalty report, and Plaintiffs crafted three reasonable-royalty models based on the Georgia-Pacific factors. The district court ultimately admitted only one model, calculated based solely on the parties’ licensing history, but excluded the other two because they included additional damages related to the value to Defendant of using the trade secrets. A jury trial was then held in October 2022, at which the jury found that Defendant misappropriated the three combination trade secrets and breached the MSSA, and awarded $22.386 million for trade secret misappropriation and $82.26 million for breach of contract. Post-trial, the district court reduced the trade secret damages award from $22.386 million to $0 because “the jury had no way to reliably determine how long it would have taken [Defendant] to develop the three (out of four) trade secrets that it found to have been misappropriated.” It reduced the breach of contract damages award from $82.26 million to $3 because “the jury had no way to calculate [Plaintiffs’] claimed breach of contract damages with reasonable certainty.”
On appeal, the Court held that the district court abused its discretion by categorically precluding Plaintiffs from pursuing unjust enrichment damages. The Court found that both the DTSA and MUTSA expressly permit recovery of unjust enrichment damages caused by misappropriation, so long as those damages are not already accounted for in actual-loss calculations. The Court noted that the Sixth Circuit in Caudill Seed & Warehouse Co. v. Jarrow Formulas, Inc., 53 F.4th 368 (6th Cir. 2022), as well as the Tenth and Eleventh Circuits, recognized unjust enrichment damages under nearly identical statutory frameworks. The Court further determined that the Sixth Circuit precedent relied upon by the district court, Vitro Corp. of America v. Hall Chemical Co., 292 F.2d 678 (6th Cir. 1961) and Mid-Michigan Computer Systems, Inc. v. Marc Glassman, Inc., 416 F.3d 505 (6th Cir. 2005), merely upheld royalty-based awards without precluding alternative theories. Accordingly, the Court vacated the trade secret damages judgment and remanded for a new trial, instructing the district court to reconsider the previously excluded damages models.
Regarding breach of contract damages, the Court reversed the district court’s reduction of the $82.26 million jury award to $3, finding that the jury had sufficient evidence to calculate damages with reasonable certainty. Plaintiffs’ counsel presented three annual licensing figures—$17 million, $14.95 million, and $10.95 million—each multiplied by a 7.5-year breach period. The jury’s award closely tracked the lowest figure, and the Court found it fell within the supportable range of approximately $82 million to $127 million and was not so excessive as to shock the conscience.
Last, on Defendant’s cross-appeal, the Court affirmed the denial of judgment as a matter of law on trade secret liability. Defendant argued that Plaintiffs failed to prove Defendant had specific knowledge of each element of the alleged combination trade secrets. The Court rejected this argument, finding that neither the DTSA nor MUTSA requires such a heightened knowledge showing, consistent with the Sixth Circuit’s reasoning in Caudill. The Court concluded that sufficient evidence, including expert testimony, user guides, and technical documents, supported the jury’s finding of misappropriation.
This decision is notable for several reasons. It establishes a clear, multi-circuit consensus that unjust enrichment damages are available as a matter of statutory right under the DTSA and analogous state trade secret statutes, reinforcing that district courts may not confine Plaintiffs to royalty-based models simply because a licensing history exists. It also reaffirms that “reasonable certainty” under Michigan law does not demand mathematical precision, and that no heightened knowledge requirement applies to combination trade secrets, easing the evidentiary burden in cases involving complex, multi-component proprietary technologies. On remand, the new trial on trade secret damages could yield a substantially larger award, given that Plaintiffs will now be permitted to pursue previously excluded unjust enrichment theories.
IP Litigation