The US Court of Appeals for the Ninth Circuit reversed a jury damages award, a permanent injunction, and an attorneys’ fee award in a trade secret misappropriation case, finding that the district court improperly instructed the jury on which party bore the burden of proving whether the asserted trade secrets were “readily ascertainable through proper means.” Comet Technologies USA, Inc. et al. v. XP Power, LLC, Case Nos. 23-15601; 25-15709; 25-745 (9th Cir. July 14, 2026) (Hamilton, Nelson, Bumatay, JJ.) (Bumatay, dissenting)
Comet Technologies, a Swiss-based leader in x-ray and radio-frequency products, sued US-based competitor XP Power after three former Comet engineers left to join XP, allegedly bringing thousands of confidential documents relating to Comet’s radio-frequency power technologies, product designs, and research and development. Comet asserted claims under the federal Defend Trade Secrets Act (DTSA) and California’s Uniform Trade Secrets Act (CUTSA).
Before trial, Comet narrowed its case to five alleged trade secrets and voluntarily dismissed its CUTSA claims, leaving only its DTSA claims. The parties addressed the effect of that dismissal on the jury instructions, with XP requesting that the burden of proving lack of ready ascertainability be shifted to Comet to conform to the DTSA while Comet argued that the instruction should be removed entirely. The district court rejected both requests without an on-the-record explanation and left in Instruction 20, which told the jury that XP was not liable for misappropriation if XP proved by a preponderance of the evidence that the alleged trade secrets were readily ascertainable by proper means, meaning they could be lawfully “obtained, discovered, developed, reverse-engineered, or compiled without significant difficulty, effort, or expense.”
The jury found that XP misappropriated three of the five trade secrets and awarded Comet $20 million in compensatory damages and $20 million in exemplary damages. The district court also entered a permanent injunction and awarded more than $17 million in attorneys’ fees. XP appealed.
Erroneous jury instruction: “Readily ascertainable by proper means”
XP argued that the district court improperly instructed the jury that XP bore the burden of proving that Comet’s alleged trade secrets were “readily ascertainable by proper means.” Comet argued that XP invited the instructional error by requesting that the challenged instruction be given to the jury and, alternatively, that any error was harmless because the instructions were accurate as a whole, they correctly stated the law, and the evidence overwhelmingly established that Comet’s trade secrets were not readily ascertainable through proper means.
The Ninth Circuit agreed with XP, explaining that under the DTSA, lack of ready ascertainability is an element of Comet’s DTSA claim – not an affirmative defense – and, therefore, Comet bore the burden of proof. The Court rejected Comet’s invited-error argument, finding that XP timely objected after Comet dismissed its CUTSA claims and correctly argued that, under the DTSA, Comet – not XP – bore the burden of proving that the alleged trade secrets were not readily ascertainable through proper means.
The Ninth Circuit also rejected Comet’s harmless-error argument. The Court explained that the erroneous instruction affected an essential element of the DTSA claims and that the parties presented conflicting expert testimony regarding whether aspects of the alleged trade secrets could have been reverse-engineered or derived from public sources. Because those factual disputes were central to determining whether the information qualified as trade secrets under the DTSA, the Court could not conclude that a properly instructed jury likely would have reached the same verdict or awarded the same damages.
Damages
XP also challenged the jury’s award of unjust enrichment damages, which were measured by the research and development costs XP allegedly avoided by misappropriating Comet’s trade secrets, rather than developing the technology independently. Although the Ninth Circuit did not decide whether that damages theory was legally proper because it ordered a new trial, the Court explained that the erroneous jury instruction was not harmless, in part because it may have affected the damages award. Comet’s damages expert calculated unjust enrichment damages based on XP’s avoided development costs, assuming that all the information comprising the asserted trade secrets was protectable. Because the jury was improperly instructed on whether certain aspects of the alleged trade secrets were readily ascertainable through proper means, the Court could not determine whether a properly instructed jury would have found all the asserted information protectable or awarded the same amount of damages. The Court vacated the entire damages award and remanded for a new trial.
In a separate concurrence, Judge David F. Hamilton addressed an issue likely to arise on remand, explaining that he would permit both avoided-cost unjust enrichment damages and prospective injunctive relief under the DTSA because the remedies compensate for different harms.
Practice note: The decision highlights the importance of revisiting jury instructions whenever claims are dismissed or narrowed before trial. The DTSA places the burden on the plaintiff to prove that alleged trade secrets are not readily ascertainable through proper means. Where a case proceeds solely under the DTSA, courts must ensure that jury instructions accurately allocate that burden, as an erroneous burden-shifting instruction on an essential element of a trade secret claim may require a new trial, even after a substantial jury verdict.
