The US Court of Appeals for the Federal Circuit vacated a judgment limiting a trade secret plaintiff to a reasonable royalty based on the parties’ licensing history, finding that unjust-enrichment damages are available under the Defend Trade Secrets Act (DTSA) and Michigan Uniform Trade Secrets Act (MUTSA). The Court rejected the defendant’s argument that liability for misappropriating a combination trade secret requires proof that the defendant knew each specific element comprising the combination. Versata Software, LLC v. Ford Motor Co., Case Nos. 24-1140; -1206; -1234 (Fed. Cir. Sept. 10, 2026).
Ford licensed Versata’s Automotive Configuration Manager (ACM) software, which helped Ford configure vehicles for manufacturing. When the parties were unable to agree on an extension of their licensing agreement, Ford released its own configuration software, PDO, which it had developed while still licensing Versata’s software. Versata asserted claims for breach of contract and trade secret misappropriation under the DTSA and the MUTSA. Versata alleged that Ford misappropriated three interdependent “combination” trade secrets within ACM: Grid, Buildability, and Workspaces.
Before trial, the district court excluded Versata’s damages expert’s proposed unjust-enrichment analysis, concluding that Versata’s trade secret damages had to be measured by reference to the parties’ licensing history. The court permitted Versata to submit revised reasonable-royalty models but excluded two models because they incorporated the value Ford obtained from using the trade secrets rather than relying solely on the parties’ licensing history.
A jury later found that Ford misappropriated all three ACM trade secrets and breached the parties’ agreement. It awarded Versata approximately $22 million for trade secret misappropriation and $82 million for breach of contract. The district court subsequently reduced the trade secret award to zero and the contract award to $3 million. Versata appealed, and Ford cross-appealed the finding of trade secret liability.
Unjust-enrichment damages
Versata argued that the district court improperly prevented it from seeking unjust-enrichment damages and instead required its damages to be based on the parties’ licensing history. The Federal Circuit agreed.
Applying Sixth Circuit law, the Federal Circuit explained that the plain language of both the DTSA and the MUTSA expressly permits a plaintiff to recover unjust enrichment caused by trade secret misappropriation to the extent that enrichment is not accounted for in calculating actual loss. The statutes separately permit a reasonable royalty “in lieu of” damages measured by other methods. The Court found that Versata was entitled, as a matter of law, to pursue unjust-enrichment damages.
The Federal Circuit rejected the district court’s conclusion that the parties’ licensing history required Versata’s damages to be measured by a reasonable royalty. Although prior Sixth Circuit decisions had upheld royalty-based awards derived from licensing history, those cases did not establish that a plaintiff was prohibited from pursuing unjust enrichment.
Nor was unjust enrichment available only where damages could not otherwise be measured. The Federal Circuit emphasized that the statutory language expressly allows a plaintiff to pursue unjust-enrichment damages. Because the district court’s contrary ruling affected Versata’s damages case throughout the litigation, the Federal Circuit vacated the judgment awarding zero trade secret damages and remanded for a new damages trial. It also instructed the district court to reconsider Versata’s previously excluded reasonable-royalty models that incorporated the value Ford obtained from using the trade secrets.
The $82 million contract award
The Federal Circuit separately reversed the district court’s reduction of Versata’s $82 million breach-of-contract award to $3 million.
At trial, Versata presented the jury with three annual damages figures derived from the parties’ licensing history: $17 million, $14 million, and $10 million. Versata asked the jury to multiply the appropriate figure by seven and a half years, representing the period of Ford’s breach through trial. The jury’s $82 million award equated to approximately $11 million per year – nearly identical to the lowest annual figure presented by Versata.
The Federal Circuit determined that the jury had a sufficient evidentiary basis to calculate damages with reasonable certainty. Versata’s expert distinguished the $11 million base license fee from the higher fee that included support and maintenance services, the underlying agreements were admitted into evidence, and even Ford’s damages expert acknowledged that $11 million was a more reasonable starting point because it excluded fees for additional services. The Court concluded that this evidence gave the jury a “discernible path” to calculate damages and reinstated the full $82 million award.
Knowledge of combination trade secrets
The Federal Circuit rejected Ford’s argument that Versata was required to prove Ford knew the specific elements that comprised each asserted combination trade secret. The Court explained that neither the DTSA nor the MUTSA imposes such a heightened knowledge requirement. Although a combination of otherwise known elements may qualify for trade secret protection, the statutes do not require proof that a defendant knew the precise combination or each individual element comprising it. Instead, the statutory inquiry focuses on whether the defendant acquired the trade secret through improper means or used or disclosed it while knowing or having reason to know that its knowledge was obtained under circumstances imposing a duty of secrecy or restricted use.
Versata also presented sufficient evidence of disclosure. Its technical expert testified that Versata disclosed the combination trade secrets to Ford through user guides and presentations, and a former Versata employee testified that the information was disclosed through manuals, technical documents, emails, onsite discussions, and the software itself. The Federal Circuit affirmed the denial of Ford’s motion for judgment as a matter of law on trade secret liability.
Practice note: A prior licensing relationship does not necessarily confine a trade secret plaintiff to royalty-based damages. The DTSA expressly permits recovery of unjust enrichment not accounted for as actual loss, allowing plaintiffs to pursue damages tied to the value or benefits obtained through misappropriation where supported by the evidence. The decision also provides useful guidance for combination trade secrets: a plaintiff need not prove that the defendant specifically recognized each element of the asserted combination as comprising a trade secret.
