Trade Secrets Archives

Trade Secrets

Federal Circuit: Unjust enrichment available as damages theory for trade secret misappropriation

by Jodi Benassi | Sep 24, 2026 | Trade Secrets

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 [...]

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Irreparable harm? Don’t bury your trade secret

by Jodi Benassi | Aug 6, 2026 | Trade Secrets

The US Court of Appeals for the Eighth Circuit affirmed the denial of a preliminary injunction, finding that the district court did not abuse its discretion in concluding that the plaintiff’s asserted harms, including lost profits and injury from the alleged trade secret injury, could be adequately remedied through monetary damages. Revenue Management Solutions, LLC v. Commerce Bank, Case No. 25-3159 (8th Cir. July 23, 2026) (Gruender, Benton, Erickson, JJ.)

Revenue Management Solutions (RMS) licensed to Commerce Bank software that processes and organizes records and payment information. Commerce marketed the software under the name RemitConnect. Under the parties’ license agreement, Commerce received access to RMS’s confidential software and source code but was prohibited from copying or disclosing the software or source code, reverse engineering the software, or creating derivative works based on RMS’s proprietary technology.

In 2018, Commerce began developing its own software, RemitConnect 2.0. By 2025, RMS observed a decline in Commerce’s use of the licensed version of its software. Suspecting that Commerce had reverse engineered and copied its software, RMS moved for a preliminary injunction to prohibit Commerce from using RemitConnect 2.0. The district court denied the motion, concluding that RMS failed to present sufficient evidence of irreparable harm. RMS appealed.

RMS argued that the district court failed to recognize the irreparable harm resulting from Commerce’s misappropriation of its trade secrets. RMS asserted claims under the Defend Trade Secrets Act and the Missouri Uniform Trade Secrets Act, identifying two categories of trade secrets: sets of input-output data and segregation logic. According to RMS, Commerce misappropriated those trade secrets in developing RemitConnect 2.0.

The Eighth Circuit noted that the district court did not expressly discuss RMS’s trade secrets in its irreparable-harm analysis. The Court explained that RMS itself framed its alleged harm primarily as lost profits, referring to the misuse and disclosure of its trade secrets only in passing through a few parenthetical references. By characterizing its injury in terms of lost profits, RMS permitted the district court to conclude that any potential harm could be adequately remedied by an award of damages. The Eight Circuit thus concluded that the district court did not clearly err in finding that RMS failed to demonstrate irreparable harm.

Practice note: Although the loss, misuse, or disclosure of trade secrets may constitute irreparable harm, a plaintiff seeking injunctive relief should clearly articulate how the alleged misappropriation causes harm that cannot be adequately remedied by monetary damages. Framing the injury primarily as lost profits or another quantifiable economic loss may undermine the argument that preliminary injunctive relief is necessary.

Specificity matters: Eighth Circuit rejects broad trade secret claims

by Jodi Benassi | Jul 23, 2026 | Trade Secrets

The US Court of Appeals for the Eighth Circuit affirmed a district court’s summary judgment against a trade secret plaintiff, finding that the plaintiff’s broad descriptions of confidential business information failed to identify its alleged trade secrets with sufficient specificity. Wilbur-Ellis Company v. Gompert, et al., Case Nos. 25-1577; -1682 (8th Cir. July 7, 2026) (Shepard, Erickson, Grasz, JJ.)

Wilbur-Ellis, an international marketer and distributor of agricultural products, specialty chemicals, and ingredients, sued four former employees after they left to join competitor J.R. Simplot Company, alleging breach of the duty of loyalty, trade secret misappropriation under the Defend Trade Secrets Act (DTSA) and the Nebraska Trade Secrets Act (NTSA), and tortious interference with business relationships. During discovery, the district court denied Wilbur-Ellis’s requests to compel discovery from both Simplot and the former employees, concluding that Wilbur-Ellis had not identified its alleged trade secrets with sufficient specificity to justify the requested discovery. After denying Wilbur-Ellis’s request to delay summary judgment pending additional discovery, the district court granted summary judgment to the former employees on the trade secret and tortious interference claims and on most of the duty-of-loyalty claims. Wilbur-Ellis appealed.

Discovery orders affirmed

Wilbur-Ellis argued that the district court improperly prevented it from obtaining discovery from Simplot by requiring it to identify its alleged trade secrets with greater specificity before permitting third-party discovery.

The Eighth Circuit disagreed, finding that the district court did not abuse its discretion in denying Wilbur-Ellis’s motion to compel. The Eighth Circuit noted that the district court had identified several concerns, including that Wilbur-Ellis’s trade secret disclosure was extremely broad, appeared to treat nearly everything the former employees encountered as a trade secret, and raised concerns that the requested third-party discovery would amount to a fishing expedition. The Court emphasized that Wilbur-Ellis did not dispute those findings on appeal or that it had sought third-party discovery before exhausting discovery from the former employees.

Trade secret claims fail for lack of specificity and evidence

Wilbur-Ellis also argued that the district court improperly granted summary judgment on its DTSA and NTSA claims. The Eighth Circuit disagreed, concluding that Wilbur-Ellis failed to present sufficient evidence that it possessed protectable trade secrets or that the defendants misappropriated them. The Court explained that Wilbur-Ellis relied on broad descriptions of categories of information – such as customer information, financial information, and business strategy – without identifying the specific trade secrets allegedly taken, who misappropriated them, or how they were misappropriated. The Court further found that, although Wilbur-Ellis identified its password-protected SeedWare database as confidential, it failed to produce evidence that the defendants improperly acquired, disclosed, or used any information contained in the database. Because Wilbur-Ellis failed to connect its allegations to specific trade secrets or admissible evidence of misappropriation, the Court found summary judgment was appropriate.

Duty of loyalty claims

Wilbur-Ellis next argued that the district court improperly granted summary judgment on its breach of the duty of loyalty claims. The Eighth Circuit disagreed, finding that Wilbur-Ellis failed to present admissible evidence that [...]

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A $40 million jury instruction error sends trade secret dispute back to trial

by Jodi Benassi | Jul 23, 2026 | Trade Secrets

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 [...]

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Tick tock: Related trade secrets have single accrual date under DTSA statute of limitations

by Tori Lazerson | Jun 11, 2026 | Trade Secrets

The US Court of Appeals for the Federal Circuit reversed a judgment awarding damages and a permanent injunction, finding that the plaintiff’s trade secret misappropriation claims were barred by the statute of limitations under the Defend Trade Secrets Act (DTSA). Insulet Corp. v. EOFlow, Co. Ltd., Case No. 25-1807 (Fed. Cir. May 28, 2026) (Dyk, Reyna, JJ.) (Prost, J., dissenting).

Insulet manufactures the Omnipod, an adhesive wearable insulin patch pump currently sold in 25 countries. EOFlow developed a competing product, the EOPatch 2, marketed in Europe and South Korea. On August 3, 2023, Insulet filed suit against EOFlow alleging trade secret misappropriation under the DTSA and patent infringement.

The misappropriation allegedly occurred when EOFlow hired several former Insulet employees to develop the EOPatch 2. The employees included Steve DiIanni, former director of mechanical engineering at Insulet, who possessed “detailed technical information” about the Omnipod. Between March and May 2018, DiIanni provided EOFlow with computer-aided design (CAD) files and information regarding the Omnipod’s soft cannula and occlusion-detection algorithm.

The district court bifurcated the DTSA and patent claims. At trial on the DTSA claims, the jury found misappropriation of four trade secrets, including the Omnipod CAD files, and concluded that none of Insulet’s claims were barred by the statute of limitations. The jury initially awarded $170 million in compensatory damages and more than $280 million in exemplary damages. These amounts were reduced to $26 million and $34 million, respectively, with the district court’s grant of a permanent injunction. Insulet’s patent claims were dismissed without prejudice.

On appeal, Insulet moved to transfer to the Court of Appeals for the First Circuit. The Federal Circuit denied the motion, concluding that it retained jurisdiction because the dismissal of the patent claims functioned, at least in part, as a dismissal with prejudice, since the statute of limitations expired with respect to certain alleged acts of patent infringement. The Court then addressed two issues under the DTSA statute of limitations: when the statute of limitations begins to run and whether related trade secrets are subject to a single accrual date.

On the first issue, the parties disputed the applicable standard. EOFlow argued that the statute of limitations began to run under an inquiry-notice standard while Insulet contended that the Supreme Court’s 2010 decision in Merck & Co. v. Reynolds required application of a discovery standard under which the limitations period begins when the plaintiff discovers or reasonably should have discovered the facts underlying its claim. The Federal Circuit declined to decide which standard governed, concluding that Insulet’s claims were time-barred even under the more demanding Merck standard. Applying an access-plus-similarity framework, the Court found that, before the critical date, Insulet knew or should have known that EOFlow had access to its trade secrets through a former Insulet employee, and possessed sufficient information regarding similarities between the EOPatch 2 and Insulet’s trade secret technology to plead a misappropriation claim.

On the second issue, for which there was no controlling First Circuit authority, the Federal Circuit determined that the [...]

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Trade secret owner may pursue unjust enrichment damages despite licensing history

by Amol Parikh | Jun 4, 2026 | Trade Secrets

The US Court of Appeals for the Federal Circuit affirmed in part, reversed in part, and vacated in part a district court’s post-trial rulings in a trade secret and contract dispute, finding that a trade secret plaintiff may pursue unjust enrichment damages under both the Defend Trade Secrets Act (DTSA) and the Michigan Uniform Trade Secrets Act (MUTSA) even where the parties have a prior licensing relationship. The Court also reinstated the jury’s breach-of-contract damages award and rejected the defendant’s attempt to impose a heightened knowledge requirement for combination trade secrets. Versata Software, LLC v. Ford Motor Co., Case No. 24-1140 (Fed. Cir. May 22, 2026) (Moore, Taranto, Hughes, JJ.)

Ford licensed Versata’s automotive configuration software under a Master Subscription and Services Agreement. When the agreement was about to expire, the parties failed to agree on renewal terms, and Ford released its own software, which it had developed while still licensing Versata’s software. Versata alleged that Ford misappropriated several combination trade secrets embodied in Versata’s software and breached the parties’ agreement. A jury found Ford liable for misappropriating three trade secrets and for breach of contract, awarding more than $22 million in trade secret damages and $82.26 million in contract damages.

Before trial, the district court had limited Versata to a reasonable royalty theory based on the parties’ licensing history and had excluded damages models that measured the value Ford allegedly derived from using the trade secrets. After trial, the district court reduced the trade secret damages award to $0 and the contract award to $3. Versata appealed.

The Federal Circuit found that the district court had legally erred by categorically precluding unjust enrichment damages. The Court explained that the plain language of both the DTSA and the MUTSA permits recovery of unjust enrichment caused by misappropriation that is not accounted for in actual loss. While prior licensing history may be relevant to damages, it does not foreclose unjust enrichment as a matter of law. The Court therefore vacated the zeroed-out trade secret damages judgment and remanded for a new damages trial, instructing the district court to reconsider the reasonable royalty models it had previously excluded because they were not based solely on licensing history.

On the contract award, the Federal Circuit reversed the district court’s decision and reinstated the jury’s $82 million award. Applying Michigan law, the Court concluded that Versata had given the jury a reasonably certain damages path in the form of three annual license figures ($17 million, $14.95 million, and $10.95 million) multiplied by seven and a half years. The jury’s $82.26 million award equated to about $10.97 million per year, which fell within the range supported by the evidence and did not shock the conscience.

The Federal Circuit also affirmed liability for trade secret misappropriation. Ford argued that Versata had to show that Ford knew the specific elements of each combination trade secret at the time of use or disclosure. The Court rejected that proposed heightened requirement, concluding that neither the DTSA nor the MUTSA [...]

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Patent disclosure erases trade secret protection

by Hannah Hurley | Apr 30, 2026 | Patents, Trade Secrets

Addressing the boundary between patent disclosures and trade secret protection, the US Court of Appeals for the Federal Circuit reversed a jury’s findings of trade secret misappropriation, breach of contract, and improper inventorship, concluding that the asserted “trade secrets” were generally known and therefore not protectable under California law. The Court affirmed, however, a $1 million statutory damages award for trademark counterfeiting. International Medical Devices, Inc. v. Cornell, Case Nos. 25 1580; 1605 (Fed. Cir. Apr. 17, 2026) (Dyk, Reyna, Taranto, JJ.)

International Medical Devices, Menova International, and Dr. James Elist (collectively, the plaintiffs) manufacture and sell the Penuma® cosmetic penile implant. The plaintiffs sued Dr. Robert Cornell and associated individuals and entities after Cornell attended a Penuma® surgical training session under a nondisclosure agreement (NDA) and later helped develop a competing implant. The plaintiffs asserted claims for misappropriation of trade secrets, breach of the NDA, trademark counterfeiting based on unauthorized use of the Penuma® mark, and invalidity of two cosmetic implant patents for failure to name Elist as an inventor.

A jury found for the plaintiffs on all claims. After a bench trial on remedies, the district court awarded more than $17 million in trade secret and exemplary damages, entered a permanent injunction, and awarded $1 million in statutory damages for counterfeiting. Cornell appealed.

The Federal Circuit reversed the trade secret verdict in its entirety, concluding that none of the asserted trade secrets were protectable under California law. The Court concluded that the alleged technical trade secrets were disclosed in publicly available patents and thus were “generally known” as a matter of law.

In doing so, the Federal Circuit reaffirmed the long-standing principle that “that which is disclosed in a patent cannot be a trade secret.” Once information enters the public domain through patent disclosures, it cannot later be reclaimed as confidential business information through trade secret law.

The plaintiffs’ remaining alleged trade secret (a list of surgical instruments) fared no better. The Federal Circuit found that the list had been emailed to the defendants without any confidentiality designation or obligation, defeating any claim that reasonable measures were taken to maintain its secrecy.

Because the plaintiffs failed to identify any confidential information beyond the alleged trade secrets, the Federal Circuit also reversed the breach of contract verdict. The NDA expressly excluded information that was “generally available to the public,” and the Court found that an NDA cannot transform public domain information into protected confidential material.

The Federal Circuit reached a different conclusion on trademark counterfeiting, however, and affirmed the jury’s finding and the $1 million statutory damages award. The Court explained that the evidence showed that Cornell had advertised and offered Penuma® implants without authorization. Cornell argued that the Penuma® mark was registered only for goods, not services, and therefore could not support a counterfeiting claim tied to surgical procedures. The Court rejected that argument, concluding there was sufficient evidence that Cornell offered the Penuma® implant itself as a good, not merely a medical service.

Finally, the Federal Circuit [...]

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Muddy paws? Franchisor’s unclean hands precludes full equitable relief

by Jolie B. Schenerman | Apr 2, 2026 | Trade Secrets, Trademarks

The US Court of Appeals for the Sixth Circuit affirmed a district court’s partial denial of a franchisor’s request for a preliminary injunction, finding that the franchisor’s inequitable conduct barred broader injunctive relief, even where the franchisor showed a likelihood of success on certain claims. Fetch! Pet Care, Inc. v. Atomic Pawz Inc., Case No. 25-1638 (6th Cir. Mar. 20, 2026) (Gibbons, Larsen, Murphy, JJ.)

Fetch! sued several former franchisee locations for breach of contract, trademark infringement, and trade secret misappropriation after the franchisees stopped paying royalties, downloaded client contact information, prepared transition plans, and continued operating competing businesses following termination of system access. Fetch! sought a temporary restraining order and then a preliminary injunction to bar operation of the competing businesses, use of alleged trade secrets, infringement of its registered trademarks, and interference with its business relationships.

The district court granted limited relief prohibiting use of Fetch!’s trademarks and restricting communications with existing Fetch! franchisees but declined to enjoin the defendants from continuing to operate competing businesses. The court concluded that although Fetch! was likely to succeed on certain claims, equitable relief was limited by Fetch!’s own conduct, including evidence that it aggressively marketed and sold its “2.0” franchise model while obscuring material differences from its legacy “1.0” model, and that it cut off certain franchisees’ system access under disputed circumstances. Fetch! appealed.

The Sixth Circuit emphasized that a preliminary injunction is an extraordinary equitable remedy and that equitable doctrines, including unclean hands, may independently bar relief. The Court agreed that the record supported a finding that Fetch!’s conduct in marketing and selling its 2.0 and managed-services franchises (particularly Fetch!’s removal of distinctions in disclosure materials and aggressive profitability representations) could constitute bad faith sufficient to deny broader injunctive relief.

The Sixth Circuit also addressed the three legacy 1.0 franchisees for which the district court had not applied unclean hands. Affirming on an alternative ground, the Court found that unclean hands likewise barred injunctive relief as to those defendants. The Court relied on evidence that Fetch! terminated or restricted their system access while they were current on payments and before they began operating competing businesses, and that Fetch! may have failed to comply with applicable state franchise law requirements governing notice and opportunity to cure.

Although it affirmed on unclean hands, the Sixth Circuit clarified aspects of its preliminary injunction jurisprudence:

It rejected the district court’s suggestion that a heightened showing of irreparable harm applies when claims are subject to arbitration, confirming that the traditional four-factor test governs.
It found that the district court erred in applying a clear-and-convincing standard for irreparable harm rather than the federal standard requiring a likelihood of irreparable injury.
It explained that competitive harms, such as loss of goodwill and customer relationships, can qualify as irreparable precisely because they are difficult to quantify.

Because Fetch!’s inequitable conduct supported denial of broader relief, the Sixth Circuit affirmed the district court’s refusal to enjoin the defendants’ competing operations while leaving in place the narrower [...]

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Good-faith investigation defeats preindictment delay challenge

by Keval Amin | Mar 12, 2026 | Trade Secrets

Addressing the constitutional limits of preindictment delay in a trade secret and wire fraud prosecution arising from alleged misuse of proprietary unemployment insurance software, the US Court of Appeals for the Fourth Circuit clarified both the standard of review for due process claims based on delay and the substantive threshold required to dismiss an indictment on that basis. United States of America v. David Gerald Minkkinen, Case No. 23-4443 (4th Cir. Feb. 26, 2026) (Wynn, Richardson, Rushing, JJ.)

Between 2009 and 2013, David Minkkinen and Sivaraman Sambasivam worked at a business management consulting firm, where they helped develop a proprietary unemployment insurance software platform called uFACTS. In 2013 they both joined Sagitec, where they participated in building a new unemployment claims system for the Maryland and West Virginia Consortium. In 2016, state employees identified references in Sagitec materials that suggested possible use of the prior company’s intellectual property, prompting a federal investigation. Investigators examined whether other former employees transferred design documents or source materials to Sagitec. While some individuals acknowledged retaining prior project materials, they disputed ownership or claimed the materials were only used as templates. The investigation was prolonged and complicated by the unexpected deaths of key witnesses.

In August 2022, Minkkinen and Sambasivam were indicted on charges including trade secret misappropriation, wire fraud, and false statements. Efforts by the defendants to obtain historical project documents were hindered by routine document destruction policies at state agencies. The government also later filed a superseding indictment focused on alleged misuse of the prior company’s proprietary files. The defendants moved to dismiss for unconstitutional preindictment delay, arguing that the loss of witness testimony and documents prejudiced their defense. The district court agreed in part, finding the missing evidence highly significant and the government’s justification for the lengthy investigation insufficient, and dismissed 10 of 14 counts. The government appealed.

The Fourth Circuit determined that in reviewing a claim of unconstitutional preindictment delay, it would apply clear-error review of the district court’s factual findings and de novo review to its legal conclusions. The Court further determined that the specific issue at stake here (i.e., whether the prosecution offended “fundamental conceptions of justice” and society’s sense of “fair play and decency”) was a mixed question of law and fact that should be reviewed de novo. The Court reasoned that the second prong of the preindictment delay test requires courts to apply a broad constitutional standard by balancing the government’s justification for delay against prejudice to the defendant, and appellate courts have a special role in defining the limits of constitutional standards through case-by-case adjudication. Accordingly, the Court concluded it would apply de novo review to the district court’s ultimate due process determination regarding the dismissed counts.

The Fourth Circuit determined that the district court erred in dismissing counts based on unconstitutional preindictment delay. Applying the second prong of the due process analysis, the Court concluded that the government’s delay was attributable to a prolonged good-faith investigation and not to any improper motive, tactical advantage, or [...]

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Case exterminated too soon: DTSA and CFAA claims survive

by Jodi Benassi | Feb 5, 2026 | Trade Secrets

The US Court of Appeals for the Tenth Circuit partially reversed and partially affirmed a series of district court rulings arising from alleged corporate espionage between competitors in the pest control industry. The decision clarifies the scope of recoverable “loss” under the Computer Fraud and Abuse Act (CFAA) after Van Buren and underscores that causation requirements under the Defend Trade Secrets Act (DTSA) and state trade secret law depend on the remedy sought. Moxie Pest Control LLC, et al. v. Kyle Nielsen, et al., Case No. 24-4076 (10th Cir. Jan. 21, 2026) (Hartz, Moritz, Rossman, JJ.)

Moxie sued rival Aptive Environmental, alleging that Aptive employees bribed current and former Moxie sales representatives to obtain confidential sales data stored in Moxie’s password-protected SalesRoutes system. According to Moxie, Aptive used this data (particularly sales leaderboards) to recruit door-to-door sales representatives by portraying Aptive as the more lucrative employer. Moxie brought claims under the CFAA, Racketeer Influenced and Corrupt Organizations (RICO) Act, DTSA, and Utah’s Uniform Trade Secrets Act (UTSA).

The district court dismissed Moxie’s CFAA claim at the pleading stage, denied motions to compel broad damages discovery, and granted Aptive summary judgment on the RICO, DTSA, and UTSA claims based on a lack of causation. Moxie appealed.

CFAA claim reinstated

The Tenth Circuit found that the district court erred in dismissing Moxie’s CFAA claim for failure to plead a qualifying “loss.” The district court had interpreted Van Buren v. United States as requiring plaintiffs to allege a technological harm, such as damage to data or systems, to recover under the CFAA. The Tenth Circuit rejected that interpretation, explaining that Van Buren addressed what conduct constitutes a CFAA violation, not the scope of recoverable loss once a violation has occurred.

Under the statute’s plain language, “loss” includes reasonable costs incurred in responding to an offense or conducting a damage assessment. Moxie’s allegations that it spent more than $5,000 investigating the unauthorized access (specifically identifying the perpetrators, methods, and scope of access) fell squarely within that definition. The Tenth Circuit emphasized that investigative costs aimed at understanding the breach itself are recoverable, even absent data corruption or system impairment.

Discovery rulings affirmed

The Tenth Circuit affirmed the district court’s denial of Moxie’s motions to compel expansive damages discovery. While acknowledging that some requested information could be relevant, the Court concluded that the district court acted within its discretion by limiting initial disclosures and inviting more targeted follow-up discovery. Moxie’s failure to pursue narrower discovery after the district court’s ruling weighed against a finding of abuse of discretion.

Trade secret and RICO claims

The Tenth Circuit agreed that Moxie failed to establish causation sufficient to sustain its RICO claim or to recover unjust-enrichment damages under the DTSA and UTSA. Evidence showing that Aptive sought Moxie’s data, used it in recruitment meetings, and experienced revenue growth during the same period amounted to correlation, not proof that the misappropriation caused Aptive’s profits. Without evidence tying the stolen data to actual financial gain, unjust-enrichment theories failed.

However, the [...]

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