Defend Trade Secrets Act of 2016/DTSA Archives

Sedona Conference releases draft model DTSA jury instructions

The Sedona Conference published the first comprehensive draft Model Jury Instructions for the Defend Trade Secrets Act of 2016 (DTSA) and invites public comment through January 17, 2026. The draft instructions, which have been three years in development, aim to provide clear, consensus-driven guidance on the key issues that juries must resolve in DTSA cases, against the backdrop of an evolving and often inconsistent body of federal trade secret law.

Background

Although the DTSA has been in effect since 2016, federal courts are only now beginning to generate a meaningful body of appellate decisions interpreting the statute, largely because of the slowdown in trial activity during the COVID-19 pandemic. According to the Sedona Conference’s announcement, more than 9,600 federal trade secret cases were filed between 2017 and 2022, but only about 300 reached a jury verdict in that period. This emerging landscape has underscored the need for model jury instructions that can guide courts and litigants in identifying, framing, and presenting DTSA issues at trial.

The draft instructions were prepared by members of the Sedona Conference Working Group 12 on Trade Secrets, a group dedicated to developing nonpartisan, consensus-based principles for managing trade secret litigation. As described in the commentary, the working group has published influential guidance on governance of trade secrets, clean room practices, and interorganizational sharing of confidential information.

Overview of the draft instructions

The Model Jury Instructions consist of core DTSA concepts and follow a familiar model instruction format, pairing proposed instructions with supporting authority and explanatory commentary. As summarized in the one-page publication outline, the instructions cover an introduction to DTSA claims, the elements of misappropriation, existence of a trade secret, misappropriation theories, and damages.

Key issues highlighted in the draft

Identifying trade secrets with “sufficient particularity”

Recent cases suggest that in some circumstances, the jury may need to decide whether the asserted trade secrets have been identified with sufficient specificity, although most practitioners agree that courts should police this issue before trial. This specificity requirement reflects a growing tension between early disclosure obligations and strategic concerns about revealing sensitive information.

What constitutes “reasonable measures”?

Whether a plaintiff took “reasonable measures” to maintain secrecy remains a fact-intensive inquiry. The commentary notes emerging case law holding that general confidentiality policies, cybersecurity protections, or “need to know” restrictions may be insufficient if not specifically tied to the trade secrets at issue. At least one court has suggested that failing to affirmatively tell an employee that a piece of proprietary information (such as source code) is a trade secret may defeat DTSA protection.

Combination trade secrets and proof of misappropriation

The draft rejects a patent-style “all-elements” test and instead endorses assessing substantial similarity between the combination trade secret and the accused method or system. This recommendation reflects a shift away from rigid element-by-element comparisons toward more flexible, fact-driven analyses.

Whether retention alone can constitute misappropriation

One unresolved issue is whether mere retention of trade secret information (once lawfully acquired) can [...]

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Message Received: Trade Secret Law Damages Available for Sales Outside US

The US Court of Appeals for the Seventh Circuit affirmed, in a matter of first impression, a district court’s decision to apply trade secret law extraterritorially and award trade secret damages for foreign sales while also finding that the copyright damages award needed to be reduced to eliminate foreign sales. Motorola Solutions, Inc. v. Hytera Communications Ltd., Case Nos. 22-2370; -2413 (7th Cir. July 2, 2024) (Hamilton, Brennan, St. Eve., JJ.)

Motorola Solutions and Hytera compete globally in the market for two-way radio systems. Motorola spent years and tens of millions of dollars developing trade secrets embodied in its line of high-end digital mobile radio (DMR) products. Hytera struggled to overcome technical challenges to develop its own competing DMR products. After failing for years, Hytera hatched a plan to “leap-frog Motorola” by stealing its trade secrets. Hytera, headquartered in China, hired three engineers from Motorola in Malaysia, offering them high-paying jobs in exchange for Motorola’s proprietary information. Before the engineers left Motorola, acting at Hytera’s direction, they downloaded thousands of documents and computer files containing Motorola’s trade secrets and copyrighted source code. Hytera relied on the stolen material to develop and launch a line of DMR radios that were functionally indistinguishable from Motorola’s DMR radios. Hytera sold these DMR radios in the United States and abroad.

Motorola sued Hytera for copyright infringement and trade secret misappropriation. The jury found that Hytera had violated both the Defend Trade Secrets Act of 2016 (DTSA) and the Copyright Act. The jury awarded compensatory damages under the Copyright Act and both compensatory and punitive damages under the DTSA for a total award of $765 million. The district court later reduced the award to $544 million, which included $136 million in copyright damages and $408 million in trade secrets damages. Hytera appealed.

Hytera conceded liability and instead challenged the damages award under both the Copyright Act and the DTSA. Among other things, Hytera argued that copyright and trade secret damages should not have been awarded for its sales outside the US. With respect to the copyright award, the Seventh Circuit agreed that Motorola failed to show a domestic violation of the Copyright Act and therefore was not entitled to recover damages for any of Hytera’s foreign sales of infringing products as unjust enrichment. Specifically, to show a domestic violation of the Copyright Act, Motorola had asserted that its code was copied from servers based in Chicago. While the district court accepted Motorola’s argument, the Seventh Circuit found that this factual finding lacked adequate support in the record, citing Motorola’s expert’s admission that there was no evidence of downloads from the Chicago servers. The Court instead found that given the location of the employees in Malaysia, it was likelier that the code was downloaded from Motorola’s Malaysia server. The Court therefore reversed the $136 million copyright award and remanded with instructions to limit the copyright award to Hytera’s domestic sales of infringing products.

The Seventh Circuit affirmed with respect to the trade secret award. Like the [...]

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