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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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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