Federal Circuit Allows Trade-Secret Damages That District Court Rejected

At a Glance

• The Federal Circuit held that trade-secret plaintiffs have a statutory right to pursue unjust enrichment damages under both the Defend Trade Secrets Act (DTSA) and the Michigan Uniform Trade Secrets Act (MUTSA), and that district courts may not categorically limit recovery to the parties' licensing history.
• The circuit court vacated the district court's judgment that eliminated a $22 million jury award for trade-secret damages and remanded for a new trial on damages.
• The circuit court also reversed the district court's reduction of an $82 million breach-of-contract jury award, reinstating the full verdict.

A May 22, 2026, decision from the US Court of Appeals for the Federal Circuit in Versata Software, LLC v. Ford Motor Company addresses, among other things, the availability of unjust enrichment as a damages theory for trade-secret misappropriation. The appellate court vacated the district court's exclusion of unjust enrichment damages models and its reduction of the jury's trade-secret damages award to $0, remanding for a new trial.

Our prior update on the case can be found in our article, "Five Trade Secret Developments to Follow in 2026."

Background

Versata Software developed automotive configuration software for Ford Motor Company. When their agreement expired in 2014, Ford released its own software, which it had developed while licensing Versata's software. Versata alleged that Ford misappropriated its trade secrets in violation of the DTSA and MUTSA, and also breached the parties' license agreement.

During pretrial proceedings, the district court excluded the testimony of Versata's damages expert and required Versata to confine its trade-secret damages to a reasonable-royalty model based solely on the parties' licensing history. The court excluded two alternative damages models because they included damages related to the value Ford obtained from using the trade secrets. At trial, the jury found Ford liable for misappropriating three of Versata's four trade secrets and awarded $22,386,000 in trade-secret damages and $82,260,000 for breaching the parties' license agreement. On posttrial motion, the district court reduced the trade-secret damages award from $22,386,000 to $0, because there was insufficient evidence for the jury to apportion damages to three rather than four trade secrets. 

Court's Analysis: Trade-Secret Damages and Liability

The Federal Circuit held that the district court erred as a matter of law when it precluded Versata from pursuing unjust enrichment damages. The court relied on the plain language of both the DTSA and MUTSA, which expressly allow recovery of "damages for any unjust enrichment caused by the misappropriation of the trade secret that is not addressed in computing damages for actual loss." The court found persuasive the holdings of the Sixth, Tenth, and Eleventh Circuits, each of which recognized unjust enrichment as a distinct and available remedy under state trade-secrets statutes containing language identical to the DTSA and MUTSA.

The district court had relied on two Sixth Circuit decisions — Vitro Corp. of America v. Hall Chemical Co. and Mid-Michigan Computer Systems, Inc. v. Marc Glassman, Inc. — to conclude that trade-secret damages must be measured with reference to the parties' licensing history. The Federal Circuit disagreed, holding that while those decisions upheld royalty-based awards, neither categorically precluded unjust enrichment damages. The court emphasized that the district court's requirement that damages be confined solely to licensing history was an erroneous view of the law that impacted Versata's ability to seek damages throughout the case.

Key Takeaways

• The decision underscores the importance of preserving multiple damages theories at the outset of trade-secret litigation. 
• Plaintiffs should consider developing expert reports supporting unjust enrichment, reasonable royalty, and actual-loss models, and should be prepared to resist early efforts to narrow damages theories. 
• Defendants, in turn, should recognize that courts may be unwilling to limit trade-secret damages solely to historical licensing terms — particularly where the statutory language provides for broader recovery. 
• For both sides, early attention to the full statutory framework for trade-secret damages is important.