Future Damages and Future Injunction May Constitute Double Recovery in Trade Secrets Case

At a Glance

• The court concluded that granting the requested injunction and upholding the entire jury verdict would constitute an impermissible double recovery. The court also concluded, however, that at least a portion of the avoided-development costs were not duplicative, and that it could therefore issue an injunction together with a reduced damages award.
• This case underscores the complexity of calculating trade secret damages and balancing remedies to align with the statutory frameworks while avoiding duplicative recovery.

In Insulet Corporation v. EO Flow Co., Ltd., No. 23-11780 (D. Mass. Apr. 24, 2025), a federal district court reduced a jury verdict in a trade secret case from $452 million to $59 million. The U.S. District Court for the District of Massachusetts determined that, under the facts of this particular case, both (1) awarding certain future damages and (2) issuing a permanent injunction would constitute a double recovery.

Court’s Analysis of Unjust Enrichment Damages

The plaintiff won a $452 million jury verdict in a trade secret case, which included certain future damages. The court also permanently enjoined the defendants from using the plaintiff’s trade secrets. The defendants challenged the award of both future damages and issuance of a permanent injunction as a double recovery.

The plaintiff’s damages expert presented two theories of unjust enrichment to the jury: (a) the “head-start” theory, which quantified the benefit the defendants gained from accelerated development based on their use of the plaintiff’s trade secrets, and (b) the “market-value” theory, which estimated the value of the trade secrets to a prospective buyer. Both theories relied in part on unrealized, future gains from developing the relevant products. The damages, therefore, implicated the possibility of double recovery between the injunctive relief and the future damages.

The plaintiff’s damages expert testified that the avoided-development costs for three of the trade secrets totaled approximately $26.2 million. He further testified that the market value of those three trade secrets was $83 million. For the fourth trade secret, the expert estimated avoided-development costs of approximately $72 million, and a market value of $232 million.

The jury awarded $170 million in unjust-enrichment damages. Because the jury did not fully adopt either theory, the specific basis for its calculation of damages was somewhat unclear. But what was clear was that the jury’s verdict was based in part on the defendants’ future, unrealized gains. It therefore overlapped with the permanent injunction, which, by its nature, is designed to prevent future harm.

The court concluded that granting the requested injunction and upholding the entire jury verdict would constitute an impermissible double recovery. The court also concluded, however, that at least a portion of the avoided-development costs were not duplicative (because the damages were already incurred and not dependent on future harm), and that it could therefore issue an injunction together with a reduced damages award.

In adjusting the award, there was no dispute that the jury adopted the market-value theory in awarding $83 million for the first three trade secrets. But for the fourth trade secret, it was unclear which theory the jury adopted — the jury awarded more than the $72 million in avoided-development costs, but less than the $232 million in market value. To address that issue, the plaintiff proposed merely adjusting the award to align with the ratio between the market value and the jury award. The defendants, however, argued (and the court agreed) that it was possible that the jury substantially rejected an avoided-development-costs award for the fourth trade secret. Given that, and because there was no obvious way to reconstruct the jury’s reasoning, the court rejected the plaintiff’s proposal to ensure that there was no real risk of duplicative recovery between the injunction and the damages.

In light of the uncertainty, the court excluded the fourth trade secret’s avoided costs entirely from the final award, concluding that including them could result in double recovery when considered alongside the permanent injunction. Consequently, the court limited the unjust enrichment damages to the avoided-development costs associated with the first three trade secrets.

Exemplary Damages Adjustment

The jury also awarded $282 million in exemplary damages based on willful misappropriation; but the court reduced this amount to comply with the Defend Trade Secrets Act, which caps exemplary damages at two times the amount of damages actually awarded. The final exemplary damages were reduced to $33.6 million — to match the adjusted damages award related to the trade secrets that the jury found the defendants willfully misappropriated. After the adjustment, the total monetary recovery was reduced to $59.4 million. The court also noted that exemplary damages are punitive and therefore do not pose the same risk of double recovery as other damages.

Key Takeaway

This case underscores the complexity of calculating trade secret damages and balancing remedies to align with the statutory frameworks while avoiding duplicative recovery.