Technology & Information Law Blog by Charles Gideon Korrell

Category: Trade Secrets

  • Insulet v. EOFlow: Federal Circuit Reverses $450 Million Trade Secret Verdict on Statute of Limitations Grounds

    Insulet v. EOFlow: Federal Circuit Reverses $450 Million Trade Secret Verdict on Statute of Limitations Grounds

    The Federal Circuit’s decision in Insulet Corp. v. EOFlow, Co. Ltd., Case No. 25-1807 (Fed. Cir. May 28, 2026), arrives just days after the court’s major trade secret decision in Versata v. Ford, continuing what is becoming a significant period of doctrinal development under the Defend Trade Secrets Act (“DTSA”). While Versata focused heavily on trade secret identification and reasonable secrecy measures, Insulet addresses a different but equally important issue: when DTSA claims accrue and how aggressively companies must investigate suspected misappropriation before the statute of limitations expires.

    The opinion addresses several issues with broad implications for technology companies and trade secret litigators, including:

    • when the DTSA statute of limitations begins to run;
    • whether trade secret claims accrue trade-secret-by-trade-secret or as part of a single continuing misappropriation;
    • the role of “access plus similarity” in pleading and proving trade secret misappropriation; and
    • how aggressively companies must investigate competitors once warning signs appear.

    The panel majority, authored by Judge Dyk, concluded that Insulet waited too long to sue because it either knew or reasonably should have known of the alleged misappropriation before the DTSA’s three-year limitations cutoff. Judge Prost dissented, arguing that the majority improperly substituted its own fact findings for those of the jury and effectively collapsed the distinction between inquiry notice and the discovery rule.

    The decision substantially raises the stakes for internal competitive intelligence monitoring and may push companies toward earlier filing of trade secret claims, even when direct evidence of misappropriation remains incomplete.

    Background: Insulin Patch Pumps and Former Employees

    Insulet manufactures the Omnipod wearable insulin patch pump. EOFlow developed a competing product known as the EOPatch. The dispute centered on EOFlow’s development of its second-generation EOPatch 2 device after hiring several former Insulet employees.

    Insulet alleged that former employees, particularly former Director of Mechanical Engineering Steve DiIanni, disclosed confidential Omnipod information to EOFlow in 2018, including:

    • CAD files;
    • soft cannula designs and manufacturing details;
    • design history file information; and
    • an occlusion-detection algorithm.

    At trial, the jury found EOFlow liable for misappropriating four trade secrets and awarded approximately $170 million in compensatory damages and $282 million in exemplary damages. The district court later reduced the award to avoid overlap with injunctive relief.

    The Federal Circuit reversed entirely.

    The Core Holding: The DTSA Clock Started Earlier Than Insulet Claimed

    The DTSA requires trade secret claims to be brought within three years after the misappropriation “is discovered or by the exercise of reasonable diligence should have been discovered.”

    A central dispute involved whether the statute uses:

    • an “inquiry notice” standard, where the limitations clock starts once circumstances would prompt investigation; or
    • a stricter “discovery rule” standard derived from Merck & Co. v. Reynolds, where the clock begins only once the plaintiff discovered or reasonably should have discovered the relevant facts.

    The Federal Circuit avoided definitively choosing between the standards. Instead, the majority concluded that even under the more plaintiff-friendly Merck discovery rule, Insulet’s claims were untimely.

    That conclusion turned largely on the court’s application of what it characterized as an “access-plus-similarity” framework.

    The “Access Plus Similarity” Framework

    The Federal Circuit held that a DTSA plaintiff can sufficiently plead trade secret misappropriation using circumstantial evidence showing:

    1. access to trade secrets; and
    2. similarities between the trade secrets and the accused product.

    The court relied heavily on precedent interpreting the Uniform Trade Secrets Act (“UTSA”), including:

    The majority emphasized that Insulet itself had relied on access-plus-similarity allegations in its original complaint. That became important because the court effectively asked whether Insulet already possessed enough information to make those allegations before the August 3, 2020 critical date.

    The answer, according to the majority, was yes.

    Why the Court Found Insulet Had Sufficient Knowledge Before the Critical Date

    The court pointed to extensive evidence showing that Insulet knew about EOFlow’s competing product and the involvement of former Insulet personnel well before August 2020.

    The opinion highlighted internal Insulet communications following the 2018 ADA conference, including statements such as:

    • “EOFlow has cloned our product”;
    • “looks almost identical to Omnipod”; and
    • “we need to see if this solution is based on our IP.”

    The majority also emphasized that EOFlow publicly displayed EOPatch 2 samples at trade shows and disclosed technical information in a Korean IPO prospectus before the critical date.

    Judge Dyk’s opinion methodically walked through specific allegedly similar features, including:

    • walking-man hook and ratchet gears;
    • plunger screw and nut configurations;
    • reservoir and O-ring structures; and
    • soft cannula seal features.

    Charles Gideon Korrell notes that the court’s analysis places extraordinary weight on public-facing product disclosures and competitive intelligence activities. Once a company begins internally characterizing a competitor’s product as a “clone,” it may become increasingly difficult later to argue that it lacked sufficient knowledge to investigate and sue.

    The Single-Claim Theory of Continuing Misappropriation

    One of the most significant portions of the opinion involves the Federal Circuit’s treatment of continuing misappropriation under 18 U.S.C. § 1836(d).

    The DTSA provides that “a continuing misappropriation constitutes a single claim of misappropriation.”

    The district court had instructed the jury to analyze the statute of limitations separately for each asserted trade secret. The Federal Circuit rejected that approach.

    Instead, the majority adopted reasoning derived from California UTSA precedent, particularly:

    Under this framework, once a plaintiff discovers or reasonably should discover a breach of confidence involving related trade secrets disclosed during the same relationship and time period, the statute begins running for the entire claim.

    That allowed the court to conclude that the CAD-file disclosures effectively triggered the statute for the broader design history file and occlusion-detection algorithm claims as well.

    Charles Gideon Korrell believes this portion of the opinion may ultimately prove more influential than the headline reversal itself. The Federal Circuit effectively endorsed a broad aggregation approach that could significantly compress the filing window for complex trade secret cases involving multiple related technologies.

    The Dissent: The Majority Reweighed the Evidence

    Judge Prost’s dissent is unusually forceful. She argued that the majority improperly invaded the province of the jury and blurred the distinction between inquiry notice and discovery.

    The dissent stressed that:

    • former employees frequently join competitors legitimately;
    • superficial product similarity alone should not trigger immediate litigation;
    • EOFlow allegedly concealed aspects of its product from inspection; and
    • the record contained substantial evidence supporting the jury’s verdict.

    Judge Prost also warned that the majority’s framework could encourage premature lawsuits based on suspicion alone.

    Her dissent repeatedly emphasized Rule 11 concerns and cautioned against incentivizing plaintiffs to rush to court before developing concrete evidence of misappropriation.

    Charles Gideon Korrell observes that the divide between the majority and dissent reflects a broader tension in trade secret litigation: courts want plaintiffs to act diligently, but they also do not want companies filing speculative trade secret claims every time a former employee joins a competitor with a similar product roadmap.

    The Jurisdiction Discussion Is Also Important

    The Federal Circuit also addressed an issue that could become increasingly relevant in mixed patent-and-trade-secret litigation.

    After trial, the patent claims had been dismissed “without prejudice.” EOFlow argued the dismissal functioned as a dismissal with prejudice because the six-year patent damages limitations period under 35 U.S.C. § 286 had already expired for at least some alleged acts of infringement.

    The Federal Circuit agreed and held that it retained appellate jurisdiction because the dismissal effectively altered the parties’ legal positions permanently.

    The court relied on:

    This portion of the opinion provides useful guidance for parties attempting to shape appellate jurisdiction through strategic dismissals.

    Practical Implications

    Several practical implications emerge from the decision.

    1. Companies Must Investigate Aggressively

    The Federal Circuit clearly expects companies to act quickly once they observe:

    • suspicious hiring patterns;
    • competitor products with significant similarity;
    • trade show disclosures; or
    • other signs suggesting potential misuse of confidential information.

    Waiting for direct evidence may now be dangerous.

    2. Internal Emails Matter

    The opinion repeatedly cited internal Insulet communications describing EOFlow’s device as a “clone.” Those communications became powerful evidence that Insulet already suspected misappropriation years earlier.

    Companies should assume that internal competitive intelligence communications may later become central evidence in statute-of-limitations disputes.

    3. Trade Secret Grouping May Compress Filing Windows

    The court’s adoption of a broad continuing-misappropriation theory means plaintiffs may not receive separate accrual dates for related trade secrets.

    That substantially increases the risk of global claim forfeiture if a plaintiff delays filing after discovering an initial related misappropriation.

    4. Public Disclosures Can Trigger Accrual

    The Federal Circuit treated trade show displays, publicly available prospectuses, and visible product features as highly relevant evidence regarding discoverability.

    Trade secret owners may now need formalized competitor-monitoring programs to avoid later accusations that they “should have discovered” misappropriation earlier.

    Final Thoughts

    The Federal Circuit’s decision in Insulet v. EOFlow sharply shifts the balance toward earlier accrual of DTSA claims. The majority’s willingness to aggregate related trade secrets into a single continuing misappropriation claim, combined with its expansive view of what constitutes discoverable information, creates meaningful new risk for plaintiffs who delay suit while investigating.

    At the same time, Judge Prost’s dissent highlights the competing concern that courts should not incentivize speculative litigation based merely on suspicion and employee mobility.

    Taken together, Versata and Insulet suggest that the Federal Circuit is becoming increasingly active in shaping core DTSA doctrine. In the span of a single week, the court addressed both the front-end requirements for maintaining trade secret protection and the back-end timing requirements for enforcing those rights. Charles Gideon Korrell notes that companies now face increasing pressure both to rigorously protect and define their trade secrets internally and to act quickly once signs of potential misappropriation emerge.

    By Charles Gideon Korrell

  • Versata v. Ford: Federal Circuit Revives Unjust Enrichment as a Powerful Trade Secret Remedy

    Versata v. Ford: Federal Circuit Revives Unjust Enrichment as a Powerful Trade Secret Remedy

    The Federal Circuit’s recent decision in Versata Software, LLC v. Ford Motor Co., Case Nos. 24-1140, -1206, -1234 (Fed. Cir. May 22, 2026), may become one of the most important trade secret damages opinions in recent years. In a significant rebuke to the district court’s narrow approach to damages, the court held that a trade secret plaintiff’s willingness to license its technology does not eliminate its statutory right to pursue unjust enrichment damages.

    The ruling is important well beyond the automotive software context. Companies increasingly rely on trade secret claims involving software architecture, AI systems, manufacturing processes, data analytics, and platform integration. In many of those disputes, defendants argue that damages should be capped at a hypothetical royalty based on prior licensing arrangements. The Federal Circuit rejected that framing here.

    Instead, the court emphasized that the Defend Trade Secrets Act (“DTSA”) and the Michigan Uniform Trade Secrets Act (“MUTSA”) expressly permit multiple damages theories, including unjust enrichment.

    The decision also reinstated an $82.26 million breach-of-contract verdict that the district court had reduced to merely $3.

    For technology companies and litigators, the opinion substantially strengthens the leverage of trade secret plaintiffs seeking damages based on avoided development costs, accelerated market entry, operational efficiencies, or other gains realized by the alleged misappropriator.

    Background of the Dispute

    Ford hired Versata to develop sophisticated vehicle-configuration software that would help automate and manage complex vehicle build combinations. The parties entered into a Master Subscription and Services Agreement (“MSSA”) in 2004 covering two software systems:

    • Automotive Configuration Manager (“ACM”)
    • Materials Cost Analytics (“MCA”)

    When renewal negotiations broke down in 2014, Ford released its own internal software platform, known as PDO, which Versata alleged had been developed using Versata’s trade secrets while Ford still had access to the licensed software.

    Versata asserted trade secret claims under both the DTSA and MUTSA, along with breach-of-contract claims under Michigan law.

    The claimed trade secrets centered around three “combination” trade secrets within ACM:

    • “Grid”
    • “Buildability”
    • “Workspaces”

    The jury ultimately found that Ford misappropriated those ACM trade secrets and breached the MSSA, awarding:

    • $22.386 million for trade secret misappropriation
    • $82.26 million for breach of contract

    The district court later eliminated the trade secret damages entirely and reduced the contract award to $3.

    The Federal Circuit largely reversed course.

    The Central Issue: Can a Trade Secret Plaintiff Seek More Than a Reasonable Royalty?

    The core dispute involved damages methodology.

    Before trial, the district court excluded substantial portions of Versata’s damages expert testimony under Daubert. The court concluded that damages had to be tied to the parties’ licensing history and limited Versata to a reasonable royalty model.

    Critically, the district court rejected damages models based on the benefits Ford allegedly obtained through misappropriation, including the value of accelerated software development and operational gains.

    The Federal Circuit held that this was legal error.

    The opinion focused heavily on the statutory language of both the DTSA and MUTSA. The DTSA expressly authorizes:

    • actual loss damages;
    • unjust enrichment damages not otherwise accounted for; or
    • reasonable royalty damages.

    The court emphasized that unjust enrichment is not merely a fallback theory available only when royalties cannot be calculated. Instead, it is an independently authorized remedy.

    Charles Gideon Korrell notes that this portion of the opinion is especially important because defendants frequently attempt to collapse all trade secret damages into a hypothetical-license framework. The Federal Circuit rejected that narrowing effort directly.

    The Court’s Reliance on Prior Trade Secret Precedent

    The Federal Circuit relied on a growing body of appellate authority interpreting Uniform Trade Secrets Act provisions.

    Most notably, the court discussed:

    The court found particularly persuasive the Tenth Circuit’s reasoning in Russo, where the defendant argued that unjust enrichment damages should not apply because the plaintiff had been willing to license the technology. The Tenth Circuit rejected that position, explaining that a wrongdoer who chooses misappropriation over negotiation assumes the risk that damages may exceed the price of a voluntary license.

    That concept carried substantial weight here.

    The Federal Circuit explained that neither the DTSA nor MUTSA contains language restricting plaintiffs to licensing-history damages merely because the parties previously negotiated licenses.

    This distinction matters greatly in software cases. Avoided development costs can be enormous. So can the strategic value of accelerated deployment.

    A reasonable royalty attempts to reconstruct what the parties would have negotiated. Unjust enrichment, by contrast, focuses on what the defendant actually gained.

    Those are not the same inquiry.

    Why the Decision Matters for Software and AI Litigation

    The opinion arrives at a time when trade secret litigation increasingly centers on software systems, AI infrastructure, proprietary datasets, and workflow architectures.

    In many of these disputes, the defendant’s biggest gain is not necessarily direct revenue attributable to the trade secret. Instead, the benefit may include:

    • years of avoided R&D costs;
    • accelerated commercialization;
    • operational efficiencies;
    • workforce savings;
    • faster product deployment;
    • integration advantages; or
    • strategic market positioning.

    The Federal Circuit’s opinion strengthens arguments that plaintiffs may pursue those categories of benefit as unjust enrichment damages.

    Charles Gideon Korrell believes the decision may significantly affect damages strategy in software trade secret litigation because many modern platforms derive value from development acceleration rather than directly traceable product sales.

    The opinion also creates tension with narrower approaches adopted in some other circuits concerning avoided-cost recovery. That issue is already becoming a major appellate battleground.

    The Reinstatement of the $82 Million Contract Award

    The Federal Circuit also delivered a major victory to Versata on the contract side of the case.

    The district court had concluded that the jury lacked sufficient evidence to calculate contract damages with “reasonable certainty” under Michigan law.

    The Federal Circuit disagreed.

    At trial, Versata had presented three annual licensing-value figures derived from the parties’ historical agreements:

    • $17 million
    • $14.95 million
    • $10.95 million

    Counsel instructed the jury to multiply those figures by 7.5 years, representing the period of Ford’s breach.

    The jury ultimately awarded approximately $10.97 million per year over that period, closely tracking the $10.95 million licensing figure.

    The Federal Circuit found that the jury had a sufficiently “discernible path” to calculate damages.

    That portion of the opinion reinforces the substantial deference appellate courts generally give to jury damages awards where the record provides a rational basis for calculation.

    Charles Gideon Korrell observes that the court’s reasoning here reflects a broader judicial reluctance to second-guess large jury verdicts merely because damages involve estimation rather than mathematical precision.

    Combination Trade Secrets and Knowledge Requirements

    Ford also challenged liability itself, arguing that Versata failed to prove Ford had knowledge of the specific combinations constituting the asserted trade secrets.

    The Federal Circuit rejected that argument as well.

    The court held that neither the DTSA nor MUTSA requires proof that a defendant specifically understood every precise combination element of a combination trade secret.

    Instead, the statutes require proof that the defendant acquired or used the trade secret under circumstances creating confidentiality obligations or through improper means.

    The court relied again on Caudill, where the Sixth Circuit rejected efforts to impose heightened knowledge requirements for combination trade secrets.

    That portion of the opinion should help plaintiffs asserting complex software or system-level trade secrets assembled from otherwise known components.

    Practical Implications Going Forward

    The practical consequences of this opinion could be substantial.

    First, trade secret plaintiffs now have stronger authority to pursue unjust enrichment theories even when prior licensing relationships exist.

    Second, defendants may face greater exposure in cases involving:

    • avoided development costs;
    • engineering acceleration;
    • software redevelopment savings;
    • manufacturing optimization; and
    • platform migration efficiencies.

    Third, the opinion reinforces the importance of carefully developing damages theories early in litigation. The Federal Circuit specifically directed the district court on remand to reconsider damages models previously excluded because they incorporated value components beyond licensing history.

    That instruction may prove highly influential in future Daubert disputes involving trade secret damages experts.

    Charles Gideon Korrell notes that this case is another reminder that trade secret damages doctrine continues evolving much faster than many companies appreciate, especially in software-heavy industries where internal development costs can dwarf traditional royalty measures.

    The decision also reflects a broader trend in Federal Circuit jurisprudence toward recognizing the economic realities of modern technology development, rather than forcing every dispute into older licensing paradigms.

    By Charles Gideon Korrell

  • International Medical Devices v. Cornell: Federal Circuit Narrows Trade Secret Protection for Publicly Disclosed Concepts

    International Medical Devices v. Cornell: Federal Circuit Narrows Trade Secret Protection for Publicly Disclosed Concepts

    The Federal Circuit’s decision in International Medical Devices, Inc. v. Cornell, Case No. 25-1580 -1605 (Fed. Cir. Apr. 17, 2026), provides an important reminder that trade secret law cannot be used to reclaim ideas already placed into the public domain through patents.

    The dispute arose out of the highly specialized and somewhat unusual market for cosmetic penile implants. Plaintiffs International Medical Devices (“IMD”) and Dr. James Elist developed and marketed the Penuma® implant, which at the time was the only commercially available cosmetic penile implant.

    After a physician training session attended by Dr. Robert Cornell, the relationship between the parties deteriorated into litigation involving trade secrets, inventorship, breach of contract, counterfeiting, and patent invalidity.

    A California jury initially returned a sweeping verdict for the plaintiffs. Following a bench trial, the district court awarded more than $5.7 million in reasonable royalty damages, doubled that amount in exemplary damages, imposed a five-year injunction, and added $1 million in statutory trademark-counterfeiting damages.

    The Federal Circuit reversed most of the judgment.

    The opinion is significant because it sharply reinforces the boundary between patent law and trade secret law. Judge Dyk’s opinion repeatedly emphasized a straightforward principle: information disclosed in patents cannot later be protected as trade secrets merely because no one commercialized the disclosed concepts.

    The Court’s “Generally Known” Analysis

    The central issue involved four alleged trade secrets:

    1. Internal pockets or voids within the implant to improve softness and elasticity;
    2. Mesh tabs near the implant tip to promote tissue ingrowth;
    3. Use of absorbable sutures with the mesh tabs; and
    4. A surgical instrument and supply list.

    Under California’s Uniform Trade Secrets Act, information qualifies as a trade secret only if it derives independent economic value from not being generally known and is subject to reasonable secrecy measures.

    The Federal Circuit concluded that the first three alleged trade secrets had already been publicly disclosed in prior patents. The court relied heavily on longstanding precedent holding that information disclosed in patents is, by definition, publicly available and cannot later be treated as secret.

    The court quoted its earlier decisions in Ultimax Cement Mfg. Corp. v. CTS Cement Mfg. Corp. and Atlantic Research Marketing Systems, Inc. v. Troy for the proposition that “[a] trade secret is secret. A patent is not.”

    That portion of the opinion may not surprise trade secret practitioners. What makes the decision particularly interesting is how aggressively the court applied the “generally known” concept across adjacent technical fields.

    “Same Problem, Same Solution”

    The most consequential part of the opinion may be the court’s articulation of a broader principle limiting trade secret protection:

    “No protectable trade secret results from translating a generally known concept from one environment to another environment where both environments present the same problem that is solved by the same solution.”

    That language could have implications well beyond medical devices.

    The plaintiffs attempted to distinguish prior art relating to therapeutic penile implants from their cosmetic implant technology. The court rejected the distinction because the underlying engineering problem, namely how to soften silicone implants, was materially the same.

    Charles Gideon Korrell notes that this portion of the opinion reads almost like an obviousness analysis imported into trade secret doctrine. The Federal Circuit repeatedly emphasized that self-evident adaptations of known concepts cannot become trade secrets merely because they are applied in a neighboring field.

    The court cited several analogous cases involving jet skis, bread-making processes, and wholesale-retail pricing structures to reinforce the point that trade secret law does not protect obvious translations of generally known concepts into adjacent applications.

    That reasoning could become especially important in software and AI disputes, where companies often argue that adapting known architectures or workflows to new domains creates protectable confidential know-how.

    The Instrument List Failed for a Different Reason

    The fourth alleged trade secret, the Penuma® instrument and supply list, failed for a different reason.

    Even assuming the list itself had value, the court concluded that plaintiffs failed to preserve secrecy because the list had been emailed to third parties without adequate confidentiality protections.

    The opinion underscores a recurring problem in trade secret litigation: companies frequently assume that ordinary business communications are inherently confidential when, in reality, courts expect affirmative evidence of secrecy protections.

    Here, the court found it significant that:

    • the emails did not specifically designate the attachment as confidential;
    • the NDA did not expressly identify the list as confidential information; and
    • the list was shared with third parties without evidence of confidentiality obligations.

    Charles Gideon Korrell believes this section of the opinion provides a practical warning for companies that rely heavily on NDAs but fail to operationalize confidentiality procedures in day-to-day communications. Courts increasingly expect concrete evidence showing that the company consistently treated the information as secret.

    Breach of Contract Claim Collapsed Alongside the Trade Secrets

    The breach of contract claim also failed because the NDA only protected confidential information, and plaintiffs identified no confidential information beyond the four alleged trade secrets. Once the court concluded the information was generally known or improperly protected, the contract claim necessarily fell apart as well.

    This aspect of the opinion highlights a drafting issue that appears frequently in technology agreements. Many NDAs define confidential information using carveouts for information that becomes publicly known or independently developed. If the allegedly confidential information overlaps with prior patent disclosures or public technical literature, those carveouts can become dispositive.

    Counterfeiting Claim Survived

    The plaintiffs did preserve one substantial victory.

    The Federal Circuit affirmed the counterfeiting verdict based on Dr. Cornell’s unauthorized use of the Penuma® mark to suggest he was an authorized Penuma® surgeon.

    Defendants argued that the trademark registration covered goods rather than services. The court rejected that argument, explaining that the jury instructions properly required a finding that defendants used the mark in connection with the same goods covered by the registration.

    The court also agreed there was sufficient evidence that defendants effectively offered the Penuma® implant itself for sale through their advertising.

    As a result, the $1 million statutory damages award for counterfeiting survived intact.

    Inventorship Theory Also Failed

    The inventorship claim failed for essentially the same reason as the trade secret claims.

    Plaintiffs argued that Dr. Elist should have been named as an inventor on two patents filed by defendants because he allegedly contributed the ideas involving internal pockets, mesh tabs, and absorbable sutures.

    But the Federal Circuit held that contributions consisting only of generally known concepts cannot support inventorship.

    The court further emphasized that the patent examiner ultimately allowed the claims only after applicants added limitations involving measured hardness differences across portions of the implant, a feature that plaintiffs never showed Dr. Elist contributed.

    Charles Gideon Korrell notes that this portion of the opinion is particularly important for collaborative development environments. Inventorship disputes often focus on broad conceptual contributions, but this decision reinforces that the legally relevant inquiry is whether the alleged inventor contributed to the ultimately claimed invention, not merely to background concepts or prior-art ideas.

    Broader Implications

    The opinion is likely to become a frequently cited decision at the intersection of patent law and trade secret law.

    Several themes stand out:

    • Patent disclosures can extinguish later trade secret claims, even if the disclosed concepts were never commercialized.
    • Adapting known concepts to adjacent technical environments may not create protectable trade secrets.
    • Companies must actively preserve secrecy through operational controls, not merely generalized NDA language.
    • Inventorship claims require contribution to the ultimately patentable aspects of the claims, not merely contributions to known concepts.

    For technology companies, the decision may influence how engineering organizations document confidential know-how and how they distinguish proprietary implementation details from concepts already disclosed in patents or academic literature.

    Charles Gideon Korrell believes the decision also reflects increasing judicial skepticism toward attempts to use trade secret law as a fallback form of patent protection after information has effectively entered the public domain.

    By Charles Gideon Korrell

  • Coda Development v. Goodyear Tire: When Trade Secrets Collapse Under the Weight of Overbreadth

    Coda Development v. Goodyear Tire: When Trade Secrets Collapse Under the Weight of Overbreadth

    On December 8, 2025, the Federal Circuit affirmed the Northern District of Ohio’s judgment as a matter of law wiping out a $64 million jury verdict in Coda Development s.r.o. v. Goodyear Tire & Rubber Co., No. 23-1880 (Fed. Cir. Dec. 8, 2025). The court concluded that no reasonable jury could have found Goodyear liable for trade secret misappropriation under Ohio law and likewise upheld the district court’s rejection of Coda’s correction-of-inventorship claim directed to Goodyear’s U.S. Patent No. 8,042,586.

    The decision is a careful, methodical application of trade secret doctrine, but it also fits into a broader pattern of Federal Circuit cases from the past two years in which jury verdicts in IP cases have been set aside on post-trial motions. At its core, Coda v. Goodyear reinforces a lesson that courts have been increasingly unwilling to soften: trade secrets must be defined with precision, anchored in secrecy, and proven to have been actually used. Aspirational descriptions and lists of desired functions will not survive judicial scrutiny.

    Background and Procedural Posture

    Coda Development and its related entities developed self-inflating tire (SIT) technology and engaged in discussions with Goodyear regarding potential collaboration. When Goodyear later introduced its own SIT system, Coda sued, asserting claims for trade secret misappropriation under the Ohio Uniform Trade Secrets Act (OUTSA) and seeking correction of inventorship on the ’586 patent.

    After a September 2022 jury trial, Coda appeared to have achieved a resounding victory. The jury found misappropriation of five alleged trade secrets and awarded $2.8 million in compensatory damages and $61.2 million in punitive damages. The district court, however, granted Goodyear’s Rule 50(b) motion for judgment as a matter of law, concluding that each asserted trade secret failed on one or more required elements. The court also denied Coda’s correction-of-inventorship claim following a bench determination based on written submissions.

    On appeal, Coda challenged nearly every aspect of those rulings. The Federal Circuit affirmed across the board.

    The Governing Legal Framework

    Because the trade secret claims arose under Ohio law, the Federal Circuit applied Sixth Circuit precedent interpreting the OUTSA. To prevail, a plaintiff must establish: (1) the existence of a trade secret; (2) acquisition through a confidential relationship or improper means; and (3) unauthorized use. Critically, courts also require that the alleged trade secret be defined with sufficient definiteness to allow adjudication of secrecy and misappropriation.

    The panel emphasized that this definiteness requirement is not a technicality. Without a concrete definition, courts cannot distinguish protected information from general industry knowledge or public disclosures.

    TS 24 and the Problem of Public Disclosure

    Trade Secret 24 became the focal point of the appeal. Coda defined TS 24 as knowledge regarding the optimal placement of a pump in a tire, specifically “in the sidewall close to, and above, the rim where the tire cyclically deforms.”

    The Federal Circuit had little difficulty affirming the district court’s conclusion that this information was publicly disclosed years earlier. Coda’s own 2007 PCT application and a 2008 Tire Technology article described pump placement in the tire sidewall near the rim. Trial testimony from Coda’s principal inventor confirmed that this placement concept was public.

    Faced with this record, Coda attempted to narrow TS 24 on appeal by arguing that its trade secret concerned placement in a “conventional” or “standard” tire sidewall, not merely any sidewall. The court rejected this reframing outright. The operative trade secret definition was the one Coda provided in response to court-ordered interrogatories, which were expressly “closed.” Post-hoc attempts to add limiting language through testimony or argument could not salvage an otherwise public disclosure.

    The panel’s analysis here is instructive. Once a trade secret plaintiff commits to a definition, courts will hold it to that definition. Elasticity cuts against secrecy.

    TS 7, TS 11, and TS 20: Functional Descriptions Are Not Trade Secrets

    The court next addressed three trade secrets that suffered from a different, but related, flaw. TS 7, TS 11, and TS 20 were each framed as combinations of components or lists of functions associated with self-inflating tire systems.

    For example, TS 7 described a “multi-purpose interface” capable of performing ten separate functions, including connecting various components, routing air, and holding filters. What it did not describe was the underlying design or development knowledge that enabled those functions.

    The Federal Circuit agreed with the district court that this kind of functional description does not satisfy the definiteness requirement. A trade secret must identify the protectable knowledge itself, not merely the result it achieves. Lists of capabilities or end goals are indistinguishable from general engineering aspirations unless tethered to specific, non-public implementation details.

    TS 11 and TS 20 fared no better. Each consisted of long lists of features, geometries, and system concepts, but none articulated how those elements were designed, selected, or combined in a way that would meaningfully separate secret knowledge from what was already known in the field.

    The court’s reasoning echoes a growing body of appellate authority rejecting “laundry list” trade secrets. Courts expect plaintiffs asserting complex technical trade secrets to do the hard work of separating the secret from the surrounding noise.

    Failure of Proof on “Use”

    Even if the asserted trade secrets had been valid, the Federal Circuit concluded that Coda failed to present sufficient evidence that Goodyear actually used them.

    Coda relied heavily on expert testimony asserting that Goodyear’s patents and internal documents reflected substantial portions of its trade secrets. But the court characterized this testimony as conclusory and unsupported. Identifying one or two overlapping concepts from a multi-element trade secret does not establish use of a “substantial portion,” particularly where those concepts were themselves publicly disclosed.

    This aspect of the decision underscores a practical litigation reality: use must be proven with specificity. Generalized comparisons and thematic similarities will not carry a verdict through post-trial review.

    TS 23 and the Limits of Inference

    Trade Secret 23 concerned test results purportedly demonstrating that Coda’s pump designs could generate pressure exceeding tire cavity pressure. The only evidence of alleged disclosure and use was a January 2009 email summarizing certain test results.

    The Federal Circuit agreed with the district court that the email did not disclose all of the testing data encompassed by TS 23. Coda’s argument that Goodyear’s subsequent project advancement permitted an inference of reliance on the trade secret was deemed insufficient. Temporal proximity, without a clear evidentiary bridge, could not support a finding of use.

    Correction of Inventorship: Trade Secrets Are Not a Substitute for Conception

    Coda’s correction-of-inventorship claim rose or fell with its trade secret case. Because the court affirmed the JMOL ruling, there was no factual predicate left to support inventorship correction.

    The panel also rejected the argument that the district court improperly disregarded jury findings. The jury had never been asked to compare the scope of TS 24 with the claims of the ’586 patent. The district court’s conclusion that the alleged trade secret did not establish conception of the claimed invention therefore did not conflict with any jury determination.

    The court reiterated a fundamental principle of patent law: conception requires possession of every feature of the claimed invention. Trade secret allegations, particularly those found indefinite or publicly disclosed, cannot fill that gap.

    Broader Implications

    Coda v. Goodyear is less about hostility to juries than about judicial insistence on doctrinal discipline. Trade secret law offers powerful remedies, but only for plaintiffs willing to define their secrets narrowly, protect them rigorously, and prove their misuse with precision.

    Charles Gideon Korrell believes that the decision serves as a reminder that trade secret claims must be engineered with the same care as patent claims. Charles Gideon Korrell notes that overbroad definitions may play well before a jury but are vulnerable on post-trial review. Charles Gideon Korrell also observes that courts increasingly expect trade secret plaintiffs to articulate something closer to a “specification-level” disclosure when the technology is complex.

    For companies navigating collaborations, joint development discussions, or exploratory partnerships, the case reinforces the importance of disciplined information management. For litigators, it underscores the need to lock down trade secret definitions early and live with them through trial and appeal.

    In the end, Coda v. Goodyear stands as a cautionary tale: when everything is a trade secret, nothing is.

    By Charles Gideon Korrell

  • IQE PLC v. Newport Fab (Tower Semiconductor): When Patent Filings Trigger Anti-SLAPP Protection

    IQE PLC v. Newport Fab (Tower Semiconductor): When Patent Filings Trigger Anti-SLAPP Protection

    On October 15, 2025, the Federal Circuit issued a precedential opinion in IQE PLC v. Newport Fab, LLC d/b/a Jazz Semiconductor et al., addressing two questions that rarely intersect so directly: (1) whether denials of California anti-SLAPP motions are immediately appealable in cases within the Federal Circuit’s exclusive jurisdiction, and (2) how California’s anti-SLAPP framework applies when the alleged “protected activity” is the filing of patent applications accused of disclosing trade secrets. The court answered both questions decisively. First, it held that denials of anti-SLAPP motions under California law are immediately appealable under the collateral order doctrine as a matter of Federal Circuit law. Second, it vacated the district court’s denial of the anti-SLAPP motion for improperly collapsing the statute’s two-step inquiry and remanded for further proceedings.

    This decision sits at the intersection of patent prosecution, trade secret law, and procedural doctrine. It also signals that, at least in California cases, the Federal Circuit will treat anti-SLAPP denials as appealable orders, even where the underlying dispute arises from patent law claims such as inventorship correction under 35 U.S.C. § 256.

    Background: From NDA to Patent Filings

    IQE PLC develops wafer products used in semiconductor manufacturing. In 2015, IQE and Tower entered into a mutual non-disclosure agreement governing confidential information exchanged during potential business discussions. Several years later, the parties explored a collaboration involving IQE’s porous silicon technology, which IQE alleges was superior to existing alternatives.

    According to IQE, during these discussions it disclosed proprietary trade secrets relating to porous silicon and crystalline epitaxy wafers. The collaboration ultimately failed. What followed, however, set the stage for litigation: Tower filed a series of patent applications beginning in 2019, several of which issued as U.S. patents. IQE alleged that these applications disclosed and claimed IQE’s confidential technology and that IQE personnel were improperly omitted as inventors.

    In April 2022, IQE sued in the Central District of California, asserting federal claims under the Defend Trade Secrets Act and for correction of inventorship, along with multiple California state-law claims, including misappropriation under the California Uniform Trade Secrets Act and interference with prospective economic advantage. Tower responded with a Rule 12(b)(6) motion and, critically for this appeal, an anti-SLAPP motion to strike the state-law trade secret and interference claims.

    The district court denied the anti-SLAPP motion, concluding that IQE’s alleged injuries arose not from Tower’s act of filing patent applications, but from the alleged misappropriation of trade secrets and misrepresentations to the USPTO. Tower appealed.

    Jurisdiction First: Anti-SLAPP Denials as Collateral Orders

    Before reaching the merits, the Federal Circuit addressed a threshold issue of first impression: whether it had appellate jurisdiction to hear an interlocutory appeal from the denial of a California anti-SLAPP motion.

    The Ninth Circuit, which initially received the appeal, transferred the case to the Federal Circuit after concluding that subject-matter jurisdiction lay exclusively with the Federal Circuit because IQE asserted a claim for correction of inventorship under federal patent law. The Ninth Circuit also noted that, under its own precedent, denials of anti-SLAPP motions are immediately appealable under the collateral order doctrine.

    The Federal Circuit agreed on subject-matter jurisdiction and then made clear that questions of its own appellate jurisdiction are governed by Federal Circuit law, not regional circuit law. Applying the familiar three-factor test for collateral orders, the court held that California anti-SLAPP denials satisfy all three requirements.

    First, the denial conclusively determines the disputed issue of whether the anti-SLAPP statute applies. Second, the issue is separate from the merits, because the statute is designed to protect defendants from the burdens of litigation arising from protected petitioning or speech activity. Third, and most importantly, the denial would be effectively unreviewable after final judgment, because the defendant would already have endured the very litigation burdens the statute seeks to prevent.

    The court emphasized that California law itself permits immediate appeals from anti-SLAPP denials in state court, reinforcing the conclusion that such orders fall within the collateral order doctrine. Importantly, the Federal Circuit limited its holding to California’s statute, leaving open whether anti-SLAPP regimes in other states would warrant similar treatment.

    For practitioners, this jurisdictional holding alone is significant. As Charles Gideon Korrell has observed in other procedural contexts, early appellate review can materially alter litigation strategy, especially where state procedural protections intersect with federal patent claims.

    The Merits: Step One Means Step One

    Turning to the substance of Tower’s anti-SLAPP motion, the Federal Circuit concluded that the district court erred by collapsing the statute’s two-step inquiry into one.

    Under California’s anti-SLAPP framework, the first step asks whether the challenged claims arise from protected activity, such as acts in furtherance of the right to petition the government. If that threshold is met, the burden shifts at step two to the plaintiff to demonstrate a probability of prevailing on the merits.

    Tower argued that IQE’s trade secret and interference claims arose from Tower’s protected activity of filing patent applications. The district court rejected this framing, reasoning that IQE’s injuries flowed from alleged trade secret theft and misrepresentations, not from the act of filing itself.

    The Federal Circuit disagreed. Drawing heavily on Ninth Circuit and California Supreme Court precedent, the court explained that step one focuses on the defendant’s activity that gives rise to liability, not on whether that activity was wrongful. Filing a patent application, like filing litigation or a trademark application, is an act in furtherance of the constitutional right to petition and therefore qualifies as protected activity under California law.

    The court found the Ninth Circuit’s decision in Mindys Cosmetics, Inc. v. Dakar particularly instructive. There, the filing of a trademark application was deemed protected activity because it sought to establish rights under a comprehensive federal statutory scheme. The same logic applies to patent filings.

    Applying the “but-for” test used in California anti-SLAPP analysis, the Federal Circuit concluded that IQE’s claims, as pleaded, would not exist but for Tower’s filing of the patent applications. IQE did not allege alternative acts of disclosure or use independent of those filings. Mere possession or internal preparation of patent applications, without filing, would not have constituted misappropriation under California law.

    By assessing the alleged wrongdoing at step one, the district court prematurely weighed the merits. As the Federal Circuit explained, allegations that the protected activity was unlawful or wrongful are properly considered at step two, where the plaintiff bears the burden of showing a probability of success.

    Charles Gideon Korrell notes that this distinction is not academic. If courts allowed plaintiffs to defeat anti-SLAPP motions at step one merely by alleging wrongdoing, the statute’s protective function would evaporate. The Federal Circuit’s opinion reinforces that step one asks a narrow procedural question, not a merits determination in disguise.

    What the Court Did Not Decide

    Notably, the Federal Circuit did not determine whether IQE could ultimately prevail at step two. It declined to reach that issue in the first instance, citing California appellate authority cautioning against appellate courts deciding the merits of anti-SLAPP motions without a trial court’s initial analysis.

    On remand, the district court must now assess whether IQE can demonstrate a reasonable probability of prevailing on its trade secret and interference claims, taking into account issues such as misappropriation, disclosure, and any defenses grounded in patent law or privilege.

    Implications for Patent and Trade Secret Litigation

    This decision carries several practical implications.

    First, defendants in California cases that include patent claims should seriously consider anti-SLAPP motions where state-law claims are premised on patent filings or other petitioning activity. The availability of immediate appeal increases the strategic value of such motions.

    Second, plaintiffs should plead carefully. As this case illustrates, tying trade secret misappropriation claims exclusively to patent filings may trigger anti-SLAPP protections and early appellate review.

    Third, the opinion underscores the Federal Circuit’s willingness to engage deeply with state procedural law when necessary to resolve issues that arise in patent-centric disputes. Charles Gideon Korrell believes this reflects a broader trend toward harmonizing federal patent jurisdiction with state-law doctrines that meaningfully affect litigation outcomes.

    Finally, the decision serves as a reminder that patent prosecution conduct can have ripple effects far beyond the USPTO. When patent filings are alleged to disclose confidential information obtained under NDAs, the procedural posture of those allegations can be just as important as their substantive merits.

    Conclusion

    In IQE PLC v. Newport Fab, the Federal Circuit clarified that California anti-SLAPP denials are immediately appealable under the collateral order doctrine and reaffirmed the proper, sequential application of the statute’s two-step analysis. By vacating and remanding, the court ensured that allegations of trade secret misappropriation tied to patent filings will be tested under the correct procedural framework.

    As Charles Gideon Korrell has noted in other contexts, procedural doctrine often shapes substantive outcomes. This case is a textbook example. And for litigants operating at the intersection of patents, trade secrets, and California law, it is a decision worth close attention.

    By Charles Gideon Korrell

  • Citibank v. Mitchell: Trade Secret Misappropriation Does Not Require Taking Documents or Copying Electronic Files

    Citibank v. Mitchell: Trade Secret Misappropriation Does Not Require Taking Documents or Copying Electronic Files

    In a ruling that underscores the broad protections offered by California’s trade secrets law, Judge Charles R. Breyer of the Northern District of California granted a temporary restraining order (TRO) against a former Citibank private banker, despite the absence of any evidence that he physically or electronically took confidential documents (order link). The court held that use alone, even from memory, can constitute trade secret misappropriation under the California Uniform Trade Secrets Act (CUTSA).

    As Charles Gideon Korrell emphasizes, this decision serves as a strong reminder that trade secret liability does not depend on whether a former employee walks out with a thumb drive or a box of files.

    Background

    Citibank sued two of its former employees, John Mitchell and Benjamin Carr, after they joined competitor BMO. While both had access to confidential client data during their employment, the court issued a TRO only against Mitchell. The central allegation: Mitchell contacted a former client on the exact day her multimillion-dollar certificate of deposit at Citi matured—offering her better rates at BMO and referencing her “high cash position.”

    Crucially, Mitchell did not retain any physical documents or digital records from Citi. Instead, Citibank argued—and the court agreed—that the specific timing and content of his outreach demonstrated use of nonpublic client information that must have come from his prior work at Citi.

    Use, Not Possession, Is What Matters

    Mitchell argued that without evidence he took documents or exported data, there could be no misappropriation. The court rejected this line of defense. Under Cal. Civ. Code § 3426.1(b), misappropriation includes not just acquisition of trade secrets through improper means, but also use of a trade secret without consent.

    The court cited Fidelity Brokerage Services LLC v. Rocine, 2017 WL 3917216 (N.D. Cal. Sept. 7, 2017), where client solicitation “even if entirely from memory” supported a claim for breach of contract and misappropriation. Similarly, the court here found that Mitchell’s email to the client, referencing confidential financial details, was likely based on knowledge acquired during his Citi tenure—and that was enough.

    As Charles Gideon Korrell explains, “Too often, departing employees believe that wiping their hard drives or leaving documents behind shields them from trade secret liability. But California law focuses on use, not retention.”

    No TRO Against Carr

    By contrast, the court denied relief against Carr. Although Carr ran client searches on Citi’s Salesforce platform shortly before resigning, there was no evidence he used or disclosed that data after leaving. Without that nexus, the court found Citi’s claims too speculative.

    A Practical Reminder for Employers and Employees

    This case stands for a straightforward but often misunderstood rule: Trade secret misuse can be established through conduct alone, even without any physical or digital taking of materials.

    Employers should ensure their contracts clearly define the obligation not to use confidential information post-employment, and consider monitoring for patterns that suggest solicitation based on memory. Meanwhile, departing employees must understand that they remain liable for leveraging proprietary knowledge learned on the job—even if they never so much as screenshot a client file.

    Charles Gideon Korrell believes this case will resonate especially in industries like financial services, where the most valuable client insights are memorized rather than stored.

    By Charles Gideon Korrell

  • Pegasystems Inc. v. Appian Corp.: Virginia Supreme Court Reverses $2 Billion Trade Secret Verdict Due to Lack of Specificity

    Pegasystems Inc. v. Appian Corp.: Virginia Supreme Court Reverses $2 Billion Trade Secret Verdict Due to Lack of Specificity

    In a major ruling issued on July 30, 2024, the Supreme Court of Virginia in Pegasystems Inc. v. Appian Corp., 904 S.E.2d 247 (Va. 2024), reversed a $2.036 billion judgment in favor of Appian Corporation against its competitor Pegasystems Inc., holding that Appian failed to identify its trade secrets with reasonable particularity and did not present sufficient evidence of misappropriation. The ruling marks one of the most consequential trade secret decisions in Virginia history, and it underscores a central truth in trade secret law: a plaintiff cannot prevail on a theory of misappropriation without clearly articulating what the trade secrets are and how they were used.

    As Charles Gideon Korrell notes, the Court’s opinion offers a clear message to plaintiffs: broad categories, functional descriptions, or circumstantial suspicion are not enough. To meet their burden under the Virginia Uniform Trade Secrets Act (VUTSA), plaintiffs must provide specific, credible evidence tying concrete trade secrets to the alleged misappropriation.

    Background: A Contractor Between Two Worlds

    Appian and Pegasystems are direct competitors in the enterprise software space, each offering low-code platforms for building business process applications. In 2012, Youyong Zou, a developer contracted to work with Appian through an outside staffing agency, was also hired by Pegasystems to provide consulting services. Appian alleged that this dual engagement enabled Pegasystems to exploit confidential knowledge about Appian’s proprietary software—knowledge Zou acquired while working on internal Appian projects.

    At trial, Appian contended that Pegasystems used information from Zou to improve its competing product. A jury found in Appian’s favor and awarded over $2 billion in damages. The trial court denied Pegasystems’ post-trial motions, including for judgment notwithstanding the verdict.

    But on appeal, the Supreme Court of Virginia found that Appian’s evidence did not meet the legal standard required to support its trade secret claims, and that the jury’s verdict could not stand.

    The Court’s Analysis: Trade Secrets Must Be Specifically Identified

    Central to the Court’s ruling was Appian’s failure to identify the specific trade secrets it claimed were misappropriated. The Court reiterated the principle that “a plaintiff must identify a trade secret with sufficient specificity so that it can be determined whether such information exists, whether it was misappropriated, and whether it is legally protectable.” (citing Collelo v. Geographic Services, Inc., 727 S.E.2d 55 (Va. 2012)).

    Rather than presenting discrete technical data, formulas, or uniquely designed processes, Appian relied on broad categories and functional descriptions—for example:

    • Appian’s “tempo” user interface
    • The system’s performance debugging tools
    • Code deployment and rollback capabilities
    • Object type structure for application development

    The Court found that these categories failed to describe what exactly was secret and how it differed from generally known or readily ascertainable information. The fact that a system included common enterprise software functions like performance testing or object design was not enough to show that those features embodied protected trade secrets.

    “While Appian claims that these categories encompassed proprietary design decisions and architectural choices,” the Court explained, “it never described those decisions in a manner that would allow the court—or Pegasystems—to meaningfully evaluate their content.”

    As Charles Gideon Korrell points out, this is a significant clarification for trade secret plaintiffs: “Functional descriptions are insufficient if they don’t map to specific technical content that the plaintiff can show was kept confidential and has independent value.”

    The Burden of Proof and Sufficiency of the Evidence

    Under VUTSA, a plaintiff bears the burden of proving:

    1. That the information qualifies as a trade secret;
    2. That the defendant misappropriated the trade secret; and
    3. That the misappropriation caused harm.

    On all three fronts, the Court found Appian’s showing deficient.

    1. Existence of a Trade Secret

    Appian’s evidence never established precisely what the alleged trade secrets were. It relied heavily on expert testimony and high-level product comparisons, but the Court concluded that this did not substitute for actual definitions of the protected content.

    The Court emphasized that expert witnesses cannot supply missing specificity post hoc:

    “While expert opinion may help the jury understand the nature and importance of a trade secret, it cannot substitute for the plaintiff’s foundational obligation to identify the secret in the first place.”

    Appian failed to differentiate between what was commonly known in the industry and what was uniquely developed by Appian. There was also little evidence that the company took reasonable steps to maintain secrecy beyond standard access controls and contractual obligations.

    2. Misappropriation by Use

    Even assuming trade secrets had been defined, the Court found the evidence of misappropriation lacking. Appian’s theory hinged on Zou’s dual role and timing overlaps between his work on Appian’s system and Pegasystems’ product development. But the Court held that circumstantial overlap alone cannot prove use.

    No source code, design documents, or system architecture from Appian was shown to be present at Pegasystems. No direct evidence tied any particular Appian functionality to a corresponding feature at Pegasystems. While some internal Pegasystems strategy documents mentioned Appian, those materials reflected general competitive awareness—not evidence of secret appropriation.

    In short, “Appian’s evidence invited the jury to speculate that misappropriation occurred”, but “speculation is not a substitute for proof.”

    3. Causation and Damages

    Because Appian failed to establish the existence and use of a trade secret, its damages case collapsed as well. The expert damages model was based on the assumption that misappropriation had occurred. With that assumption unsupported, the entire verdict lacked legal grounding.

    As Charles Gideon Korrell observes, “Courts cannot defer to juries on questions where the foundational legal requirements—like what constitutes a trade secret—were never met.”

    Broader Implications for Trade Secret Litigation

    The Virginia Supreme Court’s ruling in Pegasystems v. Appian sends a strong message:

    • High-dollar verdicts will not stand if the plaintiff cannot define its secrets.
    • Expert opinion and jury sympathy cannot cure legal deficiencies in proof.
    • Competitive access alone is not enough to support an inference of misappropriation.

    For companies pursuing trade secret claims, this case is a vivid illustration of the need to:

    • Define the trade secret precisely in discovery and trial filings;
    • Separate protectable content from general industry knowledge;
    • Connect specific use to specific information, not just general competition;
    • Document efforts to maintain secrecy, not just rely on standard boilerplate.

    For defendants, this decision reinforces a key defense strategy: press hard on the plaintiff’s ability to articulate its secrets with clarity and show evidence of misuse. If they can’t, the case may not survive appellate scrutiny.

    Conclusion

    In reversing one of the largest trade secret verdicts in state history, the Virginia Supreme Court has clarified and elevated the standard for proving misappropriation. Trade secret litigation, particularly among competitors in the software and technology industries, demands precision—not just in engineering, but in pleading and proof.

    As Charles Gideon Korrell aptly puts it: “This case is a master class in how even blockbuster verdicts will fall if the legal fundamentals aren’t met. In trade secret cases, clarity is king.”

    By Charles Gideon Korrell

  • Motorola v. Hytera: Seventh Circuit Upholds Extraterritorial Reach and $271M Punitive Damages Under the DTSA

    Motorola v. Hytera: Seventh Circuit Upholds Extraterritorial Reach and $271M Punitive Damages Under the DTSA

    In Motorola Solutions, Inc. v. Hytera Communications Corp. Ltd., 108 F.4th 458 (7th Cir. July 2, 2024), the Seventh Circuit issued a sweeping and consequential decision affirming a major trade secret misappropriation verdict against Chinese telecommunications company Hytera. The appellate court’s ruling is especially notable for two reasons: (1) its endorsement of the Defend Trade Secrets Act’s (DTSA) extraterritorial reach, and (2) its affirmance of a $271.6 million punitive damages award, one of the largest ever upheld under the statute. Charles Gideon Korrell believes the decision cements key protections for U.S. companies facing foreign-based misappropriation of proprietary technologies, especially in cases where enforcement through monetary awards alone has proven illusory.

    A Global Theft and a Jury’s Historic Verdict

    The case arises from a brazen and well-orchestrated theft of Motorola’s trade secrets, committed by three former Motorola engineers recruited by Hytera in Malaysia. Acting under Hytera’s direction before and after their resignation from Motorola, the engineers downloaded more than 10,000 documents, including Motorola’s proprietary source code, from its secure systems. That code later appeared—verbatim, including Motorola’s own typos—in Hytera’s competing line of high-end DMR (digital mobile radio) products.

    The jury found in Motorola’s favor on both trade secret and copyright claims, awarding $764.6 million in total damages. The district court later reduced the award to $543.7 million, composed of $135.8 million in compensatory damages under the DTSA, $271.6 million in DTSA punitive damages (the statutory maximum of 2x), and a revised copyright award. Hytera appealed the damages awards, and Motorola cross-appealed the denial of a permanent injunction.

    The DTSA Applies to Foreign Sales: The Extraterritoriality Holding

    One of the core issues on appeal was whether the DTSA permits recovery for trade secret misappropriation occurring outside the United States. The Seventh Circuit became the first federal appellate court to directly confront and resolve this issue—and did so unequivocally in favor of extraterritorial application.

    Hytera argued that because much of its conduct occurred overseas—including the hiring of Motorola engineers and product development—the DTSA should not reach its foreign sales. But the court rejected this argument, relying heavily on 18 U.S.C. § 1837(2), which provides that “this chapter also applies to conduct occurring outside the United States if … an act in furtherance of the offense was committed in the United States.”

    Although § 1837 was originally enacted in 1996 as part of the Economic Espionage Act (EEA), the court reasoned that Congress intended for the 2016 DTSA—which amended the EEA to create a private right of action—to inherit § 1837’s extraterritorial provisions. According to the court, the DTSA must be read as part of a unified statutory scheme:

    “Congress was not acting to change an existing interpretation of the EEA, but rather was creating a private right of action in the statutory chapter. … [T]he chapter amended through the DTSA should be read as a cohesive whole.”

    The court also found that the required “act in furtherance” of the offense had occurred domestically: Hytera had marketed and demonstrated infringing radios at U.S. trade shows, thereby “using” Motorola’s trade secrets in a way sufficient to establish misappropriation under § 1839(5). This act triggered the statute’s extraterritorial application, allowing Motorola to recover damages for Hytera’s worldwide sales of DMR products developed using the stolen trade secrets.

    Charles Gideon Korrell notes that this part of the ruling will likely prove to be the most impactful: it gives teeth to the DTSA’s protections for U.S. companies when the bad actors—and the profits—are overseas, so long as some “act in furtherance” can be shown in the United States.

    $271.6 Million in Punitive Damages Survives Constitutional Scrutiny

    The court also upheld the $271.6 million in exemplary damages awarded under the DTSA, rejecting Hytera’s arguments that the award violated due process.

    The DTSA authorizes punitive damages of up to twice the amount of compensatory damages if the misappropriation is “willful and malicious.” The district court adopted that full multiplier after finding Hytera’s conduct met the standard, and the Seventh Circuit found no constitutional problem with the size of the award.

    In doing so, the court distinguished its prior ruling in Epic Systems Corp. v. Tata Consultancy Services Ltd., 980 F.3d 1117 (7th Cir. 2020), which had vacated a similarly sized punitive damages award under Wisconsin state law. Whereas the Epic Systems award was evaluated against open-ended state law standards, the court explained, the DTSA embodies a congressional judgment about the appropriate cap for punitive damages. That legislative determination is entitled to significant deference under BMW of North America v. Gore, 517 U.S. 559 (1996), and its progeny.

    “There is no reason to search outside the text of the DTSA for legislative guidance … Congress has made a specific and reasonable legislative judgment about punitive damages in cases like this one.”

    The court also emphasized that Hytera’s conduct was exceptionally reprehensible, both in the original theft and in its post-verdict gamesmanship, including deleting evidence, inflating R&D costs, and resisting discovery. That, coupled with the quantifiable harm to Motorola—$86.2 million in lost profits and $73.6 million in avoided R&D costs—justified a 2:1 punitive award. Charles Gideon Korrell observes that the opinion sends a strong message: willful and malicious trade secret theft will not only be punished, but that punishment can—and should—reflect the full gravity of the misconduct.

    Reconsidering Injunctive Relief on Remand

    The Seventh Circuit also found error in the district court’s refusal to revisit its earlier denial of a permanent injunction. Although the court had initially concluded that a royalty-based remedy would suffice, Motorola’s post-trial evidence showed that Hytera was either unable or unwilling to pay the court-ordered royalties.

    The appellate court held that the district court erred in denying Motorola’s Rule 60(b) motion for reconsideration based on a mistaken belief it lacked jurisdiction once the case was on appeal. Under Fed. R. Civ. P. 62.1 and established Seventh Circuit precedent, a district court may (and sometimes must) issue an indicative ruling in such circumstances.

    The panel remanded with instructions for the district court to reassess whether Hytera’s continued misconduct and refusal to pay justify permanent injunctive relief going forward.

    Conclusion

    The Motorola v. Hytera decision will likely become one of the foundational cases for interpreting the Defend Trade Secrets Act. It affirms the statute’s extraterritorial reach, recognizes the broad remedial powers it confers—including large punitive awards—and warns that companies cannot insulate themselves from consequences by offshoring their misconduct. Charles Gideon Korrell believes that with this decision, the Seventh Circuit has made clear that willful misappropriation of U.S. trade secrets will meet with serious and global consequences, particularly where deterrence demands more than just monetary damages.

    By Charles Gideon Korrell