Technology & Information Law Blog by Charles Gideon Korrell

Tag: DTSA

  • 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

  • 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