Posts in Trade Secrets

Trade secrets occupy a unique position among the major forms of intellectual property. Patents, copyrights, and trademarks are, by design, defined and publicly registered, and can be consulted to determine exactly what is claimed. In contrast, trade secrets depend on their being undisclosed. This creates a structural problem the moment a trade secret owner goes to court. Because they are secret, they cannot be identified in public filings without destroying the very subject matter of the plaintiff’s claim. On the other hand, defendants must understand what the secrets are and what they’ve allegedly misappropriated. In addition, the court needs to know what the case is about to manage it.

As an expert witness on intellectual property litigations, I have noticed over the past few years parties with poor arguments in software copyright and software trade secret cases, both plaintiffs and defendants, have been taking advantage of technologically outdated protective orders to gain an unfair advantage. The U.S. District Court for the Northern District of California, where probably the majority of software IP cases take place, has a Model Protective Order for Litigation Involving Patents, Highly Sensitive Confidential Information and/or Trade Secrets that has become a de facto standard for software IP cases around the country. It is antiquated and needs to be updated.

Alden Abbott recently captured Europe’s digital-policy contradiction with a memorable image: Brussels says it wants technology champions, but when a champion emerges, it makes the winner share the trophy. The European Commission’s July 16 binding specification measures (BSMs) against Google turn that metaphor into an administrative program. One measure requires Google to provide eligible search engines—including AI chatbots with search functions—access to anonymized ranking, query, click, and view data. The other requires “free and effective” interoperability with 11 categories of Android functionality, including device sensors, app context, app and operating-system control, on-device AI models, and background execution. Google must furnish documentation and technical assistance and extend access to covered future functionality when it becomes available to its own services.

The U.S. Court of Appeals for the Ninth Circuit in Comet Technologies USA, Inc. v. XP Power, LLC, overturned Comet Technologies’ $40 million trade secret verdict against XP Power and ordered a new trial, finding that the district court erroneously instructed the jury that the defendant bore the burden of proving that Comet’s trade secrets were readily ascertainable by proper means. The court held that the error was not harmless because the instructions were not accurate as a whole, and nothing in the jury’s verdict shed light on how it would have ruled under a correct instruction. The case is notable both for clarifying what “readily ascertainable” means and for spotlighting a burden-of-proof distinction between the Defend Trade Secrets Act (DTSA) and the California Uniform Trade Secrets Act (CUTSA) that practitioners should not overlook.

An inventor pastes an unfiled disclosure into a chatbot to clean up the wording. An associate runs a draft specification through an AI tool to pressure-test claim support. A client forwards the analysis an AI gave them about their own case. All routine now, and each has produced a warning that AI quietly destroys patent rights: the prompt becomes prior art, novelty is lost, inventorship is corrupted, the application turns suspect. Some of those warnings are real. Most misidentify what went wrong.

On June 15, 2026, a federal court in San Francisco dismissed xAI’s trade secret claims against OpenAI with prejudice. The dismissal came with prejudice for a reason that sits at the heart of this article: xAI had sought to keep the case alive long enough to obtain, in discovery, the evidence it lacked at filing. The court refused, holding that a plaintiff “was required to have completed its investigation of its claims before filing suit, not after.” Put differently: the court did not treat a job interview as a trade secret extraction ceremony.

The U.S. Court of Appeals for the Federal Circuit (CAFC) in a precedential decision today reversed a district court’s judgment upholding a jury verdict of trade secret misappropriation and damages. The CAFC majority, with Judge Prost dissenting, found that the statute of limitations to bring a claim under the Defend Trade Secrets Act (DTSA) had expired. The decision reverses a $59.4 million damages award and was authored by Judge Dyk.

On Friday, the U.S. Court of Appeals for the Federal Circuit issued a precedential decision in Versata Software, LLC v. Ford Motor Co. reversing the Eastern District of Michigan’s ruling on judgment as a matter of law (JMOL) reducing Versata’s unjust enrichment damages to $0 after holding that the district court erred in precluding such damages from being awarded by a jury. The Federal Circuit also reinstated the jury verdict’s full award on Versata’s breach of contract claim after finding that the jury properly relied on a damages basis established via the parties’ licensing history, and affirmed the district court’s denial of JMOL to Ford on the knowledge required for trade secret liability.

Artificial intelligence (AI) is moving faster than traditional intellectual property (IP) strategy was designed to handle. The issue is not simply speed, although speed is certainly part of the problem. The deeper challenge is that AI innovation does not fit neatly into the legacy IP operating model. The assets, development cycles, regulatory environment, and commercial pathways are all different. And the value drivers are increasingly distributed across a spectrum of AI-related intangible domains, which include patents, trade secrets, data rights, software architecture, licensing models, and customer contracts.

The U.S. Supreme Court has been asked to grant certiorari to resolve whether the Defend Trade Secrets Act (DTSA) permits an unjust enrichment award without any showing of actual loss resulting from the defendant’s misappropriation of trade secrets. The defendant in Tata Consultancy Services Ltd. v. Computer Sciences Corp. has petitioned for certiorari, arguing that actual loss is a prerequisite for an unjust enrichment award. The petition challenges a Fifth Circuit decision affirming a $56 million unjust enrichment award and a $112 million punitive award in favor of Computer Sciences Corp. (“CSC”), measured by the costs Tata Consultancy Services (TCS) avoided through its trade secret theft rather than by any proven actual loss to CSC.

A recent U.S. Court of Appeals for the Federal Circuit decision applying California trade secret law offers a timely reminder that published patent materials cannot easily be recast as trade secrets. In International Medical Devices, Inc. v. Cornell, the Federal Circuit reversed trade-secret liability and vacated related damages and injunctive relief after concluding that the plaintiffs had not shown protectable trade secrets under the California Uniform Trade Secrets Act.

China was not the only actor being scrutinized today during a full Senate Judiciary Committee hearing, titled “Stealth Stealing: China’s Ongoing Theft of U.S. Innovation.”  Senator Thom Tillis (R-NC) stood in for Senator Chuck Grassley (R-IA) as Chair and opened the hearing with a warning that, in addition to its blatant IP theft—which is estimated to cost the United States between $400 billion and $600 billion per year—China is more recently evolving from “imitator to innovator.” “The United States must overcome its historic and ideological views that China is unable to innovate,” Tillis said.

The U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential decision Friday in International Medical Devices, Inc. v. Cornell, reversing the United States District Court for the Central District of California’s denial of judgment as a matter of law (JMOL) on trade secret misappropriation, breach of contract, and patent invalidity claims. The district court had found that Dr. Robert Cornell and several other defendants misappropriated four trade secrets related to cosmetic penile implants, breached a nondisclosure agreement (NDA), and that two patents were invalid for failure to name an inventor. The CAFC reversed the denial of JMOL on those claims but affirmed the district court’s denial of JMOL for the defendants with respect to counterfeiting liability.

For decades, management scholars and practitioners have grappled with what I call the “knowledge problem” in organizations—the stubborn difficulty of codifying and transferring expertise that resides in individual employees’ heads and habits. The most valuable organizational knowledge has always been tacit: the judgment calls, the contextual adaptations, the intuitive “feel” for how things get done. This knowledge walked out the door every evening and, more problematically, departed permanently when employees moved to competitors.