Ninth Circuit Vacated $40 Million Trade Secrets Award
The court ordered a new trial, citing incorrect jury instructions regarding trade secret ascertainability.
Updated on Sept. 22, 2026 in Financial Crime
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The Ninth Circuit Court of Appeals has vacated a $40 million judgment against XP Power in a trade secrets misappropriation case. The court also overturned a related $17 million award for attorneys fees.
Why it matters
The ruling hinges on a critical legal error concerning the burden of proof for trade secret protection. By vacating the judgment, the appellate court clarified that plaintiffs must prove information was not readily ascertainable under federal law.
A jury previously found XP Power liable for misappropriating three trade secrets, resulting in the now-vacated $40 million award. The Ninth Circuit has remanded the matter for a new trial.
The players
Ninth Circuit Court of Appeals
This is a federal appellate court that hears cases from district courts within its jurisdiction in the Western United States.
XP Power
This is an industrial electronics company that was the defendant in the trade secrets misappropriation lawsuit.
Comet Technologies
This is a technology firm that initiated the legal action after three of its senior engineers left the company.
The details
The appeal centered on the district court's jury instructions regarding the Defend Trade Secrets Act (DTSA), which the Ninth Circuit found to be legally flawed. The underlying dispute began after three senior engineers departed Comet Technologies for XP Power, allegedly taking thousands of confidential files.
Timeline
The Ninth Circuit issued its ruling on September 22, 2026.
Legal Context
This case underscores the rigorous evidentiary standards required to enforce the Defend Trade Secrets Act (DTSA). The appellate decision limits the scope of trade secret protection by reinforcing the requirement that proprietary information must not be readily ascertainable.
The ruling impacts corporate compliance strategies regarding how companies protect and define their proprietary trade secrets. Businesses operating within the United States must ensure their internal documentation meets strict legal standards to survive future litigation.
The takeaway
This decision serves as a reminder that procedural accuracy in jury instructions is paramount for the stability of significant legal judgments. Companies involved in talent-poaching disputes should review their internal documentation to ensure all trade secrets are strictly defined and not publicly accessible.
Further reading
For more on high-stakes corporate legal battles, visit Financial Crime.
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