What Can You Recover When Your Trade Secrets Are Stolen?

Quick Answer: Under both the federal Defend Trade Secrets Act (DTSA) and most state trade secret statutes, a plaintiff can recover (1) actual losses, (2) the defendant’s unjust enrichment, or (3) a reasonable royalty — and courts cannot arbitrarily limit which measure a plaintiff pursues. Versata Software, LLC v. Ford Motor Company, No. 2024-1140 (Fed. Cir. May 22, 2026).

The Case: Software Stolen, a Decade of Litigation

In 2004, Ford hired Versata Software to develop vehicle configuration software. Versata delivered two products and licensed them to Ford. When the license agreement expired in 2014, rather than renew, Ford released its own competing software, which Ford had developed while still licensing Versata’s software. Versata sued, and a jury found that Ford had misappropriated three of Versata’s trade secrets and breached the contract. The jury awarded $22.4 million for trade secret misappropriation and $82.3 million for breach of contract. The district court then reduced both awards — the trade secret damages to $0 and the contract damages to $3. The Federal Circuit largely reversed.

The Three Damages Measures in Trade Secret Cases

Trade secret plaintiffs have three distinct recovery options under both the DTSA and most state statutes:

• Actual loss — compensation for harm the plaintiff directly suffered.
• Unjust enrichment — the gains the defendant realized through wrongful conduct, to the extent not captured by actual loss.
• Reasonable royalty — a hypothetical licensing fee, available as an alternative when other measures are hard to quantify.

These are alternatives. A court cannot mandate the least generous option.

Why Unjust Enrichment Is Often the Largest Recovery

Unjust enrichment focuses on what the wrongdoer gained (including avoided R&D costs, productivity savings, and competitive advantages) rather than only what the victim lost. The Federal Circuit noted that while this measure may put a plaintiff in a better position than a licensing deal would have, that consequence falls on the party that chose to steal rather than negotiate. The wrongdoer assumes that risk.

Can a Court Limit You to a Reasonable Royalty?

No. The district court in Versata confined the plaintiff to damages based solely on the parties’ prior licensing history, effectively capping recovery at the least generous measure. The Federal Circuit held that was legal error. A reasonable royalty is a fallback when other methods are unavailable, not a ceiling. Because the limitation infected the entire damages case, the Federal Circuit  vacated the trade secret damages award and ordered a new trial.

The Breach of Contract Win: $82 Million Reinstated

The Federal Circuit also reinstated the full $82.3 million jury verdict on breach of contract. At trial, Versata presented three damages figures derived from the parties’ licensing history, and asked the jury to multiply the appropriate figure by 7.5 years, the period of Ford’s breach. The jury’s award of approximately $82.3 million mapped closely to one of those licensing figures. The court found that figure was supported by expert testimony, the contract documents themselves, and acknowledgment from Ford’s own expert that it was a reasonable starting point. Most state law requires only reasonable certainty, not mathematical precision, and the evidence met that standard.

Frequently Asked Questions

Does a defendant need specific knowledge of each element of a combination trade secret? No. The Federal Circuit held in Versata that neither the DTSA nor state law trade secret statute requires proof that the defendant knew the precise combination of features at issue, only that the defendant acquired or used the trade secret knowing it was subject to a duty of secrecy.

What evidence supports a damages calculation? Licensing history, expert testimony on avoided costs or productivity gains, and the defendant’s own financial records are all relevant. Multiple damages models should be preserved and presented.

What should companies do to protect their damages claims? Engage a damages expert early, plead all three statutory theories, and preserve evidence of both your losses and the defendant’s gains throughout litigation. As Versata illustrates, allowing a court to narrow your damages theories at the outset can cost you tens of millions of dollars.