by Manuel J. Velez

Trade secret litigation can be complex and challenging, especially when it comes to securing appropriate damages. To maximize your chances of obtaining a favorable outcome, consider these five essential tips:

1. Engage Damages Experts Early

One of the most critical steps in trade secret litigation is to engage a damages expert as early as possible.

Damages experts play a pivotal role in shaping the discovery process and ensuring that all necessary evidence is collected to support your claims. They can provide valuable feedback on document requests and interrogatories, help draft questions for depositions of fact and 30(b)(6) witnesses, and offer insights that can influence the overall strategy of your case. 

By involving a damages expert from the outset, you can build a robust foundation for your damages claims and avoid the pitfalls of inadequate preparation. 

2. Understand What State Law Remedies Are Available

 Typically, trade secret cases include claims under both federal and state law. Here, it is  important to recognize that the Defend Trade Secrets Act (“DTSA”)[1], which is the federal law, does not displace the remedies that are available under state law.

Different states have varying measures of money damages, and knowing these differences can significantly impact your litigation strategy. For example, in California, plaintiffs can pursue reasonable royalties only when plaintiffs’ actual damages and defendants’ unjust enrichment cannot be proven.[2] Virginia follows a different rule. It allows reasonable royalty damages only if plaintiffs are unable to prove a greater amount of damages by other measures.[3] Finally, New York does not allow recovery for avoided development costs.[4]

Understanding these nuances will help you tailor your approach and ensure that you are pursuing all available avenues for compensation.

3. Consider Seeking Damages for Foreign Sales

Recent case law has shown that courts may allow for the recovery of damages arising from foreign sales if there is a sufficient link to conduct that occurred within the U.S.

In the U.S., there is a generally presumption that U.S. law only applies domestically. The DTSA, however, provides for a cause of action when “an act in furtherance of the offense was committed in the United States.”[5]

In Motorola v. Hytera,[6] the district court had the opportunity to interpret this language. The court concluded that damages arising from foreign sales were appropriate because even though defendant had improperly acquired plaintiff’s trade secrets outside the U.S., it had improperly used the trade secrets in the U.S. in its marketing of products embodying the stolen trade secrets.[7] On appeal, the Seventh Circuit affirmed.[8]

Given these legal developments, it is important to explore whether a defendant can be sued for misappropriation of trade secrets in the U.S. based on foreign activities. Engaging a damages expert can be particularly beneficial in crafting a strategy to pursue these types of claims and gathering the necessary evidence to support them.

4. Apportion Damages on a Trade-Secret-By-Trade-Secret-Basis

In order to obtain money damages, plaintiffs must show that the amount of damages was caused by the misappropriation. In other words, there has to be a proximate cause.

When asserting multiple trade secrets, plaintiffs would be well advised to explain how the damages being sought are apportioned to the alleged trade secrets. This is similar to apportionment in patent cases. A recent case shows the importance of properly apportioning damages to the alleged trade secrets.

In Versata v. Ford,[9] plaintiff alleged theft of four trade secrets. The jury found that three of the four trade secrets had been misappropriated and awarded $22 million in damages.[10] Subsequently, the court vacated the damages award because the plaintiff had failed to apportion its alleged damages to the individual trade secrets.[11]

To avoid such outcomes, ensure that your damages expert provides a detailed analysis that clearly delineates the value attributable to each trade secret where appropriate.

5. Develop Evidence for Exemplary Damages

The Uniform Trade Secrets Act and DTSA allow exemplary damages in an amount not to exceed twice the damages award[12].

To obtain exemplary damages, a plaintiff has to show that the misappropriation was willful and malicious.[13] This means that the conduct must go beyond mere knowledge of the misappropriation and include an element of intent to cause harm or a reckless disregard for the rights of the trade secret owner. See, e.g., ams-OSRAM v. Renesas[14] (upholding an exemplary damages award where the jury found that the defendant’s misappropriation of the plaintiff’s trade secrets resulted from fraud, malice, or gross negligence).

Collecting and presenting compelling evidence of the defendant’s intent and wrongful actions will strengthen your case for exemplary damages and increase the likelihood of a substantial award.

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By following these five tips, you can enhance your trade secret damages claims and improve your chances of securing a favorable outcome in litigation. Engaging a damages expert early, understanding state law remedies, considering foreign sales, apportioning damages, and developing evidence for exemplary damages are all critical steps in building a strong case.

Footnotes

[1] 18 U.S.C. § 1836.

[2] Palantir Techs. Inc. v. Abramowitz, 639 F.Supp.3d 981, 991 (N.D. Cal. 2022).

[3] VA Code Ann. § 59.1-338.

[4] E.J. Brooks Company v. Cambridge Security Seals, 31 N.Y.3d 441 456-57 (2018).

[5] 18 U.S.C. § 1837(2).

[6] Motorola Solutions, Inc. v. Hytera Commc’ns Corp. Ltd., 436 F.Supp.3d 1150 (N.D. Ill. 2020).

[7] Id. at 1164-65.

[8] Motorola Solutions, Inc. v. Hytera Commc’ns Corp. Ltd., 108 F.4^th 458, 484 (7th Cir. 2024), reh’g and reh’g en banc dismissed, No. 22-2370, 2024 WL 4416886 (7th Cir. Oct. 4, 2024).

[9] Versata Software, Inc. v. Ford Motor Co., No. 15-cv-10628, *16-19 (E.D. Mich. May 1, 2023).

[10] Id.

[11] Id.

[12] UTSA § 3(b); 18 U.S.C. § 1836(b)(3)(C).

[13] Id.

[14] Ams-OSRAM USA Inc. v. Renesas Elecs. Am. Inc., Nos. 2022-2185 and 2022-2186, 2025WL 1007086, at *9 (Fed. Cir. Apr. 4, 2025).

Manuel J. Velez  is a partner at Mayer Brown LLP.

The views, opinions and positions expressed within all posts are those of the author(s) alone and do not represent those of the Program on Corporate Compliance and Enforcement (PCCE) or of the New York University School of Law. PCCE makes no representations as to the accuracy, completeness and validity or any statements made on this site and will not be liable any errors, omissions or representations. The copyright of this content belongs to the author(s) and any liability with regards to infringement of intellectual property rights remains with the author(s).