Background
Ford Motor Company licensed Versata’s Automotive Configuration Manager software under a Master Subscription and Services Agreement. When the agreement approached expiration in 2014, the parties did not agree on an extension, and Ford released its own manufacturing-configuration software, which it had developed while licensing Versata’s software. Versata asserted claims under the Defend Trade Secrets Act and Michigan Uniform Trade Secrets Act, alleging misappropriation of three combination trade secrets—Grid, Buildability, and Workspaces—and also alleged breach of contract under Michigan law.
Before trial, the district court excluded Versata’s proposed unjust-enrichment damages evidence and required its trade-secret damages case to rely on a reasonable royalty tied to the parties’ licensing history. A jury found that Ford misappropriated the three asserted ACM trade secrets and breached the agreement, awarding Versata $22,386,000 for misappropriation and $82,260,000 for breach. On Ford’s post-trial motion, the district court reduced the trade-secret award to zero and the contract award to $3, while leaving the liability findings intact.
The Court’s Holding
The Federal Circuit held that the district court legally erred by categorically preventing Versata from pursuing unjust-enrichment damages. Both the DTSA and MUTSA expressly permit recovery of unjust enrichment caused by misappropriation when that enrichment is not included in actual-loss damages. The court therefore partially vacated the post-trial judgment, ordered a new trial on trade-secret damages, and directed the district court to reconsider the two reasonable-royalty models it had excluded because they were not based solely on the parties’ licensing history.
The court also reversed the reduction of the contract award and reinstated the jury’s $82,260,000 verdict. Evidence of the parties’ licensing figures, expert testimony, the agreement and its addendum, and counsel’s damages calculation gave the jury a reasonably certain basis for its award under Michigan law. Finally, the court affirmed the denial of Ford’s motion for judgment as a matter of law on trade-secret liability, holding that neither statute requires proof that the defendant knew every specific element of a combination trade secret and concluding that the trial evidence sufficiently supported the verdict.
Key Takeaways
- The DTSA and MUTSA allow a trade-secret plaintiff to pursue unjust-enrichment damages; a prior licensing relationship does not categorically confine recovery to a royalty based on licensing history.
- A jury’s contract-damages award may stand under Michigan law when testimony, contract documents, and historical licensing amounts provide a reasonably certain calculation, even without mathematical certainty.
- To establish misappropriation of a combination trade secret, a plaintiff need not prove that the defendant knew each individual element as a specifically identified bundle.
Why It Matters
The decision confirms that courts may not eliminate a statutorily authorized unjust-enrichment theory merely because the parties previously negotiated license fees. In software trade-secret cases, the value or cost savings obtained through unauthorized use may therefore remain relevant even when a licensing history supplies another possible measure of damages.
The ruling also restores a substantial contract verdict and preserves the misappropriation finding, while leaving the amount of trade-secret damages for a new jury to determine after the district court reconsiders Versata’s previously excluded models.