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Book of wisdom has limits: Can’t impute knowledge of later-arising facts to hypothetical negotiation

by Ashley K. Justice | Jul 30, 2026 | Copyrights

The US Court of Appeals for the Federal Circuit vacated in part a US Court of Federal Claims damages award, finding that the court erred in applying the book of wisdom in its damages analysis and assessing noncompensatory damages against the government. 4DD Holdings, LLC, et al. v. United States, Case No. 2024-1996 (Fed. Cir. July 16, 2026) (Hughes, Prost, Stark, JJ.)

4DD licensed TETRA software to the US Department of Defense and the US Department of Veterans Affairs to improve interoperability among existing military healthcare databases. Under the license, the government was permitted to make only a single backup copy of TETRA. 4DD later discovered that the government had made thousands of unauthorized copies of the software and sued for copyright infringement. During discovery, 4DD learned that the government had deleted TETRA copies from its development and test center and had destroyed evidence related to those copies. 4DD moved for sanctions.

The Court of Federal Claims imposed about $1.1 million in sanctions, found that the government had exceeded the scope of the licenses by hundreds of thousands of Federator cores and Studio seats, and awarded about $12.7 million in damages based on a hypothetical negotiation rather than the parties’ license agreement. In assessing the parties’ bargaining positions, the claims court relied in part on the fact that TETRA was never implemented, had no established profitability, and faced competition from a less expensive software product. 4DD appealed.

4DD argued that the claims court should have calculated damages using the royalty rates established in the parties’ license agreement, which it contended would have resulted in an award amount between $3 billion and $5 billion. The Federal Circuit disagreed, explaining that 28 U.S.C. § 1498(b), which provides for “reasonable and entire compensation,” does not require a particular methodology for calculating copyright damages. Although a reasonable royalty may be based on an established royalty rate, it may also be determined through a hypothetical negotiation. The Court explained that the relevance of prior license agreements depends on the extent to which they are economically comparable to the infringing use. Because the government’s licensed use differed materially from the scope of its infringing use, the Federal Circuit concluded that the claims court did not abuse its discretion in determining damages through a hypothetical negotiation rather than by simply applying the parties’ license rates.

4DD also argued that the claims court misapplied the book of wisdom doctrine by imputing to the government (at the time of the hypothetical negotiation) knowledge of its later decision to abandon the TETRA project. The Federal Circuit agreed. The Court explained that although later-occurring facts may be considered to reduce uncertainty and illuminate the value that existed at the time of the hypothetical negotiation, they may not be used to impute knowledge of unforeseeable future events that affect the value of the license. Here, the court’s claims improperly relied on the government’s subsequent change in leadership and resulting decision to discontinue the project before TETRA was implemented to diminish 4DD’s bargaining [...]

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Late arrival: Fourth Circuit remands after mootness raised for first time on appeal

by Nicholas J. DiRoberto | Jul 30, 2026 | Trademarks

The US Court of Appeals for the Fourth Circuit remanded an insurance coverage dispute for the district court to determine whether settlement of the underlying lawsuit eliminated any concrete interest in the declaratory judgment action and rendered the case moot. Covington Specialty Insurance Company v. Omega Restaurant & Bar, LLC, Case No. 24-1364 (4th Cir. July 20, 2026) (Wilkinson, Wynn, Berner, JJ.)

Covington Specialty Insurance issued a commercial general liability policy to Omega Restaurant & Bar, which operated a nightclub in Virginia Beach, Virginia. The policy provided coverage for certain personal and advertising injuries.

In September 2020, several professional models sued Omega in Virginia state court, alleging that Omega used their images in advertisements without authorization. Omega removed the action to the US District Court for the Eastern District of Virginia.

In May 2021, Covington filed a separate action in the same district seeking a declaration that it had no duty to defend or indemnify Omega in connection with the models’ lawsuit. The parties filed cross-motions for summary judgment.

While the declaratory judgment action was pending, Omega settled the underlying lawsuit. Under the settlement, Omega consented to entry of a $155,000 judgment and assigned to the models its rights and claims against Covington under the insurance policy. The record did not show that Omega informed the district court presiding over the coverage action that the settlement had occurred.

The district court subsequently granted summary judgment for Covington and denied Omega’s cross-motion. The court found that the policy did not cover the injuries alleged in the underlying complaint and concluded that Covington had neither a duty to defend nor a duty to indemnify. Omega appealed.

Omega argued that the district court erred because the underlying complaint alleged conduct that potentially fell within the policy’s coverage. Covington responded by arguing for the first time that the settlement had rendered the dispute moot.

The Fourth Circuit explained that mootness is jurisdictional because Article III limits federal courts to deciding live cases and controversies. A case becomes moot when the parties no longer retain a legally cognizable interest in the outcome and the court cannot grant meaningful relief. The relevant inquiry is whether the parties retain any concrete interest, however small, in the litigation’s outcome.

Although Covington did not raise mootness until more than two years after the settlement, the Fourth Circuit explained that a jurisdictional objection cannot be waived or forfeited. The timing of the argument, however, left the appellate record insufficiently developed because the district court had never considered the effect of the settlement.

The record did not establish whether any cognizable interest remained in the coverage dispute or whether Covington had withdrawn or otherwise abandoned its defense of Omega in the underlying action. Without those facts, the Fourth Circuit could not determine whether the case remained live.

The Fourth Circuit therefore remanded for the district court to determine whether the settlement rendered the declaratory judgment action moot. It did not reach the merits of the coverage dispute and left Omega free [...]

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It’s a wrap: Constructive discovery under copyright statute of limitations

by Vincent Li, PhD | Jul 30, 2026 | Copyrights

The US Court of Appeals for the Second Circuit affirmed summary judgment dismissing a copyright infringement claim as untimely, finding that the extensive publicity surrounding the accused works, combined with the copyright owner’s ties to Italy and the local art community, meant that a reasonably diligent owner should have discovered the alleged infringement years before filing suit. Hayden v. Koons, Case No. 25-498-cv (2d Cir. July 21, 2026) (Chin, Sullivan, Lee, JJ.)

Michael Hayden, a US artist who lived and worked primarily in Italy from about 1980 to 2007, created a Styrofoam sculpture depicting a serpent wrapped around boulders for Italian performer and politician Ilona Staller. In 1988, Hayden sold the sculpture to Diva Futura, Staller’s production company, for approximately $900. The parties did not execute a written agreement or discuss copyright ownership or third-party use. Hayden designed the sculpture as a platform for Staller’s live performances and film productions.

In 1989, Koons hired Staller to pose with him for photographs taken on her sets, including Hayden’s serpentine sculpture. Koons later used the photographs to create works in his Made in Heaven series. Three works were at issue: Made in Heaven (1989), Jeff and Ilona (Made in Heaven) (1990) and Jeff in the Position of Adam (1990), each depicting Koons and Staller posing on Hayden’s sculpture.

The Made in Heaven series drew substantial international attention. The works appeared in magazines, and Jeff and Ilona (Made in Heaven) was exhibited at the Venice Biennale. Publicity surrounding the series continued for decades.

Hayden asserted that he did not discover Koons’ use of the sculpture until 2019, when a business partner sent him an Italian article concerning unrelated litigation that included an image of Made in Heaven. Hayden registered the sculpture with the US Copyright Office later that year and filed suit against Koons in December 2021, alleging copyright infringement, removal, or falsification of copyright management information under the Digital Millennium Copyright Act (DMCA) and false authorship under the Visual Artists Rights Act.

The district court granted summary judgment for Koons, finding Hayden’s copyright claim untimely. Hayden appealed.

Under 17 U.S.C. § 507(b), a copyright claim must be filed within three years after it accrues. In the Second Circuit, a copyright claim accrues under the discovery rule when the copyright owner actually discovers, or with due diligence should have discovered, the infringement. The parties agreed that Hayden lacked actual knowledge before 2019. The dispute centered on whether he should have discovered the alleged infringement earlier.

Hayden argued that constructive discovery required inquiry notice and actual knowledge of facts suggesting probable infringement. The Second Circuit rejected that proposed standard. The Court explained that inquiry notice may help identify when a reasonable plaintiff would have begun investigating, but it is not itself the governing standard for constructive discovery. The Court also declined to require actual knowledge of triggering facts, reasoning that doing so would collapse constructive discovery into actual discovery.

The Second Circuit explained that the proper inquiry is whether the defendant identified sufficient facts [...]

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In vitro data, broad dosage ranges fail to enable patient-treatment claims

by Lisette Donewald | Jul 23, 2026 | Life Sciences, Patents

Clarifying the enablement standard for pharmaceutical method-of-treatment claims, the US Court of Appeals for the Federal Circuit affirmed a post-verdict grant of judgment as a matter of law (JMOL), finding patents directed to daily administration of a “unit dosage” to cancer patients invalid for lack of enablement. The Court concluded that the specification’s in vitro data and broad dosage ranges – some exceeding the maximum tolerated dose in humans – did not provide sufficient guidance for translating the disclosed results into a workable patient-dosing regimen. Wyeth LLC v. AstraZeneca Pharmaceuticals LP, Case No. 24-2325 (Fed. Cir. July 9, 2026) (Lourie, Linn, Hughes, JJ.)

Pharmaceutical and healthcare company Wyeth owns patents directed to methods of treating gefitinib- and/or erlotinib-resistant non-small cell lung cancer (NSCLC) by administering a daily “unit dosage” of an irreversible epidermal growth factor receptor (EGFR) inhibitor. A jury found that competitor AstraZeneca, which markets the irreversible EGFR inhibitor Tagrisso® (osimertinib), induced infringement and awarded Wyeth $107.5 million in damages. After trial, however, the district court granted AstraZeneca’s renewed JMOL motion, finding the asserted claims invalid for lack of enablement.

Wyeth appealed, arguing that the district court improperly changed its construction of “unit dosage” after trial, applied that revised construction in its enablement analysis, and improperly granted JMOL on enablement grounds.

The dispute centered on the construction of “unit dosage,” which the district court defined as “physically discrete units suitable as unitary dosage for the subject, each unit containing a predetermined quantity of active material calculated to produce the desired therapeutic effect.” Wyeth argued that the claims required only the identification of compounds capable of inhibiting EGFR activity. AstraZeneca countered that, because the claims expressly required daily administration to a patient, they necessarily required a dosage regimen suitable for human treatment.

The Federal Circuit agreed with AstraZeneca, finding that the claims “plainly require the daily administration of a unit dosage to a patient to achieve a therapeutic effect in treating g/e-resistant NSCLC, not merely the identification of compounds capable of inhibiting EGFR activity in vitro.”

The Federal Circuit rejected Wyeth’s contention that the district court had effectively imported US Food and Drug Administration (FDA) approval requirements into the enablement inquiry. The Court emphasized that enablement did not require proof of regulatory-grade safety or efficacy. Because the claims required daily administration to patients, however, the specification had to teach a skilled artisan how to arrive at a workable human-dosing regimen without undue experimentation.

The Federal Circuit determined that the specification failed to do so, as it disclosed only three exemplary compounds (EKB-569, HKI-357, and HKI-272), described their in vitro activity, and provided only broad projected dosage ranges (1-1,000 mg and 2-500 mg) without explaining how to translate those ranges into effective human dosing.

The trial record reinforced the lack of enablement. AstraZeneca presented unrebutted testimony, including from Wyeth’s own experts and co-inventors, that at least two disclosed compounds could not be administered within the claimed dosage ranges without exceeding the maximum tolerated dose in humans. One co-inventor testified that the [...]

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Specificity matters: Eighth Circuit rejects broad trade secret claims

by Jodi Benassi | Jul 23, 2026 | Trade Secrets

The US Court of Appeals for the Eighth Circuit affirmed a district court’s summary judgment against a trade secret plaintiff, finding that the plaintiff’s broad descriptions of confidential business information failed to identify its alleged trade secrets with sufficient specificity. Wilbur-Ellis Company v. Gompert, et al., Case Nos. 25-1577; -1682 (8th Cir. July 7, 2026) (Shepard, Erickson, Grasz, JJ.)

Wilbur-Ellis, an international marketer and distributor of agricultural products, specialty chemicals, and ingredients, sued four former employees after they left to join competitor J.R. Simplot Company, alleging breach of the duty of loyalty, trade secret misappropriation under the Defend Trade Secrets Act (DTSA) and the Nebraska Trade Secrets Act (NTSA), and tortious interference with business relationships. During discovery, the district court denied Wilbur-Ellis’s requests to compel discovery from both Simplot and the former employees, concluding that Wilbur-Ellis had not identified its alleged trade secrets with sufficient specificity to justify the requested discovery. After denying Wilbur-Ellis’s request to delay summary judgment pending additional discovery, the district court granted summary judgment to the former employees on the trade secret and tortious interference claims and on most of the duty-of-loyalty claims. Wilbur-Ellis appealed.

Discovery orders affirmed

Wilbur-Ellis argued that the district court improperly prevented it from obtaining discovery from Simplot by requiring it to identify its alleged trade secrets with greater specificity before permitting third-party discovery.

The Eighth Circuit disagreed, finding that the district court did not abuse its discretion in denying Wilbur-Ellis’s motion to compel. The Eighth Circuit noted that the district court had identified several concerns, including that Wilbur-Ellis’s trade secret disclosure was extremely broad, appeared to treat nearly everything the former employees encountered as a trade secret, and raised concerns that the requested third-party discovery would amount to a fishing expedition. The Court emphasized that Wilbur-Ellis did not dispute those findings on appeal or that it had sought third-party discovery before exhausting discovery from the former employees.

Trade secret claims fail for lack of specificity and evidence

Wilbur-Ellis also argued that the district court improperly granted summary judgment on its DTSA and NTSA claims. The Eighth Circuit disagreed, concluding that Wilbur-Ellis failed to present sufficient evidence that it possessed protectable trade secrets or that the defendants misappropriated them. The Court explained that Wilbur-Ellis relied on broad descriptions of categories of information – such as customer information, financial information, and business strategy – without identifying the specific trade secrets allegedly taken, who misappropriated them, or how they were misappropriated. The Court further found that, although Wilbur-Ellis identified its password-protected SeedWare database as confidential, it failed to produce evidence that the defendants improperly acquired, disclosed, or used any information contained in the database. Because Wilbur-Ellis failed to connect its allegations to specific trade secrets or admissible evidence of misappropriation, the Court found summary judgment was appropriate.

Duty of loyalty claims

Wilbur-Ellis next argued that the district court improperly granted summary judgment on its breach of the duty of loyalty claims. The Eighth Circuit disagreed, finding that Wilbur-Ellis failed to present admissible evidence that [...]

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Preliminary injunction? Not when substantial questions remain

by Tyler Jackson | Jul 23, 2026 | Patents

The US Court of Appeals for the Federal Circuit reversed a preliminary injunction in a patent infringement action, finding that the district court’s claim construction raised, at a minimum, substantial questions regarding infringement and that the patentee failed to establish irreparable harm. Ridge Corp. et al. v. Kirk NationaLease Co. et al., Case No. 25-1254 (Fed. Cir. July 13, 2026) (Dyk, Mayer, Taranto, JJ.)

Ridge Corporation, the exclusive licensee of manufacturer Cold Chain’s patent directed to an insulated overhead door, sued truck leasing and maintenance company Kirk NationaLease Co. (KNL) for patent infringement, tortious interference with business relationships, and false patent marking. After the Federal Circuit vacated an initial preliminary injunction because Ridge lacked standing to sue without the patent owner, Cold Chain joined the present action as a plaintiff. The district court again granted a preliminary injunction, concluding that the plaintiffs had demonstrated a likelihood of success on the merits. KNL appealed.

KNL argued that the district court improperly construed several disputed claim limitations and, therefore, erred in concluding that the plaintiffs were likely to succeed on the merits. The Federal Circuit agreed, explaining that a preliminary injunction should not issue where an accused infringer raises one or more substantial questions concerning infringement – questions that the patentee cannot show lack substantial merit.

The Federal Circuit identified three claim limitations that raised substantial questions of noninfringement:

The district court improperly construed the limitation requiring a panel that is “flexible along the entire length of the panel,” explaining that both the claim language and prosecution history supported a narrower construction.
The accused product raised a substantial question regarding the limitation requiring that “foam insulating material” form the second outermost surface of the door because the prosecution history distinguished prior art sandwich constructions on that basis.
The district court construed the term “insulated overhead door” too broadly, explaining that the specification and industry evidence supported construing the term as referring to a door suitable for cold-storage applications.

The Federal Circuit also determined that the district court erred in finding irreparable harm. Ridge asserted that it had reduced prices because of the defendants’ allegedly infringing products, but the Court found no evidence establishing the required causal nexus between the accused sales and Ridge’s pricing decisions. The Court likewise rejected Ridge’s reliance on its false-marking and tortious-interference claims because there was no credible evidence that the challenged conduct was likely to recur, making prospective injunctive relief inappropriate.

Practice note: This decision illustrates that a patentee seeking preliminary injunctive relief must establish more than a plausible infringement theory. Where the accused infringer raises substantial questions regarding claim construction or infringement, a preliminary injunction is inappropriate.

Heirs’ lights flicker out: Sixth Circuit affirms MillerKnoll’s Bubble Lamp rights

by Lauren Hong | Jul 23, 2026 | Trademarks

The US Court of Appeals for the Sixth Circuit affirmed summary judgment for the manufacturer of an iconic lamp design, finding that the designer’s heirs could not pursue trademark infringement and related tort claims based on the contractual transference of ownership and use of the intellectual property associated with the lamp. The Court concluded that the governing agreements authorized the manufacturer’s conduct and that the designer’s family later ratified the manufacturer’s ownership by accepting royalties with knowledge of its ownership claim. Nelson v. MillerKnoll, Inc., Case No. 25-1940 (6th Cir. July 7, 2026) (Boggs, Clay, Gilman, JJ.)

George Nelson, a prominent mid-century furniture designer, created the cloth-covered hanging fixtures known as the Bubble Lamp while serving as design director of Herman Miller, now MillerKnoll. George and Herman Miller did not enter into a formal written agreement addressing ownership of the Bubble Lamp’s intellectual property during the designer’s employment.

After George’s death, his widow, Jacqueline Nelson, entered into a 2006 agreement under which Herman Miller agreed to pay royalties on certain products designed by George. In 2015, while a related foundation was litigating against another company that had registered and sold Bubble Lamp trademarks, George’s son, Mico Nelson, executed an addendum on Jacqueline’s behalf. The addendum expanded the royalty arrangement to include “Nelson branded Lamp Products” and granted Herman Miller exclusive worldwide rights to manufacture, use, sell, and license those products.

Herman Miller later acquired the Bubble Lamp business and related trademark registrations, including two product-configuration marks and the BUBBLE LAMP word mark.

The Nelson family sued MillerKnoll, alleging that it had improperly obtained the Bubble Lamp’s intellectual property as part of a broader scheme to deprive the family of George’s rights. The complaint asserted federal and state trademark infringement, fraud, conspiracy, unjust enrichment, and cancellation of the trademark registrations. The district court granted summary judgment to MillerKnoll on all claims. The Nelson family appealed.

The principal issue on appeal was whether the 2006 agreement and 2015 addendum merely licensed MillerKnoll to use the Bubble Lamp’s intellectual property or also authorized MillerKnoll ownership of that intellectual property.

Applying Michigan contract law, the Sixth Circuit concluded that the agreements unambiguously granted MillerKnoll both ownership and use rights. Although the agreements referred to “Licensed Products,” that term was contractually defined to include products whose rights MillerKnoll owned. Other provisions granted MillerKnoll “exclusive right, title, and interest” in the covered designs and the sole right to enforce the associated proprietary rights.

That contractual authorization defeated the Nelson family’s Lanham Act claim. The Sixth Circuit explained that authorized use of a mark cannot support an infringement claim under § 43(a) because authorized conduct does not create the type of source confusion the statute is intended to prevent.

The same reasoning foreclosed the state-law trademark and tort claims. Because the agreements authorized MillerKnoll’s ownership and use of the Bubble Lamp’s intellectual property, the Nelson family could not recover for conduct to which it had consented.

The Sixth Circuit also concluded that Mico independently ratified MillerKnoll’s ownership. [...]

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Lanham Act vs. First Amendment: Clarifying the proper scope of commercial speech

by Ian J. Howard | Jul 23, 2026 | Trademarks

The US Court of Appeals for the Tenth Circuit affirmed in part and reversed in part the dismissal of a false advertising complaint, clarifying that courts must take a “holistic” approach when determining whether challenged statements constitute commercial speech under the Lanham Act. KetoNatural Pet Foods, Inc. v. Hill’s Pet Nutrition, Inc., Case No. 24-3185 (10th Cir. July 14, 2026) (Tymkovich, Phillips, McHugh, JJ.)

KetoNatural Pet Foods sells grain-free pet food while Hill’s Pet Nutrition sells more traditional pet food containing grains. KetoNatural alleged that Hill’s lost sales and market share after KetoNatural and other nontraditional pet food companies entered the market. According to KetoNatural, Hill’s responded by working with veterinarians and nonprofit organizations to publicize false claims that boutique, exotic, and grain-free (BEG) diets are associated with an increased risk of dilated cardiomyopathy in dogs.

KetoNatural sued Hill’s for false advertising under the Lanham Act. To state a false advertising claim, a plaintiff must plausibly allege, among other elements, that the defendant made a false or misleading representation of fact in commercial advertising or promotion.

Hill’s moved to dismiss KetoNatural’s complaint. The district court granted the motion, finding that KetoNatural had not adequately alleged either that Hill’s engaged in commercial speech or that the challenged statements were false. KetoNatural appealed.

The Tenth Circuit concluded that KetoNatural plausibly stated a claim for false advertising based on some of the statements made by Hill’s on its website, but Hill’s was not vicariously liable for the statements made by certain veterinarians and nonprofit organizations. In drawing these conclusions, the Tenth Circuit relied on the Supreme Court’s 1983 decision in Bolger v. Youngs Drug Products Corporation, which enunciated three factors for determining whether speech is commercial in character:

It is an advertisement,
It references a specific product, and
It is made with economic motivation.

The Hill’s website stated that BEG diets were linked to a higher risk of canine heart disease without promoting any particular product. Although such statements did not constitute “a classic advertising campaign” and did not reference a specific product, they functionally served to promote Hill’s products given the company’s position as one of three dominant market players in the traditional dog food industry. And critically, Hill’s was clearly economically motivated to make such statements to regain its waning market share.

Furthermore, the Tenth Circuit found that KetoNatural had adequately alleged that these statements were false because, under the establishment claim doctrine, which had been adopted by other federal appellate courts, KetoNatural sufficiently pleaded that “the scientific studies” that Hill’s relied on did “not establish the assertion for which they are cited.”

By contrast, the Tenth Circuit concluded that Hill’s was not vicariously liable for the statements made by veterinarians and nonprofit organizations. According to the Court, the veterinarians and other third parties were too attenuated from Hill’s such that a reasonable inference could not be drawn that their statements were promoting Hill’s products. Moreover, the veterinarians and other third parties lacked an adequate economic motive. Importantly, KetoNatural [...]

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Federal Circuit: Mandate rule applies only to issues actually decided on appeal

by Dexter Hamilton | Jul 23, 2026 | Patents

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board obviousness determination, finding that the Board did not exceed the scope of the Court’s prior mandate by addressing a claim limitation that the Board had not reached in its original final written decision. Intellectual Pixels Ltd. v. Sony Interactive Entertainment LLC, Case No. 24-2174 (Fed. Cir. July 10, 2026) (Dyk, Stoll, Stark, JJ.)

Sony Interactive Entertainment petitioned for inter partes review (IPR) of an Intellectual Pixels Limited (IPL) patent directed to methods and systems for generating digital images using an external visual server. IPL is a UK-based intellectual property licensing company known for holding a US patent that covers methods for generating and displaying digital images using a remote visual server. A key feature of the claimed invention was that the external server assumed responsibility for generating the images, relieving the client device of that processing burden.

The primary prior art reference disclosed a system in which a game was hosted “exclusively on a server/host computer” while users played the game through separate client or terminal computers. The Board instituted review but, in its first final written decision, concluded that Sony had not shown the challenged claims to be unpatentable.

Sony appealed. The Federal Circuit vacated the Board’s decision, finding that substantial evidence did not support the Board’s determination regarding the claim limitation requiring “generating” a new image.

On remand, the Board addressed a separate “compressing” limitation, concluded that the prior art satisfied that limitation, and issued a second final written decision finding the challenged claims unpatentable as obvious.

IPL appealed, arguing that the Board violated the Federal Circuit’s mandate by revisiting findings that had not been expressly disturbed in the first appeal. Under the mandate rule, issues decided on appeal generally may not be reconsidered by a lower tribunal on remand.

The Federal Circuit rejected IPL’s argument. One of the two findings IPL identified had, in fact, been vacated by the Court’s prior decision as unsupported by substantial evidence. The other concerned the Board’s observation that the primary reference was “completely silent as to the content or origin of that ‘compressed video MPEG stream.’” The Court concluded that this second finding fell outside the scope of the prior mandate because it related to the “compressing” limitation, which the Board had not reached in its first final written decision. Because the Board’s original decision rested only on the “generating” limitation, the “compressing” issue was not before the Court in the first appeal and, therefore, was not resolved – expressly or implicitly – by the Court’s mandate.

The Federal Circuit also noted that its prior discussion of the “generating” limitation had implicitly undermined IPL’s reliance on the Board’s earlier observation. Both the “generating” and “compressing” limitations referred to “at least one updated image,” making the prior finding difficult to reconcile with the Court’s earlier analysis.

IPL relied on a 2025 Federal Circuit decision, Bitmanagement Software GmBH v. United States, suggesting that factual findings made during [...]

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A $40 million jury instruction error sends trade secret dispute back to trial

by Jodi Benassi | Jul 23, 2026 | Trade Secrets

The US Court of Appeals for the Ninth Circuit reversed a jury damages award, a permanent injunction, and an attorneys’ fee award in a trade secret misappropriation case, finding that the district court improperly instructed the jury on which party bore the burden of proving whether the asserted trade secrets were “readily ascertainable through proper means.” Comet Technologies USA, Inc. et al. v. XP Power, LLC, Case Nos. 23-15601; 25-15709; 25-745 (9th Cir. July 14, 2026) (Hamilton, Nelson, Bumatay, JJ.) (Bumatay, dissenting)

Comet Technologies, a Swiss-based leader in x-ray and radio-frequency products, sued US-based competitor XP Power after three former Comet engineers left to join XP, allegedly bringing thousands of confidential documents relating to Comet’s radio-frequency power technologies, product designs, and research and development. Comet asserted claims under the federal Defend Trade Secrets Act (DTSA) and California’s Uniform Trade Secrets Act (CUTSA).

Before trial, Comet narrowed its case to five alleged trade secrets and voluntarily dismissed its CUTSA claims, leaving only its DTSA claims. The parties addressed the effect of that dismissal on the jury instructions, with XP requesting that the burden of proving lack of ready ascertainability be shifted to Comet to conform to the DTSA while Comet argued that the instruction should be removed entirely. The district court rejected both requests without an on-the-record explanation and left in Instruction 20, which told the jury that XP was not liable for misappropriation if XP proved by a preponderance of the evidence that the alleged trade secrets were readily ascertainable by proper means, meaning they could be lawfully “obtained, discovered, developed, reverse-engineered, or compiled without significant difficulty, effort, or expense.”

The jury found that XP misappropriated three of the five trade secrets and awarded Comet $20 million in compensatory damages and $20 million in exemplary damages. The district court also entered a permanent injunction and awarded more than $17 million in attorneys’ fees. XP appealed.

Erroneous jury instruction: “Readily ascertainable by proper means”

XP argued that the district court improperly instructed the jury that XP bore the burden of proving that Comet’s alleged trade secrets were “readily ascertainable by proper means.” Comet argued that XP invited the instructional error by requesting that the challenged instruction be given to the jury and, alternatively, that any error was harmless because the instructions were accurate as a whole, they correctly stated the law, and the evidence overwhelmingly established that Comet’s trade secrets were not readily ascertainable through proper means.

The Ninth Circuit agreed with XP, explaining that under the DTSA, lack of ready ascertainability is an element of Comet’s DTSA claim – not an affirmative defense – and, therefore, Comet bore the burden of proof. The Court rejected Comet’s invited-error argument, finding that XP timely objected after Comet dismissed its CUTSA claims and correctly argued that, under the DTSA, Comet – not XP – bore the burden of proving that the alleged trade secrets were not readily ascertainable through proper means.

The Ninth Circuit also rejected Comet’s harmless-error argument. The Court explained that [...]

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