Jury instructions in trade secret cases are often one of the last items on a trial team’s checklist. A recent decision of the U.S. Court of Appeals for the Ninth Circuit, issued on July 14, 2026, is a reminder of why counsel should take them seriously. In Comet Technologies USA, Inc. v. XP Power, LLC, 181 F.4th 988, 2026 U.S. App. LEXIS 20577, WL 2028303 (9th Cir. July 14, 2026), the court reversed a $40 million verdict, vacated a permanent injunction and an attorney fee award exceeding $17 million, and remanded for a new trial, because a single instruction placed the burden of proof on the wrong party.
The Underlying Dispute
As the Ninth Circuit described the record, three senior Comet engineers left the company in February 2018 to join XP and develop new product lines in the radio frequency power generator and impedance matching market. They carried with them years of industry experience and, according to the court, thousands of confidential Comet documents and files covering product designs, research and development strategy, and the underlying technologies. Within nine days, XP had complete designs and a development plan for its new product lines. Because the judgment has now been vacated, those findings must be established again at a new trial.
Comet sued in the Northern District of California, alleging violations of both the federal Defend Trade Secrets Act (DTSA), 18 U.S.C. §§ 1836–1839, and the California Uniform Trade Secrets Act (CUTSA), Cal. Civ. Code §§ 3426–3426.11. The DTSA, enacted in 2016, reaches misappropriation of a trade secret related to a product or service used in, or intended for use in, interstate or foreign commerce. It supplements, but does not displace, state trade secret law. See 18 U.S.C. section 1838.
The parties and the district court narrowed the issues before and during trial. Comet originally alleged misappropriation of twenty trade secrets and, at the district court’s urging, narrowed that list to five for trial. Several days into trial, Comet voluntarily dismissed its CUTSA claims to streamline the issues for the jury, leaving only its federal DTSA claims. That mid-trial change is what produced the instructional error that led to reversal.
What Went Wrong
The jury found that XP had misappropriated three of the five asserted trade secrets and awarded $20 million in compensatory damages — measured by the research and development costs XP avoided — plus $20 million in punitive damages for willful and malicious misappropriation. The district court entered a permanent injunction and awarded more than $17 million in attorney fees. On appeal, the dispositive issue was narrow: which side bore the burden on ready ascertainability. Must the plaintiff prove that its trade secrets were not readily ascertainable? Or must the defendant prove the plaintiff’s trade secrets were readily ascertainable?
The plaintiff had originally pleaded parallel state and federal claims, then dismissed its California claim and proceeded to verdict under the federal DTSA alone. The jury instruction given by the district court, however, still tracked California law. Instruction 20 told the jury that XP was not liable if XP proved, by a preponderance of the evidence, that the asserted trade secrets were readily ascertainable by proper means. That framing converted an essential element of Comet’s federal claim into an affirmative defense to be carried by XP. XP had originally proposed the instruction while both claims were still in the case, but it objected as soon as Comet dismissed the CUTSA claims and asked that the burden be shifted to Comet; Comet asked that the instruction be struck altogether. The district court denied both requests without an on-the-record explanation, and the instruction went to the jury uncorrected. On appeal, the panel held that XP’s timely and correct objection defeated Comet’s invited-error argument, and that Comet, as the party defending the judgment, had not shown the error was more probably not harmless.
The Doctrinal Split Behind the Reversal
Under the DTSA, Lack of Ready Ascertainability Is an Element of the Plaintiff’s Claim
The federal definition of a trade secret at 18 U.S.C. § 1839(3)(B) requires that the information derive independent economic value from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from its disclosure or use. Because the absence of ready ascertainability is written into the definition itself, the plaintiff bears the burden of proving it as an element of its claim. The panel also rejected the argument that proving independent economic value necessarily proves lack of ready ascertainability: economic value and secrecy are related but distinct statutory requirements.
Under CUTSA, Ready Ascertainability Is an Affirmative Defense that Defendant Must Plead and Prove
California takes the opposite approach. When California enacted CUTSA, Cal. Civ. Code §§ 3426–3426.11, it omitted “readily ascertainable” from the statutory definition of a trade secret. California courts and CACI No. 4420 instead treat ready ascertainability as an affirmative defense the defendant must prove. See ABBA Rubber Co. v. Seaquist, 235 Cal. App. 3d 1, 21 n.9 (1991); compare with CACI No. 4420’s “Directions for Use.” The two regimes are not perfect mirror images, however: the California defense has been read to require that the defendant actually acquired the information by the means that made it readily ascertainable, while the federal element asks only what a competitor could have learned by proper means. Either way, an instruction drafted for one statute can misallocate the burden under the other statute.
Why This Trap Is Easy to Fall Into
California trade secret cases commonly begin with CUTSA and DTSA claims pleaded together. Proposed jury instructions, pretrial filings, and trial briefs are often assembled while both claims are still in the case. When a plaintiff later streamlines by dismissing the state claim, the instruction packet is frequently not revised for a DTSA-only trial. The result is a federal verdict resting on a state-law burden allocation and, as Comet Technologies demonstrates, a reversal after trial.
Four Practice Points for Trade Secret Litigators
- Review the entire jury instruction packet whenever a claim is dismissed, narrowed, or added, and treat the audit as a discrete calendared task.
- Draft each instruction from the operative statutory text rather than from a prior case file, and confirm whether each element or defense belongs to the plaintiff or the defendant.
- Preserve any objection to an instruction with precision, on the record, and consistent with Federal Rule of Civil Procedure 51(c). The Comet Technologies record turned on exactly what each party asked the court to do and when, and a general objection may not preserve a burden-allocation challenge.
- Evaluate strategically whether to keep the CUTSA claim in the case, since the state-law burden allocation is generally more favorable to a trade secret plaintiff. Retaining both claims is not by itself a cure: each claim needs its own burden instruction and its own question on the verdict form.
What It Means for California Businesses and Litigators
A verdict is only as durable as the validity of the instructions that produced the verdict. For a company seeking relief for misappropriation of its confidential information, an instruction error can erase years of litigation investment and force a second trial on the same facts. For a company defending against a trade secret claim, the burden allocation question is a genuine appellate issue worth preserving from the first pretrial conference forward.
The practical lesson is that these instructions are substantive law, not administrative housekeeping. Where parallel CUTSA and DTSA claims are the norm, the two frameworks must be tracked separately at every stage of the case.
Comet Technologies is also a reminder to litigators to review the applicable jury instructions early in a case, as they provide a roadmap of what must be proven or rebutted. For plaintiff’s counsel, this means reviewing the instructions when drafting the initial complaint.
Finally, two other matters from the Ninth’s Circuit’s opinion are worth mentioning for litigators. First, the panel was divided: Judge Bumatay dissented, agreeing the instruction was wrong but concluding the error was harmless on the weight of the evidence. Second, Judge Hamilton’s separate concurrence would hold that awarding both avoided-cost unjust enrichment damages and a permanent injunction under the DTSA is not an impermissible double recovery, expressly declining to follow the Second Circuit’s decision in Syntel Sterling Best Shores Mauritius Ltd. v. TriZetto Group, Inc., 68 F.4th 792 (2d Cir. 2023) (applying DTSA).
Speak With a Los Angeles Trade Secret Litigation Attorney
The Law Office of Shanen R. Prout handles trade secret misappropriation, confidential information, and unfair competition disputes in California state and federal courts. If your business is enforcing or defending a trade secret claim, we can help you evaluate the claim structure and the burden allocation issues that decided Comet Technologies.
Shanen R. Prout, Law Office of Shanen R. Prout: 21 Miller Alley, Ste. 210, Pasadena, CA 91103
Telephone: (626) 529-3022
Email: shanen@srplawyer.com
Website: www.srplawyer.com
This article is provided for general informational purposes only and does not constitute legal advice or create an attorney-client relationship. Case authority should be independently verified before it is relied upon.