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Trade secret lawyers commonly assert claims under both the federal Defend Trade Secrets Act (“DTSA”) and the applicable state’s version of the Uniform Trade Secrets Act (“UTSA”). But in doing so, they might overlook differences in the key elements and burdens of proof under those statutes. That can be costly, as shown by the Ninth Circuit’s recent decision in Comet Technologies USA, Inc. v. XP Power, LLC, 181 F.4th 988 (9th Cir. 2026): https://cdn.ca9.uscourts.gov/datastore/opinions/2026/07/14/23-15601.pdf.

In Comet Technologies, a jury instruction correctly tailored for the California Uniform Trade Secrets Act regarding the ascertainability of the alleged trade secret became reversible error after the plaintiff dropped its state law claims. With only federal trade secret claims remaining, the DTSA standard applied and shifted the burden from the defendant (who, under the California version of the UTSA, must prove the trade secrets were readily ascertainable) to the plaintiff, who under the DTSA must prove its trade secrets were not readily ascertainable. As a result, the appellate court overturned a $40 million verdict as well as a permanent injunction and more than $17 million in attorney fees.

Background

Three senior engineers left Comet Technologies, a computer chip component manufacturer, in February 2018 to work for competitor XP Power. They brought with them thousands of confidential files detailing Comet’s products, research and development strategy, and underlying technologies. They then delivered complete designs and a development plan to XP for new product lines in just nine days.

Comet sued XP under both the DTSA and California UTSA, asserting misappropriation of 20 alleged trade secrets. Comet narrowed its claims to five trade secrets and then, during trial, voluntarily dismissed its California UTSA claims to streamline the case. The jury found that XP misappropriated three trade secrets and awarded Comet $20 million in compensatory damages and $20 million in punitive damages. The district court later entered a permanent injunction and awarded Comet more than $17 million in attorney fees. XP appealed.

On appeal, the Ninth Circuit held that the district court improperly instructed the jury on the burden of proof regarding whether the alleged trade secrets were readily ascertainable, an essential element of Comet’s DTSA claims. The court reversed the $40 million verdict, vacated the permanent injunction and more than $17 million attorney fee award, and remanded for a new trial.

The “Readily Ascertainable” Burden Split

Information is “readily ascertainable by proper means” and thus is not a protectable trade secret if it could be lawfully “obtained, discovered, developed, reverse-engineered, or compiled without significant difficulty, effort, or expense.” Comet Techs., 181 F.4th at 994. This inquiry is purely hypothetical. It asks what a skilled competitor could have learned through proper means, not what the defendant actually did.

The appeal turned on which party must prove that Comet’s alleged trade secrets were “readily ascertainable through proper means.” Under the federal DTSA, lack of ready ascertainability is built into the statutory definition of a trade secret, and the plaintiff must prove that the information was not readily ascertainable. 18 U.S.C. § 1839(3)(B). Most states’ UTSA analogues, including Georgia’s (see Ga. Code Ann. § 10-1-761(4)), track the federal formulation and place the burden on the plaintiff.

Under the California UTSA, however, ready ascertainability is an affirmative defense, meaning the defendant must prove the information was readily ascertainable and acquired by lawful means. Cal. Civ. Jury Instr. No. 4420 (2025). While no other state’s UTSA includes California’s explicit burden-shifting instruction, other states, including Colorado, Illinois, and Oregon, have declined to adopt the DTSA’s “readily ascertainable by proper means” language in their statutory definitions of a trade secret (see C.R.S.A. § 7-74-102(4), 765 ILCS 1065/2(d), O.R.S. § 646.461(4)). The practical effect is similar to California’s UTSA on the front end: A plaintiff asserting trade secret misappropriation does not need to affirmatively prove non-ascertainability.

XP initially (and correctly) proposed the defendant-burden instruction when both Comet’s DTSA and California UTSA claims were pending. But once Comet dropped its California UTSA claims, the same instruction became erroneous. The Ninth Circuit rejected Comet’s defenses of the resulting error and found that (1) there was no invited error because XP timely and correctly objected, and (2) there was no showing that the error was harmless.

The damages methodology compounded the problem. Comet’s expert assumed that all confidential information was valuable to XP and calculated avoided research and development costs using internal cost codes. But because the expert provided a lump-sum figure for each trade secret, there was no way to isolate how much of the $20 million in compensatory damages turned on material that might have been readily ascertainable.

Practical Takeaways

  • Chart burdens claim-by-claim before trial. Pleading federal and state claims together is routine, but one should not assume they share the same burden structure.
  • Audit jury instructions and the verdict form each time claims are added, amended, or dismissed.
  • Build damages for appellate durability. Itemized, component-level proof is tedious, but a lump-sum number can present an “all or nothing” scenario and leave nothing for a reviewing court to salvage.