9th Circuit reverses $40M trade secret verdict against XP Power, orders new trial because jury…
Comet Technologies USA, Inc. v. Xp Power, LLC
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9th Circuit reverses $40M trade secret verdict against XP Power, orders new trial because jury was wrongly told XP had to disprove a key element of Comet's claims.
Why it matters
The Ninth Circuit reversed a $40 million jury verdict in favor of Comet Technologies against XP Power for trade secret misappropriation and ordered a new trial. The court found that the trial judge gave the jury an incorrect instruction that placed the burden on XP Power to disprove that Comet's trade secrets were readily ascertainable by proper means, when that burden properly belonged to Comet. Because conflicting evidence on that issue could have changed the outcome, the error was not harmless.
Who it affects
- Particularly in the semiconductor
- Clarifying that plaintiffs
- Not defendants
What happens next
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Decision issued Jul 14, 2026
Published opinion
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- Decision issued Jul 14, 2026Published opinion
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Jul 14, 2026 · Published opinion
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This case began when three senior engineers left Comet Technologies in 2018 to work for rival XP Power, taking thousands of confidential documents with them. Using those documents, the engineers delivered complete product designs to XP in just nine days. Comet sued under the federal Defend Trade Secrets Act, and a jury awarded Comet $40 million in compensatory and punitive damages, a permanent injunction, and over $17 million in attorney fees. The central legal question on appeal was whether the jury was properly instructed on which side bore the burden of proof on a key element: whether Comet's alleged trade secrets were not readily ascertainable by proper means. The Ninth Circuit held that the district court made a serious error by telling the jury that XP Power had to disprove this element, rather than requiring Comet to prove it. The court also found that XP Power had properly objected to the instruction at trial, so it had not given up its right to challenge it on appeal. The majority concluded the error was not harmless. Because the evidence on whether the information was readily ascertainable was genuinely disputed, and because the damages calculations were tied to those disputed issues, a properly instructed jury might have reached a different verdict. The court therefore reversed the judgment and sent the case back for a new trial. Judge Hamilton wrote a separate concurrence addressing the question of whether awarding both unjust enrichment damages and injunctive relief under the DTSA amounts to an improper double recovery. He concluded it does not, joining the Third and Seventh Circuits on that point, though that issue was not resolved in the main opinion because the entire judgment was vacated. Judge Bumatay dissented from the order for a new trial. He agreed the jury instruction was wrong, but argued the error was harmless because he believed the undisputed evidence introduced at trial was strong enough that a properly instructed jury would more probably than not have reached the same verdict.
CITATION AND RECORD
Record source: CourtListener
FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT COMET TECHNOLOGIES USA, Nos. 23-15601, INC., a Delaware corporation; 23-15709, 25-745 COMET, AG, a Swiss corporation; D.C. No. YXLON INTERNATIONAL, 5:20-cv-06408- GMBH, a German corporation, NC Plaintiffs – Appellees/ Cross-Appellants, v. OPINION XP POWER, LLC, a California Limited Liability Company, Defendant – Appellant/ Cross-Appellee. Appeals from the United States District Court for the Northern District of California Nathanael M. Cousins, Magistrate Judge, Presiding Argued and Submitted September 19, 2025 San Francisco, California Filed July 14, 2026 2 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC Before: David F. Hamilton, Ryan D. Nelson, and Patrick J. Bumatay, Circuit Judges. * Opinion by Judge Hamilton; Concurrence by Judge Hamilton; Dissent by Judge Bumatay SUMMARY ** Trade Secret Misappropriation The panel (1) reversed the district court’s judgment after a jury trial in favor Comet Technologies USA, Inc., and affiliates on their claims against XP Power, LLC, for misappropriating trade secrets and (2) remanded for a new trial. Comet alleged that XP, a fellow manufacturer of components used in fabricating computer chips, misappropriated Comet’s trade secrets in violation of the Defend Trade Secrets Act. The jury awarded Comet $40 million in compensatory and punitive damages, a permanent injunction against any further use of the alleged trade secrets by XP, and over $17 million in attorney fees. The panel held that the district court erred by instructing the jury that XP bore the burden of disproving an essential * The Honorable David F. Hamilton, United States Circuit Judge for the Court of Appeals, Seventh Circuit, sitting by designation. ** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 3 element of Comet’s DTSA claims, namely, that its trade secrets were not readily ascertainable by proper means. The panel concluded that XP did not invite the error because it made a timely and correct objection on the burden of proof. The panel further concluded that the error was not harmless because the jury instructions were not accurate as a whole, and conflicting evidence on many issues of ready ascertainability and the ensuing damage calculations presented the sorts of disputes that a properly instructed jury must decide. The panel addressed an evidentiary issue in a separate memorandum disposition. Concurring, Judge Hamilton wrote that he would address a challenge to the relief awarded and would join the Third and Seventh Circuits in holding that awarding both damages for unjust enrichment based on avoided costs and injunctive relief under the DTSA does not create an impermissible double recovery. Dissenting, Judge Bumatay agreed with the majority that the district court used an erroneous jury instruction, but he would hold that the error was harmless because the wealth of undisputed evidence introduced at trial easily established that it was more probable than not that the jury would have reached the same verdict had it been properly instructed. 4 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC COUNSEL Jason M. Wilcox (argued), Joseph M. Capobianco, and John C. O’Quinn, Kirkland & Ellis LLP, Washington, D.C.; Adam R. Alper, Kirkland & Ellis LLP, San Francisco, California; Michael W. De Vries and Sharre Lotfollahi, Kirkland & Ellis LLP, Los Angeles, California; Elizabeth Nielson, Kirkland & Ellis LLP, Salt Lake City, Utah; Steven J. Lindsay, Kirkland & Ellis LLP, Chicago, Illinois; for Plaintiffs-Appellees. Michael E. Bern (argued), Uriel Hinberg, and Christine C. Smith, Latham & Watkins LLP, Washington, D.C.; Patricia Young, Latham & Watkins LLP, Menlo Park, California; for Defendant-Appellant. Robert J. Gunther Jr., Wilmer Cutler Pickering Hale and Dorr LLP, New York, New York, for Intervenor. COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 5 OPINION HAMILTON, Circuit Judge: These appeals arise from a dispute between two manufacturers of components used in fabricating computer chips. Comet Technologies USA, Inc. and affiliates sued XP Power, LLC under federal and state law for misappropriating trade secrets. Comet won a $40 million verdict for compensatory and punitive damages, a permanent injunction against any further use of the alleged trade secrets by XP, and over $17 million in attorney fees. We reverse the judgment and remand for a new trial. The district court erroneously instructed the jury that XP bore the burden of disproving an essential element of Comet’s claims, namely, that its trade secrets were not readily ascertainable by proper means. Because we vacate the judgment below, we do not reach XP’s challenges to the awarded relief in this opinion. 1 I. Factual and Procedural Background A. The Theft Christopher Mason and two other senior engineers left their jobs at Comet in February 2018 to work for XP on developing new product lines in the radio frequency power generator and impedance matching market. They brought with them not only years of industry experience but also 1 In a separate non-precedential memorandum, we also reject XP’s argument that the district court abused its discretion in excluding certain evidence under Federal Rule of Evidence 403. Judge Bumatay dissents from this opinion’s order of a new trial based on the jury instruction issue. In a separate concurring opinion, Judge Hamilton addresses XP’s challenges to the relief awarded. 6 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC thousands of confidential documents and files detailing Comet’s products, research and development strategy, and the underlying technologies. Stolen documents in hand, they delivered complete designs and a development plan for XP’s new product lines in just nine days. Comet quickly discovered the theft and filed suit, alleging violations of both the federal Defend Trade Secrets Act (DTSA), 18 U.S.C. § 1836 et seq., and the California Uniform Trade Secrets Act (UTSA), Cal. Civ. Code § 3426 et seq. The DTSA, enacted in 2016, applies to misappropriation of trade secrets used in interstate or foreign commerce. It provides federal remedies that supplement, but do not replace, state trade secret laws. See 18 U.S.C. § 1838; Quintara Biosciences, Inc. v. Ruifeng Biztech, Inc., 149 F.4th 1081, 1088 (9th Cir. 2025); Attia v. Google LLC, 983 F.3d 420, 424–25 (9th Cir. 2020). The parties and the district court narrowed the issues before and during trial. Comet originally alleged misappropriation of twenty alleged trade secrets. At the district court’s sensible urging, Comet agreed to pursue only five at trial, designated as follows: • Trade Secret D: Da Vinci RF Generator Control, Digital Measurement, and Software. • Trade Secret E: Next Generation RF Matching Network. • Trade Secret L: Kiyo Matching Network. • Trade Secret S: AMAT Matching Network. COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 7 • Trade Secret T: Comet’s Manufacturing, Sales, and Pricing. 2 During trial, Comet also voluntarily dismissed its California UTSA claims to streamline the case, l
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