Comet Technologies USA, Inc. v. Xp Power, LLC
CourtCourt of Appeals for the Ninth Circuit
Date FiledJuly 14, 2026
Docket23-15709
StatusPublished
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Full Opinion
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, leaving only those
brought under the federal DTSA. That was a significant
change that led to the reversible instructional error that we
explain in Section III.
B. The Trial
The jury heard from numerous fact witnesses, including
a video deposition of Mason, and technical and damages
experts from both parties. The evidence included one
proverbial smoking gun: a call between Mason and a
headhunter for XP, a call in which Mason—still employed
at Comet—offered a “crew” to provide a “turnkey”
(meaning “already done”) product design. In what one
Comet expert, Dr. Stanley Shanfield, aptly called a
“remarkable” move, the headhunter recorded the call and
immediately forwarded it to XP’s chief executive officer and
2
In Comet’s words:
These valuable RF technologies are used in the
semiconductor industry to manufacture silicon
computer chips, which are used around the world. An
RF generator generates radio frequency power, and an
RF matching network (sometimes called a “match” or
“matchbox”) receives the generated RF power, and
conditions it so it can be used to control plasma, which
is in turn used to carve a silicon wafer into a
semiconductor.
For an introduction to semiconductor manufacturing, see Corey Richard,
Understanding Semiconductors: A Technical Guide for Non-Technical
People 57–80 (2023).
8 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC
other senior executives, telling them “please keep this
recording strictly confidential. You will see why.”
On damages, Comet asked the jury to award the full
research and development costs that XP avoided having to
spend by stealing the alleged trade secrets instead of
developing them independently. Comet relied on this theory
of unjust enrichment, rather than seeking its own lost profits
or XP’s ill-gotten gains. By the time of trial, XP had not yet
released any new products using the Comet secrets.
The district court instructed the jury that Comet had the
burden of showing that: (1) it owned the alleged trade
secrets, (2) XP misappropriated them, and (3) they were in
fact trade secrets at the time of the misappropriation. Over
XP’s objection, however, the district court also instructed the
jury that XP bore the burden of proving its so-called
“affirmative defense” that the alleged trade secrets were
“readily ascertainable by proper means.”
C. The Verdict and Judgment
In a special verdict, the jury found that Trade Secrets D,
E, L, and S were owned by Comet and protected as trade
secrets under the DTSA, and that XP had misappropriated
Trade Secrets D, E, and L, but not Trade Secret S. The
district court had already granted XP judgment as a matter
of law on Trade Secret T. 3
The jury awarded $5 million in damages for
misappropriation of Trade Secret D and $15 million for
misappropriation of Trade Secret E, but nothing for Trade
Secret L, for a total of $20 million in compensatory damages.
3
The district court wrote regarding Trade Secret S that the jury “appears
to have credited XP’s argument that . . . the information was available in
non-secret forums or had previously been disclosed outside Comet.”
COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 9
It also found that XP “willfully and maliciously”
misappropriated at least one of the trade secrets and awarded
a further $20 million in punitive damages for a total award
of $40 million.
After trial, the district court granted Comet’s motion for
a permanent injunction requiring XP to: refrain from using,
disclosing, selling, or distributing Trade Secrets D, E, and L;
remove and quarantine the stolen information; and allow
third-party audits to ensure compliance. Later, the district
court awarded Comet over $17 million in attorney fees.
XP appealed, raising several issues with the trial and
judgment. Comet conditionally cross-appealed regarding
only the award of zero damages for Trade Secret L. We
consolidated the cross-appeals on the merits and XP’s later
appeal of the fee award.
II. Appellate Jurisdiction
The district court had subject matter jurisdiction under
28 U.S.C. § 1331 and 18 U.S.C. § 1836(c). We have
appellate jurisdiction under 28 U.S.C. § 1291.
XP’s opening brief on appeal questioned our appellate
jurisdiction on the basis that, when XP filed its original
notice of appeal, there was no final judgment because the
district court had not yet ruled on Comet’s motion for
prejudgment interest. Any potential jurisdictional defect
was cured when XP filed an amended notice of appeal after
the district court decided the motion for prejudgment interest
in January 2025. See Fed. R. App. P. 4(a)(4)(B)(i); In re
Jack Raley Construction, Inc., 17 F.3d 291, 294 (9th Cir.
1994) (“[T]he prudent course of action is merely to file a
fresh appeal after entry of final judgment.”); see also
Martinez v. Barr, 941 F.3d 907, 916 (9th Cir. 2019) (“We
10 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC
prioritize substantive rights of parties over procedural
defects in appeals, allowing premature appeals to ripen
absent any prejudice to the appellee.”). The parties correctly
agreed that this course would establish jurisdiction, and
neither argues prejudice from the fact that some briefing had
been filed before then. We have jurisdiction and proceed to
the merits.
III. The Erroneous Jury Instruction
Jury instructions in civil trials focus the jury on the
questions they must decide and how they should go about
deciding them. Trial judges enjoy wide latitude in crafting
jury instructions, but they must get the substance correct.
Here, we must reverse and remand for a new trial. We
agree with both plaintiffs and defendants that the district
court improperly instructed the jury on the burden of proof
for lack of ready ascertainability, an essential element of
Comet’s DTSA claims. XP did not invite the error, and
Comet has not convinced us that the error was harmless.
A. How It Happened
Instruction 20 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.” This instruction was erroneous because the
DTSA instead puts the burden of proof on the plaintiff to
show that its alleged trade secrets were not readily
ascertainable by proper means. See 18 U.S.C. § 1839(3)(B).
Instruction 20 thus erroneously flipped the burden of proof
on an essential element of Comet’s claim.
COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 11
Some states, including California, put the burden of
proof on the defendant by making ready ascertainability an
affirmative defense to a trade secret claim. California Civil
Jury Instructions No. 4420 (2025). Indeed, to avoid
confusing the jury, XP had originally proposed Instruction
20 at a time when Comet was still asserting claims under
both the federal DTSA and California’s UTSA.
Several days into trial, however, Comet voluntarily
dropped its California UTSA claims to streamline the issues
for the jury. The district court asked the parties to explain
how this change would affect the jury instructions and
verdict form. In response, XP said correctly that Instruction
20 should be amended to shift the burden of proof on lack of
ready ascertainability to Comet, in line with the federal
DTSA. Comet objected and argued that Instruction 20
should be removed entirely, claiming quite erroneously that
the “DTSA does not permit a defendant to avoid liability for
misappropriation by showing that it could have found the
information some other way.” The district court rejected
both requests without an on-the-record explanation.
At the final charging conference the next day, the district
court asked if there were “any other suggestions from either
side as to the verdict form as to the issues not previously
objected to in your writings?” Comet asked the district court
to remove the “not readily ascertainable” question from the
verdict form, repeating in substance its written objection to
Instruction 20. XP responded that “I believe we’ve raised all
our concerns already and they’re preserved,” plainly
referring to the previous day’s motion and denial. Then,
responding to Comet’s request, XP argued that Instruction
20 and the corresponding verdict question were “appropriate
under the DTSA.” The district court agreed and left them in.
12 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC
We review a district court’s formulation of civil jury
instructions for abuse of discretion, but we review de novo
whether instructions substantively misstate the law. Chess
v. Dovey, 790 F.3d 961, 970 (9th Cir. 2015). The parties
agree that Instruction 20 erroneously reversed the burden of
proof. Comet raises two arguments to save the verdict from
the error: (1) that XP invited the error, and (2) that the error
was harmless. We reject both arguments.
B. No Invited Error
Comet argues that XP invited the instructional error
when it told the district court in the final charging conference
that Instruction 20 should be given. A party waives appellate
review by inviting an error when it is aware of the applicable
law but nonetheless “intentionally relinquishe[s] or
abandon[s] a known right” by advancing the error or failing
to object. United States v. Perez, 116 F.3d 840, 845 (9th Cir.
1997) (en banc). Proposing a flawed jury instruction is a
“paradigmatic example” of invited error. United States v.
Magdaleno, 43 F.4th 1215, 1220 (9th Cir. 2022).
The requisite intent to invite an error can be inferred
when a party insists on a faulty instruction despite the court
or the other side pointing out the problem. See United States
v. Guthrie, 931 F.2d 564, 567 (9th Cir. 1991) (“Here, the
district court offered to instruct the jury on what it could
infer . . . . Guthrie declined the offer, however, and proposed
instead that the court simply reread its more general
instruction on the element of knowledge. The court
complied with Guthrie’s request, so he cannot now complain
of what he received.”); United States v. Baldwin, 987 F.2d
1432, 1437 (9th Cir. 1993) (finding invited error where
criminal defendant opposed government’s request to give the
erroneously missing jury instruction); see also Fed. R. Civ.
COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 13
P. 51(d)(1)(A) (“A party may assign as error . . . an error in
an instruction actually given, if that party properly
objected . . . .”).
XP did not invite this error. Far from acquiescing, XP
objected immediately when Comet dismissed its state law
claims and thereby made Instruction 20 erroneous. XP
specifically drew the district court’s attention to the different
burdens of proof. In response, Comet muddled the issue by
asking the district court to remove the instruction entirely on
the erroneous theory that XP did not claim to have actually
reverse-engineered the information, an argument that Comet
has wisely abandoned. The district court’s failure to correct
the error as XP requested was not XP’s fault. 4
XP’s statements at the charging conference the next day
also do not show invited error. The district court asked the
parties for objections to the verdict form that were not
previously raised in writing; XP’s objection to Instruction 20
was neither. Even so, XP did not remain silent. It reminded
the judge of its previous objection and noted that the issue
4
Ninth Circuit precedent and at least one California state court case
support Comet’s argument as to the California UTSA claims. See
California Civil Jury Instructions No. 4420 (2025), citing ABBA Rubber
Co. v. Seaquist, 235 Cal. App. 3d 1, 21 n.9 (1991). The same is not true
of the DTSA, which defines a “trade secret” to exclude information that
is not “readily ascertainable through proper means.” 18 U.S.C.
§ 1839(3)(B); e.g., Masimo Corp. v. True Wearables Inc., No. 18-cv-
2001, 2021 WL 2548690, at *3 (C.D. Cal. Apr. 28, 2021) (“[T]here is
one key difference between the [California UTSA] and the
DTSA . . . . [U]nder the [California UTSA], ready ascertainability is
only a defense insofar as the defendant actually gained knowledge of the
trade secret by use of those materials which make the trade secret readily
ascertainable.”), aff’d, No. 21-2146, 2022 WL 205485 (Fed. Cir. Jan. 24,
2022), citing IMAX Corp. v. Cinema Technologies, Inc., 152 F.3d 1161,
1168 n.10 (9th Cir. 1998).
14 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC
was preserved. More fundamental, the district court’s
erroneous ruling the day before and Comet’s proposal to
remove Instruction 20 entirely forced XP into a Hobson’s
choice between either a flawed instruction on ready
ascertainability or no instruction at all. Having made a
timely and correct objection on the burden of proof the day
before, XP’s argument in the alternative—to keep an
imperfect instruction on an element important to XP’s
defense—did not amount to invited error. See United States
v. Laurienti, 611 F.3d 530, 544 (9th Cir. 2010) (“[N]othing
prevents a party from arguing in the alternative.”). 5
C. No Harmless Error
An instructional error in a civil case does not require
reversal if the party defending the judgment shows that the
error was “more probably than not harmless.” Clem v.
Lomeli, 566 F.3d 1177, 1182 (9th Cir. 2009), quoting Dang
v. Cross, 422 F.3d 800, 811 (9th Cir. 2005); see also
BladeRoom Group Ltd. v. Emerson Electric Co., 20 F.4th
1231, 1243–44 (9th Cir. 2021) (rejecting a universal “tie-to-
the-verdict” rule). We have explained that prejudice is likely
where the error adds an element to a party’s burden of proof
and where “nothing about th[e jury’s] verdict indicates that
the result would have been the same without the error.”
Clem, 566 F.3d at 1182–83 (alteration in original), quoting
Caballero v. City of Concord, 956 F.2d 204, 207 (9th Cir.
1992). This is the general rule because “the burden of proof
affects all aspects of the jury’s verdict,” and an error can
make it “impossible to determine whether the erroneous
5
This is a case where “counsel shifted his position as advocate precisely
because” of an erroneous ruling. See United States v. Espinoza-
Bazaldua, 711 F. App’x 737, 741 (5th Cir. 2017) (non-precedential)
(rejecting argument that defendant invited the error he argued on appeal).
COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 15
burden of proof was outcome determinative.” Carvalho v.
Raybestos-Manhattan, Inc., 794 F.2d 454, 455 (9th Cir.
1986).
Comet offers two grounds for finding this instructional
error harmless: (1) that the instructions were accurate as a
whole; and (2) that Comet’s evidence was so strong that the
jury probably would have ruled the same way even if it had
been properly instructed. We reject both contentions.
1. Accuracy as a Whole
A single mistaken instruction may be deemed harmless
if the instructions, taken as a whole, fairly and correctly
cover the substance of the applicable law. Swinton v.
Potomac Corp., 270 F.3d 794, 807 (9th Cir. 2001). Comet
points out that Instruction 18, a separate instruction,
correctly told the jury that Comet bore the burden of proof
on another element of its claims: that the alleged trade
secrets gave Comet “independent economic value” through
providing a “business advantage.” Comet contends that by
satisfying its burden on this element under Instruction 18, it
necessarily proved that its alleged trade secrets were not
readily ascertainable by proper means.
On this subject, the instructions were not accurate as a
whole. Instruction 20 flipped the burden of proof on lack of
ready ascertainability. Instruction 18 addressed utility in
terms of “independent economic value,” while “ready
ascertainability” addresses secrecy. Information can be
secret without being useful or useful without being secret.
The two may often go together, but neither feature
necessarily implies the other.
For three reasons, we reject Comet’s argument, which
the dissent seems to adopt, that by proving a trade secret
16 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC
provides independent economic value, it proved “as a matter
of logic” that the information was not readily ascertainable.
First, that position is undermined by Comet’s admission in
the district court that “Instruction No. 18 . . . omits [the lack
of ready ascertainability] aspect of the trade-secret definition
under the DTSA,” a point it made when arguing to remove
Instruction 20 altogether. Second, and more fundamental,
Comet’s theory would effectively rewrite the DTSA, which
defines a trade secret to require both independent economic
value and lack of ready ascertainability as related but distinct
statutory elements. See 18 U.S.C. § 1839(3)(B) (“[T]he
information derives independent economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable through proper means by, another
person who can obtain economic value from the disclosure
or use of the information.”). Third, a reasonable juror would
easily conclude that, because Instructions 18 and 20 were
separate and tied to separate questions on the verdict form,
the two required independent consideration.
2. Likely Result
The party defending the judgment bears the burden of
showing that the jury more likely than not would have
reached the same result if it had been properly instructed.
Clem, 566 F.3d at 1182. Comet must either: (1) point to
something about the jury’s verdict from which we can infer
how it would have ruled absent the mistake; or (2) convince
us that its evidence was so strong that we can step
confidently into the jury’s shoes to make that determination
ourselves. See Mockler v. Multnomah County, 140 F.3d 808,
812–14 (9th Cir. 1998) (making inferences from jury’s
verdict and reviewing weight of evidence in addressing
harmlessness). Comet has done neither.
COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 17
Nothing in the jury’s complete verdict sheds light on how
it would have ruled if properly instructed on lack of ready
ascertainability. To be sure, the jury found that XP
misappropriated some of the alleged trade secrets and did so
willfully and maliciously, and the jury awarded
compensatory and punitive damages. Those findings were
all supported by sufficient evidence, but sufficiency is not
enough to show an instructional error was harmless. Lack
of ready ascertainability under the DTSA has nothing to do
with the defendant’s real-world conduct. The jury had to
decide whether XP or others could have reverse-engineered
the alleged trade secrets, not whether XP had actually done
so. On the ability to reverse-engineer, the jury heard sharply
conflicting evidence, which we review below. As to whether
XP could have reverse-engineered the alleged trade secrets,
the jury’s finding about what actually happened does not tell
us what the jury would have decided—under a correct
instruction on the burden of proof—about what XP could
have theoretically done to reverse-engineer any of the
information. These two aspects of the jury’s verdict are
distinct. One asks what XP did and the other what XP and
others could have done.
The award of compensatory damages for “the value of
XP’s benefit that would not have been achieved except for
their misappropriation,” as required by Instruction 23, is a
red herring on the harmless-error question. XP did not argue
that it would have reverse-engineered the alleged trade
secrets if not for acquiring them through Mr. Mason, merely
that it could have done so, at least in part. Likewise, the
jury’s award of punitive damages does not support
harmlessness on lack of ready ascertainability, as the dissent
asserts. In past cases noting a punitive damages award as a
significant factor in finding harmlessness, the aspect of the
18 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC
case on which the jury was improperly instructed bore a
direct logical relationship to the findings required to award
punitive damages. See Larez v. Holcomb, 16 F.3d 1513,
1518 (9th Cir. 1994) (jury’s finding that police officer
engaged in “extraordinary misconduct” warranting punitive
damages was “highly significant” in gauging how a properly
instructed jury likely would have ruled on a consent-to-arrest
defense); Lambert v. Ackerley, 180 F.3d 997, 1008–10 (9th
Cir. 1999) (en banc) (failure to give instruction on
affirmative defense of economic restructuring was harmless
where jury awarded punitive damages and therefore must
have found defendants acted with a culpable mens rea).
Here, however, ready ascertainability or its absence did
not depend on whether XP engaged in egregious misconduct,
of which there was ample evidence. Instead, the jury had to
weigh conflicting testimony from experts on what XP or
others could have reverse-engineered. In general, weighing
conflicting expert testimony falls outside the wheelhouse of
a federal court of appeals. See Wyler Summit P’ship v. Turner
Broad. Sys., Inc., 235 F.3d 1184, 1192, 1196 (9th Cir. 2000)
(reversing summary judgment in case of dueling experts
because neither side’s theory was barred as a matter of law).
This is not a case where we could simply apply familiar legal
standards to undisputed facts about who said and did what
when. See Mockler, 140 F.3d at 812–14 (affirming jury
verdict despite instructional error in employment
discrimination case; panel could conclude remedial action
was inadequate from unrebutted factual testimony). Rather,
we must review highly technical expert testimony and do so
mostly without the benefit of access to the many exhibits
those witnesses used to illustrate and explain their testimony.
We do not agree with Comet that its evidence on lack of
ready ascertainability was so overwhelming that we should
COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 19
deem the error harmless. The first major obstacle to a
finding of harmless error here is Comet’s attempt to rebut the
testimony of XP’s key expert witness, Dr. Joshua Phinney.
It was a study in changing the subject. In cross-examination
of Dr. Phinney, Comet understandably emphasized the
defendants’ bad acts in taking and using confidential
information from Comet. But the cross-examination does
not seem to have laid a glove on Dr. Phinney’s points about
significant aspects of the alleged trade secrets actually
consisting of information that could have been reverse-
engineered or was otherwise publicly disclosed. Similarly,
Comet’s closing argument on lack of ready ascertainability
amounted only to pointing out that “XP kept going back to
the Comet documents. There’s no evidence that XP went out
and looked publicly for this stuff.” 6
At the risk of some repetition, lack of ready
ascertainability does not depend on what the defendants
actually did. Ready ascertainability or its absence, as here,
depends on an evaluation of what another expert in the field
could have learned by proper means. Comet’s failure to
defang Dr. Phinney’s testimony on this subject weighs
against a finding of harmless error.
Even if we could say with some confidence that some of
Comet’s alleged trade secrets were genuinely protected,
meaning that the information was not readily ascertainable
with legitimate methods, there are further obstacles to
finding harmless error. The jury found in favor of XP on
6
Perhaps Comet focused on XP’s conduct when cross-examining Dr.
Phinney because at the time it was still asserting claims under the
California UTSA, for which ready ascertainability is an affirmative
defense. It requires the defendant actually to have obtained the
information lawfully. Supra n.4.
20 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC
Trade Secret S, and it found that Trade Secret L was
misappropriated but that Comet did not prove damages for
Trade Secret L. Further, the compensatory damage award
was $5 million for Trade Secret D and $15 million for Trade
Secret E. The combination of verdict answers makes it
impossible to tease out how a failure to prove lack of ready
ascertainability as to some elements of the claimed trade
secrets would affect the compensatory damage award.
Even if we assume for the sake of argument that some of
the documents and computer files identified by Comet and
our dissenting colleague contained at least some information
that was not readily ascertainable, we could not find the error
was harmless. Comet’s damages were based on its own total
research and development expenses. In particular, Comet’s
damages expert used internal cost codes to calculate
development costs for each alleged trade secret—a common
method of intellectual property valuation—and “assume[d]
that every bit of confidential information included in
Comet’s prior generation product codes . . . was valuable to
XP.” He relied on other witnesses to identify these cost
codes and lacked the technical expertise to opine that they
reflected only protected elements of the alleged trade secrets.
On appeal, Comet provides no basis for identifying which of
those expenses were implicated by various sorts of
information that may have been readily ascertainable by
proper means, such as through reverse-engineering, by XP
or others. At an absolute minimum, XP correctly identifies,
the jury would have had to award a smaller amount in
compensatory damages if it concluded that certain aspects of
the alleged trade secrets were readily ascertainable and thus
not protected by the DTSA. Given the conflicting testimony
on the question of lack of ready ascertainability, which we
review below, we cannot be confident that the instructional
COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 21
error was harmless as to all of the stolen information. Comet
all but conceded as such when it wrote that “Trade Secrets D
and E encompassed a vast library of information, much of
which could not be obtained from reverse engineering.”
Appellee’s Br. at 32–33 (emphasis added).
Comet characterized Dr. Phinney’s testimony as being
that the “dimensions and configuration” of similar
components in competitors’ products could be replicated by
opening them up and that public patents disclosed certain
“concept[s]” used in the alleged trade secrets. Id. at 35–36.
Indeed, XP introduced testimony intended to show that the
alleged trade secrets were readily ascertainable “through
various means, including by opening a match box and
reviewing public patents.” Appellant’s Br. at 25. For
example, Dr. Phinney testified that significant aspects of
Comet’s alleged trade secrets were disclosed in other
companies’ public patents and product bulletins. Anyone
wishing to replicate the physical dimensions of a product
could easily measure them, Dr. Phinney testified, and in his
opinion certain components used a “standard format or form
factor” and were derived from “off-the-shelf” parts.
In response to Dr. Phinney’s testimony, Comet contends
that “other vital aspects” of its trade secrets, such as
“manufacturing variation and material properties,” could not
have been learned through reverse-engineering. Appellees’
Br. at 35–36. Comet also argues that the patents Dr. Phinney
relied upon did not reveal the “strategy behind design
choices, or how to implement the technology.” Id. at 36. For
example, Dr. Shanfield testified that proprietary
performance test data the engineers brought from Comet to
XP was “the key” to choosing the right components. Comet
also noted that its products containing Trade Secrets D and
22 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC
E were not yet available for purchase at the time of the theft,
making reverse-engineering anything from them impossible.
However, Dr. Phinney’s testimony largely concerned
public information about other companies’ products already
on the market. By his account, skilled electrical engineers
would easily have understood Comet’s design strategy. For
example, Dr. Phinney identified one aspect of Trade Secret
E as “a component that has been used for a long time in this
industry,” one that “everyone knew” was needed. He also
criticized Comet’s expert, Dr. Shanfield, for failing to
address what was known generally in the industry and for
failing to engage on many of the details of the alleged trade
secrets so as not to “bore the jury.”
Critical too, Trade Secret L was already on the market.
Comet itself wrote in another section of its brief that the
“award of $0 in damages for Trade Secret L was given in
tandem with an award for Trade Secret E that incorporated
development costs for Trade Secret L, reflecting an effort to
avoid double counting.” Appellees’ Br. at 21–22. That is,
Comet had asked for $6 million for Trade Secret E and $11.1
million for Trade Secret L, and eventually won a $15 million
award for Trade Secret E. Accordingly, on Comet’s own
theory of the case, the development costs for Trade Secret L
must have been the majority of the award for Trade Secret E,
and close to (if not a majority) of the entire compensatory
damages award of $20 million. In Comet’s own words: “The
jury’s damages awards for Trade Secrets E and L are thus
intertwined and cannot fairly be reconsidered separately.”
Id. at 22.
We simply cannot say on this record how much the jury
would likely have awarded for research and development
costs going into “manufacturing variation,” “material
COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC 23
properties,” and “strategy behind design choices,” after
excluding costs going into the potentially readily
ascertainable categories of “dimensions” and
“configuration,” as well as certain “concepts.” See
BladeRoom, 20 F.4th at 1246 (vacating damages award and
noting court has “no way to know how much damages the
jury intended to allocate for each claim” and “cannot tell
whether the damages findings would be the same”).
Moreover, even if we were to ignore the patents as offered at
trial solely for secrecy and not ready ascertainability, as
Comet and the dissent insist, some significant portion of the
design files Mason stole must reflect “dimensions” and
“configuration.” One Comet witness described the
“documents that you create as part of your design process”
as starting with “specification and concepts” and then
moving on to “schematics, to layouts; for example, for PCB
boards, 3-D drawings.”
Comet chose to propose a bottom-line damages figure
for each alleged trade secret rather than risk boring or
confusing the jury with a more detailed component-by-
component or document-by-document breakdown. With the
benefit of hindsight, that understandable strategic choice
created obstacles to a finding of harmless error. If the jury
had arrived at the same verdict after being properly
instructed, we would have applied much more forgiving
standards of review on appeal. See Acosta v. City of Costa
Mesa, 718 F.3d 800, 828 (9th Cir. 2013) (per curiam)
(liability); Oracle Corp. v. SAP AG, 765 F.3d 1081, 1094 (9th
Cir. 2014) (remittitur).
The conflicting evidence on the many issues of ready
ascertainability and the ensuing damage calculations
presented the sorts of disputes a properly instructed jury
must decide, so we cannot overlook the instructional error as
24 COMET TECHNOLOGIES USA, INC. V. XP POWER, LLC
harmless. We therefore vacate the district court’s amended
final judgment in its entirety, including the permanent
injunction, though the jury’s verdict that XP did not
misappropriate Trade Secret S and the grant of judgment as
a matter of law for XP on Trade Secret T are unchallenged
on appeal and thus rema