The Ninth Circuit held that DTSA plaintiffs bear the burden to prove that their trade secrets were not readily ascertainable by proper means.
On July 14, 2026, the Ninth Circuit issued a published decision in Comet Technologies USA, Inc. v. XP Power, LLC, reversing a $40 million trade secret verdict and vacating a permanent injunction and more than $17 million in attorney fees.[1] The panel found that the district court erroneously placed the burden on defendant XP to prove that plaintiff Comet’s alleged trade secrets were readily ascertainable.[2] The court held this was error because it flipped the burden of proof on an essential element of Comet’s claim.[3] The Ninth Circuit explained that under the federal Defend Trade Secrets Act (DTSA), the plaintiff bears the burden to prove that its alleged trade secrets were not readily ascertainable by proper means.[4]
The Ninth Circuit’s decision is significant because it clarified the elements necessary to prove a claim of trade secret misappropriation under the DTSA. It also surfaced a potential complication that litigants should consider in deciding whether to bring and maintain at trial parallel claims under the DTSA and the California Uniform Trade Secrets Act (CUTSA).
Comet sued XP for trade secret misappropriation under both the DTSA and CUTSA.[5] Comet alleged that three of its engineers took thousands of confidential documents to competitor XP to help develop competing product lines.[6]
During trial, to streamline the issues before the jury, Comet voluntarily dismissed its CUTSA claims, leaving only its DTSA claims.[7] The district court asked the parties to explain how this change would affect the jury instructions and verdict form.[8] XP argued that the Court’s instruction on ready ascertainability should be amended to shift the burden of proof to Comet, in line with the DTSA.[9] The Court denied the request.
The Ninth Circuit held that this was reversible error.[10] The court noted that the parties agreed that the district court’s instruction erroneously reversed the burden of proof.[11] It then examined and rejected Comet’s arguments that XP invited the error and that the error was harmless.[12] In view of its findings, the court vacated the judgment and remanded for a new trial on the trade secrets the jury had found misappropriated.[13]
Although the CUTSA claim was not at issue on appeal, in dicta the panel stated that some states, including California, put the burden of proof on the defendant by making ready ascertainability an affirmative defense to a trade secret claim.[14] For support, the panel cited the Judicial Council of California’s Civil Jury Instruction No. 4420. Trade secret litigants should be mindful of this potential distinction when determining whether to bring parallel DTSA and CUTSA claims and maintain them at trial.
Comet gives trade secret litigants in the Ninth Circuit a clear rule that, under the DTSA, proving that a trade secret is not readily ascertainable is the plaintiff’s burden. The decision also highlights a potential complication that parties should consider when litigating parallel federal and California trade secret misappropriation claims.
Bradley Snyder, a summer associate in Morrison Foerster’s San Francisco office, contributed to this alert.
[1] Comet Techs. USA, Inc. v. XP Power, LLC, No. 23-15601, 2026 WL 2028303, --- F.4th --- (9th Cir. July 14, 2026).
[2] Id. at *4.
[3] Id.
[4] Id.
[5] Id. at *2.
[6] Id.
[7] Id.
[8] Id. at *4.
[9] Id.
[10] Id. at *1.
[11] Id. at *4.
[12] Id.
[13] Id. at *10.
[14] Id. at *4.