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A $40 million trade-secret verdict was reversed and sent back for a new trial because the jury was instructed to put the burden of proof on the wrong party.
In Comet Technologies USA, Inc. v. XP Power, LLC, decided July 14, 2026, the Ninth Circuit held that Comet, not XP, had the burden of proving that its alleged trade secrets were not readily ascertainable through proper means under the federal Defend Trade Secrets Act (DTSA). The case arose after three former Comet engineers took thousands of confidential files when they left for XP. Within nine days, XP had complete product designs and a development plan.
The court’s decision highlights an important distinction: evidence that a defendant took and used confidential information does not necessarily establish that the information qualifies as a trade secret. Under the DTSA, the plaintiff must also prove that the information was not readily ascertainable through lawful means.
For Illinois businesses, the distinction may matter because, unlike the DTSA, the Illinois Trade Secrets Act (ITSA) does not expressly require a plaintiff to establish that the information was not readily ascertainable through proper means.
What Must a Plaintiff Prove Under DTSA
Under the DTSA, a plaintiff must show that the information derives independent economic value from not being generally known or readily ascertainable through proper means. The plaintiff must also have taken reasonable measures to protect the information’s secrecy. In practical terms, the plaintiff must be prepared to show not only what the defendant did, but why the information could not readily have been obtained or reconstructed through lawful means.
Could the information have been developed independently? Reverse-engineered from an available product? Assembled from patents, technical publications, or ordinary industry knowledge? Those questions concern the status of the information itself, not merely the defendant’s conduct.
This distinction mattered in Comet. The downloaded files and rapid product development supported an inference that XP used Comet’s information. But that evidence did not establish that the information could not have been obtained through proper means, particularly in light of the conflicting expert testimony about what a competitor could have learned or developed through proper means.
The jury, however, was instructed that XP had to establish that Comet’s information was readily ascertainable through proper means. The Ninth Circuit held that this placed the burden on the wrong party. Because Comet bore the burden of establishing that its information was not readily ascertainable, the erroneous instruction required a new trial
How Does Illinois Differ?
The ITSA asks whether the information is sufficiently secret to derive economic value from not being generally known and whether the owner took efforts that were reasonable under the circumstances to maintain its secrecy or confidentiality. The statutory inquiry therefore focuses on the information’s secrecy and the owner’s efforts to maintain that secrecy, rather than expressly requiring the plaintiff to prove the absence of ready ascertainability as a separate element.
That does not mean, however, that the ease with which information could be obtained or duplicated is irrelevant under Illinois law. Illinois courts have recognized that the ease or difficulty of properly acquiring or duplicating information can bear on whether the information is sufficiently secret to qualify as a trade secret. Thus, evidence that a competitor could readily obtain or recreate the information may still undermine an Illinois claim, even though the ITSA does not use the DTSA’s “readily ascertainable through proper means” language.
What Should Companies Do Before a Trade Secret Dispute?
Whether pursuing a claim under the DTSA or the ITSA, a company is best served by preserving evidence while a trade secret is being developed, not trying to reconstruct that evidence after an employee leaves or a competitor launches a similar product. The strongest record will show both why the information is valuable and secret and the work required to develop it.
Companies should consider:
- Identifying important trade secrets with precision, rather than relying on broad labels such as “proprietary process.”
- Preserving development records, testing results, iterations, and failed designs that show the time, effort, and resources required to reach the final result.
- Maintaining dated records of relevant public sources, commercially available products, and development tools that existed when the information was developed, helping establish what a competitor could and could not have obtained through lawful means at the time.
- Updating confidentiality and AI-use policies so that the company’s actual practices reflect how it expects to protect its information.
Comet does not mean the DTSA should be avoided or that an Illinois claim will necessarily fare differently. It shows instead that evidence of misappropriation is only part of the case. Businesses should be prepared to show both what the defendant took and why it gave the defendant a shortcut that lawful methods could not readily replicate.
