Versata v. Ford: Trade Secret Damages Are Not Limited to Prior License Fees

A company can spend years paying to use valuable software, decline to renew the license, and then face a trade-secret suit after launching an internal replacement. If liability is established, are damages capped by the price the parties previously negotiated?

The Federal Circuit’s modified opinion in Versata Software, LLC v. Ford Motor Co. says no—not as a categorical rule. The opinion, issued May 22 and modified September 10, 2026, holds that both the federal Defend Trade Secrets Act (DTSA) and Michigan’s trade-secret statute permit a plaintiff to pursue unjust-enrichment damages. A prior licensing relationship may be powerful evidence, but it does not automatically confine recovery to a reasonable royalty calculated from old license fees.

The decision matters beyond software. Trade secrets often move through commercial relationships—licenses, development agreements, vendor engagements, joint ventures, and technical evaluations. Versata shows why damages strategy and contract design should be considered before a relationship ends, not after litigation begins.

How the Versata-Ford dispute developed

Versata developed two pieces of software for Ford: Automotive Configuration Manager (ACM), used in vehicle configuration, and Materials Cost Analytics (MCA). Beginning in 2004, Versata licensed the software to Ford under a Master Subscription and Services Agreement, or MSSA, and provided related support services.

When the parties could not agree on an extension in 2014, Ford did not renew. It instead released its own manufacturing-configuration software, which it had developed while licensing Versata’s software. Ford sought a declaration that it had not infringed Versata’s intellectual-property rights or misappropriated its trade secrets. Versata counterclaimed under the DTSA, the Michigan Uniform Trade Secrets Act (MUTSA), and Michigan contract law.

Versata alleged that ACM contained three interdependent “combination” trade secrets called Grid, Buildability, and Workspaces. A jury found that Ford misappropriated those three trade secrets and breached the MSSA, but it rejected Versata’s claim concerning the separate MCA trade secret. The jury awarded approximately $22.4 million for trade-secret misappropriation and $82.26 million for breach of contract.

The district court later reduced the trade-secret award to zero and the contract award to $3. On appeal, the Federal Circuit affirmed trade-secret liability, vacated the trade-secret damages judgment, ordered a new damages trial, and reinstated the $82.26 million contract award.

The central damages holding: licensing history is not necessarily the ceiling

The district court had excluded Versata’s original expert approach and required any trade-secret damages model to be tied to the parties’ licensing history. It allowed one reasonable-royalty model based solely on that history, but excluded two other models because they included additional value Ford allegedly obtained by using the trade secrets.

The Federal Circuit held that this categorical restriction rested on an erroneous view of the law. The DTSA’s civil-remedies provision, 18 U.S.C. § 1836(b)(3)(B), permits actual-loss damages and unjust enrichment caused by the misappropriation that was not already counted in actual loss. In lieu of other damages methods, it also permits liability measured by a reasonable royalty for unauthorized disclosure or use. The Michigan statute contains materially similar remedies language.

That menu matters. A royalty asks what price the parties might have negotiated for authorized use. Unjust enrichment asks a different question: what benefit did the defendant obtain because of the misappropriation? Depending on the proof, that benefit may include avoided research expense, productivity gains, accelerated development, or other measurable savings. A historical license fee can inform the analysis without answering it completely.

The court therefore remanded for a new trial on trade-secret damages and directed the district court to reconsider the two royalty models it had excluded for reasons tied to the licensing-only limitation.

What the opinion does not decide

Versata does not hold that every trade-secret plaintiff may recover all development savings or every dollar of alleged business benefit. Nor did the Federal Circuit reinstate the jury’s $22.4 million trade-secret award. The court ordered a new damages trial.

That distinction is critical. The statute requires unjust enrichment to be caused by the misappropriation, and it prohibits counting the same amount again if it is already included in actual-loss damages. Damages evidence must also satisfy the ordinary requirements governing expert testimony and proof.

The district court had raised concerns about apportionment and the reliability of Versata’s expert data. The appellate court corrected the threshold legal error that barred unjust-enrichment damages, but it did not erase the need to connect a damages model to the specific secrets that were actually misappropriated. Here, for example, the jury found misappropriation of three ACM trade secrets but not the MCA trade secret. A damages model covering benefits attributable to both products could overreach unless it separates the protected contribution.

Building a defensible trade-secret damages case

The practical lesson is that damages work should begin alongside liability analysis. A plaintiff should identify the protected information with precision, document how the defendant allegedly used it, and trace the economic benefit of that use. Broad claims about the value of an entire product are vulnerable when the asserted secrets cover only certain functions or combinations.

Connect the benefit to the misappropriation

Avoided-cost and productivity models require a causal bridge. Evidence may include project plans, internal budgets, engineering estimates, development timelines, source-code analysis, and testimony showing which work the defendant did not need to perform because it possessed the secret. The value of an entire replacement system is not automatically the value of the misappropriated information.

Choose the correct time period

The relevant benefit may not last forever. Independent development, public disclosure, obsolescence, or the time needed to reverse engineer lawful inputs can affect the duration of any head-start advantage. A model should explain why its start and end dates correspond to the proven conduct.

Apportion public and protected contributions

A combination can qualify as a trade secret even if some elements are known. But a damages expert still needs to isolate the value of the protected combination from public features, the defendant’s independent work, unrelated modules, and ordinary support or maintenance services. Apportionment makes the theory more credible and helps prevent a windfall.

Prevent double recovery

The DTSA permits actual loss plus unjust enrichment only to the extent the enrichment was not already accounted for in the loss calculation. When contract and trade-secret claims travel together, the same discipline is essential. Counsel and experts should identify overlaps among lost profits, unpaid license value, avoided costs, and contract damages before presenting the case to a jury.

Why the reinstated contract award matters too

The Federal Circuit separately reinstated the jury’s $82.26 million contract award. Applying Sixth Circuit standards and Michigan law, the court concluded that the jury had a discernible, evidence-based path to its number. Trial evidence included multiple historical annual license figures, the MSSA and a later addendum, expert testimony distinguishing the base license from support and maintenance, and an explanation of the relevant 7.5-year period.

The holding is tied to the record and applicable Michigan law; it is not a universal formula for contract damages. Still, it illustrates the commercial importance of maintaining clean licensing records. Agreements, addenda, renewal proposals, product allocations, and service-fee breakdowns can become the best evidence of value years later.

For businesses managing licensed technology, IP licensing strategy should address more than price. Use restrictions, confidentiality duties, employee and contractor access, return or destruction obligations, transition assistance, audit rights, and post-termination development should be drafted with a possible separation in mind. Ambiguity at the end of a relationship often becomes expensive evidence at trial.

A second lesson for combination trade secrets

Ford also argued that Versata had to prove Ford knew the specific elements of each asserted combination trade secret at the time of disclosure or use. The Federal Circuit rejected that proposed heightened requirement. It explained that neither the DTSA nor MUTSA demands knowledge of every exact element or “atom” of a combination trade secret.

That does not relieve a plaintiff of proving a protectable trade secret, disclosure or use, the required knowledge or duty, and causation. The evidence in Versata included manuals, technical documents, presentations, emails, onsite discussions, the software itself, and testimony that the combinations were disclosed to Ford employees with relevant technical expertise. The court found that evidence sufficient to support the liability verdict.

Companies therefore need more than a label saying “confidential.” Their protection program should show what information is restricted, who receives it, why access is necessary, and what obligations govern use. Those operational safeguards are central to broader intellectual-property protection, whether the business ultimately relies on trade secrecy, patent protection, or a coordinated approach.

Practical takeaways for technology owners and licensees

For a trade-secret owner, Versata supports evaluating more than prior royalty rates. The damages theory should reflect the statutory remedy that fits the evidence, while remaining carefully apportioned and grounded in reliable data. Owners should preserve contemporaneous evidence of development cost, implementation time, customer value, and the measures used to maintain secrecy.

For an accused party, the opinion highlights where to focus the defense. Test whether the plaintiff has linked the claimed benefit to the particular secrets found misappropriated; challenge unsupported time periods, stale inputs, and product-wide assumptions; identify independent development; and scrutinize overlap among damages categories.

For both sides, the best protection may begin before any dispute. A thoughtful agreement and disciplined information-handling process can define authorized use, establish an evidentiary record, and reduce uncertainty if the relationship ends. Businesses sharing technology with potential partners or buyers should also understand how NDAs and staged disclosures fit into that process.

The bottom line

Versata v. Ford rejects a one-size-fits-all cap on trade-secret damages. Prior license fees remain relevant, but the DTSA expressly allows proof of unjust enrichment caused by misappropriation and not already captured in actual loss. Winning that recovery still depends on causation, apportionment, reliable proof, and avoiding double counting.

If your business is licensing valuable technology, preparing to end a development relationship, or evaluating suspected misuse of confidential information, contact Tucker Law to assess the agreement, evidence, and enforcement strategy before the record becomes harder to reconstruct.

This article is for general informational purposes and is not legal advice. Outcomes depend on the governing law and the specific facts and evidence.