Trade Secrets Lawsuit News: Record Filings, Verdicts, and AI Theft

Trade secret litigation is at its busiest and most expensive point in a decade. Recent trade secrets lawsuit news includes a record 1,552 federal filings in 2025, a $195 million punitive damages addition that pushed Phillips 66’s liability past $833 million, the Virginia Supreme Court throwing out a $2 billion verdict against Pegasystems, and the Federal Circuit wiping out Insulet’s $452 million win against EOFlow on statute-of-limitations grounds.¹² Behind the headlines, AI-related theft claims and the collapse of federal non-compete reform are reshaping how companies protect proprietary information.

Federal Filings Set a Record in 2025

Claimants filed 1,552 new federal trade secret cases in 2025, a 20% jump over the prior year and the highest annual total since the Defend Trade Secrets Act (DTSA) became law in 2016.¹ DTSA claims now appear in more than 80% of federal trade secret suits, and the statute reaches its ten-year anniversary in May 2026.² The Central District of California led the country with 100 newly filed suits.

Analysts have attributed the sustained growth to the rise of AI tools, higher employee mobility, and tougher competition for talent carrying proprietary knowledge from one employer to the next.³

The Biggest Recent Verdicts and Appellate Reversals

Juries awarded more than $716 million in actual damages and $510 million in punitive damages in trade secret trials between 2023 and 2025.² Four cases in particular define the current landscape.

Propel Fuels v. Phillips 66: $833 Million and Climbing

Sacramento biofuel maker Propel Fuels alleged that Houston refiner Phillips 66 took confidential financial data and business strategy shared during 2017 acquisition talks, walked away from the deal in 2018, and launched a competing renewable fuel business the next year. A California state jury in October 2024 awarded Propel $604.9 million in compensatory damages and found the misappropriation willful and malicious.⁴ On July 31, 2025, the trial court added $195 million in punitive damages, calling Phillips 66’s conduct “reprehensible” and criticizing the company for failing to use a “clean team” to wall off due diligence information from competitive strategy. With pre-judgment interest, the total judgment topped $833 million.⁵

Appian v. Pegasystems: $2 Billion Verdict Vacated

The largest trade secret verdict in Virginia history, $2.036 billion in favor of software company Appian against rival Pegasystems, is headed for retrial. On January 8, 2026, the Supreme Court of Virginia unanimously affirmed the lower appellate court’s decision to throw out the verdict.⁶ The high court found several reversible errors at trial: shifting the burden of proof on damages to Pegasystems rather than requiring Appian to show which revenues the misappropriation caused; improperly excluding Pegasystems’ own software from evidence; and barring testimony about how many people had access to Appian’s supposedly secret information.⁷ The jury’s finding that Pegasystems was liable for misappropriation was not disturbed; only damages must be retried.⁸ The case has been remanded to the Fairfax Circuit Court with no retrial date set.

Insulet v. EOFlow: $452 Million Wiped Out as Time-Barred

Insulet Corporation, maker of the Omnipod wearable insulin pump, won a $452 million jury verdict in Massachusetts federal court against South Korea-based EOFlow for willful misappropriation tied to a competing patch pump.⁹ The trial court later reduced the award to $60 million, issued a permanent injunction, and ordered patents filed with the stolen secrets to be reassigned.¹⁰

On May 28, 2026, a divided Federal Circuit panel reversed the entire judgment, ruling that Insulet’s DTSA claim was time-barred. The majority held that Insulet knew or should have known enough to sue more than three years before it filed in August 2023, pointing to EOFlow’s hiring of former Insulet engineers and public observations of the competing product at trade shows in 2018 and 2019.¹¹ Judge Prost dissented, arguing the majority had converted the DTSA’s discovery rule into a stricter “inquiry-notice” standard that “invites premature suits, because employees routinely move between companies making similar products.”¹²

Other Significant Awards

Zest Labs v. Walmart: an Arkansas jury found Walmart willfully misappropriated technology designed to keep groceries fresh, awarding nearly $223 million in combined compensatory and exemplary damages.¹³
Computer Sciences Corp. v. Tata Consultancy Services: a Texas federal jury awarded $56 million in compensatory and $112 million in punitive damages after finding TCS avoided development costs by taking CSC’s secrets. The Fifth Circuit affirmed in November 2025.¹⁴
Zunum Aero v. Boeing: aerospace startup Zunum accused Boeing of stealing hybrid-electric aircraft trade secrets. After a trial judge threw out the jury’s $81 million verdict, the Ninth Circuit unanimously reinstated it in August 2025, calling the lower court’s ruling an “abuse of discretion.”¹⁵
Versata Software v. Ford Motor: on May 22, 2026, the Federal Circuit reinstated an $82.3 million breach-of-contract award a district court had reduced to $3 and ordered a new trial on trade secret damages, finding the lower court wrongly blocked Versata’s unjust enrichment theory.¹⁶

Rulings That Are Changing How These Cases Get Fought

How Unjust Enrichment Damages Can Be Proved

Federal appeals courts have split on measuring damages when a defendant profits from stolen secrets. In the TCS case, the Fifth Circuit held that a plaintiff can recover unjust enrichment damages based on the development costs a defendant avoided, without separately proving quantifiable harm to the plaintiff. The court called any stricter requirement “divorced from the text of the DTSA.”¹⁴ That conflicts with the Second Circuit’s 2023 Syntel decision, which required proof of impact on the trade secret holder beyond the defendant’s gain.¹⁷ The split is a candidate for eventual Supreme Court review.

How Far the DTSA Reaches Abroad

The Seventh Circuit’s 2024 ruling in Motorola Solutions v. Hytera Communications held that the DTSA allows recovery based on worldwide sales when any “act in furtherance” of the misappropriation occurs in the United States. The court affirmed $135.8 million in compensatory and $271.6 million in punitive damages against Chinese manufacturer Hytera for stealing two-way radio technology.¹⁸ Hytera petitioned the Supreme Court in January 2025, arguing that marketing U.S. products manufactured abroad is not enough to trigger extraterritorial liability.¹⁹ No other circuit has addressed the question, so the Seventh Circuit’s ruling remains the leading precedent.

When Plaintiffs Must Identify Their Secrets

Courts also disagree on how specifically a plaintiff must describe its trade secrets at the start of a case. The Fourth Circuit, in Sysco Machinery Corp. v. DCS USA Corp., required identification with “sufficient particularity” at the pleading stage or face dismissal. The Ninth Circuit took the opposite approach in Quintara Biosciences v. Ruifeng Biztech, holding that the DTSA does not mandate early particularized disclosure and that general allegations suffice at pleading.²⁰ The Ninth Circuit said protective orders and phased discovery, not pre-discovery dismissals, should manage the tension between confidentiality and fairness.²¹

AI Is a New Front for Trade Secret Theft

AI-related trade secret filings surged 92% from the first half of 2025, according to one tracking report.¹

On the criminal side, a federal jury in the Northern District of California convicted former Google software engineer Linwei Ding on January 29, 2026, of seven counts of economic espionage and seven counts of trade secret theft. Prosecutors said Ding stole more than 2,000 pages of confidential information covering Google’s Tensor Processing Unit chips, GPU systems, and AI training infrastructure to benefit technology companies and government-aligned “talent plans” in the People’s Republic of China. The Department of Justice called it the first conviction on AI-related economic espionage charges. Ding faces a maximum of 15 years per espionage count and 10 years per trade secret count.²²

In the civil courts, Elon Musk’s xAI sued OpenAI in September 2025, alleging a scheme to poach employees and misappropriate trade secrets. In a different dispute, a Northern District of California court dismissed a pro se plaintiff’s DTSA claim against OpenAI after finding that developing “proprietary methodologies” through ChatGPT without contractual protections meant she had not taken reasonable measures to maintain secrecy.²³ The lesson for anyone using generative AI tools with sensitive material is direct: using a public model can defeat secrecy.

Why the Non-Compete Collapse Is Pushing Cases Into Trade Secret Court

The FTC’s April 2024 rule banning most non-competes nationwide was blocked by a federal court in Texas and never took effect.²⁴ In September 2025, the FTC moved to dismiss its own appeals, ending the effort. Under Chair Andrew Ferguson, the agency has shifted to case-by-case enforcement rather than a blanket prohibition.²⁵ President Trump signed an executive order in August 2025 rescinding the prior administration’s non-compete directive.

Non-compete restrictions have tightened at the state level even without a federal ban. Virginia expanded restrictions effective July 2026, Utah prohibited post-employment non-competes for healthcare workers, and Washington implemented a near-total ban. Florida moved the other direction, enacting employer-friendly restrictive covenant legislation in July 2025.²⁶

Legal commentators have observed that as non-competes become harder to enforce in many states, companies are turning to trade secret claims to protect proprietary information when employees leave. Trade secret suits rarely stand alone; they frequently accompany breach-of-contract and other claims tied to employment relationships.²⁷

Courts Are Pushing Back on Weak and Overbroad Claims

Awards are rising, but courts in 2025 showed increasing skepticism toward plaintiffs who define their secrets too loosely or fail to take basic protective measures. The Fourth Circuit dismissed claims over rotary die-cutting machines in Sysco Machinery v. DCS USA after the plaintiff tried to classify its entire business as a trade secret, and the court held that depositing unredacted technical drawings with the U.S. Copyright Office “extinguished” their trade secret status. A Fifth Circuit court rejected a management consultant’s claims as “vastly overbroad” because the plaintiff had labeled large portions of a CRM database as proprietary without specific identification. In the Tenth Circuit, a claim over a customer list failed because the company had not marked documents as confidential or restricted access when sharing them with colleagues.²⁸

The pattern is consistent across these rulings. Courts want companies to identify what their trade secrets actually are with granular specificity and to show concrete steps taken to protect them. Vague assertions and after-the-fact labeling are increasingly insufficient, even as the dollar figures at the far end of successful cases keep climbing.

1
CRA. Trade Secret Litigation Watch: February 2026
2
LexisNexis. Lex Machina 2026 Trade Secret Litigation Report
3
Steptoe. Trade Secret Litigation Shows No Signs of Slowing
4
Reuters. Phillips 66 Hit With $800 Million Penalty in Biofuel Trade Secrets Case
5
PR Newswire. Propel Fuels Is Awarded $195 Million Additional Exemplary Damages
6
Greenberg Traurig. Virginia Supreme Court Orders New Trial in $2 Billion Trade Secrets Case
7
Blanking Ship and Keith. Supreme Court of Virginia Affirms New Trial Order in $2B Trade Secrets Case
8
Holland and Knight. Virginia High Court Upholds Reversal of Trade Secret Damages Award
9
Fierce Biotech. Insulet Nets $452M in Damages From Insulin Pump Rival EOFlow
10
Jones Day. Trade Secret Litigation Trends in Life Sciences
11
U.S. Court of Appeals for the Federal Circuit. Insulet Corp. v. EOFlow, Co. Ltd., No. 25-1807
12
Patently-O. The DTSA Discovery Rule After Insulet v. EOFlow
13
Finnegan. Top Trade Secrets Decisions of 2025
14
Faegre Drinker. Fifth Circuit Provides Guidance on Damages and Injunctive Relief Under the DTSA
15
Hagens Schiffer Gallagher LLP. Ninth Circuit Reinstates Jury Verdict Against Boeing
16
U.S. Court of Appeals for the Federal Circuit. Versata Software, LLC v. Ford Motor Company, No. 24-1140
17
IPWatchdog. Trade Secret Misappropriation Lessons From Computer Sciences Corp. v. Tata Consultancy Services
18
Justia. Motorola Solutions, Inc. v. Hytera Communications Corporation Ltd., No. 22-2413
19
Faegre Drinker. Hytera Petitions Supreme Court to End DTSA’s Extraterritorial Reach
20
DLA Piper. Federal Courts Split on Trade Secret Identification Requirements Under the DTSA
21
American Bar Association. Federal Court Shields Trade Secret Plaintiffs From Early Disclosure
22
U.S. Department of Justice. Former Google Engineer Found Guilty of Economic Espionage and Theft of Confidential AI Technology
23
Foley Hoag. Litigating Trade Secret Claims Focused on Generative AI
24
American Bar Association. Recent Developments in Mobility, Covenants, and Trade Secrets
25
Seyfarth Shaw. Federal Non-Compete Legislation Update
26
Epstein Becker Green. Trade Secrets and Employee Mobility
27
LexisNexis. Tracking Trends in Trade Secret Litigation
28
Greenberg Traurig. Trade Secrets Year in Review 2025