IP Law Daily, TRADE SECRETS—E.D. Mich.: Jury award of $105 million against Ford Motor Co. over trade secrets tossed, (May 2, 2023)

By Brian Craig, J.D.

The lack of evidence forced the jury to rest its damages awards on nothing more than speculation.

In a trade secrets and breach of contract case against Ford Motor Company over automotive configuration software, the federal district court in Detroit has vacated a jury verdict that awarded Versata Software Inc. $104.6 million for misappropriation of trade secrets and breach of contract. In granting Ford’s motion for judgment as a matter of law to toss the jury damages award, the court concluded the lack of evidence forced the jury to rest its damages awards on nothing more than speculation. The court awarded the Texas-based software company nominal damages of $3 for breach of contract against the giant vehicle manufacturer (Versata Software, Inc. v. Ford Motor Co., May 1, 2023, Leitman, M.).

Ford and Versata entered into a contract in 2004 for a customized automotive configuration software program developed by Versata. Before the contract expired in 2014, Ford began to develop its own automotive configuration software program. The parties attempted to negotiate an extension, but no renewal agreement was formed. After the contract expired in 2014, Ford implemented its own software program. Versata filed suit against Ford and brought breach of contract and trade secret misappropriation claims. The case proceeded to trial, and a jury awarded Versata $82,260,000 in breach of contract damages and $22,386,000 in trade secret misappropriation damages. Ford filed a post-trial motion for judgment as a matter of law.

Breach of contract. The court first concluded that Versata failed to present sufficient evidence of damages to support the breach of contract claims. Under Michigan law, a plaintiff alleging breach of contract must prove the measure of damages with reasonable certainty. In several key respects Versata’s damages case was supported by no evidence. There was no testimony as to the amount of the claimed damages, no documents reflecting the calculation or amount of the damages, and no evidence concerning costs and expenses. The contract damages case crossed the line from uncertainty to mere speculation, the court found. The court reduced the amount to $3 in nominal damages for breach of contract, with $1 in nominal damages for each of the three breaches.

Misappropriation of trade secrets. The court also concluded that Versata failed to present sufficient evidence of damages to support the jury verdict for misappropriation of trade secrets. The court found that while Versata presented sufficient evidence to support the jury’s finding of liability through testimony, Versata failed to present sufficient testimony to support damages. Other courts have held that a jury’s award of damages cannot be based on speculation and guesswork. The court instructed the jury that in order to return a properly-supported award of trade secret damages, the jury needed proof as to how long it would have taken Ford to develop any trade secret that Ford misappropriated.

As with the breach of contract claim, the lack of evidence presented by Versata forced the jury to rest its damages awards on nothing more than speculation. Versata failed to calculate damages on a trade-secret-by-trade-secret basis and instead used an all-or-nothing damages calculation. The jury had no way to reliably determine how long it would have taken Ford to develop the three trade secrets that Ford misappropriated. Under these circumstances, any development-time figure used by the jury would necessarily have been pure speculation. Without that evidence, there was no reliable foundation for the jury’s award of trade secret damages. Therefore, the court granted Ford’s motion and vacated the jury verdict award.

The Case is No. 2:15-cv-10628-MFL-EAS.

Attorneys: Matthew R. Carter (Winston and Strawn LLP) for Versata Development Group, Inc. Frank A. Angileri (Brooks Kushman PC) for Ford Motor Co.

Companies: Versata Software, Inc.; Trilogy Development Group, Inc.; Trilogy, Inc.; Ford Motor Co.

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