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Federal Circuit Determines That Profit Disgorgement is a Matter Exclusively for the Court, Not the Jury

Article by Heath Coffman

Generally, there are three primary types of damages of damages in a trade secrets case: (1) lost profits, (2) defendant’s profits, and (3) a reasonable royalty. The Federal Circuit in Texas Advanced Optoelectronic Sols., Inc. v. Renesas Elecs. Am., Inc., No. 2016-2121, 2018 WL 2011463 (Fed. Cir. May 1, 2018) explores who—the judge or the jury—can award defendant’s profits. In Texas Advanced Optoelectronic, defendant argued the court erred in relying on the jury’s verdict on profit disgorgement because it profit disgorgement was an equitable remedy for the court, not the jury, to award. The Federal Circuit, which had already vacated the trial court’s disgorgement award on different grounds, decided to take the issue before remand. In doing so, the court undertook a lengthy analysis of the Seventh Amendment and determined that when the Seventh Amendment was enacted in 1791, there was no profit disgorgement remedy then. Therefore, plaintiff had no right to a jury a decision on its request for disgorgement of defendant’s profits as a remedy for trade secret misappropriation. Such determinations are a matter for the court only.