TRADE SECRET DAMAGES: UNJUST ENRICHMENT AS AN EQUITABLE REMEDY
For many trade secret litigants, unjust enrichment is the difference between a modest and potentially mammoth recovery. The Defend Trade Secrets Act (DTSA) authorises recovery for “any unjust enrichment caused by the misappropriation of the trade secret that is not addressed in computing damages for actual loss”. In practice, that measure often captures the defendant’s avoided development costs or other benefits derived from the misappropriation. Where a plaintiff’s provable loss is limited – for example, a start-up with thin profits, or a licensor whose contract damages are capped – unjust enrichment may represent the most significant component of the damages claim.
The statute, however, offers little guidance about the principles that govern an unjust enrichment award. Congress placed unjust enrichment alongside actual loss and reasonable royalty within the DTSA’s “award” provision, suggesting that it operates as a remedy in law. But unjust enrichment is historically an equitable remedy, rooted in principles of restitution and disgorgement, and subject to equitable principles. It is unclear from the statute whether these principles are incorporated into the DTSA. That is, does the DTSA adopt unjust enrichment as a full-fledged equitable remedy, bringing its defences and judicial discretion along with it, or does it use the term only as shorthand for an otherwise legal remedy? The question was left to the courts.
At least one court has chosen to read that equitable lineage into the DTSA, particularly where the relief sought resembles an accounting or disgorgement of profits rather than a conventional damages award.
Oct-Dec 2026 issue
MoloLamken LLP