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Here’s What Happened:
Zunum Aero, Inc. developed aerospace technology for hybrid-electric aircraft and protected aspects of it as trade secrets. Zunum got Boeing Company’s attention. The parties entered into an investment agreement. The investment agreement contained a confidentiality clause. The agreement also restricted Boeing’s use of Zunum trade secrets to only what would be needed to perform the agreement.
Boeing used the trade secrets despite the agreement. At some point, an aircraft supplier, Safran, became interested in investing in Zunum. Possibly fearing that it was going to lose its goose that lays golden eggs, Boeing interfered with the Safran negotiations.
Zunum sued Boeing. A jury found that Zunum’s favor and returned a $81.2 million verdict. The district court granted Boeing’s motion for a judgment notwithstanding the verdict. Zunum appealed to the Ninth Circuit Court of Appeals.
The Ninth Circuit did not mince words about how wrong the district court was in granted Boeing’s motion.
The district court believed that Zunum did not properly identify its trade secrets with specificity. The Ninth Circuit clarified that start-ups like Zunum need not define trade secrets with exact boundaries at trial. A plaintiff only needs to identify the trade secrets with sufficient specificity so the jury can conclude that the trade secrets are not generally known or readily ascertainable and that they have value. Further through expert testimony and Boeing’s internal communications, the jury had a reasonable basis to determine that Zunum’s trade secrets gave it a competitive advantage. So, the trade secret misappropriation verdict should not have been disturbed.
The Ninth Circuit also reinstated Zunum’s breach of contract for breaching the confidentiality clause and tortious interference claims for undermining Zunum’s investment negotiations with Safran.
The Ninth Circuit remanded the case back to the district court but with a twist. The case will be reassigned to another judge. Apparently on the day before the district court entered its final judgment, the judge disclosed that his wife had an investment interest in Boeing. The judge had sufficient information to know about this investment years before trial but did not disclose it. The Ninth Circuit stated, “This delayed disclosure, taken together with the district court’s consistent rulings in Boeing’s favor during and after trial, could give an objective observer reason to question the district judge’s impartiality in further proceedings.”
WHY YOU SHOULD KNOW THIS: Trade secrets can be lost two ways. First, by failing to properly identify the trade secret. As the Ninth Circuit concluded in this case, the identification need not include every detail; just enough to know what it is. Second, by failing to take sufficient steps to prevent disclosure of the trade secrets. Zunum got it right.
Cited Authority: Zunum Aero, Inc. v. The Boeing Company, et al., 24-5212 (Ninth Circuit, 2025, Unpublished Opinion).