Spartan Composites v. Signature Systems Group — Court Grants Permanent Injunction After $13M Trade Secret Verdict but Limits Scope

Background

Spartan Composites (doing business as FODS) manufactures composite trackout control mats used at construction sites to prevent mud and debris from being tracked onto public roads. In November 2025, after a four-day trial, a jury found that Signature Systems Group willfully and maliciously misappropriated three of Spartan’s trade secrets — mold designs, manufacturing specifications, and customer and business data obtained during failed acquisition negotiations — and awarded approximately $13 million in total damages: $2.3 million in disgorged profits, $570,000 in avoided development costs, $5.5 million as a reasonable royalty, $8 million in punitive damages, and $1.2 million for breach of contract.

Spartan then filed a post-trial brief seeking entry of final judgment, a permanent injunction, and resolution of overlapping damages theories.

The Court’s Holding

Double recovery eliminated. Chief Judge Mazzant held that Spartan could not stack both the $2.3 million disgorged-profits award and the $570,000 avoided-development-costs award, because the profit calculation already incorporated the savings Signature achieved by not independently developing the misappropriated technology. Following Salsbury Laboratories and Motorola v. Hytera, the court required plaintiffs to elect one theory. Spartan elected the $2.3 million disgorgement figure.

Permanent injunction granted but narrowed. Applying the Supreme Court’s four-factor eBay test, the court found all four factors satisfied: (1) Spartan suffered irreparable injury from ongoing misuse of customer lists and marketing strategy trade secrets; (2) the reasonable royalty award was inadequate to compensate for all future harm; (3) the balance of hardships tipped to Spartan since Signature had already stopped manufacturing the competing DiamondTrack product; and (4) the public interest favored protecting trade secrets.

However, the court significantly narrowed the injunction compared to what Spartan requested. Spartan had sought a broad 18-month ban on Signature selling any composite trackout products. The court limited the injunction primarily to trade secrets related to marketing strategies and customer lists, declining to impose the broader product-category ban. The court reasoned that an overbroad injunction would restrain legitimate competition beyond what was needed to protect Spartan’s trade secrets.

Key Takeaways

• Courts will not allow plaintiffs to stack overlapping trade secret damages theories. When disgorged profits and avoided development costs measure the same economic benefit, plaintiffs must elect one or the other.
• Permanent injunctions remain available after eBay in trade secret cases, but courts will tailor the scope to the specific trade secrets at issue rather than granting broad product-category bans that could restrain legitimate competition.
• The willfulness finding was critical to the $8 million punitive damages award — the jury found Signature’s misappropriation was both willful and malicious, which under the DTSA and Texas Uniform Trade Secrets Act permits exemplary damages up to twice the compensatory award.
• The case illustrates the risks of sharing proprietary information during acquisition negotiations without adequate contractual protections, as the misappropriated trade secrets were obtained during failed deal discussions.

Why It Matters

This ruling provides practical guidance for litigants navigating post-verdict trade secret remedies. The court’s elimination of overlapping damages theories and its careful narrowing of the permanent injunction demonstrate that even after a decisive jury verdict, courts will scrutinize the scope of relief to avoid overcompensation and undue restraints on competition. For companies negotiating potential acquisitions or partnerships, the underlying facts serve as a cautionary tale about sharing trade secrets during deal discussions — the protection of NDAs and confidentiality agreements is only as strong as the remedies available when they are breached.