The Federal Circuit didn't seem to be buying Versata Software's argument Thursday morning that a Michigan federal judge made a big mistake by clearing a nearly $105 million trade secrets and breach of contract verdict it won against Ford and replacing it with just $3 in damages.

The panel, however, seemed more open to the idea that the lower court committed a legal error by blocking Versata Software Inc. from seeking unjust enrichment damages on its trade secrets claim. U.S. Circuit Judge Todd Hughes cut right to the issue, telling Versata: "I know that's not where you want to begin, but it's where I want to begin."

He said: "Here's where I'm struggling with you on this unjust enrichment stuff — hypothetically, let's assume I agree with you that the district court erred as a matter of law in excluding unjust enrichment as a possible theory. But also hypothetically, I agree with the district court's exclusion of your expert witness under Daubert on that issue because his testimony was speculative."

In that case, Versata wins on one claim and loses on the other, Judge Hughes said. "Where does that leave us?" he asked the software company.

Versata's answer to that was "with a remand."

Judge Hughes said he'd been "struggling with whether, honestly, the error, if there is error, was harmless or not."

Once Ford Motor Co. was up to bat, Judge Hughes pressed the carmaker — which Versata has accused of reverse engineering software it previously paid the company for — on whether the lower court had messed up by saying "unjust enrichment is inappropriate when there's licensing."

"I know you don't want us to read it that way, but if you read it that way, that's wrong as a matter of law, isn't it?" Judge Hughes said. "That you can't have an unjust enrichment theory in a licensing scenario."

Judge Hughes said he understood "you think that's not what he decided, but if that's what he decided, is it wrong?" After finding counsel's answer unsatisfactory, he pressed further, saying: "You need to take a position on this thing."

Also on the panel was U.S. Circuit Judge Kimberly A. Moore. She was more interested in the contract damages issue. Ford says the judge was wrong to say that the jury hadn't had enough information to calculate its damages after its expert witness was blocked.

"So you're saying, look, there wasn't an expert, but the documents were provided to the jury and the lawyer walked the jury through what they should glean from the documents," Judge Moore said. "Is that the idea?"

When the arguments got into the nitty-gritty of the supporting documents, U.S. Circuit Judge Richard G. Taranto asked whether there was "testimony about all this, or did you expect the jury to just dig through the documents and make this determination on their own?"

When the trial between Ford and Versata came to a head at the tail end of 2022, a jury sided with Versata and awarded the software company $104.65 million after finding Ford had misused confidential information to reverse engineer Versata's software for its own commercial use, and without a license. Of the $104 million total, $82.26 million was for breach of contract and $22.39 million was for trade secrets violations.

Neither company was happy with the result. Ford was displeased with having to pay damages at all, and Versata — which filed counterclaims in response to Ford seeking a declaration it had done nothing wrong — says the court "limited" the damages theories it was allowed to present, and therefore how much it was able to collect.

But things took a turn for the worse for Versata when the judge overseeing the case wiped away the damages and left it with only $3 in damages, saying that the jury hadn't had enough information to properly calculate damages.

Now each side is hoping the Federal Circuit will settle the matter in its favor.

U.S. Circuit Judges Todd Hughes, Kimberly A. Moore and Richard G. Taranto sat on the panel for the Federal Circuit.

Versata is represented by Jeffrey Lamken of MoloLamken LLP.

Ford is represented by Jessica Ellsworth of Hogan Lovells.

The case is Versata Software Inc. v. Ford Motor Co., case number 24-1140, in the U.S. Court of Appeals for the Federal Circuit.