Invention-Theft Charges against Goodyear Revived by the Federal Circuit

by Dennis Crouch

Coda Development v. Goodyear Tire & Rubber (Fed. Cir. 2019)

Coda and Goodyear cooperated in a project to commercialize self-inflating tire technology invented by the CEO of Czech-based Coda (Hrabal).  Coda shared its information as well as functional prototypes with Goodyear representatives, including Robert Benedict.  At the meeting Benedict photographed the prototype without permission (after asking to be left alone for a moment).  All of this sharing was done under a non-disclosure agreement between the companies.  Benedict then ghosted and did not return attempted contacts from Coda.

Self-Inflating-Tire: Pause here to note that this is pretty neat technology. As a tire rolls along, its sidewalls are repeatedly squashed and then expanded in a rotating procession. That squash-expand cycle is used here to power a simple air pump that keeps pressure in the tires.

Back to the Story: One month after their meeting with Coda, Goodyear applied for a patent titled “Self-Inflating Tire Assembly” Naming Benedict and Mr. Losey as inventors.  The patent issued as U.S. Patent No. 8,042,586 “with claims covering the allegedly novel, proprietary, and confidential information Coda disclosed to Goodyear.”

Coda was clued-in to what happened at a later date from an email from a former Goodyear employee stating:

I am retired now from Goodyear and see in the news today that they have copied your SIT. Unfortunate.  I thought China companies were bad.

Coda sued, requesting to add Hrabal as inventor on the ‘586 patent and delete Benedict and Losey.  See 35 U.S.C. 256. Coda also identified eleven other Goodyear patents included confidential technology invented by Hrabal, and requested that he be added as inventor on those as well. The complaint also alleges trade secret misappropriation.

Although the story might sound sounds compelling, the district court still dismissed the complaint for failure to state a claim.  The crux of the dismissal centers on an additional piece of evidence – 2008 article published by Hrabal that, according to the district court found, disclosed the information that Coda “now claims was secret when disclosed to Goodyear in 2009.”  The district court denied Hrabal’s request to amend its complaint to provide details regarding the differences between the published article and the information taken by Goodyear.

On appeal, the Federal Circuit has vacated the dismissal — finding that Hrabal’s complaint sets out a plausible claim for correction of inventorship. In particular, the court held that the facts outlined above “allow the reasonable inference that Mr. Hrabal conceived the invention of the ’586 patent and that Messrs. Benedict and Losey did not” and that Hrabal should be considered a joint inventor.  The appellate panel identified the lower court’s error as procedural. Namely, in its motion-to-dismiss, the court considered evidence outside of the pleadings (the 2008 publication), but did not permit Hrabal to present explanatory evidence. Under motion-to-dismiss rules, [i]f a court does consider material outside the pleadings, the motion to dismiss must be treated as a motion for summary judgment under Rule 56 and all parties must be given a reasonable opportunity to present all material pertinent to the motion.” See Fed. R. Civ. P. 12(d).

In this case, the parties “hotly” dispute whether the 2008 publication actually discloses the alleged novel trade secrets – and so a judicial conclusion is inappropriate at the pleadings stage.

The district court erred in considering the Hrabal article for this purpose without converting Defendants’ motion to dismiss into one for summary judgment and giving Plaintiffs a reasonable opportunity to present all pertinent material.

On remand, the district court will need to reconsider these issues and must also permit the plaintiff to amend its complaint in order to clarify the trade secrets and inventive elements at issue.  “We …. aware of no reason why they should not be permitted to file their proposed amended complaint on remand.”

= = = =

The district court had also dismissed the trade-secret claims as time-barred based upon the Ohio statute of limitations that requires a claim filed “within four years after the misappropriation is discovered or by the exercise of reasonable diligence should
have been discovered.” Ohio Rev. Code § 1333.66.  On appeal, the court also found substantial factual dispute – making this an issue not appropriate for dismissal on the pleadings.

Defendants ask us to infer, from the complaint itself, that Plaintiffs should have begun investigating in 2009 and that, had they done so, they would have discovered the application leading to the ’586 patent as of its publication
date eighteen months later. Defendants argue that the only reasonable inference to be drawn is against Plaintiffs. We disagree. Plaintiffs might have assumed Goodyear lost interest in the technology, given its previous failed investment. Or they might have thought that Goodyear would honor the nondisclosure agreement.

On remand, the court must allow this issue to proceed past the pleadings stage.

16 thoughts on “Invention-Theft Charges against Goodyear Revived by the Federal Circuit

  1. 5

    Shrug, I was responding to the sentence, not the author.

    As to the rest: Do I have to hold up a rhetorical sign?

    1. 5.1

      ooops. This was meant to be under 1.1.1.1.1

    2. 5.2

      You certainly may have to hold up such a sign, as the Sheldon sarcasm sign clearly is not the same as some (unfathomable) “rhetorical” sign.

      As I noted as well, the actual questions you put forth hardly sound in being rhetorical.

      Lastly, as I first indicated, you responded to MY post, even as now you want to backtrack and indicate that you were responding only to the article.

      As I noted, you should have just posted a new post. Instead, you not only goofed – you attempted to defend your goof instead of simply saying “thank you, I made a mistake.”

      Not sure why you now want to shrug this off instead of learning from your mistake…

      1. 5.2.1

        Maybe YOU should have used quotation marks.

        1. 5.2.1.1

          why? My statements are direct and I am not the one being confused as to the application of rhetoric in the sense of a rhetorical question.

          You just cannot help yourself from digging deeper and deeper, can you Les?

          You made a mistake. Just admit it and move on (you are just not going to be able to shift YOUR mistake to me).

  2. 4

    If the 2008 publication actually discloses the alleged novel trade secrets, shouldn’t such disclosure invalidate the patents as prior art references?

    1. 4.1

      Does the year grace period apply?

      1. 4.1.1

        Certainly.

        And since this is pre-AIA, there may even be a “swearing behind” option….

        That being said, the bigger problem may well be that a publication would remove the Trade Secret causes of action (and thus, the item IS — or was — hotly contested).

  3. 3

    It is worth noting that not only “inventions” (patentable) can be stolen, but also trade secrets can be stolen.

    And trade secrets very well may not be patentable – due in part because such are not novel nor non-obvious. The “worth noting” stems at least in part from those that clamor that patents for “over-the-top” obviousness are the “worst things ever” while criminal charges for theft of things that cannot even rise to patent levels are the law. (what does that portends for those wanting the over-the-top obviousness standards…?)

    This is NOT to say that patents should be granted for what the law concerning obviousness actually dictates. But there is a nuanced message here that those who deal with innovation (and trade secrets) should be able to grasp as it comes to the views of anti-patent “hawks.”

  4. 2

    Although alleged “stolen inventions” are quite rare, what is interesting is that when they exist one AIA statutory recourse seems more likely to succeed than another. Here “plaintiffs’ complaint sets forth thirteen correction-of-inventorship claims under 35 U.S.C. § 256..” That will now on remand here get either a proper SJ hearing or a trial, and a trial is far more likely given disputed facts. In contrast, of the two AIA “Derivation” proceedings, only one has ever even been declared, presumably due to their far more stringent petition requirements.

    1. 2.1

      Fed. Cir. decisions of several years back on the wrong folks getting a patent on someone else’s invention which they were informed of, of which I believe I recall [but don’t want to spend the time looking up], include one re a J&J patent on a tape used to make casts for broken bones, and another on a motorcycle structural design by a private U.S. inventor versus a major Japanese motorcycle company. As I recall in the latter decision Judge Newman even also required assignments of the foreign patent rights? Someone with a better memory may be able to provide case cites. But did anyone ever get properly nailed for for filing a perjured application inventorship oath?

  5. 1

    Pause here to note that this is pretty neat technology. As a tire rolls along, its sidewalls are repeatedly squashed and then expanded in a rotating procession. That squash-expand cycle is used here to power a simple air pump that keeps pressure in the tires.

    Sounds like an obvious use of a Law of Nature to me….

    1. 1.1

      Sounds like a terrible idea to me as it requires the tire to be manufactured with a hole in it for to put the air outlet of the pump. How many miles before the seal between the outlet and the tire wears out so the tire is leaking faster than the pump pumps. Also there is the issue of unbalancing the tire. Still further, rain, ice and snow will probably gum up the works. How many puddles do you have to drive through before your pumping water into your tire?

      1. 1.1.1

        Les,

        Each and every one of your questions has nothing to do with my post.

        You should have simply posted your questions as a new thread-starting post….

        1. 1.1.1.1

          1. I was responding to your first sentence. So, my questions have everything to do with your post.

          2. My questions were rhetorical. You need not answer them.

          1. 1.1.1.1.1

            That entire first paragraph was NOT mine.

            I only had a one line response to the Article’s paragraph that I put there in order to anchor MY one line.

            There was no indication whatsoever that your questions were meant to be rhetorical.

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