IP Law Daily Purported developers of self-inflating tire technology plausibly stated correction-of-inventorship claims
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Friday, February 22, 2019

Purported developers of self-inflating tire technology plausibly stated correction-of-inventorship claims

By Thomas Long, J.D.

Goodyear and R&D personnel could have collaborated with the developers on the technology and could have failed to include the plaintiff company’s CEO as an inventor on 12 patents. Trade secrets claims against Goodyear were not time-barred, on the pleadings.

Two Czech technology development companies and their CEO plausibly stated correction-of-inventorship claims with respect to 12 Goodyear patents related to self-inflating tire (SIT) technology, the U.S. Court of Appeals for the Federal Circuit has determined, vacating a district court’s dismissal of the technology developers’ complaint. The allegations allowed reasonable inferences that Goodyear used proprietary information that had been revealed to them under the terms of a nondisclosure agreement, and had obtained the patents without naming the CEO—who purportedly had conceived of the technology at issue—as either sole or joint inventor on the patents. In addition, the district court erred in dismissing state-law trade secrets misappropriation claims on statute of limitations grounds because it could not be determined on the pleadings that the plaintiffs reasonably should have realized that "something might have been amiss" when a Goodyear employee informed them that Goodyear was continuing to work on SIT technology after collaboration efforts between the parties had ceased (CODA Development s.r.o. v. Goodyear Tire & Rubber Co., February 22, 2019, Prost, S.).

Technology at issue. Plaintiff Frantisek Hrabal—CEO of co-plaintiffs CODA Development s.r.o. and CODA Innovations s.r.o. (collectively "Coda")—allegedly invented certain SIT technology in 2008. General Motors became interested in the technology in 2008. On General Motors’ request and with Coda’s consent, Goodyear contacted Coda and requested a meeting. Before the meeting, the parties executed a nondisclosure agreement restricting use of disclosed information to cooperation regarding the development of SIT technology. Coda and At their first meeting, in January 2009 at a facility near Frankfurt, Germany, Coda shared certain confidential proprietary information with Goodyear, including information regarding the placement of the tire’s pump tube, the design of the pressure management system, the efficiency of the leakage compensation system, and the air passageway/interface between the exterior and interior of the tire. Although some Goodyear representatives expressed skepticism about Coda’s technology, Coda addressed these viability concerns at the meeting, and the parties agreed to continue discussions.

Coda and Goodyear met for a second time in June 2009 in Prague. Coda allowed Goodyear to examine a functional prototype of Coda’s SIT technology. Goodyear’s research and development head for the SIT project, defendant Robert Benedict, requested that he and his team be allowed to spend some time alone with the prototype. Benedict allegedly photographed the prototype without permission.

Coda attempted to restart communications with Goodyear in November 2009, but Benedict stated that a meeting would be "premature" at that time. In December 2009, a member of Benedict’s team contacted Coda to ask about the status of its SIT technology in preparation for an internal Goodyear meeting. This employee allegedly revealed to Coda that Coda’s prototype matched up with Goodyear’s criteria but that Benedict had been evasive about the matter. That month—unbeknownst to Coda—Goodyear applied for a patent titled "Self-Inflating Tire Assembly." The application was issued as U.S. Patent No. 8,042,586 ("the ’586 patent") on October 25, 2011, and named Benedict and co-defendant Robert Allen Losey as the inventors. In September 2012, the Goodyear employee who had contacted Coda in 2009—no longer with Goodyear—contacted Coda again and informed Coda that Goodyear had "copied you SIT." Goodyear allegedly obtained 11 other patents covering various components of SIT systems between 2012 and 2015. According to Coda, these patents had claims covering the novel, proprietary, and confidential information that Coda had disclosed to Goodyear.

District court proceedings. Coda and Hrabal sued Goodyear, Benedict, and Losey on August 9, 2015, asserting two correction-of-inventorship claims concerning the ’586 patent—one to add Hrabal as an inventor, the other to remove Benedict and Losey. The complaint also included claims seeking to add Hrabal as an inventor on the other 11 Goodyear patents and a claim for misappropriation of trade secrets in violation of Ohio law. The district court dismissed the complaint after determining that Hrabal had publicly disclosed the technology at issue in a 2008 publication, before the meetings with Goodyear took place; that Hrabal failed to plausibly assert that he was the sole inventor of the subject matter of the ’586 patent; that he failed to allege facts to establish his contributions to the 11 allegedly jointly invented patents or that the parties "collaborated" on the covered inventions; and that the trade secrets claim was barred under Ohio’s four-year statute of limitations. Coda and Hrabal requested leave to replead; this request was denied. Coda and Hrabal appealed.

Correction of inventorship. The Federal Circuit pointed out that 35 U.S.C. §256 addresses two types of inventorship errors—misjoinder and nonjoinder. Misjoinder is the error of naming a person as an inventor who is not an inventor; nonjoinder is the error of omitting an inventor. Claims of misjoinder and nonjoinder can be combined to allow for complete substitution of inventors. Inventorship depended on "conception." To be a joint inventor, a person must contribute to the invention’s conception. Also, for joint inventorship, there must be "some quantum of collaboration" between the inventors.

In the appellate court’s view, "Goodyear’s prior failure [to develop SIT technology], its eagerness to meet with Coda, its unauthorized photography of Coda’s functional prototype, the timing of its distancing itself from Coda and its filing for the ’586 patent, and a pointed accusation from one of its former employees"—along with other "highly specific facts"—made the correction of inventorship claims plausible. The asserted facts allowed the reasonable inference that Hrabal conceived the invention of the ’586 patent and that Benedict and Losey did not. They also allowed the reasonable inference that Hrabal made a significant contribution to the conception of at least one claim of each of the other patents. Furthermore, Coda’s meetings with Goodyear, as well as the nondisclosure agreement, permitted the inference that the collaboration requirement was satisfied.

"Plausibility" was not the same as "probability," the court observed. Coda and Hrabal were required only to "nudge their claims across the line from conceivable to plausible." The district court’s reliance on Hrabal’s 2008 article was procedurally erroneous because the article constituted material outside pleadings and not appropriate for consideration in the context of a motion to dismiss on the pleadings. The district court had not converted the motion into a motion for summary judgment. Nor did the district court give the plaintiffs a reasonable opportunity to present all pertinent material. The article was not judicially noticeable as a public-record fact, in the Federal Circuit’s view. Accordingly, the appellate court vacated the district court’s dismissal of the correction-of-inventorship claims.

Trade secrets misappropriation. The district court also erred in dismissing Coda and Hrabal’s Ohio trade secrets misappropriation claims as time-barred, the appellate court said. The relevant statute of limitations provided that a misappropriation claim had to be filed within four years after the misappropriation was discovered or reasonably should have been discovered. This inquiry was fact-intensive, and the district court erred in concluding, from the complaint alone, that Coda and Hrabal should have begun investigating after the unnamed employee from Goodyear first contacted them in 2009 regarding Goodyear’s independent efforts in developing SIT technology. In the district court’s view, this contact "should have been sufficient notice to plaintiffs that something might have been amiss" (emphasis in original). The Federal Circuit disagreed "Plaintiffs might have assumed Goodyear lost interest in the technology, given its previous failed investment," the appellate court said. "Or they might have thought that Goodyear would honor the nondisclosure agreement." Regardless, these questions went to the merits of the statute-of-limitations defense and not the complaint’s sufficiency. "Considering only the complaint, and drawing all reasonable inferences in Plaintiffs’ favor, we conclude that the district court erred in dismissing Plaintiffs’ trade-secret-misappropriation claim as time-barred," the Federal Circuit said.

Leave to amend. Finally, the appellate court held that the district court erred in denying the post-judgment motion seeking leave to amend the complaint. Calling the lower court’s decision "troubling," the Federal Circuit noted that the district court had found that the proposed amended complaint set forth the inventorship claims with "amazing clarity." In the court’s view, Coda and Hrabal should be permitted to file their proposed amended complaint on remand.

This case is No. 18-1028.

Attorneys: Boyd T. Cloern (Steptoe & Johnson, LLP) for CODA Development s.r.o. and CODA Innovations s.r.o. Gregory A. Castanias (Jones Day) for Goodyear Tire & Rubber Co.

Companies: CODA Development s.r.o.; CODA Innovations s.r.o.; Goodyear Tire & Rubber Co.

MainStory: TopStory Patent TradeSecrets FedCirNews

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