Coda Dev. S.R.O. v. Goodyear Tire & Rubber Co.
Opinion
Plaintiffs-appellants CODA Development s.r.o., CODA Innovations s.r.o. (together, "Coda"), and Frantisek Hrabal (collectively, "Plaintiffs") filed a complaint against defendants-appellees The Goodyear Tire & Rubber Company ("Goodyear"), Robert Benedict, and Robert Losey (collectively, "Defendants") in the U.S. District Court for the Northern District of Ohio. The complaint sought correction of inventorship in several Goodyear patents and alleged, among other things, that Goodyear misappropriated Coda's trade secrets.
The district court dismissed the complaint for failing to state a claim upon which relief could be granted, and following the dismissal, it denied Plaintiffs leave to amend their complaint. Plaintiffs appeal the district court's dismissal and denial of leave to amend. We vacate the district court's dismissal and remand for further proceedings consistent with this opinion.
BACKGROUND
I
The complaint alleges the following facts. Mr. Hrabal, Coda's CEO, invented certain self-inflating tire ("SIT") technology. In 2008, General Motors representatives approached Coda and expressed interest in the technology. General Motors wanted to involve Goodyear in commercializing the technology, and Coda consented to that arrangement. General Motors then wrote to Goodyear suggesting that it contact Coda, which it did. Goodyear requested and arranged a meeting with Coda, but before the meeting took place, the parties executed a nondisclosure agreement restricting use of disclosed information to cooperation between the parties regarding the development of SIT technology.
*1354 Coda and Goodyear met for the first time on January 15, 2009, at a research facility near Frankfurt, Germany. Several Goodyear representatives participated in the meeting, including Mr. Benedict, who was responsible for Goodyear's research and development relating to SIT technology. At this meeting, and at Goodyear's request, Coda shared novel, proprietary, and confidential information concerning its SIT technology, including 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. 1 J.A. 55-56 ¶¶ 29, 31.
Some Goodyear representatives expressed skepticism about the viability of Coda's technology. Goodyear had been disappointed before; it previously invested in a failed inflating technology called the "Cycloid." Nevertheless, Coda addressed Goodyear's viability concerns at this meeting, and the parties agreed to continue discussions.
Goodyear contacted Coda requesting a second meeting. Mr. Benedict specifically requested to review an updated technical presentation, the latest product, testing methods, and performance results. J.A. 56-57 ¶ 34. This second meeting occurred in Prague on June 15, 2009, with Mr. Benedict and members of his team in attendance. At this meeting, Coda allowed Goodyear to examine a functional prototype of Coda's SIT technology. Mr. Benedict requested that he and his team be allowed to spend some time alone with the prototype, during which he photographed it without permission. J.A. 57 ¶ 36.
Following the June 2009 Prague meeting, several months passed without any communication from Goodyear. Coda attempted to restart communications in November 2009, inviting Mr. Benedict to dinner to discuss the status of the proposed development project. Mr. Benedict declined, saying that "[a] meeting would be premature at this point." J.A. 58 ¶ 38 (alteration in original).
The following month, December 2009, a Goodyear employee on Mr. Benedict's team independently contacted Coda to inquire about the status of Coda's SIT technology in preparation for an internal Goodyear meeting. Coda explained that Mr. Benedict had surprisingly gone silent. The employee replied, saying that "during [Goodyear's] brainstorm session, I indicated your invention matches up nicely with Goodyear's current criteria for development and asked if we have looked into this with SIT Coda. [Mr. Benedict's] response to this question was oddly vague." J.A. 58 ¶ 40 (first alteration in original).
Also that month, and unbeknownst to Coda, Goodyear applied for a patent entitled "Self-Inflating Tire Assembly." Goodyear's application published on June 23, 2011, issued as
Meanwhile, Coda assumed that Goodyear's silence indicated a lack of interest in Coda's SIT technology, or perhaps that the economic recession was inhibiting further discussions. But in September 2012, Coda received an unsolicited email from the (then ex-) Goodyear employee with whom Coda corresponded in December 2009. The email said, "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." J.A. 59 ¶ 44.
*1355 According to the complaint, between 2012 and 2015, eleven other patents issued to Goodyear covering assemblies and methods for assembly of pumps and other devices used in self-inflating tires. The complaint alleges that these patents have claims with limitations covering the novel, proprietary, and confidential information Coda disclosed to Goodyear.
II
Plaintiffs sued Defendants in the U.S. District Court for the Northern District of Ohio on August 9, 2015. The complaint included two correction-of-inventorship claims concerning the '586 patent -one to add Mr. Hrabal as an inventor, the other to remove Messrs. Benedict and Losey as inventors. The complaint also included correction-of-inventorship claims to add Mr. Hrabal as an inventor on eleven other Goodyear patents (the "Alleged Jointly Invented Patents") 2 and a claim of trade-secret misappropriation under Ohio state law.
Defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). Defendants argued that for each of Plaintiffs' correction-of-inventorship claims, the complaint failed to plead facts supporting Mr. Hrabal's conception or co-conception of the inventions claimed in Goodyear's patents. Defendants referenced an exhibit to their motion-a patent application of Mr. Hrabal's published before the '586 patent 's filing date-and argued that the complaint's description of Plaintiffs' novel, confidential technology was "so unspecific that it applie[d] equally" to this publication. J.A. 273. With respect to the Alleged Jointly Invented Patents, Defendants further argued that the complaint failed to plead facts supporting collaboration. Finally, Defendants argued that Plaintiffs' trade-secret-misappropriation claim was barred by the relevant Ohio statute of limitations because Coda should have known of its claim as of June 2011, when the application leading to the '586 patent published.
Plaintiffs opposed. In reply, Defendants attached an article written by Mr. Hrabal that was published in November 2008 (the "Hrabal article"). J.A. 874-78. Defendants argued that the Hrabal article publicly disclosed everything the complaint alleged was novel, proprietary, and confidential (and shared with Goodyear), including 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. J.A. 844-45.
Plaintiffs moved the district court to strike or disregard the Hrabal article because it was outside the pleadings and was offered for the first time on reply. Alternatively, Plaintiffs requested leave to file a sur-reply addressing the new arguments based on the Hrabal article. In their request for a sur-reply, Plaintiffs argued that while the Hrabal article disclosed a location for the tire's pump tube, that location was not the secret location disclosed to Goodyear. Plaintiffs indicated that a sur-reply would fully explain why the Hrabal article did not disclose the alleged novelty and trade secrets that Coda disclosed to Goodyear.
Nine months after briefing on the motion to dismiss concluded, the district court issued an opinion and order denying Plaintiffs' motion to strike and granting Defendants' motion to dismiss.
*1356
Coda Dev. s.r.o. v. Goodyear Tire & Rubber Co.
, No. 5:15-cv-1572,
The district court then addressed Defendants' motion to dismiss. Beginning with Plaintiffs' correction-of-inventorship claims, the court set forth the alleged disclosures to Goodyear and found that Goodyear's '586 patent"actually identifies these very concepts as 'prior art,' " and that Mr. Hrabal's prior, published patent application disclosed a pump tube in a side wall. Id. at *4-5. But the bulk of the court's prior-art analysis rested on the Hrabal article. The court adopted Defendants' mapping of the article's contents to the complaint's description of the elements disclosed to Goodyear and concluded that the article publicly disclosed each of those elements. Id. 3 The court also concluded that the complaint did not plausibly show that Mr. Hrabal was the sole inventor of the subject matter claimed in the '586 patent or that he "contributed in any way, much less a novel way," to the Alleged Jointly Invented Patents. See id. at *5-6. Further, concerning the Alleged Jointly Invented Patents in particular, the court concluded that the complaint undermined the necessary showing of collaboration because it alleged that Goodyear stopped communicating with Coda after the Prague meeting. Id. at *5. On these bases, the court dismissed Plaintiffs' correction-of-inventorship claims.
The district court also dismissed Plaintiffs' trade-secret-misappropriation claim as time-barred under Ohio's four-year statute of limitations. Id. at *11 ; see id. at *9-10. The court found that the facts alleged in the complaint-including those concerning the two Goodyear meetings, the subsequent silence from Goodyear, and the independent contact from a Goodyear employee concerning Goodyear's internal meeting-"should have been sufficient notice to plaintiffs that something might have been amiss," thus triggering a duty to investigate. Id. at *10 (emphasis in original). According to the court, had Plaintiffs investigated, they would have discovered the application leading to the '586 patent at least as of its June 23, 2011 publication date-more than four years before the complaint's August 9, 2015 filing date. Id. The court therefore dismissed Plaintiffs' trade-secret-misappropriation claim. 4
Plaintiffs moved the court to amend the judgment under Federal Rule of Civil Procedure 59(e) and also for leave to file an amended complaint. 5 The proposed amended *1357 complaint provided additional factual allegations regarding the SIT information disclosed to Goodyear, including the specific location of the tire's pump tube and how that location differed from the prior art. In this respect, the proposed amended complaint alleged that Mr. Hrabal "communicated to Goodyear the idea to put a tube in a groove in the bending region of the [tire's] sidewall ." J.A. 137-38 ¶ 124 (emphasis added); J.A. 92 ¶ 15 ("Mr. Hrabal did not include this tube in the sidewall groove embodiment in any of his patent applications. ... and this embodiment was not found in any prior art.").
Nearly a year after Plaintiffs filed their post-judgment motions, the district court denied them.
Coda Dev. s.r.o. v. Goodyear Tire & Rubber Co.
, No. 5:15-cv-1572,
Plaintiffs appeal the district court's dismissal of their original complaint and denial of their post-judgment request for leave to amend the complaint. We have jurisdiction under
DISCUSSION
We review a district court's dismissal for failure to state a claim under the regional circuit's law.
BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC
,
We also review a district court's denial of a Rule 59(e) motion to amend a judgment and a motion to amend the complaint under the regional circuit's law.
Alcon Research Ltd. v. Barr Labs., Inc.
,
Below, we first discuss the original complaint and the district court's dismissal, analyzing the correction-of-inventorship *1358 and trade-secret-misappropriation claims separately. We then address Plaintiffs' post-judgment motions.
I
A
Plaintiffs' complaint sets forth thirteen correction-of-inventorship claims under
(a) CORRECTION .-Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent, the Director may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error.
(b) PATENT VALID IF ERROR CORRECTED .-The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Director shall issue a certificate accordingly.
Section 256 addresses two types of inventorship errors-misjoinder and nonjoinder.
Stark v. Advanced Magnetics, Inc.
,
"Conception is the touchstone of inventorship."
Acromed Corp. v. Sofamor Danek Grp., Inc.
,
*1359
Further, with regard to joint inventorship, there must be "some quantum of collaboration."
Kimberly-Clark Corp. v. Procter & Gamble Distrib. Co.
,
Accepting the complaint's well-pleaded factual allegations as true and drawing all reasonable inferences in Plaintiffs' favor, we conclude that Plaintiffs' claims for correction of inventorship are plausible. The complaint describes Goodyear's prior failures with inflation technology. It also describes two meetings with Goodyear representatives-both arranged at Goodyear's initiative and attended by Mr. Benedict, Goodyear's point-person on SIT technology. Goodyear sought technical information from Coda at both meetings. And in the second meeting, Mr. Benedict requested that he and his team be allowed to spend some time alone with Coda's functional prototype, during which he photographed it without permission. After this second meeting, Goodyear stopped communicating with Coda for a time. When Coda reached out to Mr. Benedict attempting to restart communications, Mr. Benedict responded that a meeting would be premature.
Yet the next month, in preparation for Goodyear's own internal meeting, a Goodyear employee independently contacted Coda to inquire about the status of Coda's SIT technology. Correspondence with that employee revealed that Mr. Benedict responded in an "oddly vague" way when asked whether Goodyear had looked into Coda's invention. Also that month, Goodyear applied for the first in a series of patents covering assemblies and methods concerning self-inflating tires, with claims covering the allegedly novel, proprietary, and confidential information Coda disclosed to Goodyear. Years later, after Coda deemed the Goodyear endeavor a bust, Coda received an unsolicited email from the former Goodyear employee, who said that Goodyear copied Coda's SIT technology.
Construing the complaint in the light most favorable to Plaintiffs and taking these and other highly specific facts together-including, but not limited to, Goodyear's prior failure, 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-we conclude that Plaintiffs' correction-of-inventorship claims are plausible. These facts allow the reasonable inference that Mr. Hrabal conceived the invention of the '586 patent and that Messrs. Benedict and Losey did not.
See
Iqbal
,
The "plausibility standard is not akin to a 'probability requirement.' "
Iqbal
,
The district court's contrary conclusion rested largely on a procedural error-namely, the consideration of material outside the pleadings. The principle is familiar:
Assessment of the facial sufficiency of the complaint must ordinarily be undertaken without resort to matters outside the pleadings. If 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.
Gavitt v. Born
,
The district court considered the Hrabal article without converting Defendants' motion into one for summary judgment and without giving Plaintiffs a reasonable opportunity to present all pertinent material. Defendants spend little time defending this procedure. They argue only that the district court properly relied on the Hrabal article without conversion because the article was judicially noticeable as a "public-record fact[ ]." Appellee's Br. 18. We are unpersuaded that the conversion rule was appropriately circumvented on this basis.
Although a district court may consider judicially noticeable matters outside the pleadings without converting a Rule 12(b)(6) motion into one for summary judgment,
see
Jackson v. City of Columbus
,
*1361 B
The district court also erred in dismissing Plaintiffs' trade-secret-misappropriation claim as time-barred.
An Ohio trade-secret-misappropriation claim must be brought "within four years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered." Ohio Rev. Code § 1333.66 ;
Adcor Indus., Inc. v. Bevcorp, LLC
,
The statute-of-limitations inquiry here is when Plaintiffs discovered or by the exercise of reasonable diligence should have discovered their claim. This inquiry is fact-specific.
See
Adcor
,
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.
See, e.g.
,
Allied Erecting & Dismantling Co.
,
Regardless, these issues go more to the merits of Defendants' statute-of-limitations defense than the complaint's sufficiency. Indeed, because "[t]he statute of limitations is an affirmative defense, and a plaintiff generally need not plead the lack of affirmative defenses to state a valid
*1362
claim," a Rule 12(b)(6) motion, "which considers only the allegations in the complaint, is generally an inappropriate vehicle for dismissing a claim based upon the statute of limitations."
Cataldo v. U.S. Steel Corp.
,
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.
II
We now turn to Plaintiffs' post-judgment motions. Although the district court found that the proposed amended complaint set forth Plaintiffs' correction-of-inventorship claims with "amazing clarity," it denied Plaintiffs leave to amend their complaint. We find this result troubling, particularly given the previously described errors.
Leave to amend should be "freely give[n] ... when justice so requires." Fed. R. Civ. P. 15(a)(2) ;
see
Morse
,
At oral argument, Plaintiffs expressed their desire to proceed with their proposed amended complaint even if this court were to conclude, as it now has, that the original complaint sufficiently stated the claims on appeal. Oral Arg. at 7:40-52; see id. at 7:02-40 (describing how the number of claims in the proposed amended complaint has been pared down from the original complaint). We deem Plaintiffs' suggested approach sensible and are aware of no reason why they should not be permitted to file their proposed amended complaint on remand. 9
CONCLUSION
For the foregoing reasons, we vacate the district court's dismissal and remand for further proceedings consistent with this opinion.
VACATED AND REMANDED
COSTS
Costs to Plaintiffs-appellants.
Separately, the complaint notes that the pump tube is "preferably located in the tire sidewall." J.A. 53 ¶ 20.
The Alleged Jointly Invented Patents are U.S. Patent Nos. 8,235,081 ; 8,322,036 ; 8,381,784 ; 8,550,137 ; 8,573,270 ; 8,695,661 ; 8,944,126 ; 8,857,484 ; 8,746,306 ; 8,381,785 ; and 8,113,254. J.A. 65-71.
The court's mapping is not printed in the currently available Westlaw version of the Dismissal Opinion , but it can be found in the table at J.A. 25.
The district court dismissed all claims in the complaint, but Plaintiffs appeal the dismissal of only their correction-of-inventorship claims and trade-secret-misappropriation claim. Appellant's Br. 23-24, 28, 40; Oral Arg. at 1:03-20, No. 2018-1028, http://www.cafc.uscourts.gov/oral-argument-recordings ("Oral Arg.").
The proposed amended complaint dropped many claims but added others. For example, it maintained correction-of-inventorship claims only with respect to the '586 patent and a subset of the Alleged Jointly Invented Patents, but it added a correction-of-inventorship claim with respect to U.S. Patent Nos. 8,826,955 and 8,851,132 -neither of which was in the original complaint. Additionally, it maintained the trade-secret-misappropriation claim and added a declaratory-judgment claim regarding the parties' interests in certain patents and pending patent applications. It dropped all other claims that appeared in the original complaint.
Before the enactment of the Leahy-Smith America Invents Act ("AIA"), Pub. L. No. 112-29,
We note further that, to the extent the district court relied on the '586 patent and Mr. Hrabal's prior, published patent application to determine that the alleged novel trade secrets were already in the prior art,
see
Dismissal Opinion
,
We also reject, for similar reasons, Defendants' theories based on its characterization of Plaintiffs' activity in the SIT patent space and the purported ease of discovering new patents and patent applications. Both ask us to infer that Plaintiffs were looking for SIT patents (or should have been doing so) at a certain time and that they would have found the '586 patent application at the time it was published. But the complaint does not compel those inferences to the exclusion of reasonable inferences favorable to Plaintiffs.
Aside from a potential futility argument, Defendants' counsel did not articulate any argument Defendants might have in opposition to the filing of the proposed amended complaint under these circumstances. Oral Arg. at 29:19-30:12.
Reference
- Full Case Name
- CODA DEVELOPMENT S.R.O., CODA Innovations S.R.O., Frantisek Hrabal, Plaintiffs-Appellants v. GOODYEAR TIRE & RUBBER COMPANY, Robert Benedict, Robert Allen Losey, Defendants-Appellees
- Cited By
- 52 cases
- Status
- Published