Trade secrets can be a valuable part of a company’s IP strategy. A recent decision from the U.S. Court of Appeals for the Federal Circuit, Coda Development S.R.O. v. Goodyear Tire & Rubber Co., underscores that imprecise definitions and overlapping public patent disclosures may unravel even successful jury verdicts. For businesses, the case is a reminder to align patent and trade secret strategies from the start, ensuring that public filings do not inadvertently give away what you later hope to protect as trade secrets.
Coda sued Goodyear alleging misappropriation of trade secrets under Ohio law related to self-inflating tire technology. After years of litigation and a trial, a jury ruled in favor of Coda, awarding $2.8 million in compensatory damages and $61.2 million in punitive damages.
But after trial, the district court granted Goodyear’s motion for judgment as a matter of law, ruling that Coda’s trade secrets were not sufficiently definite, among other issues, and awarded no damages.
The Federal Circuit affirmed, concluding that the trade secrets were not sufficiently definite, not secret, and/or not used or disclosed by Goodyear.
For the primary trade secret (TS 24), the Federal Circuit ruled that the trade secret as defined in Coda’s interrogatory responses had been publicly disclosed in a Coda patent application and trade magazine. Specifically, Coda’s patent application disclosed that the pump can be located “at any place in the wall of the tire ... or in its vicinity, so for example, in the tread or side wall of the tire.” (Emphasis added.) The Federal Circuit concluded that such language disclosed TS 24, which was directed to “the optimal location” for a pump in a tire, specifically “in the sidewall close to, and above, the rim,” thereby rendering TS 24 not protectable as a trade secret. (Emphasis added.) Coda also argued that TS 24 was narrower than the patent disclosure, but the Federal Circuit rejected this. In doing so, it looked back to Coda’s discovery responses, rather than the trial evidence, to define the trade secret’s scope.
For other trade secrets (TS 7, TS 11, TS 20, and TS 23), the Federal Circuit ruled that the trade secrets were not defined with sufficient particularity, as they merely listed Coda’s knowledge of a product performing functions or containing certain components, but without “detail regarding how those functions are carried out” or “disclosure of what [the claimed] knowledge is and/or what the design or development is.” The court reached these conclusions despite the case having gone all the way through trial, where the jury had decided otherwise and sided with Coda.
The case illustrates how broad patent disclosures can diminish trade secret protection, even when the trade secret is directed to specific embodiments that are not expressly disclosed in the patent application. For example, stating in a patent that a pump can be “at any place in the wall . . . or in its vicinity” can undermine a later claim that a more specific “optimal” location, specifically “in the sidewall close to, and above, the rim,” is a trade secret.
This tension is significant for companies relying on both the patent regime and the trade secret regime to protect their innovations. Dual protection may work if companies ensure that patent disclosures do not disclose information meant to be protected as trade secrets.
Additionally, when patent or other public disclosures intersect with information a company seeks to protect as a trade secret, it is important to define the secret with enough detail to clearly set it apart from what is public. The required specificity, and when it must be provided during litigation, can vary by forum and by whether the claim is brought under federal or state trade secret law. An effective strategy therefore benefits from careful consideration of the scope of the trade secret, as well as procedural rules and timing requirements for the disclosure.