Coda Dev. S.R.O. v. Goodyear Tire & Rubber Co.

United States Court of Appeals
for the Federal Circuit
______________________
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
______________________
2018-1028
______________________
Appeal from the United States District Court for the
Northern District of Ohio in No. 5:15-cv-01572-SL, Judge
Sara Lioi.
______________________
Decided: February 22, 2019
______________________
BOYD T. CLOERN, Steptoe & Johnson, LLP, Washing-
ton, DC, argued for plaintiffs-appellants. Also represented
by CHARLES GLASTON COLE; DAVID KWASNIEWSKI, San
Francisco, CA.
GREGORY A. CASTANIAS, Jones Day, Washington, DC,
argued for defendants-appellees. Also represented by
JOHN CHARLES EVANS, CALVIN GRIFFITH, DAVID MICHAEL
MAIORANA, Cleveland, OH.
______________________
2 CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER
Before PROST, Chief Judge, WALLACH and HUGHES,
Circuit Judges.
PROST, Chief Judge.
Plaintiffs-appellants CODA Development s.r.o., CODA
Innovations s.r.o. (together, “Coda”), and Frantisek Hrabal
(collectively, “Plaintiffs”) filed a complaint against defend-
ants-appellees The Goodyear Tire & Rubber Company
(“Goodyear”), Robert Benedict, and Robert Losey (collec-
tively, “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 fol-
lowing the dismissal, it denied Plaintiffs leave to amend
their complaint. Plaintiffs appeal the district court’s dis-
missal and denial of leave to amend. We vacate the district
court’s dismissal and remand for further proceedings con-
sistent 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 ap-
proached Coda and expressed interest in the technology.
General Motors wanted to involve Goodyear in commercial-
izing the technology, and Coda consented to that arrange-
ment. 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 re-
stricting use of disclosed information to cooperation
CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER 3
between the parties regarding the development of SIT tech-
nology.
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 meet-
ing, including Mr. Benedict, who was responsible for Good-
year’s research and development relating to SIT
technology. At this meeting, and at Goodyear’s request,
Coda shared novel, proprietary, and confidential infor-
mation concerning its SIT technology, including the place-
ment of the tire’s pump tube, the design of the pressure
management system, the efficiency of the leakage compen-
sation 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 meet-
ing, 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 re-
quested that he and his team be allowed to spend some
time alone with the prototype, during which he photo-
graphed it without permission. J.A. 57 ¶ 36.
1 Separately, the complaint notes that the pump
tube is “preferably located in the tire sidewall.” J.A. 53
¶ 20.
4 CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER
Following the June 2009 Prague meeting, several
months passed without any communication from Good-
year. Coda attempted to restart communications in No-
vember 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 em-
ployee 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 ex-
plained 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 U.S. Patent No. 8,042,586 (the “’586 patent”) on October
25, 2011, and named Messrs. Benedict and Losey as the
inventors.
Meanwhile, Coda assumed that Goodyear’s silence in-
dicated a lack of interest in Coda’s SIT technology, or per-
haps that the economic recession was inhibiting further
discussions. But in September 2012, Coda received an un-
solicited 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.
According to the complaint, between 2012 and 2015,
eleven other patents issued to Goodyear covering assem-
blies and methods for assembly of pumps and other devices
CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER 5
used in self-inflating tires. The complaint alleges that
these patents have claims with limitations covering the
novel, proprietary, and confidential information Coda dis-
closed 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-in-
ventorship claims to add Mr. Hrabal as an inventor on
eleven other Goodyear patents (the “Alleged Jointly In-
vented Patents”) 2 and a claim of trade-secret misappropri-
ation 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 com-
plaint failed to plead facts supporting Mr. Hrabal’s concep-
tion 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 pub-
lished 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 collabora-
tion. Finally, Defendants argued that Plaintiffs’ trade-se-
cret-misappropriation claim was barred by the relevant
2 The Alleged Jointly Invented Patents are U.S. Pa-
tent 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.
6 CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER
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 No-
vember 2008 (the “Hrabal article”). J.A. 874–78. Defend-
ants 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 pres-
sure management system, the efficiency of the leakage
compensation system, and the air passageway/interface be-
tween 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, Plain-
tiffs 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 ar-
ticle disclosed a location for the tire’s pump tube, that loca-
tion 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 Defend-
ants’ motion to dismiss. Coda Dev. s.r.o. v. Goodyear Tire
& Rubber Co., No. 5:15-cv-1572, 2016 WL 5463058 (N.D.
Ohio Sept. 29, 2016) (“Dismissal Opinion”). The court de-
nied Plaintiffs’ motion to strike because it found the Hrabal
article was judicially noticeable as a “2008 public disclo-
sure of something [Plaintiffs] now claim[] was secret when
disclosed to Goodyear in 2009.” Id. at *2. The court’s opin-
ion did not explain why it denied Plaintiffs’ alternative re-
quest to file a sur-reply addressing the new article.
CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER 7
The district court then addressed Defendants’ motion
to dismiss. Beginning with Plaintiffs’ correction-of-inven-
torship 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 In-
vented Patents in particular, the court concluded that the
complaint undermined the necessary showing of collabora-
tion because it alleged that Goodyear stopped communi-
cating with Coda after the Prague meeting. Id. at *5. On
these bases, the court dismissed Plaintiffs’ correction-of-in-
ventorship claims.
The district court also dismissed Plaintiffs’ trade-se-
cret-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
3 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.
8 CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER
triggering a duty to investigate. Id. at *10 (emphasis in
original). According to the court, had Plaintiffs investi-
gated, they would have discovered the application leading
to the ’586 patent at least as of its June 23, 2011 publica-
tion date—more than four years before the complaint’s Au-
gust 9, 2015 filing date. Id. The court therefore dismissed
Plaintiffs’ trade-secret-misappropriation claim. 4
Plaintiffs moved the court to amend the judgment un-
der Federal Rule of Civil Procedure 59(e) and also for leave
to file an amended complaint. 5 The proposed amended
complaint provided additional factual allegations regard-
ing 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 pro-
posed amended complaint alleged that Mr. Hrabal “com-
municated to Goodyear the idea to put a tube in a groove in
4 The district court dismissed all claims in the com-
plaint, but Plaintiffs appeal the dismissal of only their cor-
rection-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.”).
5 The proposed amended complaint dropped many
claims but added others. For example, it maintained cor-
rection-of-inventorship claims only with respect to the ’586
patent and a subset of the Alleged Jointly Invented Pa-
tents, but it added a correction-of-inventorship claim with
respect to U.S. Patent Nos. 8,826,955 and 8,851,132—nei-
ther 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 applica-
tions. It dropped all other claims that appeared in the orig-
inal complaint.
CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER 9
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, 2017 WL
4271874 (N.D. Ohio Sept. 26, 2017). The court acknowl-
edged that the proposed amended complaint set forth
Plaintiffs’ correction-of-inventorship claims with “amazing
clarity.” Id. at *6. But, in the court’s view, the factual de-
tails added in the proposed amended complaint—particu-
larly the specific location of the pump tube—should have
been in the original complaint. Id. at *5–6. Given this
view, and Plaintiffs’ decision not to request leave to amend
before judgment, the court declined to allow Plaintiffs a “do
over” on these claims. Id. at *7. The court separately re-
jected Plaintiffs’ arguments concerning their trade-secret-
misappropriation claim. Id. at *7–8.
Plaintiffs appeal the district court’s dismissal of their
original complaint and denial of their post-judgment re-
quest for leave to amend the complaint. We have jurisdic-
tion under 28 U.S.C. § 1295(a)(1).
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, 827 F.3d
1341, 1347 (Fed. Cir. 2016). The Sixth Circuit reviews such
dismissals de novo, “construing the complaint in the light
most favorable to the plaintiffs, accepting their well-
pleaded factual allegations as true, and drawing all reason-
able inferences in their favor.” Allied Erecting & Disman-
tling Co. v. Genesis Equip. & Mfg., Inc., 805 F.3d 701, 707
(6th Cir. 2015) (quoting Russell v. Lundergan-Grimes, 784
F.3d 1037, 1045 (6th Cir. 2015)). “To survive a motion to
10 CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER
dismiss, a complaint must contain sufficient factual mat-
ter, accepted as true, to ‘state a claim to relief that is plau-
sible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007)). “A claim has facial plausibility when the plain-
tiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Id. “Determining whether a com-
plaint states a plausible claim for relief will . . . be a con-
text-specific task that requires the reviewing court to draw
on its judicial experience and common sense.” Id. at 679.
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., 745 F.3d 1180, 1192 (Fed. Cir.
2014) (Rule 59(e) motion to amend a judgment); Advanced
Software Design Corp. v. Fiserv, Inc., 641 F.3d 1368, 1380
(Fed. Cir. 2011) (motion to amend the complaint). The
Sixth Circuit reviews denial of such motions for abuse of
discretion. Morse v. McWhorter, 290 F.3d 795, 799 (6th Cir.
2002).
Below, we first discuss the original complaint and the
district court’s dismissal, analyzing the correction-of-in-
ventorship and trade-secret-misappropriation claims sepa-
rately. We then address Plaintiffs’ post-judgment motions.
I
A
Plaintiffs’ complaint sets forth thirteen correction-of-
inventorship claims under 35 U.S.C. § 256, which states:
(a) CORRECTION.—Whenever through error a per-
son is named in an issued patent as the inventor,
or through error an inventor is not named in an is-
sued patent, the Director may, on application of all
the parties and assignees, with proof of the facts
CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER 11
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 correc-
tion of the patent on notice and hearing of all par-
ties concerned and the Director shall issue a
certificate accordingly.
35 U.S.C. § 256 (2012). This section “provides a cause of
action to interested parties to have the inventorship of a
patent changed to reflect the true inventors of the subject
matter claimed in the patent.” Fina Oil & Chem. Co. v.
Ewen, 123 F.3d 1466, 1471 (Fed. Cir. 1997).
Section 256 addresses two types of inventorship er-
rors—misjoinder and nonjoinder. Stark v. Advanced Mag-
netics, Inc., 119 F.3d 1551, 1553 (Fed. Cir. 1997).
Misjoinder is the error of naming a person as an inventor
who is not an inventor; nonjoinder is the error of omitting
an inventor. See id. Through claims of misjoinder and non-
joinder together, § 256 “allows complete substitution of in-
ventors.” 6 Id. at 1556; see id. at 1553.
6 Before the enactment of the Leahy-Smith America
Invents Act (“AIA”), Pub. L. No. 112–29, 125 Stat. 284
(2011), the first paragraph of § 256 stated: “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 and such error arose without any deceptive
intention on his part . . . .” 35 U.S.C. § 256 (2006) (emphasis
added). We previously interpreted this language and held
that “the statute allows correction in all misjoinder cases
featuring an error and in those nonjoinder cases where the
12 CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER
“Conception is the touchstone of inventorship.” Acro-
med Corp. v. Sofamor Danek Grp., Inc., 253 F.3d 1371,
1379 (Fed. Cir. 2001) (quoting Burroughs Wellcome Co. v.
Barr Labs., Inc., 40 F.3d 1223, 1227 (Fed. Cir. 1994)); ac-
cord Fina Oil, 123 F.3d at 1473. As to joint inventorship,
a joint inventor must contribute to the invention’s concep-
tion. E.g., Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352,
1358–59 (Fed. Cir. 2004); Ethicon, Inc. v. U.S. Surgical
Corp., 135 F.3d 1456, 1460–61 (Fed. Cir. 1998); Fina Oil,
123 F.3d at 1473 (“[T]o be a joint inventor, an individual
must make a contribution to the conception of the claimed
invention that is not insignificant in quality, when that
contribution is measured against the dimension of the full
invention.”). He or she need not “make the same type or
amount of contribution” to the invention nor contribute to
every claim—a contribution to one claim is enough. Ethi-
con, 135 F.3d at 1460 (quoting 35 U.S.C. § 116).
Further, with regard to joint inventorship, there must
be “some quantum of collaboration.” Kimberly-Clark Corp.
v. Procter & Gamble Distrib. Co., 973 F.2d 911, 917 (Fed.
Cir. 1992) (“[T]here must be some element of joint behav-
ior, such as collaboration or working under common direc-
tion, one inventor seeing a relevant report and building
upon it or hearing another’s suggestion at a meeting.”); see
Eli Lilly, 376 F.3d at 1359 (referring to the inventors
unnamed inventor is free of deceptive intent.” Stark, 119
F.3d at 1555; see id. at 1554. We note, however, that sec-
tion 20(f) of the AIA removed the emphasized language
from § 256. AIA sec. 20(f)(1)(B), 125 Stat. at 334. The up-
dated version of § 256 applies to “proceedings commenced
on or after” September 16, 2012. Id. sec. 20(l), 125 Stat. at
335. Plaintiffs filed their complaint on August 9, 2015, and
therefore the updated version of § 256 applies to this pro-
ceeding.
CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER 13
having “some open line of communication during or in tem-
poral proximity to their inventive efforts”).
Accepting the complaint’s well-pleaded factual allega-
tions as true and drawing all reasonable inferences in
Plaintiffs’ favor, we conclude that Plaintiffs’ claims for cor-
rection of inventorship are plausible. The complaint de-
scribes Goodyear’s prior failures with inflation technology.
It also describes two meetings with Goodyear representa-
tives—both arranged at Goodyear’s initiative and attended
by Mr. Benedict, Goodyear’s point-person on SIT technol-
ogy. 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 con-
tacted Coda to inquire about the status of Coda’s SIT tech-
nology. 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 dis-
closed 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
14 CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER
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 pa-
tent, and a pointed accusation from one of its former em-
ployees—we conclude that Plaintiffs’ correction-of-
inventorship claims are plausible. These facts allow the
reasonable inference that Mr. Hrabal conceived the inven-
tion of the ’586 patent and that Messrs. Benedict and Losey
did not. See Iqbal, 556 U.S. at 678 (“A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.”). They also
allow the reasonable inference that Mr. Hrabal made a
more-than-insignificant contribution to the conception of at
least one claim of each of the Alleged Jointly Invented Pa-
tents. Cf. Fina Oil, 123 F.3d at 1473 (“The determination
of whether a person is a joint inventor is fact specific, and
no bright-line standard will suffice in every case.”). Fur-
ther, Coda’s two meetings with Goodyear representatives,
as well as the parties’ signing a nondisclosure agreement
going to cooperation between the parties in developing SIT
technology, allow the reasonable inference that the collab-
oration requirement was satisfied as to the Alleged Jointly
Invented Patents.
The “plausibility standard is not akin to a ‘probability
requirement.’” Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 556). Rather, Plaintiffs need only “nudge[]
their claims across the line from conceivable to plausible.”
See Twombly, 550 U.S. at 570. Under these circumstances,
we conclude that Plaintiffs have done so as to their correc-
tion-of-inventorship claims.
The district court’s contrary conclusion rested largely
on a procedural error—namely, the consideration of mate-
rial outside the pleadings. The principle is familiar:
Assessment of the facial sufficiency of the com-
plaint must ordinarily be undertaken without
CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER 15
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, 835 F.3d 623, 640 (6th Cir. 2016) (citation
omitted); see Fed. R. Civ. P. 12(d) (stating similarly); 5C
Charles Alan Wright & Arthur R. Miller, Federal Practice
and Procedure § 1366 (3d ed. 2018) (“Once the district court
decides to accept matters outside of the pleadings, the pres-
ence of the word ‘must’ [in Rule 12(d)] indicates that the
judge must convert the motion to dismiss into one for sum-
mary judgment . . . . [T]hat is what has been done in a vast
array of cases, especially when the district court actually
considers the contents of this material in deciding the mo-
tion.”).
The district court considered the Hrabal article without
converting Defendants’ motion into one for summary judg-
ment and without giving Plaintiffs a reasonable oppor-
tunity 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 with-
out conversion because the article was judicially noticeable
as a “public-record fact[].” Appellee’s Br. 18. We are un-
persuaded that the conversion rule was appropriately cir-
cumvented on this basis.
Although a district court may consider judicially no-
ticeable matters outside the pleadings without converting
a Rule 12(b)(6) motion into one for summary judgment, see
Jackson v. City of Columbus, 194 F.3d 737, 745 (6th Cir.
1999), overruled on other grounds by Swierkiewicz v.
Sorema N. A., 534 U.S. 506 (2002), judicially noticeable
facts must “not [be] subject to reasonable dispute,” see Fed.
R. Evid. 201(b). Here, the district court used the Hrabal
article to “determine whether it was a 2008 public
16 CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER
disclosure of something Coda now claims was secret when
disclosed to Goodyear in 2009.” Dismissal Opinion, 2016
WL 5463058, at *2; see J.A. 24–25 (concluding that the ar-
ticle publicly disclosed each element of the alleged trade
secrets). But whether the Hrabal article actually disclosed
those alleged novel trade secrets was a reasonably (indeed,
hotly) disputed factual issue—one outside any judicial-no-
tice exception to the general rule requiring conversion, and
one that should not have been resolved adversely to Plain-
tiffs on a motion to dismiss. The district court erred in con-
sidering the Hrabal article for this purpose without
converting Defendants’ motion to dismiss into one for sum-
mary judgment and giving Plaintiffs a reasonable oppor-
tunity to present all pertinent material. 7
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, 411 F. Supp. 2d 778, 784–85
(N.D. Ohio 2005) (observing that this provision incorpo-
rates the “discovery rule”). Defendants’ motion to dismiss
argued that if Plaintiffs had been reasonably diligent, they
7 We note further that, to the extent the district
court relied on the ’586 patent and Mr. Hrabal’s prior, pub-
lished patent application to determine that the alleged
novel trade secrets were already in the prior art, see Dis-
missal Opinion, 2016 WL 5463058, at *5, such a determi-
nation was improper at this stage, for at least the reason
that it constituted an inference adverse to Plaintiffs when
there were other reasonable inferences to draw in their fa-
vor.
CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER 17
would have discovered the alleged trade-secret misappro-
priation by June 2011, when the application leading to the
’586 patent published. J.A. 284–85. Defendants based
their reasonable-diligence theory on Plaintiffs’ activity in
the SIT patent space and the purported ease of discovering
new patents and patent applications “[w]ith today’s tech-
nology.” J.A. 284. The district court adopted a different
theory—one to which Plaintiffs never had an opportunity
to respond. The court found that the facts alleged in the
complaint, including the independent contact from the
Goodyear employee in 2009, “should have been sufficient
notice to plaintiffs that something might have been amiss,”
thus triggering a duty to investigate. Dismissal Opinion,
2016 WL 5463058, at *10 (emphasis in original). The court
found that such an investigation would have led to the dis-
covery of the patent application when it published. Id.
The statute-of-limitations inquiry here is when Plain-
tiffs discovered or by the exercise of reasonable diligence
should have discovered their claim. This inquiry is fact-
specific. See Adcor, 411 F. Supp. 2d at 785–86 (citing Ohio
law). 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. See Appellee’s Br. 29–30, 33
(adopting the district court’s theory). Defendants argue
that the only reasonable inference to be drawn is against
Plaintiffs. Appellee’s Br. 30 (saying that Plaintiffs’ allega-
tions “lead inexorably to only one reasonable inference—
that [Plaintiffs] had constructive notice of potential claims
in 2009”).
We disagree. Plaintiffs might have assumed Goodyear
lost interest in the technology, given its previous failed in-
vestment. Or they might have thought that Goodyear
would honor the nondisclosure agreement. See, e.g., Allied
Erecting & Dismantling Co., 805 F.3d at 707 (noting that
18 CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER
“all reasonable inferences” must be drawn in Plaintiffs’ fa-
vor in reviewing a motion to dismiss). 8
Regardless, these issues go more to the merits of De-
fendants’ statute-of-limitations defense than the com-
plaint’s sufficiency. Indeed, because “[t]he statute of
limitations is an affirmative defense, and a plaintiff gener-
ally need not plead the lack of affirmative defenses to state
a valid claim,” a Rule 12(b)(6) motion, “which considers
only the allegations in the complaint, is generally an inap-
propriate vehicle for dismissing a claim based upon the
statute of limitations.” Cataldo v. U.S. Steel Corp., 676
F.3d 542, 547 (6th Cir. 2012) (citation omitted); see Lutz v.
Chesapeake Appalachia, L.L.C., 717 F.3d 459, 464 (6th Cir.
2013).
Considering only the complaint, and drawing all rea-
sonable 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. Alt-
hough the district court found that the proposed amended
complaint set forth Plaintiffs’ correction-of-inventorship
claims with “amazing clarity,” it denied Plaintiffs leave to
8 We also reject, for similar reasons, Defendants’ the-
ories 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 pub-
lished. But the complaint does not compel those inferences
to the exclusion of reasonable inferences favorable to Plain-
tiffs.
CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER 19
amend their complaint. We find this result troubling, par-
ticularly given the previously described errors.
Leave to amend should be “freely give[n] . . . when jus-
tice so requires.” Fed. R. Civ. P. 15(a)(2); see Morse, 290
F.3d at 799–800. The Federal Rules of Civil Procedure fa-
vor resolution of cases on their merits. See Foman v. Davis,
371 U.S. 178, 181–82 (1962); see also Krupski v. Costa Cro-
ciere S. p. A., 560 U.S. 538, 550 (2010) (observing that Rule
15 in particular expresses this preference). The Supreme
Court in Foman indicated that, in the absence of any ap-
parent reason (e.g., undue delay, bad faith or dilatory mo-
tive, repeated failure to cure deficiencies by previously
allowed amendments, undue prejudice to the opposing
party, futility), leave to amend should be freely given, as
Rule 15 requires. 371 U.S. at 182. While the post-judg-
ment context introduces competing considerations, Morse,
290 F.3d at 800, our vacating the district court’s dismissal
should remove such considerations from the analysis.
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 num-
ber of claims in the proposed amended complaint has been
pared down from the original complaint). We deem Plain-
tiffs’ suggested approach sensible and are aware of no rea-
son why they should not be permitted to file their proposed
amended complaint on remand. 9
9 Aside from a potential futility argument, Defend-
ants’ 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.
20 CODA DEVELOPMENT v. GOODYEAR TIRE & RUBBER
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.