Jury awards Coda $64 million, finds Goodyear 'misappropriated' some trade secrets

CLEVELAND—A U.S. District Court jury has awarded Czech Republic-based Coda Development S.R.O. $64 million after finding that Goodyear had "willfully and maliciously" used confidential and proprietary Self-Inflating Tire Technology developed by Coda.

Following a trial in U.S. District Court in the Northern District of Ohio, the jury found that Goodyear had misappropriated Coda's trade secrets in five of the 12 instances in which Coda alleged wrong doing on Goodyear's part.

The jury then awarded Coda $2.8 million in compensatory and $61.2 million in punitive damages.

"We are disappointed with the verdict and will consider all of our options," Goodyear said in a statement to Rubber News. "Goodyear believes that the jury's finding of misappropriation of 5 of the 12 alleged trade secrets should be overturned. That said, the compensatory damages are far less than the amount Coda sought and the punitive damages award will be limited up to three times the compensatory damages."

Coda, in a lawsuit filed in August 2015, alleged that the Akron-based tire maker "improperly sought to deliver a technological breakthrough by misappropriating (Coda's) SIT technology" and received a patent in 2011 following the successful development of such technology on the basis of Coda's SIT.

In the lawsuit, Coda contends that in 2008, it exhibited its SIT technology at the Society of Automotive Engineers World Congress in Detroit. There, Coda said, General Motors representatives expressed interest in the technology as an original equipment solution for underinflated tires on vehicles. GM later facilitated a partnership with Goodyear to bring the technology to the market.

The partnership between Goodyear and Coda took root in 2009 and it was during this process that Coda claims Goodyear "fraudulently induced Coda to enter into a non-disclosure agreement—one that Goodyear did not ever intend to honor—under the pretense of potentially engaging in a "development project" with Coda related to this technology." The agreement, the lawsuit says, restricted the use of SIT technology to the cooperative efforts between the two companies.

In 2012, Coda said a former Goodyear employee alerted the company to the potential use of SIT technology outside of the partnership.

Coda CEO Frantisek Hrabal and Coda sued Goodyear in the Northern Ohio court in August 2015, asking that Hrabal be added to the patent as an inventor of the self-inflating tire technology, and to have two Goodyear officials removed. The suit also sought to have Hrabal listed as an inventor on 11 other Goodyear patents related to self-inflating tires.

Goodyear moved for dismissal, arguing that Coda and Hrabal had failed to plead facts supporting their claims. The tire maker cited a November 2008 article by Hrabal that it said publicly disclosed everything proprietary about his invention.

Coda moved to strike the Hrabal article on the grounds that it was outside the pleadings; simultaneously, it requested leave to file a sur-reply addressing the arguments arising from the Hrabal article. The district court denied Coda's motion and granted Goodyear's motion to dismiss.

The district court ruled that the Coda complaint did not plausibly show that Hrabal was the sole inventor of the technology, according to the appeals court's Feb. 22, 2019, remand. It also denied a proposed amended complaint from Coda that offered additional factual allegations, it said.

The appeals court ruled that Coda's claims for correction of inventorship were plausible.

"The complaint describes Goodyear's prior failures with inflation technology," the appeals court said.

The district court also erred in saying the statute of limitations had run out under Ohio law on Coda's claims, the appeals court said.

"Plaintiffs might have assumed Goodyear lost interest in the technology, given its previous failed investment," it said. "Or they might have thought that Goodyear would honor the nondisclosure agreement."