Enlargement Verdict Diminishes: Federal Circuit Cuts Down $17 Million Trade Secret Based on Patent Disclosure and Lack of Secrecy

On April 17, 2026, the United States Court of Appeals for the Federal Circuit reversed a $17.3 million trade secret judgment and a five-year permanent injunction in International Medical Devices, Inc. v. Cornell, No. 25-1580 (Fed. Cir.). The opinion vacates the verdict on two independent CUTSA grounds: three of the four asserted trade secrets were disclosed in prior-art patents, and the fourth was disclosed to third parties without confidentiality protection.

Background

Plaintiffs International Medical Devices, Inc. (“IMD”), Menova International, Inc., and Dr. James Elist manufacture and sell the Penuma cosmetic penile implant. In March 2018, defendant Dr. Robert Cornell attended a Penuma surgical training session hosted by Dr. Elist and signed a non-disclosure agreement. At the training, Dr. Elist disclosed three concepts for improving the implant: incorporating internal cavities to add softness, placing mesh tabs near the distal tip to facilitate tissue ingrowth, and using absorbable sutures with the mesh tabs. After the training, Dr. Cornell received a list of surgical instruments and supplies used in the Penuma procedure. Within months, Dr. Cornell and two associates filed provisional patent applications for cosmetic implants incorporating those features and launched a competing implant called Augmenta. (Not a joke.) None of the resulting patent applications named Dr. Elist as an inventor.

Plaintiffs sued Dr. Cornell and several other individuals and entities in the Central District of California, asserting (1) misappropriation of four trade secrets under CUTSA, the three design concepts and the instrument list; (2) breach of the NDA; (3) Lanham Act counterfeiting based on Dr. Cornell’s advertising of Penuma surgeries on his website; and (4) invalidity of the resulting patents for failure to name Dr. Elist as a co-inventor.

A jury found for plaintiffs on every claim. After a bench trial on damages, the district court awarded $5,772,044 in reasonable royalties, $11,544,088 in exemplary damages for willful and malicious misappropriation, $1,000,000 in statutory counterfeiting damages, and entered a five-year permanent injunction against use of the trade secrets. The district court denied defendants’ motion for judgment as a matter of law (“JMOL”). Int’l Med. Devices, Inc. v. Cornell, No. 2:20-cv-3503 (C.D. Cal.).

Patent Disclosure Extinguished Three of the Four Trade Secrets

Under CUTSA, a “trade secret” must “[d]erive[] independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use.” Cal. Civ. Code § 3426.1(d). The plaintiff bears the burden of proving the information is not generally known. Altavion, Inc. v. Konica Minolta Sys. Lab’y, Inc., 171 Cal. Rptr. 3d 714, 743 (2014).

The Federal Circuit’s analysis began from the settled rule that “what is disclosed in a patent is ‘generally known to the public’ and cannot be a trade secret.” Ultimax Cement Mfg. Corp. v. CTS Cement Mfg. Corp., 587 F.3d 1339, 1355–56 (Fed. Cir. 2009) (applying CUTSA); see also Atl. Rsch. Mktg. Sys., Inc. v. Troy, 659 F.3d 1345, 1357 (Fed. Cir. 2011) (“A trade secret is secret. A patent is not. That which is disclosed in a patent cannot be a trade secret.”); Glob. Protein Prods., Inc. v. Le, 255 Cal. Rptr. 3d 310, 321 (Cal. Ct. App. 2019) (“[O]nce a trade secret is publicly disclosed in a patent, the information contained in the trade secret is placed in the public domain and the trade secret is subsequently extinguished.”).

Two prior-art patents disposed of the first three asserted trade secrets:

First, U.S. Patent No. 5,088,477 (Subrini), issued in 1992, disclosed a silicone penile implant with “internal cavities” that “make[] it possible to give [the implant] a hardness less than that which it would have if it were formed of a solid and homogeneous body.” The court found this disclosure dispositive of the internal-pockets trade secret. Plaintiffs’ expert testified that the concept “was not generally known,” but his testimony was unsupported by any analysis of Subrini and was contradicted by his own concession that Subrini’s internal cavities make the implant softer. As the court put it, “[e]xpert testimony that is inconsistent with unambiguous intrinsic evidence should be accorded no weight.”

Second, U.S. Patent 4,204,530 (Finney), issued in 1980, disclosed a cosmetic penile implant with Dacron mesh suturing strips, including tabs at the distal end. Both sides’ experts agreed Dacron is a mesh and that Finney disclosed mesh tabs at the distal end of a cosmetic penile implant. That was enough to defeat the mesh-tabs trade secret.

For the absorbable-sutures trade secret, Finney disclosed mesh suturing strips but did not specify the suture material. Both sides’ experts agreed that absorbable sutures were long known and were generally preferred over nonabsorbable sutures for penile surgery. The court held that “Finney, while not explicitly specifying absorbable or nonabsorbable sutures, when coupled with the general knowledge in the art, discloses the use of absorbable sutures with mesh tabs.”

Plaintiffs raised two arguments to escape the patent-disclosure rule, and the court rejected both.

First, plaintiffs argued that “[n]one of the prior art patents on which Defendants relied had been embodied in actual products.” The court held that whether a disclosed concept has been commercially implemented is irrelevant: “The patent disclosures make the alleged trade secrets generally known whether or not they were ever made into real-world products.”

Second, plaintiffs argued that Subrini disclosed only therapeutic implants designed to address erectile dysfunction, while their trade secret concerned cosmetic implants designed to increase penile size. The court rejected the argument, holding that “no protectable trade secret results from translating a generally known concept from one environment to another environment where both environments present the same problem that is solved by the same solution.” On the record before it, the court found “no testimony … that cosmetic and therapeutic implants present different problems or require different solutions” with respect to silicone softness.

The Instrument List Was Not Maintained as a Secret

The fourth alleged trade secret, the Penuma instrument and supply list, failed for an entirely separate reason: plaintiffs had not preserved its secrecy.

CUTSA also requires that information be “the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” Cal. Civ. Code § 3426.1(d)(2). “Disclosure of information to those who are not obligated to maintain its confidentiality extinguishes any claim to trade secret protection.” Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1002 (1984); Amgen Inc. v. Cal. Corr. Health Care Servs., 260 Cal. Rptr. 3d 873, 887 (Cal. Ct. App. 2020).

The trial record established that the instrument list was emailed to Dr. Cornell with only a generic boilerplate footer stating that the message “may contain confidential, privileged and/or proprietary information.” The list itself was not designated as confidential.

In addition, the NDA contained no provision generally treating all communications between the parties as confidential, and did not specifically designate the instrument list.

Also, IMD’s sales representative emailed the instrument list to a third party, SCA Surgery, in April 2018, also without confidentiality marking. Plaintiffs presented no evidence of any other confidentiality agreement with SCA.

Finally, Jonathan Elist, IMD’s CEO, testified that the implant procedure itself was not a trade secret and that IMD permitted the procedure to be disclosed to third parties to build patient awareness.

On that record, the court held there was “insufficient evidence from which a reasonable jury could find that plaintiffs met their burden to show the instrument list derived independent economic value from secrecy.”

The Breach-of-Contract Claim

The NDA defined “Confidential Information” to exclude information that “was or becomes generally available to the public.” Plaintiffs identified no confidential information beyond the four trade secrets. With each trade secret either generally known or not maintained as a secret, the NDA claim could not stand. The Federal Circuit reversed the denial of JMOL on the breach-of-contract claim and vacated the district court’s findings of willful and malicious misappropriation, the reasonable royalty award, the exemplary damages award, and the permanent injunction.

Survival of the Counterfeiting Verdict

The Cornell defendants did not escape entirely. The Federal Circuit affirmed the jury’s finding that they had committed Lanham Act counterfeiting based on Dr. Cornell’s website advertising himself as an authorized Penuma surgeon. Defendants argued that the Penuma mark was registered for goods only and that they had offered only services. The court found this objection both legally and factually unavailing. The jury instructions specifically required that defendants used the counterfeit mark on “the same goods” matching plaintiffs’ registration. And the trial record contained evidence supporting the finding that Cornell had offered the Penuma implant as a good: he testified that his website’s advertising of Penuma surgeries “was in anticipation of being credentialed to provide this product.” The $1 million in statutory damages stood.

Inventorship

The same defect that destroyed the trade secret claims also destroyed the patent-invalidity finding. The jury had held the ’413 and ’639 patents invalid for failure to name Dr. Elist as a co-inventor. But “[a] person who contributes only what is already known in the prior art does not contribute to conception and is not an inventor.” Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 1362 (Fed. Cir. 2004). Because Dr. Elist’s only claimed contributions were the three design concepts already shown to be generally known, his contribution was, by definition, not inventive. The court reinforced the point with the prosecution histories: claims reciting internal pockets, mesh tabs, and absorbable sutures had been rejected as unpatentable; the patents issued only after the applicants amended the independent claims to recite a “measured property of hardness” differential between two locations on the implant. There was no evidence Dr. Elist had ever mentioned that feature. Under Bd. of Educ. ex rel. Bd. of Trs. of Fla. State Univ. v. Am. Bioscience, Inc., 333 F.3d 1330 (Fed. Cir. 2003), the patent office’s determination that Dr. Elist’s contribution alone was not patentable foreclosed the inventorship claim.

Conclusion

International Medical Devices is a useful illustration of how two well-established CUTSA defects can each independently destroy a multimillion-dollar trade secret verdict. The patent-disclosure ground operates as a substantive matter: information already in published patents is, as a matter of law, generally known and not protectable, even when the prior patents have never been commercialized and even when the field of use differs, so long as the same problem is solved by the same solution. The secrecy-maintenance ground operates as a procedural matter: confidentiality must be specifically designated, and a generic email footer or an NDA covering some communications does not extend protection to materials disclosed to other recipients without their own confidentiality protections. A plaintiff identifying multiple alleged trade secrets in the same suit can lose them on different theories, as plaintiffs did here. And, as the patent-invalidity reversal illustrates, an idea that fails the trade secret threshold for being too generally known will, by the same reasoning, generally fail to support a co-inventorship claim.

International Medical Devices, Inc. v. Cornell, No. 25-1580 (Fed. Cir. Apr. 17, 2026)