International Medical Devices, Inc. v. Cornell: What the Federal Circuit’s Decision Means for Trade Secret and Patent Protection
Protecting an innovative medical device often requires more than obtaining a patent or family of patents. Companies may also rely on trade secrets, confidentiality agreements, trademarks, copyrights, and other forms of intellectual property protection to safeguard technology and maintain a competitive advantage.
A recent decision from the United States Court of Appeals for the Federal Circuit (the “CFAC”) illustrates the challenges that can arise when these different forms of intellectual property protection overlap. In International Medical Devices, Inc. v. Cornell, the CFAC considered claims involving alleged trade-secret misappropriation, breach of a nondisclosure agreement, trademark counterfeiting, and the validity of two medical-device patents. The dispute arose from the development of competing cosmetic penile implant technology after a physician attended a training session involving a cosmetic penile implant known in the trade as the Penuma® implant, developed by International Medical Devices (“IMD”).
The CAFC's April 17, 2026 decision reversed the district court's denial of judgment as a matter of law on the trade-secret and related breach-of-contract claims, vacated the associated damages and injunction, affirmed liability for counterfeiting, and reversed the district court's denial of judgment as a matter of law concerning the invalidity of two patents.
The decision provides an important lesson for companies developing medical devices and other technologies: information does not qualify as a trade secret simply because it was shared confidentially or because a company considers it commercially valuable. Under the California trade-secret law at issue in the case, the information must derive economic value from not being generally known and must be subject to reasonable efforts to maintain its secrecy. The case also demonstrates why companies should carefully consider how patents, trade secrets, confidentiality agreements, and trademarks work together when developing and commercializing new technology.
The Technology and Patent Rights at Issue
The dispute involved IMD, Menova International, Inc., and Dr. James Elist, who developed and commercialized the Penuma® implant. The CFAC explained that Dr. Elist was a urologist and the owner of IMD, which manufactured the device. In 2018, the Penuma® was the only commercially available cosmetic penile implant.
The case began after Dr. Robert Cornell attended a Penuma® surgical training session hosted by Dr. Elist on March 30, 2018. Before attending the training, Dr. Cornell signed a nondisclosure agreement (“NDA”) under which he agreed not to disclose or use confidential information provided to him. The NDA, however, excluded information that was or became generally available to the public other than through Dr. Cornell's disclosure.
During the training, Dr. Cornell observed several Penuma® implant procedures. The plaintiffs alleged that Dr. Elist also discussed potential improvements to the implant, including internal cavities intended to provide greater flexibility, mesh tabs near the distal end of the implant to facilitate tissue ingrowth, and the use of absorbable sutures with those mesh tabs to provide temporary anchoring. Dr. Cornell later requested and received a list of instruments and supplies used to perform the Penuma® implant procedure.
The plaintiffs subsequently alleged that this information was confidential and constituted trade secrets. They contended that the defendants used the information to develop a competing cosmetic implant known in the trade as “Augmenta.” They also alleged that Dr. Cornell and others later obtained patents relating to cosmetic implants without naming Dr. Elist as an inventor.
The dispute therefore involved several different forms of intellectual property and related legal rights:
Trade-secret protection for confidential technical information.
Contractual protection through the NDA.
Patent rights relating to the competing implant technology.
Trademark protection associated with the Penuma® brand.
The fact that a single dispute can involve multiple forms of intellectual property is one of the most important aspects of the case. Each form of protection, however, has different legal requirements. Understanding those distinctions became particularly important when the CFAC evaluated whether the information at issue actually qualified for trade-secret protection and whether the patents were valid.
What is a Trade Secret?
Before examining the CAFC's decision, it is important to understand what makes information legally protectable as a trade secret.
Trade-secret law generally protects information that has economic value because it is not generally known and that the owner takes reasonable measures to keep secret. Unlike patent protection, trade-secret protection does not require the owner to publicly disclose the underlying information in exchange for exclusive rights.
In this case, the relevant law was California's Uniform Trade Secrets Act (UTSA). Under California Civil Code § 3426.1(d), a trade secret is information that derives independent economic value from not being generally known or readily ascertainable and is subject to reasonable efforts to maintain its secrecy. This framework raises several important questions.
Is the Information Actually Secret?
First, the information must not be generally known or readily ascertainable by others who could obtain economic value from its disclosure or use.
Information that is already publicly available cannot ordinarily become a trade secret simply because a company labels it "confidential." The same principle can apply when technical information has been publicly disclosed through patents, publications, or other sources.
Does the Information Have Value Because It Is Secret?
The information must also derive independent economic value from its secrecy. In other words, its value must stem, at least in part, from the fact that competitors do not know or readily have access to it.
The mere fact that information is useful to a business does not necessarily make it a trade secret. The secrecy of the information must contribute to its economic value.
Were Reasonable Steps Taken to Protect It?
Finally, the owner must take reasonable measures under the circumstances to maintain the information's secrecy. Depending on the circumstances, those measures may include confidentiality agreements, restricted access, internal policies, confidentiality markings, and limitations on who can receive sensitive technical information.
These requirements make trade-secret protection fundamentally different from patent protection. A patent provides exclusive rights for a limited period in exchange for full, public disclosure of the claimed invention. A trade secret, by contrast, can potentially remain protected for as long as the information continues to satisfy the applicable requirements and remains secret.
That distinction became central to the CAFC's analysis in International Medical Devices. The court ultimately focused on whether the information the plaintiffs identified as trade secrets was actually secret, particularly in light of information that had already been publicly disclosed.
The Main Dispute: Were the Alleged Trade Secrets Actually Secret?
The plaintiffs identified four alleged trade secrets:
Internal pockets or voids within the silicone implant intended to provide softness and elasticity.
Mesh tabs incorporated near the distal end of the implant to facilitate tissue ingrowth.
The use of absorbable sutures with mesh tabs to temporarily hold the implant during tissue ingrowth.
A particular list of instruments and materials used during the Penuma® surgical procedure.
A jury found that each of the four items qualified as a protectable trade secret and that the defendants had misappropriated them. The district court subsequently awarded $5.77 million in reasonable royalties for the alleged trade-secret misappropriation, $11.54 million in exemplary damages, and entered a permanent injunction preventing the defendants from using the four alleged trade secrets for five years.
The defendants appealed and argued, among other things, that the evidence was insufficient to establish that the information qualified as trade secrets in the first place. The CAFC agreed. That court held that there was no legally sufficient evidentiary basis for the jury to find that any of the four asserted items qualified as a protectable trade secret under California law.
For the first three alleged trade secrets, the court focused heavily on whether the claimed concepts were already disclosed in publicly available patents. The court determined that the prior patents, together with the undisputed knowledge in the field, disclosed the relevant concepts and therefore provided insufficient evidence that those concepts were not generally known.
The fourth alleged trade secret (the Penuma® instruments and material/supply list) presented a different problem. The CAFC concluded that the evidence was insufficient to establish that the list derived independent economic value from secrecy. Among other things, the list had been provided to another third party without an express confidentiality designation, and there was evidence that the procedure itself was not treated as a trade secret.
The court therefore reversed the trade-secret judgment. Because the plaintiffs did not identify confidential information covered by the NDA beyond the four asserted trade secrets, the CAFC also reversed the breach-of-contract judgment. It consequently vacated the findings of willful and malicious misappropriation, the $5.77 million reasonable-royalty award, the $11.54 million exemplary-damages award, and the permanent injunction.
Public Patent Disclosures Can Create Problems for Trade-Secret Protection
One of the most significant lessons from International Medical Devices concerns the relationship between patents and trade secrets. The plaintiffs argued that certain technical concepts associated with the implant qualified as trade secrets. The Federal Circuit, however, examined whether those concepts had already been disclosed in publicly available patents and other materials.
This creates an important tension between the two forms of intellectual property protection. A patent is designed to disclose an invention to the public in exchange for exclusive rights. Trade-secret law, by contrast, protects information that derives economic value from remaining secret.
Once particular technical information has been publicly disclosed, it generally cannot continue to qualify as a trade secret because it is no longer sufficiently secret. International Medical Devices illustrates why businesses must therefore carefully distinguish between information disclosed through patent filings and information they intend to keep confidential.
This does not mean that every piece of information associated with a patented invention loses trade-secret protection. A company may possess additional confidential information that is not disclosed in the patent, such as manufacturing parameters, internal processes, unpublished development data, or specialized implementation details.
The critical question is: What specific information is being claimed as the trade secret and whether that information remains sufficiently secret to satisfy the applicable trade-secret law.
For businesses developing new technologies, this distinction should be considered before filing patent applications. Companies should identify which aspects of their technology they intend to disclose publicly and which information may provide greater value if maintained as confidential. Coordinating patent and trade-secret strategies from the beginning can help prevent a public disclosure from undermining an intended trade-secret claim.
Trade Secrets and Patents Protect Different Things
The case also demonstrates why companies should not assume that patents and trade secrets provide interchangeable forms of protection. Patents and trade secrets operate according to fundamentally different principles.
A patent can provide exclusive rights in a qualifying invention in exchange for publicly disclosing the invention. Trade-secret protection, by contrast, depends on information remaining sufficiently secret. This creates different strategic considerations.
A company developing a new medical device may pursue patent protection for the device's structural features while maintaining certain manufacturing processes as trade secrets. Alternatively, a company may determine that a particular innovation is better suited to trade-secret protection if it can realistically be kept confidential and is difficult for competitors to independently discover. The decision can depend on factors such as:
Whether the technology can be reverse engineered.
Whether the company can realistically maintain confidentiality.
Whether competitors could independently develop the same technology.
Whether public disclosure would be necessary to obtain patent protection.
How long the company expects the information to remain commercially valuable.
The Federal Circuit's decision reinforces the importance of making these decisions deliberately rather than assuming that valuable technical information will automatically qualify for multiple forms of intellectual property protection.
The NDA Was Not Enough by Itself
Another important aspect of International Medical Devices concerns confidentiality agreements. Dr. Cornell had signed an NDA before attending the Penuma® training session. The plaintiffs therefore argued that the information disclosed during the training was confidential and that its subsequent use breached the agreement.
A confidentiality agreement can be an important tool for protecting sensitive business information. However, an NDA does not necessarily transform information that is already public into a trade secret. The CAFC specifically considered the NDA's definition of confidential information and noted that it excluded information that was or became generally available to the public, other than through the recipient's disclosure.
This distinction is particularly important for businesses that routinely share technology with employees, consultants, physicians, manufacturers, investors, distributors, or potential business partners. An NDA can establish contractual obligations concerning information covered by the agreement. But if a company is relying on trade-secret law, the underlying information must still satisfy the applicable requirements for trade-secret protection.
Businesses should therefore avoid treating an NDA as a substitute for a broader confidentiality strategy. Effective protection may require:
Clearly identifying what information is actually confidential.
Limiting access to people who need the information.
Marking or otherwise identifying sensitive materials where appropriate.
Using appropriate confidentiality agreements.
Maintaining internal policies governing confidential information.
Periodically reviewing whether sensitive information has become public.
The Patent-Inventorship Issue
The case also involved two patents relating to cosmetic implants: U.S. Patent Nos. 10,413,413 and 10,980,639. The plaintiffs sought to invalidate the patents based on allegations that Dr. Elist was a true inventor but was not named as an inventor on the patents. Inventorship is a separate issue from trade-secret protection.
Patent law requires the correct inventors to be identified on a patent application. A person does not become an inventor merely because that person contributed general knowledge, background information, or an idea that was already known. Inventorship generally depends on whether the person contributed to the conception of the claimed invention.
The CAFC 's analysis of the alleged trade secrets also informed its consideration of the inventorship issue. The court concluded that the evidence did not establish that Dr. Elist contributed to the conception of the claimed inventions in a manner sufficient to support the inventorship allegations. The court therefore reversed the district court's denial of judgment as a matter of law concerning patent invalidity.
This portion of the decision illustrates an important principle for businesses and inventors: inventorship depends on actual contribution to the claimed invention. Simply providing information about an existing technique does not necessarily make someone an inventor. Conversely, a person who contributes a novel concept that ultimately appears in the claims may need to be identified as an inventor even if that person did not perform every aspect of the development work. Careful inventorship analysis should therefore occur before filing a patent application and should be revisited when the claims evolve during prosecution.
The Counterfeiting Claim Was Different
Although the Federal Circuit rejected the trade-secret claims and reversed the patent-related judgment, the decision was not a complete victory for the defendants. The court affirmed liability for counterfeiting based on unauthorized use of the Penuma® trademark. The court concluded that sufficient evidence supported the jury's finding of liability and affirmed the associated damages.
This distinction is important because the different intellectual property claims were evaluated under different legal standards. The alleged trade secrets had to satisfy California's statutory requirements for trade-secret protection. The patent claims involved questions of inventorship and patent validity. The trademark claim involved unauthorized use of the federally registered Penuma® mark and the legal requirements governing trademark counterfeiting.
A single dispute can therefore involve several different forms of intellectual property, each requiring its own legal analysis. The outcome in International Medical Devices demonstrates why businesses should avoid viewing an intellectual property dispute as a single, unified question. A company may prevail on one type of IP claim while losing another, depending on the specific legal requirements and evidence applicable to each claim.
Protecting Innovation: Key Lessons
The CAFC’s decision in International Medical Devices provides several practical lessons for medical-device companies and other businesses that rely on patents and trade secrets. The case demonstrates that protecting valuable technology requires more than labeling information as confidential or requiring business partners to sign nondisclosure agreements. Companies must also understand whether the information actually satisfies the legal requirements for the particular form of protection being asserted.
One important consideration is identifying what information is genuinely confidential. Information that is already publicly available, including information disclosed in patents, generally cannot qualify as a trade secret merely because a company considers it commercially valuable or has treated it as confidential. Businesses should therefore distinguish between information that is publicly known and proprietary information that derives value from remaining secret.
This distinction is especially important when developing patent and trade-secret strategies. Patent protection requires public disclosure of the claimed invention, while trade-secret protection depends on maintaining secrecy. A company may therefore choose to patent certain aspects of a technology while keeping other information confidential, such as particular manufacturing processes, technical parameters, or internal know-how. That strategy works only if the information being maintained as a trade secret remains sufficiently secret and the company takes reasonable measures to preserve its confidentiality.
Confidentiality agreements remain an important part of that process. An NDA can establish contractual obligations concerning confidential information and provide evidence that a company took reasonable steps to protect sensitive information. However, an NDA does not transform publicly available information into a trade secret. Companies should also use practical safeguards, such as access restrictions, confidentiality policies, appropriate document markings, and records identifying who received sensitive information.
The case also highlights the importance of careful inventorship analysis. Patent inventorship is based on contribution to the conception of the claimed invention, rather than simply on employment status, seniority, ownership, or participation in commercialization. When a product is developed through collaboration among engineers, physicians, consultants, employees, or outside organizations, companies should carefully evaluate and document inventorship before filing a patent application.
What International Medical Devices Means for Intellectual Property Strategy
International Medical Devices illustrates a broader principle that extends well beyond the medical-device industry: different forms of intellectual property protect different aspects of innovation, and each has its own legal requirements. A technology company may possess patentable inventions, confidential technical information, proprietary manufacturing processes, trademarks, and copyrighted materials at the same time. These assets should not be treated as interchangeable. A patent depends on requirements such as patentability, disclosure, and proper inventorship, while trade-secret protection depends on secrecy, economic value derived from that secrecy, and reasonable efforts to maintain it.
For businesses developing new technologies, these distinctions should be considered early rather than after a dispute arises. Companies should identify which aspects of an invention should be publicly disclosed through patent filings, which information may be better maintained as a trade secret, and what procedures are necessary to protect genuinely confidential information.
The CAFC’s decision reinforces the importance of building an intellectual property strategy around the actual characteristics of the technology being developed. A commercially valuable idea is not necessarily a trade secret, and an NDA does not by itself create trade-secret protection. Likewise, obtaining meaningful patent protection requires careful attention to what was invented, who contributed to it, and what information is disclosed.
If you’re interested in learning more about this topic or how the principles discussed in this article may impact your business, don’t hesitate to contact us at info@patentxl.com or at +1(610)871-2024.
