Ninth Circuit Rejects Boeing’s Bid to Rehear Appeal of Trade Secret Loss

The U.S. Court of Appeals for the Ninth Circuit yesterday rejected Boeing’s bid to revisit its August 2025 ruling in favor of electric-aircraft startup Zunum Aero, holding that Boeing’s patent-inventorship counterclaims did not strip the Ninth Circuit of jurisdiction over the trade secret dispute.

The Ninth Circuit panel denied Boeing’s petition for panel rehearing after concluding that its patent counterclaims were “permissive” rather than “compulsory”, and therefore not subject to the exclusive jurisdiction of the U.S. Court of Appeals for the Federal Circuit.

The ruling leaves in place the Ninth Circuit’s earlier decision reversing and remanding a district court order that had wiped out a jury verdict of more than $92 million in Zunum’s favor.

Trade Secret Lawsuit

Zunum sued Boeing in Washington state court in 2020, alleging that Boeing misused confidential information it obtained while evaluating an investment in and possible collaborations with the company. Zunum’s complaint asserted 12 Washington state-law claims, including breach of contract, tortious interference and trade secret misappropriation.

Zunum alleged that Boeing gained access to confidential information under agreements limiting its use to investment evaluation, management and potential collaborations, but later used or disclosed that information for other purposes. Its complaint identified more than 30 alleged trade secrets.

Zunum also alleged that Boeing’s Thin Haul Hybrid Electric Propulsion System patent, U.S. Patent No. 11,110,811, borrowed from Zunum’s ZA10 aircraft architecture, and that Boeing’s Active Voltage Control for Hybrid Electric Aircraft patent, U.S. Patent No. 10,589,635, incorporated information closely related to technology addressed by a Zunum patent filing.

After Zunum suggested in discovery that Boeing patents derived from Zunum’s hybrid-electric architecture, Boeing counterclaimed for declaratory judgments that its personnel were the sole inventors of the patented technology. Boeing then removed the case to federal court based on the federal patent-law counterclaim.

The district court ultimately granted Boeing summary judgment on its two patent-inventorship counterclaims. Zunum’s trade secret and other state-law claims, however, proceeded to an eight-day jury trial in May 2024. The jury found Boeing had misappropriated 11 of 19 trade secrets presented at trial, breached a contract and tortiously interfered with Zunum’s prospective relationship with Safran. It awarded Zunum $67.08 million in actual trade secret damages, $14.15 million in unjust enrichment and $11.56 million for tortious interference.

The district court subsequently granted Boeing judgment as a matter of law and conditionally ordered a new trial, vacating the verdict. The Ninth Circuit reversed those rulings on appeal. After that loss, the panel noted in yesterday’s decision, Boeing argued for the first time in its rehearing petition that the Ninth Circuit lacked jurisdiction in the first place.

Decision on Rehearing Petition

Under 28 U.S.C. § 1295(a)(1), the Federal Circuit has exclusive appellate jurisdiction over a civil action in which a party has asserted a compulsory counterclaim arising under federal patent law. While the Ninth Circuit agreed with Boeing that its inventorship counterclaims unquestionably arose under federal patent law, “these counterclaims are permissive, not
compulsory, because they do not arise from the same transaction or occurrence as Zunum’s claims,” said the court.

Under Ninth Circuit precedent, the court explained, a counterclaim is compulsory when there is a “logical relationship” between it and the opposing party’s claim. That generally requires the claims to arise from the same aggregate set of operative facts, either because the same facts form the basis of both claims or because the facts underlying the original claim activate additional legal rights in the defendant.

The panel concluded that Boeing’s patent counterclaims failed that test.

Although the patent allegations overlapped with Zunum’s trade secret case, they represented only a small part of a much broader misappropriation theory. Boeing’s counterclaims grew from just two paragraphs of Zunum’s 576-paragraph complaint, the court emphasized, while Zunum alleged numerous ways in which Boeing had improperly used or disclosed more than 30 trade secrets.

Boeing prevailed on inventorship at summary judgment, while Zunum subsequently prevailed before a jury on trade secret misappropriation, so Zunum did not need to prove that Boeing was not the sole inventor of its patented technology in order to establish trade secret misappropriation.

The court also rejected Boeing’s argument that it should be enough that its counterclaims overlapped substantially with one theory supporting Zunum’s trade secret claim. Rule 13(a), the panel said, asks whether a counterclaim arises out of the transaction or occurrence underlying the opposing party’s claim, not merely one theory used to prove that claim. Boeing conceded at oral argument that no precedent supported its theory-level approach.

The Ninth Circuit went further, concluding that even if Federal Circuit precedent governed the compulsory-counterclaim question, Boeing would still lose.

Federal Circuit precedent considers whether the legal and factual issues are largely the same, whether substantially the same evidence supports both claims, and whether a logical relationship exists between them. Ultimately, according to the Ninth Circuit, those tests focus on “the extent of factual overlap between what the plaintiff must establish to prove its claim and what the defendant must establish to prove its counterclaim.”

That overlap was too slight here. Zunum established trade secret misappropriation without defeating Boeing’s inventorship claims. As a result, the panel concluded the patent counterclaims were permissive under both Ninth Circuit and Federal Circuit precedent.

Boeing next argued that if its patent claims were merely permissive, then they could not provide the federal jurisdictional anchor necessary for the district court to hear Zunum’s state-law claims. In Boeing’s view, if the claims were insufficiently related to satisfy Rule 13(a)’s “same transaction or occurrence” test, they necessarily could not constitute the same constitutional “case or controversy” for purposes of supplemental jurisdiction under 28 U.S.C. § 1367.

The Ninth Circuit rejected that proposition and joined the First, Second and Seventh Circuits in holding that the supplemental-jurisdiction standard is broader than the compulsory-counterclaim test.

Supplemental jurisdiction requires only a “common nucleus of operative fact,” the court explained. A relatively “loose factual connection” can suffice, whereas compulsory-counterclaim treatment requires substantially greater factual overlap.

Zunum’s state claims and Boeing’s patent counterclaims cleared that lower threshold because they all related to Boeing’s access to and alleged misuse of confidential information concerning Zunum’s hybrid-electric aircraft technology. The district court therefore properly exercised supplemental jurisdiction over the state-law claims.

Concurrence

Judge Bridget Bade concurred in the denial of rehearing and agreed that Boeing’s counterclaims were permissive, but she criticized the majority’s application of Ninth Circuit precedent and said the majority “does not persuasively explain why Boeing’s counterclaims were not compulsory.”

According to Bade, the majority placed too much weight on its judicial interpretation of Mattel v. MGA Entertainment, Inc., 705 F.3d 1108 (9th Cir. 2013), relying on factors such as “logical relationship,” “same operative facts” and “aggregate core of facts” rather than beginning with Rule 13(a)’s actual language: whether the counterclaim “arises out of the transaction or occurrence” underlying the plaintiff’s claim.

Bade would identify the occurrences essential to each claim and ask whether those occurrences were sufficiently related to constitute a single transaction. She nevertheless reached the same ultimate answer because Boeing’s declaratory-judgment counterclaims arose only after Zunum created an actual controversy over inventorship by filing suit.

Image Source: Deposit Photos
Author: ericbvd
Image ID: 24031355