  United States Court of Appeals
      for the Federal Circuit
              __________________________

               RAYTHEON COMPANY,
                 Plaintiff-Appellant,

                           v.
         INDIGO SYSTEMS CORPORATION
             AND FLIR SYSTEMS, INC.,
             Defendants-Cross Appellants.
              __________________________

                   2011-1245, -1246
              __________________________

    Appeal from the United States District Court for the
Eastern District of Texas in No. 07-CV-0109, Judge
Richard A. Schell.
              __________________________

                 Decided: August 1, 2012
              __________________________

    CHRISTOPHER LANDAU, Kirkland & Ellis, LLP, of
Washington, DC, argued for plaintiff-appellant. With him
on the brief was DANIEL A. BRESS. Of counsel on the brief
were MARTIN E. ROSE, M. ROSS CUNNINGHAM, and STEVEN
D. SANFELIPPO, Rose Walker, LLP, of Dallas, Texas.

   MICHAEL J. COLLINS, Bickel & Brewer, of Dallas,
Texas, argued for defendants-cross appellants. With him
2                            RAYTHEON CO v. INDIGO SYSTEMS

on the brief were JAMES S. RENARD, WILLIAM A. BREWER,
III and C. DUNHAM BILES.
               __________________________

        Before LINN, DYK, and O’MALLEY, Circuit Judges.
LINN, Circuit Judge.

    Raytheon Company (“Raytheon”) appeals from a deci-
sion of the U.S. District Court for the Eastern District of
Texas entering summary judgment and dismissing Ray-
theon’s claims against Indigo Systems Corporation and
FLIR Systems, Inc. (“FLIR”) (collectively “Indigo”) for
trade secret misappropriation on the ground that they
were time barred. See Raytheon Co. v. Indigo Sys. Corp.,
653 F. Supp. 2d 677 (E.D. Tex. 2009). Indigo cross ap-
peals from the district court’s decision denying its motion
for attorney fees. See Raytheon Co. v. Indigo Sys. Corp.,
No. 4:07-CV-109 (E.D. Tex. Sept. 17, 2010). Because the
district court erred by resolving genuine issues of mate-
rial fact and drawing inferences in favor of Indigo, this
court reverses the district court’s grant of summary
judgment. 1



    1 Because this decision nullifies Indigo’s status as a
prevailing party, this opinion will not address the sub-
stance of Indigo’s cross appeal from the district court’s
denial of its motion for attorney fees. The district court’s
denial of attorney fees is therefore vacated. The court
notes, however, that the district court denied Indigo’s fees
motion because it did not recite its intent to seek fees in
the pleadings, relying on the Supreme Court’s decisions in
Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atlantic
Corp. v. Twombly, 550 U.S. 544 (2007). This court does
not consider Iqbal and Twombly to support the district
court’s conclusion.
RAYTHEON CO   v. INDIGO SYSTEMS                         3

                      I. BACKGROUND

    Raytheon Image Systems, a unit of the defense con-
tractor Raytheon, specializes in infrared imaging equip-
ment. Indigo Systems Corporation is a wholly owned
subsidiary of FLIR, also specializing in infrared imaging,
and founded in 1996 by three former Raytheon employees
including James Woolaway (“Woolaway”). In his resigna-
tion letter, Woolaway promised not to recruit Raytheon
employees while still at Raytheon or during any consul-
tancy that might develop between Raytheon and Indigo.
Indigo soon thereafter began to provide consulting ser-
vices to Raytheon in a relationship governed by a series of
Confidential Disclosure Agreements.

    In 1997, Raytheon became concerned that Indigo was
recruiting Raytheon personnel to gain access to Raytheon
trade secrets. Raytheon expressed this concern to Indigo,
which responded that the concern was baseless and cited
multiple Indigo policies aimed at protecting Raytheon’s
intellectual property. On July 30, 1997, Raytheon and
Indigo reached an agreement whereby Indigo would not
hire Raytheon personnel without permission for the
remainder of 1997, and would notify Raytheon of any
plans to hire Raytheon personnel through June 30, 1998.
Indigo would also prohibit future employees from using
any intellectual property obtained from former employers.
In exchange, Raytheon released all claims against Indigo
of which it was then aware. Raytheon enforced this
agreement through separate agreements with its own
employees.     The relationship between Raytheon and
Indigo terminated in 2000.

    In 2000, Indigo won the Litening military contract to
provide cooled infrared cameras to the military, over
Raytheon and other competitors. Then, in March 2003,
Indigo was selected over a number of competitors, includ-
ing Raytheon, to receive a subcontract from Northrop
4                            RAYTHEON CO v. INDIGO SYSTEMS

Grumman to provide infrared cameras for the F-35 Joint
Strike Fighter contract.

    In March 2004, Raytheon acquired an Indigo infrared
camera “to see how one of its competitors was manufac-
turing a competing camera.” Raytheon, 653 F. Supp. 2d
at 682. (citation omitted). In August of the same year,
Raytheon disassembled the camera and found what it
believed was evidence of patent infringement and trade
secret misappropriation. In February 2007, Raytheon
found a correlation between the areas of expertise of
former employees who had departed for Indigo and In-
digo’s intervening technological achievements, which
Raytheon began to believe were the result of the misuse of
Raytheon’s intellectual property.

     On March 2, 2007, Raytheon sued Indigo in the U.S.
District Court for the Eastern District of Texas asserting
causes of action, among others, for patent infringement
and misappropriation of trade secrets under both Texas
and California law. Indigo asserted a statute of limita-
tions defense, which Raytheon countered by arguing that
the discovery rule (under which a cause of action does not
accrue until it is known or should be known to the plain-
tiff) and the doctrine of fraudulent concealment (which
Raytheon asserted as a separate cause of action) tolled
the statute. 2


    2 Both California and Texas have statutes that pro-
vide for a three year statute of limitations for trade secret
misappropriation claims. See Cal. Civ. Code § 3426.6.
(“An action for misappropriation must be brought within
three years after the misappropriation is discovered or by
the exercise of reasonable diligence should have been
discovered.”); Tex. Civ. Prac. & Rem. Code § 16.010(a) (“A
person must bring suit for misappropriation of trade
secrets not later than three years after the misappropria-
RAYTHEON CO   v. INDIGO SYSTEMS                          5
    The district court agreed that Raytheon’s trade secret
claim was time barred and granted summary judgment in
favor of Indigo. In its analysis, the court first acknowl-
edged that “Indigo’s assurances reasonably convinced
Raytheon that its fears of misappropriation were un-
founded.” Raytheon, 653 F. Supp. 2d at 685. But it went
on to explain that the combined factors of the expiration
of the parties’ agreement regarding recruitment of Ray-
theon personnel in 1998, the end of the consulting ar-
rangement in 2000, and Indigo’s success as a competitor
in 2000 and 2003 demonstrated that “Raytheon had
developed an acute suspicion before March of 2004 that
Indigo was infringing its intellectual property rights.” Id.
The district court questioned Raytheon’s claim that it
purchased the Indigo camera as part of “routine competi-
tive analysis” based on the testimony of five witnesses
who claimed to have been unaware of Raytheon having
taken similar measures in the past. Id. The district court
stated that “the most damaging factor for Raytheon” was
“that it [could] point to no change in circumstances be-
tween 2000, when it ceased reposing trust in Indigo to
perform consulting services, and March of 2004, when
Raytheon had developed suspicions it deemed worth
investigation . . . [and that] the blend of information that
alerted Raytheon to the existence of its claim was avail-
able to, and known by, Raytheon long before it acted on
that information.” Id. at 686 (emphasis added). Accord-
ing to the district court, “had [Raytheon] timely investi-
gated the facts available to it, it indeed would have drawn
the conclusion that its intellectual property had been
misappropriated.” Id. Thus, the district court concluded
that “[t]he evidence demonstrates as a matter of law that
Raytheon knew or should have known all of the facts on
which it base[d] its trade secret misappropriation claim
before March of 2004.” Id. at 689 (emphasis in original).

tion is discovered or by the exercise of reasonable dili-
gence should have been discovered.”).
6                            RAYTHEON CO v. INDIGO SYSTEMS

    The parties settled Raytheon’s claims for patent in-
fringement. The district court dismissed the case and
entered a final judgment on January 7, 2011. Raytheon
timely appealed and Indigo timely cross appealed. This
court has jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

                      II. DISCUSSION

                  A. Standard of Review

     Summary judgment is granted “if the movant shows
that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). “This court reviews the dis-
trict court’s grant or denial of summary judgment under
the law of the regional circuit.” Lexion Med., LLC v.
Northgate Techs., Inc., 641 F.3d 1352, 1358 (Fed. Cir.
2011). “Applying Fifth Circuit law, we review the district
court’s decision to grant summary judgment de novo,
applying the same standard as the district court.” Abso-
lute Software, Inc. v. Stealth Signal, Inc., 659 F.3d 1121,
1129 (Fed. Cir. 2011) (citing United States v. Caremark,
Inc., 634 F.3d 808, 814 (5th Cir. 2011)). In its review, the
Fifth Circuit “views all evidence in the light most favor-
able to the non-moving party and draws all reasonable
inferences in that party’s favor.” Griffin v. United Parcel
Serv., Inc., 661 F.3d 216, 221 (5th Cir. 2011).

                 B. Arguments on Appeal

     On appeal, Raytheon primarily argues that the dis-
trict court erred by granting summary judgment that the
statute of limitations barred its claim. Specifically,
Raytheon argues that the district court erroneously
concluded that Raytheon reasonably should have known
about all the facts giving rise to its claim before March 2,
2004, based on the factual conclusion that Raytheon could
no longer reasonably rely on Indigo’s assurances in view
of the termination of the parties’ agreements and consul-
RAYTHEON CO   v. INDIGO SYSTEMS                           7
tancy and Indigo’s subsequent competition with Ray-
theon. According to Raytheon, this conclusion improperly
resolved a genuine factual dispute that needed to be
presented to the jury. Raytheon also contends that the
district court committed a similar error when it decided
that Raytheon purchased the Indigo camera because of
preexisting suspicions rather than because of routine
competitive analysis, arguing that this is another factual
dispute that also needed to be resolved by the jury.
According to Raytheon, both of these conclusions disre-
gard contrary evidence and resolve disputed issues of fact
in favor of the moving party, Indigo, in violation of the
summary judgment rule.

     Indigo responds that the district court did not base its
decision on the resolution of any disputed issue of fact.
Indigo argues that, while it presented numerous wit-
nesses rebutting Raytheon’s contention that it purchased
the Indigo camera through routine competitive analysis,
Raytheon presented only two witnesses to support its
claim—witnesses whose testimony was so vague that the
district court correctly refused to consider it. According to
Indigo, the district court based its decision on the follow-
ing undisputed facts: Raytheon’s knowledge of large scale
employee movement to Indigo; Indigo’s successful compe-
tition in the military infrared space; and Raytheon’s
ability to disassemble the camera and analyze its person-
nel records long before March 2004. Indigo argues that
the discovery rule does not help Raytheon because it had
a basis for suspicion as of 2000 and, from that time on,
could have discovered, with minimal investigation, all the
facts upon which it would later base its claim. Indigo
argues that its own protestations of innocence did not
excuse Raytheon’s failure to investigate. Finally, Indigo
argues that summary judgment was also proper because
Raytheon failed to support the elements of its fraudulent
concealment claim with any evidence.
8                           RAYTHEON CO v. INDIGO SYSTEMS

    Raytheon replies that Indigo relies primarily on cases
in which there were no affirmative assurances, thereby
falsely equating the extensive series of assurances in this
case with mere denials of wrongdoing. Raytheon argues
that neither Texas nor California law establishes a rule
that parties are automatically on notice of possible trade
secret claims whenever their employees move to their
competitors. Raytheon further argues that Indigo con-
cedes that the district court failed to consider evidence
that Raytheon had conducted competitive analyses on
previous occasions, and explains that the district court
provided no reason for ignoring that evidence, notwith-
standing Indigo’s assertion that it was proper to ignore it
because it was too vague.

                       C. Analysis

                            i.

    As a threshold matter, the parties dispute whether
California law or Texas law should apply to the trade
secret misappropriation claims in this case. Indigo con-
tends that Texas law should apply, while Raytheon ar-
gues for the application of California law. For the
purposes of this appeal, we need not decide this question
because we conclude, as did the district court, that there
is no meaningful difference between California and Texas
law with respect to the tolling of the statute of limita-
tions. See Raytheon, 653 F. Supp. 2d at 683-84 (relying on
both California and Texas law). California and Texas
have both adopted a “discovery rule” such that claims for
trade secret misappropriation accrue for statute-of-
limitations purposes when the plaintiff knew or reasona-
bly should have known of the facts that give rise to the
claim. Tex. Civ. Prac. & Rem. Code Ann. § 16.010(a); Cal.
Civ. Code § 3426.6.      In both Texas and California,
whether or not a plaintiff “should have known” under the
discovery rule is ordinarily a question of fact. See, e.g.,
RAYTHEON CO   v. INDIGO SYSTEMS                           9
Childs v. Haussecker, 974 S.W.2d 31, 44 (Tex. 1998)
(“Inquiries involving the discovery rule usually entail
questions for the trier of fact.”); Pirtle v. Kahn, 177
S.W.3d 567, 572 (Tex. App. 2005) (“When a plaintiff
discovers or should have discovered the cause of his injury
and whether a particular plaintiff exercised due diligence
in so discovering are questions of fact.”); Ovando v.
County of Los Angeles, 159 Cal. App. 4th 42, 61 (Cal. Ct.
App. 2008) (“The question when a plaintiff actually dis-
covered or reasonably should have discovered the facts for
purposes of the delayed discovery rule is a question of fact
unless the evidence can support only one reasonable
conclusion.” (citing Jolly v. Eli Lilly & Co., 44 Cal. 3d
1103, 1112 (Cal. 1988)).

     The same is true when the statute of limitations is
tolled by fraud. See, e.g., Stonecipher’s Estate v. Butts’
Estate, 591 S.W.2d 806, 809 (Tex. 1979) (“Our courts have
consistently held that fraud vitiates whatever it
touches . . . and that limitations begin to run from the
time the fraud is discovered or could have been discovered
by the defrauded party by exercise of reasonable dili-
gence. Reasonable diligence is a question of fact.” (cita-
tions omitted)); Mills v. Mills, 305 P.2d 61, 70 (Cal. Dist.
Ct. App. 1956) (“When a party is guilty of fraudulent
concealment of the cause of action the statute is deemed
not to become operative until the aggrieved party discov-
ers the cause of action. . . . When the facts are susceptible
to opposing inferences, whether a party had notice of
circumstances sufficient to put a prudent man on inquiry
as to a particular fact, and whether by prosecuting such
inquiry he might have learned such fact, are questions of
fact to be determined by the trial court.” (citations omit-
ted)).

   While the discovery rule is focused on the reasonable-
ness of the plaintiff’s failure to discover a cause of action
and fraudulent concealment is focused on the actions of
10                           RAYTHEON CO v. INDIGO SYSTEMS

the defendant to prevent the plaintiff from discovering the
cause of action, the two issues turn on the same questions
of fact in the present case. The district court acknowl-
edged this when it explained that the distinction between
fraudulent concealment and the discovery rule would
make no difference here because “[t]he circumstances that
render the doctrine of fraudulent concealment unavailing
ensure the same fate for Raytheon’s discovery rule argu-
ment.” Raytheon, 653 F. Supp. 2d at 688.

    The only way Indigo alleges—and the district court
found—that Raytheon could have known of the alleged
misappropriation is by taking apart Indigo’s camera. So,
for Raytheon’s claim to be time barred, the facts must
establish as a matter of law that Raytheon could have and
should have acquired and disassembled the camera before
March 2, 2004, because by that time it already had a
reason to believe the camera contained evidence that its
trade secrets had been misappropriated. The threshold
problem with the district court’s conclusion is that it fails
to recognize this basic point: the disassembly and inspec-
tion of the Indigo camera is the only alleged path to
Raytheon’s knowledge of the facts giving rise to Ray-
theon’s cause of action. To reach the conclusion it did, the
district court needed to find (at least implicitly) that
Raytheon, as a matter of law, should have acquired and
disassembled the Indigo camera before March 2004. But
there is no way the district court could reach such a
conclusion without resolving factual questions against
Raytheon, the non-moving party, at summary judgment.

    Raytheon denies that it bought the camera due to any
suspicion at all. And Raytheon supported its claim with
testimony relating to its past practice of examining com-
petitive products, which the district court ignored. More-
over, the fact that Raytheon waited from March, 2004,
when it acquired the camera, until August of the same
year before taking it apart, supports Raytheon’s conten-
RAYTHEON CO   v. INDIGO SYSTEMS                           11
tion that it did not actually suspect anything before it
dissected the camera. Thus, the facts of record could
support a reasonable inference in Raytheon’s favor, which
the district court improperly declined to draw. Instead,
the district court focused only on the witnesses who
denied being aware of previous instances of reverse engi-
neering for competitive-analysis reasons. Id. (“[A]t least
five [Raytheon witnesses] . . . testified that they had never
heard of Raytheon taking such steps.”). Thus, the district
court drew impermissible factual inferences against the
non-moving party to a summary judgment motion. See
Griffin, 661 F.3d at 221; KPMG Peat Marwick v. Harrison
Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999)
(“A defendant moving for summary judgment on the
affirmative defense of limitations has the burden to
conclusively establish that defense. Thus, the defendant
must (1) conclusively prove when the cause of action
accrued, and (2) negate the discovery rule, if it applies
and has been pleaded or otherwise raised, by proving as a
matter of law that there is no genuine issue of material
fact about when the plaintiff discovered, or in the exercise
of reasonable diligence should have discovered the nature
of its injury. If the movant establishes that the statute of
limitations bars the action, the nonmovant must then
adduce summary judgment proof raising a fact issue in
avoidance of the statute of limitations.” (citations omit-
ted)); Woods v. William M. Mercer, Inc., 769 S.W.2d 515,
518 n.2 (Tex. 1988) (“[O]n motion for summary judgment,
the burden is on the defendant to negate the discovery
rule by proving as a matter of law that no issue of mate-
rial fact exists concerning when the plaintiff discovered or
should have discovered [its cause of action]. . . . Thus, in
a summary judgment setting, the burden rests upon the
movant defendant not only to plead limitations, but also
to negate the discovery rule.” (citation omitted)). To the
extent that the district court’s decision depends on the
conclusion that Raytheon bought the Indigo camera due
to a preexisting suspicion, it cannot be sustained.
12                          RAYTHEON CO v. INDIGO SYSTEMS

                            ii.

     We must next determine whether the district court
erred in concluding that Raytheon should have suspected
Indigo at an earlier time. The district court asserted that
all the relevant facts (aside from those discovered inside
the camera itself)—i.e. the employee mobility, the confi-
dentiality agreements, the expiration of the consultancy,
and the 2000 and 2003 Indigo victories in the market-
place—were already known to Raytheon before March
2004.     As the district court explained, there was “no
change in circumstances between 2000, when it ceased
reposing trust in Indigo to perform consulting services,
and March of 2004, when Raytheon had developed suspi-
cions it deemed worth investigation.” Raytheon, 653 F.
Supp. 2d at 686. But this reasoning is premised on the
district court’s factual conclusion that Raytheon’s discov-
ery of its cause of action was not based entirely on hap-
penstance rather than any preexisting suspicion. Thus,
the district court’s conclusion that, because nothing had
changed in the intervening time, Raytheon’s delayed
discovery was unreasonable, fails for the same reason as
the district court’s factual conclusion that Raytheon
discovered the injury through its own pre-existing suspi-
cion: it rests on the resolution of the same genuine issue
of material fact against the non-moving party at summary
judgment.

     Furthermore, while Indigo relies on Seatrax, Inc. v.
Sonbeck International, Inc., 200 F.3d 358 (5th Cir. 2000),
to support its argument that Raytheon should have
suspected something sooner than it did, this reliance is
misplaced. The district court accepted that initially
“Indigo’s assurances reasonably convinced Raytheon that
its fears of misappropriation were unfounded.” Raytheon,
653 F. Supp. 2d at 685. In Seatrax there were neither
assurances nor a finding of reasonable reliance thereon.
See 200 F.3d at 363-67. Here, the district court held that
RAYTHEON CO   v. INDIGO SYSTEMS                           13
the conceded reasonableness of relying on these assur-
ances expired in 2000 along with the consultancy itself.
Thus, the district court essentially concluded that from
2000 on, Raytheon was on permanent inquiry notice and
therefore had a constant duty to investigate all acts of
competition by Indigo for evidence of misappropriation.
The district court presumed that because Raytheon once
suspected Indigo, therefore, as a matter of law, it should
have continued to suspect Indigo after 2000. But, this
presumption ignores Indigo’s assurances and was imper-
missible under both Texas and California law, because, as
discussed above, whether or not the discovery rule applies
is ordinarily a question of fact in both states.

    It was for the jury and not for the district court to de-
termine when Raytheon should have first discovered the
facts supporting its cause of action. The district court
erred by resolving genuine factual disputes in favor of
Indigo, the moving party, when it concluded that Ray-
theon should have discovered its cause of action before
March 2, 2004.

                     III. CONCLUSION

    For the foregoing reasons, the grant of summary
judgment is reversed and the order denying Indigo’s
motion for fees is vacated. The case is remanded for
further proceedings consistent with this opinion.

  REVERSED IN PART, VACATED IN PART, AND
                REMANDED
