The decision means that Howley and Roberts, former engineers with Wyko Tire Technology, may face stiffer prison time in the corporate espionage case. Both men were sentenced to house confinement and probation.
It's not clear whether either will appeal the decision.
"We're in the process of weighing the options for Mr. Roberts and we believe that a sentence of no incarceration is one that is appropriate for him," said Stephen Ross Johnson, a Knoxville attorney who represents Roberts.
Howley's attorney did not immediately respond to a call seeking comment.
A Knoxville federal jury convicted both men of seven counts of stealing trade secrets and three counts of engaging in wire fraud in December 2010.
The following year, U.S. District Court Judge Thomas W. Phillips sentenced both men to four months home confinement, 150 hours of community service and four years of probation. In the sentencing, the judge noted that neither man had been in trouble with the law before. The judge also found that Goodyear, the victim in the case, did not suffer any loss.
Goodyear is one of the few companies in the U.S. with the technology to build tires for very large earth-moving machines and mining equipment. In 2006 a Chinese state-run company reached out to the Wyko to help it build the large tires. At the time, Wyko was headquartered in Greenback, Tenn., and did not have its own technology to make parts for the off-road tires.
One of the engineers took unauthorized cellphone photos of the technology at a Goodyear plant in Topeka, Kan., where the tire company made the equipment in an effort to help Wyko come up with a design of their own. Wyko, which as has since been sold to a Chinese firm, was never able to fulfill the contract.
In its ruling, the federal appeals court said the trade secrets of the tire company were worth something to Goodyear, so the judge needs to come up with a reasonable estimate of an actual loss or intended loss to the tire company. The amount the judge decides could determine whether the pair would receive a stiffer sentence.