Diamond Coating Technologies, LLC v. Hyundai Motor America
823 F.3d 615
| Fed. Cir. | 2016Background
- Diamond Coating Technologies sued several automakers for infringement of U.S. Patent Nos. 6,066,399 and 6,354,008; the patents were originally assigned to Sanyo Electric Co., Ltd.
- In 2011 Diamond and Sanyo executed a Patent Assignment and Transfer Agreement (PATA) and an Ancillary Agreement under New York law, transferring certain patent-related rights to Diamond.
- District Court dismissed Diamond’s lawsuits, concluding the PATA did not make Diamond the sole “patentee” able to sue without joining Sanyo; Diamond’s motion for reconsideration was denied.
- Key contested terms: Sanyo retained a worldwide, royalty-free, non-exclusive right to practice the patents; Sanyo retained economic interests in future proceeds; Diamond’s enforcement/licensing rights were conditioned on consideration of Sanyo’s interests and limited in scope.
- After the dismissal, Diamond and Sanyo executed nunc pro tunc agreements attempting to clarify that Diamond was intended to have full ownership; Diamond argued these cured the defect.
- The Federal Circuit affirmed dismissal, holding Diamond lacked all substantial rights at the time of suit and that nunc pro tunc assignments could not confer retroactive patentee status.
Issues
| Issue | Diamond's Argument | Appellees' Argument | Held |
|---|---|---|---|
| Whether Diamond was a "patentee" able to sue alone | PATA granted legal title/entire exclusive rights to Diamond, making it successor-in-title and able to sue without Sanyo | PATA preserved substantial rights in Sanyo (practice, economic interest, control over enforcement), so Diamond was not sole patentee | Diamond was not a patentee under 35 U.S.C. § 281 because it did not have all substantial rights at time of suit |
| Whether retention of rights to make/use/sell affects assignment status | Diamond: PATA’s language (e.g., “exploitation”) gives Diamond rights to practice/sell; Sanyo’s retained rights are limited | Appellees: PATA explicitly grants Sanyo a worldwide, royalty-free, non-exclusive right to make/use/sell and Diamond lacks affirmative rights to practice | Retention by Sanyo of a license to make/use/sell indicates the PATA was a license, not an assignment; Diamond failed to acquire all substantial rights |
| Whether control over enforcement/licensing defeats assignment | Diamond: PATA does not divest Diamond’s sole right to sue or to fully control enforcement/licensing | Appellees: PATA conditions enforcement on Diamond considering Sanyo’s interests, restricts sublicensing/joint licensing, lists companies Diamond may reserve not to sue—showing Sanyo’s control | Court: Sanyo retained significant control over enforcement/licensing; this is a critical factor showing no effective assignment |
| Effect of nunc pro tunc agreements executed after dismissal | Diamond: nunc pro tunc agreements clarify original intent and confer full ownership retroactively | Appellees: post-suit clarifications cannot retroactively cure lack of patentee status at time of suit | Under controlling precedent nunc pro tunc assignments cannot confer retroactive patentee status; they do not cure the defect |
Key Cases Cited
- WiAV Sols. LLC v. Motorola, Inc., 631 F.3d 1257 (Fed. Cir. 2010) (standard of review: patentee status is a question of law reviewed de novo)
- Minco, Inc. v. Combustion Eng’g, Inc., 95 F.3d 1109 (Fed. Cir. 1996) (assignment transfers title; license leaves title with owner; assignment requires transfer of entire exclusive right, undivided interest, or entire right in a geographic region)
- Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 604 F.3d 1354 (Fed. Cir. 2010) (the exclusive right to make/use/sell and retained enforcement/licensing rights are critical to assignment analysis)
- Alps South, LLC v. Ohio Willow Wood Co., 787 F.3d 1379 (Fed. Cir. 2015) (nunc pro tunc assignments cannot confer retroactive patentee status)
- Vaupel Textilmaschinen KG v. Meccanica Euro Italia S.p.A., 944 F.2d 870 (Fed. Cir. 1991) (substance of what was granted controls whether an agreement is an assignment or license)