US Courts Can Compel Parties to Transfer Ownership of Foreign Patents

By on December 17, 2020
Posted In Patents

Addressing a district court decision agreeing to transfer ownership of certain US patents, but declining to do likewise for the related foreign patents, the US Court of Appeals for the Federal Circuit explained that US courts have authority to compel litigants before them to transfer ownership of their patents and held that ownership of the foreign patents should have been transferred as well. SiOnyx LLC v. Hamamatsu Photonics K.K., Case Nos. 19-2359, 20-1217 (Fed. Cir. Dec. 7, 2020) (Lourie, J.).

In 1998, a professor at Harvard discovered a process for creating black silicon with unique properties and launched a company, SiOnyx, to commercialize the invention. SiOnyx eventually met with Hamamatsu, a manufacturer of silicon-based photodetector devices, and entered into a nondisclosure agreement (NDA) to share confidential information to explore a potential joint venture. SiOnyx provided information to Hamamatsu under the NDA, but the joint venture plans never came to fruition, and Hamamatsu allowed the agreement to lapse. A short time later, Hamamatsu began marketing photodetector devices using black silicon and applied for foreign patents covering its products, along with related US patents. SiOnyx sued Hamamatsu for breach of contract, infringement of a SiOnyx patent and for ownership of Hamamatsu’s patents.

The case ultimately went to trial and led to a jury verdict in SiOnyx’s favor on breach of contract and infringement. The jury also found that one of SiOnyx’s employees had contributed to the inventions claimed by Hamamatsu’s patents. Based on that inventorship finding, the district court transferred sole ownership of the US patents to SiOnyx pursuant to an NDA provision retaining intellectual property rights for confidential information shared under the agreement. The district court also treated the ownership transfer as an equitable remedy in view of Hamamatsu’s breach of the agreement. However, the district court declined to transfer ownership of the foreign patents because it questioned its authority to do so. Both parties appealed.

On appeal, the Federal Circuit first disposed of most of the appellate issues as being resolved by the jury verdict. Regarding ownership of the patents, Hamamatsu argued that the jury finding of co-inventorship by SiOnyx’s employee, rather than sole inventorship, implied that Hamamatsu employees also contributed to the invention and thus warranted partial ownership. The Court rejected this argument because it found that Hamamatsu had not shown that its contribution was derived from confidential information shared under the NDA and thus did not trigger any ownership rights under the agreement. The Federal Circuit also reasoned that Hamamatsu’s inventive contribution would not bar the equitable relief imposed by the district court. As for the foreign patents, the Court agreed with SiOnyx that the same grounds that led to transfer of the US patents also warranted transfer of the foreign patents, and reiterated that US courts have authority to compel the parties properly before them to transfer ownership of their patents.

Alexander P. OttAlexander P. Ott
Alexander (Alex) P. Ott focuses his practice on litigating complex patent disputes and representing clients in a variety of high technology industries, including the semiconductor, consumer electronics, telecommunications, pharmaceutical and software industries. He is a registered patent attorney with significant experience in patent prosecution matters. Alex has represented clients in federal district courts, in Section 337 investigations before the US International Trade Commission (ITC), in inter partes review (IPR) and post-grant review (PGR) proceedings at the US Patent and Trademark Office, and before the US Court of Appeals for the Federal Circuit. Read Alexander (Alex) P. Ott's full bio.