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Latest Federal Court Cases,12/14/20

December 14, 2020

Overview

In the only precedential patent opinion issued this week, the Federal Circuit determined multiple issues in cross-appeals from the district court’s disposition of post-trial motions following a jury trial. The dispute concerned infringement, patent ownership, and contract issues arising from the parties’ 2007-2008 collaboration on commercializing “black silicon” technology first developed by SiOnyx’s co-founders in the late 1990s. The parties’ non-disclosure agreement had provided that each party claimed ownership in patent rights arising from their confidential information provided thereunder, and when Hamamatsu began commercializing black silicon products following termination of the agreement, SiOnyx sued for breach of the NDA, for infringement of its own patent covering the technology, and for an order compelling Hamamatsu to assign to SiOnyx Hamamatsu’s U.S. and foreign patents arising from the collaboration.

The jury determined, inter alia, that Hamamatsu breached its NDA with SiOnyx and was entitled to damages for that breach and for unjust enrichment stemming therefrom; that Hamamatsu willfully infringed SiOnyx’s U.S. Patent 8,080,467 but awarding $0 in damages on that claim; and that Hamamatsu’s U.S. patents were co-invented by a SiOnyx founder. Following post-trial motions practice, the district court denied Hamamatsu’s JMOL motion and granted to SiOnyx, inter alia, sole ownership of Hamamatsu’s U.S. patents and injunctive relief prohibiting Hamamatsu from practicing the ’467 patent, as well as from practicing its own U.S. patents (now assignable to SiOnyx) for breach of the NDA. However, the district court denied, inter alia, SiOnyx’s motion for sole ownership of the foreign patent applications from which Hamamatsu’s U.S. patents claimed priority.

The Federal Circuit affirmed the district court’s grant of injunctive relief concerning SiOnyx’s ’467 patent, finding that the district court did not abuse its discretion in finding that Hamamatsu’s accused products competed with SiOnyx’s where conflicting testimony was presented on that issue by both parties, and that the showing of irreparable harm was supported by Hamamatsu’s use of SiOnyx’s confidential information to accelerate its market entry. The Federal Circuit also affirmed, on substantially the same grounds, the injunction against Hamamatsu’s continued use of the U.S. patents it had itself obtained, as well as the jury’s award of contract and unjust enrichment damages accruing after expiration of the NDA’s confidentiality period. In these rulings, the Court rejected Hamamatsu’s arguments that there was no continuing harm after the confidentiality period had expired, pointing out the ongoing benefits to Hamamatsu from its prior use of SiOnyx’s confidential information in breach of the NDA.

Hamamatsu also argued that the district court erred in compelling it to assign its U.S. patents to SiOnyx, arguing that the jury’s finding of co-inventorship necessarily implied that Hamamatsu’s information was also used to develop the technology, and so it should retain ownership rights under the terms of the parties’ agreement. The Federal Circuit rejected this argument and affirmed, pointing out that inventorship and ownership are separate issues and that Hamamatsu had presented no evidence that its contributions were its “confidential information” under the NDA, such that the parties’ agreement would have conferred ownership rights on Hamamatsu.

The Federal Circuit further held that the district court erred in declining to award SiOnyx sole ownership of Hamamatsu’s foreign patents for black silicon technology. Noting that the district court’s decision appeared rooted in uncertainty over its jurisdiction to compel assignment of foreign patents, the Federal Circuit clarified that an order compelling assignment of foreign patents is an exercise of the court’s jurisdiction over the party, not the foreign patent office in which the assignment was made. The Court further reasoned that because Hamamatsu’s U.S. patents claimed priority from its Japanese patent applications, those applications must be for the same inventions as the U.S. patents, and that SiOnyx was therefore entitled to sole ownership of the Japanese applications and any foreign applications claiming priority therefrom for the same reasons it was entitled to sole ownership of the U.S. patents.

The Federal Circuit declined to reach Hamamatsu’s appeal of the willfulness determination, noting that because the district court had declined to award any enhanced damages under 35 U.S.C. § 284, it was unclear what effect any reversal would have, and so considering the issue would be tantamount to an advisory opinion.

The Federal Circuit also found that the district court did not abuse its discretion in denying SiOnyx’s request for § 285 fees found the jury’s determination that SiOnyx’s contract and unjust enrichment claims were not barred by the statute of limitations to be supported by substantial evidence, and found for SiOnyx on pre-judgment interest issues under Massachusetts law.

The opinion can be found here.

By Jason A. Wrubleski

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