Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-02003/USCOURTS-ca13-15-02003-0/pdf.json

Parties Involved:
Don Alford
Appellant
Bryant Hickman
Appellee
Kenneth Matheson
Appellant
Elliott Moorhead
Appellee
NanoVapor Fuels Group, Inc.
Appellee
Keith Nathan
Appellant
Jefferey St. Amant
Appellant
Vapor Point LLC
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

VAPOR POINT LLC, KEITH NATHAN, KENNETH 

MATHESON,

Plaintiffs-Cross-Appellants

DON ALFORD, JEFFEREY ST. AMANT,

Counterclaim Defendants-Cross-Appellants

v.

ELLIOTT MOORHEAD, NANOVAPOR FUELS 

GROUP, INC., BRYANT HICKMAN,

Defendants-Appellants

______________________ 

2015-1801, 2015-2003

______________________ 

Appeals from the United States District Court for the 

Southern District of Texas in No. 4:11-cv-04639, Judge 

Vanessa D. Gilmore.

______________________ 

Decided: August 10, 2016

______________________ 

 JASON AARON WIETJES, Polsinelli PC, Dallas, TX, 

argued for plaintiffs-cross-appellants and counterclaim 

defendants-cross-appellants. Also represented by 

MICHAEL DAVID PEGUES. 

 WILLIAM PETERSON RAMEY III, Ramey & Schwaller, 

LLP, Houston, TX, argued for defendants-appellants.

Case: 15-2003 Document: 12-2 Page: 1 Filed: 08/10/2016
2 VAPOR POINT LLC v. MOORHEAD

______________________ 

Before O’MALLEY, CHEN, and STOLL, Circuit Judges.

Opinion for the court filed PER CURIAM. 

Concurring opinion filed by Circuit Judge O’MALLEY. 

PER CURIAM. 

Vapor Point, L.L.C., Keith Nathan (“Nathan”), and 

Kenneth Matheson (“Matheson”) (collectively “Vapor 

Point”) sued Elliott Moorhead (“Moorhead”), NanoVapor 

Fuels Group, Inc., and Bryant Hickman (“Hickman”)

(collectively “NanoVapor”) in the United States District 

Court for the Southern District of Texas, seeking to have 

Nathan and Matheson recognized as joint inventors under 

35 U.S.C. § 256 on NanoVapor’s U.S. Patent Nos. 

7,727,310 (“the ’310 patent”) and 8,500,862 (“the ’862 

patent”). NanoVapor responded by suing Vapor Point, 

seeking to have Moorhead recognized as a joint inventor 

under 35 U.S.C. § 256 on Vapor Point’s U.S. Patent Nos. 

7,740,816; 7,803,337; 8,337,585; 8,337,604; 8,337,763 and 

for declaratory relief regarding inventorship of 

NanoVapor’s ’310 and ’862 patents. After a four-day 

evidentiary hearing, the district court issued an order 

granting Vapor Point’s motion for correction of inventorship and denying each of NanoVapor’s motions. Vapor 

Point moved for exceptional case status and attorneys’ 

fees. The district court issued a final judgment correcting 

inventorship, dismissing the action with prejudice, and 

denying Vapor Point’s motion for exceptional case status 

and attorneys’ fees. 

NanoVapor appeals the district court’s order on inventorship and its dismissal of the case. Vapor Point crossappeals the same order to the extent it holds that the case 

is not exceptional and that an award of attorneys’ fees is 

not warranted. We find that the district court did not err 

in dismissing the case after determining inventorship, 

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VAPOR POINT LLC v. MOORHEAD 3

especially in light of NanoVapor’s concession that a determination of inventorship would resolve the case. We 

further find that the district court did not abuse its discretion in denying Vapor Point’s motion for exceptional 

case status and attorneys’ fees. Therefore, we affirm.

BACKGROUND

The factual and procedural history in this case is confusing, but is important to the issues we resolve. We do 

our best to lay it out with clarity. 

The patents-in-suit are generally directed “to the removal of volatile fuel vapors, also known as volatile 

organic compounds (‘VOCs’), from storage tanks and other 

holding vessels, generally in the oil and gas industry.” 

Inventorship Order at 3, Vapor Point, L.L.C., et al. v. 

Moorhead, et al., No. 4:11-CV-04639 (S.D. Tex. Mar. 13, 

2015), ECF No. 321 (hereinafter “Inventorship Order”). 

“EPA and state ‘clean air’ regulations regulate the percentage of contaminates that may be discharged” into the 

atmosphere. Id. at 4. The patents-in-suit “address this 

problem by capturing and recovering the fuel vapors.” Id.

“NanoVapor is an industry leader in the field of [VOC] 

containment, including a process called Vapor Suppression System developed by Moorhead that aims to control 

or eliminate combustible and toxic gases in fuel storage 

and transfer operations.” Id. at 7. After working with 

Moorhead to help market this technology, Nathan became 

Chief Operating Officer of NanoVapor in 2007. Id. at 8.1 

 

1 The parties agree that Moorhead and Nathan 

were acquainted before Nathan began work with 

NanoVapor, but disagree regarding the length of their 

interaction. NanoVapor alleged they met “at an industry 

conference in 2005” while Vapor Point alleged they “began 

working [together] . . . in the summer of 2006.” Id. at 7. 

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4 VAPOR POINT LLC v. MOORHEAD

NanoVapor later hired Matheson to help with the “commercial embodiment” of the technology being developed. 

Id. Moorhead filed provisional patent application 

60/871/766 on December 22, 2006, claiming the vapor 

suppression system that is the subject of NanoVapor’s 

’310 patent. The ’310 patent claims priority to this application. The parties disagree over whether Nathan was 

aware at the time of the progress of the patent application. Id. at 8. 

NanoVapor alleged that Nathan and Matheson “plotted to steal [NanoVapor’s] technology and destroy 

[NanoVapor’s] business when [Nathan and Matheson] 

developed the commercial embodiment of NanoVapor’s 

patent-pending concept.” Id. According to NanoVapor, 

“an outside group conducted due diligence testing that 

exceeded expectations,” after which Nathan and Matheson “decided to steal the technology and associated trade 

secrets.” Id. NanoVapor asserts that Nathan and Matheson “each requested a 20% stake in NanoVapor, which 

[NanoVapor] rejected.” Id.

In contrast, Vapor Point alleges that “the ’310 patent 

[NanoVapor] filed for on December 18, 2007 wrongfully 

incorporated, disclosed, and claimed all of Nathan and 

Matheson’s conceptual and inventive contributions.” Id. 

The ’862 patent, according to Vapor Point, similarly 

misappropriated Nathan and Matheson’s work. Id. 

Nathan and Matheson allege that they are the true 

inventors of the technology disclosed in the ’310 patent 

“because Defendant Moorhead brought on Nathan and 

Matheson to help him reengineer the system and bring it 

to market but that Moorhead wrongfully filed for the ’310 

patent without consent, notice, or compensation to Nathan or Matheson.” Id. at 9. Based on the allegations, 

Vapor Point asked that the district court correct inventorship of the ’310 and ’862 patents to add their names to 

both, or possibly even substitute their names for Moorhead’s on both.

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VAPOR POINT LLC v. MOORHEAD 5

For its part, NanoVapor asked the district court to alter the inventorship of Vapor Point’s five patents to include Moorhead “because the Vapor Point patents are 

based on Defendant Moorhead’s conceptions in the ’310 

patent.” Id.

In addition to its requests to correct the inventorship

of NanoVapor’s patents, Vapor Point also asserted a 

number of state law claims against NanoVapor: commonlaw fraud, fraud by nondisclosure, unjust enrichment, 

tortious interference, misappropriation of trade secrets, 

and the Texas Theft Liability Act. First Amended Complaint at ¶¶ 61–104 (Counts III–VIII), Vapor Point (S.D. 

Tex. Aug. 16, 2013), ECF No. 151. NanoVapor, in turn,

asserted a number of affirmative defenses to the claims in 

Vapor Point’s First Amended Complaint, including that 

“[Vapor Point] cannot prevail because [Vapor Point has] 

an obligation to assign any invention to NanoVapor Fuels

Group, Inc.” Original Answer to First Amended Complaint at ¶ 116, Vapor Point (S.D. Tex. Aug. 30, 2013), 

ECF No. 155; see also id. at ¶ 117 (specifying that an 

obligation to assign arises from an alleged employment of 

Nathan and Matheson by NanoVapor). In its counterclaim NanoVapor also asserted infringement of the ’310 

patent and eight state law claims: misappropriation of 

trade secrets, the Texas Theft Liability Act, fraud, breach 

of fiduciary duty, tortious interference with business 

relationships, tortious interference with prospective 

business relationships, breach of contract, and unjust 

enrichment. Fourth Amended Counterclaim at ¶¶ 83–

138, Vapor Point (S.D. Tex. May 14, 2014), ECF No. 212. 

On June 25, 2014, the district court issued an order 

denying NanoVapor’s motion for an evidentiary hearing 

on inventorship. Order, Vapor Point (S.D. Tex. June 25, 

2014), ECF No. 241. The district court reasoned that, 

“[b]y requesting findings of fact and conclusions of law 

relating only to inventorship under 35 U.S.C. § 256, both 

parties are essentially requesting that this Court bifurCase: 15-2003 Document: 12-2 Page: 5 Filed: 08/10/2016
6 VAPOR POINT LLC v. MOORHEAD

cate the inventorship claims from the state law and 

infringement claims and make an early determination on 

the inventorship issues.” Id. at 1. Because “the state law 

causes of action share a common factual core with the 

inventorship claims and judicial determination of the 

inventorship issues at [that] time would deprive the 

parties of their right to a jury trial,” the district court

denied the parties’ request for an evidentiary hearing. Id.

at 2. 

NanoVapor then filed a notice with the district court 

dismissing its state law claims “with prejudice to refiling.” Notice of Nonsuit of State Law Claims, Vapor 

Point (S.D. Tex. Aug. 1, 2014), ECF No. 254. In that 

notice, NanoVapor asserted that, “[i]n response to 

[NanoVapor] non-suiting their state law claims, [Vapor 

Point has] agreed to nonsuit” its state law claims. Id. at 

2. “After [Vapor Point’s] concurrent nonsuit of the state 

law claims only claims related to inventorship and infringement will remain before the Court.” Id. In so doing, 

NanoVapor explicitly “request[ed] the Court to decide the 

inventorship issues as there is no right to a jury trial on 

contested fact issues related to inventorship.” Id. Accordingly, the district court dismissed all of the state law 

claims pled by either Vapor Point or NanoVapor, with 

prejudice. See Order on Notice of Nonsuit of State Law 

Claims, Vapor Point (S.D. Tex. Aug. 11, 2014), ECF No. 

261.

“[S]ection 256 . . . explicitly authorizes judicial resolution of co-inventorship contests over issued patents.” 

MCV, Inc. v. King-Seeley Thermos Co., 870 F.2d 1568, 

1570 (Fed. Cir. 1989). Consistent with § 256, the district 

court held a four-day evidentiary hearing to determine 

inventorship of the patents-in-suit. After the hearing, the 

district court issued an order denying NanoVapor’s claims 

of inventorship and granting Vapor Point’s to the extent 

Nathan and Matheson sought to be added to the ’310 and 

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VAPOR POINT LLC v. MOORHEAD 7

’862 patents as additional inventors. See Inventorship 

Order at 27. 

In that decision, the district court addressed the “four 

key concepts in the ’310 and ’862 patents”: (1) using 

biodiesel as a vapor capture medium; (2) removing VOCs 

from a vessel containing fuel vapors and introducing them 

into a vapor capture medium (such as biodiesel); (3) using 

a particulatizer to create micro-sized VOC particles for 

treatment; and (4) using diffusion plates to distribute 

micro-sized particles across the vapor capture medium. 

Id. at 11. The district court found that Nathan contributed to the conception of the first three of these four key 

concepts and that Matheson contributed to the third and 

fourth concepts. See id. at 16–24. The district court 

denied NanoVapor’s claim that Moorhead should be a 

named inventor on Vapor Point’s patents. See id. at 24–

26.

Following the district court’s resolution of the inventorship issues, NanoVapor moved for a new trial “solely 

address[ing] the Court’s closing of the case without allowing a trial on the affirmative defenses,” including any 

obligation to assign. NanoVapor’s Motion for a New Trial, 

Vapor Point (S.D. Tex. Apr. 3, 2015), ECF No. 330. In 

Vapor Point’s response, it argued that NanoVapor’s 

motion for a new trial on the affirmative defense of an 

obligation to assign was improper. 

Vapor Point initially asserted a claim for correction of 

inventorship under § 256 along with its various state law 

tort claims. Because the latter were dismissed with 

prejudice, only the federal claim under § 256 remained. 

Since “an obligation to assign is not an affirmative defense to a cause of action to correct inventorship,” and

because only the inventorship claims remained, Vapor 

Point argued that the equitable affirmative defense of an 

obligation to assign also should be dismissed with prejudice. Vapor Point’s Response to NanoVapor’s Motion for 

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8 VAPOR POINT LLC v. MOORHEAD

New Trial at 6, Vapor Point (S.D. Tex. Apr. 24, 2015), 

ECF No. 335. Because NanoVapor did not join Nathan 

and Matheson—now deemed to be two of the inventors of 

the patents-in-suit—in the infringement claims against 

Vapor Point, Vapor Point argued that NanoVapor “d[id]

not have standing to pursue [its] claim for infringement of 

the ’310 patent, eliminating any claim against Vapor 

Point.” Id. at 9; see also Appellant’s Br. at 13 (“All patent 

owners must join in a patent infringement suit. 

NanoVapor did not join Nathan and Matheson in its 

infringement claim. Therefore, NanoVapor did not have 

standing to pursue a claim for infringement of the ’310 

patent.”) (citing Enovsys LLC v. Nextel Commc’ns., Inc., 

614 F.3d 1333, 1341 (Fed. Cir. 2010) (“When a patent is 

co-owned, a joint owner must join all other co-owners to

establish standing.”); 35 U.S.C. § 281). The district court 

agreed with Vapor Point and dismissed the case. Final 

Judgment at 2, Vapor Point (S.D. Tex. Aug. 24, 2015), 

ECF No. 377.

After the court’s order on inventorship, Vapor Point 

moved for a determination that the case was exceptional, 

entitling it to attorneys’ fees. See Vapor Point (S.D. Tex. 

June 16, 2015), ECF No. 347; Vapor Point (S.D. Tex. June 

16, 2015), ECF No. 349. The district court, without 

discussion, denied these motions in its final order. Final 

Judgment at 2, Vapor Point (S.D. Tex. Aug. 24, 2015), 

ECF No. 377. We have jurisdiction pursuant to 28 U.S.C. 

§ 1295(a)(1).

DISCUSSION

NanoVapor now appeals, arguing, inter alia, that the 

district court erred in its determination of inventorship

and erred when it dismissed the case without deciding 

whether Nathan and Matheson had an obligation to 

assign their inventorship interests to NanoVapor. Vapor 

Point appeals the district court’s denial of attorneys’ fees 

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VAPOR POINT LLC v. MOORHEAD 9

and its decision that the case is not exceptional. We 

address each argument in turn.

A. Inventorship Order

“A person who alleges that he is a co-inventor of the 

invention claimed in an issued patent who was not listed 

as an inventor on the patent may bring a cause of action 

to correct inventorship in a district court under 35 U.S.C. 

§ 256.” Eli Lilly & Co. v. Aradigm Corp., 376 F.3d 1352, 

1357 n.1 (Fed. Cir. 2004). Inventorship is a question of 

law entitled to de novo review by this court. Gen. Elec. 

Co. v. Wilkins, 750 F.3d 1324, 1329 (Fed. Cir. 2014). “On 

appeal from a bench trial, we review a district court’s 

decision for errors of law and clearly erroneous findings of 

fact.” Trovan, Ltd. v. Sokymat SA, Irori, 299 F.3d 1292, 

1301 (Fed. Cir. 2002); see also Preston v. Marathon Oil 

Co., 684 F.3d 1276, 1287 (Fed. Cir. 2012). A factual 

finding is clearly erroneous when, “although there is 

evidence to support it, the reviewing court on the entire 

evidence is left with the definite and firm conviction that 

a mistake has been committed.” United States v. U.S.

Gypsum Co., 333 U.S. 364, 395 (1948).

NanoVapor argues, inter alia, that the district court’s 

determinations on inventorship were not supported by 

clear and convincing evidence. See Appellant’s Br. at 23–

30.

For the most part, we disagree. Given the evidence 

adduced, we find that the district court was correct to 

conclude that both Nathan and Matheson should be listed 

as inventors on the ’310 patent, which is the only patent 

asserted in NanoVapor’s infringement claim. All inventors, even those who contribute to only one claim or one 

aspect of one claim of a patent, must be listed on that 

patent. See Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 

1456, 1460 (Fed. Cir. 1998) (“[A] co-inventor need not 

make a contribution to every claim of a patent. A contribution to one claim is enough.”) (citation omitted). The 

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10 VAPOR POINT LLC v. MOORHEAD

district court’s findings that Nathan contributed to three

of the four key aspects of the invention are supported by 

substantial evidence. And, substantial evidence supports 

the district court’s conclusion that Matheson contributed 

to the conception of the use of diffusion plates, as recited 

in claims 11 and 12 of the ’310 patent. While we agree 

with NanoVapor that the district court erred in finding

that Matheson contributed to the conception of the use of 

a particulatizer to create micro-sized VOC particles for 

treatment and the use of diffusion plates to distribute 

micro-sized particles across the vapor capture medium,

that error does not change the validity of the ultimate 

judgment because Matheson was still properly found to be 

an inventor of the diffusion plates.2

These findings are sufficient to support the district 

court’s inventorship judgment. Co-inventors need not 

“physically work together or at the same time,” “make the 

same type or amount of contribution,” or “make a contri-

 

2 Matheson admitted on cross-examination that the 

use of a particulatizer was conceived before Matheson 

joined the project, and no other evidence shows that 

Matheson was involved in or copied on exchanges between 

Moorhead and Nathan on that topic. While the district 

court noted that “emails sent from Nathan to Moorhead 

between January and March of 2007, include the concept 

of introducing VOCs to the vapor capture medium as 

micro-sized particles” and that “Nathan’s email messages 

to Moorhead including text like ‘Another photo to keep 

your spirits high!!’ and ‘pics from lab this AM’ support 

[Vapor Point’s] theory that Nathan and Matheson conceived of the need for micro-particles of VOCs,” Inventorship Order at 21–22 (emphasis added), the emails do not 

show that Matheson was copied on these exchanges, or 

was ever aware of them.

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VAPOR POINT LLC v. MOORHEAD 11

bution to the subject matter of every claim of the patent.” 

35 U.S.C. § 116. “[I]nventorship is determined on a claimby-claim basis.” Trovan, 299 F.3d at 1302 (citing Ethicon, 

135 F.3d at 1460).

Because we find that the district court’s conclusions 

are supported by substantial evidence for both Nathan 

and Matheson—for at least one of the claim elements—we 

affirm the district court’s inventorship determinations 

with respect to the ’310 patent.

B. Obligation to Assign

NanoVapor next claims that the district court erred 

when it dismissed the action without first determining 

whether Nathan and Matheson had an obligation to 

assign their invention to NanoVapor. The district court 

found that it need not resolve whether there was an 

obligation to assign the patents because “[a]ll parties 

understood that the evidentiary hearing would resolve the 

issue of inventorship and would be dispositive of the 

remaining infringement claim in the case.” Final Judgment at 2, Vapor Point (S.D. Tex. Aug. 24, 2015), ECF No. 

377. In other words, the district court found that 

NanoVapor had waived its right to ask the court to decide 

the assignment question. We agree.

While NanoVapor did assert that Nathan and Matheson had an obligation to assign their rights to the invention, it did so only as an equitable affirmative defense to 

Vapor Point’s state law claims. See Original Answer to 

First Amended Complaint at ¶¶ 116–17, Vapor Point

(S.D. Tex. Aug. 30, 2013), ECF No. 155. As discussed 

above, these state law claims were dismissed with prejudice. Order on Notice of Nonsuit of State Law Claims, 

Vapor Point (S.D. Tex. Aug. 11, 2014), ECF No. 261. The 

only remaining claims from Vapor Point’s complaint were 

those seeking a correction of inventorship. And, “[i]t is 

elementary that inventorship and ownership are separate 

issues.” Beech Aircraft Corp. v. EDO Corp., 990 F.2d 

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12 VAPOR POINT LLC v. MOORHEAD

1237, 1248 (Fed. Cir. 1993); see also Ethicon, Inc. v. U.S. 

Surgical Corp., 135 F.3d 1456, 1465 (Fed. Cir. 1998) 

(“Questions of patent ownership are distinct from questions of inventorship.”). “[I]nventorship is a question of 

who actually invented the subject matter claimed in a 

patent. Ownership, however, is a question of who owns 

legal title to the subject matter claimed in a patent, 

patents having the attributes of personal property.” Id. 

The parties agree that ownership is not an affirmative 

defense to an inventorship claim under § 256. See, e.g., 

Appellant’s Response and Reply Br. at 3 (“ownership is 

not an affirmative defense to inventorship”); Oral Arg. at 

26:19–27:10, available at http://

oralarguments.cafc.uscourts.gov/default.aspx?fl=2015-

1801.mp3 (counsel for Vapor Point arguing that ownership is not a defense to inventorship). The voluntary 

dismissal of the state law claims mooted NanoVapor’s 

affirmative defense that Nathan and Matheson had an 

obligation to assign any rights in the ’310 patent to 

NanoVapor. 

NanoVapor went further by affirmatively representing to the district court that resolution of the inventorship 

issue would dispose of the infringement issue. On August 

29, 2014, the district court asked NanoVapor’s counsel 

whether the trial to determine inventorship would “basically be the entire trial on the merits.” J.A. 1480. Counsel for NanoVapor responded: inventorship “is ultimately 

most likely dispositive of the other issue, now just infringement, and ultimate willfulness at that point if it’s 

decided against NanoVapor.” J.A. 1480–81; see also J.A. 

392 (August 6, 2014 letter from NanoVapor’s counsel 

seeking a status conference and representing that “the 

only two issues remaining are inventorship and infringement.”). Inventorship is dispositive of infringement if and 

only if NanoVapor waives its ownership by assignment 

claim. Ultimately, the district court decided the inventorship issue against NanoVapor when it determined that 

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VAPOR POINT LLC v. MOORHEAD 13

Nathan and Matheson were co-inventors. NanoVapor’s

clear representation that such a determination would be 

“ultimately most likely dispositive” of the inventorship 

issue is a waiver of any assertion of ownership of Nathan 

and Matheson’s rights. 

The district court did not err, therefore, in dismissing 

the infringement claim with prejudice because “[a]ll 

parties understood that the evidentiary hearing would 

resolve the issue of inventorship and would be dispositive 

of the remaining infringement claim in the case.” Final 

Judgment at 2, Vapor Point (S.D. Tex. Aug. 24, 2015), 

ECF No. 377.

EXCEPTIONAL CASE AND ATTORNEYS’ FEES

Vapor Point cross-appeals the district court’s determination that it is not entitled to attorneys’ fees and the 

case is not exceptional. While we would have preferred a 

written explanation for its decision, upon review of the 

record, we do not find that the denial of Vapor Point’s 

motion was an abuse of the district court’s discretion.

CONCLUSION

The district court’s ultimate determination on inventorship is supported by substantial evidence. NanoVapor

cannot now assert equitable defenses to claims that were 

voluntarily dismissed. Moreover, NanoVapor waived its 

right to pursue ownership under an obligation to assign

theory by explicitly representing that resolution of the 

inventorship issue would resolve the infringement issue. 

For the reasons discussed above, and because we find 

each of NanoVapor’s additional arguments unpersuasive, 

we affirm.

AFFIRMED

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United States Court of Appeals 

for the Federal Circuit ______________________ 

VAPOR POINT LLC, KEITH NATHAN, KENNETH 

MATHESON,

Plaintiffs-Cross-Appellants

DON ALFORD, JEFFEREY ST. AMANT,

Counterclaim Defendants-Cross-Appellants

v.

ELLIOTT MOORHEAD, NANOVAPOR FUELS 

GROUP, INC., BRYANT HICKMAN,

Defendants-Appellants

______________________ 

2015-1801, 2015-2003

______________________ 

Appeals from the United States District Court for the 

Southern District of Texas in No. 4:11-cv-04639, Judge 

Vanessa D. Gilmore.

______________________ 

O’MALLEY, Circuit Judge, concurring.

I agree that the district court’s conclusions on inventorship are, as detailed in the majority opinion, supported 

by substantial evidence. I also agree that, by the stipulated dismissal of all state law claims and through its 

representations to the district court, NanoVapor’s counsel 

waived its right to an additional hearing on whether it 

has the right to assert ownership over the patent interests 

of Nathan and Matheson. I write separately, however,

because I believe that, even if we did not find waiver, 35 

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2 VAPOR POINT LLC v. MOORHEAD

U.S.C. § 261 requires NanoVapor to demonstrate that any 

assignment of patent rights was executed in writing, 

which it undeniably cannot do. NanoVapor’s admission

that no writing exists should render unnecessary its

request for an evidentiary hearing to determine if Nathan 

and Matheson had an obligation to assign their interests 

in the ’310 patent to NanoVapor. Without an assignment 

in writing, Nathan and Matheson could not give 

NanoVapor legal title to the patents sufficient to maintain 

standing in a patent infringement suit for money damages. To the extent Teets v. Chromalloy Gas Turbine Corp., 

83 F.3d 403 (Fed. Cir. 1996) and its progeny are to the 

contrary, this court should consider overruling that precedent when presented with the question in a case where 

the issue is determinative of the outcome. 

DISCUSSION

35 U.S.C. § 261 provides that “[a]pplications for patent, patents, or any interest therein, shall be assignable 

in law by an instrument in writing.” This is an explicit 

statutory requirement that “all assignments of patent 

interest be in writing.” Sky Techs. LLC v. SAP AG, 576 

F.3d 1374, 1379 (Fed. Cir. 2009). The “in-writing” requirement for patent assignment goes back at least as far 

as the Patent Act of 1836, noting that “assignment[s] . . . shall be recorded in the Patent Office within 

three months from the execution thereof.” Patent Act of 

1836, ch. 357, § 11, 5 Stat. 117 (where recordation requires a writing); see also Patent Act of 1870, ch. 230, 

§ 36, 16 Stat. 198 (codified as amended in 1874 as R.S. 

§ 4898) (“[E]very patent or any interest therein shall be 

assignable in law, by an instrument in writing . . . .”); 

Blakeney v. Goode, 30 Ohio St. 350, 355 (1876) (“[S]uch 

contracts must be in writing as affect the title to the 

patent; other contracts, which affect equitable interests, 

may be by parol.”).

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VAPOR POINT LLC v. MOORHEAD 3

In assessing whether an attempted assignment is sufficient to transfer title or ownership, courts must look to 

whether the parties can satisfy this “in-writing” requirement. Abbott Point of Care Inc. v. Epocal, Inc., 666 F.3d 

1299, 1302 (Fed. Cir. 2012) (“Transfers of title, otherwise 

known as assignments, are controlled by 35 U.S.C. 

§ 261 . . . .”). Without a written assignment that satisfies 

§ 261, a party who is not the inventor simply lacks standing to bring a patent infringement suit for money damages. Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1250 

(Fed. Cir. 2000) (holding that a “written instrument” was 

needed to document the “transfer of proprietary rights” to 

support standing to sue for patent infringement) (citing 

35 U.S.C. § 261). Our case law, in most cases, reflects this 

apparently inviolable rule.

We have written, for example, that, although a license 

may be written, verbal, or implied, if a license is to confer 

standing it must be written so as to “resemble an assignment in both form and substance” to prevent parties from 

“engag[ing] in revisionist history, circumventing the 

certainty provided by the writing requirement of section 

261 by claiming to be patentee by virtue of a verbal licensing arrangement.” Enzo APA & Son, Inc. v. Geapag A.G., 

134 F.3d 1090, 1093 (Fed. Cir. 1998). And while this 

court has acknowledged that patent ownership may be 

transferred by “operation of law” rather than through a 

written assignment—such as by way of inheritance, see

Sky Techs., 576 F.3d at 1379—§ 261 applies where an 

employer claims an employee had an obligation to assign 

his or her rights in an invention to the employer. 

In Teets, however, a panel of this court held that the

“in-writing” requirement of § 261 can be ignored. In that 

case, the district court found that Teets solely owned the 

invention-at-issue and granted him an injunction against 

his employer Chromalloy, who appealed. A panel of this 

court resolved the conflict between the litigants on two 

separate theories: the shop right doctrine and an impliedCase: 15-2003 Document: 12-2 Page: 16 Filed: 08/10/2016
4 VAPOR POINT LLC v. MOORHEAD

in-fact contract. See 83 F.3d at 407, 408–09. This court 

first found that Chromalloy had a shop right, which 

“permits the employer to use the employee’s invention 

without liability for infringement.” Teets, 83 F.3d at 407. 

This would have been sufficient to end the inquiry on 

appeal—Teets could not obtain an injunction against his 

employer if the employer has a valid shop right, an equitable claim to use the invention. The panel further resolved the matter, however, by holding (1) that “an 

employee may . . . freely consent by contract to assign all 

rights in inventive ideas to the employer”—which is 

certainly a correct statement of law—and (2) even “without such an express assignment,” an employer may prove 

the “existence of an implied-in-fact contract to assign 

inventive rights” under state law principles. This is 

where the Teets decision becomes irreconcilable with 

§ 261. Id. at 407–08. Even with “no express agreement of 

any kind with Teets,” the panel not only vacated the 

injunction against Chromalloy, but also reversed the 

district court’s determination that Teets owned all rights 

in the patent-in-suit. It did so, moreover, without so 

much as a nod to the language of § 261. Id. at 409.

But § 261 cannot be ignored or rendered inapplicable 

by contrary state law contract principles. Section 261 is a 

federal statute that must prevail even where state law 

would otherwise allow a court to find and enforce a nonwritten agreement between the parties. See Sky Techs., 

576 F.3d at 1379 (“Usually, federal law is used to determine the validity and terms of an assignment, but state 

law controls any transfer of patent ownership by operation of law not deemed an assignment.”); DDB Techs., 

L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284, 1290 

(Fed. Cir. 2008) (“Although state law governs the interpretation of contracts generally, the question of whether a 

patent assignment clause creates an automatic assignment or merely an obligation to assign is intimately 

bound up with the question of standing in patent cases. 

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VAPOR POINT LLC v. MOORHEAD 5

We have accordingly treated it as a matter of federal 

law.”) (citation omitted); Enzo, 134 F.3d at 1093 (Fed. Cir. 

1998) (holding that a plaintiff lacked standing to file suit 

because the purported license is not in writing, as required by federal law); see also In re CFLC, Inc., 89 F.3d 

673, 679 (9th Cir. 1996) (“[F]ederal law governs the 

assignability of patent licenses because of the conflict 

between federal patent policy and state laws, such as 

California’s, that would allow assignability.”); PPG Indus., Inc. v. Guardian Indus. Corp., 597 F.2d 1090, 1093 

(6th Cir. 1979) (“Questions with respect to the assignability of a patent license are controlled by federal law.”); 

Unarco Indus., Inc. v. Kelley Co., 465 F.2d 1303, 1306 (7th 

Cir. 1972) (“We are of the opinion that the question of 

assignability of a patent license is a specific policy of 

federal patent law dealing with federal patent law. Therefore, we hold federal law applies to the question of the 

assignability of the patent license in question.”). A federal statute on the law of assignments simply trumps 

contrary state law.

While it is true that state law principles give rise to 

the equitable shop rights Teets addressed in the first 

portion of its judgment, state law cannot create standing 

where federal law prohibits it. Teets’ holding to the 

contrary is wrong.

In this case, NanoVapor conceded to the district court 

that it lacked an executed written instrument and conceded again at oral argument before this court that the 

non-executed document on which it relies is neither a 

writing under § 261 nor contains an assignment clause. 

At the inventorship hearing, the district judge asked 

counsel for NanoVapor whether Nathan and Matheson 

were employees of NanoVapor and, in particular, whether 

they had written employment agreements. The following 

exchange took place:

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6 VAPOR POINT LLC v. MOORHEAD

THE COURT: You guys had written employment 

agreements? 

MR. RAMEY: Yes, your Honor. They weren’t actually signed by Mr. Matheson or Mr.—well, Mr. 

Nathan signed a prospective hire agreement but 

Mr. Matheson didn't even sign that. At that 

point, it was just the NDAs that had been signed. 

But they had—and the parties—the big point here 

is the parties were operating under them.

J.A. 731 (emphasis added). During Nathan’s redirect 

examination, Nathan confirmed that he never signed an 

employment agreement:

Q Were you ever proffered an employment agreement from NanoVapor?

A I was given employment agreements. I never 

signed any of them. 

Q Do you recall how many employment agreements you were given?

A Three, maybe four.

J.A. 988 (emphasis added). In its Motion for a New Trial, 

NanoVapor stated that, while it was undisputed “that 

Nathan and Matheson intended to sign [the employment] 

agreements when NanoVapor was funded,” “as 

NanoVapor was unable to secure funding by December 18, 

2007, Nathan and Matheson did not sign the employment 

agreements and left NanoVapor.” NanoVapor’s Motion 

for a New Trial at 4, Vapor Point (S.D. Tex. Apr. 3, 2015), 

ECF No. 330. And at oral argument in front of this court, 

counsel for NanoVapor again confirmed the absence of 

any written instrument assigning Nathan and Matheson’s 

ownership rights to NanoVapor. Oral Arg. at 01:56–

02:15.

During oral argument, NanoVapor contended that, 

even without a signed employment agreement, this court 

Case: 15-2003 Document: 12-2 Page: 19 Filed: 08/10/2016
VAPOR POINT LLC v. MOORHEAD 7

should nevertheless remand for additional proceedings on 

ownership and infringement because “the courts can 

recognize that the person that was hired was operating 

pursuant to an employment agreement [under] Fifth 

Circuit law . . . that they were performing according to the 

terms of that employment agreement and that employment agreement maintained that they had an obligation 

to assign.” Id. at 04:24–04:51. But NanoVapor immediately conceded that, whether executed or not, the employment agreement at issue had no obligation-to-assign 

clause. Id. at 05:03–05:24. NanoVapor’s interpretation of 

the law of assignment would, moreover, undermine § 261 

by conflating the requirements for an assignment sufficient to establish legal title that gives rise to standing to 

assert an infringement claim with those that merely give 

rise to equitable title under the hired-to-invent and shop 

right doctrines.

The Supreme Court has explained that the hired-toinvent assignment is an equitable one: 

If one is employed to devise or perfect an instrument, or a means for accomplishing a prescribed 

result, he cannot, after successfully accomplishing 

the work for which he was employed, plead title 

thereto as against his employer. That which he 

has been employed and paid to accomplish becomes, when accomplished, the property of his 

employer. 

Solomons v. United States, 137 U.S. 342, 346 (1890) 

(emphasis added); see also Standard Parts Co. v. Peck, 

264 U.S. 52, 59–60 (1924) (holding that an independent 

contractor engaged to “devote his time to the development 

of a process and machinery” to solve a particular problem 

for compensation had no legal right to a patent on the 

inventions he develops in that employment absent a 

contract to the contrary). Under the so-called hired-toinvent doctrine, therefore, an employer may have an 

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8 VAPOR POINT LLC v. MOORHEAD

equitable right to practice the claims of the patent by 

virtue of the employment relationship. That equitable 

right protects an employer from a claim of patent infringement by its employee, but does not operate to transfer legal title in the patent.

The shop right doctrine is similar. When an employee 

invents under the auspices of an employer, the employer 

will, at a minimum, have an implied right to use that 

invention.

[W]hen one is in the employ of another in a certain line of work, and devises an improved method 

or instrument for doing that work, and uses the 

property of his employer and the services of other 

employes to develop and put in practicable form 

his invention, and explicitly assents to the use by 

his employer of such invention, a jury, or a court, 

trying the facts, is warranted in finding that he 

has so far recognized the obligations of service 

flowing from his employment and the benefits resulting from his use of the property, and the assistance of the co-employes, of his employer, as to 

have given to such employer an irrevocable license 

to use such invention. 

Solomons, 137 U.S. at 346. In this way, the concept of an 

equitable defense to an infringement claim merges with 

the shop right doctrine, which itself arises from the fact 

that the work done was for hire. This court has recognized shop rights as providing an employer a right to use 

its employee’s invention without subjecting itself to 

liability for infringement. In Teets itself, for example, this 

court noted: 

Consistent with the presumption that the inventor owns his invention, an individual owns the patent rights even though the invention was 

conceived and/or reduced to practice during the 

course of employment. At the same time, howevCase: 15-2003 Document: 12-2 Page: 21 Filed: 08/10/2016
VAPOR POINT LLC v. MOORHEAD 9

er, the law recognizes that employers may have 

an interest in the creative products of their employees. For example, an employer may obtain a 

shop right in employee inventions where it has 

contributed to the development of the invention. 

A shop right permits the employer to use the employee’s invention without liability for infringement.

Teets, 83 F.3d at 407 (citations omitted).

In Gellman v. Telular Corp., 2011 WL 5966666 (Fed. 

Cir. 2011) (nonprecedential), moreover, this court clarified 

the equitable nature of the shop right and hired-to-invent 

doctrines. This court affirmed the dismissal of an infringement action brought by Ms. Gellman, the widow of 

one of the named inventors on the patent-in-suit. This 

was because Ms. Gellman failed to prove that the other 

co-inventor, an alleged employee of her late husband who 

had not joined the suit, had assigned his rights in the 

patent to her. The court wisely noted:

[E]quitable claims [of patent ownership] do not 

themselves confer standing. . . . Courts have in 

some cases held that the inventions of an employee hired to make that invention fairly belong to 

the employer. But this doctrine is expressly equitable, and creates only an obligation for the employee to assign to his employer. It cannot save 

Ms. Gellman’s case. . . . For the foregoing reasons, 

the district court did not err in dismissing without 

prejudice Ms. Gellman’s case for lack of standing.”

Id. at *3 (citations omitted). But equitable title is not 

sufficient to confer standing to pursue money damages in 

a patent infringement suit. “The general rule is that one 

seeking to recover money damages for infringement of a 

United States patent (an action ‘at law’) must have held 

the legal title to the patent during the time of the infringement.” Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 

Case: 15-2003 Document: 12-2 Page: 22 Filed: 08/10/2016
10 VAPOR POINT LLC v. MOORHEAD

1574, 1579 (Fed. Cir. 1991) (citing Crown Die & Tool Co. 

v. Nye Tool & Mach. Works, 261 U.S. 24, 40–41 (1923)).

In this case, if Nathan and Matheson asserted a claim 

of infringement against NanoVapor—they did not—

NanoVapor could have asserted equitable defenses under 

these doctrines. See Banks v. Unisys Corp., 228 F.3d 1357 

(Fed. Cir. 2000) (applying hired-to-invent doctrine as an 

equitable defense); Teets, 83 F.3d 403 (applying shop right 

doctrine as an equitable defense). But where, as here, the 

question of affirmative standing to sue in the absence of 

named inventors is at issue, compliance with § 261 is 

mandatory. Any judicially crafted exception must bend 

under the unconditional language of § 261. NanoVapor’s 

argument that Nathan and Matheson had an obligation to 

assign their rights to the ’310 patent, therefore, first 

requires the production of a written instrument reflecting 

such an assignment. Only then could NanoVapor pursue 

its infringement claims.

CONCLUSION

Accordingly, as NanoVapor concedes it cannot adduce 

an executed assignment consistent with the requirements 

of § 261, and never sought a court order requiring a 

written assignment before asserting its infringement 

claims, those claims must be dismissed. Nathan and 

Matheson—along with Moorhead—currently hold legal 

title to the ’310 patent and held legal title at the time suit 

commenced. As co-inventors on the ’310 patent, Nathan 

and Matheson are entitled to practice the invention 

without fear of suit from the other inventors, and vice 

versa. Dismissal of the infringement claims against 

Vapor Point was, thus, appropriate for this reason as well 

as those explained in our majority opinion. To the extent 

Teets indicates that it is appropriate for a court to identify 

an implied-in-fact contract as a basis for an assignment of 

patent ownership rights that gives rise to standing to seek 

money damages for patent infringement in the absence of 

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VAPOR POINT LLC v. MOORHEAD 11

a writing, we should undo that impermissible exception to 

the otherwise unconditional language of § 261 as soon as 

the appropriate opportunity arises. 

Case: 15-2003 Document: 12-2 Page: 24 Filed: 08/10/2016