Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-15-01844/USCOURTS-ca13-15-01844-0/pdf.json

Parties Involved:
Diamond Coating Technologies, LLC
Appellant
Federal-Mogul Corporation
Not party
Hyundai Motor America
Appellee
Hyundai Motor Company
Appellee
Kia Motors America, Inc.
Appellee
Kia Motors Company
Appellee
Nissan Motor Co. Ltd.
Appellee
Nissan North America, Inc.
Appellee

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

DIAMOND COATING TECHNOLOGIES, LLC,

Plaintiff-Appellant

FEDERAL-MOGUL CORPORATION,

Third Party Defendant

v.

HYUNDAI MOTOR AMERICA, HYUNDAI MOTOR 

COMPANY, KIA MOTORS AMERICA, INC., KIA 

MOTORS COMPANY, NISSAN NORTH AMERICA, 

INC., NISSAN MOTOR CO. LTD.,

Defendants-Appellees

______________________ 

2015-1844, 2015-1861

______________________ 

Appeals from the United States District Court for the 

Central District of California in Nos. 8:13-cv-01480-GHKDFM, 8:13-cv-01481-GHK-DFM, Judge George H. King.

______________________ 

Decided: May 17, 2016

______________________ 

JOSEPH SAMUEL GRINSTEIN, Susman Godfrey LLP, 

Houston, TX, argued for plaintiff-appellant. Also represented by COLIN MICHAEL WATTERSON; OLEG 

ELKHUNOVICH, KATHRYN HOEK, MARC M. SELTZER, Los 

Angeles, CA.

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2 DIAMOND COATING TECHS., LLC v. HYUNDAI MOTOR AM. 

REGINALD J. HILL, Jenner & Block LLP, Chicago, IL, 

argued for all defendants-appellees. Defendantsappellees Nissan North America, Inc., Nissan Motor Co. 

Ltd. also represented by PETER J. BRENNAN, CHAD J. RAY;

ADAM G. UNIKOWSKY, Washington, DC.

DANIEL TALLITSCH, Baker & McKenzie LLP, Chicago, 

IL, for defendants-appellees Hyundai Motor America, 

Hyundai Motor Company, Kia Motors America, Inc., Kia 

Motors Company. Also represented by D. JAMES PAK, San 

Francisco, CA.

______________________ 

Before WALLACH, BRYSON, and TARANTO, Circuit Judges.

WALLACH, Circuit Judge. 

Appellant Diamond Coating Technologies, LLC (“Diamond”) sued Appellees Hyundai Motor America, Hyundai Motor Company, Kia Motors America, Inc., Kia 

Motors Company, Nissan North America, Inc., and Nissan 

Motor Co. Ltd. (collectively, “Appellees”) in the United 

States District Court for the Central District of California 

(“District Court”) alleging infringement of U.S. Patent 

Nos. 6,066,399 and 6,354,008 (together, the “patents-insuit”). The District Court dismissed the actions because it 

found that agreements between Diamond and Sanyo 

Electric Co., Ltd. (“Sanyo”), the original assignee of the 

patents-in-suit, did not confer patentee status on Diamond, allowing Diamond to sue Appellees without joining 

Sanyo. Diamond Coating Techs., LLC v. Hyundai Motor 

Am., Nos. 8:13-cv-01480-MRP, 8:13-cv-01481-MRP(DFM), 

2015 WL 2088892, at *6 (C.D. Cal. Apr. 1, 2015). The 

District Court subsequently held that nunc pro tunc

agreements executed by Diamond and Sanyo after its 

decision in Diamond did not affect its determination. J.A. 

12 (order denying reconsideration). 

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DIAMOND COATING TECHS., LLC v. HYUNDAI MOTOR AM. 3

Diamond appeals the District Court’s dismissals. We 

have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1) 

(2012). For the reasons provided below, we affirm.

DISCUSSION

I. Standard of Review

Whether a party is a patentee able to sue another for 

patent infringement raises “a question of law that this 

court reviews de novo, applying Federal Circuit precedent.” WiAV Sols. LLC v. Motorola, Inc., 631 F.3d 1257, 

1263 (Fed. Cir. 2010) (citation omitted).

II. Diamond Cannot Sue Alone Unless It Received All 

Substantial Rights in the Patents-in-Suit

“A patentee shall have remedy by civil action for infringement of his patent.” 35 U.S.C. § 281 (2012) (emphasis added). A “‘patentee’ includes not only the patentee to 

whom the patent was issued but also the successors in 

title to the patentee.” Id. § 100(d). A party may become 

the successor-in-title to the patentee. Id. § 261, ¶ 2 

(“[P]atents, or any interest therein, shall be assignable in 

law by an instrument in writing.”).

In 2011, Diamond and Sanyo signed the Patent Assignment and Transfer Agreement (“PATA”) (J.A. 199–

232) and the Ancillary Agreement (J.A. 246–56).1 When 

the patents-in-suit issued, the inventors assigned the 

 

1 In their submissions, the parties designated the 

entire PATA and Ancillary Agreement as confidential. 

However, during oral argument, Diamond agreed to waive 

any claim of confidentiality at the court’s request. See 

Oral Argument at 3:44–4:49, available at http://oralargum 

ents.cafc.uscourts.gov/default.aspx?fl=2015-1844.mp3. 

Accordingly, we treat the terms of the PATA and Ancillary Agreement as public, including any such terms that 

accompany the parties’ arguments in their briefs.

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4 DIAMOND COATING TECHS., LLC v. HYUNDAI MOTOR AM. 

patents to Sanyo. J.A. 82, 141. Sanyo then conveyed to 

Diamond various rights to and interests in the patents-insuit via the PATA. J.A. 199–232.

Diamond alleges the PATA provides Diamond with 

“legal title [to] the patents-in-suit,” Appellant’s Br. 14, 

such that it is the successor-in-title to the patents-in-suit, 

see id. at 16–17. Because it is the successor-in-title to the 

patents-in-suit, Diamond continues, it meets the definition of “patentee” under 35 U.S.C. § 281. See id. And 

because it is a patentee under § 281, Diamond argues that 

it may sue Appellees without joining Sanyo. Id.

Agreements transferring patent rights occur by assignment or license. “An assignment of patent rights 

operates to transfer title to the patent, while a license 

leaves title in the patent owner” and transfers something 

less than full title and rights. Minco, Inc. v. Combustion 

Eng’g, Inc., 95 F.3d 1109, 1116 (Fed. Cir. 1996) (citation 

omitted). “To create an assignment, a contract must 

transfer: (1) the entire exclusive patent right, (2) an 

undivided interest[2] in the patent rights, or (3) the entire 

exclusive right within any geographical region of the 

United States.” Id. at 1117 (citation omitted). “An 

agreement that does not transfer one of these three interests is merely a license.” Id. (citation omitted).

We treat an agreement granting patent rights as a 

contract and interpret its terms consistent with the choice 

of law provision in the agreement in question. See Alfred 

E. Mann Found. for Sci. Research v. Cochlear Corp., 604 

 

2 “When . . . multiple inventors are listed on the 

face of the patent, each co-owner presumptively owns a 

pro rata undivided interest in the entire patent, no matter 

what their respective contributions.” Isr. Bio-Eng’g 

Project v. Amgen, Inc., 475 F.3d 1256, 1263 (Fed. Cir. 

2007) (internal quotation marks and citation omitted).

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DIAMOND COATING TECHS., LLC v. HYUNDAI MOTOR AM. 5

F.3d 1354, 1359 (Fed. Cir. 2010). The PATA states that 

New York law governs the interpretation of its terms, J.A. 

219, and under that law we review the District Court’s 

interpretation of the PATA de novo, Dreisinger v. Teglasi, 

13 N.Y.S.3d 432, 435 (App. Div. 2015).

In this case, Diamond asserts “patentee” status only 

as the alleged recipient of “the entire exclusive patent 

right” (not an undivided interest or a geographically 

limited entire exclusive right). On its face, “the entire 

exclusive patent right” must include all substantial rights 

in the patent. We have not allowed labels to control by 

treating bare formalities of “title” transfer as sufficient to 

determine that an “assignment” of the entire exclusive 

right has occurred. Rather, we have explained that, “[t]o 

determine whether a provision in an agreement constitutes an assignment or license, one must . . . examine the 

substance of what was granted.” Vaupel Textilmaschinen 

KG v. Meccanica Euro Italia S.p.A., 944 F.2d 870, 874 

(Fed. Cir. 1991); see Waterman v. Mackenzie, 138 U.S. 

252, 256 (1891); Prima Tek II, L.L.C. v. A-Roo Co., 222 

F.3d 1372, 1378 (Fed. Cir. 2000). 

We therefore must ask whether Diamond received all 

substantial rights in the patents-in-suit or, instead, 

whether Sanyo retained substantial rights. Unless Diamond received all substantial rights in the patents-in-suit

at the time it filed suit in the District Court, it was not a 

“patentee” (allegedly without a joint owner). If Diamond

was not a patentee, it could not bring this suit by itself. 

And since Diamond did not take the opportunity provided 

by the District Court to join Sanyo, the District Court 

properly dismissed the suit. See, e.g., Alfred E. Mann, 604 

F.3d at 1360.

III. At the Time of Suit, Diamond Did Not Have All Substantial Rights in the Patents-in-Suit

The District Court held that the PATA did not convey 

all substantial rights in the patents-in-suit to Diamond. 

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6 DIAMOND COATING TECHS., LLC v. HYUNDAI MOTOR AM. 

Diamond, 2015 WL 2088892, at *5–6. In particular, it 

held that the following terms of the PATA weighed 

against finding a transfer of substantial rights: (1) Diamond could not assign the PATA to another party without 

Sanyo’s consent; (2) Sanyo retains an economic interest in 

future proceeds, including any that arise from infringement litigation; (3) “Sanyo retains a license to make, use, 

and sell products covered by the patents-in-suit”; and (4) 

“Sanyo retains significant control over the decision to 

enforce the patents” because the PATA “condition[s] 

enforcement on consideration of the best interests of 

[Diamond] and Sanyo.” Id. at *5 (internal quotation 

marks and citation omitted). 

Diamond challenges these findings.3 It argues that 

“[t]he PATA vests [Diamond] with the sole right to exclude others,” Appellant’s Br. 19; “[n]othing in the PATA 

divests [Diamond]’s sole right to sue,” id. at 21; “[Diamond] could assign or sell the patents-in-suit,” id. at 23; 

“Sanyo’s economic interest did not deprive” Diamond of 

patentee status, id. at 30; “Sanyo’s non-exclusive license 

did not affect” Diamond’s patentee status, id. at 31; and 

“Sanyo did not control [Diamond]’s ability to enforce the 

patents-in-suit,” id. at 33. Thus, Diamond contends that 

the PATA transferred to it all substantial rights in the 

patents-in-suit. Id. at 12.

We need not resolve all of Diamond’s questions because two characteristics of the PATA resolve the issue 

before us. We “have never . . . establish[ed] a complete 

 

3 In its opening brief, Diamond states that various 

provisions in the PATA were intended to achieve a particular result, see, e.g., Appellant’s Br. 34, 37, but it cites no 

evidence to support its statements, see id. Accordingly, 

we disregard them as speculative. See Lucent Techs., Inc. 

v. Gateway, Inc., 580 F.3d 1301, 1327 (Fed. Cir. 2009) 

(speculation does not equate to evidence).

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DIAMOND COATING TECHS., LLC v. HYUNDAI MOTOR AM. 7

list of the rights” that “must be examined to determine 

whether a [patentee] has transferred away sufficient 

rights to render an[other party] . . . the owner of a patent.” Alfred E. Mann, 604 F.3d at 1360. However, we 

have observed that (1) “the exclusive right to make, use, 

and sell . . . is vitally important,” and (2) “the nature and 

scope of the [patentee’s] retained right to sue accused 

infringers [and license the patent are] the most important 

factor[s] in determining whether an [agreement] . . . 

transfers sufficient rights to render the [other party] the 

owner of the patent.” Id. at 1360–61 (emphasis added). 

We examine each of these issues in turn.

With respect to the first, Diamond does not possess 

sufficient rights to make, use, or sell the patented invention. We have held that a “licensor’s retention of a limited 

right to develop and market the patented invention 

indicates that the licensee failed to acquire all substantial 

rights.” Fieldturf, Inc. v. Sw. Recreational Indus., Inc., 

357 F.3d 1266, 1269 (Fed. Cir. 2004) (citation omitted). 

Sanyo retains a right and license to make, use, and sell 

products covered by the patents-in-suit. Section 2.4(a) of 

the PATA provides Sanyo with “a world-wide, royaltyfree, non-exclusive, non-sublicensable, non-transferable

. . . right and license . . . to practice the methods and to 

make, have made, use, distribute, lease, sell, offer for sale, 

import, export, develop and otherwise dispose of and 

exploit any” products covered by the patents-in-suit, 

including any “foundry[4] or contract manufacturing 

activities . . . that [Sanyo] . . . currently undertake[s] . . . 

or may undertake in the future.” J.A. 204. Indeed, the 

PATA does not even grant Diamond a right to practice the 

 

4 A “foundry” right is “a licensee’s right[] to make a 

product and sell it under a third party’s name.” 

CoreBrace LLC v. Star Seismic LLC, 566 F.3d 1069, 1071 

(Fed. Cir. 2009).

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8 DIAMOND COATING TECHS., LLC v. HYUNDAI MOTOR AM. 

patents-in-suit. Section 5.1.1 of the PATA limits Diamond 

to the “prosecution, maintenance, licensing, litigation, 

enforcement and exploitation” of the patents-in-suit and 

explains that Diamond “shall engage in no [other] business or activity.” J.A. 208. Thus, in this respect, Diamond unquestionably failed to acquire all substantial 

rights in the patents-in-suit.

Diamond contends that the court should construe “exploitation” in Section 5.1.1 of the PATA to mean “practice” 

and “sell,” such that the PATA provides Diamond with 

sufficient rights to make, use, and sell the patented 

invention. Appellant’s Br. 24–26 (equating “exploitation” 

with “selling”); Oral Argument at 35:21–35:55 (equating 

“practice” with “exploitation”), available at http://oralargu

ments.cafc.uscourts.gov/default.aspx?fl=2015-1844.mp3. 

“Practice” and “sell” appear in Section 2.4(a) of the PATA. 

J.A. 204. If the parties intended for Diamond to possess 

the rights to practice and sell the patents-in-suit, Section 

2.4(a) indicates that they knew how to say so.5 See 

Dreisinger, 13 N.Y.S.3d at 435 (“Our function is to apply 

the meaning intended by the parties, as derived from the 

language of the contract in question.” (internal quotation 

marks and citations omitted)).

With respect to the second issue, “[r]etaining control 

of [licensing or litigation] activities is [] critical to demon-

 

5 Among other words, “exploitation” follows “prosecution,” “licensing,” “litigation,” and “enforcement” in 

Section 5.1.1 of the PATA, which indicates that “exploitation” concerns enforcement activities not explicitly addressed by the PATA. See J.A. 208; see also Harris v. 

Allstate Ins. Co., 127 N.E.2d 816, 818 (N.Y. 1955) (applying the principle noscitur a sociis—that the meaning of a 

word should be derived from the words immediately 

surrounding it—to interpret a contract); Noscitur a Sociis, 

Black’s Law Dictionary (10th ed. 2014).

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strating that the patent has not been effectively assigned 

to the licensee.” Azure Networks, LLC v. CSR PLC, 771 

F.3d 1336, 1343 (Fed. Cir. 2014) (citations omitted), 

vacated on other grounds, 135 S. Ct. 1846 (2015). Sanyo 

retained significant control over Diamond’s enforcement 

and litigation activities. First, the PATA conditions 

Diamond’s litigation and enforcement activities on 

Sanyo’s best interests. Section 5.1.4 of the PATA states 

that Diamond, “in its reasonable sole discretion,” “shall 

pursue the licensing, litigation, enforcement and other 

exploitation of the [patents-in-suit] to generate revenue 

for so long as [Diamond] determines in good faith, taking 

into consideration the best interests of [Diamond] and

[Sanyo], that it is commercially reasonably to do so.” J.A. 

209 (emphases added). Second, the PATA cabins Diamond’s authority to license the patents-in-suit. Section 

5.2.2 of the PATA explains that Diamond “shall not” 

license the patents-in-suit jointly with patents owned by 

another party absent Sanyo’s prior written consent. J.A. 

210. Third, the PATA and Ancillary Agreement limit 

Diamond’s discretion to refrain from suing certain companies. As the District Court observed, the agreements

provide

a list of companies which [Diamond] “reserves the 

right not to assert the [patents-in-suit] against.” 

Sanyo “acknowledges and agrees” that [Diamond]’s decision not to seek enforcement against 

these companies “shall not form a basis for alleging that [Diamond] breached any obligation under 

the PATA.” Furthermore, [Diamond] may not add 

companies to [the list] “in bad faith or in a manner that would reasonably be viewed as circumvention of the business objectives” of the [PATA].

Diamond, 2015 WL 2088892, at *6 (brackets and citations 

omitted). The District Court properly concluded that, “if 

[Diamond] had unfettered discretion on enforcement, then 

[the list] would be superfluous.” Id. Section 5 and ApCase: 15-1844 Document: 67-2 Page: 9 Filed: 05/17/2016
10 DIAMOND COATING TECHS., LLC v. HYUNDAI MOTOR AM. 

pendix 2 of the Ancillary Agreement also provide a list of 

“companies that Sanyo reasonably believes represent 

licensing opportunities” and restrict Diamond’s ability to 

remove companies from that list. J.A. 249, 256. These 

provisions show that Sanyo retained significant control 

over Diamond’s enforcement and litigation activities.

The PATA and the Ancillary Agreement therefore did 

not convey all of the substantial rights in the patents-insuit to Diamond. Accordingly, we hold that Diamond is 

not a “patentee” under 35 U.S.C. § 281. 

IV. Precedent Bars Consideration of the Nunc Pro Tunc 

Agreements 

Following the District Court’s decision in Diamond, 

Diamond and Sanyo executed nunc pro tunc agreements,6

purportedly “to clarify the parties’ original intent; namely, 

to grant full ownership of the patents in question to 

[Diamond].” Appellant’s Br. 12. Diamond asserts these 

nunc pro tunc agreements effectively establish Diamond’s 

status as a patentee. Id. at 43. We conclude they do not.

In Alps South, LLC v. Ohio Willow Wood Co., we held 

that “[n]unc pro tunc assignments are not sufficient to 

confer retroactive [patentee status].” 787 F.3d 1379, 1384 

(Fed. Cir. 2015) (citation omitted). Although Diamond 

contends that the nunc pro tunc agreements cure its 

patentee problems, Appellant’s Br. 43–49, it concedes that 

“the panel should . . . affirm . . . based on Alps South” 

unless there is “intervening authority from an en banc 

panel of this Court or the Supreme Court,” id. at 43. 

Because neither the en banc court nor the Supreme Court 

has overruled Alps South, we reject Diamond’s argument. 

See Deckers Corp. v. United States, 752 F.3d 949, 965 

 

6 The phrase “nunc pro tunc” means “[h]aving retroactive legal effect.” Nunc Pro Tunc, Black’s Law Dictionary (10th ed. 2014).

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(Fed. Cir. 2014) (explaining that panels do not have the 

authority to overrule prior precedential panel decisions 

unless the en banc court or the Supreme Court overturns 

the prior decision).

CONCLUSION

We have considered Diamond’s remaining arguments 

and find them unpersuasive. Accordingly, the decisions of 

the United States District Court for the Central District 

of California are

AFFIRMED

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