# United States **Court of A**  **p peals**  **for the Federal Circuit**

______________________ VAPOR POINT LLC, KEI TH 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 Di s trict Court for the Southern District of Texas in No. 4:11

- cv

- 04639, Judge Vanessa D. Gilmore.

______________________

Decided: August 10, 2016

______________________

J ASON A ARON W IETJES , Polsinelli PC, Dallas, TX, argued for plaintiffs

- cross

- appellants and counte r cl aim defendants

- cross

- appellants. A lso represented by M ICHAEL D AVID P EGUES

.

W ILLIAM P ETERSON R AMEY III , Ramey & Schwaller, LLP, Houston, TX, argued for defendants

- appellants.VAPOR POINT LLC v. MOORHEAD 2

______________________

Before O’M ALLEY , C HEN , and S TOLL , Circuit Judges.
Opinion for the court filed P ER C URIAM

. Concurring opinion filed by Circuit Judge O’M ALLEY

. P ER C URIAM

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

, and Kenneth Mathe son (“Matheson”) (collectively “Vapor Point”) sued Elliott Moorhea d (“Moorhead”), NanoVap or Fuels Group, Inc., and Bryant Hickman (“Hickman”) (collectively “NanoVapor”) in the United States District Court for the Southern District of Te x as , seeking to have Nathan and Matheson recognized as join t inventors under 35 U.S.C. § 256 on NanoVapor’s U.S. Patent No s

. 7,727,310 (“the ’310 patent”) and 8,500,86 2 (“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 inve n to rsh ip and denying each of NanoVapor’s motions

. Vapor Point moved for exceptional case status and attorneys’ fees. T he district court issued a final jud g ment 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 i n ve ntorship and its dismissal of the case. Vapor Point cross

appeals the same order to the extent it holds that the case is not exceptional and that an award o f attorneys’ fees is not warranted

. We find that the district court did not err in dismissing the case after determining inventorship,VAPOR POINT LLC v. MOORHEAD 3

especially in light of NanoVapor’s concession that a d etermination of i n ventorship would resolve the case. We further find that the district court did not abuse its di scretion in denying Vapor Point ’s motion for exceptional case status and attorneys’ fees. Therefore, we affirm.

B ACKGROUND The factual and procedural history in this case is co nfusing, 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 r emoval of volatile fuel vapors, also known as volatile organic compounds (‘VOCs’), from storage tanks and other holding vessels, genera lly in t he 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 p e rcentage of contaminates that may be discharged” into the atmosphere. Id. at 4 . T he patents

- in

- suit “address this problem by captu r ing and recov ering the fuel vapors.” Id.
“NanoVapor is an industry leader in the field of [VOC] containment, including a process called Vapor Suppre ssion System developed by Moorhead that aims to control or eliminate combustible and toxic gases in fuel stor age and transfer operations.” Id. at 7

. After working with Moorhead to help market this technol o gy, Nathan became Chie f 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 i n dustry conference in 2005” while Vapor Point alleged they “began working [together] . . . in the summer of 2006.” Id. at 7.VAPOR POINT LLC v. MOORHEAD 4

NanoVapor later hired Matheson to help with the “ co mmercial 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 appl ication. The parties disagree over whether Nathan was

aware at the time of the progress of the patent applic ation. Id. at 8

. NanoVapor allege d that Nathan and Matheson “plo tted 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, “a n outside group conducted due dil i gence testing that exceeded expectations,” after which Nathan and Math eson “decided to steal the technology and associated trade secrets.” Id. NanoVapor asserts that Nathan and Math eson “each requested a 20% stake in Nan oVapor, which [NanoVapor] rejected.” Id.
In contrast, Vapor Point allege s that “the ’310 p a tent [NanoVapor] filed for on December 18, 2007 wrongfully incorporated, disclosed, and claimed all of Nathan and Matheson’s conceptual and inventive contri butions. ” Id. The ’862 patent, according to V a por Point, similarly misappropriated Na than 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 Moo r head 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 N athan or Math e son.” Id. at 9. Based on the allegations, Vapor Point asked that the district court correct invento rship of the ’310 and ’862 patents to add their names to both, or possibly even substitute their names for Moo rhead’s on both.VAPOR POINT LLC v. MOORHEAD 5

For its part, NanoVapor asked the district court to a lter the inventorship of Vapor Point’s five patents to i nclude Moorhead “because the Vapor Point patents are based on Defendant Moorhead’s con ceptions in the ’310 patent.” Id.

In addition to its requests to correct the invento r ship of NanoVapor’s patents, Vapor Point also asser t ed a number of state law claims against NanoVapor: commonlaw fraud, fraud by nondisclosure, unjust enrichment, tortious interference, misappropriat ion of trade secrets, and the Texas Theft Liability Act. First Amended Co mplaint 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 pr e vail because [Vapor Point has ]

an obligati on to assign any invention to NanoVapor Fuels Group, Inc.” Ori g inal Answer to First Amended Co mplaint 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 emplo yment of Nathan and Matheson by NanoVapor )

. In its counte rclaim 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 Counte r claim at ¶¶ 83

– 138

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

. On June 25, 2 014, the district court issued an order denying NanoVapor’s motion for an evidentiary hea r ing on inventorship. Order, Vapor Point (S.D. Tex. June 25, 2014), ECF No. 241. T he district court re asoned that, “[b]y requesting findings of fact and co n clusions of law relating only to inventorship under 35 U.S.C. § 256, both parties are essentially requesting that this Court bifu r-VAPOR POINT LLC v. MOORHEAD 6

cate the inventorship claims from the state law and infringement claims and make an early determination on the inventorship issues. ” I d. at 1. Because “t he 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 c ourt de nied the parties’ r e quest for an evidentiary hearing. Id. at 2

. NanoVapor then filed a notice with the district court dismissing its state law claims “with prejudice to re

filing.” Notice of Nonsuit of State Law C laims, Vapor Point (S.D. Tex. Aug. 1, 201 4), ECF No. 254. In that notice, NanoVapor asserted that, “[i]n response to [NanoVapor] non

- suiting their state law claims, [V a por 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 invento r ship and i nfringement 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 re sol ution of co

- inventorship contests over issued p a tents .” 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 grant ing Vapor Point’s to the extent Nathan and Matheson sought to be added to the ’310 andVAPOR POINT LLC v. MOORHEAD 7

’862 p a tents 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) remo v ing 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 diff u sion plates to distribute micro

- sized particles across the vapor capture medium. Id. at 11. The district court found that Nathan contribu ted to the conception of the first three of these four key concepts and that Matheson contributed to the third and fourth co n cepts. 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 i n ve ntorship issues, NanoVap or moved for a new trial “solely address[ing] the Court’s closing of the case without allo wing a trial on the affirmative defenses,” including any obligation to assign. NanoVapor’s M o tion 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 stat e law tort claims. Because the latter were di s missed with prejudice , only the federal claim under § 256 remained

. Since “an obligation to assign is not an affirmative d efense to a cause of action to correct inventorship ,” and because only the invento rship claims remained

, Vapor Point argued that the equit a ble affirmative defense of an obligation to assign also should be dismissed with prej udice . Vapor Point’s Response to NanoVapor’s Motion forVAPOR POINT LLC v. MOORHEAD 8

New Trial at 6, Vapor Point (S.D. Tex. Apr. 24, 2015), EC F No. 335. Because NanoVapor did not join Nathan and Math e son

— now deemed to be two of the inventors of the patents

- in

- suit

— in the infringement claims against Vapor Point, Vapor Point argued that Na noVapor “d[id] not have standing to pursue [its] claim for in fringement 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 i n fringement suit. NanoVapor did not join Nathan and Matheson in its infringement claim. The refore, NanoVapor did not have standing to pursue a claim for infringement of the ’310 patent.”) (citing Enovsys LLC v. Nextel Comm c’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 m o tions 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).

D ISCUSSION NanoVapor now appeals, arguing, inter alia , that the district court erred in its determination of in ve n torship and erred when it dismiss ed the case without deciding whether Nathan and Matheson had an obl i gation to assign their inventorship interests to NanoVapor . Vapor Point appeals the district court’s denial of attorneys’ feesVAPOR POINT LLC v. MOORHEAD 9

and its decision that th e 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). Inve n torship 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 tr ial, 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. Mara thon Oil Co. , 684 F.3d 1276, 1287 (Fed. Cir. 2012)

. A factual finding is clea r ly 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 co mmitted.” 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 su p ported by clear and convincing evidence. See Appe l lant’s Br. at 23

– 30.
For the most p art, w e 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 inve ntors, 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 contr ibution to one claim is enough. ”) (citation omitted). TheVAPOR POINT LLC v. MOORHEAD 10

district court’s findings that Nathan contributed to three of the four key aspects of the invention are supported by substa n tial 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 NanoV apor that the d istrict court erred in finding that Matheson contributed to the conce p tion of the use of a particulatizer to create micro

- sized VOC particles for
treat ment 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 diff u sion 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 contr i-

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 co nceived of the ne ed for micro

- particles of VOCs,” Invento rship Order at 21

– 22 (emphasis added), the emails do not show that Matheson was copied on these exchanges, or was ever aware of them.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 dete r mined on a claim

by

- claim basis .” T rovan , 299 F.3d at 1302 (citing Ethicon

, 135 F.3d at 1460).

Because we find that the district court’s concl u sions are supported by substantial eviden ce 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 d e termining whether Nathan and Matheson had an obligation to assign their invent ion 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 Jud gment 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
t he assig n ment question. We agree.

While NanoVapor did assert that Nathan and Math eson had an obligation to assign their rights to the inve ntion, it did so only as an equitable affirm a tive 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 prej udice

. 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 see k ing a correction of inventorship. And, “ [i] t is elemen tary that inventorship and ownership are separate issues.” Beech Aircraft Corp. v. EDO Corp. , 990 F.2dVAPOR POINT LLC v. MOORHEAD 12

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 que stions of inventorship.”). “[I] nventorship is a question of who actually invented the subject matter clai med in a patent. Ownership, however, is a que s tion 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 owne r ship is not an affirmative defense to a n inventors hip claim under § 256

. See, e.g.

, Appellant’s Response and Reply Br. at 3 (“ownership is not an affirmative d e fense to inventorship”) ; Oral Arg. at 26:19

– 27:10, available at http:// oralarguments.cafc.uscourts.gov/default.aspx?fl=2015

- 1801.mp3 (counsel fo r Vapor Point arguing that ow ne rship is not a defense to inventorship)

. The volu n tary dismiss al 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 repr e sen ting 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 “bas ically be the entire trial on the merits. ” J.A. 1480. C ou nsel for NanoVapor respon d ed: inventorship “ is ultimately most likely dispositive of the other issue, now just i nfringement, and ult i mate willfulness at that point if it’ s de cided against NanoVapor .” J.A. 1480

– 81; s ee 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 infring ement.”). Inventorship is dispositive o f infringement if and only if NanoVapor waives its ownership by a s signment claim

. Ultimately, t he district court decided the invento rship issue against NanoVapor when it determined thatVAPOR POINT LLC v. MOORHEAD 13

Nathan and Matheson were co

- inventors. NanoVapor ’s clear representat ion that such a determination would be “ultimately most likely dispositive” of the inven torship issu e is a waiver of any assertion of ownership of Nathan and Matheson’s rights

. The district court did not err, therefore, in dismis s ing 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 infringe ment claim in the case. ” Final Judgment at 2, Vapor P oint (S.D. Tex . Aug. 24, 2015), ECF No. 377.

E XCEPTIONAL C ASE AND A TTORNEYS ’ F EES Vapor Point cross

- appeals the district court’s d e te rmination that it is not entitled to attorneys’ fees and the case is not exceptional. While we would have preferred a writ ten explanation for its decision, upon review of the record, w e do not find that the denial of Vapor Point’s motion was an abuse of the district court’s discretion.

C ONCLUSION

The district court’s ultimate determination on in ve ntorship is supported by substantial evidence. NanoVapor cannot now assert equitable defenses to claims that were voluntarily dismissed. M oreover, NanoVapor waived its right to pursue ownership u n der an obligation to assign theory by explicitly repr e senting 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.

AFFIRM ED

# United States **Court of Appeals**  **for the Federal Circuit**

______________________ VAPOR POINT LLC, KEI TH 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’M ALLEY , Circuit Judge , concurring.
I agree that the district court’s conclusions on inve ntorship are , as detailed in the majority opinion, supported by substantial evidence. I also agree that, by the stip ulated 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, 35VAPOR POINT LLC v. MOORHEAD 2

U.S.C. § 261 requires NanoVapor to demonstrate that an y assignment of patent rights was executed in writing

, which it undeniably cannot do

. NanoVapor’ s admission that no writing exist s 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 dama ges

. To the extent Teets v. Chromalloy Gas Turbine Corp.

, 83 F.3d 403 (Fe d. Cir. 1996) and its progeny are to the contrary, this court should consider overruling that pre cedent when presented with the question in a case where the issue is determinative of the outcome

. D ISCUSSION 35 U.S.C. § 261 provides that “[a] pplications for p atent, 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” r equirement for patent assignment goes back at least as far as the Patent Act of 1836, noting that “assig nment [s]

. . . shall be recorded in the Patent Office within three months fr om the execution thereof. ” Patent Act of 1836, ch. 357, § 11, 5 Stat. 117 (where recordation r equires 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.”).VAPOR POINT LLC v. MOORHEAD 3

In assessing whether an attempted assignment is su fficient to transfer title or ownership, courts must look to whether the parties can satisfy this “in

- writing” requir ement. Abbott Point of Care Inc. v. Epocal, Inc. , 666 F.3d 1299, 1302 (Fed. Cir. 2012 ) (“Transfers of title, otherwise known as ass ignments, are controlled by 35 U.S.C. § 261

. . . .” ). Without a written assignment that satisfies § 261, a party who is not the inventor simply lack s stan ding to bring a patent infringement suit for money dama ges

. Speedplay, Inc. v. Bebop, Inc. , 211 F.3 d 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)

. O ur 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 assig nment in both form and substance” to prevent parties fro m “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 licen sing arrangement .” Enzo APA & Son, Inc. v. Geapag A.G.

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

. And w hile 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 ow ned 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 implied

-VAPOR POINT LLC v. MOORHEAD 4

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 inqui ry on appeal —Teets could not obtain an injun ction against his employer if the employer has a valid shop right , an equ itable claim to use the invention

. The panel further r esolve d the matter , however, by holding (1) that “an employee may

. . . freely conse nt by contract to assign all rights in inventive ideas to the employer ”— which is certainly a correct statement of law

— and (2) even “wit hout 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. E ven with “no express agreement of any kind with Teets,” the pa nel not only vacated the injunction against Chromalloy, but also rever sed 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 non

written 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 oper ation 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 inte rpretation of contracts generally, the question of whether a patent assignment clause creates an automatic assig nment or merely an obligation to assign is intimately bound up with the question of standing in patent cases.VAPOR POINT LLC v. MOORHEAD 5

We have ac cordingly 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 r equired 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 assignabi lity 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. Ther efore, we hold federal law applies to the question of the assignability of the patent license in question.”). A fede ral 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 p rohibits 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 co nceded again at oral argument before this court that the

non

- executed document on which it rel ies 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:VAPOR POINT LLC v. MOORHEAD 6

THE COURT: You guys had written employment agreements?
MR. RAMEY: Yes, your Honor. They weren’ t a ctually signed by Mr. Matheson or Mr.

— well, Mr. Nathan signed a prospective hire agreement but Mr. Mathes on 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 confirm ed that he never signed an employment agreement:
Q Were you ever proffered an employment agre ement from NanoVapor?
A I was given employment agreements. I never signed any of them

. Q Do you recall how many employment agre ements you were given?
A Three, may be 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 0 1:56

– 02:15.
During oral argument, NanoVapor contended that, even without a signed employment agreement, this courtVAPOR 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 emplo yment agreement maintained that they had an obligation to assign.” Id. at 04:24

– 04:51. But NanoVapor immed iately conceded that, whether executed or not, the e mployment 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.

T he Supreme Court has explained that the hired

- to

invent assignment is an equitable one : If one is employed to devise or perfect an instr ument, 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 b ecomes, when accomplished, the property of his employer.

Solomons v. United States , 137 U.S. 342, 346 (1890) (emphasis added); s ee 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

- to

invent doctrin e, therefore, an employer may have anVAPOR POINT LLC v. MOORHEAD 8

equitable right to practice the claims of the patent by virtue of the employment relationship

. T hat equitable right protects an employer from a claim of patent i nfringement by its employee, but does not operate to tra n sfer legal title in the patent.
The shop right doctrine is similar. W hen 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 ce rt ain 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 empl oyer 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 r esulting from his use of the property, and the assi stance 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 it self arises from the fact that the work done was for hire. This court has reco gnized shop rights as providing an employer a right to use its employee’s invention without subjecting itself to liability for infringement. I n Teets itself, for example, this court noted : Consistent with the presumption that the inve ntor owns his invention, an individual owns the p atent rights even though the invention was conceived and/or reduced to practice during the course of employment. At the same time, howe v-VAPOR POINT LLC v. MOORHEAD 9

er, the law recognizes that employers may have an interest in the creative products of their e mployees. 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 emp loyer to use the e mployee’ s invention without liability for in fring ement.

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 i nfringement 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 emplo yee hired to make that invention fairly belong to the employer. But this doctrine is expressly equ itable, and creates only an obligation for the e mployee to assign to his employ er. It cannot save Ms. Gellman’ s case. . . . For the foregoing reasons, the district court did not err in dismissin g without prejudice Ms. Gellman’ s case for lack of standing.”

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

s ufficient 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 U nited States patent (an action ‘at law’ ) must have held the legal title to the patent during the time of the i nfringement. ” Arachnid, Inc. v. Merit Indus., Inc. , 939 F.2dVAPOR POINT LLC v. MOORHEAD 10

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, i f Nathan and Matheson asserted a claim of infringement against NanoVapor

— they did not

— NanoVapor could have assert ed equitable defenses under these doctrines. See B anks 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, t he 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 th e 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.

C ONCLUSION 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 in fringement claims, those claims must be dismissed. Nathan and Matheson— along with Mo or head

— 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 Te ets 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 ofVAPOR POINT LLC v. MOORHEAD 11

a writing, we shoul d undo that impermissible exception to the otherwise unconditional language of § 261 as soon as the appropriate opportunity arises

.