Exactly a month ago, a jury in the Western District of North Carolina returned a verdict in favor of Nexus Technologies, et al, in what could prove to be an intellectual property case with historical importance.
The facts of Nexus Technologies, Inc., et al. v. Unlimited Power Ltd. and Christopher Petrella, revolve around Nexus having been persuaded into giving the defendants proprietary technical information about the design and functionality of a novel portable renewable energy system. Defendants and an affiliate company (Revensafe) then used the information they were able to extract to file four distinct patent applications naming Defendant Petrella as the inventor, rather than the Nexus employees (Daniel Conti and Benjamin Bomer) who developed the inventions and designs.
After having done this, the patent applications were transferred to Ravensafe. which later sued Nexus for infringement of the patents it has invented. As bizarre as this sounds and not to make too fine a point of this, Nexus was being sued for using Nexus’ own intellectual property.
The jury found in favor of Nexus, and awarded inventorship of all four patents to Nexus along with damages of $10,650,000. Because the jury also found that Defendants’ conduct violated North Carolina’s unfair and deceptive trade practices statute, the damages award was trebled to $31,950,000.
I sat down with lead counsel for Nexus, John Morrow, Chair of Womble Bond Dickinson's US Intellectual Property Litigation Group, to discuss the importance of this case and why the verdict should survive the inevitable appeal.
https://www.youtube.com/embed/OknW-VRAaAs
The question remains as to what the endgame was here of the people and entity that stole the technology that Nexus had invented. To the observer, this appears to be a fairly egregious case of IP theft. Yet the reality is that this dispute spanned a period of close to six years before the litigation was actually filed. As Morrow points out in this interview, the parties had spent years trying to work out a business deal involving the technology that was the subject of the litigation.
This is more common than most people would imagine in cases involving technologies and theft of intellectual property. While there are definitely times where one party is motivated solely by malice and the intent to steal the work of another, oftentimes, as is the case in Nexus, in addition to malice the litigation is the result of ongoing business dealings and negotiations gone bad.
It’s clear that Nexus is going to be an important case for years to come, and part of the reason is because while this is a significant IP case, it’s also a relatively rare type of case. As Morrow points out, “These inventorship disputes are not all that common. Normally, when you have a patent case it’s over infringement issues and validity issues as opposed to fighting over who actually invented the patents.”
Morrow adds that “Generally, there is a presumption that the PTO got things right. This creates a pretty big hurdle for plaintiffs like Nexus to overcome and it needs to be by clear and convincing evidence that the named inventors aren’t the rightful owners of the technology.”
Along those lines, Morrow provides some great counsel for tech founders who might find themselves dealing with a similar situation as they begin their project. He suggests filing patent applications prior to disclosing ideas or inventions to third parties, as well as entering into a legal agreement with a third party that precludes him/her from using the ideas prior to such disclosure. Do this with everyone with whom you’re disclosing technological concepts, drawings, and the like. Because patent applications can file as unpublished, you might not become aware that someone has filed a patent on your technology for many years potentially. What’s critically important is to bring your claim as early as possible, as an inventor will have an easier time before a patent is granted.
While Nexus may or may not act as a deterrent, what Nexus will certainly do is provide a clear example that these difficult types of IP cases are winnable. The key is having clear and convincing evidence to support your claim.
About Aron Solomon
Aron Solomon is the Head of Digital Strategy for NextLevel.com and an adjunct professor of business management at the Desautels Faculty of Management at McGill University.