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The district court dismissed the case on the grounds that Diamond Coating lacked standing, as it had not received all of the necessary patent rights in the transaction with the patent owner, and it had not joined the patent owner as a plaintiff in the action.  Additionally, the court would not reinstate the action based on an agreement that did grant Diamond Coating all of the necessary rights that the parties entered after the district court had dismissed the action based on the defective original agreement.

On appeal, the Federal Circuit affirmed.  It held that the agreement between Diamond Coating and Sanyo (the original patent owner) failed to grant Diamond all of the necessary rights, because Sanyo retained a license to practice the claimed invention, Diamond itself had no rights to practice the invention, and any enforcement of the patent was conditioned on consideration of the best interests of Diamond and Sanyo.  Thus, Diamond Coating had not received all substantial rights. 

The Federal Circuit also affirmed the district court’s decision not to treat that the later agreement retroactively so as to confer status on Diamond Coating after the decision to dismiss the action.  The law in the Federal Circuit is that later assignments are not sufficient to confer retroactive patentee status and controlled here. 

Diamond Coating Technologies, LLC v. Hyundai Motor America, Case Nos. 2015-1844, -1861 (May 17, 2016); Opinion by: Wallach, joined by Bryson and Taranto; Appealed From: United States District Court for the Central District of California, King, J. Read the full opinion here.

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