When Help from A Vendor is Not So Helpful

The district court’s September 30 Order in Ethox Chemical, LLC vs. The Coca-Cola Company, 6:12-1682-KFM (D.S,C.2015) is an important reminder to pay close attention to the contributions made by vendors and consultants, and in particular to plan in advance for the possibility of such contributions.

Coca-Cola’s packaging group pioneered the use of polyethylene terephthalate (“PET”)
beverage containers.  One disadvantage of PET was that it is porous to gas, so the carbonation in beverages would gradually escape from the bottle.  Coca-Cola scientists identified an additive, BPO-1, that functioned as a gas barrier, and sought the assistance of several vendors including Ethox to make BPO-1 on a commercial scale.  Ethox determined that it it was not commercially feasible to use BPO-1, but one if its employees, Dr, Tanner, proposed PEM as an alternative.

Coca-Cola proceeded with a patent application on PET containers, and included PEM, which eventually resulted in the issuance of U.S. Patent No. 8,110,265.  However Coca-Cola did not include Dr. Tanner as a co-inventor.  Ethox and Dr. Tanner sued to have Dr. Tanner named as a co-inventor, and in the Order issued on September 30, the court agreed.  While adding Dr. Tanner as a co-inventor would not affect Coca-Cola’s access to the technology under 35 U.S.C. 262, it would affect Coca-Cola’s ability to block competitor from using the technology.  While the dispute is not yet over, and Coca-Cola may yet prevail, the dispute could have been avoided entirely with some advance planning.

Whenever a business deals with a third party who could potentially solve a technical problem it is facing, that business should address  the possibility upfront taking steps to secure access to the solution, and if desired secure exclusivity over the solution.  In addition, when preparing a patent application, the potential contributions of anyone who might have contributed to the invention should be vetted..



State Statute Restricting Assertion of Patent Infringement Not At Issue, So Remand to State Court Appropriate

Many of the states have passed legislation purporting to restrict a patent owner’s right to make accusations of infringement.  Some of these statutes seem to be of questionable validity, but we will have to wait for a determination.  In State of Vermont v, MPHJ Technology Investments, LLC, [2015-1310] (September 28, 2015), the Federal Circuit affirmed the district court’s remand back to state Court, finding that the Vermont Bad Faith Assertions of Patent Infringement Act (“BFAPIA”) had not (yet) been raised by the state.

The State of Vermont initiated an action under the Vermont Consumer Protection Act, 9 V.S.A. § 2453(a) for unfair trade practices and deceptive trade practices arising from MPHJ’s conduct in sending patent infringement warnings in the State of Vermont.  The district court found that Vermont was not seeking an injunction that requires MPHJ’s compliance with the Vermont Bad Faith Assertions of Patent Infringement Act (“BFAPIA”), 9 V.S.A. §§ 4195–99.. Given this conclusion, the Federal Circuit agreed that if the State
prevails on the merits in state court, it may not seek an injunction requiring MPHJ to comply with the BFAPIA.  The Federal Circuit found that because MPHJ relies
on the BFAPIA as its basis for removal under § 1442(a)(2), the necessary consequence of our decision is that we find no grounds for removal to federal court.