DCT
2:17-cv-09067
CTC Global Corp v. Jason Huang
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: CTC Global Corp (Delaware)
- Defendant: Jason Huang (California); Rulong Chen (California); Jianping Huang a/k/a James Huang (Canada)
- Plaintiff’s Counsel: Venable LLP
- Case Identification: 2:17-cv-09067, C.D. Cal., 12/18/2017
- Venue Allegations: Venue is alleged to be proper in the Central District of California because the plaintiff's principal place of business is in Orange County, the alleged injury occurred there, and many of the alleged wrongful acts took place within the district.
- Core Dispute: Plaintiff alleges that its former executive misappropriated proprietary technology and trade secrets related to pre-stressed electrical conductors, which were then improperly patented by the executive's brother, and seeks correction of inventorship for the resulting patent.
- Technical Context: The technology concerns high-performance composite core conductors for electrical power grids, which are designed to increase power capacity and reduce thermal sag.
- Key Procedural History: The complaint alleges that the core inventive concept—pre-stressing a conductor's strength member—was a confidential trade secret developed at CTC beginning in 2012. It further references invention assignment agreements signed by the alleged true inventors that purportedly assign all rights in the technology to CTC.
Case Timeline
| Date | Event |
|---|---|
| 2011-08-12 | CTC employee Eric Bosze executes Confidential Information and Invention Assignment Agreement. |
| 2011-08-15 | CTC employee Doug Pilling executes Confidential Information and Invention Assignment Agreement. |
| 2012-01-01 | Complaint alleges CTC began considering the concept of pre-stressing a conductor's strength member. |
| 2014-09-26 | '766 Patent earliest priority date. |
| 2015-09-23 | U.S. Patent Application No. 14/863,396 (leading to '766 Patent) is filed. |
| 2017-04-25 | U.S. Patent No. 9,633,766 issues. |
| 2017-12-18 | Complaint is filed. |
II. Technology and Patent(s)-in-Suit Analysis
U.S. Patent No. 9,633,766 - "Energy Efficient Conductors With Reduced Thermal Knee Points And The Method Of Manufacture Thereof"
- Patent Identification: U.S. Patent No. 9,633,766, "Energy Efficient Conductors With Reduced Thermal Knee Points And The Method Of Manufacture Thereof," issued April 25, 2017.
The Invention Explained
- Problem Addressed: The patent's background describes how conventional electrical conductors sag when they heat up under electrical load. This is largely dictated by the thermal expansion of the conductive material (e.g., aluminum). This sag limits the amount of current a power line can safely carry. (’971 Patent, col. 1:53-65).
- The Patented Solution: The invention proposes pre-stressing the conductor's high-strength, low-expansion core member so it is under permanent tension, while the surrounding conductive material is left tension-free or in a state of compression. This process lowers the "thermal knee point," which is the temperature at which the conductor's sag behavior begins to be dominated by the conductive material. By lowering this point, the conductor's sag is controlled by the more stable core over a wider operational temperature range, allowing for increased power transmission. (’971 Patent, Abstract; col. 2:1-29).
- Technical Importance: This technology allows for greater current-carrying capacity on existing electrical transmission infrastructure, which can help upgrade power grids without the cost and difficulty of building new towers. (’971 Patent, col. 10:41-44).
Key Claims at a Glance
- The complaint alleges that CTC employees contributed to the invention disclosed and claimed in the ’971 Patent, specifically referencing dependent claims 3, 5, 8, and 12, which depend from independent claim 1. (Compl. ¶118).
- Independent Claim 1 recites the following essential elements:
- A strength member comprising a strand or a plurality of strands of steel or fiber-reinforced longitudinally extending composite materials under tensile strain of at least 0.05%.
- An optional insulation layer sufficient to eliminate galvanic corrosion.
- An electrically conductive encapsulating layer portion comprising at least a single layer of cladding conductive media.
- The conductive encapsulating layer is in direct contact with the strength member (with or without a lubricating layer) with no gaps.
- The electrically conductive encapsulating layer portion is substantially free of tension.
III. The Accused Instrumentality
Product Identification
- The subject of the dispute is not a commercial product, but the inventorship and ownership of U.S. Patent No. 9,633,766 itself. (Compl. ¶¶116-121).
Functionality and Market Context
- The complaint alleges that Defendant James Huang, who is listed as the sole inventor, filed for and obtained the ’766 Patent based on technology and trade secrets misappropriated from CTC by his brother, Defendant Jason Huang, a former CTC executive. (Compl. ¶¶67-68, 83). The complaint asserts that James Huang lacks the technical expertise to have conceived of the invention independently and that CTC employees Eric Bosze, Doug Pilling, and/or Jason Huang are the true inventors. (Compl. ¶¶45, 118). These employees were allegedly bound by agreements to assign their inventions to CTC, which forms the basis for CTC's claim of ownership. (Compl. ¶¶69-71, 120).
No probative visual evidence provided in complaint.
IV. Analysis of Inventorship Allegations
'971 Patent Inventorship Correction Allegations
| Claim Element (from Independent Claim 1) | Alleged Inventive Contribution by CTC Personnel | Complaint Citation | Patent Citation |
|---|---|---|---|
| A strength member... under tensile strain of at least 0.05%... | The complaint alleges that the core concept of pre-stressing a conductor's strength member was a confidential trade secret at CTC and that CTC employees contributed to the conception and/or reduction to practice of this claimed invention. | ¶¶67, 68, 118 | col. 26:33-38 |
| ...and an electrically conductive encapsulating layer portion... wherein the electrically conductive encapsulating layer portion is substantially free of tension... | The complaint alleges that the claimed configuration, where the conductive layer is tension-free, is a direct result of the pre-stressing concept developed by and for CTC. | ¶¶67, 68, 118 | col. 26:45-48 |
- Identified Points of Contention:
- Evidentiary Question: The case will turn on what corroborating evidence, such as dated lab notebooks, emails, or technical reports, CTC can produce to meet the high "clear and convincing" standard required to prove that its employees conceived of the claimed invention before the named inventor.
- Derivation vs. Independent Invention: A central question for the court will be whether the named inventor, James Huang, derived the invention from information supplied by his brother, as alleged, or if he conceived of it independently. The complaint's allegation that James Huang lacks the requisite technical expertise will be a key factual dispute. (Compl. ¶45).
- Contribution Question: The court will need to determine if the alleged contributions of CTC employees (Bosze, Pilling, and Huang) meet the legal standard for joint inventorship, which requires a contribution to the conception of the invention as claimed, not merely to its reduction to practice. (Compl. ¶118).
V. Key Claim Terms for Construction
- The Term: "under tensile strain of at least 0.05%"
- Context and Importance: This quantitative limitation is a core technical feature of the invention. The dispute over inventorship will likely focus on who first conceived of applying a specific, measurable degree of pre-stress to the strength member to achieve the novel, low-sag result.
- Intrinsic Evidence for Interpretation: The specification discusses the general concept of pre-stressing the core. (’971 Patent, Abstract). However, the claim itself recites a specific numerical floor of "at least 0.05%," suggesting that conceiving of this specific quantitative relationship, rather than just the general idea, may be a critical part of the inventive act. (’971 Patent, col. 26:35-36).
- The Term: "electrically conductive encapsulating layer portion"
- Context and Importance: This term describes the method of applying the conductive material to the pre-stressed core. Determining who conceived of this method will be critical to establishing inventorship, as it is the means by which the pre-stress is preserved in the final conductor.
- Intrinsic Evidence for Interpretation: The patent specification describes this element as part of a "cohesive conductive hybrid rod" and discusses its formation via a "conforming machine." (’971 Patent, col. 12:1-3; col. 11:15-26). This language may support a narrower interpretation tied to a specific manufacturing process beyond simple stranding, and evidence of conceiving this particular method could be dispositive for inventorship.
VI. Other Allegations
- Correction of Inventorship (Count 6): The complaint formally requests that the court order the USPTO to correct the inventorship of the '766 Patent pursuant to 35 U.S.C. § 256. It alleges that Defendant James Huang is improperly named as the sole inventor and that CTC employees Jason Huang, Eric Bosze, and/or Doug Pilling should be named as inventors based on their contributions. (Compl. ¶¶117-118). The complaint further alleges that the omission was erroneous and that CTC has ownership rights through assignment agreements from the proper inventors. (Compl. ¶¶119-120).
- Trade Secret Misappropriation (Counts 1 & 2): The complaint alleges that the patented technology was a CTC trade secret and that Defendant Jason Huang breached his duties by disclosing this information to Defendant James Huang, who then used it to file for the patent. (Compl. ¶¶67, 83-85).
- Breach of Contract (Count 5): Plaintiff alleges that Defendant Jason Huang breached his employment agreement, which required him to disclose and assign all inventions conceived during his employment to CTC. This count provides the basis for CTC's claim to ownership of the '766 Patent if inventorship is corrected. (Compl. ¶¶71, 110-111).
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of origination and derivation: Can CTC present clear and convincing evidence that its employees were the true conceivers of the claimed invention, and that the named inventor derived the technology from them through the alleged misappropriation scheme?
- A key evidentiary question will be one of inventive contribution: The court will need to analyze the specific contributions allegedly made by CTC personnel to determine if they rise to the level of "conception" of the invention as recited in the patent's claims, which is the legal standard for inventorship, or if they constituted non-inventive contributions.
- The ultimate question of ownership will depend on the outcome of the inventorship dispute. If the court orders a correction of inventorship, it will then need to interpret the various employment and invention assignment agreements to decide whether ownership of the patent rightfully belongs to CTC.