Summary:
CAFC denies BearBox LLC’s conversion claim, citing patent law preemption.
Storms' attempt to be named sole or joint inventor on Lancium’s patent rejected.
Court rules BearBox sought patent-like protection for unprotected ideas.
BearBox's technology was not patented and is in the public domain.
CAFC affirms district court's findings after a three-day bench trial.
The U.S. Court of Appeals for the Federal Circuit (CAFC) issued a precedential decision on January 13, denying a state law conversion claim brought by BearBox LLC owner Austin Storms. The court ruled that the claim was preempted by federal patent law and rejected Storms' request to be recognized as a sole or joint inventor of a patent owned by Lancium LLC.
The patent in question, U.S. Patent No. 10,608,433, is titled “Methods and Systems for Adjusting Power Consumption Based on a Fixed-duration Power Option Agreement” and is associated with power management solutions for data centers, including those used for Bitcoin mining. Storms, who founded BearBox to design mobile cryptocurrency datacenters, initially met Lancium co-founder Michael McNamara at the FCAT Mining Summit.
During their interactions, Storms shared information about BearBox but did not meet McNamara again. Following the issuance of the '433 patent, BearBox filed a lawsuit in Louisiana, claiming that Storms should be acknowledged as an inventor and alleging conversion under state law. However, the district court sided with Lancium, stating that the conversion claim was essentially a patent infringement claim, thus preempted by federal law. The CAFC supported this view, indicating that BearBox's claims sought monetary damages akin to patent royalties, which are not permissible under state law.
The CAFC further explained that BearBox’s technology was not patented and was publicly available, meaning it could not claim protection under federal law. The court noted that allowing the conversion claim to proceed would permit BearBox to recover lost profits or reasonable royalties, which is not allowed for unprotected ideas.
On the matter of inventorship, the CAFC upheld the district court's findings after a three-day bench trial, confirming that Storms did not provide any substantial evidence proving he contributed to the conception of the invention prior to Lancium’s development of the technology. BearBox's arguments regarding hearsay testimony were dismissed as the CAFC found no prejudicial error in the district court's decisions. Additionally, BearBox's late-filed expert report was also struck down as untimely.
The CAFC ultimately affirmed the district court’s ruling in full, marking a significant decision in the intersection of patent law and cryptocurrency technology.
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