Nature-Control Technologies Inc. v. Li, 2014 BCSC 1868

This was an action by the Plaintiff for relief arising from the allegedly wrongful conduct of the Defendant Li. The Plaintiff claimed that Li breached the fiduciary duties he owed to it by diverting a business opportunity to one of the co-defendants, a company owned indirectly by Li and his wife (the “Li Company”). One of the issues to be decided in this case was the scope of the Plaintiff’s business and, in particular, whether it included the sale of certain products. The Defendants argue that Li agreed to give the Plaintiff certain rights for certain compounds (the “Compounds”), but not for his “specialty bleaching and brightening products” (the “Products”). The Plaintiff maintains that the Compounds and Products were developed by Li at the Plaintiff’s laboratory and at its cost. The costs of registering the patents in respect of the Compounds and Products were originally borne by the Li Company, but it was agreed that the Plaintiff would reimburse the Li Company. Therefore, the Court was asked to determine, among other things, whether the Plaintiff beneficially owns the intellectual property (patents and trademarks) in the name of the Li Company.

Following a review of the scope of the Plaintiff’s business, the Court determined that two (2) patents and four (4) trademarks are beneficially owned by the Li Company. With respect to the patents covering the Compounds, the Court held that there is a presumption that an inventor, even one who is an employee, is entitled to the benefit of his own invention. However, two exceptions exist: (1) where there is an express contract to the contrary; or (2) where the person was employed for the express purpose of inventing or innovating. Based on the evidence in this regard, the Court held that Li retained the beneficial ownership of the Compound patents. With respect to a “FAS Patent”, the Plaintiff was held to be the beneficial owner. The Court held that the parties impliedly intended for the Plaintiff to own the FAS Patent, as it asked Li to “come up with a solution” to address an “opportunity”. In addition, the Court found that the conduct of the parties supported this conclusion, as well as the fact that the Plaintiff paid the costs associated with registering the patent. Li was therefore ordered to assign the FAS Patent to the Plaintiff.