CarbonCharge Technologies LLC v. Talafous-Favetta

Background

CarbonCharge Technologies LLC brought this action seeking to remove Dino A. Favetta as an inventor from U.S. Patent Nos. 9,478,324 and 10,121,563, which the opinion calls the “Biochar Patents.” CarbonCharge also sought a declaration that Marylou Talafous-Favetta and other heirs did not co-own those patents. Favetta’s widow was sued both individually and as executor of the estate.

EnRevo Industries LLC and EnRevo Phytron LLC, together called EnRevo, claimed an interest based on agreements involving the patent rights. In 2016, Favetta signed an agreement involving Michrinik Technologies LLC and EnRevo. The opinion states that Michrinik had not yet been formed as a limited liability company when the first agreement and purported assignment were signed. Later agreements between EnRevo and Michrinik did not include an executed assignment from Favetta. One later license agreement contained a New Jersey choice-of-law provision and a mandatory arbitration clause. Michrinik later terminated that license agreement, although the validity and effect of the termination were unresolved in this case.

The original parties began settlement discussions after discovery had started. The court dismissed the action without prejudice to reopening within 60 days of its order. After the case was closed, EnRevo moved to intervene under Federal Rule of Civil Procedure 24(a) and Rule 24(b). CarbonCharge and the defendants opposed intervention. EnRevo also requested a stay of the action, a request joined by CarbonCharge.

Intervention as of Right

Rule 24(a)(2) allows intervention as of right only if the proposed intervenor shows four elements: a timely motion; an interest relating to the property or transaction at issue; a risk that the case could impair the ability to protect that interest; and inadequate representation by the existing parties. Failure to satisfy any one requirement is enough to deny the motion.

The court held that EnRevo’s motion was untimely. EnRevo learned of the lawsuit in March 2024, monitored the docket, and communicated with the defendants during the litigation and settlement discussions. It did not seek intervention until after the parties had reached a settlement in principle and the case had been closed. The court found that allowing intervention at that point could derail the settlement and prejudice the existing parties. It also rejected EnRevo’s claim that the delay was justified by its later concern that the proposed settlement might affect its license rights.

The court separately held that EnRevo had not shown a sufficient direct, substantial, and legally protectable interest in the subject matter of the lawsuit. EnRevo did not allege an interest in the ’563 Patent. As to the ’324 Patent, the court found that EnRevo’s claimed interest was as a possible licensee, dependent on an assignment from Favetta to Michrinik. The court characterized EnRevo’s potential dispute as one involving claims against Michrinik under the license agreement, not an interest in the central question of Favetta’s inventorship. Because Michrinik was not a party and the license agreement required arbitration, the court concluded that EnRevo was not a necessary party to resolving the claims between CarbonCharge and the defendants.

The court acknowledged that a ruling finding CarbonCharge to be the sole owner of the technology underlying the ’324 Patent might impair EnRevo’s claimed license interest. But it found the record unclear about whether EnRevo had any surviving interest and concluded that EnRevo’s conduct had not preserved its position in this litigation.

Finally, the court held that EnRevo had not shown that the defendants would inadequately represent its interests. EnRevo and the defendants shared the goal of keeping Favetta listed as an inventor. The possibility that the defendants might settle on terms EnRevo disliked did not, by itself, establish inadequate representation. The court therefore denied intervention as of right.

Permissive Intervention

Rule 24(b) permits intervention when a proposed intervenor has a claim or defense sharing a common legal or factual question with the main action, but the decision is discretionary. The court declined to permit EnRevo to intervene. It reasoned that allowing EnRevo to pursue potential claims involving Michrinik, a nonparty, while also defending Favetta’s inventorship would add complexity that outweighed any benefit and would unnecessarily delay the litigation. Those license-related issues were ancillary to the patent claims in the action.

Disposition

Judge Philip M. Halpern denied EnRevo’s motion to intervene under Rules 24(a) and 24(b). The court also denied EnRevo’s alternative request to stay the action. The court extended the deadline to move to reopen the action until 30 days after the order and directed the clerk to terminate the pending motion.