Contractual and Fiduciary Duty of Loyalty May Estop Defendant From Asserting Invalidity Defense

The court denied defendant's motion to dismiss on the ground that plaintiff’s synthetic gem investment product patent encompassed unpatentable subject matter because there were genuine disputes of fact whether an individual defendant was estopped from challenging the patent's validity. "⁠[T]he Court is unpersuaded by defendants' contention that [plaintiff] is legally precluded from asserting an estoppel or contractual bar to [the individual defendant's] invalidity argument arising from his fiduciary and contractual duties to [plaintiff]. Whether those duties actually bar [the individual defendant] (and [the LLC defendant] as his alleged alter ego) in the way asserted by [plaintiff] is another matter, and one the Court cannot adjudicate at this stage of the litigation -- as it may depend on factual disputes that cannot be adjudicated at this point. The upshot is that the Court does not believe that it can appropriately decide defendants' invalidity challenge in the context of their motion to dismiss for failure to state a claim."

Gemshares LLC v. Lipton et al, 1-17-cv-06221 (ILND February 11, 2018, Order) (Kennelly, USDJ)