Case 1:23-cv-00324-ADA Document 397 Filed 07/31/25 Page 1 of 14
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`
`AUSTIN DIVISION
`CARBYNE BIOMETRICS, LLC, §
`Plaintiff, §
`§ A-23-CV-00324-ADA
`12 §
`§
`APPLE INC., §
`Defendant. §
`§
`
`FINDINGS OF FACT AND CONCLUSIONS OF LAW
`
`The Court held a bench trial on whether Carbyne has standing to assert the
`Authentication Patents (U.S. Patents Nos. 11,475,105 and 11,514,138) on November 1,
`2024, and November 5, 2024. The following findings of fact and conclusions of law are
`being entered based on the Court’s assessment of the evidence, testimony, argument, and
`exhibits presented at trial. Any finding of fact that constitutes a conclusion of law or any
`conclusion of law that constitutes a finding of fact shall be deemed the other as appropriate.
`
`I. FINDINGS OF FACT
`Dr. Jakobsson’s employment at PayPal
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`1. Dr. Markus Jakobsson was a full-time employee at PayPal' from May 2011 to
`September 2013. ECF No. 204-2 at 318:8-11; Hr-g Tr. 1 at 31:9-11 (Nov. 1, 2024)
`(Day 1). Dr. Jakobsson received a salary from PayPal throughout his employment.
`Hr-g Tr. 1 at 31:18-20 (Nov. 1, 2024) (Day 1).
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`2. Dr. Jakobsson’s job title at PayPal was Principal Scientist. /d. at 36:11-13. Dr.
`Jakobsson reported to Michael Barrett, PayPal’s Chief Information Security Officer.
`Id. at 50:13-16; ECF No. 204-11 at 2.
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`Dr. Jakobsson’s Employment Agreement
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`3. Dr. Jakobsson and PayPal executed an Employee Proprietary Information and
`Inventions Agreement (“Employment Agreement”) on April 20, 2011. ECF No.
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`! eBay was PayPal’s parent company at the time. Hr-g Tr. 1 at 101:11-17. For ease of reference, the Court
`refers to PayPal throughout.
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`204-1 1s a true and correct copy of an Employment Agreement containing an
`Employee Invention Assignment Agreement entered into between Dr. Jakobsson
`and PayPal.
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`Apple was not a party to the Employment Agreement. ECF No. 204-1 at 5-6.
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`The Employment Agreement has an effective date as of the first day of Dr.
`Jakobsson’s employment with PayPal in May 2011. /d. at 6.
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`Conception and Filing of Asserted Patents
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`15.
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`16.
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`17.
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`18.
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`19.
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`20.
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`21.
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`22.
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`23.
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`Dr. Jakobsson is listed as the sole inventor of U.S. Patent Nos. 11,475,105 and
`11,514,138. ECF No. 204-48; ECF No. 204-49. The 105 and 138 patents claim
`priority to two provisionals—one filed December 9, 2011, and the other filed
`January 17, 2012. Both provisionals were filed while Dr. Jakobsson was employed
`at PayPal. Hr-g Tr. 1 at 30:21-31:2 (Nov. 1, 2024) (Day 1). The January 17, 2012,
`provisional is titled, “Biometrics-Supported Secure Authentication System.” ECF
`No. 204-5 at 1.
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`The conception and reduction to practice dates for Patent Nos. 11,475,105 and
`11,514,138 1s January 17, 2012, while Dr. Jakobsson was employed at PayPal. ECF
`No. 204-3 at 7.
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`Dr. Jakobsson filed the first non-provisional application in the Authentication
`Patents family on December 5, 2012, again while Dr. Jakobsson was employed at
`PayPal. ECF No. 204-12.
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`The Authentication Patents describe purported improvements in authentication
`techniques for mobile and other devices. Hr-g Tr. 1 at 103:9-16; ECF No. 219-2 at
`1:40-52. The patents purport to address the problem of password reuse and use of
`poor-quality passwords. /d.
`
`The Authentication Patents were assigned to Carbyne. ECF No. 219-4.
`The Authentication Patents (‘105 and ‘138) were developed entirely without
`PayPal’s equipment, supplies, or facilities. Apple has provided no evidence to rebut
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`this. Hr-g Tr. 1 at 73:16-18, 89:13-17.
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`The Authentication Patents were created on Dr. Jakobsson’s own time. /d. at 73:19-
`20.
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`The Authentication Patents were developed without PayPal trade secret
`information. /d. at 89:13-17.
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`The Authentication Patents are based on hardware. See, e.g., id. at 73:21-74:10,
`75:7-12, 77:23-78:6.
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`24.
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`25.
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`26.
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`27.
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`28.
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`29.
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`30.
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`31.
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`32.
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`33.
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`34.
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`35.
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`36.
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`Dr. Jakobsson understood that the Authentication Patents he worked on were not
`relevant to PayPal’s business because they pertained to hardware rather than
`payment software. See, e.g., id. at 73:21-74:10, 75:7-12, 77:23-78:6.
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`The Authentication Patents did not result from any work Dr. Jakobsson did for
`PayPal. Id. at 93:16-18.
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`Dr. Jakobsson wrote the Provisionals for the Authentication Patents while on
`holiday breaks from work. The first during Thanksgiving of 2011. The second
`during Christmas break of 2011 while visiting his in-law’s home in Thailand. Hr-g
`Tr. 1 at 89:23-90:18 (Nov. 1, 2024) (Day 1); ECF No. 270 at 9.
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`Dr. Jakobsson saved PayPal Paid Time Off for the Christmas period to visit
`extended family. ECF No. 204-13 at 12.
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`Dr. Jakobsson’s work schedule with PayPal was flexible and he had freedom to
`work on endeavors outside of his work at PayPal. Hr-g Tr. 1 at 90:19-92:8 (Nov. 1,
`2024) (Day 1).
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`Dr. Jakobsson disclosed fully and in writing the inventions in this case to PayPal
`while an employee. Id. at 78:16-79:15.
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`PayPal was subpoenaed by Samsung in March 2022 in regard to a case involving
`other patents developed by Dr. Jakobsson in the same family as the patents-in-suit.
`RightQuestion v. Samsung Electronics, 2022 WL 507487 (E.D. Tex., 2022); ECF
`No. 219-39.
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`Despite being subpoenaed in another case involving patents conceived by Dr.
`Jakobsson during his employment at Paypal, PayPal has not initiated any legal
`action against Dr. Jakobsson or asserted any ownership rights to the Authentication
`Patents. Hr-g Tr. 1 at 88:3-18 (Nov. 1, 2024) (Day 1).
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`PayPal has never asserted ownership of the Authentication Patents. /d. at 12:24-
`13:1.
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`PayPal did not send counsel to attend the virtual evidentiary hearing held on
`November 1, 2024. Id. at 18:19-22.
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`Michael Barrett was the Chief Information Security Officer at PayPal from 2006 to
`2013. ECF No. 204-18 at 13:25-14:2.
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`William (“Bill”’) Leddy worked at PayPal from 2007 to 2014. ECF 204-20 at 17:15-
`18:6.
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`Michael Barrett was aware and supportive of Dr. Jakobsson’s outside work while
`employed at PayPal. Hr-g Tr. 1 at 51:22-52:10 (Nov. 1, 2024) (Day 1).
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`37.
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`38.
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`39.
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`Dr. Jakobsson started the company RavenWhite Cybersecurity in 2005. He was
`involved with RavenWhite during his employment at PayPal. Jakobsson has filed
`for many patents through his work at RavenWhite. /d. at 45:6-46:16.
`
`Dr. Jakobsson started the company FatSkunk in 2009 and worked for the company
`until 2013 when FatSkunk was acquired by Qualcomm. Dr. Jakobsson has filed for
`many patents through his work at FatSkunk. /d. at 49:11-50:1.
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`Dr. Jakobsson worked at Extricatus while working for PayPal. Id. at 56:11-15.
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`Scope of PayPal’s Business and Dr. Jakobsson’s Employment
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`40.
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`41.
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`42.
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`43.
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`44,
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`45.
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`46.
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`PayPal was not involved in biometric authentication hardware-based devices. See,
`e.g., Barrett Dep. at 46:23-47:5; Hr-g Tr. 1 at 43:22-45:2 (Nov. 5, 2024) (Day 2).
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`In 2013, PayPal launched PayPal Beacon, a hardware device which enabled
`handsfree payments. Hr-g Tr. 1 at 111:20-21 (Nov. 1, 2024) (Day 1). Beacon did
`not implement or deal with biometric authentication. Hr-g Tr. 1 at 43:2-10 (Nov. 5,
`2024) (Day 2).
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`In 2012, PayPal launched PayPal Here, a credit card reader which plugged into
`phones. Hr-g Tr. 1 at 111:18-19 (Nov. 1, 2024) (Day 1). Here did not implement
`nor relate to biometric authentication. Hr-g Tr. 1 at 43:19-25 (Nov. 5, 2024) (Day
`2).
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`In 2011 PayPal acquired Fig Card, a USB device which plugs into point-of-sale
`terminals to enable mobile payments in stores. Hr-g Tr. 1 at 111:22-25 (Nov. 1,
`2024) (Day 1). Fig Card does not implement biometric authentication. Hr-g Tr. 1
`at 44:11-19 (Nov. 5, 2024) (Day 2).
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`The testimony by Apple’s expert witness that the Authentication Patents relate to
`the business and research of PayPal contradicts the testimony given by PayPal’s
`former Chief Technology Officer. Mr. Barrett testified that if Dr. Jakobsson had
`shown him an application related to biometric supported authentication systems
`predominantly based on hardware, he would have almost certainly concluded it was
`unrelated to the business writ large of PayPal. /d. at 4:13-24:2 (November 5, 2024)
`(Day 2); ECF No. 220-21, Barrett Dep. at 46:23-47:5.
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`The copyright to the book “Mobile Authentication Problems and Solutions,” which
`Dr. Jakobsson coauthored, belongs to “the authors,” not PayPal. Hr-g Tr. 1 at 34:24-
`35:7,93:22-94:2 (Nov. 1, 2024) (Day 1).
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`The Mobile Authentication book lists Dr. Jakobsson’s name, title at PayPal, and his
`PayPal email address. Id. at 34:24-37:28.
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`47.
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`48.
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`49.
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`50.
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`52.
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`Chapters 7 and 8 of the Mobile Authentication book did not relate to Dr.
`Jakobsson’s work at PayPal. /d. at 93:18-21.
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`Dr. Jakobsson included his title at PayPal and his PayPal email address in the
`Mobile Authentication book because Mr. Barrett instructed him to do so. Mr.
`Barrett never claimed the chapters of the book related to the Authentication Patents
`came from Dr. Jakobsson’s work at PayPal. Mr. Barrett told Dr. Jakobsson to list
`his affiliation to PayPal on the book because he wanted to raise awareness that
`PayPal was a place where research could happen. 7d. at 92:22-93:21.
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`PayPal’s business in 2011-2012 was being an online payment platform. PayPal was
`not in the business of creating or modifying hardware systems for end-user devices
`to promote better authentication. /d. at 94:8-11.
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`Mr. Leddy, a PayPal colleague of Dr. Jakobsson, testified that the Authentication
`patents would not have been of any interest to PayPal. ECF No. 220-26, Leddy
`Dep. at 167:22-169:19.
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`. PayPal’s business in 2011-2012 was being an “online payments platform.” ECF
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`No. 219-25; Hr-g Tr. 1 at 94:8-11 (Nov. 1, 2024) (Day 1).
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`When Dr. Jakobsson complied with Section 8 of the Employment Agreement when
`he left PayPal in 2013. Dr. Jakobsson left all the required documents and materials
`under Section 8 with PayPal. /d. at 83:25-84:2.
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`Assignment to Carbyne
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`53.
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`RightQuestion assigned the Authentication Patents to Carbyne. ECF No. 219-4.
`Apple agrees that Carbyne is the assignee. ECF No. 203 at 2; ECF No. 219-4.
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`II. Conclusions of Law
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`A. —
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`1.
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`“Standing 1s a constitutional requirement pursuant to Article III, and it is a threshold
`jurisdictional issue.” Abraxis Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1363
`(Fed. Cir. 2010). Carbyne “‘must demonstrate that it held enforceable title to the
`patent at the inception of the lawsuit’ to assert standing.” /d. at 1364. As relevant
`here, for Carbyne to have either constitutional or statutory standing to assert the
`Authentication Patents, Carbyne must have a valid assignment agreement from the
`owner of Authentication Patents.
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`The Employment Agreement is a valid and binding agreement between PayPal and
`Dr. Jakobsson.
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`10.
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`Whether an employment agreement automatically assigns future inventions is
`governed by federal law. Schwendimann v. Arkwright Advanced Coating, Inc., 959
`F.3d 1065, 1075 (Fed. Cir. 2020) (citing DDB Techs., L.L.C. v. MLB Advanced
`Media, L.P., 517 F.3d 1284, 1290 (Fed. Cir. 2008)).
`
`“If the contract expressly conveys rights in future inventions, no further act is
`required once an invention comes into being, and the transfer of title occurs by
`operation of law.” Abraxis, 625 F.3d at 1364. “In contrast, contracts that obligate
`the owner to grant rights in the future do not vest legal title to the patents in the
`assignee.” Id. at 1364-65.
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`This Court finds the analysis employed by the Federal Circuit when the contractual
`language included the phrase “hereby assign” to be most on point in this case.
`
`Multiple cases have considered contracts with similar language and found it creates
`an automatic assignment. See, e.g., DDB Technologies, L.L.C. v. MLB Advanced
`Media, L.P., 517 F.3d 1284 (Fed. Cir. 2008); Board of Trs. of Leland Stanford
`Junior Univ. v. Roche Molecular Sys., Inc., 583 F.3d 832, 837 (Fed. Cir. 2009);
`FilmTec Corp. v. Allied—Signal Inc., 939 F.2d 1568, 1570, 1573 (Fed. Cir. 1991).
`
`In Board of Trustees of Leland Stanford Junior University. v. Roche Molecular
`Systems, Inc., the Federal Circuit considered an agreement that required the
`mventor “will assign and do[es| hereby assign to CETUS, my right, title, and
`interest in each of the ideas, inventions and improvements” that the inventor may
`devise “as a consequence of” his work. 583 F.3d at 837. The Federal Circuit
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`explained that the “language of ‘do hereby assign’ effected a present assignment.”
`Id. at 842.
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`Similarly, in DDB Technologies, L.L.C. v. MLB Advanced Media, L.P., the Federal
`Circuit considered the language “[e]Jmployee agrees to and does hereby grant and
`assign to [c]Jompany or its nominee his entire right, title and interest in and to ideas,
`inventions and improvements coming within the scope of [p]aragraph 3.” 517 F.3d
`1284, 1287 (Fed. Cir. 2008). The Court held “[t]his contractual language was not
`merely an agreement to assign, but an express assignment of rights in future
`inventions.” Id. at 1290. See also Target Tech. Co. v. Williams Advanced Materials,
`Inc., No. SACV041083, 2008 WL 5002935, at *1 (C.D. Cal. Nov. 21, 2008) (citing
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`2 g
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`DDB for holding that language “I hereby assign and agree to assign” “is considered
`an automatic assignment of a right in a future interest.””) (emphasis added)).
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`11. And m Filmtec Corp., the Court read an agreement that required the employee
`“agrees to grant and does hereby grant ... the full and entire domestic right, title
`and interest in [any invention, discovery, improvement or development (whether or
`not patentable) made in the course of or under this contract or any subcontract”
`created an automatic assignment. 939 F.2d at 1570, 1573 (alterations in original).
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`13.
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`Imation Corp. V. Koninklijke
`Philips Elecs. N.V., 586 F.3d 980, 986 (Fed. Cir. 2009) (holding that the assignment
`provision “agrees to grant and does hereby grant” is a singular, present grant which
`effects a present grant of rights of future inventions).
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`14. The Court finds Cyber Sols. Int'l, LLC v. Pro Mktg. Sales, Inc., 634 F. App'x 557
`(6th Cir. 2016) to be napposite to the contractual language at issue here. In the
`Cyber Sols. case, the contract included only the forward-looking language of
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`“agrees to assign and agrees to assign in the future” which the Federal Circuit held
`to be insufficient to affect a present transfer of title. /d. at 564 (citing Abraxis
`Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1365 (Fed. Cir. 2010)).
`
`Thus, the
`contractual language here does not represent a mere agreement to assign in the
`future as in Cyber Sols., but a present assignment of a future invention. Carbyne
`has not directed this Court to an instance where a contract including the language
`was found not to create a present assignment.
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`16. The Court declines to accept Carbyne’s interpretation of the contract clause as
`having a bifurcated effect—namely, that the phrase _ applies only
`to inventions existing or conceived at the time the agreement was executed, while
`— governs inventions developed thereafter. See ECF No. 303 at 2.
`Carbyne cites no authority drawing this specific distinction between pre-existing
`and future inventions based on the structure of a combined assignment clause. If
`the contractual language was “I hereby assign all existing inventions and agree to
`assign all future inventions” to PayPal, then Carbyne’s distinction between existing
`and future inventions would be correct. But in this instance, the 1s
`not limited to only existing inventions but applies to uring the
`period of employment.
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`17.
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`18.
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`This Court finds that the language of the contract represents a present assignment
`of future interests.
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`Because the Agreement provides an automatic assignment, no further action by
`PayPal was needed for PayPal to own the Authentication Patents. The only
`exception to the automatic assignment is if Section 2870 applied. Ex. 1 § 3.2; see
`also Venture Corp. v. Barrett, No. 5:13-CV-03384, 2015 WL 8479475, at *4 (N.D.
`Cal. Dec. 9, 2015) (“by agreeing to the Inventions Agreement, Barrett immediately
`assigned his ‘entire right, title and interest in and to’ the three inventions to VDSI,
`so long as section 2870 did not bar the assignment”), aff’d sub nom. Venture Corp.,
`Ltd v. Barrett, 694 F. App'x 597 (9th Cir. 2017) (unpublished).
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`Section 2870 exempts the Authentication Patents from automatic assignment.
`California Labor Code Section 2870 provides:
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`(a) Any provision in an employment agreement which provides that
`an employee shall assign, or offer to assign, any of his or her rights in
`an invention to his or her employer shall not apply to an invention that
`the employee developed entirely on his or her own time without using
`the employer's equipment, supplies, facilities, or trade secret
`information except for those inventions that either:
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`(1) Relate at the time of conception or reduction to practice of the
`invention to the employer’s business, or actual or demonstrably
`anticipated research or development of the employer; or
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`(2) Result from any work performed by the employee for the
`employer.
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`(b) To the extent a provision in an employment agreement purports to
`require an employee to assign an invention otherwise excluded from
`being required to be assigned under subdivision (a), the provision is
`against the public policy of this state and is unenforceable.
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`Cal. Lab. Code § 2870.
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`The employee bears the burden of establishing his invention comes within
`California Labor Code § 2870. Cubic Corp v. Marty, 229 Cal. Rptr. 828, 835 (Ct.
`App. 1986).
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`Section 2870 confers no rights on employers. It is meant to protect employees by
`rendering assignment agreements unenforceable to the extent they exceed
`permissible limits. Applera Corp.—Applied Biosystems Group v. Illumina, Inc.,
`375 Fed. Appx. 12 (Fed. Cir. 2010).
`
`The conduct of PayPal in relation to the Employment Agreement, particularly its
`awareness of Dr. Jakobsson’s outside endeavors, strongly supports finding Carbyne
`has standing. See Odyssey Wireless, Inc. v. Apple, Inc., 2016 WL 4496844 at *6
`(S.D. Cal., 2016) (finding a company’s awareness of outside endeavors strongly
`supported plaintiff’s position that it had standing.).
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`10.
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`11.
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`12.
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`PayPal had constructive notice of the Authentication Patent family when Patent No.
`9.294,452 issued in March 2016. “The issuance of a patent by the PTO constitutes
`notice to the entire world of its existence, regardless of whether other persons take
`it upon themselves to examine the records.” WesternGeco v. lon Geophysical Corp.,
`2009 WL 3497123, at *4 (S.D. Tex. Oct. 28, 2009); see also Plastronics Socket
`Partners, Ltd. v. Dong Weon Hwang, 2019 WL 4392525, at *2 (E.D. Tex. June 11,
`2019) (“Plastronics is charged with constructive notice of the actual knowledge that
`could have been acquired by examining public records.”) (cleaned up).
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`For California Labor Code § 2870 to apply, the employee must have developed the
`invention entirely on his own time.
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`For California Labor Code § 2870 to apply, the employee must have developed the
`invention without using the employer’s equipment, supplies, facilities, or trade
`secret information.
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`For California Labor Code § 2870 to apply, the invention, at its time of conception
`or reduction to practice, must also not relate to the employer’s business, or actual
`or demonstrably anticipated research or development of the employer.
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`Further, for California Labor Code § 2870 to apply, the invention cannot be the
`result of any work performed by the employee for the employer.
`
`If the requirements under § 2870 are met, the provision in the employment
`agreement purporting to require an employee to assign an invention is
`unenforceable against that invention.
`
`The Court concludes that the Authentication Patents were developed entirely on Dr.
`Jakobsson’s own time because the evidence presented shows that Dr. Jakobsson
`had a flexible work schedule that allowed him to continue working for RavenWhite
`and FatSkunk while working at PayPal and he wrote the Provisionals for the Patents
`while on holiday breaks away from PayPal. Apple did not provide any contrary
`evidence.
`
`The Court concludes that the Authentication Patents were developed without using
`PayPal’s equipment, supplies, facilities, or trade secret information. First, Dr.
`Jakobsson had the knowledge, experience, and equipment to develop the
`Authentication Patents independent of PayPal. Dr. Jakobsson applied for and
`received many patents through his work at RavenWhite, FatSkunk, Xerox PARC,
`and Extricatus before working for PayPal. Dr. Jakobsson continued his work with
`RavenWhite, FatSkunk, and Extricatus while working at PayPal. Second, Dr.
`Jakobsson testified that he developed the Patents on his own time, without using
`PayPal’s equipment, supplies, facilities, or trade secret information. There was no
`evidence presented to show Dr. Jakobsson used any of PayPal’s equipment,
`supplies, facilities, or trade secret information to develop the Authentication Patents.
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`13.
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`14.
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`15.
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`16.
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`17.
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`18.
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`The Court concludes that the Authentication Patents, at the time of conception or
`reduction to practice of the invention, do not relate to PayPal’s business or PayPal’s
`actual or demonstrably anticipated research or development. While employed at
`PayPal (2011 to 2013), Dr. Jakobsson continued to work for three other companies:
`RavenWhite, FatSkunk, and Extricatus. Dr. Jakobsson had developed, applied for,
`and received many patents with these companies before ever working at PayPal.
`Before signing the Employment Agreement with PayPal, Dr. Jakobsson made sure
`PayPal knew of his work at these companies and that it would be continuing while
`employed at PayPal. See Odyssey Wireless, Inc. v. Apple Inc., 2016 WL 4496844,
`at *6 (S.D. Cal. June 30, 2016) (finding that a company’s awareness of outside
`endeavors strongly supported plaintiff’s position that it had standing).
`
`Dr. Jakobsson also disclosed the many patents he had conceived or was currently
`working on to PayPal. Mr. Barrett, PayPal’s Chief Information Security Officer
`from 2006 to 2013, testified he was aware of Dr. Jakobsson’s projects and
`inventions outside of his work at PayPal. Mr. Barrett also testified that he was
`supportive of Dr. Jakobsson’s outside research, work, and inventions. Mr. Leddy,
`a contemporary of Dr. Jakobsson at PayPal, also testified that he was aware of Dr.
`Jakobsson’s projects and inventions outside of his work at PayPal.
`
`In 2011-2012, when the Authentication Patents were conceived, PayPal’s business
`was being an online payment platform. PayPal was not in the business of creating
`or modifying hardware systems for end-user devices for better authentication. This
`is supported by the testimony of PayPal employees, Mr. Barrett and Mr. Leddy. Mr.
`Barrett testified that patents related to biometric supported authentication would
`not have been of interest to PayPal. Mr. Leddy also testified that after reviewing
`the Authentication Patents he agreed the inventions would not have been of interest
`to PayPal.
`
`The Court finds Apple’s argument that PayPal’s patents and products show it was
`doing research into ‘“authentication” to be an overgeneralization of PayPal’s
`business. PayPal was focused on software-based authentication that was not based
`on hardware.
`
`Apple argues that PayPal has developed hardware-based devices, so the
`authentication patents still relate to its business. While the Court notes that PayPal
`has been involved in creating hardware-based devices, all these devices were point
`of sale or transaction related. They did not relate to biometric authentication. Here,
`the Authentication Patent claims and provisionals are not related to PayPal’s
`software authentication interests or its transaction related hardware. The Court
`concludes that the evidence establishes the Authentication Patents are not related
`to PayPal’s business.
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`The Court concludes that the Authentication Patents did not result from any work
`performed by Dr. Jakobsson for PayPal. Dr. Jakobsson had a flexible work schedule
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`Case 1:23-cv-00324-ADA Document 397 Filed 07/31/25 Page 13 of 14
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`19.
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`20.
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`21.
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`22.
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`23.
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`24.
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`that allowed him to continue his work with other companies. Furthermore, it was
`shown that Dr. Jakobsson worked on both Authentication Patents during holidays.
`
`Dr. Jakobsson used his time off for Thanksgiving and Christmas to work on the
`Patents. If the patents came from his work at PayPal, there would be no need for
`Dr. Jakobsson to use his Paid Time Off at the same time he was developing the
`patents for PayPal. Dr. Jakobsson’s actions show the Authentication Patents
`resulted from endeavors outside of his work for PayPal.
`
`The Court concludes that PayPal has been aware of and put on notice of these
`patents and litigation surrounding them. Despite this, Paypal has never asserted any
`ownership interest in the patents. This supports the conclusion that the patents were
`not a result from Dr. Jakobsson’s work at PayPal.
`
`He was not require
`to return anything from the development of the Authentication Patents because they
`were not a part of his work at PayPal.
`
`The Court rejects Apple’s argument that because Dr. Jakobsson listed his name, his
`title at PayPal, and his PayPal email address, the Authentication Patents result from
`Dr. Jakobsson’s work at PayPal. Dr. Jakobsson testified Chapters 7 and 8 of the
`book, which include similar disclosures as the Authentication Patents, were not a
`result of his work at PayPal. No other evidence was admitted supporting the
`argument that the Authentication Patents were the result of work Dr. Jakobsson
`performed for PayPal.
`
`The Court concludes that Carbyne has met its burden to show that the
`Authentication Patents fall within the Section 2870 exemption. The employment
`agreement 1s not enforceable as to the assignment of the Authentication patents.
`
`Because Carbyne has shown that the Authentication Patents fall within Section
`2870, the Patents were not assigned to PayPal. Dr. Jakobsson retained ownership
`over the Patents.
`
`Because the Patents were not assigned to PayPal, and Dr. Jakobsson retained
`ownership over the Patents, the assingment to Carbyne was effective.
`
`. Finally, because the Authentication Patents were properly transferred to Carbyne,
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`Carbyne has standing.
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`Case 1:23-cv-00324-ADA Document 397 Filed 07/31/25 Page 14 of 14
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`III. CONCLUSION
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`The Court concludes that:
`
`a. The Employment Agreement included an automatic, present assignment of
`intellectual property rights to PayPal.
`
`b. Carbyne met its burden to show that the Authentication Patents fell within
`Section 2870’s exemption.
`
`c. Because Section 2870 exempted the Authentication Patents from
`automatic assignment, the inventions were not automatically assigned to
`PayPal. Instead, Carbyne acquired ownership rights through Dr.
`Jakobsson’s assignment to RightQuestion, and the subsequent transfer to
`Carbyne.
`
`d. Therefore, Carbyne has standing to bring this suit.
`
`SIGNED this 24th day of July, 2025. ALAN D ALBRIGHT
`UNITED STATES DISTRICT JUDGE
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