[비즈한국] EOFlow, which recently won an appellate court victory in its trade secret litigation against the U.S. insulin pump manufacturer Insulet, is pushing to reclaim patent application rights that were transferred to Insulet under a lower court’s order. Although the original verdict was overturned on appeal, some patent applications remain registered under Insulet’s name.
According to public patent information reflecting transfer records from the United States Patent and Trademark Office (USPTO), U.S. patent application US20230248902A1, filed by EOFlow, was transferred to Insulet on June 24 of last year, with the transfer registered on July 23. While the U.S. Court of Appeals for the Federal Circuit overturned the lower court’s ruling this past May, the rights holder of the patent application is still listed as Insulet. This application, which involves technology for detecting occlusion in the inlet of a drug infusion device, was transferred pursuant to an order from the U.S. District Court for the District of Massachusetts in April last year. Although the application received a Notice of Allowance from the USPTO on June 10 of this year, the final registration of the patent has not yet been confirmed.
In a phone call with Biz Hankook on the 12th, EOFlow CEO Kim Jae-jin stated, “Since we won the appeal, we can get these patents back, but we need the court’s final order.” CEO Kim noted that he expects a decision on Insulet’s request for a rehearing to be issued this month, after which he plans to demand the re-transfer of the patent application rights.
Appellate Victory Achieved, but Patent Return Still Pending… Despite Insulet’s Rehearing Request, Company Remains “Confident in Recovery”
The legal dispute between EOFlow and Insulet began in August 2023 when Insulet filed a lawsuit in the U.S. District Court for the District of Massachusetts, alleging trade secret infringement. Insulet claimed that EOFlow used its trade secrets to develop the wearable insulin pump "EOPatch."
In December 2024, a jury accepted Insulet’s claims and handed down a verdict awarding approximately $452 million in damages. The court subsequently adjusted the damages to approximately $59.4 million and issued a permanent injunction in April last year. The order also included a mandate to transfer certain patent application rights related to trade secret infringement to Insulet.
However, on May 28 of this year, the U.S. Court of Appeals for the Federal Circuit vacated the lower court’s judgment, ruling that Insulet had filed the lawsuit after the three-year statute of limitations had expired, starting from when it knew or should have known about the alleged trade secret infringement. Note that this did not constitute a judgment on all technical issues regarding the actual occurrence of trade secret infringement.
CEO Kim explained that the company could not stop the execution of the first-instance order at the time due to financial circumstances. “The first-instance ruling was an enforceable order, and although we appealed, we could not apply for a stay of execution because we lacked the funds,” he said. “Because the amount was so large, it was difficult to secure the deposit, so we had no choice but to comply with the order.”
Currently, the proceedings regarding Insulet’s petition for an *en banc* rehearing, filed in July against the appellate ruling, remain ongoing. Insulet has requested a review of the appellate court’s jurisdictional determination and the interpretation of the statute of limitations for trade secret infringement claims.
“We can only receive the re-transfer of the patents once the rehearing request is dismissed,” CEO Kim said. “We believe a decision will be made this month.” He added that he plans to demand the re-transfer of the patent application rights once the court issues its decision.
However, the outlook that the rehearing request will be dismissed this month is the company’s internal expectation, and the actual timing of the decision and the schedule for patent return have not been finalized.
Are Other Patents Problematic? Exclusive Licensing Secured for University of Texas Patents
The patent applications transferred to Insulet relate to technology that detects blockages in the drug delivery path of insulin pumps. This technology is linked to product safety, as the cessation of drug delivery could result in patients not receiving necessary insulin.
Some of the electro-osmotic pump technology used by EOFlow in its business is owned by the University of Texas. Notably, U.S. Patent No. 9,314,567 (US9314567B2) is registered under the University of Texas System. Registered in 2016, this patent concerns pump technology that uses electro-osmotic phenomena to move fluids and can be applied to small drug delivery devices. The expected expiration date is January 2033.
EOFlow signed a license agreement with the University of Texas for electro-osmotic pump technology in 2013 and has developed its own technology based on it. Regarding the University of Texas patent, CEO Kim stated, “We hold exclusive implementation rights,” adding, “We own many related derivative or modified patents, so there is no major problem even if the patent expires.”
Apart from the patent applications transferred to Insulet, EOFlow is also in the process of reclaiming core patent rights that it sold last year to raise funds.
In January last year, to secure operating funds, EOFlow sold a total of 66 patent rights—including 17 registered U.S. patents, 33 U.S. patent applications, and 16 PCT international patent applications—to IPV, a patent-holding entity, for 8 billion won. The contract at the time included a buyback clause allowing EOFlow to re-acquire the patent rights if it paid 26 billion won by April 24 of this year.
Instead of paying cash, EOFlow conducted a paid-in capital increase by issuing 8,666,666 new shares at 3,000 won per share in exchange for an in-kind contribution of the patent rights held by IPV. The external appraisal value of the patent rights was approximately 34.2 billion won, with the actual in-kind contribution value at approximately 26 billion won. With the completion of the in-kind capital increase payment on the 15th of last month, IPV became the largest shareholder of EOFlow, holding a 17.17% stake.
Regarding the fact that some of these patents are listed as "Abandoned," CEO Kim explained that it is a common management practice for companies to review the utility of patents and decide whether to maintain them.
Regarding patents with little time left before expiration, he emphasized, “Even if there are only a few years left, it is important to bring them back. They form the core of our company’s key technologies, and it is inappropriate to leave them in someone else’s hands when we can reclaim them.”
Possibility of New Share Listing and Trading Resumption?
As the patent transfer registration process has been delayed, the schedule for listing the new shares has also been pushed back. On the 12th, EOFlow announced a correction to its paid-in capital increase disclosure, delaying the expected listing date of the new shares by one week, from the 16th to the 23rd. The company stated that the listing date for the new shares could change further depending on the schedule for the transfer of patent ownership.
CEO Kim explained, “The schedule is being delayed because the patent name change process at the USPTO has not yet been completed.”
Meanwhile, EOFlow’s stock trading has been suspended since March 21 of last year after receiving a disclaimer of opinion from its auditor regarding its 2024 fiscal year financial statements. Although it resolved the cause for delisting by obtaining an "unqualified" opinion on its 2024 fiscal year financial statements through a re-audit last month, issues regarding the audit opinion disclaimer for the 2025 fiscal year and a capital impairment review for listing eligibility remain.
On the 8th, the KOSDAQ Market Committee of the Korea Exchange granted EOFlow an improvement period of six months, until April 8 of next year. While the company avoided immediate delisting, it will undergo a review on whether to delist after the improvement period ends, and the suspension of stock trading will continue.
EOFlow is accelerating its business normalization as restrictions on its operations due to the litigation have eased. On June 22, the U.S. Court of Appeals for the Federal Circuit expanded the scope of the stay of execution regarding the first-instance permanent injunction in regions including South Korea and the European Union (EU).
“As of the end of June, we have been able to secure new users in places like Korea and Europe, so we are growing,” said CEO Kim, expressing hope that the company would be able to demonstrate an improvement in its business situation during the improvement period granted until next April.