Trireme Medical, LLC v. Angioscore, Inc. ( 2016 )

United States Court of Appeals
for the Federal Circuit
______________________
TRIREME MEDICAL, LLC,
Plaintiff-Appellant
v.
ANGIOSCORE, INC.,
Defendant-Appellee
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2015-1504
______________________
Appeal from the United States District Court for the
Northern District of California in No. 3:14-cv-02946-LB,
Magistrate Judge Laurel Beeler.
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Decided: February 5, 2016
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DAVID A. CAINE, Arnold & Porter, LLP, Palo Alto, CA,
argued for plaintiff-appellant. Also represented by
THOMAS T. CARMACK, MICHAEL DUY KHIEM NGUYEN,
JAMES C. OTTESON.
PETER J. ARMENIO, Quinn Emanuel Urquhart & Sulli-
van, LLP, New York, NY, argued for defendant-appellee.
Also represented by WILLIAM ADAMS, MATTHEW ROBSON,
CLELAND B. WELTON, II; AARON BERGSTROM, San Francis-
co, CA.
2 TRIREME MEDICAL, LLC v. ANGIOSCORE, INC.
______________________
Before PROST, Chief Judge, DYK, and CHEN, Circuit
Judges.
DYK, Circuit Judge.
AngioScore, Inc. (“AngioScore”) claims exclusive
ownership of U.S. Patent Nos. 8,080,026 (“the ’026 pa-
tent”), 8,454,636 (“the ’636 patent”), and 8,721,667 (“the
’667 patent”) (collectively, “the AngioScore patents”).
TriReme Medical, LLC (“TriReme”), claiming to have
received an assignment of an interest in the AngioScore
patents from Dr. Chaim Lotan, brought suit for correction
of inventorship. It sought to have Dr. Lotan named as an
inventor on the patents pursuant to 35 U.S.C. § 256. The
district court dismissed for lack of subject matter jurisdic-
tion, holding that any interest Dr. Lotan may have had in
the AngioScore patents had been assigned earlier to
AngioScore under a consulting agreement, and that
TriReme as a consequence lacked standing. TriReme
appeals. We reverse and remand for further proceedings.
BACKGROUND
AngioScore sells a line of angioplasty balloon cathe-
ters called AngioSculpt, which are designed to open
arterial blockages. To accomplish this, an AngioSculpt
device is inserted into a blood vessel and inflated when it
reaches the targeted occlusion area. The balloon contains
a metal spiral on its surface, which expands as the bal-
loon inflates and scores the plaque lining the occluded
blood vessel. The balloon is then deflated and the device
removed from the vessel. All three AngioScore patents
relate to this concept. Each lists three inventors: Dr.
Eitan Konstantino, Tanhum Feld, and Nimrod Tzori.
None lists Dr. Chaim Lotan as an inventor.
TRIREME MEDICAL, LLC v. ANGIOSCORE, INC. 3
TriReme is a competitor of AngioScore. Apparently
concerned that AngioScore might charge TriReme with
infringement of the ’026, ’636, and ’667 patents, TriReme
sought to acquire an interest in the AngioScore patents
from Dr. Lotan, who performed consulting services for
AngioScore. In June 2014, Dr. Lotan granted TriReme an
exclusive license to “any and all legal and equitable
rights” he held in the AngioScore patents. J.A. 317. Dr.
Lotan testified that he retained no financial interest in
the patents. If Dr. Lotan was an inventor of the patents
and TriReme acquired his interest, TriReme could prac-
tice the patents and would have a defense to infringe-
ment. See 35 U.S.C. § 262; Shum v. Intel Corp., 629 F.3d
1360, 1369 (Fed. Cir. 2010).
Dr. Lotan claims that his inventive contribution arose
from his work in connection with the development of the
AngioSculpt catheters in 2003, which is reflected in the
AngioScore patents. AngioScore’s defense to this claim is
based on a contract entitled “AngioScore, Inc. Consulting
Agreement” (“Consulting Agreement”) between Angi-
oScore and Dr. Lotan, with an effective date of May 1,
2003. J.A. 309. AngioScore asserts that it had acquired
rights to all inventive work completed by Dr. Lotan under
both § 9(a) and § 9(b) of the Consulting Agreement.
TriReme brought suit for correction of inventorship
pursuant to 35 U.S.C. § 256, seeking to have Dr. Lotan
named as an inventor of the AngioScore patents. Angi-
oScore moved to dismiss for lack of subject matter juris-
diction, arguing that TriReme lacked standing because
Dr. Lotan had assigned any rights he may have had in his
inventive contribution to the patents to AngioScore under
the Consulting Agreement, and that, accordingly, Dr.
Lotan had nothing to later license to TriReme. The
district court granted AngioScore’s motion and dismissed
the complaint. See TriReme Med., LLC v. AngioScore,
Inc., No. 14-cv-02946-LB, 2015 WL 1246532 (N.D. Cal.
4 TRIREME MEDICAL, LLC v. ANGIOSCORE, INC.
Mar. 17, 2015). It held that the “question of when Dr.
Lotan completed work is ultimately immaterial,” inter-
preting the Consulting Agreement to provide for assign-
ment of Dr. Lotan’s interest to AngioScore regardless of
the date of his work. J.A. 8. TriReme appealed. We have
jurisdiction pursuant to 28 U.S.C. § 1295(a)(1). Standing
in an inventorship dispute is a question of law that we
review de novo. Chou v. Univ. of Chicago, 254 F.3d 1347,
1355 (Fed. Cir. 2001). We also review the interpretation
of a contract de novo. Intel Corp. v. ULSI Sys. Tech., Inc.,
995 F.2d 1566, 1569 (Fed. Cir. 1993).
DISCUSSION
When the owner of a patent assigns away all rights to
the patent, neither he nor his later assignee has a “con-
crete financial interest in the patent” that would support
standing in a correction of inventorship action. Chou, 254
F.3d at 1359; see also Larson v. Correct Craft, Inc., 569
F.3d 1319, 1326–27 (Fed. Cir. 2009). The question is
whether such an assignment to AngioScore occurred here.
Necessary to understanding this dispute is a descrip-
tion of the Consulting Agreement. The Consulting
Agreement contains two provisions material to this ap-
peal: § 9(a), which relates to Dr. Lotan’s work before the
May 1, 2003, effective date; and § 9(b), which relates to
Dr. Lotan’s work after the effective date. The Consulting
Agreement provides:
9. Inventions
(a) Inventions Retained and Licensed. Consult-
ant has attached hereto, as part of Exhibit C, a
list describing all inventions, original works of au-
thorship, developments, improvements, and trade
secrets which were made by Consultant prior to
the date of this Agreement (collectively referred to
as “Prior Inventions”), that belong solely to Con-
TRIREME MEDICAL, LLC v. ANGIOSCORE, INC. 5
sultant or belong to Consultant jointly with an-
other and that relate to any of the Company’s cur-
rent or proposed businesses, products or research
and development; or if no such list is attached,
Consultant represents that there are no such Pri-
or Inventions. If, in the course of providing the
Services, Consultant incorporates into a Company
product, process or machine or into any Invention
(as defined below), a Prior Invention owned by
Consultant or in which Consultant has an inter-
est, the Company is hereby granted and shall
have a non-exclusive license (with the right to
sublicense) to make, have made, copy, modify,
make derivative works of, use, sell and otherwise
distribute such Prior Inventions as part of or in
connection with such product, process, machine or
Invention.
(b) Assignment of Inventions. Consultant agrees
to promptly disclose to the Company and hereby
assigns to the Company, or its designee, all right,
title and interest in and to all inventions, original
works of authorship, developments, concepts,
know-how, improvements or trade secrets, wheth-
er or not patentable, that Consultant may solely
or jointly conceive or develop or reduce to practice
during the term of this Agreement that relate to
the Services (collectively referred to as “Inven-
tions”).
J.A. 310 (underlining in § 9(b) other than final “Inven-
tions” added).
AngioScore’s theory under § 9(a) is that § 9(a) re-
quired Dr. Lotan to attach a list of any “Prior Inventions”
made before May 1, 2003, in Exhibit C of the Consulting
Agreement. Id. He did not list any such inventions in
Exhibit C. The Consulting Agreement provides that
6 TRIREME MEDICAL, LLC v. ANGIOSCORE, INC.
failure to attach a list amounts to a representation that
there are “no such Prior Inventions.” Id. The result,
AngioScore contends, is that such unlisted inventions
belong to AngioScore.
AngioScore’s theory under § 9(b) is that § 9(b) governs
all inventions, developments, concepts, and improvements
relating to Dr. Lotan’s work for AngioScore that Dr. Lotan
conceived, developed, or reduced to practice after the
effective date, and provides that AngioScore shall be
assigned all such inventions. AngioScore contends that it
was assigned all of Dr. Lotan’s rights to his inventive
contribution because his work relating to that contribu-
tion continued after May 1, 2003.
We first consider AngioScore’s claim under § 9(a) of
the Consulting Agreement. Before the May 1, 2003,
effective date, Dr. Lotan performed a single-day study
testing AngioSculpt prototypes in pig arteries. During the
study, Dr. Lotan discovered a “clear retention problem” in
which the metal spiral on the surface of the balloon
dislodged from the device upon retraction from the pigs’
arteries. J.A. 418. Dr. Lotan suspected that the problem
arose because the spiral was only affixed to the balloon at
one end—the other end was “free-floating” to enable the
spiral to move in response to the balloon’s expansion and
contraction. J.A. 512. After observing this problem, Dr.
Lotan contributed to a memorandum summarizing the
study, which highlighted the retraction issue and recom-
mended that the unattached end be better secured.
According to Dr. Lotan, during two follow-up meetings
with AngioScore he further recommended that the unat-
tached end be affixed to the balloon with a polymer tube,
which he believed would more securely bond the spiral to
the balloon while still allowing the spiral to expand and
contract synchronously with the balloon. The later issued
AngioScore patents claim a balloon catheter with an
attachment structure similar to that allegedly recom-
TRIREME MEDICAL, LLC v. ANGIOSCORE, INC. 7
mended by Dr. Lotan. According to Dr. Lotan, it was not
until 2013 that he learned that the AngioScore patents
had incorporated his alleged recommendation. Dr. Lotan
testified that he did not list his work on the pig study
under Exhibit C of the Consulting Agreement because he
did not consider it an invention at the time.
AngioScore argued before the district court that it had
acquired all of Dr. Lotan’s interest in the pre-May 1, 2003,
work under § 9(a) of the Consulting Agreement. Angi-
oScore contended that Dr. Lotan’s work on the pig study
qualified under the terms of the Consulting Agreement as
an “invention,” “development,” or “improvement” that
related to AngioScore’s business and was made by Dr.
Lotan “prior to the date of [the] Agreement.” J.A. 310.
Thus, AngioScore argued, Dr. Lotan was required to list
the pig study under Exhibit C of the Consulting Agree-
ment pursuant to § 9(a), and his failure to do so resulted
in an assignment—not simply a license—of his rights to
AngioScore. The district court agreed, reasoning based on
the “purpose” of the Consulting Agreement that § 9(a)
“together” with § 9(b) operated to assign Dr. Lotan’s
rights in his inventive contribution to AngioScore as a
consequence of his failure to list the pig study. J.A. 13.
Contrary to the district court’s conclusion, § 9(a) does
not provide for assignment of Dr. Lotan’s rights. Califor-
nia law, which governs the interpretation of this contract,
requires that we construe the Consulting Agreement
according to the plain meaning of the language employed
if possible. See Cal. Civ. Code § 1639; Cedars-Sinai Med.
Ctr. v. Shewry, 137 Cal. App. 4th 964, 979–80 (2006).
Section 9(a) is entitled “Inventions Retained and Li-
censed,” but nothing in its terms suggests that anything
not listed as a “Prior Invention” would not be “retained.”
J.A. 310. And it certainly does not provide that inven-
tions that are not listed are assigned, rather than li-
censed. Indeed, granting an assignment for any “Prior
8 TRIREME MEDICAL, LLC v. ANGIOSCORE, INC.
Invention” would make little sense, because listed inven-
tions under § 9(a) could theoretically encompass inde-
pendent inventions dating back many years before the
start of the Consulting Agreement.
What § 9(a) does, at most, is grant AngioScore a non-
exclusive license in the event that the consultant incorpo-
rates a Prior Invention into an AngioScore product during
the term of the Consulting Agreement. But such license
is not exclusive and would not prevent Dr. Lotan from
subsequently assigning his rights in those contributions
to TriReme. In short, the district court erred to the extent
it relied on § 9(a) to find that Dr. Lotan assigned his
rights to AngioScore.
AngioScore argues, however, that estoppel by con-
tract—codified by § 622 of the California Evidence Code—
binds TriReme, as Dr. Lotan’s successor in interest, to Dr.
Lotan’s representation under § 9(a) that he had no “Prior
Inventions” relevant to AngioSculpt and therefore “owned
no rights in any purported ‘development’ or ‘improvement’
of AngioScore’s prototype.” Appellee’s Br. 28. This repre-
sentation, AngioScore argues, precludes TriReme from
now alleging that Dr. Lotan made an inventive contribu-
tion on which TriReme could base an inventorship claim.
This new argument is unavailing. Estoppel by contract
does not apply here, because neither Dr. Lotan nor his
successor in interest (TriReme) seeks to enforce any rights
under the contract. See Gas Appliance Sales Co. v. W.B.
Bastian Mfg. Co., 262 P. 452, 455 (Cal. Dist. Ct. App.
1927); see also Bank of Am. v. Banks, 101 U.S. 240, 247
(1879); Popplewell v. Stevenson, 176 F.2d 362, 364 (10th
Cir. 1949). AngioScore has cited no case that applies
estoppel by contract where the cause of action is not
founded upon the written instrument itself. Accordingly,
estoppel by contract does not bind TriReme in its correc-
tion of inventorship action here.
TRIREME MEDICAL, LLC v. ANGIOSCORE, INC. 9
We next consider AngioScore’s alternative argument
that Dr. Lotan assigned it all rights in his inventive
contribution pursuant to § 9(b). The parties dispute the
significance of Dr. Lotan’s role in the development of
AngioSculpt after the May 1, 2003, effective date. It is
not disputed, however, that all of Dr. Lotan’s work during
the term of the Consulting Agreement related to design-
ing, implementing, and analyzing clinical trials, including
collecting regulatory data. Section § 9(b) explicitly pro-
vides for assignment of all “inventions, original works of
authorship, developments, concepts, know-how, improve-
ments or trade secrets” that Dr. Lotan “conceive[d] or
develop[ed] or reduce[d] to practice during the term” of
the Consulting Agreement that relate to his work for
AngioScore. J.A. 310. AngioScore’s theory under § 9(b) is
that Dr. Lotan’s work relating to his inventive contribu-
tion continued after May 1, 2003, and amounted to both
“development” and “reduction to practice” within the
meaning of § 9(b). Id. Thus, AngioScore contends, all of
Dr. Lotan’s rights in his inventive contribution were
assigned to AngioScore even if some of his work was
performed before May 1, 2003. Whether Dr. Lotan as-
signed his rights under § 9(b) thus depends on whether
Dr. Lotan’s continued work on AngioSculpt after the
effective date in fact amounted to “developing,” or “reduc-
ing to practice” an “invention,” “development,” or “im-
provement” pursuant to § 9(b). Id. Only if Dr. Lotan’s
continued work after May 1, 2003, constituted “develop-
ing,” or “reducing to practice” would his inventive contri-
bution have been assigned to AngioScore under § 9(b) of
the Consulting Agreement. Id.
It is undisputed that while Dr. Lotan no longer
worked on the physical design of the catheter after the
effective date, he continued “talking” with AngioScore,
performing work relating to designing, implementing, and
analyzing clinical trials. J.A. 14. The parties dispute the
10 TRIREME MEDICAL, LLC v. ANGIOSCORE, INC.
significance of this clinical trial work, however, disagree-
ing as to whether it amounted to “conceiving,” “develop-
ing,” or “reducing to practice” an “invention,”
“development,” or “improvement” pursuant to § 9(b).
Discovery before the district court was limited regarding
Dr. Lotan’s work after May 1, 2003, and there was no
trial. Nor did the district court make any findings about
this work. The district court merely found that Dr. Lo-
tan’s post-effective date work on AngioSculpt “might have
amounted to” “developing” or “reducing to practice” his
recommendations. 1 J.A. 15. Whether this work falls
under § 9(b) remains a question of fact that cannot be
resolved on a motion to dismiss. We remand for the
district court to consider whether Dr. Lotan’s continued
work on AngioSculpt after the effective date came within
the language of § 9(b). 2
REVERSED AND REMANDED
COSTS
Costs to Appellee.
1 AngioScore inaccurately asserts that “the district
court ruled that Lotan’s work on the catheter after May 1,
2003 constituted such ‘development’ and ‘reduction to
practice.’” Appellee’s Br. 14–15 (emphasis added). In
fact, the district court merely found that such work
“might have amounted to” “developing” or “reducing to
practice” his recommendations. J.A. 15.
2 Our opinion should not be read as resolving the
question of whether (if Dr. Lotan performed work after
May 1, 2003, covered by § 9(b)) Dr. Lotan’s pre-May 1,
2003, work was assigned to AngioScore under § 9(b).