United States Court of Appeals for the Federal Circuit
03-1444, -1490
CATERPILLAR INC.,
Plaintiff-Cross Appellant,
v.
STURMAN INDUSTRIES, INC.,
ODED E. STURMAN, and CAROL K. STURMAN,
Defendants-Appellants.
William K. West, Jr., Howrey Simon Arnold & White, LLP, of Washington, DC,
argued for plaintiff-cross appellant. With him on the brief were Robert G. Abrams,
Gregory J. Commins, Jr., Christopher J. DelliCarpini and Gary J. Fischman. Of counsel
was Pamela S. Kane.
William A. Streff, Jr., Kirkland & Ellis LLP, of Chicago, Illinois, argued for
defendants-appellants. With him on the brief were Paul R. Steadman, Mary E. Zaug,
Craig D. Leavell, Mark L. Vanboncouer and Tiffany P. Cunningham.
Appealed from: United States District Court for the Central District of Illinois
Chief Judge Joe Billy McDade
United States Court of Appeals for the Federal Circuit
03-1444, -1490
CATERPILLAR INC.,
Plaintiff-Cross Appellant,
v.
STURMAN INDUSTRIES, INC.,
ODED E. STURMAN, and CAROL K. STURMAN,
Defendants-Appellants.
__________________________
DECIDED: October 28, 2004
__________________________
Before NEWMAN, DYK, and PROST, Circuit Judges.
PROST, Circuit Judge.
Sturman Industries, Inc., Oded E. Sturman, and Carol K. Sturman (collectively,
Sturman) appeal from a decision of the United States District Court for the Central
District of Illinois, Case No. 99-CV-1201, in which the jury found in favor of Caterpillar
Inc. (Caterpillar) on its claims of trade-secret misappropriation, breach of contract, and
conversion. In particular, Sturman appeals the district court’s refusal to strike a juror for
cause, the denial of judgment as a matter of law, the exclusion of a defense exhibit from
evidence before the jury, the assignment of two of its United States patents to
Caterpillar, and the grant of summary judgment in favor of Caterpillar on certain of
Sturman’s counterclaims. Caterpillar cross-appeals the trial judge’s findings in favor of
Sturman on issues of co-inventorship of various United States patents, as well as the
limitation on state unjust enrichment remedies as preempted by federal law. We
reverse the district court’s decision to allow a presumed biased juror to sit on the jury,
vacate the jury’s verdict and resultant remedies, and remand for a new trial on the state
common law and statutory claims. In addition, we reverse the grant of summary
judgment in favor of Caterpillar on Sturman’s fraudulent inducement counterclaim, affirm
the decision maintaining Mr. Sturman as the sole inventor of U.S. Patent Nos.
5,460,329 and 5,640,987, and reverse the decision naming Mr. Sturman the sole
inventor of
U.S. Patent No. 5,479,901.
I. BACKGROUND
A. Facts
As the district court noted, “[t]he technology at issue in this case is the use of
magnetic latching in a fuel injector via the use of residual magnetism.” Residual
magnetism here refers to magnetism that a material continues to exert after it has been
magnetized by the process of passing an electric current through a coil of wire wound
around the material.
Mr. Sturman began his work in residual magnetism in the nineteen-sixties. On
July 3, 1973, Mr. Sturman obtained
U.S. Patent No. 3,643,898 (the ’898 patent) on
technology employing this phenomenon. The ’898 patent relates to “[l]atching devices
which utilize the residual magnetism retained in the relatively soft magnetic materials in
the magnetic circuit for the latching force.” ’898 patent, Abstract. Figure 8 of the ’898
patent (below) demonstrates relevant features of the claimed invention.
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In this design, the plunger or armature (202) moves up and down between the upper
and lower pole pieces (200a, 200b).
Id. at col. 12, ll. 15-29. This moves the attached
actuating pin (204), which linearly actuates a valve or other device.
Id. at col. 12, ll. 7-
12. For example, to move the armature downward, the lower solenoid coil (208) is
energized, thus magnetizing the housing and lower pole and creating a magnetic force
that attracts the armature (202).
Id. at col. 12, ll. 15-20. The current to the solenoid can
be shut off once the armature is in contact with the lower pole because the armature will
remain latched against the lower pole by the residual magnetism exerted by the
material.
Id. at col. 12, ll. 59-66; col. 13, ll. 22-24. To then move the armature upward,
the upper solenoid coil (206) is energized. This, in turn, pulls the armature to the upper
pole. When the armature touches the upper pole, the current to the solenoid is again
shut off and the armature remains latched via residual magnetism.
In the late nineteen-eighties, Mr. Sturman worked for Cummins Engine Co. on
fuel injector valves. While at Cummins, Mr. Sturman alleges he developed a fuel
injector valve using residual magnetic latching. Caterpillar notes, however, that all of
the resultant designs used permanent magnets. Later, in the early nineteen-nineties,
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Sturman was developing applications for residual magnetism for both BKM, a California
fuel injection consulting firm, and the United States Navy, among others.
In 1991, Caterpillar and Sturman executed a Consultant Agreement to develop
electronically controlled actuators and related driver circuits for possible applications in
fuel systems for diesel engines. In 1992, the parties replaced the Consultant
Agreement with a Joint Development Agreement (JDA). The purpose of the JDA was to
develop “ACTUATORS and DRIVER CIRCUITS for CATERPILLAR’s exclusive use in
fuel systems for diesel engines.”
Under the JDA, Sturman agreed to assign Caterpillar “INTELLECTUAL
PROPERTY made or conceived by [Sturman] personnel, either alone or with others (a)
pursuant to the [joint development program] or (b) resulting from CATERPILLAR’S
PROPRIETARY INFORMATION.” The JDA defined “INTELLECTUAL PROPERTY” as
“patentable inventions, patents, copyrights, technical trade secrets and/or technical
PROPRIETARY INFORMATION.” Caterpillar agreed to pay Sturman royalties on any
uses of such intellectual property going forward, even after termination of the JDA.
Pursuant to the JDA, Sturman and Caterpillar jointly developed actuators and
driver circuits for fuel injection in diesel engines. The work related primarily to poppet
valves using linear actuators, which operate under principles similar to those described
above with respect to the ’898 patent. The complete systems are known as
mechanically actuated, electronically controlled unit injectors (MEUIs). Sturman
assigned its rights in these inventions to Caterpillar, which obtained U.S. Patent Nos.
5,407,131 and 5,494,219 claiming such technology (the ’131 patent and ’219 patent,
respectively). The MEUI designs under consideration under the JDA had demanding
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physical requirements. They had to open and close nine hundred times per second,
with a required life of a billion cycles. In addition, they required a sixty pound latching
force over a 0.002 inch air gap. Thus, to make use of residual magnetic latching (as
opposed to permanent magnets), it became necessary to find a material with both the
necessary magnetic and physical characteristics capable of withstanding such
demanding operational requirements. Caterpillar engineers Maley and Tharp engaged
in this search, ultimately identifying hardened 52100 and 4140 steels as appropriate for
residual magnetic latching in a MEUI.
From September 1 to September 3, 1992, Sturman and Caterpillar engineers met
at Jumers Castle Lodge, a hotel in Peoria, Illinois, to discuss fuel injector designs. On
the second day, the team met to “brainstorm alternate system designs.” The following
morning, Mr. Sturman sketched an idea for an integrated spool valve employing residual
magnetic latching using 52100 steel (below).
(Jumers Drawing.) Mr. Sturman marked his sketch “Confidential.”
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The integrated spool valve works on different principles than the armature-with-
connecting-pin design described above. The design eliminates the need for a separate
armature and connecting pin; it integrates the armature function into the body of the
spool itself. As depicted in the Jumers Drawing, an integrated spool valve comprises a
spool-shaped piece—marked “plunger (52100)”—that moves back and forth within a
cylindrical housing. When it moves from one position to another, it opens and closes
different flow channels cut around the circumference of the spool. In the integrated
spool valve, electromagnetic pole pieces reside at opposite ends of the spool. When an
electric current is applied to the electromagnetic pole pieces at one end of the device,
the spool is magnetically attracted thereto. After the spool has reached the end and the
current has been shut off, residual magnetism latches the spool in place. When a
current is drawn through the pole pieces at the opposite end (while a small current is
passed through the latched end to demagnetize it), the electromagnetic force pulls the
spool, causing it to slide towards and latch at the other end.
Caterpillar rejected the idea for a spool valve design for a MEUI for a variety of
reasons, but primarily because it was not suitable for high pressure 30,000 psi fuel
systems. Under these operating conditions, the valve leaked too much. Sturman
agreed with this assessment and the parties did not further develop the idea of a spool
valve for use in a MEUI. Nonetheless, Caterpillar engineers did recognize that
Sturman’s integrated spool valve design had “tremendous potential.”
In fact, Caterpillar began exploring the idea of using an integrated spool valve for
a hydraulically actuated, electronically controlled unit injector (HEUI). The district court
found that contemporaneous memoranda indicate that the idea came from Sturman’s
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design, as presented in the Jumers Drawing. Caterpillar never informed Sturman about
its work using an integrated spool valve for a HEUI. Instead, it treated this project as
independent and outside of the JDA.
By its own terms, the JDA expired in July 1993. To avoid paying ongoing
royalties to Sturman under its terms, Caterpillar sought to amend the JDA. It offered
Sturman a lump-sum payment of $275,000 and sought a release of any claims involving
the JDA in exchange. The parties executed the amendment on November 30, 1993.
In negotiating the release, Sturman repeatedly sought to determine which
intellectual property arose under the JDA. In particular, as reflected in Mrs. Sturman’s
handwritten notes from an October 22, 1993, teleconference regarding the potential
buy-out, the release was “to cover everything generated in the program,” specifically the
“2 applications w/ Eddie as co-inventor.” A letter dated November 16, 1993, from
Anthony Woloch in Caterpillar’s patent department listed as “the inventions naming
Eddie as a co-inventor and arising under the [JDA],” the two patent applications that
matured into the ’131 and ’239 patents. This letter also asked Mr. Sturman to fill out an
enclosed form if he believed any other inventions arose under the JDA. Finally, on the
date the parties signed the amendment, Mrs. Sturman’s handwritten notes reflect that
she asked whether the release would cover “just these 2 applications as spelled out [in
the] Nov. 16 letter from CAT?” According to the notes, Caterpillar responded that the
“$275,000 will cover whatever CAT [received] during our time together” and would
“cover anything from the program that [Caterpillar] utilized now or in the future.”
Following the 1993 dissolution of the JDA, Sturman began working on numerous
other projects as a consultant. Much of this work focused on integrated spool valve
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designs for clients including Navistar and BKM. In February 1994, Sturman published
an article describing this technology in Machine Design. That spring, Sturman also filed
two patent applications claiming this technology. The first application related to two-,
three-, and four-way versions of the integrated spool valve technology and issued as
U.S. Patent No. 5,640,987 (the ’987 patent). The second application related to three-
and four-way integrated spool valves for a HEUI and issued as
U.S. Patent No.
5,460,329 (the ’329 patent). Both patents are related to the spool-valve design depicted
in Mr. Sturman’s Jumers Drawing.
Meanwhile, Caterpillar continued its own work with an integrated spool valve
design for use in a HEUI. In May 1994, Caterpillar’s counsel drafted a patent
application covering this technology. The application named Mr. Sturman as a co-
inventor. Caterpillar therefore asked Mr. Sturman to sign the patent application and
assign Caterpillar his rights in the invention. Mr. Sturman refused, claiming he had
invented the technology outside the JDA. In response to the request, Mrs. Sturman
sent Caterpillar a letter dated June 14, 1994, which stated:
Upon review of Patent Application No. 92-463, we have
found that there must be some mistake. Sturman Industries
has already applied for a similar patent independently. As
per your letter of November 16, 1993, there were only two
inventions that were derived out of our [JDA] . . . . The
material in your Patent Application No. 92-463 is almost
identical to work that Sturman Industries . . . did
independently of Caterpillar.
In light of this, Caterpillar filed two separate applications. One was directed to two-way
valves, which Mr. Sturman refused to sign and went abandoned. The other was
directed to three-way valves, which did not name Mr. Sturman as an inventor and
ultimately issued as
U.S. Patent No. 5,479,901 (the ’901 patent).
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B. Prior Proceedings
On June 28, 1999, Caterpillar filed a complaint against Sturman in the United
States District Court for the Central District of Illinois. Among other things, Caterpillar
brought claims alleging Sturman violated the Illinois trade-secret statute, breached the
JDA, and unlawfully converted Caterpillar’s property. Caterpillar also sought correction
of inventorship of Sturman’s ’329 and ’987 patents. In response, Sturman
counterclaimed, seeking, inter alia, correction of inventorship of the ’901 patent and
alleging fraudulent inducement of the amendment to the JDA.
Before trial, Caterpillar moved for summary judgment on Sturman’s
counterclaims. The district court granted-in-part Caterpillar’s motion on the basis that
many of Sturman’s counterclaims were barred by the release in the amendment to the
JDA and, further, because Sturman did not present genuine issues of material fact that
it was fraudulently induced into signing that amendment. Caterpillar Inc. v. Sturman
Indus., Inc., No. 99-1201 (C.D. Ill. Dec. 10, 2001) (order denying, inter alia, Sturman’s
fraudulent inducement claim). Among other things, the district court denied-in-part
Caterpillar’s summary judgment motion on Sturman’s counterclaim seeking correction of
inventorship of the ’901 patent.
Id.
At the beginning of trial, during the jury selection process, Sturman moved to
dismiss for cause any current or former Caterpillar employees and their spouses. The
district court denied Sturman’s blanket objection, but specifically allowed Sturman to
show cause for individual jurors. During that process, over Caterpillar’s objections,
Sturman sought to strike for cause any potential jurors with close ties to Caterpillar. The
district court dismissed one juror whose husband was in management at Caterpillar, but
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refused to dismiss other jurors who simply had a connection to certain of Caterpillar’s
union-contract employees. Sturman did not individually challenge for cause Juror No.
31, the spouse of a current Caterpillar employee, nor did it use one of its peremptory
challenges to have her removed. Juror No. 3 ultimately sat on the jury.
At the conclusion of Caterpillar’s case on the merits, Sturman moved for
judgment as a matter of law (JMOL) under Rule 50(a) of the Federal Rules of Civil
Procedure. Sturman argued that, based on Caterpillar’s evidence, no reasonable juror
could rule in favor of Caterpillar on its trade-secret, breach-of-contract, and conversion
claims. The district court denied Sturman’s motion. See Caterpillar Inc. v. Sturman
Indus., Inc., No. 99-1201 (C.D. Ill. July 12, 2002) (order denying Sturman’s motion for
JMOL).
Thereafter, Sturman presented its case to the jury. As part of its case, Sturman
sought to introduce into evidence DX410, an internal Caterpillar report prepared before
the litigation discussing the merits of material choices for the spool valve. Caterpillar
objected to the introduction of DX410. The district court sustained the objection, finding
that its probative value was substantially outweighed by the danger of unfair prejudice
and potential to mislead the jury. See Caterpillar Inc. v. Sturman Indus., Inc., No. 99-
1201 (C.D. Ill. July 16, 2002) (order sustaining Caterpillar’s objection to the admission of
DX410).
The jury ruled in favor of Caterpillar on all counts before it. In response to a
special interrogatory regarding the trade secret, the jury found that Caterpillar “proved
by a preponderance of the evidence that workable magnetic latching in the fuel injector
1
“Juror No. 3” refers to the juror who filled out Juror Questionnaire No. 3,
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valve in the absence of permanent magnets via the use of a housing and armature
made of a material with sufficient residual magnetism was first made or conceived
pursuant to the [JDA].” With respect to the trade-secret misappropriation claim, the jury
found in favor of Caterpillar and awarded $1.00 in nominal damages and $1.32 million in
restitution for unjust enrichment. With respect to the breach-of-contract claim, the jury
found that Sturman breached a variety of different clauses in the JDA but awarded only
$1.00 in nominal damages. Finally, the jury also found in favor of Caterpillar on its
conversion claim.
The district court conducted a bench trial on the correction-of-inventorship
claims. On Caterpillar’s claims for correction of inventorship of Sturman’s ’329 and ’987
patents, the court held that Caterpillar failed to rebut, by clear and convincing evidence,
the presumption that Sturman, the named inventor, was the true and only inventor. See
Caterpillar Inc. v. Sturman Indus., Inc., No 99-1201, slip op. 40 (C.D. Ill. Feb. 6, 2003)
(Caterpillar Opinion). It therefore denied Caterpillar’s co-inventorship claim. On
Sturman’s counterclaim for correction of inventorship of the ’901 patent, however, the
district court found that Sturman had presented clear and convincing evidence to rebut
the presumption that the Caterpillar engineers named on the patent were the true and
only inventors. See
id. Consequently, the court named Sturman as the sole inventor of
the ’901 patent.
Thereafter, based on the jury findings, the district court granted Caterpillar
additional remedies. Notwithstanding the district court’s inventorship findings in favor of
Sturman regarding the ’329 and ’987 patents, the district court granted Caterpillar’s
not the juror who was seated third.
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request for specific performance, ordering Sturman to assign Caterpillar sole ownership
of those patents. See Caterpillar Inc. v. Sturman Indus., Inc., No. 99-1201 (C.D. Ill.
Feb. 11, 2003) (order directing specific performance). The district court noted that the
ruling depended on the jury’s verdict that Sturman breached the IP-assignment clause
in the JDA and converted the ’329 and ’987 patents in violation of Illinois law. In
addition, the court imposed a constructive trust on all monies received by Sturman
attributable to the ’329 patent prior to January 2, 1996, at which point Caterpillar’s ’901
patent issued, ending any trade-secret claims. See Caterpillar Inc. v. Sturman Indus.,
Inc., No. 99-1201 (C.D. Ill. Feb. 10, 2003) (order imposing constructive trust).
On February 12, 2003, the district court entered final judgment in Caterpillar’s
favor on all litigated claims. See Caterpillar Inc. v. Sturman Indus., Inc., No. 99-1201
(C.D. Ill. Feb. 12, 2003). Sturman subsequently filed timely motions for judgment as a
matter of law and for a new trial, which the district court denied. See Caterpillar Inc. v.
Sturman Indus., Inc., No. 99-1201 (C.D. Ill. May 29, 2003) (order denying Sturman’s
renewed motion for JMOL); Caterpillar Inc. v. Sturman Indus., Inc., No. 99-1201 (C.D.
Ill. May 30, 2003) (order denying Sturman’s motion for a new trial). On June 3, 2003,
Sturman filed a timely notice of appeal. Caterpillar responded with a timely notice of
cross-appeal on June 27, 2003. After entering an amended judgment on June 30,
2003, see Caterpillar Inc. v. Sturman Indus., Inc., No. 99-1201 (C.D. Ill. June 30, 2003),
Sturman filed a corrected amended notice of appeal on July 3, 2003, and Caterpillar
filed an amended notice of cross-appeal on July 9, 2003.
We have jurisdiction pursuant to
28 U.S.C. § 1295(a)(1).
II. DISCUSSION
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Sturman appeals (1) the district court’s decision to allow Juror No. 3 to sit on the
jury; (2) the district court’s denial of Sturman’s motions for judgment as a matter of law
on Caterpillar’s trade-secret and breach-of-contract claims; (3) the district court’s
exclusion of DX410 from evidence before the jury; (4) the district court’s assignment of
Sturman’s ’329 and ’987 patents to Caterpillar on the basis of the jury’s verdicts; and (5)
the district court’s grant of summary judgment in favor of Caterpillar on various Sturman
counterclaims, particularly the fraudulent inducement counterclaim, as having been
released under the amendment to the JDA.
Caterpillar cross-appeals (1) the district court’s decision denying Caterpillar’s
claims that its engineers Maley and Tharp were joint inventors of the ’329 and ’987
patents; (2) the district court’s decision that Sturman was the sole inventor of the ’901
patent; and (3) the district court’s limitation of Caterpillar’s state unjust enrichment
remedies as preempted by federal law.
We address each of these issues in turn.
A. Whether the District Court Erred By Seating Juror No. 3
1. Standard of review
The parties disagree as to the applicable standard of review. Caterpillar argues
the more common abuse-of-discretion standard applies, while Sturman contends this
case presents a legal question of implied bias, which is reviewed de novo.
Typically, the redress for an assertion of jury bias at the trial court is a hearing at
which the defendant is afforded the opportunity to prove actual bias. Smith v. Phillips,
455 U.S. 209, 217 (1982). “While the Supreme Court has held that the question of
whether an individual juror is biased is a factual determination entitled to deference on
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review,” however, “it has never ‘precluded the use of the conclusive presumption of
bias’ in ‘extreme’ or ‘extraordinary cases.’” Hunley v. Godinez,
975 F.2d 316, 318 (7th
Cir. 1992) (quoting Smith,
455 U.S. at 217 (O’Connor, J., concurring)). Thus, in cases
of implied bias, as opposed to actual bias, “[w]hether a juror’s partiality may be
presumed from the circumstances is a question of law,” which we review de novo. Id.;
see also Skaggs v. Otis Elevator Co.,
164 F.3d 511, 517 (10th Cir. 1998) (“The
determination of implied bias is a question of law reviewed de novo.”)
As discussed in detail below, Sturman’s arguments relate to whether the district
court should have dismissed for cause Caterpillar employees, retirees, and their
spouses due to their interest in the case, not whether Juror No. 3 had actual bias (which
would be a factual question). Accordingly, Sturman presents a legal question of
whether Juror No. 3 was impliedly biased and de novo review applies.
2. Arguments
Sturman argues that the district court erred by allowing Juror No. 3, the spouse
of a Caterpillar employee, to sit on the jury. Juror No. 3’s marriage to an employee of a
party and consequent financial interest in the case, Sturman contends, required the
court to excuse her under United States v. Polichemi,
219 F.3d 698, 704 (7th Cir. 2000),
and Getter v. Wal-Mart Stores,
66 F.3d 1119, 1122 (10th Cir. 1995). As Sturman points
out, it therefore moved before trial to excuse all such potential jurors (including Juror
No. 3) for cause, even warning the district court that failure to do so could warrant
finding a mistrial. Contrary to Caterpillar’s arguments at the district court that the
exclusion of these potential jurors would violate the rule set forth in Batson v. Kentucky,
476 U.S. 79 (1986), which prohibits, under the Equal Protection Clause, challenging
03-1444, -1490 14
potential jurors solely on the basis of their race, Sturman asserts there is no
constitutional right to have the employees of a party and their spouses sit on a jury,
even if that party employs a large percentage of the local population. In addition,
according to Sturman, having raised the blanket objection to the presence of such
jurors, it was not required to raise the same point individually for each potential juror,
nor was it required to use a peremptory challenge to dismiss the juror.
Caterpillar counters that Sturman waived its right to appeal the presence of Juror
No. 3 because it did not individually object to her presence when offered the opportunity
to do so by the district court. Sturman’s blanket objection did not suffice, according to
Caterpillar, because “[s]uch a ‘class’ is not presumed biased as a matter of law; rather,
bias must be shown individually.” Appellee’s Br. 24. As such, Caterpillar contends, the
district court did not abuse its discretion in denying Sturman’s blanket objection and
directing it to make individual for-cause showings. Citing Zamora v. Guam,
394 F.2d
815, 816 (9th Cir. 1968), Caterpillar argues Sturman waived objection by not making an
individual motion to strike Juror No. 3 for cause. Moreover, Caterpillar asserts, the
cases Sturman relies on do not hold that Juror No. 3 is biased as a matter of law.
Caterpillar particularly points out that the juror at issue in Getter was challenged
individually and presumed biased in part because of his stockholdings in Wal-Mart, not
simply his spouse’s employment there.
3. Analysis
The threshold issue with regard to the question of juror bias is whether the district
court correctly concluded that Sturman waived objection to the presence of Juror No. 3
on the jury. If we disagree with the district court as to the waiver issue, we must
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subsequently determine whether Juror No. 3 should have been deemed biased as a
matter of law.
a. Whether Sturman waived objection to Juror No. 3
We hold that Sturman did not waive objection to Juror No. 3, who was married to
a Caterpillar employee. If a party fails to raise an argument at trial, it waives any appeal
of that issue because, barring a few exceptions, an appellate court does not consider
arguments first made on appeal. See Datamatic Servs. v. United States,
909 F.2d
1029, 1034 (7th Cir. 1990). In this case, in considering Sturman’s Motion for a New
Trial Pursuant to Rule 59 of the Federal Rules of Civil Procedure, the district court had
already considered the waiver issue, concluding that Sturman waived objection to Juror
No. 3 by declining to individually challenge her for cause when offered the opportunity to
do so. See Caterpillar Inc. v. Sturman Indus., Inc., No. 99-1201 (C.D. Ill. May 30, 2003)
(order denying Sturman’s motion for a new trial). The court therefore concluded that
Sturman could not, at that late stage in the trial, challenge the propriety of Juror No. 3.
Id. (relying on Frazier v. United States,
335 U.S. 497, 513 (1949)).
In most cases, we are the first to consider the legal question of whether a party
waived appeal of an issue, basing that decision on underlying facts. E.g., Sage Prods.,
Inc. v. Devon Indus., Inc.,
126 F.3d 1420, 1426 (Fed. Cir. 1997). In considering the
question of waiver here, however, we find ourselves reviewing the district court’s
conclusion that Sturman waived objection to Juror No. 3. Because the issue of waiver
on appeal and the issue of waiver on a request for a new trial require the same legal
determination based on the same underlying facts, we review the district court’s legal
determination de novo and factual determinations for clear error.
03-1444, -1490 16
Having reviewed the transcript from the jury selection process in detail, we hold
that Sturman did not waive objection to Juror No. 3. At the onset of the jury selection
process, Sturman requested that the district court hear challenges for cause. Sturman
noted that these challenges fell into two categories. “One [was] current employees or
retirees from Caterpillar,” and the other was those closely related to them, for example,
spouses or children. Sturman had a list of eleven people that it challenged for these
reasons, including Juror No. 3. Discussing the motion with counsel in chambers, the
court treated it as one to strike for cause all retirees and current employees of
Caterpillar, as well as all spouses of retirees or current employees of Caterpillar.
Caterpillar contested the motion, arguing that the jury would not be
representative of the community if people were dismissed on the basis of having ties
with Caterpillar. In response, Sturman argued that it was not appropriate to have
people on the jury whose financial livelihood came from a party to the proceedings.
Even if these potential jurors claimed to be impartial, Sturman asserted, it was unlikely
to be true given their inherent interest in the case. Sturman then reiterated that the
challenge centered on current and retired Caterpillar employees and their spouses.
Caterpillar concluded the discussion by contending any such blanket exclusion of
potential jurors would violate the Supreme Court’s decision in Batson.
In ruling on Sturman’s challenges for cause, the district court sided with
Caterpillar on the basis that “it would not be a representative community without some
Caterpillar connection.” It did, however, exclude those potential jurors who knew
potential witnesses. The district court also noted that, once it excluded this group, “any
others you [Sturman] will have to make your record”; for those the court would “make a
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decision individually.” The court reiterated, after excusing three potential jurors for
knowing potential witnesses, “if you [Sturman] want to make individual motions for
cause . . . you can. We will take them up individually.”
In making individual challenges for cause, Sturman argued beyond the
parameters of the initial blanket objection, noting additional ties to Caterpillar. For
example, with respect to one potential juror, Sturman noted that both daughters worked
at Caterpillar. With respect to another, Sturman noted that, in addition to having her
husband work at Caterpillar, her father had worked there and her son in law currently
worked there.
While Sturman made its individual challenges, Caterpillar repeatedly objected
that Sturman was simply rearguing its previous blanket objection individually.
Caterpillar made this argument at least three separate times. For example, Caterpillar
contended that “now what we’re doing is going one by one, and [Sturman] is going to
make the argument with respect to each person that he is a current or retired person at
Caterpillar, deriving a paycheck. Well, that is the same thing as striking all these people
for cause.” In response, Sturman reminded the court that it “made a motion in the
beginning for a group of people to try to expedite this matter. We could have gone one
by one.”
During the individual for-cause arguments, the district court focused on whether
each potential juror worked in management or held a union-contract position at
Caterpillar, or whether the potential juror’s spouse was in management or held a union-
contract position. The court explained its rationale by stating “if someone is in a union,
they have a union contract, it solely isn’t at the whim of management. If they are
03-1444, -1490 18
considered management, then they’re not protected by a union contract. And I presume
they may even have employment at will, and that makes a big difference, in my mind.”
Sturman disagreed with this logic, arguing that the dividing line was not appropriate
because both management employees and employees under a union contract would
have a financial interest in the outcome of the case.
Nearing the end of the process, Sturman returned to the issue of one of the
potential jurors that the judge had originally passed on. In doing so, Sturman stated it
would “not move to strike either of the latter two [jurors], although they have significant
contact with Caterpillar—sons, as well as one of them’s got a grandson—but we do
renew our motion on [Juror].” The judge subsequently struck this juror because of his
work in Caterpillar management.
Based on this record, we conclude Sturman did not waive objection to the
presence of Juror No. 3 on the jury. While Sturman began its objection by more broadly
trying to exclude all current and retired Caterpillar employees and their immediate
family, the judge immediately narrowed the issue to one of current and retired
Caterpillar employees and their spouses. The parties focused their arguments on this
alleged ground for dismissal, making the arguments detailed above. Considering this
basis alone as the reason for Sturman’s for-cause challenges, the judge refused to
dismiss any potential jurors. Thus, it is clear that Sturman voiced its objection to these
potential jurors for reasons of implied bias, and the court distinctly ruled on the
objection.
Further, we disagree with Caterpillar and the district court that Sturman had to
individually challenge Juror No. 3 to later avoid waiving its objection. To begin,
03-1444, -1490 19
Caterpillar’s waiver arguments on appeal that Sturman was required to make individual
objections to each and every juror are inconsistent with its position before the district
court. As detailed above, Caterpillar repeatedly objected to Sturman’s individual
objections to jurors at trial, contending that all Sturman was doing was making the same
arguments it made in its blanket objection. It therefore repeatedly asked the judge to
deny Sturman’s individual objections as having already been ruled on.
In any event, while the judge did advise Sturman to object to specific jurors
individually after refusing to dismiss those jurors under Sturman’s blanket objection, the
context of those individual challenges reveals that the judge’s request sought to elicit
more factually particularized challenges where appropriate. In other words, having
previously rejected Sturman’s blanket objection, the judge would allow Sturman to make
challenges for reasons supplemental to the original blanket objection, allowing Sturman
to point out additional facts that might have warranted dismissing a potential juror for
cause. This is best demonstrated by the fact that (as discussed) Sturman brought up
additional facts about the individual jurors beyond the reasons given in the original
blanket objection, particularly the employment by Caterpillar of other immediate family
members. This is also highlighted by the judge’s focus on whether an employee held a
management or union-contract position at Caterpillar, a matter of fact beyond the
bounds of the blanket objection. In making these additional arguments in its individual
challenges, Sturman was going beyond the parameters of the original challenge.
Indeed, Sturman specifically stated it would not individually challenge Juror No.
3, despite having additional reasons for doing so. This highlights two things. First, as
mentioned above, when the judge requested that Sturman make individual challenges,
03-1444, -1490 20
Sturman treated that request as seeking additional reasons for dismissing jurors, above
and beyond the reasons for its blanket objection. Second, by failing to do so, Sturman
waived its right to appeal the issue of implied bias potentially resulting from any
additional family connections to Caterpillar, having failed to preserve the record on this
issue. Nonetheless, by its original objection on the record, Sturman preserved the
blanket issue of whether Juror No. 3 should be presumed biased because of her
husband’s employment at Caterpillar.
Our holding is consistent with Zamora v. Guam,
394 F.2d 815, 816 (9th Cir.
1968), cited by Caterpillar in support of its argument. In Zamora, the United States
Court of Appeals for the Ninth Circuit refused to overturn a guilty verdict based on
allegations of juror bias. In that case, the defendant, Zamora, was charged with robbery
after a police line-up. At trial, the defense attorney made a general objection to the
presence of “repeat” jurors—jurors who had been on the jury for a previous murder trial
against Zamora. The trial judge refused to dismiss all such jurors for cause, but
“announced that defense counsel could explore the matter of prejudice with any juror.”
Id. Defense counsel did not question individual jurors as to any bias. The Ninth Circuit
therefore concluded that defense counsel had made a deliberate choice of trial tactics
by not pursuing the issue individually, thereby waiving the issue on appeal.
Id.
Zamora is distinguishable from this case. As discussed before, actual bias and
implied bias require the application of different legal tests. The bias at issue in Zamora
was actual bias. Thus, the trial judge allowed defense counsel to “explore the matter of
prejudice with any juror.” This indicates that the bias at issue was a factual question
that required inquiry of individual jurors. The bias at issue here, implied bias, did not
03-1444, -1490 21
require such factual inquiry because it is an issue of law. The relevant facts—ties to
Caterpillar through employment, retirement, or immediate relatives—were already on
the record as a result of the voir dire process. Part of the rationale for the waiver
doctrine—to encourage parties to develop a full record of the case—is therefore not
applicable. In addition, Sturman already satisfied another rationale for the waiver
doctrine—expeditiously informing the court about potential errors so as to put the court
on notice of mistakes that, if left uncorrected, may result in reversal on appeal.
Because this case deals with a legal question of implied bias, not actual bias, and the
relevant facts were established during voir dire, Sturman preserved this issue by making
its general objection.
b. Whether Juror No. 3 was biased as a matter of law
Having concluded from the record that Sturman did not waive objection to Juror
No. 3, we must determine whether Juror No. 3 was biased as a matter of law such that
the district court should have dismissed her. We conclude the district court erred by not
dismissing Juror No. 3 for cause because she was biased as a matter of law.
Because the issue of juror bias is not an issue of patent law or procedurally
related thereto and this case arose in the Central District of Illinois, we apply the law of
the Seventh Circuit with regard to the issue of implied bias. See Utah Med. Prods., Inc.
v. Graphic Controls Corp.,
350 F.3d 1376, 1381 (Fed. Cir. 2003). We also look to
opinions of the other regional circuits for their persuasive authority.
Courts may use the doctrine of implied bias to dismiss a potential juror in
extraordinary circumstances. See Hunley,
975 F.2d at 318; see also Getter,
66 F.3d at
1122. This helps ensure the right to an impartial jury and a fair trial. Skaggs,
164 F.3d
03-1444, -1490 22
at 514-17.2 A party may demonstrate implied bias by “showing that the juror has a
‘personal connection to the parties or circumstances.’”
Id. at 517 (quoting Gonzales v.
Thomas,
99 F.3d 978, 987 (10th Cir. 1996)); see also Hunley,
975 F.2d at 319 (noting
that, in criminal cases, potential jurors have been presumed biased in cases where they
have been the victim of a crime or have experienced a situation similar to the one at
issue in the trial). Specific examples of extraordinary circumstances in civil cases
include owning stock in a corporation that was a party to the suit, Gladhill v. General
Motors Corp.,
743 F.2d 1049, 1050 (4th Cir. 1984); see also Getter,
66 F.3d at 1122
(concluding potential juror was biased as a matter of law because of stock ownership
and his wife’s employment at defendant-company); as well as working as an employee
of a party, see Francone v. Southern Pacific Co.,
145 F.2d 732, 733 (5th Cir. 1944);
United States v. Haynes,
398 F.2d 980, 984 (2d Cir. 1968).
The doctrine of implied bias has been addressed in detail by several circuit
courts, including the Seventh Circuit. In Polichemi, the Seventh Circuit reevaluated its
original conclusion that a juror should have been dismissed as a matter of law in light of
an intervening Supreme Court case. In the original criminal trial at the district court, the
defendants argued that a potential juror should be excluded on the ground of implied
bias because she was a long-time employee of the United States Attorney’s Office that
was conducting the prosecution. The district court refused to dismiss her for cause. On
2
As the court noted in Skaggs, the Seventh Amendment guarantees a civil
litigant the right to a trial by jury.
164 F.3d at 514. And while this right is not the same
as that guaranteed by the Sixth Amendment, which grants the right to an “impartial” jury,
it applies equally as a result of the Fifth Amendment’s due process protections.
Id.
Moreover, while most of the reported cases deal with the issue of implied bias in
criminal proceedings, and therefore the Sixth Amendment, the reasoning of those cases
is “germane” to the Seventh Amendment analysis here.
Id. at 515 n.2.
03-1444, -1490 23
petition for rehearing, the Seventh Circuit affirmed its prior conclusion that the district
court should have excused the potential juror when the defendants moved to strike her
for cause. It noted that “a court must excuse a juror for cause if the juror is related to
one of the parties in the case, or if the juror has even a tiny financial interest in the
case.”
Id. at 704 (citing Getter,
66 F.3d at 1122) (emphasis added). Furthermore, the
court so concluded despite assurances from the potential juror during voir dire that she
could be fair and impartial. Id. at 703. Based on the close relationship between the
potential juror and the prosecuting office, the Seventh Circuit concluded that the
potential juror should have been dismissed as a matter of law, noting that “the law errs
on the side of caution.” Id. at 704.
In Getter, the plaintiff sued Wal-Mart because she was injured in a slip and fall
accident. At the district court, Getter challenged a prospective juror both because he
owned stock in Wal-Mart and his wife was employed there. Getter,
66 F.3d at 1122.
The district court refused to dismiss the juror for cause, however, and Getter used a
peremptory challenge.
Id. The appellate court began its review by noting that
extraordinary conditions call for a presumption of bias, listing as examples of such
conditions ownership of stock in a company or working for a corporation that was a
party to the suit.
Id. “In these situations, the relationship between the prospective juror
and a party to the lawsuit points so sharply to bias in [the] particular juror that even the
juror’s own assertions of impartiality must be discounted in ruling on a challenge for
cause.”
Id. (internal quotes omitted). Consequently, the court found that the district
court abused its discretion as a matter of law by not dismissing the juror for cause.
Id.
“Due to his stock ownership and his wife’s employment, Mr. Agin’s financial well-being
03-1444, -1490 24
was to some extent dependent upon defendant’s. This is precisely the type of
relationship that requires the district court to presume bias and dismiss the prospective
juror for cause.”
Id.
We conclude that the district court should have dismissed Juror No. 3 for implied
bias. Juror No. 3 had a financial interest in this case because her husband worked for
Caterpillar at the time of the trial. As noted in Polichemi, even a tiny financial interest is
enough to warrant dismissal. And it is legally irrelevant whether this financial interest
arose due to his employment in management or under a union contract. We therefore
disagree with the district court’s reasoning during the jury selection process, whereby it
either retained or dismissed potential jurors based on, respectively, employment under
a union contract or, alternatively, in management. In either case, there is a financial
interest in the outcome of the case. In addition, we find no distinction in the law
between the financial interest of an at-will management employee and the interest of an
employee under a union contract, nor do we advocate creating one.
The situation of Juror No. 3 is akin to the juror in Getter. As discussed, in Getter,
the Tenth Circuit found that the district court erred by failing to dismiss a potential juror
in part because he was married to a woman who worked for the defendant. Although
there is no record in this case regarding stock ownership, as in Getter, Juror No. 3’s
“financial well-being was to some extent dependent upon defendant’s.”
Id. She should
have been presumed biased and dismissed for cause, despite assurances that she
could be fair and impartial. See id.; Polichemi,
219 F.3d at 703.
Having concluded that Sturman preserved its objection to Juror No. 3 and that
she was biased as a matter of law, we reverse the district court’s decision to empanel
03-1444, -1490 25
Juror No. 3.3 Because Juror No. 3 actually sat on the jury, we vacate the jury’s verdicts
in favor of Caterpillar on its claims of trade-secret misappropriation, breach of contract,
and conversion, and order a new trial thereon. See Martinez-Salazar, 528 U.S. at 316
(ordering a new trial because a biased juror actually sat on the jury).4 In addition, we
also vacate the district court’s grant of specific performance ordering Sturman to assign
the ’329 and ’987 patents to Caterpillar because the grant of this remedy was based
purely on the jury’s verdict.
B. Summary Judgment on Sturman’s Fraudulent Inducement Counterclaim
As one of its counterclaims at trial, Sturman alleged that Caterpillar fraudulently
induced it to execute the amendment to the JDA by misrepresenting its scope. At trial,
Caterpillar filed a motion for summary judgment as to all of Sturman’s counterclaims,
which the district court resolved in Caterpillar’s favor. With respect to the fraudulent
inducement claim, the district court held that the evidence produced was insufficient to
create a genuine issue of material fact and thereby preclude summary judgment. In
particular, the court found that Mrs. Sturman’s contemporaneous notes from the
negotiations of the terms of the amendment demonstrated that Caterpillar clearly
“communicated to Sturman that the release was to cover anything from the JDA that
Caterpillar was utilizing or would utilize in the future.” It further found Mr. Sturman’s
3
Notably, Sturman did not have to use a peremptory challenge to correct
the district court’s error. United States v. Martinez-Salazar,
528 U.S. 304, 316 (2000).
4
Based on our decision, we do not address two other issues raised by
Sturman on appeal: (1) whether the district court properly denied Sturman’s motion for
judgment as a matter of law; and (2) whether the district court properly excluded DX410
from evidence. Finally, we do not address the cross-appeal issue of whether the district
court properly limited state unjust enrichment remedies as preempted by federal law.
03-1444, -1490 26
affidavit self-serving and insufficient to create a genuine issue of material fact. It
therefore concluded that Caterpillar did not fraudulently induce Sturman into signing the
JDA amendment.5
We review the district court’s grant of summary judgment de novo. See Davis v.
Con-Way Transp. Cent. Express, Inc.,
368 F.3d 776, 782 (7th Cir. 2004). Summary
judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(c). “The evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in his favor.” Anderson v. Liberty
Lobby, Inc.,
477 U.S. 242, 255 (1986).
On appeal, Sturman argues that the district court improperly granted summary
judgment because there were genuine issues of material fact as to whether Caterpillar
fraudulently induced Sturman to enter into the amendment, which contained the
release. Sturman contends that Caterpillar falsely represented that it was considering
only two inventions (not including the integrated spool valve technology) to be within the
scope of the JDA. Given its repeated inquiries into which technology was covered by
the JDA, Sturman argues, it was misled, in part, by Anthony Woloch’s November 16,
1993, letter, which identified only two Sturman poppet-valve designs as “arising under
the JDA.” Sturman avers it understood this response to be a representation that
5
Because the spool valve technology was covered under the JDA—having
been disclosed by Sturman to Caterpillar as an alternate solution—and the release
applied to all actions arising out of the JDA, the court found that Sturman released all its
claims regarding the integrated spool valve design.
03-1444, -1490 27
Caterpillar did not consider Mr. Sturman’s integrated spool valve design to have been
made or conceived pursuant to the JDA. According to Sturman, had it known
Caterpillar was using the design, it would have negotiated different terms for the
amendment. Furthermore, Sturman contends, the district court erred by dispositively
resolving the issue on the basis of Mrs. Sturman’s contemporaneous notes; at best, it
argues, they provide evidence for arguments to a jury. Finally, Sturman notes, a
release is not effective against a claim of fraudulent inducement of that release under
Illinois law.
Caterpillar contends otherwise, arguing that the district court properly granted
summary judgment on Sturman’s counterclaims as released under the amendment to
the JDA. Focusing on the necessary elements of a fraudulent inducement claim,
Caterpillar asserts that Sturman did not raise a genuine issue as to whether Caterpillar
made a knowingly false statement of material fact for the purpose of inducing reliance,
and that Sturman actually relied to its detriment. In particular, Caterpillar focuses, as
did the district court, on Mrs. Sturman’s contemporaneous notes, which it contends
demonstrate that Sturman knowingly and willingly released all future claims. According
to Caterpillar, because Sturman reviewed and signed the unambiguous release
language, it cannot contend that Caterpillar misrepresented its scope, which is a legal
and not a factual question. In addition, Caterpillar avers, Anthony Woloch’s letter does
not amount to a false statement because it never suggested that the two inventions over
which Caterpillar asserted its rights were the only inventions it believed were conceived
under the JDA.
03-1444, -1490 28
We hold that the district court erred by granting summary judgment in
Caterpillar’s favor because, in one limited respect, we think that sufficient allegations of
fraudulent inducement have been made to create a genuine issue of material fact. The
amendment to the JDA, which contained the release, provided, in pertinent part, that
Sturman
release and forever discharge Caterpillar, Inc. . . . from any
and all claims, demands, actions or causes of actions at law
or equity relating to or arising out of i) ACTUATORS and/or
DRIVER CIRCUITS created under the PROGRAM (including
derivatives thereof) which are manufactured by
CATERPILLAR, . . . and/or ii) any subject matter of the
[JDA].
There is a genuine issue as to whether, during the negotiations of the terms of the
amendment, Caterpillar knowingly and falsely created the impression that it considered
only two inventions to have been developed under the JDA, and that the integrated
spool valve design was not one of them.
First, drawing all justifiable inferences in favor of Sturman, there are genuine
issues of material fact as to whether Anthony Woloch’s letter to Sturman was false or
misleading with respect to the contemporaneous negotiation of the JDA amendment.
Anthony Woloch, in his letter to Sturman on November 16, 1993, stated that “Exhibit A
lists the inventions naming [Mr. Sturman] as a co-inventor and arising under the [JDA]
between our companies.” But Exhibit A listed only the patent applications that matured
into the ’131 and ’219 patents and never mentioned the spool valve technology.
While we agree with Caterpillar that Woloch’s letter did not state that Exhibit A
listed the only inventions Caterpillar then believed were created under the JDA, one can
justifiably infer that Sturman may have been lulled into thinking that this was then
03-1444, -1490 29
Caterpillar’s belief. Likewise, Caterpillar argues that Woloch’s letter left open the
question of what the JDA covered by asking Sturman if it knew of any other inventions
that arose thereunder. But one might also reasonably infer that Woloch’s letter
suggested that Caterpillar otherwise had a complete list of the technology created
pursuant to the JDA, only to be supplemented by Sturman.
Second, Mrs. Sturman’s contemporaneous notes also demonstrate the existence
of genuine issues of material fact. Drawing all justifiable inferences, these notes show
that Sturman understood Caterpillar’s representation regarding the technology at issue
to be the “2 applications w/ Eddie as co-inventor,” and that Mrs. Sturman asked “Would
it be just these two applications as spelled out [in the] Nov. 16 letter from [Anthony
Woloch]?” Mrs. Sturman’s notes thus reflect the confusion that arose from the language
in Anthony Woloch’s letter; they suggest that Sturman understood Caterpillar to lay
claim to only those two inventions under the JDA mentioned in Woloch’s letter.
In conclusion, applying the standard for summary judgment and drawing all
inferences in favor of Sturman, we conclude that the district court improperly granted
summary judgment in favor of Caterpillar on the issue of Sturman’s counterclaim of
fraudulent inducement. Specifically, material issues of fact exist regarding whether
Caterpillar knowingly intended to deceive Sturman with false statements to induce
Sturman’s signing of the amendment. In particular, as discussed above, one could
justifiably infer from both Anthony Woloch’s letter of October 16, 1993, and Mrs.
Sturman’s contemporaneous notes from the JDA amendment negotiations that Sturman
was led to believe that Caterpillar understood the JDA to cover only the two patent
applications and not the integrated spool valve technology. It is on this limited basis
03-1444, -1490 30
that we reverse the district court’s grant of summary judgment as to the fraudulent
inducement counterclaim. Sturman’s other allegations of fraudulent inducement
concerning the scope of the release raise no material issues of fact, as, under Illinois
law, interpretation of the language of the release is a question of law governed by the
“traditional rules of contract interpretation.” Hoseman v. Weinschneider,
322 F.3d 468,
473 (7th Cir. 2003). Contrary to arguments advanced by Caterpillar, however, the
language of the release cannot be used to prevent a court from inquiring into whether
the release itself may have been fraudulently induced. “As with any contract, a release
may be set aside if there is fraud in the inducement.”
Id. at 476 (internal quotations and
citations omitted); see also Lawrence v. Muter Co.,
171 F.2d 380, 384 (7th Cir. 1940)
(noting that fraudulent inducement can serve to vitiate a release even when the release
language was unequivocal). We therefore reverse the grant of summary judgment on
Sturman’s fraudulent-inducement counterclaim in favor of Caterpillar and remand for
trial.6
C. Caterpillar’s Claims of Joint inventorship of the ’329 and ’987 Patents
At trial, the court found in favor of Sturman on Caterpillar’s claims seeking
correction of inventorship to the ’329 and ’987 patents. Following detailed factual
findings, see Caterpillar Opinion at slip. op. 5-21, the district court arrived at this legal
conclusion based primarily on the fact that the specific materials identified by Maley and
6
If, upon remand, Sturman is unable to demonstrate that the release was
fraudulently induced, the district court’s findings (not appealed by Sturman) that the
release covered all of Sturman’s claims arising under the JDA would stand. Apart from
the fraudulent inducement issue, there has been no contention on appeal that the
district court’s holding that “Sturman’s misappropriation of trade secrets claims with
respect to the spool valve (Count I), fraud claim (Count V), and breach of contract claim
(Count XX) have been released” was erroneous.
03-1444, -1490 31
Tharp were not significant to the claimed spool valve technology. See
id. at slip op. 44-
45. While the district court agreed that Maley and Tharp’s research into 52100 and
4140 steels was important for the poppet valve design developed under the JDA, it
found the demands of the integrated spool valve claimed in the ’329 patent to be far
less. See
id. at slip op. 41-42. In particular, the district court found that the spool valve
did not require sixty pounds of latching force over a 0.002 inch air gap; it was a zero-air-
gap system that, consequently, required much less latching force. See
id. at slip op. 42-
43. The district court also found that the ’898 patent taught that “substantially any
magnetic material” would latch in a system with zero air gap. See
id. at slip op. 43-44.
Thus, the court concluded:
Given the existence of the ’898 patent, the existence of texts
in the public domain separately detailing the physical and
magnetic properties of these materials . . . and the claimed
design of the ’329 patent, Caterpillar’s selection of 52100
and 4140 was merely the exercise of ordinary skill in the art
and therefore not a significant addition to the conception of
the ’329 patent.
Id. at slip op. 44. The district court therefore denied Caterpillar’s co-inventorship claim.
For the same reasons, it denied Caterpillar’s request regarding the ’987 patent. See
id.
Inventorship is a question of law that we review without deference. See Sewall v.
Walters,
21 F.3d 411, 415 (Fed. Cir. 1994). We review the underlying findings of fact
for clear error. See Hess v. Advanced Cardiovascular Sys., Inc.,
106 F.3d 976, 980
(Fed. Cir. 1997).
On appeal, Caterpillar contends that the district court erred in denying
Caterpillar’s claims that engineers Maley and Tharp were co-inventors of the ’329 and
’987 patents. With respect to the ’329 patent, Caterpillar notes that the claims include
03-1444, -1490 32
the limitation “a material with enough residual magnetism to maintain [the] spool
position” through residual magnetic latching. Moreover, Caterpillar argues, the
preferred materials are the steels researched by Maley and Tharp. According to
Caterpillar, because the ’329 patent claims were only allowed after being amended to
include the “material with enough residual magnetism . . .” limitation, Maley and Tharp
materially contributed to the claimed invention. In addition, Caterpillar argues, the
district court applied an incorrect inventorship analysis. By finding that the contribution
of Maley and Tharp “was not significant as compared to” the spool valve design,
Caterpillar asserts, the district court failed to apply the proper test—whether the
contribution was “not insignificant in quality” as measured against the whole. Caterpillar
also argues that the district court incorrectly found that knowledge regarding which
materials would work to achieve residual magnetism was public information that any
person of ordinary skill in the art could apply in accordance with the teachings of
Sturman’s ’898 patent.
With respect to the ’987 patent, Caterpillar also asserts that Maley and Tharp
made a “not insignificant” contribution. In particular, Caterpillar points out, Sturman
amended its patent claims to cover residual magnetism in the spool and housing,
arguing that the invention relied on hard steel, a feature Sturman learned from Maley
and Tharp. Caterpillar notes, however, that Sturman argued over a rejection by saying
that the use of hard steels was not taught in the prior art, which included Sturman’s ’898
patent. In light of the amendments and arguments, Caterpillar avers, the district court
erred by finding that Maley and Tharp’s contribution did not make a “not insignificant
contribution.”
03-1444, -1490 33
In response, Sturman argues that the district court correctly determined that Mr.
Sturman is the sole inventor of the ’329 and ’987 patents. According to Sturman, the
only contribution Maley and Tharp claim to have made—identifying 52100 and 4140
steel for residual magnetic latching—is not actually a claimed feature of either patent;
thus, they do not qualify as co-inventors. And while the claims do generally recite a
“material with enough residual magnetism to maintain said spool in position” (emphasis
added), Sturman points out that Maley and Tharp never worked with Sturman on spool
valves. In addition, Sturman avers, their materials search related to a fundamentally
different type of design—a poppet valve that requires sixty pounds of latching force
across a 0.002 inch air gap. With respect to spool valves, notes Sturman (echoing the
district court’s findings), the choice of materials would have been an exercise of ordinary
skill after the teachings of the ’898 patent; the lesser demands of such a valve did not
require specific materials.
Patent issuance creates a presumption that the named inventors are the true and
only inventors. Hess,
106 F.3d at 980. To rebut this presumption, a district court must
find clear and convincing evidence that the alleged unnamed inventor was in fact a co-
inventor before correcting inventorship under
35 U.S.C. § 256. Pannu v. Iolab Corp.,
155 F.3d 1344, 1350 (Fed. Cir. 1998). “[T]o be a joint inventor, an individual must make
a contribution to the conception of the claimed invention that is not insignificant in
quality, when that contribution is measured against the dimension of the full invention”
Fina Oil & Chem. Co. v. Ewen,
123 F.3d 1466, 1473 (Fed. Cir. 1997). This requires
more than merely exercising ordinary skill in the art—“a person will not be a co-inventor
if he or she does no more than explain to the real inventors concepts that are well
03-1444, -1490 34
known [in] the current state of the art.”
Id. Finally, an alleged co-inventor’s testimony
cannot, standing alone, provide clear and convincing evidence. Ethicon, Inc. v. United
States Surgical Corp.,
135 F.3d 1456, 1460 (Fed. Cir. 1998). Instead, an alleged co-
inventor must supply evidence to corroborate his or her testimony.
Id.
We agree with the district court that Caterpillar has not presented clear and
convincing evidence to rebut the presumption that Mr. Sturman is the true and only
inventor of the ’329 and ’987 patents. With respect to the ’329 patent, we defer to the
district court’s findings of fact. In particular, we defer to its findings that: (1) neither
Maley nor Tharp nor anyone else at Caterpillar had conceived of an integrated spool
valve prior to being shown Mr. Sturman’s Jumers Drawing, Caterpillar Opinion, ¶ 9, at
slip op. 9; (2) Caterpillar’s only claimed contribution to the ’329 patent was the
identification of 52100 and 4140 steel for residual magnetic latching, id. ¶ 10, at slip op.
9; (3) an integrated spool valve such as that claimed in the ’329 patent has no air gap
and requires significantly less than sixty pounds of latching, id. ¶ 11, at slip op. 10; (4)
the contribution of suitable materials for the design claimed in the ’329 patent was not
significant, id. ¶ 13, at slip op. 11; (5) the ’898 patent teaches that “substantially any
magnetic materials” will work for residual magnetic latching in a zero-air-gap system
such as the ’329 patent, id. ¶ 19, at slip op. 14; and (6) various publicly available texts
and patents describe the basic magnetic properties of 52100 and 4140 steel, id. ¶¶ 24-
25, at slip op. 16-17.
On the basis of the district court’s factual findings, we agree with its ultimate legal
conclusion that Maley and Tharp should not be named as co-inventors of the ’329
patent. As Sturman argues on appeal, the facts found by the district court demonstrate
03-1444, -1490 35
that they neither developed nor worked on an integrated spool valve under the JDA, that
such a design does not require as much latching force, and, finally, that the teachings of
the ’898 patent together with information in the public domain regarding material
properties would have made the choice of materials an exercise of ordinary skill in the
art. Thus, the use of 52100 and 4140 steels was an insignificant contribution and does
not support their claims of co-inventorship. In addition, we agree with the district court’s
legal conclusion because the ’329 patent claims do not mention either 52100 or 4140
steel and Fina Oil requires that one contribute something to the claimed invention.
123
F.3d at 1473.
Caterpillar’s arguments to the contrary are not persuasive. First, we disagree
with Caterpillar that Sturman’s amendments to the ’329 patent claims demonstrate that
Maley and Tharp made an inventive contribution. The addition of the “material with
enough residual magnetism . . .” limitation is broad; it is not limited to the specific steels
identified by Maley and Tharp. Moreover, as the district court found, when used in an
integrated spool valve such as claimed in the ’329 patent, the teachings of Sturman’s
’898 patent provide all that is necessary for one of skill in the art to identify the
appropriate materials. We also reject Caterpillar’s argument that the district court
employed the incorrect legal standard. In considering whether Maley and Tharp
contributed anything to the ’329 patent, the district court specifically weighed the quality
of their identification of 52100 and 4140 steel against the value of the whole design,
concluding that the contribution was insignificant.
For the reasons discussed above, we also affirm the district court’s decision to
deny Maley and Tharp co-inventorship of the ’987 patent. Specifically with respect to
03-1444, -1490 36
Caterpillar’s arguments, we again note that the amendment of the claims was not
relevant because the additional language broadly claimed residual magnetism and the
’898 patent taught those skilled in the art to identify the appropriate materials. In
addition, the distinct hard steel limitation is also irrelevant because the ’898 patent
teaches that “substantially any magnetic materials” will work for residual magnetic
latching in a zero-air-gap system, whether hard or soft.
D. Caterpillar’s Claim of Joint inventorship of the ’901 Patent
With respect to Caterpillar’s ’901 patent, the trial court found in favor of Mr.
Sturman as to his claim of sole inventorship. Caterpillar Opinion at slip op. 46. As the
district court explained, Caterpillar’s ’901 patent generally claims a three-way integrated
spool valve for use in a HEUI, in addition to other, more specific features. See
id.
Noting that Mr. Sturman originated the concept of a two-way integrated spool valve in
the Jumers Drawing, the district court evaluated whether the additional features claimed
by Caterpillar in the ’901 patent “were either significant or more than merely the
exercise of ordinary skill in the art.”
Id. In particular, the district court addressed
Caterpillar’s arguments that a three-way configuration for use in a HEUI was a
significant improvement. See
id. at slip op. 47.
The court found that Mr. Sturman first developed this idea, as demonstrated by
slides from a presentation to Caterpillar on October 14, 1992. See
id. In this
presentation, during which Mr. Sturman proposed an “integrated product line” of valves,
the court found that Sturman revealed to Caterpillar an idea for a three-way spool valve
configuration. See
id. at slip op. 47-48. As for Caterpillar’s other alleged
improvements—hollowing the spool valve, narrowing the waist of the spool, and partially
03-1444, -1490 37
blocking the channels in the spool—the court found that these were either an exercise
of ordinary skill in the art or disclosed in the Jumers Drawing. See
id. at slip op. 48-49.
Consequently, the district court held in favor of Sturman on its counterclaim seeking
sole inventorship of the ’901 patent. See
id. at slip op. 49.
We apply the same standard of review and legal rules detailed above in our
discussion regarding Caterpillar’s co-inventorship claims to the ’329 and ’987 patents.
Caterpillar appeals the district court’s conclusion that Mr. Sturman was the sole
inventor of the ’901 patent. In keeping with its arguments regarding the ’326 and ’987
patents, Caterpillar generally argues that the court erroneously focused on the “heart” of
the invention—a spool valve—as opposed to other claimed features, which were not old
or disclosed in the Jumers Drawing. First, Caterpillar contends, Sturman never worked
with Caterpillar on a three-way spool valve for a HEUI, and certainly never had a
“definite and permanent idea” of such a device such that he could be considered the
sole inventor. Second, according to Caterpillar, the Jumers Drawing and Sturman’s
October 14, 1992, presentation mentioning a three-way valve do not evidence
conception of the invention claimed in the ’901 patent. Specifically with respect to the
marketing presentation, Caterpillar argues that nothing suggests that Sturman was
introducing a new design for a three-way integrated spool valve for a HEUI. Third,
Caterpillar asserts, the district court erred in failing to find any suggestion for combining
the claim features it considered within the skill of the art, thereby failing to appreciate
the novelty of the combination. Consequently, Caterpillar asks that we reverse the
district court’s inventorship conclusion because, it insists, Mr. Sturman did not clearly
and convincingly show that he alone conceived everything claimed in the ’901 patent.
03-1444, -1490 38
In response, Sturman argues that the district court correctly determined that Mr.
Sturman is the sole inventor of the ’901 patent. Contrary to Caterpillar’s assertions,
Sturman contends, Mr. Sturman need not have shown he conceived of everything
claimed in the ’901 patent. Instead, according to Sturman, Mr. Sturman need only
satisfy the inventorship test described above. As it did with respect to the ’326 and ’987
patents, Sturman counters Caterpillar’s arguments that the district court erroneously
focused on the “heart” of the invention by asserting that the court correctly applied the
law and measured Caterpillar’s contribution against the “full measure of the invention,”
concluding that they did not meet the standard for inventorship. Moreover, according to
Sturman many of Caterpillar’s arguments relate to findings of fact, which it fails to
demonstrate were clearly erroneous. In particular, Sturman points out, the district court
found both that Mr. Sturman conceived the idea for a spool valve and suggested the
idea for a three-way valve, only after which Caterpillar developed a three-way integrated
spool valve for a HEUI and claimed it in the ’901 patent.
As the district court found, all the claims generally cover a three-way, dual-
solenoid, integrated spool valve used to control the flow of working fluid in a HEUI.
Caterpillar Opinion at slip op. 23-24. Notably, we agree with the court’s finding that Mr.
Sturman conceived of a two-way integrated spool valve. Id. ¶¶ 9-11, at slip op. 25-26.
We note also that the district court found that a three-way valve is more complex than
the two-way valve conceived by Mr. Sturman. Id. ¶ 13, at slip op. 26. Given this
difference in complexity, we conclude that the idea for a three-way valve was “not
insignificant in quality, when . . . measured against the dimension of the full invention,”
Fina Oil,
123 F.3d at 1473, and, consequently, was worthy of an inventorship claim.
03-1444, -1490 39
We conclude that the district court clearly erred in finding that, in addition to
conceiving the design for an integrated spool valve, Mr. Sturman presented clear and
convincing evidence that he also conceived the idea of a three-way version of the valve
applied to a HEUI. In particular, the district court clearly erred in finding that Mr.
Sturman disclosed the idea as part of a proposal for an integrated product line in his
October 14, 1992, presentation. Caterpillar Opinion ¶¶ 14-15, at slip op. 26-27. Having
reviewed the slides from the presentation, we agree with Caterpillar that they do not
demonstrate that Mr. Sturman conceived of the idea of a three-way integrated spool
valve. These slides relate to a presentation entitled “Advanced Solenoid Valve
Manufacturing,” and one slide particularly related to Mr. Sturman’s proposal for an
integrated product line. Although that slide does mention both a “2-way valve” and “3-
way valve,” it does not refer to an integrated spool valve. Nor is there any reference to
such a valve elsewhere in the presentation. Instead, as Caterpillar points out, the
presentation as a whole relates to plans to continue with the initial proposal for a
traditional solenoid valve (such as the one described above in relation to the ’898
patent). Consequently, we conclude that the district court’s finding that Mr. Sturman
disclosed the idea for a three-way integrated spool valve in his presentation to
Caterpillar on October 14, 1992, was clearly erroneous.
Accordingly, we reverse the district court’s ultimate legal conclusion that Mr.
Sturman was the true and sole inventor of the invention claimed in the ’901 patent.
Because Mr. Sturman did not present clear and convincing evidence that he conceived
of the idea for a three-way integrated spool valve in his presentation, there is insufficient
03-1444, -1490 40
corroborating evidence proving that Mr. Sturman was the sole inventor of the ’901
patent.7
III. CONCLUSION
For the reasons stated above, we:
(A) REVERSE the district court’s decision to allow Juror No. 3 to sit on the jury,
and therefore VACATE the jury’s verdict and resultant remedies and REMAND for a
new trial on the state common law and statutory claims (rendering moot Sturman’s
issues regarding the denial of JMOL in favor of Sturman, assignment of the ’329 and
’987 patents to Caterpillar, and exclusion of DX410 from evidence);
(B) REVERSE the grant of summary judgment in favor of Caterpillar on
Sturman’s fraudulent-inducement counterclaim;
(C) AFFIRM the decision that Mr. Sturman is the sole inventor of the ’329 and
’987 patents; and
(D) REVERSE the decision naming Mr. Sturman the sole inventor of the ’901
patent.
7
As Caterpillar points out, Mr. Sturman only sought to have himself
declared the sole inventor. We therefore decline to address whether he might be a joint
inventor.
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