E I Du Pont v. Okuley

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206 2 E.I. Du Pont de Nemours v. Okuley No. 01-3074
ELECTRONIC CITATION: 2003 FED App. 0331P (6th Cir.)File Name: 03a0331p.06 _________________
COUNSEL
UNITED STATES COURT OF APPEALS
ARGUED: Edward A. Matto, BRICKER & ECKLER,
FOR THE SIXTH CIRCUIT Columbus, Ohio, for Appellant. C. Craig Woods, SQUIRE,
_________________ SANDERS & DEMPSEY, Columbus, Ohio, for Appellee.
ON BRIEF: Edward A. Matto, BRICKER & ECKLER,
E.I. DU PONT DE NEMOU RS & X Columbus, Ohio, Jerry K. Mueller, Jr., MUELLER &
COMPANY , - SMITH, Columbus, Ohio, for Appellant. C. Craig Woods,
SQUIRE, SANDERS & DEMPSEY, Columbus, Ohio, for
Plaintiff-Appellee, - Appellee.
- No. 01-3074
-
v. > _________________
,
- OPINION
DR. JOHN JOSEPH OKULEY, - _________________
Defendant-Appellant. -
- BOGGS, Circuit Judge. The defendant, Dr. John Joseph
N Okuley, appeals the summary judgment for the plaintiff, E.I.
Appeal from the United States District Court Du Pont de Nemours and Company (“DuPont”), in a dispute
for the Southern District of Ohio at Columbus. involving both contract and patent elements. Okuley helped
No. 97-01205—John D. Holschuh, District Judge. discover FAD2, one of the genes encoding the Fatty Acid
Desaturase enzyme, while an employee of Washington State
Argued: September 12, 2002 University (“WSU”), which had a research collaboration
agreement (“RCA”) with DuPont that assigned to DuPont
Decided and Filed: September 17, 2003 rights to intellectual property discovered in the course of the
collaboration. When Okuley ceased cooperating with the
Before: BOGGS and COLE, Circuit Judges; and BELL, processing of DuPont’s application for a patent on FAD2,
Chief District Judge.* DuPont filed suit in the United State District Court for the
Southern District of Ohio for a declaratory judgment that it
owned FAD2 and for specific enforcement of Okuley’s
agreement to cooperate with DuPont. Okuley counterclaimed
for a declaratory judgment that he was the inventor of FAD2
and to rescind his personal assignment of patent rights to
DuPont. The district court granted summary judgment to
DuPont on all issues. After initially appealing the district
*
court’s decision to this court, Okuley moved to transfer the
The Honorable Robert Holmes Bell, Chief United States District appeal to the Court of Appeals for the Federal Circuit. We
Judge for the Western District of Michigan, sitting by designation.
1
No. 01-3074 E.I. Du Pont de Nemours v. Okuley 3 4 E.I. Du Pont de Nemours v. Okuley No. 01-3074
take appellate jurisdiction of this matter and affirm the On November 3, 1997, DuPont filed a three-count
judgment of the district court. complaint against Okuley in the United States District Court
for the Southern District of Ohio. Subject matter jurisdiction
I was based on diversity, DuPont being a Delaware
corporation, with its principal place of business in Delaware,
In 1991, Okuley, a Ph.D. in molecular biology, began work and Okuley a citizen of Ohio, and the matter in controversy
at WSU on a project on plant fat metabolism, with the aim of meeting the jurisdictional amount. The first count sought a
isolating and patenting genes that could increase the ratio declaratory judgment that DuPont had exclusive ownership of
between beneficial fatty acids and harmful saturated fats. the FAD2 gene, at least vis-a-vis Okuley. The second count
Under the WSU Faculty Manual (“Faculty Manual”), sought specific enforcement of Okuley’s contractual duties to
employees assigned to WSU any intellectual property arising continue executing documents necessary for DuPont to pursue
out of their employment, and WSU and DuPont were the FAD2 patent. The third count sought the same relief on
operating under the RCA regarding the assignment of the the basis of Okuley’s common law duties. Okuley
intellectual property arising out of this project. In August counterclaimed, seeking rescission of his personal assignment
1992, while still employed at WSU, but while working at a of FAD2 to DuPont and a judicial declaration that Okuley
borrowed laboratory at Ohio State University (“OSU”), was the sole owner and inventor of FAD2. On November 1,
Okuley successfully identified the FAD2 gene and 2000, after extensive discovery, the parties filed cross-
immediately informed both his supervisor at WSU and motions for summary judgment on all counts. The district
DuPont of his discovery. On November 17, DuPont initiated court granted summary judgment to DuPont on all issues. It
the patent process on FAD2. After some initial disagreement concluded that it had no jurisdiction to entertain Okuley’s
about the inventorship of FAD2, the issue was resolved in claim to inventorship, that DuPont owned the rights to FAD2
May 1993 by DuPont agreeing that inventorship was shared under its agreement with WSU, that Okuley was bound by the
between Okuley and another WSU scientist and Okuley Faculty Manual to assign all interests in FAD2 to DuPont;
agreeing to assign to DuPont his “entire right, title and and that Okuley’s personal, written assignment to DuPont
interest” in FAD2 and obligating himself to “execute all was valid, enforceable, and not subject to rescission. Okuley
applications, papers or instruments necessary or required” for timely appealed the district court’s judgment to this court.
DuPont to obtain the patent. In December 1994, relations After filing his proof brief in this court, Okuley moved to
under this agreement between DuPont and Okuley broke transfer the appeal to the Court of Appeals for the Federal
down over Okuley’s refusal to sign any more of the papers Circuit, on the basis that it had exclusive appellate jurisdiction
necessary for the patent application, unless he received “a in this case.
reasonable royalty for the use of this invention.” DuPont
thereafter filed a petition with the Patent and Trademark II
Office (“PTO”) to process the FAD2 patent application
without Okuley’s consent. At the time briefs in this case were We first turn to the issue of proper appellate jurisdiction.
filed, both the petition and the application were still pending, This court has jurisdiction over almost all appeals from final
but on April 16, 2002, the PTO issued the patent litigated decisions of district courts within its geographical boundaries.
here. 28 U.S.C. § 1294. However, the Court of Appeals for the
Federal Circuit has exclusive jurisdiction over appeals from
final decisions of a district court, if the jurisdiction of that
No. 01-3074 E.I. Du Pont de Nemours v. Okuley 5 6 E.I. Du Pont de Nemours v. Okuley No. 01-3074
court was based, in whole or in part, on 28 U.S.C. § 1338(a), contractual privity with the plaintiff. If the father was in fact,
subject to certain exceptions not applicable here. 28 U.S.C. as the patent application claimed, an inventor of the disputed
§ 1295. District court jurisdiction under § 1338(a) extends patent, Rustevader had no right to the assignment of his
“only to those cases in which a well-pleaded complaint interest. If the son was the sole inventor and the contract
establishes either that federal patent law creates the cause of assigned his rights to Rustevader, Rustevader had a right to
action or that the plaintiff’s right to relief necessarily depends the assignment of both father’s and son’s interest. Therefore,
on resolution of a substantial question of federal patent law, Rustevader’s claim against the father required a resolution of
in that patent law is a necessary element of one of the well- the question of inventorship and unintentionally invoked
pleaded claims.” Christianson v. Colt Indus. Operating federal patent jurisdiction.
Corp., 486 U.S. 800, 809 (1988). The seemingly amorphous
“substantial question of federal patent law” component of the This court has appellate jurisdiction if, and only if,
test merely makes clear that a plaintiff cannot avoid federal DuPont’s well-pleaded complaint necessarily requires
patent jurisdiction by leaving out an element necessary to the resolution of the question of inventorship. The only claim in
success of his claim, any more than a plaintiff can create DuPont’s complaint relevant to this question is the request for
federal jurisdiction by including extraneous references to a declaratory judgment that DuPont had “sole title to [the
federal law. Ibid. Moreover, it is important to note that only FAD2] intellectual property.” At first blush, to determine the
inventorship, the “question of who actually invented the validity of such a broad claim would appear to require
subject matter claimed in a patent,” is a question of federal resolution of the inventorship question, but a focus on the
patent law. Beech Aircraft Corp. v. Edo Corp., 990 F.2d issues facing the court leads to the opposite conclusion. First,
1237, 1248 (Fed. Cir. 1993). “Ownership, however, is a the district court only had the power to adjudicate the relative
question of who owns legal title to the subject matter claimed rights of the parties. Even if a hypothetical third party X had
in a patent, patents having the attributes of personal property” been the true inventor of the FAD2 gene, no judgment could
and is not a question of federal patent law. Ibid. have affected X’s rights, as the district court never took
personal jurisdiction over X. Therefore, the court needed
These principles are illustrated by Rustevader Corp. v. concern itself only with the relative rights of DuPont and
Cowatch, 842 F. Supp. 171 (W.D. Pa. 1993). In that case, Okuley, regardless of the language of the complaint. The
Rustevader sued its former employee, Cowatch, and broad language of the complaint was extraneous to the
Cowatch’s father in state court. The defendants had jointly resolution of the matter between the parties to the case.
taken out a patent and Rustevader demanded assignment of DuPont could not create federal patent jurisdiction by making
the patent under a breach of employment contract theory. The the unnecessarily broad claim. Okuley cannot now use the
defendants removed to federal court on the basis of federal overbreadth of DuPont’s complaint to claim federal patent
patent jurisdiction and Rustevader asked for remand on the jurisdiction.
basis that there was no federal jurisdiction. The court
reasoned that if the suit had been filed exclusively against the Second, as between Okuley and DuPont, the district court
former employee, the court could have ordered an assignment could have resolved the relative interests in FAD2 on several
to the employer on the basis of contract, regardless of whether theories. For example, it could have determined that one of
the son was the inventor, and a resolution of the inventorship DuPont’s other researchers was the sole inventor of FAD2
issue would not have been necessary. However, the plaintiff and that Okuley therefore had no right to the intellectual
also made a claim against the father, who was not in property. That would have required answering the
No. 01-3074 E.I. Du Pont de Nemours v. Okuley 7 8 E.I. Du Pont de Nemours v. Okuley No. 01-3074
inventorship question. Alternatively, the district court could proceedings below, Okuley had argued that the district court
have reasoned, as in fact it ultimately did, that if Okuley was had been granted jurisdiction in two sections of the patent
the inventor of FAD2, he contractually assigned all his code.
interests to DuPont. That would not have required answering
the inventorship question. If there are several alternative Whenever through error a person is named in an
theories on which a claim may succeed, patent law application for patent as the inventor, or through error an
jurisdiction is only invoked when all alternative theories inventor is not named in an application, and such error
necessarily state a complaint under the patent law. arose without any deceptive intention on his part, the
Christianson, 486 U.S. at 810.1 As DuPont’s assignment Director may permit the application to be amended
theory sounded in contract, not patent law, DuPont’s claim to accordingly, under such terms as he prescribes.
the sole ownership of the gene did not invoke patent law
jurisdiction.2 Therefore, appellate jurisdiction lies with this 35 U.S.C. § 116 (emphases added).
court.
Whenever through error a person is named in an issued
A separate jurisdictional issue arises with respect to patent as the inventor, or through error an inventor is not
Okuley’s counter-claim of sole inventorship, which the named in an issued patent and such error arose without
district court had dismissed for lack of jurisdiction.3 In the any deceptive intention on his part, the Director may, on
application of all the parties and assignees, with proof of
the facts and such other requirements as may be imposed,
1 issue a certificate correcting such error. . . . The court
The alternative rule, that federal patent jurisdiction is invoked
whenever any of the theories on the basis of which a claim may succeed
before which such matter is called in question may order
necessarily states a complaint under patent law, would eradicate Beech correction of the patent on notice and hearing of all
Aircraft’s distinction between inventorship actions, arising under the parties concerned and the Director shall issue a
federal patent law, and patent ownership actions, not arising under the certificate accordingly.
federal patent law, as any patent ownership claim could hypothetically
succeed on the basis that the claimant was the inventor, rather than the 35 U.S.C. § 256 (emphases added).
contractual purchaser of the invention. Such an alternative rule would
also be contrary to Christianson.
We affirm the holding of the district court on the basis of
2
It is worth noting that, while of course subject matter jurisdiction is
the language of § 116 and § 256 and their notable differences.
decided on the basis of the well-pleaded complaint and not the well-tried At the time of the trial and the briefs, no patent had yet been
case, over the course of the four-year litigation there appears to have been issued. Therefore, only § 116 applied. Section 116 does not
abso lutely no disagree ment betwe en the parties that Okuley was an mention courts, but rather gives discretion to the Director of
inventor of FA D2 . All issues in this case were decided solely on the the PTO to permit amendments to patent applications and to
validity and construction of agreements between the parties and the
involved universities.
do so under such terms as the Director deems proper. Section
3
Okuley’s counter-claim does not affec t the issue o f appellate
jurisdic tion of the Federal Circuit. Even if he had standing to sue to of the plaintiff’s complaint–cannot serve as the basis for ‘arising under’
clarify invento rship, still no federal patent ap pellate jurisdiction wo uld jurisdiction.” Holmes Group, Inc. v. Vornado Air Circulation Sys., 535
exist, because Okuley’s inventorship claims were counter-claims. “[A] U.S. 826 , 831 (2002). Hence a p atent-law counter-claim does not create
counterclaim–which appears as part of the defendant’s answer, not as part federal patent jurisdiction under § 1338.
No. 01-3074 E.I. Du Pont de Nemours v. Okuley 9 10 E.I. Du Pont de Nemours v. Okuley No. 01-3074
256, by contrast, explicitly mentions the courts and the the contracts WSU entered with Okuley and DuPont in
authority of the courts to compel action by the Director. Washington is Washington law. With respect to the
Comparing these two sections, it is clear that Congress assignment executed in Ohio and the interpretation of Ohio
intended to draw a distinction between patent applications and statutes, the source is Ohio law.
issued patents. While the patent is still in the process of
gestation, it is solely within the authority of the Director. As The judgment appealed was a grant of summary judgment,
soon as the patent actually comes into existence, the federal so we apply the well-known summary judgment standard:
courts are empowered to correct any error that the Director
may have committed. Such a scheme avoids premature This court reviews grants of summary judgment de novo,
litigation and litigation that could become futile if the under the same standard as the district court. Summary
Director declined to grant a patent or voluntarily acceded to judgment is appropriate when the pleadings, depositions,
the claims of the would-be inventor prior to issue. We answers to interrogatories, and admissions on file,
conclude, therefore, that the district court lacked jurisdiction together with the affidavits, if any, show that there is no
to review the inventorship of an unissued patent. genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law. In
After the briefs in this case were filed, the PTO issued a reviewing a summary judgment, this court reviews the
patent naming Okuley, among others, as inventor. While this factual evidence and draws all reasonable inferences in
may have created § 256 jurisdiction to review Okuley’s favor of the non-moving party. To prevail, the
inventorship claim, in reviewing the district court’s judgment non-movant must show sufficient evidence to create a
we consider the facts as faced by that court, without prejudice genuine issue of material fact. A mere scintilla of
to a § 256 claim should Okuley choose to file such an action. evidence will not suffice for the non-movant to overturn
In this appeal, Okuley has dropped any argument that § 256 the summary judgment, but instead, the non-movant
was applicable and merely made a perfunctory statement that must show evidence on which the jury could reasonably
§ 116 vests jurisdiction in the courts implicitly because find for the non-movant.
“inventorship is a question of law.” However, federal courts
have not been granted jurisdiction to settle all questions of Cornist v. B.J.T. Auto Sales, Inc., 272 F.3d 322, 326 (6th Cir.
law. 2001) (internal citations and quotation marks omitted).
III DuPont’s claim of ownership to FAD2 rests on the basis of
two contracts: the Faculty Manual and the RCA.4 According
Having disposed of the somewhat thorny issues of federal to the Faculty Manual, WSU holds “ownership in patents and
patent jurisdiction, we now turn to the substance of the claims
adjudicated by the district court and appealed here. These are
questions of property and contract law and, as explained 4
DuPo nt also argues that O kuley’s person al assignm ent was legally
above, do not arise under federal law, patent law or otherwise. valid and sufficient to transfer whatever interest in FAD 2 rem ained with
The district court’s jurisdiction was based on the diversity of Okuley to DuPo nt. However, Okuley executed the assignment in reliance
the parties. When sitting in diversity, a federal court applies on DuP ont’s claims that he was legally obligated to do so. W hether these
the substantive law of the state. Erie R. Co. v. Tompkins, 304 representations were accurate in turn depends on whether DuPont had a
U.S. 64, 78 (1938). Hence, our source of law with respect to right to FAD2 before the assignment. Therefore this ground is not in fact
indep endent and we do not rea ch it.
No. 01-3074 E.I. Du Pont de Nemours v. Okuley 11 12 E.I. Du Pont de Nemours v. Okuley No. 01-3074
other non-patentable intellectual products . . . developed by its contained an assignment to Okuley of FAD2, an action
employees as a result of their employment.” The parties do undisputedly within OSU’s power. This assignment enabled
not dispute that this manual was a legally binding part of Okuley to fulfill his pre-existing contractual obligation to
Okuley’s employment contract with WSU. See Thompson v. transfer FAD2 to WSU. Okuley argues that the assignment
St. Regis Paper Co., 685 P.2d 1081, 1087 (Wash. 1984) transferred FAD2 to him free and clear of any obligation. But
(recognizing that under Washington law employment manuals even setting aside the question of whether OSU had the
can give rise to contractual claims). Under the RCA between authority to void a contract to which it was not a party and
DuPont and WSU, WSU’s interest in FAD2 was transferred executed in another state, the language of the assignment is
to DuPont. In combination, these two contracts serve to unambiguous. The assignment clearly states that it was
transfer FAD2 from Okuley to WSU and from WSU to “subject to any rights of [WSU] or its research sponsor
DuPont. Therefore DuPont owns FAD2. Against this [DuPont].” Therefore Okuley’s obligation to give FAD2 to
conclusion, Okuley raises a series of objections. WSU remained unaltered by the Ohio statute and the OSU
waiver/assignment.5
Okuley’s first and most novel objection is based on the fact
that he discovered FAD2 while working under a WSU Next, Okuley claims that if FAD2 became property of
employment contract, but in an OSU laboratory and using WSU under the Faculty Manual, WSU failed to follow the
OSU equipment. Under Ohio statutory law, “[a]ll rights to manual’s procedures and thus forfeited it back to him.6 The
and interests in discoveries, inventions, or patents which Faculty Manual states that if WSU’s “Intellectual Property
result from research or investigation conducted in any . . . Committee fails to notify the employee in writing of
facility of any state college or university, . . . shall be the sole determination of ownership within fifty days of full
property of that college or university” Ohio Rev. Code disclosure, . . . the University’s rights in the patentable
§ 3345.14(B). Therefore ab initio the ownership of FAD2 property shall automatically become the property of the
vested in OSU, not Okuley. Nevertheless, the Ohio statute employee.” It is a disputed question of fact whether Okuley
did not abrogate Okuley’s contract with WSU. Hence Okuley made full disclosure to WSU, triggering the clause in the
was also under an obligation to transfer FAD2 to WSU–an Faculty Manual. But even if the clause was triggered, it will
obligation he could not satisfy as at that time he did not own
FAD2. Had matters rested in this posture, interesting, but
quite different, litigation could have ensued involving WSU 5
That Okuley was no longer an employee of W SU at the time the
and OSU and including questions of the statute’s OSU waiver/assignm ent became effective is not relevant. Okuley’s
constitutionality under the Takings Clause. contractual obligation to give FAD 2 to W SU, incurred during the lifetime
of the contract, survived until fulfilled.
However, matters did not rest there. In 1993 , at Okuley’s 6
insistence, OSU–as apparently is its practice–explicitly Okuley now claims that his discovery was not covered under the
Faculty Manual, because at the time of the discovery he was working at
waived its rights to FAD2. If OSU’s waiver was effective, OSU and was using different methods than his W SU supervisor had
releasing any statutory rights that it enjoyed, the site of the suggested. However, it is undisputed that he was still an employee of
research and the statute ceased to have any effect on this case. W SU, using W SU and DuPont supplies, and working on the project that
However, even if, as Okuley argues, the mandatory language he had been given by his WS U supervisors. M oreo ver, he immediately
of the statute prevents OSU from waiving its interest in communicated his success to his W SU supervisor and D uPo nt. Therefore,
Okuley’s claim of independence from WSU must fail. The Fac ulty
FAD2, the outcome is no different because the “waiver” also Manua l confirms this understanding.
No. 01-3074 E.I. Du Pont de Nemours v. Okuley 13 14 E.I. Du Pont de Nemours v. Okuley No. 01-3074
not avail Okuley for several reasons. First, the Faculty Okuley argues that it had expired before he even began his
Manual explicitly exempts property developed under an research. According to DuPont and WSU, Okuley’s
agreement with an outside sponsor from its return clause.7 discovery of FAD2 started the period and DuPont was able to
Second, the clause only vests WSU’s rights back with the isolate the gene almost immediately thereafter. Even if
employee. However, under the collaboration agreement with Okuley had standing to challenge the interpretation of a
DuPont, WSU did not have any rights in the property and contract to which the parties agreed, and his interpretation
only DuPont did. Therefore, WSU had nothing to return to were correct, which seems highly unlikely, the effect would
DuPont. be merely to vest the property in WSU, not Okuley. For
Okuley to obtain the patent, the court would also have to
Okuley also contends that the patent for FAD2 was based agree with the above argument regarding the reversion of the
on additional “transformation work” that he performed after patent to Okuley by inaction of WSU. As we do not, this
the end of the agreement between WSU and DuPont and that issue is moot.
DuPont incorporated in later versions of its patent application.
However, this transformation work was merely used to IV
confirm the identity and use of FAD2 covered under the
original patent application. As such it was, as the district For the foregoing reasons, the judgment of the district court
court found, a simple extension of the original patent is AFFIRMED.
application and hence falls under the Faculty Manual’s
language regarding “intellectual products . . . developed by its
employees as a result of their employment” and was assigned
to WSU.
Okuley’s final argument is based upon a reinterpretation of
the RCA, to which he was not a party and with which all
parties to the contract disagree. Under the RCA, almost all
intellectual property rights arising from the research belongs
to DuPont. However, under a clause of the RCA, if DuPont
failed to isolate a gene resulting from the research within nine
months of the identification, and WSU succeeded where
DuPont had failed, the gene would belong to WSU and
DuPont would merely receive a license. Using strained
definitions of the conditions that start the nine-month period,
7
Okuley raises the question that the collaboration agreem ent with
DuPo nt was not a sponsorship agreement, because DuPont did not
provide funds for the research. However, both W SU and D uPont
construed the agreement as a sponsorship agreement and DuPont provided
valuab le consideration to WSU in the form of access to its database of
genetic material.