Kippen v. Pack

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
__________________________
STANLEY JOHN KIPPEN,
Plaintiff-Appellant,
v.
STEVEN PACK AND
ALLIED MATERIALS & EQUIPMENT,
Defendants-Appellees.
__________________________
2012-1259
__________________________
Appeal from the United States District Court for the
District of Utah in case no. 10-CV-0119, Chief Judge Ted
Stewart.
__________________________
Decided: August 2, 2012
__________________________
STANLEY JOHN KIPPEN, of North Ogden, Utah, pro se.
TERRY E. WELCH, Parr Brown Gee & Loveless, of Salt
Lake City, Utah, for defendants-appellees.
__________________________
Before NEWMAN, CLEVENGER, and BRYSON, Circuit
Judges.
KIPPEN v. PACK 2
CLEVENGER, Circuit Judge.
This appeal concerns a failed business venture to
market and sell toy gliders, and an inventor’s attempt to
have his licensee held liable for patent infringement. The
district court granted summary judgment of noninfringe-
ment, and we affirm. We vacate, however, the district
court’s corollary entry of judgment on contract claims that
the plaintiff did not plead.
I
Plaintiff Stanley John Kippen is the inventor and
owner of U.S. Patent No. 5,078,639 (issued Jan. 7, 1992)
(“the ’639 patent”), entitled “Model Aircraft Glider.” In
early 1993, Mr. Kippen (along with a partnership that he
had formed called Wingers Co. (“Wingers”)) entered into
an agreement with Allied Materials and Equipment Co.
(“Allied”) concerning the ’639 patent. See Am. Compl., Ex.
2 (Agreement of Jan. 9, 1993), Kippen v. Pack, No. 1:10-
cv-119 [hereinafter Kippen] (D. Utah Oct. 12, 2010) [here-
inafter 1993 Agreement].
Under the 1993 Agreement, Allied received an exclu-
sive license to the ’639 patent. In return it agreed to
make certain royalty payments and to make “best efforts”
to manufacture and market gliders covered by the patent.
Time passed. Allied manufactured gliders and, with
some assistance from Mr. Kippen, marketed and sold
them, but Allied says that sales dropped off and by the
mid 2000’s sales were essentially zero.
Then, in mid-2010, Mr. Kippen filed the current law-
suit against Allied’s president Steven Pack, who had
signed the 1993 Agreement for Allied. Proceeding pro se,
Mr. Kippen alleged that Allied should have paid him a
substantial yearly royalty under the 1993 Agreement, but
that under Mr. Pack‘s direction Allied had failed to meet
3 KIPPEN v. PACK
its obligations. Am. Compl. ¶ 8, Kippen (D. Utah Oct. 12,
2010), ECF #15. As the case evolved, Mr. Kippen also
argued that Mr. Pack had deceived him in the execution
of the 1993 Agreement, which Mr. Kippen claims he
would not have signed but for misrepresentations by Mr.
Pack. Mr. Kippen thus accused Mr. Pack of infringing the
’639 patent and owing damages.
Mr. Pack disputed any personal liability and moved
that Allied and Wingers be joined. Mr. Kippen opposed.
The district court held Allied and Wingers necessary to
the case due to their participation in the 1993 Agreement,
and ordered them joined. Kippen, 2011 WL 5574969 (D.
Utah Nov. 16, 2011) [hereinafter Joinder Order].
Several months later, the district court entered sum-
mary judgment for Mr. Pack and Allied. Kippen, 2012
WL 256563 (D. Utah Jan. 27, 2012) [hereinafter SJ
Opinion]. The district court’s opinion included four main
holdings. First, it held that section 286 of the Patent Act
blocked any monetary recovery for infringement commit-
ted more than six years before Mr. Kippen filed his com-
plaint, i.e., on or before July 29, 2004. Second, the court
granted Mr. Pack summary judgment of no infringement,
noting that Mr. Kippen had failed to rebut Mr. Pack’s
personal declaration that he had never undertaken “any
activity in my individual capacity that could be construed
as infringing upon Plaintiff’s patent.” Third, the court
granted judgment of no infringement to Allied for two
reasons: Mr. Kippen, though repeatedly citing section 261
as the cornerstone of his case, had failed to show any
action contravening that statute; and there could be no
infringement under any other section because Allied was
licensed under the 1993 Agreement. Fourth and finally,
the court ruled that Mr. Kippen could find no relief under
contract law. Though noting that Mr. Kippen had not
expressly recited a contract claim against either Allied or
KIPPEN v. PACK 4
Mr. Pack, the court reasoned that his infringement claim
was so interwoven with the 1993 Agreement as to make
judgment for the defendants on contract grounds a neces-
sary aspect of resolving the case. SJ Opinion, at *4–5.
Mr. Kippen timely appealed. This court has jurisdic-
tion over appeals from final judgments of the district
courts in cases arising under the patent laws. 28 U.S.C.
§ 1295(a)(1).
II
As invoking issues not unique to patent law, the join-
der proceedings applied by the district court are reviewed
under the law of the regional circuit. Katz v. Lear Siegler,
Inc., 909 F.2d 1459, 1461 (Fed. Cir. 1990). The Tenth
Circuit reviews a district court’s determinations concern-
ing whether an absent party is necessary and/or indispen-
sable to the case for abuse of discretion. Davis v. United
States, 192 F.3d 951, 957 (10th Cir. 1999).
This court also reviews a district court’s grant of
summary judgment under the law of the regional circuit.
CollegeNet, Inc. v. ApplyYourself, Inc., 418 F.3d 1225,
1230 (Fed. Cir. 2005). In the Tenth Circuit, such judg-
ments are reviewed de novo, “employing the same legal
standard applicable in the district court.” Thomson v.
Salt Lake Cnty., 584 F.3d 1304, 1311–12 (10th Cir. 2009).
In the Tenth Circuit summary judgment is warranted
where there is no genuine issue of material fact and the
moving party is entitled to judgment as a matter law.
“Material” facts are those that could affect the lawsuit’s
outcome. “Genuine” issues are those on which a rational
juror could find in favor of the nonmoving party on the
evidence presented. In reviewing the trial record, this
court will draw any reasonable inferences therefrom in
the light most favorable to the nonmoving party. Adams
5 KIPPEN v. PACK
v. Am. Guarantee & Liab. Ins. Co., 233 F.3d 1242, 1246
(10th Cir. 2000).
III
A
First, we see no error in the district court’s decision to
join Allied and Winger to this case. Mr. Kippen suggests
that this joinder was “not necessary,” as he believes Mr.
Pack is “personally liable” for infringement. Appellant
Informal Br., Extended Answers [hereinafter Appellant
Br.], at 5. We disagree. We see no abuse of discretion in
the district court’s conclusion that it would be impossible
to analyze Mr. Kippen’s relationship with Mr. Pack except
in the light of the 1993 Agreement, and that Allied and
Winger’s participation was necessary to that process. See
Joinder Order, at *2.
Mr. Kippen also points out that, under the district
court’s scheduling order, motions for joinder were due no
later than April 29, 2011. Kippen, slip op. (D. Utah Feb.
10, 2011), ECF #35. Mr. Pack filed his motion—styled as
a motion to join or, in the alternative, to dismiss for
failure to join a necessary party—on August 8. Mr. Kip-
pen contends that Mr. Pack’s motion was too late, and
that Mr. Kippen was prejudiced by the resulting late
joinder insofar as it limited his ability to take necessary
discovery.
Appellees’ brief is silent on this issue, as is the Join-
der Order. Nevertheless, we see no grounds for reversal.
While the Scheduling Order set a deadline to “amend the
pleadings or join additional parties” of April 29, 2011, the
Federal Rules of Civil Procedure make clear that dis-
missal for failure to join a necessary party can be moved
at any time up to trial. Fed. R. Civ. P. 12(h)(2). The
court’s Joinder Order reasons that Allied and Winger
KIPPEN v. PACK 6
were necessary parties, and we see no abuse of discretion
in the court’s decision to order them joined rather than
dismiss the case.
We therefore affirm the district court’s joinder of Al-
lied and Winger.
B
Second, the district court properly applied section 286
of the Patent Act in holding that Mr. Kippen could not be
awarded damages for infringements occurring more than
six years before the filing of this case. This case squarely
fits within section 286’s plain text: Congress has flatly
barred any patentee from extending the damages period
more than six years pre-complaint. A.C. Aukerman Co. v.
R.L. Chaides Constr. Co., 960 F.2d 1020, 1030 (Fed. Cir.
1992).
C
Third, we agree with the district court that Mr. Pack
was entitled to summary judgment of no infringement.
Mr. Kippen’s theory of liability against Mr. Pack is
that Mr. Pack should be held responsible for Allied’s
allegedly-wrongful manufacture and sale of the disputed
gliders. Mr. Kippen’s brief suggests that the facts of this
case merit “piercing the corporate veil” as to Mr. Pack.
Appellant Br. 2. We disagree.
While its details vary from state to state, the doctrine
of piercing the corporate veil generally requires a would-
be piercer to prove that the corporation is the mere alter
ego of some individual. See William Meade Fletcher,
Fletcher Cyclopedia of the Law of Corporations § 41.28
(2012 ed.). Mere allegation will not suffice.
Mr. Kippen’s allegations of malfeasance by Mr. Pack
are not supported by cognizable evidence sufficient to
7 KIPPEN v. PACK
support a conclusion that Allied was in fact Mr. Pack’s
mere alter ego. To the contrary, the available evidence
tends to reinforce the presumption that Allied has a
practical existence separate from its president Mr. Pack.
We therefore conclude that no reasonable juror could
reasonably attribute Allied’s actions to Mr. Pack in his
individual capacity.
Nor has Mr. Kippen provided evidence that Mr. Pack
in his individual capacity ever made, used, sold, offered to
sell, or imported the invention of the ’639 patent without
proper authority. All Mr. Kippen’s allegations concern
actions by Allied, either outright or via Mr. Pack as its
representative. For the above reasons, we agree with the
district court that summary judgment of no infringement
by Mr. Pack is warranted.
D
Fourth, we agree that Allied is entitled to summary
judgment of no infringement. As the SJ Opinion lays out,
the 1993 Agreement conferred to Allied an exclusive
license to the ’639 patent that could, in certain circum-
stances, be converted into a nonexclusive license. That
contract, so long as it was in force, gave Allied a right to
practice the ’639 patent for that patent’s entire life.
Mr. Kippen suggests that the 1993 Agreement is not
in force, and has not been for some time. He offers sev-
eral theories, but none is supported by sufficient evidence
to avoid summary judgment.
First, Mr. Kippen argues that he was fraudulently in-
duced to sign the 1993 Agreement, and that the agree-
ment should be void for that reason. Mr. Kippen points
out that Allied, in addition to making toys, has an ord-
nance business that sells various armed forces materiel.
Mr. Kippen says he “had reservations about mixing toys
KIPPEN v. PACK 8
with weapons.” Appellant Br. 1. He claims that before
the 1993 Agreement was executed, Mr. Pack falsely told
him that Allied would exit that business, and it was on
that basis alone that Mr. Kippen signed. The evidentiary
record, however, does not support these allegations. It
contains a letter from Mr. Pack to Mr. Kippen, dated
before the 1993 Agreement, stating that “our primary
business has been and remains performing as a defense
contractor to various Department of Defense Agencies[.]”
Ltr. to Stan Kippen fr. Steven Pack (Dec. 10, 1992), in
Pack Decl., Ex. 3, Kippen (D. Utah Oct. 19, 2011), ECF
#78. Mr. Kippen makes much of a following statement in
the letter that Allied recently “began to diversify away
from defense work,” pointing to recent toy sales. But such
a statement says nothing about exiting the defense con-
tracting business, only about adding more diverse enter-
prises. We hold that, reading the letter as a whole, any
reasonable juror would find Mr. Kippen could not have
reasonably believed Allied would shutter its ordnance
division.
Second, Mr. Kippen suggests that the 1993 Agree-
ment is void because Allied failed to make required roy-
alty payments. The evidence is, again, against him. The
record contains a spreadsheet, presented by Mr. Pack as
reflecting his personal knowledge, describing Allied’s
sales of covered products and its royalty payments to Mr.
Kippen from January 2005 until the end of 2011. Wing
Zinger Royalty Report, in Pack Decl., Ex. 6, Kippen (D.
Utah Oct. 19, 2011), ECF #78. The spreadsheet describes
yearly royalty payments to Mr. Kippen ranging from
$170.91 in 2005 to zero in 2008–11, with accordingly
diminishing sales (and zero sales from 2008–11). Mr. Pack
also stated that, over the entire life of the 1993 Agree-
ment Allied paid Mr. Kippen “over $40,000.”
9 KIPPEN v. PACK
Mr. Kippen does not dispute any of these statements
except to accuse Allied and Mr. Pack of imprecision and to
suggest that “a full accounting of total production and
sales” is necessary. Appellant Br. 2. While we are mind-
ful of Mr. Kippen’s pro se status, we note that in this case
he had the opportunity to discover all necessary detail
from both Mr. Pack and Allied and, if either failed to
participate fully in such discovery, to seek relief from the
district court. 1 We thus do not believe summary judg-
ment should have been withheld in order to provide still
further discovery opportunities.
Alternatively, Mr. Kippen suggests that the 1993
Agreement entitled him to yearly royalties of $26,000
irrespective of how many units Allied sold. Id. at 3. He
says that these minimum payments were not made, and
that the agreement is accordingly void. This argument
misreads the 1993 Agreement, which states:
4. License Fee. Allied shall pay to Wingers Co. a
license fee of 5% of the gross receipts on wholesale
sales of Wingers, less a credit for returns, payable
quarterly on the fifteenth day of the month follow-
ing the quarter in which the sales proceeds of
Wingers are received . . . .
...
7. Advance Royalties/Minimum Royalties. Upon
execution of this Agreement, Allied shall pay
Wingers Co. the sum of $10,000.00 as an advance
against royalties to become due in year three of
this Agreement. The minimum aggregate royal-
ties which shall be paid to Wingers Co. by Allied
1 We recognize that Allied did not become a party
until November 2011. But we see no reason why Mr.
Kippen could not have pursued discovery via subpoena
concerning Allied’s sales and royalty payments.
KIPPEN v. PACK 10
by the end of year four of this agreement shall be
$26,000.00. Any royalties paid by Allied to Wing-
ers Co. in excess of $26,000.00 during years one,
two, and/or three of this Agreement shall be ap-
plied to the minimum royalties due in year four.
1993 Agreement ¶¶ 4, 7. This language gave Mr. Kippen
(via Wingers) a right in the first four years to total royal-
ties equaling either 5% of Allied’s four-year sales, or
$26,000, whichever was greater. For the period after the
end of the fourth year, Mr. Kippen was entitled to a
straight royalty of 5%, with no minimum. We reject his
argument to the contrary.
Because Mr. Kippen has not put forward evidence suf-
ficient to create a material fact question as to Allied’s
compliance with the 1993 Agreement, we affirm the
district court’s grant of summary judgment that Allied’s
practice of the ’639 patent was licensed.
E
Finally, we must vacate the district court’s entry of
judgment for Allied on contract claims that Mr. Kippen
did not plead. While we agree that Mr. Kippen’s patent
claims against Allied are thoroughly interwoven with the
rights and obligations set forth in the 1993 Agreement,
the federal courts may not resolve claims not actually
submitted for adjudication. Osage Oil & Ref. Co. v. Cont’l
Oil Co., 34 F.2d 585, 588 (10th Cir. 1929) (“A court is
without jurisdiction to pass upon questions not submitted
to it for decision.”); see also Reynolds v. Stockton, 140 U.S.
254, 265–66 (1891).
11 KIPPEN v. PACK
IV
For these reasons, the judgment of the district court is
affirmed in part and vacated in part.
AFFIRMED IN PART, VACATED IN PART
COSTS
No costs.