-JLT General Electric Company, et al. v. Wilkins, No. 1:2010cv00674 - Document 173 (E.D. Cal. 2011)
Court Description: ORDER DENYING defendant's Motion to Dismiss the First Amended Complaint as Time-Barred, document 96 ; order signed by Judge Oliver W. Wanger on 3/15/2011. (Rooney, M)
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-JLT General Electric Company, et al. v. Wilkins Doc. 173 1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 8 GENERAL ELECTRIC COMPANY, 9 Plaintiff, 10 1:10-cv-00674–OWW-JLT ORDER DENYING DEFENDANT’S MOTION TO DISMISS FIRST AMENDED COMPLAINT v. 11 12 THOMAS WILKINS, Defendant. 13 I. INTRODUCTION. 14 Plaintiff General Electric Company(“Plaintiff”) proceeds with 15 16 an 17 damages and injunctive relief. 18 action against Defendant Thomas Wilkins (“Defendant”) for On October 13, Plaintiff filed a first amended complaint 19 (“FAC”). (Doc. 76). Defendant moved to dismiss the FAC on October 20 29, 2010. 21 dismiss on January 10, 2011. 22 January 17, 2011. 23 heard on January 24, 2011. (Doc. 96). Plaintiff filed opposition to the motion to (Doc. 154). (Doc. 144). Defendant replied on Defendant’s motion to dismiss was II. FACTUAL BACKGROUND. 24 25 Plaintiff is a developer of energy technologies and the holder 26 of U.S. Patent Nos. 6,921,985 (“‘985 Patent”) and 6,924,565, 27 (“the’565 28 Defendant is listed as one of seven inventors of the ‘565 Patent patent”) (collectively “the subject technology”). 1 Dockets.Justia.com 1 and asserts that he is an unnamed co-inventor of the ’985 Patent. 2 Defendant claims an ownership interest in both patents. 3 Defendant was employed as an electrical engineer by Enron Wind 4 Corp. 5 intermittently from approximately April 1998 to May 2002. 6 condition 7 Confidentiality and Inventions Agreement (“C&I Agreement”). 8 C&I Agreement provided, inter alia, that Defendant agreed “upon the 9 Company’s request and without the need for further consideration, 10 to execute any and all documents and take such actions which may be 11 necessary in the Company’s judgment to assign all rights to any 12 Invention Idea to the Company and to obtain patent or other 13 intellectual property protections for any Invention Idea.” 14 the terms of the C&I Agreement, Defendant was obligated to assign 15 any 16 employment duties to Plaintiff. 17 (“Enron”), of his interest in Defendant’s Plaintiff’s employment with inventions job predecessor in Enron, Defendant created responsibilities within while the interest, As a signed scope employed a The Under of his by Enron 18 included the design, development, installation and testing of wind 19 turbine generators. Enron filed for bankruptcy protection in 2002. 20 In May 2002, Plaintiff purchased Enron’s assets, including its 21 intellectual property. 22 Defendant became Plaintiff’s employee in May of 2002. A 23 requirement of employment was that Defendant sign Plaintiff’s 24 Employee Innovation and Proprietary Information Agreement (“EIPI 25 Agreement”). 26 Defendant agreed “to disclose and assign to the Company (or as the 27 Company may direct) as its exclusive property, all inventions, 28 discoveries, innovations, improvements, trade secrets and technical The EIPI Agreement 2 provided, inter alia, that 1 or business information which [he] may solely or jointly develop, 2 conceive, reduce to practice or author during the period of [his] 3 employment.” 4 obligated to assign any interest in inventions created within the 5 scope of his employment to Plaintiff. Defendant was also requested 6 to sign an acknowledgment that he was required to comply with the 7 policies described in the guide: “GE Policies. Integrity: The 8 Spirit the Letter of our Commitment” (“GE Policy Guide”), which 9 also Under the terms of the EIPI Agreement, Defendant was specified Defendant’s obligations to protect and assign 10 intellectual property Defendant worked on or invented in the course 11 of his work for Defendant. 12 Defendant served as Plaintiff’s lead power systems electrical 13 engineer in California. 14 wind turbine equipment. On May 31, 2002, Defendant first conceived 15 the invention underlying the ‘565 Patent. 16 allege when the invention underlying the ‘985 Patent was first 17 conceived, or who first thought of it. Defendant voluntarily 18 resigned from Plaintiff’s employ in December 2002. 19 Plaintiff applied His job was to develop new designs for for the ‘565 and Plaintiff does not ‘985 Patents after 20 Defendant terminated his employment with Plaintiff. 21 2004, 22 connection with Plaintiff’s application for the ’565 Patent, but 23 Defendant refused. 24 expressly transferring his rights in the ’565 Patent to Plaintiff, 25 despite Plaintiff’s requests that he do so. Plaintiff did not seek 26 an assignment from Defendant in connection with the ‘985 Patent. 27 28 Plaintiff requested that Defendant sign In February documents in Defendant has never signed an assignment In 2009, Defendant purported to license the ‘985 Patent to one of Plaintiff’s competitors. In May 2010, Defendant informed 3 1 Plaintiff that he was offering to license the ‘565 Patent to 2 others. 3 such conduct. Defendant refused Plaintiff’s request to cease and desist III. LEGAL STANDARD. 4 5 Dismissal under Rule 12(b)(6) is appropriate where the 6 complaint lacks sufficient facts to support a cognizable legal 7 theory. 8 (9th Cir.1990). 9 survive a 12(b) (6) motion, the pleading “does not need detailed 10 factual allegations” but the “[f]actual allegations must be enough 11 to raise a right to relief above the speculative level.” Bell Atl. 12 Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 13 929 14 recitation of the elements of a cause of action will not do.” Id. 15 Rather, there must be “enough facts to state a claim to relief that 16 is plausible on its face.” Id. at 570. In other words, the 17 “complaint must contain sufficient factual matter, accepted as 18 true, to state a claim to relief that is plausible on its face.” 19 Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S.Ct. 1937, 1949, 173 20 L.Ed.2d 868 (2009) (internal quotation marks omitted). Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (2007). Mere To sufficiently state a claim to relief and “labels and conclusions” or a “formulaic 21 The Ninth Circuit has summarized the governing standard, in 22 light of Twombly and Iqbal, as follows: “In sum, for a complaint to 23 survive a motion to dismiss, the nonconclusory factual content, and 24 reasonable 25 suggestive of a claim entitling the plaintiff to relief.” Moss v. 26 U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.2009) (internal 27 quotation marks omitted). Apart from factual insufficiency, a 28 complaint is also subject to dismissal under Rule 12(b)(6) where it inferences from that 4 content, must be plausibly 1 lacks a cognizable legal theory, Balistreri, 901 F.2d at 699, or 2 where the allegations on their face “show that relief is barred” 3 for some legal reason, Jones v. Bock, 549 U.S. 199, 215, 127 S.Ct. 4 910, 166 L.Ed.2d 798 (2007). 5 In deciding whether to grant a motion to dismiss, the court 6 must accept as true all “well-pleaded factual allegations” in the 7 pleading under attack. Iqbal, 129 S.Ct. at 1950. A court is not, 8 however, “required to accept as true allegations that are merely 9 conclusory, unwarranted deductions of fact, or unreasonable 10 inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 11 (9th Cir.2001). “When ruling on a Rule 12(b)(6) motion to dismiss, 12 if a district court considers evidence outside the pleadings, it 13 must normally convert the 12(b)(6) motion into a Rule 56 motion for 14 summary 15 opportunity to respond.” 16 907 (9th Cir. 2003). “A court may, however, consider certain 17 materials-documents 18 incorporated by reference in the complaint, or matters of judicial 19 notice-without converting the motion to dismiss into a motion for 20 summary judgment.” Id. at 908. judgment, and must give the nonmoving party an United States v. Ritchie, 342 F.3d 903, attached to the complaint, documents IV. Discussion 21 22 it A. Contract Claims 23 Defendant seeks dismissal of Plaintiff’s contract claims, with 24 prejudice, based on the statute of limitations. Defendant contends 25 that he breached his obligations under the C & I Agreement and EIPI 26 Agreement in 2004, when he refused to assign his rights in the ‘565 27 technology to Plaintiff in connection with Plaintiff’s prosecution 28 of the ‘565 Patent. Plaintiff contends that Defendant did not 5 1 cause Plaintiff appreciable harm until, at the earliest, 2009, when 2 Defendant first purported to assert an adverse ownership interest 3 in the subject technology. 4 The statute of limitations for breach of a written contract in 5 California is four years. Cal. Civ. Code 337. A breach of 6 contract ordinarily occurs upon the promisor's failure to render 7 the promised performance, but the statute of limitations cannot 8 begin to run until the plaintiff possesses a true cause of action, 9 meaning that events have developed to a point where the plaintiff 10 is entitled to a legal remedy, not merely a symbolic judgment such 11 as an award of nominal damages. 12 Automobile Assn., 189 Cal. App. 4th 947, 958-59 (Cal. Ct. App. 13 2010). McCaskey v. California State 14 Defendant’s refusal to cooperate with Plaintiff in connection 15 with the ‘565 Patent application in 2004 did not cause Plaintiff 16 any “compensable harm,” as Defendant’s refusal to assign his 17 interests in the ‘565 Patent did not inflict “an injury of a type 18 that could translate into damages in an action for breach of 19 contract.” Id. at 960. The allegations of the complaint establish 20 that Plaintiff did not suffer any compensable injury until, at the 21 earliest, 2009, when Defendant first began to affirmatively assert 22 an 23 Plaintiff’s interest. ownership interest in the subject technology adverse to 24 According to the complaint, in 2009, Wilkins granted MHI a 25 license in the ‘985 technology, and MHI has relied on Wilkins’ 26 assertion of ownership interests in the subject technology to 27 challenge Plaintiff’s standing to enforce Plaintiff’s rights in its 28 patents. In contrast to the speculative injury 6 entailed in 1 Defendant’s refusal to cooperate in connection with the ‘565 Patent 2 application in 2004, Defendant’s affirmative assertion of adverse 3 ownership interests in the patent in 2009 has caused Plaintiff 4 compensable harm in the form of, inter alia, infringement of its 5 patent interest and litigation costs resulting from the purported 6 license Defendant granted to MHI. 7 Defendant argues that, because the FAC references a “cloud on 8 the ownership and title” of the ‘565 Patent, the complaint 9 establishes that Plaintiff suffered compensable harm in 2005 when 10 the Patent issued. (Reply at 2). 11 for the proposition that, because Defendant was a presumed owner of 12 the ‘565 patent by virtue of his refusal to effect an assignment, 13 see 37 C.F.R. § 3.73(a) ("inventor is presumed to be the owner of 14 a patent application, and any patent that may issue therefrom, 15 unless there is an assignment"), Plaintiff was harmed in 2005 16 because Plaintiff “could have” used, sold, or licensed the ‘565 17 technology upon issuance of the patent. (Reply at 203). 18 262 provides: 19 20 21 Defendant cites 35 U.S.C. § 262 Section In the absence of any agreement to the contrary, each of the joint owners of a patent may make, use, offer to sell, or sell the patented invention within the United States, or import the patented invention into the United States, without the consent of and without accounting to the other owners. 22 23 35 U.S.C. § 262 (emphasis added). Defendant ignores the fact that 24 section 262 specifically provides that owners of a patent remain 25 bound by contractual restrictions related to the sale and use of 26 patented technology. 27 purported ability to exercise the rights of an owner was completely 28 speculative until, at the earliest, 2009, when Defendant first Further, any injury based on Defendant’s 7 1 began affirmatively asserting ownership rights in the subject 2 technology by offering to license the technology to Plaintiff’s 3 competitor. 4 Defendant also contends that Plaintiff was harmed in 2005 5 because Defendant could not have brought a patent infringement 6 action without Defendant’s consent. 7 Surgical Corp., 135 F.3d 1456, 1467 (Fed. Cir. 1998) (“one co-owner 8 has the right to impede the other co-owner’s ability to sue 9 infringers by refusing to voluntarily join in such a suit”), 10 Defendant contends that Plaintiff was “deprived of the right to sue 11 under the ‘565 patent since it issued in 2005.” 12 However, other than a refusal to assign his rights, Defendant did 13 not exercise any adverse interest or contrary rights that derogated 14 Plaintiff’s right to sue for patent infringement. 15 not then, nor did anyone else until 2009, act to infringe the 16 subject technology. Defendant’s claim he injured Plaintiff in 2005 17 is completely speculative. Plaintiff suffered no compensable harm, 18 in 2005, to its right to bring a patent infringement action or in 19 any 20 hypothetical scenarios regarding the harm Plaintiff’s “could have” 21 suffered in 2005 present no compensable injury, nor did Defendant 22 act to then interfere with Plaintiff’s use or enjoyment of the 23 Patent. 24 other of its rights in the Citing Ethicon, Inc. v. U.S. ‘565 (Reply at 2). Plaintiff did Patent. Defendant’s Damages are an element of a cause of action for breach of 25 contract. E.g., Careau & Co. v. Security Pacific Business Credit, 26 Inc., 222 Cal. App. 3d 1371, 1389 (Cal. Ct. App. 1990). 27 cause of action accrues “at the time when the cause of action is 28 complete with all of its elements,” 8 e.g., Fox v. Because a Ethicon 1 Endo-Surgery, Inc., 35 Cal. 4th 797, 806 (Cal. 2005) (citations 2 omitted), the statute of limitations did not begin to run until 3 Defendant’s conduct caused Plaintiff to suffer an actual injury of 4 the type that could translate into damages in an action for breach 5 of contract, see McCaskey, 189 Cal. App. 4th at 960. 6 the complaint’s allegations, Plaintiff did not suffer compensable 7 harm until 2009 at the earliest, when Defendant licensed the ‘985 8 technology to MHI. 9 of the complaint, Plaintiff’s contract claims are barred by the According to Defendant has not established that on the face 10 statute of limitations.1 11 B. Non-Contract Claims 12 13 14 15 16 Plaintiff’s non-contract causes of action are predicated on the notion that: Even in the absence of contractual agreement, pursuant to California law, including but not limited to, California Labor Code § 2860, Wilkins is required to assign to GE any interest he claimed...[and] is [] constrained under California law from purporting to offer to license [the subject technology]. 17 18 19 (FAC at 14, 19).2 California Labor Code Section 2860 provides: Everything which an employee acquires by virtue of his 20 1 21 22 23 24 25 26 27 28 Defendant also contends that the court does not have Article III jurisdiction over Plaintiff’s breach of contract claims concerning the ‘985 Patent because the FAC alleges that Defendant is not an inventor of the ‘985 Patent. In Defendant’s view, accepting this allegation as true, “GE cannot maintain any separate cause of action based on Mr. Wilkins’ alleged hypothetical obligations as to the ’985 patent,” because the case or controversy requirement cannot be satisfied by requests for advisory opinions. (Motion to Dismiss at 1213). Defendant’s argument lacks merit. It is axiomatic that parties may assert alternative contentions. Plaintiff contends that Defendant has no rights in the ‘985 Patent. Alternatively, Plaintiff contends that if Defendant does have rights in the ‘985 Patent, he is obligated to assign such rights under the applicable contracts. 2 The complaint does not clearly assert claims under any California law other than section 2860, however, Defendant has not moved for a more definite statement. Nor has Defendant asked for dismissal based on the ambiguity created by the FAC. 9 1 2 employment, except the compensation which is due to him from his employer, belongs to the employer, whether acquired lawfully or unlawfully, or during or after the expiration of the term of his employment 3 4 Cal. Lab. Code § 2860. California Labor Code section 2860 embodies 5 the universally accepted principal that work product created by an 6 employee belongs to the employer where the employee was hired to 7 create such work product. 8 25 Cal. 3d 813, 826 (Cal. 1979)3 (Mosk, J., concurring) (collecting 9 cases such as Zahler v. Columbia Pictures Corp., 180 Cal. App. 2d 10 582, 589 (Cal. Ct. App. 1960) (where an employee creates something 11 as part of his duties under his employment, the thing created is 12 the property of his employer"); Treu v. Garrett Corp., 264 Cal. 13 App. 2d 432, 436 (Cal. Ct. App. 1968) (an invention created by an 14 employee was held to belong to the employer because that was the 15 very reason he was hired and paid); Famous Players-Lasky Corp. v. 16 Ewing, 49 Cal. App. 676 (Cal. Ct. App. 1920) (same)); accord Aero 17 Bolt & Screw Co. v. Iaia, 180 Cal. App. 2d 728, 736 (Cal. Ct. App. 18 1960) (where employee is hired to invent, employer owns invention); 19 United States v. Dubilier Condenser Corp., 289 U.S. 178, 216 (1933) 20 (employer owns invention where employee is "hired or assigned to 21 evolve a process or mechanism for meeting a specific need").4 See e.g. Lugosi v. Universal Pictures, 22 23 24 25 26 27 28 3 Superceded on other grounds as stated in In re Sloppy Joe’s Int’l., Inc., 43 U.S.P.Q.2D (Trademark Trial & App. Bd. 1997) . 4 In his reply, Defendant contends that section 2860 does not apply to inventions. This argument was not raised in the motion to dismiss and cannot provide the basis for a dismissal. The case Defendant relies on, Williams v. Weisser, 273 Cal. App. 2d 726, 733-34 (Cal. Ct. App. 1969), does not stand for the proposition Defendant cites it for. The Williams Court specifically distinguished the lectures at issue in that case from inventions created by an employee hired to invent: “University lectures are sui generis...they should not be blindly thrown into the same legal hopper with valve designs.” Id. at 735 (citing Daniel Orifice Fitting Co. V. Whalen, 198 Cal. App. 2d 791 (Cal. Ct. App. 10 1 The applicable limitations period on an action under section 2 2860 is either two years under California Civil Code section 339, 3 see Lugosi, 25 Cal. 3d at 854 (assuming, without deciding, that 4 section 339 provided the applicable limitations period), or four 5 years 6 California Civil Code section 343, see Cal. Civ. Code § 343 (“An 7 action for relief not hereinbefore provided for must be commenced 8 within four years after the cause of action shall have accrued.”). 9 Under either scenario, Defendant has failed to establish that 10 under the residual statute of limitations provided in Plaintiff's claims under section 2860 are time-barred. 11 Where an employer’s claim under section 2860 is predicated on 12 a former employee’s attempt to grant licenses in the employer’s 13 intellectual property to a third party, each licensing agreement 14 presents a “separate and distinct invasion of the [employer’s] 15 rights,” and the statute of limitations for each injury begins to 16 run from the time a license is granted. 17 854. 18 rights in the subject technology and began to license such rights 19 in 2009. Plaintiff initiated this action on April 15, 2010, within 20 two 21 interests and grants of licenses in the subject technology. 22 Contrary to Defendant's conclusory argument, Defendant's refusal in 23 2004 to cooperate with GE's request for assignment of his rights in 24 the technology underlying the ‘565 Patent was not, as a matter of See Lugosi, 25 Cal. 3d at According to the FAC, Plaintiff first asserted ownership years following Defendant's first assertion of ownership 25 26 27 28 1962)). Whalen expressly recognizes that “[w]here a improvements to the product of his employer, or to employer, and he does so, he may not use the results and benefit, and particularly not to the detriment App. 2d at 798. 11 person is employed to design design new products for his of such work for his own use of his employer.” 198 Cal. 1 law, tantamount to assertion of an ownership interest in the ‘565 2 technology– much less the ‘985 technology. 3 California Supreme Court stated in Lugosi, Defendant’s licensing of 4 the technology in 2009 created a separate and distinct invasion of 5 Plaintiff’s rights. In any event, as the See id. 6 Defendant's reliance on Bd. of Trs. of the Leland Stanford 7 Junior Univ. v. Roche Molecular Systems, Inc., 583 F.3d 832, 848 8 (Fed. Cir. 1999) is misplaced. 9 found, based on "undisputed evidence," that a Stanford employee put 10 Roche on notice that Stanford asserted an ownership interest in the 11 subject technology more than four years before Roche filed suit. 12 Id. 13 that 14 inappropriate absent admissible evidence sufficient to support a 15 finding as to when Plaintiff was put on notice of Defendant's 16 assertion 17 technology.5 18 In Roche, the district court Rather than support Defendant's position, Roche makes clear resolution of an of the adverse statute of ownership limitations interest in issue the is subject No allegations of the FAC suggest that Plaintiff's claims 19 under section 2680 accrued before 2009. Nor is there any evidence 20 or judicially noticeable fact cited to support such a conclusion. 21 Defendant has not established that Plaintiff’s claims under section 22 2680 are barred by the statute of limitations. 23 24 25 26 27 28 5 “When considering a motion to dismiss pursuant to Rule 12(b)(1) the district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction.” See, e.g., McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (citing Land v. Dollar, 330 U.S. 731, 735 n.4, (1947)("when a question of the District Court's jurisdiction is raised . . . the court may inquire by affidavits or otherwise, into the facts as they exist.")). Defendant has provided no evidence that suggests Plaintiff was on notice of Defendant’s adverse assertion of ownership interests in the subject property prior to 2009. 12 ORDER 1 2 For the reasons stated above, Defendant’s motion to dismiss 3 the FAC as time-barred is DENIED. 4 IT IS SO ORDERED. 5 Dated: hkh80h March 15, 2011 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13
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