-JLT General Electric Company, et al. v. Wilkins, No. 1:2010cv00674 - Document 190 (E.D. Cal. 2011)

Court Description: MEMORANDUM DECISION re plaintiff's Motion for Preliminary Injunction, documents 15 and 16 . The Court orders defendant Thomas Wilkins and those acting in concert with him, and those who have actual notice of this order, are enjoined and rest ricted from licensing or offering to license any interest in the technology described in the '565 and '985 patents, or from making any representation that Wilkins is presently legally entitled to license such technology, pending the entry of final judgment in this action or further order of the Court; order signed by Judge Oliver W. Wanger on 5/5/2011. (Rooney, M)
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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 MEMORANDUM DECISION REGARDING PLAINTIFF S MOTION TO FOR PRELIMINARY INJUNCTION (Docs. 15, 16) v. 11 THOMAS WILKINS, 12 Defendant. 13 I. INTRODUCTION. 14 15 A. Plaintiff s Allegations 16 Plaintiff General Electric Company( Plaintiff ) brings this 17 action against Defendant Thomas Wilkins ( Defendant ) for damages 18 and 19 Plaintiff is a developer of energy technologies and the holder of 20 U.S. Patent Nos. 6,921,985 ( 985 Patent ) and 6,924,565, ( the 565 21 patent ).1 22 565 patent and asserts that he is an unnamed co-inventor of the 23 985 patent. 24 patents. relief. According to Plaintiff s complaint, Defendant is listed as one of seven inventors of the Defendant asserts an ownership interest in both Defendant was employed as an electrical engineer by Enron Wind 25 26 injunctive Corp. ( Enron ), Plaintiff s predecessor in interest, 27 1 28 Only allegations common to Plaintiff s original complaint and first amended complaint are included in this summary. 1 1 intermittently 2 Defendant s job responsibilities while employed by Enron included 3 the design, development, installation and testing of wind turbine 4 generators. 5 2002, 6 intellectual property. 7 from approximately April 1998 to May 2002. Enron filed for bankruptcy protection in 2002. In May Plaintiff Defendant purchased became Enron s Plaintiff s assets, employee in including May of its 2002. 8 Defendant served as Plaintiff s lead power systems electrical 9 engineer in California, and his job was to develop new designs for 10 wind turbine equipment. On May 31, 2002, Defendant first conceived 11 the invention underlying the 565 patent. 12 allege when the invention underlying the 985 was first thought of, 13 or who first thought of it. Defendant voluntarily resigned from 14 Plaintiff in December 2002. 15 Plaintiff applied for the 565 and Plaintiff does not 985 patents after 16 Defendant terminated his employment with Plaintiff. 17 2004, 18 connection with Plaintiff s application for the 565 patent, but 19 Defendant refused. Defendant has never signed an assignment 20 expressly the 21 Plaintiff s requests that he do so. 22 assignment from Defendant in connection with the 985 patent. 23 Plaintiff requested assigning that 565 Defendant patent to sign In February documents Plaintiff, in despite Plaintiff did not seek an In 2009, Defendant purported to license the 985 patent to one 24 of Plaintiff s competitors.2 25 Plaintiff that he was offering to license the 565 patent to In May 2010, Defendant informed 26 27 28 2 On February 11, 2011, the court granted a motion to intervene filed by Mitsubishi Heavy Industries, Ltd., and Mitsubishi Power Systems Americas, Inc., the competitors Defendant purported to grant licenses to. 2 1 others. 2 such conduct. 3 B. Procedural History 4 Defendant refused Plaintiff s request to cease and desist Plaintiff filed a motion for preliminary injunction on July 9, 5 2010. (Docs. 15, 16). On July 12, 2010, Plaintiff filed an ex 6 parte application requesting that the court advance the hearing on 7 its motion for preliminary injunction to August 16, 2010. 8 23).3 (Doc. 9 Defendant filed a motion to dismiss Plaintiff s original 10 complaint on July 15, 2010; the hearing on the motion was set for 11 September 27, 2010. 12 an ex parte motion seeking to suspend briefing on the Motion for 13 Preliminary Injunction until after the hearing on Defendant s 14 motion to dismiss. 15 expressed Defendant s hope that resolution of the motion to dismiss 16 would moot Plaintiff s motion for preliminary injunction. (Doc. 27 17 at 2). 18 (Doc. 26). On July 20, 2010, (Doc. 27).4 Defendant filed Defendant s ex parte motion On July 21, 2010, the court issued a minute order setting a 19 scheduling conference for July 22, 2010 in order to discuss 20 resolution of the parties respective ex parte requests. 21 28). After conducting the July 22 scheduling conference, the court 22 issued a minute order that directed Plaintiff to file a motion for 23 a temporary restraining order ( TRO ) by July 26, 2010 and set a 24 hearing for Plaintiff s motion for August 6, 2010. (Doc. 29). The (Doc. 25 3 26 27 Local Rule 230(b) provides a twenty-eight day notice requirement. E.D. Cal. R. 230(b). A hearing date on August 16, 2010 would have provided Defendant thirty-eight days notice. 4 28 Defendant's motion also advanced opposition to Plaintiff's request to advance the hearing on Plaintiff's motion for preliminary injunction. (Id). 3 1 minute 2 reciprocal depositions, preferably by August 3, 2010. 3 order also directed the parties to complete limited (Id.). On July 26, 2010, Plaintiff filed a motion seeking a TRO and 4 supporting documents. 5 the parties submitted a stipulation pursuant to which 6 agreed to withdraw its TRO application and cooperate with Defendant 7 on various scheduling matters in exchange for Defendant s agreement 8 to refrain from certain conduct. 9 stipulation on July 20, 2010 ( Stipulation ). 10 11 (Docs. 30, 31, 32, 33). (Doc. 37). On July 30, 2010, Plaintiff The court signed the (Doc. 38). parties Stipulation provided, in pertinent part: 1. GE s motion for a temporary restraining order is denied as moot; 12 13 2. The hearing date for GE s motion for preliminary injunction is taken off calendar pending the hearing on Wilkins motion to dismiss; 14 15 16 17 18 19 3. The hearing date for Wilkins motion to dismiss shall be set on a date agreeable to the Court at the earliest practicable opportunity, and the briefing schedule shall be pursuant to the local rules; and 4. The Court will set a hearing date on briefing schedule for GE s motion for a preliminary injunction at the hearing on Wilkins motion to dismiss. The parties request that the hearing on GE s motion for a preliminary injunction be set within 35 days of the hearing on Wilkins motion to dismiss. 20 21 22 23 24 THEREFORE, the parties stipulate and agree that pending GE s hearing on the motion for a preliminary injunction that neither Wilkins, nor any person or entity acting in concert with Wilkins, shall: 1. Take any steps to license, purport to license, grant, or purport to grant rights to third parties in GE s Patent Nos. 6,924,565 and 6,921,985 (the 565 and 985 Patents ); or 25 26 2. Modify or extend the license agreement with Mitsubishi Heavy Industries, Ltd. and/or related entities related to GE s 565 and 985 Patents; or 27 28 3. Engage in any conduct that would convey or tend to convey to third parties that Wilkins is licensing or will 4 The 1 license any ownership interest in the 565 or 985 Patents; or 2 4. Represent on his website or otherwise, unless under oath in judicially required or requested testimony, that he believes he has an ownership interest in the 565 and 985 Patents, or that he believes he has the lawful right to license under the 565 and 985 Patents. 3 4 5 (Doc. 38 at 3-4). 6 On September 2, 2010, Plaintiff filed an ex parte application 7 to continue the hearing date on Defendant s motion to dismiss due 8 to a scheduling conflict. (Doc. 40). Defendant filed vehement 9 opposition to Plaintiff s request for continuance on September 7, 10 2010.5 (Doc. 41). Defendant s opposition argued that Defendant 11 only agreed to the Stipulation based on the assumption that his 12 motion to dismiss would be heard on September 27. (Doc. 41 at 2). 13 Defendant s opposition threatened noncompliance with the 14 Stipulation if the hearing on Defendant s motion to dismiss was not 15 held on September 27. (Doc. 41 at 4). 16 The court conducted a hearing on Plaintiff s ex parte request 17 to continue the hearing on the motion to dismiss on September 16, 18 2010. In an attempt to effect a compromise solution to the 19 parties contentious dispute, the court issued a minute order that 20 granted Plaintiff s request for continuance but also stated that 21 the Stipulation would expire on September 27, 2010. (Doc. 45). On 22 September 17, Plaintiff s counsel emailed the court and stated that 23 Plaintiff would proceed with the September 27 hearing date for the 24 motion to dismiss in order to preserve the terms of Stipulation, 25 26 5 27 28 In the opposition to Plaintiff s ex parte request, Defendant s counsel accused Plaintiff s counsel of fraud in procurement of the Stipulation. The court rejected Defendant s accusation. Defendant s counsel also vowed not to agree to any further stipulations in this case. (Doc. 41 at 4). 5 1 pursuant to which the Stipulation was to remain in place until the 2 preliminary injunction hearing. 3 minute order on September 17 which provided: 4 5 (Doc. 46). The court issued a In view of the Plaintiff electing to proceed to hearing on 9/27/2010, Stipulated [TRO] and Scheduling Order shall remain in full force and effect according to its original terms. 6 7 8 9 (Doc. 46). The court heard Defendant s motion to dismiss on September 27, 2010. During the hearing, the court announced its tentative 10 decision to dismiss the contract cause of action pled in the 11 complaint with leave to amend. The court expressed its belief that 12 although Plaintiff s complaint was not technically deficient under 13 federal pleading standards, amendment of the complaint would be 14 beneficial during later stages of the litigation: 15 16 17 18 19 20 The Court: [D]o you agree that you should, in effect, separately state the [distinct breach of contract] claims you have? Mr. Hanlon: Your Honor, I think the claims are sufficiently alleged in the four causes of action that are stated. I don t believe there s a requirement under federal procedural law that each separate contractual breach be separately alleged as a separate cause of action. We could certainly do that if it s the Court s preference, but we don t believe that GE was required to so plead. 21 22 23 The Court: I think that s probably right, but if it does -- what is alleged doesn t permit, if you will, the application of the statute of limitations to what is alleged to be breached, then you run the risk of having that barred if you don t amend. 24 25 (Doc. 87, Trans. at 16-17). 26 close of the hearing: 27 28 The court reiterated its view at the I ll just close my thoughts by saying this. The reason that I mentioned amendment was because although it doesn t dictate the Court s pleading standards, 6 1 California law does utilize, to the extent that a California contract is in dispute here, it does utilize a primary rights theory to underlie pleading doctrine... 2 3 [I]t seems to me that there is more than one primary right being asserted by GE in this lawsuit. There s a contract right, three of them, and then there s some intellectual property rights as well and then there is a -- an employment property right also that is at dispute and so down the line if GE wants to live dangerously, I suppose they can do that...the matter stands submitted. We ll get a decision out to you as soon as we can. 4 5 6 7 (Id. at 23-24). A Memorandum Decision dismissing Plaintiff s 8 complaint without prejudice was entered on October 8, 2010. (Doc. 9 58).6 10 On September 28, 2010, the court issued a minute order 11 vacating as moot the hearing date on Plaintiff s motion for 12 preliminary injunction; this minute order was a clerical error, as 13 there was no hearing date on calendar pursuant to the Stipulation. 14 (See Doc. 38 ¶2). 15 On October 1, 2010, the court held a status conference 16 regarding yet another contentious dispute among the parties this 17 time, the parties dispute concerned the status of their 18 Stipulation. Defendant argued that because the court stated its 19 tentative decision to dismiss the complaint, and because the court 20 did not set a hearing date or briefing schedule for the motion for 21 preliminary injunction at the close of the hearing on the motion to 22 dismiss, the Stipulation expired on its own terms. (Doc. 52). 23 The court rejected Defendant s position, noting that the terms of 24 the stipulation enjoined Defendant from certain actions pending 25 GE s hearing on the motion for preliminary injunction. (Doc. 108 26 27 6 28 The formal order dismissing the original complaint was signed on October 18, 2010, after Plaintiff filed the FAC. 7 1 at 8). 2 unequivocally specified that the life of the agreement was to 3 extend until the hearing on Plaintiff s motion for preliminary 4 injunction. 5 that there was no complaint on file, the court stated: 6 The court held that the language of the Stipulation (Doc. 108 at 8). In response to Defendant s argument [W]e have a complaint...under the injunction and declaratory relief claims for the alleged...interference with the alleged patent rights...at least those claims are going to survive until the next round or dispositive motion...As of today we do have a complaint because I ve only announced a tentative ruling and I haven t made a dispositive order...We had an agreement that this interim order would be in effect until the hearing of the preliminary injunction motion, and that was to be within 35 days of the [September 27], which was the hearing date on the motion [to dismiss] 7 8 9 10 11 12 (Doc. 108 at 10).7 13 order 14 stipulated temporary restraining order remains in full force and 15 effect 16 injunction...Motion for Preliminary Inunction set for 10/18/2010 at 17 11:00 AM. 18 directed Defendant to file opposition to Plaintiff s motion for 19 preliminary injunction on or before October 8, 2010. 20 Defendant filed opposition to Plaintiff s motion on October 8, 21 2010. 22 opposition on October 14, 2010. which After the hearing, the court entered a minute provided pending the in hearing (Doc. 53). (Doc. pertinent 62). on part: the The motion Court for ORDERED preliminary The Court s October 1, 2010 minute order Plaintiff filed a reply to (Id.). Defendant s (Doc. 77) 23 On October 12, 2010, the court ordered Plaintiff to submit an 24 amended complaint by October 14, 2010 so that Defendant would have 25 the amended complaint in his possession at the hearing on 26 27 28 7 After the court explained its holding that the Stipulation remained in force, Defendant's counsel informed the court that Defendant would not comply with the court s ruling. (Id.). 8 1 Plaintiff s motion for preliminary injunction. Plaintiff filed its 2 First Amended Complaint ( FAC ) on October 13, 2010. (Doc. 74). 3 The court heard Plaintiff s motion for preliminary injunction 4 on October 18, 2010 and stated orally on the record that it would 5 issue a written decision granting a preliminary injunction. 6 83). 7 fact and conclusions of law. (Doc. The court directed Plaintiff to prepare proposed findings of (Id.). 8 Defendant submitted a request for leave to file supplemental 9 opposition to the motion for preliminary injunction on October 20, 10 2010; the court denied Defendant s request on October 21, 2010, as 11 the matter had been heard on notice. (Docs. 84, 86). 12 Plaintiff submitted proposed findings of fact and conclusions 13 of law on October 25, 2010. (Doc. 94). Defendant filed objections 14 to Plaintiff s proposed findings of fact and conclusions of law on 15 October 26, 2010. (Doc. 95). II. LEGAL STANDARD. 16 17 "A preliminary injunction is an extraordinary remedy never 18 awarded as of right." Winter v. Natural Resources Defense Council, 19 Inc., 129 S. Ct. 365, 376 (2008) (citation omitted). "A plaintiff 20 seeking a preliminary injunction must establish that he is likely 21 to succeed on the merits, that he is likely to suffer irreparable 22 harm in the absence of preliminary relief, that the balance of 23 equities tips in his favor, and that an injunction is in the public 24 interest." Id. at 374 (citations omitted). 25 be awarded upon a clear showing that the plaintiff is entitled to 26 relief. Id. at 376 (citation omitted) (emphasis added). 27 /// 28 /// 9 An injunction may only 1 III. FINDINGS OF FACT. 2 A. Defendant's Employment With GE and Enron 3 1. 4 employment to Defendant dated December 17, 2001 ("2001 Enron Offer 5 Letter"). 6 offered to Defendant in the 2001 Enron Offer Letter was "Power 7 Systems Engineer." 8 responsibilities of a Power Systems Engineer as follows: 9 Enron Wind Corporation ("Enron") extended a written offer of (Doc. 18, Brace Decl. at 1). The title of the position The 2001 Enron Offer letter described the Will be responsible for the design, development, installation, and testing of the Enron Wind Dynamic VAR system. Duties will include direct interaction with project developers, site operators, park owners, utilities, Enron Wind Manufacturing and vendors. Will help establish performance criteria, testing procedures, installation procedures, and product manuals data 10 11 12 13 Will work to assure proper electrical design of all Ballance-of-Plant (BOP) items including pad mount transformers, electrical infrastructure, sub-station design review including all data acquisition requirements. Will work directly with Enron Wing Execution group, and Enron Wing engineering. 14 15 16 Will be responsible for the specification, and overall performance of the Variable Speed Drive Converters used on all Enron Wind Variable Speed turbines. Duties will include specification system design, testing, and vendor qualification. Design development engineering input for any in-house design is also expected. 17 18 19 20 Will interact with the Advanced Technology Group as needed to provide input for new technology developments including control system, converter system, ptich system, generator system, and overall wind turbine design. 21 22 23 (Doc. 18, Brace Decl., Ex. A at 1). The 2001 Enron Offer Letter 24 stated "As part of your terms of employment, you will be required 25 to sign a Confidentiality and Inventions Agreement." (Id. at 2). 26 27 2. Defendant commenced employment with Enron in January 2002. 28 (Doc. 18, Brace Decl. at 2; Ex. A at 4). 10 At some point in early 1 2002, Defendant signed the 2001 Enron Offer Letter. 2 Pursuant to the terms of the 2001 Enron Offer Letter and Enron's 3 general 4 Confidentiality and Inventions Agreement ("Enron C & I Agreement") 5 as a condition of his employment. 6 A at 2). business practice, Defendant was required (Id.). to sign a (Doc. 18, Brace Decl. at 2; Ex. 7 8 3. In early 2002, Norland Brace, Enron's Director of Human 9 Resources, was involved in due diligence preparations in connection 10 with the proposed sale of Enron. (Doc. 18, Brace Decl. at 2). 11 Mr. Brace was charged with ensuring that each of Enron's employees, 12 including its engineers, had signed Enron's C & I Agreement so that 13 Enron could present the agreements to prospective buyers. 14 When Mr. Brace was unable to locate a signed copy of Defendant's C 15 & I Agreement, he personally 16 Agreement along with other employment documents, including a copy 17 of the 2001 Enron Offer Letter; these documents comprised Enron's 18 "employment packet." (Id.). took a copy of the Enron's C & I (Id.). 19 20 4. Defendant initially refused to sign the Enron C & I Agreement. 21 (Doc 18, Brace Decl. at 2). 22 signing the C & I Agreement was a condition of his employment and 23 that he would be terminated if he did not sign the agreement. 24 (Id.). 25 Agreement and the 2001 Enron Offer Letter; 26 indicates that he witnessed Defendant sign these documents on 27 February 3, 2002. 28 February 3, 2002 was a Sunday. Mr. Brace informed Defendant that Mr. Brace witnessed Defendant sign the Enron C & I (Id.). Mr Brace's declaration The court takes judicial notice that 11 1 5. A signed copy of Defendant's Enron C & I Agreement was sent by 2 Enron to prospective buyers as part of Enron's due diligence 3 requirement, along with the C & I Agreements of Enron's other 4 employees. (Doc. 18, Brace Decl. at 2). 5 6 6. A signed copy of Defendant's Enron C & I Agreement cannot be 7 located by Plaintiff. 8 experienced problems locating documents from the set of records 9 that should contain Defendant's signed Enron C & I Agreement, as (Doc. 18, Brace Decl. at 2). 10 such records have been moved off site. 11 Plaintiff has (Id.; Doc. 17, Hunt Decl. at 2). 12 13 7. Defendant worked for Enron from January 2002 until May 2002. 14 (Doc 18, Brace Decl. at 2). 15 16 8. On May 10, 2002, Plaintiff acquired certain of Enron's assets, 17 including intellectual property related to Enron's wind turbine 18 operations. (Doc. 19, McGinness Decl. at 2; Doc. 63, Schulte 19 Decl., Ex. E at 5). 20 "rights...under any and all employment contracts" were expressly 21 excluded from the assets Plaintiff purchased from Enron. (Doc. 68, 22 Schulte Decl. at 5). Pursuant to the purchase agreement, 23 24 9. In 2002, David Hunt, GE's current Human Resources Manager, 25 Global Mergers and Acquisitions, was part of the human resources 26 team that was responsible for integrating Enron's employees into 27 Plaintiff's business. 28 the integration process, all Enron employees were required to sign (Doc. 17, Hunt Decl. at 1-2). 12 As part of 1 various employment forms 2 Plaintiff. 3 provided by Plaintiff, they would have been immediately terminated. 4 (Id.). (Id.). as a condition to employment with If any employee refused to sign the forms 5 6 10. Defendant commenced employment with Plaintiff as a Power 7 Systems Engineer in May 2002. (Doc. 18, Brace Decl. at 3). 8 9 11. On May 29, 2002, Defendant signed a document entitled "The 10 Spirit & Letter of Our Commitment" in which Defendant acknowledged 11 that he had received various documents that comprised the guide to 12 Plaintiff's employee policies ("Spirit and Commitment Letter"). 13 (Doc. 17, Hunt Decl. at 2, Ex. B). 14 was to require employees to sign all documents that accompanied the 15 Spirit and Commitment Letter at the same time. 16 Decl. at 2). One of the documents Defendant acknowledged receiving 17 by 18 Employee Innovation and Proprietary Information Agreement ("GE EIPI 19 Agreement"). 20 locate a copy of the GE EIPI Agreement signed by Defendant. 21 17, Hunt Decl. at 2). signing the Spirit and Plaintiff's business practice Commitment (Doc. 17, Hunt Decl. Ex. B). Letter (Doc. 17, Hunt was Plaintiff's Plaintiff is unable to (Doc. 22 23 12. The Spirit and Commitment Letter contains a provision which 24 provides "I understand that every employee is required to comply 25 with the policies described in the guide." 26 2, Ex. B). (Doc. 17, Hunt Decl. at 27 28 13. Defendant resigned from Plaintiff s employ on December 1, 13 1 2002. 2 B. The 565 Patent 3 14. 4 a document entitled "Record of Invention" for technology described 5 as "Continuous WTG VAR Support and Prioritization." 6 McGinness Decl. Ex. B). 7 signed the form as an inventor. 8 stated that Defendant first thought of the invention on May 31, 9 2002 and indicated that the inventors' division was "General 10 (Doc. 18, Brace Decl. at 3). On May 31, 2002 Defendant signed and submitted Electric Wind Energy." to Plaintiff (Doc. 19, A second person, Nagwa Elkachouty, also (Id.). The Record of Invention (Id). 11 12 15. On August 18, 2003, Plaintiff filed a patent application for 13 the technology described in the Record of Invention. (See Doc. 26, 14 Ex. 1 at 37; Doc. 19, McGinness Decl. at 2). 15 patent application with an unsigned Inventor Declaration and Power 16 of Attorney Form for Defendant. Plaintiff filed the (See Doc. 26, Ex. 1 at 37). 17 18 16. After receiving 19 Nonprovisional Application" in November 2003, Plaintiff, through 20 counsel, 21 requesting that Defendant sign an Inventor Declaration and Power of 22 Attorney form in connection with the patent application. (Doc. 26, 23 Ex. 1 at 38). 24 attorney of record for the patent application, spoke with Defendant 25 on the phone and Defendant stated that he was not willing to sign 26 the Inventor Declaration and Power of Attorney form. 27 Mendonsa received the unexecuted forms from Defendant on February 28 24, 2004. sent a Defendant "Notice a letter to File dated Missing February Parts 10, of 2004, On February 11, 2004, Paul Mendonsa, Plaintiff's (Id.). (Id.). Mr. On March 17, 2004, Plaintiff filed a petition 14 1 under 37 C.F.R. § 1.47(a) to continue the patent application in the 2 name of Defendant. (Id.). 3 4 17. On August 2, 2005, United States Patent No. 6,924,565 B2 5 (" 562 Patent") issued for technology titled "Continuous Reactive 6 Power Support for Wind Turbine Generators." 7 Decl. Ex. A at 1). 8 Invention established the basis for the 565 Patent. 9 McGinness Decl. at 2). (Doc. 19, McGinness The technology disclosed in the Record of (Doc. 19, The 565 Patent named seven inventors, one 10 of whom was Defendant and one of whom was Nagwa Elkchouty. 11 Each of the inventors listed in the 565 Patent is a current or 12 former employee of Plaintiff, and other than Defendant, each has 13 assigned his or her rights in the patent to Plaintiff. 14 McGinness Decl. at 2). 15 the assignee on the 565 Patent. 16 at 1). 17 (Id.). (Doc. 19, "General Electric Company" is listed as (Doc. 19, McGinness Decl. Ex. A The abstract to the 565 Patent provides: Real and reactive power control for wind turbine generator systems. The technique described herein provides the potential to utilize the total capacity of a wind turbine generator system (e.g., a wind farm) to provide dynamic VAR (reactive power support). The VAR support provided by individual wind turbine generators in a system can be dynamically varied to suit application parameters. 18 19 20 21 22 (Id.). 23 24 18. Plaintiff has licensed and continues to offer licenses for the 25 use of the technology subject to the 565 Patent. 26 McGinness Decl. at 2). (Doc. 19, 27 28 19. On June 2, 2010, Defendant, through counsel, sent an email to 15 1 Plaintiff's counsel containing a document entitled "Notice of 2 Non-Abandonment and Intent to License" ("June 2010 Notice"). 3 (Doc. 20, Glynn Decl. at 2, Ex. C1). 4 that 5 selling, licensing, engineering, and designing wind turbines and 6 wind farms to utilize [the technology underlying the 565 Patent]." 7 (Id. at Ex. C1 at 1). Defendant was "actively The June 2010 Notice stated performing work in commerce by 8 9 C. The 985 Patent 10 20. On July 26, 2005, United States Patent No. 6,921,985 B2 (" 985 11 Patent") issued for technology described as "Low Voltage Ride 12 Through for Wind Turbine Generators." 13 Ex. C at 1). 14 Defendant is not one of them. (Id.). 15 appeared on the application transmittal letter and cover sheet 16 Plaintiff initially filed with the U.S. Patent and Trademark 17 Office. 18 Patent is a current or former employee of Plaintiff and each has 19 assigned his or her rights in the patent to Plaintiff. 20 McGinness Decl. at 2). "General Electric Company" is listed as the 21 assignee on the 985 Patent. 22 1). 23 24 25 26 27 28 (Doc. 19, McGinness Decl. Five inventors are named in the 985 Patent; (Doc. 64). However, Defendant's name Each of the inventors listed in the 985 (Doc. 19, (Doc. 19, McGinness Decl. Ex. C at The abstract to the 985 Patent provides: A wind turbine. The wind turbine includes a blade pitch control system to vary a pitch of one or more blades and a turbine controller coupled with the blade pitch control system. A first power source is coupled with the turbine controller and with the blade pitch control system to provide power during a first mode of operation. Uninterruptible power supplies coupled to the turbine controller and with the blade pitch control system to provide power during a second mode of operation. The turbine controller detects a transition from the first mode of operation to the second mode of operation and 16 1 2 causes the blade pitch control system to vary the pitch of one or more blades in response to the transition. (Id.). 3 4 21. On August 7, 2009, an Administrative Law Judge ("ALJ") for 5 the United States International Trade Commission issued an "Initial 6 Determination" which held that Defendant was an inventor "of the 7 subject matter of claim 15 of the 985 patent." 8 On March 2, 2010 the United States International Trade Commission 9 affirmed the ALJ's finding that Defendant was an inventor of the 10 985 patent, but held that because Defendant's name did not appear 11 on the face of the patent, he was not an "owner" of the patent. 12 (Doc. 67 at 7). (Doc. 66 at 3). 13 14 22. On May 17, 2010, Defendant, through counsel, informed 15 Plaintiff's counsel that Defendant had purported to license the 16 technology subject to the 985 Patent to MHI. 17 Dec. at 2, Ex. B). (Doc. 20., Glynn 18 19 23. On June 2, 2010, Defendant, through counsel, sent an email to 20 Plaintiff's counsel containing a document entitled "Notice of 21 Non-Abandonment and Intent to License" ("June 2010 Notice"). 22 (Doc. 20, Glynn Decl. at 2, Ex. C1). 23 that 24 selling, licensing, engineering, and designing wind turbines and 25 wind farms to utilize [the technology underlying the 985 Patent]." 26 (Id. at Ex. C1 at 2). 27 /// 28 /// Defendant was "actively The June 2010 Notice stated performing 17 work in commerce by 1 D. Defendant's Recent Conduct 2 24. On July 30, 2010, the parties submitted a Stipulation pursuant 3 to which Defendant agreed to refrain from certain conduct until 4 Plaintiff's motion for preliminary injunction was heard. 5 37). 6 any rights in the subject patents to third parties; (2) engage in 7 any conduct that would convey or tend to convey to third parties 8 that Defendant is licensing or will license any ownership interest 9 in Inter alia, Defendant agreed not to: the subject patents; or (3) (Doc. (1) license or grant represent on his website or 10 otherwise, unless under oath in judicially required or requested 11 testimony, that he believes he has an ownership interest in the 12 subject patents 13 license the subject patents. (See Doc. 38 at 3-4). The court 14 signed the Stipulation on July 20, 2010. On October 15 1, 2010, the court held a hearing to resolve a dispute regarding 16 the parties disparate interpretations of the Stipulation. 17 53). 18 pending a hearing on Plaintiff's motion for preliminary injunction. 19 (Doc. 53). 20 informed the court that Defendant would not comply with the court's 21 order. or that he believes he has the lawful right to (Doc. 38). (Doc. The court ordered that the Stipulation would remain in force At the close of the hearing, Defendant's counsel (Doc. 108, Trans. at 10-11). 22 23 25. On October 1, 2010, Defendant represented on his personal 24 website that (1) he had the capacity to assign an interest the 985 25 patent; (2) entities interested in licensing "LVRT or POWER FACTOR 26 CONTROL" technology 27 discuss;" and (3) 28 injunction should "there preventing is "contact [Defendant] no pending [Defendant] 18 from directly restraining licensing his to order or rightful 1 technology." (Doc. 91, Eldredge Dec. Exs. B, B1). On October 20, 2 2010, Defendant modified his website by adding the text of the 3 court's October 1 minute order and stating "if you would like to 4 discuss licensing for terms for technologies contained in United 5 States Patents 985 and 565 you will have to wait until this matter 6 is handled with the court, and then terms can be negotiated. 7 come back to this web site from time to time because you never 8 know. Things have a way of just working out for the benefit of all 9 parties." But (Doc. 91, Eldredge Dec. Ex. C). 10 IV. CONCLUSIONS OF LAW 11 12 A. Jurisdiction 13 1. Jurisdiction over this action is proper pursuant to 28 U.S.C. § 14 1332 based on diversity of citizenship. 15 16 2. Equitable powers are an inherent part of the judicial power 17 committed to the federal courts by Article III of the United States 18 Constitution. 19 Cir. 2010)(citing Pa. v. Wheeling & Belmont Bridge Co., 59 U.S. 20 460, 462 (1855)). 21 equitable relief; "[t]he essence of equity jurisdiction is the 22 power 23 necessities of the particular case." United States v. Odessa Union 24 Warehouse Co-op, 833 F.2d 172, 175 (9th Cir. 1987). 25 courts also have inherent power to control their dockets and to 26 promote efficient use of judicial resources. 27 Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 28 2007) (citation omitted). of the E.g. Rodriguez v. Hayes, 591 F.3d 1105, 1120 (9th District courts have broad latitude in crafting court to fashion 19 a remedy depending upon the District Dependable Highway 1 2 3. The court s dismissal of Plaintiff s original complaint with 3 leave to amend did not render Plaintiff s motion for preliminary 4 injunction moot, as the court and both parties were aware that 5 Plaintiff intended to and did amend its complaint to clarify its 6 breach of contract claims. An order of a district court dismissing 7 a complaint with leave to amend leaves the suit pending for further 8 proceedings. 9 (1958) (citation omitted). E.g. Jung v. K. & D. Mining Co., 356 U.S. 335, 337 Where the district court expressly 10 grants a party leave to amend its complaint, it is plain that the 11 court does not intend to relinquish jurisdiction over the case. 12 See WMX Techs. v. Miller, 104 F.3d 1133, 1137 (9th Cir. 1997) 13 (dismissal with leave to amend was not a final appealable order). 14 A district court s dismissal of a complaint with leave to amend is 15 not a dismissal of the underlying action. Montes v. United States, 16 37 F.3d 1347, 1350 (9th Cir. 1994) (noting distinction between 17 dismissal of a complaint and dismissal of the underlying action); 18 De Tie v. Orange County, 152 F.3d 1109, 1111 (9th Cir. 1998) 19 (same); Martinez v. Flores, 299 F.2d 888. 20 misrepresentation 21 informed assumption of risk not to offer evidence to oppose the 22 injunction 23 injunction requires that Defendant be held accountable for this 24 strategic misevaluation. at of the this October law and 18, Defendant s counsel s Defendant s 2010 hearing voluntary on preliminary 25 26 B. Likelihood of Success 27 4. California Labor Code Section 2860 provides: 28 Everything which an employee acquires by virtue of his 20 and 1 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 2 3 Cal. Lab. Code § 2860. California Labor Code section 2860 embodies 4 the universally accepted principal that work product created by an 5 employee belongs to the employer where the employee was hired to 6 create such work product. See e.g. Lugosi v. Universal Pictures, 7 25 Cal. 3d 813, 826 (Cal. 1979)(Mosk, J., concurring) (collecting 8 cases such as Zahler v. Columbia Pictures Corp., 180 Cal. App. 2d 9 582, 589 (Cal. Ct. App. 1960) (where an employee creates something 10 as part of his duties under his employment, the thing created is 11 the property of his employer"); accord Treu v. Garrett Corp., 264 12 Cal. App. 2d 432, 436 (1968) (an invention created by an employee 13 was held to belong to the employer because that was the very reason 14 he was hired and paid); Famous Players-Lasky Corp. v. Ewing, 49 15 Cal. App. 676 (Cal. Ct. App. 1920) (same)); Aero Bolt & Screw Co. 16 v. Iaia, 180 Cal. App. 2d 728, 736 (Cal. Ct. App. 1960) (where 17 employee is hired to invent, employer owns invention); United 18 States v. Dubilier Condenser Corp., 289 U.S. 178, 216 (1933) 19 (employer owns invention where employee is hired or assigned to 20 evolve a process or mechanism for meeting a specific need ). There 21 is no dispute that Defendant was Plaintiff s statutory employee at 22 all times relevant. 23 24 5. On or about May 31, 2002, Defendant signed a document entitled 25 Record of Invention providing that he first thought of the 26 technology underlying the 565 Patent on May 31, 2002. The Record 27 of Invention indicated that the 28 21 invention was developed for 1 "General Electric Wind Energy." (Doc. 19, McGinness Decl. Ex. B). 2 At the time Defendant signed the Record of Invention, he was 3 employed by Plaintiff as a Power Systems Engineer.8 4 conceived the technology underlying the 565 patent while employed 5 by 6 developing 7 technology presumptively belongs to Plaintiff. E.g. Treu, 264 Cal. 8 App. 2d at 436; Cal. Lab. Code § 2860.9 9 the record and applicable case law, Plaintiff has established a Plaintiff for such the purpose technology, of engineering, pursuant to As Defendant designing, California law, and the In light of the state of 10 11 12 13 14 15 16 8 As a power system s engineer at Enron, Defendant s duties included design, development, installation, and testing of the Enron Wind Dynamic VAR system; [d]esign development engineering input for any in-house design; and provid[ing] input for new technology developments including control system, converter system, pitch system, generator system, and overall wind turbine design. (Doc. 18, Brace Decl., Ex. A at 1). There is no admissible evidence indicating that the scope of Defendant s job duties changed when he transferred from Enron to GE, and it is reasonable to infer from the evidence on the record that Defendant s job duties remained substantially the same at GE. Further, Defendant s representations to the U.S. International Trade Commission reveal that his job at GE was to develop new designs for technology used in GE s business. (Doc. 66, Schulte Decl. Ex. C at 4-5). 17 9 18 19 20 21 22 23 24 25 26 27 28 The cases provided in Defendant s opposition, Dubilier Condenser Corp., 289 U.S. at 188 and Banner Metals, Inc. V. Lockwood, 180 Cal. App. 2d 728, 733 (Cal. Ct. App. 1960) are of no help to Defendant. Rather, these cases serve to reinforce the point that Plaintiff presumptively owns the subject technology in this action, as the cases highlight the differences between Defendant s situation and an employee who independently develops technology on his own. In Banner Metals, the inventor was employed by his employer as an order clerk, developed his invention on his own time at his own expense, and prosecuted the patent for his invention without involvement from his employer. 180 Cal. App. 2d at 731, 736 (emphasis in original). Similarly, in Dubilier, the employees invention was not developed within the scope of their employment duties. 289 U.S. at 197. Here, the evidence demonstrates that Defendant developed the subject technology within the scope of his employment. Williams v. Weisser, 273 Cal. App. 2d 726, 733-34 (Cal. Ct. App. 1969), cited by Intervenor Mitsubishi, is not persuasive either. 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. 1962)). Whalen expressly recognizes that [w]here a person is employed to design improvements to the product of his employer, or to design new products for his employer, and he does so, he may not use the results of such work for his own use and benefit, and particularly not to the detriment of his employer. 198 Cal. App. 2d at 798. 22 1 high probability of success on its claim for declaratory relief 2 regarding its ownership claim to the technology subject to the 565 3 patent. 4 5 6. According 6 International Trade Commission, Defendant worked on developing the 7 technology underlying the 985 patent as an employee of Enron Wind 8 during 1999 and 2000. 9 Defendant also to Defendant s representations to the U.S. (Doc. 66, Schulte Decl. Ex. C at 3). represented to the U.S. International Trade 10 Commission that in 2002, he was the lead power systems electrical 11 engineer for GE and that his job was to develop new designs for low 12 voltage ride-through. (Id. at 4-5). In connection with his duties 13 as GE s lead power systems engineer, Defendant flew to Germany to 14 work on the technology underlying the 985 Patent with other GE 15 engineers. 16 Defendant incorporated into the 985 Patent presumptively belongs 17 to Plaintiff, as Defendant invented such technology in his capacity 18 as an employee of Plaintiff s who was being paid to invent. 19 Treu, 264 Cal. App. 2d at 436; Cal. Lab. Code § 2860. 20 has established a high probability of success on its claim for 21 declaratory relief regarding the 985 patent.10 (Id.). Accordingly, any technology invented by E.g. Plaintiff 22 23 C. Irreparable Harm 24 7. 25 that irreparable injury is likely in the absence of preliminary 26 relief; mere possibility of such injury is insufficient. A plaintiff seeking a preliminary injunction must demonstrate E.g. 27 10 28 As Plaintiff has established a high probability of success on this equitable claim, it is unnecessary to discuss Plaintiff s contract claims. 23 1 Winter, 129 S.Ct. At 375. 2 may constitute irreparable harm. 3 of Fayetteville, 2010 U.S. App. LEXIS 26202*14 (8th Cir. 2010); 4 BellSouth 5 Services, 425 F.3d 964, 970 (11th Cir. 2005); Gallagher Benefit 6 Servs. 7 2008)(unpublished).11 8 holder s right to license and practice a patent supports a finding 9 of irreparable harm protected by equity and injunctive relief, as 10 the attendant loss of profits, goodwill, and reputation cannot be 11 satisfactorily 12 Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 640 (1st Cir. 13 1992). v. Telecomms., De La Loss of customers and damage to goodwill Inc. Torre, E.g. Rogers Group, Inc. v. City v. 283 MCImetro Fed. Appx. Access 543, Transmission 546 (9th Cir. A party s active interference with a patent quantified. See, e.g., Societe Des Produits 14 15 8. In light of Defendant s conduct, licensing and offering to 16 license 17 Plaintiff will suffer lost customers and damage to its goodwill 18 unless a preliminary injunction enjoins Defendant from further 19 licensing of technology that is presumptively owned by Plaintiff. 20 According to Defendant, he has already intentionally and knowingly 21 licensed a portion of the technology underlying the 985 Patent to technology claimed by Plaintiff, it is likely that 22 23 24 25 26 27 28 11 In eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393-94,(2006), the Supreme Court held that the Federal Circuit erred in adopting a categorical rule that permanent injunctive relief was available once a patentee established the validity of its patent and infringement by defendant. Id. at 392-94. eBay involved a permanent injunction, but the rule espoused therein "has been applied to preliminary, as well as permanent, injunctions, and has been read to limit the presumption of irreparable harm [based] solely upon the finding of infringement." Aurora World, Inc. v. TY Inc., 2009 U.S. Dist. LEXIS 129128*146-47 (C.D. Cal. 2009) (collecting cases) but see Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 877 (9th Cir. 2009)(applying presumption in trademark case). 24 1 one of Plaintiff s competitors, and as recently as October 2010, 2 Defendant offered to license the technology at issue in this action 3 on his website despite the existence of a temporary restraining 4 order prohibiting such conduct. 5 sufficient likelihood of irreparable harm to warrant a preliminary 6 injunction. See Concrete Washout Systems, Inc., 2008 WL 5411965 at 7 * 3 (C.D. Cal. 2008) (granting injunction based on likelihood of 8 damage to goodwill); see also Oakley, Inc. v. Sunglass Hut Int'l, 9 2001 WL 1683252, * 11 (C.D. Cal. 2001) (same). Plaintiff has established a 10 11 D. Equities 12 9. The equities favor Plaintiff. Based on the current record, it 13 does not appear that Defendant has rights in the subject technology 14 sufficient to permit Defendant to license the technology to 15 Plaintiff s competitors. Accordingly, an injunction does not impose 16 a significant burden on Defendant. At most, Defendant risks losing 17 licensing opportunities, for a limited period 18 technology that he does not hold a patent to. of time, for Such opportunities 19 are likely limited by prospective customers reluctance to pay 20 Defendant money for technology for which he does not hold a patent. 21 Conversely, it appears that Plaintiff owns the subject technology 22 but is at risk of losing customers, suffering diminished goodwill, 23 and having to engage in litigation against multiple parties if 24 Defendant is permitted to continue attempting to license the subject 25 technology; indeed, Plaintiff is already engaged in litigation with 26 a competitor to which Defendant has purported to license some of the 27 subject technology. 28 25 1 2 3 4 5 E. Public Interest 10. The public has a strong interest in protecting intellectual property rights. LEXIS 25900*68 (Fed. Cir. 2010). F. Conclusion For the reasons stated, Plaintiff has established it is likely 6 7 8 9 to prevail on the merits, that it is injured by the conduct of Defendant, that the threatened harm is irreparable, and that an injunction is in the public interest. ORDER 10 For the reasons stated, Defendant Thomas Wilkins and those 11 12 13 14 15 16 17 18 19 See, e.g., Spansion, Inc. v. ITC, 2010 U.S. App. acting in concert with him, and those who have actual notice of this order, are enjoined and restricted from licensing or offering to license any interest in the technology described in the 565 and 985 patents, or from making any representation that Wilkins is presently legally entitled to license such technology, pending the entry of a final judgment in this action or further order of the court. IT IS SO ORDERED. Dated: 20 hkh80h May 5, 2011 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 21 22 23 24 25 26 27 28 26