NOTE: Pursuant to Fed. Cir. R. 47.6, this disposition is not citable as precedent. It is a public record. 

## United States Court of Appeals for the Federal Circuit

04-1281, -1282 THE REGENTS OF THE UNIVERSITY OF NEW MEXICO, Plaintiff-Appellee, v. GALEN D. KNIGHT, Defendant-Appellant, and TERENCE J. SCALLEN, Defendant-Appellant.

__________________________ DECIDED: November 9, 2004

__________________________ Before LOURIE, SCHALL, and LINN, Circuit Judges

. LINN, Circuit Judge

. Terence J. Scallen (“Scallen”) and Galen D. Knight (“Knight”) separately appeal from a final judgment dismi ssing all of their counterclaims against the Regents of the University of New Mexico (“the University”). Regents of the Univ. of N.M. v. Knight , No. CIV 99-577 (D.N.M. Jan. 8, 2004). Because Scallen and Knight’s arguments are without merit, we affirm

.BACKGROUND The present appeals stem from a lawsuit filed by the University against Scallen and Knight seeking a declaration of ownersh ip of various patents and applications related to beta-alethine compounds and vitale theine modulators as well as asserting breach of contract and interference with cont ractual relations claims. In response, Scallen and Knight asserted various counter claims against the University seeking determinations of their rights in the inventi ons and asserting various other contract and tort claims. The United States District Court for the District of New Mexico (“district court”) originally determined that the Un iversity was the ow ner of all patents and applications at issue, that Scallen and Knight breached their contractual obligation to assign the patents to the Univ ersity, and that Scallen and Knight’s counterclaims were barred by the Eleventh Amendment. On appeal, this court affirmed the district court’s judgment that the University was the owner of the patents and applic ations at issue and that Sc allen and Knight breached their obligation to assign the in ventions to the University. Regents of the Univ. of N.M. v. Knight , 321 F.3d 1111 (Fed. Cir. 2003). Ho wever, this court also held that the district court’s dismissal of Scallen and Knight’s counterclaims based on Eleventh Amendment immunity was error. We held that by sui ng in federal court, t he University had waived its Eleventh Amendment immunity with res pect to all compulsory counterclaims asserted by Scallen and Knight. Id. at 1124-26. In evaluating Scallen and Knight’s counterclaims, we held that Knight’s c ounterclaim for royalties was compulsory; however, we were unable to discern which of the remaining counterclaims were compulsory. Thus, we vacated the distri ct court’s dismissal of the remaining

04-1281, -1282 2counterclaims and remanded stating, “Scall en and Knight are admoni shed, however, to be precise in indicating to the district court how they were damaged by actions or inactions arising from the same transacti ons. None of the abov e should preclude the district court from dismissing any count erclaims on proper grounds other than the Eleventh Amendment.” Id. at 1126. On remand, Scallen and Knight attempted to amend their counterclaims, but the district court denied their motions to amend. Regents of the Univ. of N.M. v. Knight , CIV 99-577, slip op. at 3-4 (June 18, 2003) (Mem. Op. & Order). The district court then dismissed all of Scallen and Knight’s count erclaims, other than Knight’s claim for royalties. The district c ourt determined that Knight’s co unterclaims for intentional interference with prospective economic adv antage and malicious abuse of process were not compulsory and should be dismissed. Id. at 6-7. The district court also held that Scallen’s counterclaim for breac h of the duties of care, good faith, and fair dealing based upon the University entering into a faulty license agreement, filing certain documents with the Patent and Trademark Offi ce, and attempting to harm Scallen’s professional reputation was compulsory. Id. at 9-10. Nevertheless, the district court concluded that these claims, although com pulsory, were barred by the applicable statutes of limitations and by t he New Mexico Tort Claims Act. Id. at 10-12. The district court subsequently granted summary judgment in favor of the University on Knight’s remaining counterclaim for royalties. Regents of the Univ. of N.M. v. Knight , CIV 99-577 (Jan. 8, 2004) (Mem. Op. & Order). On the same day, the district court entered final judgment in favor of the Univ ersity on all claims and awarded costs to the University,

04-1281, -1282 3including the costs of a special ma ster in the amount of $63,887.33. Regents of the Univ. of N.M. v. Knight , CIV 99-577 (Jan. 8, 2004) (Final Order). Scallen and Knight separatel y appeal the district court’s various decisions. We have jurisdiction under 28 U.S.C. § 1295(a)(1). DISCUSSION Scallen and Knight each raise different issues on appeal. Therefore, their arguments will be addressed separately. A. Scallen’s Arguments Scallen first contends that t he district court abused its discretion in failing to allow him to amend his counterclaims. In particular, Scallen argues that the district court’s dismissal of his third motion to amend, fil ed after remand from this court, was an abuse of discretion. Scallen argues that the dismissal for untim eliness was improper because this court’s remand effectively “turned the clock back to May 16, 2000, the date Scallen filed his second motion to amend.” The University responds that Scallen’s motion to amend was properly denied because he sought to file new counterclaims that were barred under the mandate rule and that untimeliness is a proper basis for denial of motions to amend after the close of discovery . We agree that Scallen’s third motion to amend was properly denied as untimely. Frank v. U.S. West, Inc. , 3 F.3d 1357, 1365- 66 (10th Cir. 1993). Scallen’s claim that the clock was effectively turned back to the denial of his second motion to amend is in correct because Scallen did not expressly argue, in his original appeal, that the denial of his second motion to amend was error. Thus, he cannot now cha llenge that decision. Tronzo v. Biomet, Inc. , 236 F.3d 1342, 1347-49 (Fed. Cir. 2001).

04-1281, -1282 4Additionally, Scallen argues that the dist rict court improperly dismissed as untimely his motion seeking a declaration that the University’s commercial activities, i.e. , its patent-related activities, were not imm une under the New Mexico Tort Claims Act. Although raised in the form of a motion, Sc allen’s arguments are more appropriately viewed as challenging the district court’s dism issal of his counterclaims as barred by the New Mexico Tort Claims Act. Scallen relies heavily on language in Genentech, Inc. v. Regents of the University of California , 143 F.3d 1446 (Fed. Cir. 1998), to support his claim that patent-related activities are commercial and not subject to sovereign immunity. Although Genentech hinted that such a proposition might be tenable in the context of state sovereign imm unity under the Eleventh Amendment, Genentech did not decide the issue. Id. at 1453-54. Moreover, the case was subsequently vacated by the Supreme Court in view of its then-recently decided case College Savings Bank v. Florida Prepaid Postsecondar y Education Expense Board , 527 U.S. 666 (1999). Regents of the Univ. of Cal. v. Genentech, Inc. , 527 U.S. 1031 (1999). In Florida Prepaid , the Supreme Court said, Nor do we think that the constitu tionally grounded principle of state sovereign immunity is any less robust where, as here, t he asserted basis for constructive waiver is conduct that the State realistically could choose to abandon, that is undertaken for profit, that is traditionally performed by private citizens and corporations , and that otherwise resembles the behavior of “market participants.” 527 U.S. at 684. Although Florida Prepaid also involved immunity under the Eleventh Amendment, the quoted language undercuts any s liver of support Scallen may have derived from our language in Genentech . Scallen has not directed this court to any analogous waiver in the New Mexico Tort Claims Act, and we have found none.

04-1281, -1282 5Scallen also contends that in waiving its Eleventh Amendment immunity by filing suit in federal court, the Un iversity has waived all immunity, both state and federal, for all claims asserted by Scallen. We have already decided that the University waived Eleventh Amendment immunity only fo r compulsory counterclaims. Regents of the Univ. of N.M. v. Knight , 321 F.3d 1111, 1124-26 (Fed. Cir. 2003). That issue may not be relitigated now. To the extent that our prior decision has not disposed of this issue, waiver of Eleventh Am endment immunity does not, in and of itself, constitute waiver of the University’s sovereign immunity under the New Mexico Tort Claims Act. Scallen also argues that NMSA § 41-4-21 constitutes a waiver of sovereign immunity in the New Mexico Tort Claims Act for employer-employ ee relationships and that his counterclaims fall within this ex ception. As the Univer sity points out, however, “[t]hat section was designed to preserve employment relations, not to provide a waiver of immunity.” Rubio v. Carlsbad Mun. Sch. Dist. , 744 P.2d 919, 922 (N.M. Ct. App. 1987). Scallen argues that the University violated his First Amendment academic freedom rights by filing inaccurate and/orfalse documents with the Patent and Trademark Office. Scallen raises this claim for the first time on appeal. Although district courts have a duty to liberally construe pro se plaintiffs’ pleadings, Haines v. Kerner , 404 U.S. 519 (1972), the record in this case evinces no denial or derogation of Scallen’s First Amendment academic freedom rights. Scallen argues that the appr opriate statutes of limit ations have not begun to run on any of his counterclaims bec ause all of the wrongs involv ed in the counterclaims are continuing to this day. Scallen makes no e ffort, however, to support this assertion. Scallen points to no evidence suggesting that he should not have be en aware of the

04-1281, -1282 6alleged wrongs identified in his counterclaims until after June 16, 1997, the date two years prior to his counterclaim filing date. See LaMure v. Peters , 924 P.2d 1379, 1383- 84 (N.M. Ct. App. 1996) (looking to “the point at which the [claimant s] knew or should have known that they were damaged” as the appropriate time to begin the statute of limitations period under a claim of continuing harm). Scallen raises numerous arguments r egarding the University’s purported unwillingness to seek to profit from the te chnology at issue in this case and the University’s purported obligation to return the rights to the technology to Scallen and Knight upon its decision not to seek to prof it from the technology. All of these arguments are based on allegations of breach of contract, impracticability, or fraud stemming from a failure to per form contractual duties. As the University properly points out, however, Scallen raised none of these issues in his pending counterclaims. Moreover, as the University al so properly points out, these entirely new claims were first raised on December 1, 2003 in t he form of a motion, after our remand to consider which counterclaims were compulsory. Thus, the district court’s dismissal of Scallen’s “motion” as untimely was proper. Scallen argues that the di strict court abused its discretion in awarding costs against him where the University engaged in lit igation misconduct and that the district court improperly awarded $4,256.99 in costs that were not authorized. The University responds that Scallen did not timely rais e the litigation misconduc t issue and thus has waived it and that the $4,256. 99 in costs associated with the special master were authorized. The University is correct that Scallen has shown no abuse of discretion in the district court’s failure to deny costs to the University where Scallen failed to timely

04-1281, -1282 7raise an argument against such an award. Moreover, the Order of Reference and Amended Order of Reference of the district court cannot be construed as disallowing any fees of the special mast er after the due date for the specified reports, especially where the district court tasked the spec ial master with preparing an additional document. Finally, Scallen argues that Judge Conw ay should be recused under 28 U.S.C. § 455(a) because of alleged prej udicial conduct toward Scallen and Knight. Scallen’s contention that Judge Conwayshowed prejudice is who lly without merit. Although Knight filed a motion before the district court addressing this issue, Scallen did not join that motion, and he cannot nowobject to its denial. Correge v. Murphy , 705 F.2d 1326, 1331 (Fed. Cir. 1983). Moreover, merely failing to rule in a litigant’s favor on disputed issues of law does not raise a reasonable question as to a Judge’s impartiality. See Caravalho v. Pugh , 177 F.3d 1177, 1178-79 ( 10th Cir. 1999) (“[M]er e disagreement with the merits of a district court decision, which decision was clearly correct, does not support recusal of the judge.”). B. Knight’s Arguments Knight initially raises numerous ar guments alleging fraud on the Patent and Trademark Office by the University. Although the argument is not ent irely clear, Knight appears to be arguing, among other things, that the University fraudulently amended its United States patent applications so that a different invent or could claim what he and Scallen actually invented. Knight makes numerous additional allegations related to the University’s alleged complicity in supposedly allowing its licensee to claim credit for what Scallen and Knight actua lly invented, but Knight neverexplains how any of this

04-1281, -1282 8relates to the current appeal. As noted above, Knight’s counterclaims were dismissed for being: (1) not compulsory, (2) barred by re levant statutes of limitations and the New Mexico Tort Claims Act, and (3) in the case of his claim for royalties, unproven. Knight’s allegations, even if true, do not show any erro r in the district court’s decisions on these issues. With respect to Knight’s royalties claim in particular, the district court granted summary judgment in favor of the University dismissing the claim due to Knight’s lack of evidence. Regents of the Univ. of N.M. v. Knight , No. CIV 99-577 (D.N.M. Jan. 8, 2004) (Mem. Op. & Order). In grant ing summary judgment, the dist rict court noted that the University argued that it di d not owe Knight royalties until the patents produced a net income, which the University asserted had not yet occurred. Id. The district court held that Knight had not raised a material issue of fact challenging these assertions, stating, “Instead, Knight’s Response contains mult iple amorphous and illogi cal arguments that do not pertain to the issue of royalties.” Id. , slip op. at 6. Kni ght has not directed this court to any evidence that a material issue of fact existed precluding summary judgment or that the district court incorrectly app lied the law in reaching its decision. Knight also alleges numerous improprieti es by the district court, including appointing a special master who taught at the University, c oncealing the fact that the special master taught at the University, allowing the University’s licensee to receive Knight and Scallen’s confidential information, and refusing to consider timely pleadings regarding recusal of Judge Conway. All of thes e issues except that relating to recusal of Judge Conway arose prior to Knight ’s last appeal and cannot be raised now. Tronzo v. Biomet, Inc. , 236 F.3d 1342, 1347-49 (Fed. Cir. 2001). With respect to recusal of

04-1281, -1282 9Judge Conway, Knight present s no substantive argument as to why Judge Conway’s refusal to recuse himsel f constituted error. Finally, Knight argues that a continuing wrong precludes a statute of limitations and a Tort Claims Act defense. As evidence of such a “continuing wrong,” Knight cites conduct occurring in September 1994 and a letter from the University to an attorney for Knight dated July 8, 1997. Kn ight does not explain to which of his counterclaims this evidence purportedly relates, nor does Kni ght explain how merely restating the University’s position in the July 1997 letter constitutes a “continuing wrong” sufficient to toll a statute of limitations under New Mexico law. Knight also argues that the University’s failure to timely respond to hi s letter in 1998 after stating that it would “respond shortly” somehow makes his counterclai m within the statute of limitations. The district court found, however, that Kni ght’s claim for slander of inventorship— presumably the cause of ac tion to which Knight is referring—arose in 1995. Regents of the Univ. of N.M. v. Knight , CIV 99-577, slip op. at 11 (D .N.M. June 18, 2003) (Mem. Op. & Order). Thus, when Knight wrote t he letter in 1998, the two-year statute of limitations had already run, and the letter could not have tolled the stat ute of limitations. Similarly, Knight’s allegati on that the University unlawfully changed inventorship in August 1995, even if true, could not make hi s counterclaim timely because his initial counterclaim was filed June 9, 1999. Knight has not dem onstrated any error in the district court’s decision.

04-1281, -1282 10CONCLUSION For the above reasons, Scallen and Kni ght’s arguments pr esented on appeal are without merit. Thus, we affirm the district court’s dismissal of Scallen and Knight’s counterclaims and award of costs.

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