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 

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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 dismissing 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 ownership of various patents and applications 

related to beta-alethine compounds and vitaletheine modulators as well as asserting 

breach of contract and interference with contractual relations claims. In response, 

Scallen and Knight asserted various counterclaims against the University seeking 

determinations of their rights in the inventions 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 University was the owner of all patents and 

applications at issue, that Scallen and Knight breached their contractual obligation to 

assign the patents to the University, 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 applications at issue and that Scallen and Knight breached 

their obligation to assign the inventions to the University. Regents of the Univ. of N.M. 

v. Knight, 321 F.3d 1111 (Fed. Cir. 2003). However, 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 suing in federal court, the University had waived 

its Eleventh Amendment immunity with respect 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 counterclaim for royalties was compulsory; 

however, we were unable to discern which of the remaining counterclaims were 

compulsory. Thus, we vacated the district court’s dismissal of the remaining 

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counterclaims and remanded stating, “Scallen and Knight are admonished, however, to 

be precise in indicating to the district court how they were damaged by actions or 

inactions arising from the same transactions. None of the above should preclude the 

district court from dismissing any counterclaims 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 counterclaims, other than Knight’s claim for 

royalties. The district court determined that Knight’s counterclaims for intentional 

interference with prospective economic advantage 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 breach 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 Office, and attempting to harm Scallen’s 

professional reputation was compulsory. Id. at 9-10. Nevertheless, the district court 

concluded that these claims, although compulsory, were barred by the applicable 

statutes of limitations and by the 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 University on all claims and awarded costs to the University, 

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including the costs of a special master 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 separately 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 the 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, filed after remand from this court, was an abuse 

of discretion. Scallen argues that the dismissal for untimeliness 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 incorrect 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 challenge that decision. Tronzo v. Biomet, Inc., 236 F.3d 1342, 

1347-49 (Fed. Cir. 2001). 

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Additionally, Scallen argues that the district court improperly dismissed as 

untimely his motion seeking a declaration that the University’s commercial activities, i.e., 

its patent-related activities, were not immune under the New Mexico Tort Claims Act. 

Although raised in the form of a motion, Scallen’s arguments are more appropriately 

viewed as challenging the district court’s dismissal 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 immunity 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 Postsecondary 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 constitutionally grounded principle of state 

sovereign immunity is any less robust where, as here, the 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 sliver 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. 

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Scallen also contends that in waiving its Eleventh Amendment immunity by filing 

suit in federal court, the University 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 for 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 Amendment 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-employee relationships and that his counterclaims 

fall within this exception. As the University 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/or false 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 appropriate statutes of limitations have not begun to run 

on any of his counterclaims because all of the wrongs involved in the counterclaims are 

continuing to this day. Scallen makes no effort, however, to support this assertion. 

Scallen points to no evidence suggesting that he should not have been aware of the 

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alleged 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 [claimants] 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 regarding the University’s purported 

unwillingness to seek to profit from the technology 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 profit from the technology. All of these 

arguments are based on allegations of breach of contract, impracticability, or fraud 

stemming from a failure to perform contractual duties. As the University properly points 

out, however, Scallen raised none of these issues in his pending counterclaims. 

Moreover, as the University also properly points out, these entirely new claims were first 

raised on December 1, 2003 in the 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 district court abused its discretion in awarding costs 

against him where the University engaged in litigation 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 raise the litigation misconduct 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 7
raise 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 master after the due date for the specified reports, especially 

where the district court tasked the special master with preparing an additional 

document. 

Finally, Scallen argues that Judge Conway should be recused under 28 U.S.C. 

§ 455(a) because of alleged prejudicial conduct toward Scallen and Knight. Scallen’s 

contention that Judge Conway showed prejudice is wholly without merit. Although 

Knight filed a motion before the district court addressing this issue, Scallen did not join 

that motion, and he cannot now object 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]ere 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 arguments alleging fraud on the Patent and 

Trademark Office by the University. Although the argument is not entirely clear, Knight 

appears to be arguing, among other things, that the University fraudulently amended its 

United States patent applications so that a different inventor 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 actually invented, but Knight never explains how any of this 

04-1281, -1282 8
relates to the current appeal. As noted above, Knight’s counterclaims were dismissed 

for being: (1) not compulsory, (2) barred by relevant 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 error 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 granting summary judgment, the district court noted that the 

University argued that it did 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 multiple amorphous and illogical arguments that 

do not pertain to the issue of royalties.” Id., slip op. at 6. Knight has not directed this 

court to any evidence that a material issue of fact existed precluding summary judgment 

or that the district court incorrectly applied the law in reaching its decision. 

Knight also alleges numerous improprieties by the district court, including 

appointing a special master who taught at the University, concealing 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 these 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 9
Judge Conway, Knight presents no substantive argument as to why Judge Conway’s 

refusal to recuse himself 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. Knight does not explain to which of his counterclaims this 

evidence purportedly relates, nor does Knight 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 his letter in 1998 after stating that it would 

“respond shortly” somehow makes his counterclaim within the statute of limitations. The 

district court found, however, that Knight’s claim for slander of inventorship—

presumably the cause of action 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 the letter in 1998, the two-year statute of 

limitations had already run, and the letter could not have tolled the statute of limitations. 

Similarly, Knight’s allegation that the University unlawfully changed inventorship in 

August 1995, even if true, could not make his counterclaim timely because his initial 

counterclaim was filed June 9, 1999. Knight has not demonstrated any error in the 

district court’s decision. 

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CONCLUSION 

For the above reasons, Scallen and Knight’s arguments presented 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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