Source: https://casetext.com/case/shaw-v-regents-of-university-of-california
Timestamp: 2019-05-25 17:53:34
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Matched Legal Cases: ['§ 322', '§ 1060', '§ 1550', '§ 1636', '§ 452', '§ 454']

Shaw v. Regents of University of California, 58 Cal. App. 4th 44 | Casetext
58 Cal. App. 4th 44 (Cal. Ct. App. 1997)
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Shawv.Regents of University of California
Court of Appeal of California, Third DistrictOct 2, 1997
58 Cal. App. 4th 44•67 Cal. Rptr. 2d 850•
Docket No. C021828.
Appeal from Superior Court of Yolo County, No. 71730, Thomas E. Warriner, Judge.
Judge of the Yolo Municipal Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
P. Martin Simpson, Jr., James E. Holst, John F. Lundberg, Robert Barnes, Arnold, White Durkee, Gerald P. Dodson and James F. Valentine for Defendant and Appellant.
Miller, Starr Regalia, Marvin B. Starr and Lynne M. Yerkes for Plaintiff and Respondent.
At the time he became a member of the University faculty, Shaw was asked to sign a single-page, two-sided University form document entitled "STATE OATH OF ALLEGIANCE and PATENT AGREEMENT." The document contains (1) a half-page "STATE OATH OF ALLEGIANCE," (2) a half-page "PATENT AGREEMENT," and (3) the "UNIVERSITY POLICY REGARDING PATENTS" (the Patent Policy).
The Patent Policy provides that "[a]n agreement to assign inventions and patents to the [University] . . . shall be mandatory for all employees, for persons not employed by the University but who use University research facilities and for those who receive grant or contract funds through the University." It also provides that exceptions to this assignment requirement may be authorized when "the mission of the University is better served" thereby.
The patent agreement obligates the signatory to inform the University promptly of "every possibly patentable device, process, plant or product, hereinafter referred to as `invention,'" which the signatory may conceive in the course of University employment. Should the University deem the invention patentable, the signatory promises thereafter "to assign to University all rights, title and interest" in the invention.
Directly under the title of the patent agreement appear the words: "Please read the Patent Policy on reverse side and above." The first paragraphs of the patent agreement state: "This agreement is made by me with The Regents of the University of California, a corporation, hereinafter called `University,' in part consideration of my employment, and of wages and/or salary to be paid to me during any period of my employment, by University, and/or my utilization of University research facilities. [¶] By execution of this agreement, I understand I am not waiving any rights to a percentage of royalty payments received by University, as set forth in University Policy Regarding Patents, hereinafter called `Policy.'"
In April 1990, the University officially revised its Patent Policy to reduce an inventor's share of net royalties and fees from a flat rate of 50 percent to a sliding scale in which the inventor would receive 50 percent of the first $100,000, 35 percent of the next $400,000, and 20 percent of any additional net royalties and fees. The University's president announced that the creation of this sliding scale "responds to internal criticisms of the present system and to concerns that — particularly in a public institution — the goal of such a policy should be to provide support and incentives for further productive research rather than the highest earnings for individual inventors." In the University's view, its 1990 Patent Policy increases the percentage of royalties that can be used to fund additional research and "is much more in line with what most of the other universities in the states do."
Shaw objected and argued the University should instead "meet its obligation under the Patent Agreement that [Shaw] signed" to pay inventors 50 percent of the net royalties. The University declined, asserting that the Patent Policy is not a contract but merely a "personnel policy grounded in the employment relationship" and the University "may prospectively change its personnel policies unilaterally," provided it gives advance notice to employees of its intent to do so.
The University directed Shaw to execute an assignment of his interest in the patents of the six strawberry cultivars. The assignment provided that net royalties for the new plants would be divided in accordance with the "benefits stipulated for the inventor in the `University of California Patent Policy' revised effective April 16, 1990, which document is made by reference a part hereof and in fulfillment of the Assignor's Patent Agreement with the University of California. . . ." When Shaw refused to sign the assignment, the University agreed to modify its terms to provide that consideration for the assignment includes a share of net royalties in accordance with "the applicable University of California Patent Policy," so as to preserve the parties' respective positions on what policy should apply.
In opposition to Shaw's motion, the University did not challenge Shaw's statement of undisputed facts; it opted instead to supplement the record with further undisputed facts of its own. The University also argued in pertinent part that (1) because Shaw's employment is governed by statute, not contract, he can maintain no contract action against the University; (2) the "Patent Policy" in effect at the time Shaw signed the patent agreement is not a contract and thus may be changed unilaterally by the University, so long as Shaw received notice of the new policy and a reasonable time within which to decide whether to continue under the new policy or to seek different employment; (3) the patent agreement operates as a complete transfer of Shaw's rights in all as-yet-uninvented plants or processes to the University; and (4) the University has done nothing to modify the patent agreement.
(1a) The University begins its argument on appeal by advancing a theory that it admits was not raised before the trial court. Characterizing Shaw's complaint as "a challenge to the administrative decisions of a state agency in establishing its policies," the University claims the trial court erred in applying "a straightforward contract analysis" rather than the standard of review for a mandamus action, i.e., that the University's decision to revise its Patent Policy must be upheld so long as it is not arbitrary, capricious, or entirely lacking in evidentiary support.
To support this argument, the University relies principally on the decision in Bunnett v. Regents of University of California (1995) 35 Cal.App.4th 843 [ 41 Cal.Rptr.2d 567], which was issued after the entry of judgment in this case.
(2) Generally, a party may not raise a new contention on appeal. ( Ernst v. Searle (1933) 218 Cal. 233, 240-241 [ 22 P.2d 715]; In re Marriage of Moschetta (1994) 25 Cal.App.4th 1218, 1227 [30 Cal.Rptr.2d 893].) An exception exists, however, in cases where a new point of law is decided after the trial ( Fisher v. City of Berkeley (1984) 37 Cal.3d 644, 654, fn. 3 [ 209 Cal.Rptr. 682, 693 P.2d 261]) or where the new theory "presents a question of law to be applied to undisputed facts in the record." ( Hoffman-Haag v. Transamerica Ins. Co. (1991) 1 Cal.App.4th 10, 15 [ 1 Cal.Rptr.2d 805].) Application of this rule is discretionary with the reviewing court. ( In re Marriage of Moschetta, supra, 25 Cal.App.4th 1218, 1227; see 9 Witkin, Cal. Procedure (3d ed. 1985) Appeal, § 322, p. 332.)
(1b) We shall consider, but reject, the University's claim of error. While it is true the University's administrative decisions regarding its faculty are properly reviewed by writ of mandate (e.g., McGill v. Regents of University of California (1996) 44 Cal.App.4th 1776, 1785 [ 52 Cal.Rptr.2d 466] [denial of tenure]; Bunnett v. Regents of University of California, supra, 35 Cal.App.4th at pp. 847-848 [denial of professor's application to enroll in early retirement incentive program]), Shaw does not challenge an administrative decision of the University. He seeks an interpretation of his existing written contract with the University.
As a general proposition, mandamus is not an appropriate remedy for enforcing a contractual obligation against a public entity. ( California Teachers Assn. v. Governing Board (1984) 161 Cal.App.3d 393, 399 [ 207 Cal.Rptr. 659]; Wenzler v. Municipal Court (1965) 235 Cal.App.2d 128, 132 [ 45 Cal.Rptr. 54].) Thus, the trial court correctly applied contract principles in resolving the parties' dispute over the patent agreement.
The University does not contend that there are material issues of triable fact. Rather, the parties' chief disagreement concerns the legal effect of the patent agreement. This poses a legal question which we consider de novo on appeal. ( Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865 [ 44 Cal.Rptr. 767, 402 P.2d 839] [where the interpretation of written instrument does not turn on the credibility of extrinsic evidence, it poses a pure question of law].)
(3a) We first consider whether Shaw has demonstrated that he is entitled to a declaration on summary judgment that the patent agreement is an enforceable agreement which entitles him to 50 percent of the net royalties and fees from his strawberry cultivars.
(4) An action for declaratory relief is appropriate to determine the legal rights and duties of the parties to a written contract. (Code Civ. Proc., § 1060) Where, as here, the only cause of action is one for declaratory relief, a motion for summary judgment likewise is appropriate. ( National Exhibition Co. v. City and County of San Francisco (1972) 24 Cal.App.3d 1, 11 [ 100 Cal.Rptr. 757]; Michelman v. Frye (1965) 238 Cal.App.2d 698, 702 [ 48 Cal.Rptr. 142].)
(3b) The written patent agreement, signed by Shaw, contains all the essential elements of a contract: "(1) parties capable of contracting; (2) their consent; (3) a lawful object; and (4) a sufficient cause or consideration. (Civ. Code, § 1550)" ( Marshall Co. v. Weisel (1966) 242 Cal.App.2d 191, 196 [ 51 Cal.Rptr. 183].) The University's statement of undisputed facts raises no issue of material fact as to whether the patent agreement is a valid agreement.
(5) To resolve the parties' dispute concerning the meaning and effect of the patent agreement, we resort to the traditional rules governing interpretation of contracts, which "teach us that the overriding goal of interpretation is to give effect to the parties' mutual intentions as of the time of contracting. . . . Where contract language is clear and explicit and does not lead to absurd results, we ascertain intent from the written terms and go no further." ( Ticor Title Ins. Co. v. Employers Ins. of Wausau (1995) 40 Cal.App.4th 1699, 1707 [ 48 Cal.Rptr.2d 368], citations and fn. omitted.)
(3c) By its terms, the patent agreement embodies Shaw's promises to disclose any inventions he may create in the future so that the University may "examine . . . and determine rights and equities therein in accordance with the Policy" and, if the University "desires . . . to seek patent protection thereon," to assign his interest in the invention to the University.
The clear language of the patent agreement does not, as the University argues, effect a contemporaneous and "complete transfer of plaintiff's rights to the University." Accordingly, the University's reliance upon cases in which the parties' agreement so provides is misplaced. (E.g., Cubic Corp. v. Marty (1986) 185 Cal.App.3d 438, 444, 448 [ 229 Cal.Rptr. 828] [invention agreement provided that all inventions by employee "shall be the sole and exclusive property" of the employer] and Treu v. Garrett Corp. (1968) 264 Cal.App.2d 432, 433 [ 70 Cal.Rptr. 284] [same].)
Shaw contends that the patent agreement incorporates the Patent Policy and its 50 percent royalty provision. We agree.
"A contract may validly include the provisions of a document not physically a part of the basic contract. . . . `It is, of course, the law that the parties may incorporate by reference into their contract the terms of some other document. [Citations.] But each case must turn on its facts. [Citation.] For the terms of another document to be incorporated into the document executed by the parties the reference must be clear and unequivocal, the reference must be called to the attention of the other party and he must consent thereto, and the terms of the incorporated document must be known or easily available to the contracting parties.'" ( Williams Constr. Co. v. Standard-Pacific Corp. (1967) 254 Cal.App.2d 442, 454 [ 61 Cal.Rptr. 912]; accord, Baker v. Aubry (1989) 216 Cal.App.3d 1259, 1264 [ 265 Cal.Rptr. 381], and King v. Larsen Realty, Inc. (1981) 121 Cal.App.3d 349, 357 [ 175 Cal.Rptr. 226].)
The contract need not recite that it "incorporates" another document, so long as it "guide[s] the reader to the incorporated document." (Compare Baker v. Aubry, supra, 216 Cal.App.3d at p. 1264 with Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, 644 [ 223 Cal.Rptr. 838].)
Not only is reference to the Patent Policy "`clear and unequivocal,'" and its terms "`easily available to the contracting parties'" ( Williams Constr. Co. v. Standard-Pacific Corp., supra, 254 Cal.App.2d at p. 454), the language we have italicized above expressly defines the "percentage of royalty payments received by [the] University" that Shaw may expect to receive on his invention as that which is "set forth in" the Patent Policy, i.e., 50 percent of net royalties and fees.
In 1990, the University revised the patent agreement to include the following: "I also understand and agree that the University has the right to change the Policy at any time, including the percentage of net royalty payments paid to me."
We are unconvinced by the University's assertion that it "did not intend to incorporate the Patent Policy as part of the Patent Agreement." (6) Although the intent of the parties determines the meaning of the contract (Civ. Code, §§ 1636, 1638), the relevant intent is "objective" — that is, the objective intent as evidenced by the words of the instrument, not a party's subjective intent. ( Beck v. American Health Group Internat., Inc. (1989) 211 Cal.App.3d 1555, 1562 [ 260 Cal.Rptr. 237].) Nothing in the patent agreement hints at what the University now claims was its long-held desire that the Patent Policy's inventor royalty provision not be incorporated into the patent agreement. The true intent of a contracting party is irrelevant if it remains unexpressed. ( 211 Cal.App.3d 1555, 1562; see also City of Mill Valley v. Transamerica Ins. Co. (1979) 98 Cal.App.3d 595, 603 [ 159 Cal.Rptr. 635].)
The University asks us to take judicial notice of its standing order No. 100.4 (mm); the University Bulletin, volume 11, No. 39; minutes of the University Board of Patents meeting on April 29, 1963; and various United States patents issued in or before 1989. (Evid. Code, §§ 452, subds. (b), (c) and 459, subd. (a).) As these documents are not pertinent to our analysis, we deny the request. (Evid. Code, § 454, subd. (a)(1).)
(7) We find no merit in the University's suggestion that, as a public employee who is employed pursuant to statute, not contract, Shaw has no vested contractual right in his terms of employment, such terms being subject to change by the University.
In each of the two cases upon which the University relied for this proposition, the public employee bringing a contract action had no written contract with his public employer. ( Kemmerer v. County of Fresno (1988) 200 Cal.App.3d 1426, 1431-1432 [ 246 Cal.Rptr. 609] [civil service employee had no contract of employment which included an implied covenant of good faith and fair dealing]; Gabe v. County of Clark (9th Cir. 1983) 701 F.2d 102, 103 [county policy which changed employee's status to "at will" cannot affect the status of her employment without her knowledge].)
3d We also reject the University's argument that the Patent Policy is a mere personnel policy which it may modify unilaterally. Although the University is entitled to revise its Patent Policy, it cannot do so with respect to Shaw because of its written agreement with him. The University prepared, and Shaw signed, a patent agreement whose references to the Patent Policy are so direct as to indicate the parties' intent to incorporate the policy's then-existing terms into the patent agreement, including the University's promise to pay Shaw 50 percent of the net royalties of any patentable invention. Whether, absent the incorporation, the Patent Policy would constitute a mere statement of personnel policy is immaterial. Having made the Patent Policy a part of its written agreement with Shaw, the University may not unilaterally revise it as to him.
Sims, Acting P.J., and Sparks, J., concurred.
Retired Associate Justice of the Court of Appeal, Third District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.