Court Opinion

ID: 4520503
Source: CourtListenerOpinion
Date Created: 2020-03-30 07:00:31.315001+00
Date Added: 2024-06-11T09:25:01.247328
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                To be cited only in accordance with Fed. R. App. P. 32.1

                United States Court of Appeals
                                 For the Seventh Circuit
                                 Chicago, Illinois 60604

                               Submitted March 26, 2020*
                                Decided March 27, 2020

                                         Before

                         DAVID F. HAMILTON, Circuit Judge

                         MICHAEL B. BRENNAN, Circuit Judge

                         MICHAEL Y. SCUDDER, Circuit Judge

No. 19‐1852

BASSAM ANNOUS,                                  Appeal from the United States District
     Plaintiff‐Appellant,                       Court for the Central District of Illinois.

      v.                                        No. 18‐cv‐2094

HANS BLASCHEK,                                  Colin S. Bruce,
    Defendant‐Appellee.                         Judge.

                                        ORDER

        While he was a graduate student at the University of Illinois at Urbana‐
Champaign, Bassam Annous discovered a process, later patented by the University,
that isolates a strain of bacteria. When Hans Blaschek later received $5 million for
selling a business that relied on a license from the University for this patent, Annous

      * We have agreed to decide this case without oral argument because the briefs
and record adequately present the facts and legal arguments, and oral argument would
not significantly aid the court. FED. R. APP. P. 34(a)(2)(C).
No. 19‐1852                                                                         Page 2

sued Blaschek for some of that money. But the district court correctly ruled that no
contract entitled Annous to these proceeds, and any other legal theory was untimely, so
we affirm.

       When Annous was a graduate student, Blaschek was his advisor, and they
conducted research for the University. Annous learned how to isolate a mutant strain of
bacteria called Clostridium biejerinckii. The strain, BA101, was valuable because it
produced enhanced levels of butanol (an alcohol) and acetone (a flammable organic
solvent). It was patented as U.S. Patent 6,358,717 (“the ’717 patent”). Annous and
Blaschek were listed as inventors, but all patent rights were issued to the sole
assignee—The Board of Trustees at the University of Illinois.

       Annous, Blaschek, and two other researchers made other discoveries that, along
with the ’717 patent, led to an agreement with the University. These four uncovered
more strains of mutant bacteria and invented technology that could produce the
bacteria. They signed an agreement with the University under which a fraction of the
proceeds that the University receives from licensing this technology “will be shared” by
the University with each of the “creator(s),” including Annous.

        The ‘717 patent generated licensing revenues for the University that it shared
with Annous. The first set of revenues came from a start‐up venture that Blaschek
formed based on BA101. Although the original BA101 culture had become
contaminated, Annous told Blaschek how to get backup cultures, which Blaschek then
used for his business. Afterwards, the University licensed the ’717 patent to Blaschek’s
venture. Later, Eastman Chemical Company bought that venture from Blaschek for
about $5 million, and the University then licensed the patent to Eastman. On February
13, 2013, Annous received a letter from the University telling him about the first license
of the ‘717 patent to Blaschek’s venture, the sale of Blaschek’s venture to Eastman, and
the second license of the ‘717 patent to Eastman. Annous received about $1,000 from his
share of the first license and $10,000 from the second. He did not receive a percentage of
the proceeds of the sale of Blaschek’s venture, which Annous alleges occurred only
because he told Blaschek about the uncontaminated, backup cultures.

       More than five years after receiving his letter from the University about the sale,
Annous filed this suit in March 2018 to obtain more money from Blaschek. Invoking
diversity jurisdiction, see 28 U.S.C. § 1332, he sued Blaschek (and the University and
Eastman, both later dismissed voluntarily), alleging that Blaschek had not fairly
compensated him for his work on BA101. He raised four legal theories: (1) breach of
No. 19‐1852                                                                            Page 3

contract (based on the agreement with the University, which he attached to his
complaint); (2) quantum meruit; (3) conversion; and (4) fraud.

       Blaschek filed a motion to dismiss, which the district court granted. On the
claims for breach of contract and quantum meruit, the court relied on the licensing
agreement that Annous attached to his complaint. See FED. R. CIV. P. 10(c); see also ADM
All. Nutrition, Inc. v. SGA Pharm Lab, Inc., 877 F.3d 742, 745–46 (7th Cir. 2017). Based on
that contract, which the court ruled defined the parties’ relationship, Blaschek had no
duty to pay Annous a percentage of the proceeds from the sale of his venture, so both
claims failed. Next, the court dismissed Annous’s conversion claim, because Annous
had not alleged a protected interest in the underlying technology. The court also
dismissed the fraud count, reasoning that Annous failed to allege that Blaschek had lied
or violated a duty to speak. In the alternative, the court also ruled that these last three
claims were barred by the Illinois five‐year statute of limitations.

       On appeal, Annous challenges most of these dismissals and seeks a remand so
that he can amend his complaint to add more legal theories. (He has abandoned his
conversion claim, so we leave that issue alone.) We review de novo a dismissal for
failure to state a claim. Warciak v. Subway Rests., Inc., 949 F.3d 354, 356 (7th Cir. 2020).

        We first consider the dismissal of Annous’s breach of contract claim. The only
contract that he relies upon is the revenue‐sharing agreement that, in his words, is a
“valid and enforceable contract between Plaintiff, on the one hand, and the University
of Illinois (and its Board of Trustees), on the other.” By virtue of its terms, as Annous
himself describes them, this contract dictates the rights and obligations between him
and the University to share the latter’s licensing revenue, not between him and Blaschek
to share anything. It required the University to give to Annous a portion of the proceeds
that it received from the licensing the ‘717 patent and related technology, and the
University did so. The money that Blaschek received from the sale of his venture, or
from other sources, is not governed by this agreement. See Urban Sites of Chi., LLC v.
Crown Castle USA, 979 N.E.2d 480, 491 (Ill. App. Ct. 2012) (party bound by clear
language of written agreement which contained entire agreement between parties).

       Annous offers two responses, but neither persuades us. First, he argues that he
was an intended third‐party beneficiary of the revenue‐sharing agreement, and
therefore deserves more money from it, because he was named a co‐creator in it. But
Annous was a party to this agreement, and a third‐party beneficiary is a person who is
not named a party to the contract. See Estate of Willis v. Kiferbaum Const. Corp.,
No. 19‐1852                                                                         Page 4

830 N.E.2d 636, 642 (Ill. 2005); Carlson v. Rehab. Inst. of Chi., 50 N.E.3d 1250, 1256
(Ill. App. 2016). Second, Annous suggests that we should remand the case and allow
him to amend his complaint to plead claims for promissory or equitable estoppel. But
Annous had already received two opportunities to amend his complaint, and he took
advantage of them. The district court is not required to offer him another opportunity to
add claims that he could have presented earlier. Freeman v. Metro. Water Reclamation
Dist. of Greater Chicago, 927 F.3d 961, 966 (7th Cir. 2019). Nor are we required to consider
them: By saving some legal theories for appeal and not presenting them first to the
district court, Annous has forfeited them. See Avila v. CitiMortgage, Inc., 801 F.3d 777,
783 (7th Cir. 2015).

        Finally, Annous contends that he adequately pleaded claims for quantum meruit
and fraud. But these claims are barred by the statute of limitations. See Brooks v. Ross,
578 F.3d 574, 579 (7th Cir. 2009) (appropriate to consider a statute of limitations defense
where “the relevant dates are set forth unambiguously in the complaint”). These claims
are subject to the Illinois five‐year statute of limitations. 735 ILCS 5/13‐205. Under
Illinois law, these claims accrued as soon as the plaintiff should have discovered his
injury. Golla v. Gen. Motors Corp., 657 N.E.2d 894, 901 (Ill. 1995). As the district court
correctly noted, Annous knew of his injuries by February 2013, at the latest. That is
when, according to his complaint and exhibits, he received a letter from the University
informing him that it had licensed the ’717 patent to Blaschek’s venture, that Eastman
paid Blaschek to buy the venture, and that Eastman received a license for the patent.
When he sued in March 2018, more than five years later, the limitations period had
expired.
                                                                                   AFFIRMED