Court Opinion

ID: 2970946
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Date Created: 2015-09-22 16:25:39.768512+00
Date Added: 2024-06-11T12:09:53.957417
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                Pursuant to Sixth Circuit Rule 206                    2    E.I. Du Pont de Nemours v. Okuley           No. 01-3074
        ELECTRONIC CITATION: 2003 FED App. 0331P (6th Cir.)
                    File Name: 03a0331p.06                                                _________________
                                                                                               COUNSEL
UNITED STATES COURT OF APPEALS
                                                                      ARGUED: Edward A. Matto, BRICKER & ECKLER,
                  FOR THE SIXTH CIRCUIT                               Columbus, Ohio, for Appellant. C. Craig Woods, SQUIRE,
                    _________________                                 SANDERS & DEMPSEY, Columbus, Ohio, for Appellee.
                                                                      ON BRIEF: Edward A. Matto, BRICKER & ECKLER,
 E.I. DU PONT DE NEMOU RS & X                                         Columbus, Ohio, Jerry K. Mueller, Jr., MUELLER &
 COMPANY ,                           -                                SMITH, Columbus, Ohio, for Appellant. C. Craig Woods,
                                                                      SQUIRE, SANDERS & DEMPSEY, Columbus, Ohio, for
              Plaintiff-Appellee, -                                   Appellee.
                                     -  No. 01-3074
                                     -
             v.                       >                                                   _________________
                                     ,
                                     -                                                        OPINION
 DR. JOHN JOSEPH OKULEY,             -                                                    _________________
           Defendant-Appellant. -
                                     -                                   BOGGS, Circuit Judge. The defendant, Dr. John Joseph
                                    N                                 Okuley, appeals the summary judgment for the plaintiff, E.I.
        Appeal from the United States District Court                  Du Pont de Nemours and Company (“DuPont”), in a dispute
       for the Southern District of Ohio at Columbus.                 involving both contract and patent elements. Okuley helped
     No. 97-01205—John D. Holschuh, District Judge.                   discover FAD2, one of the genes encoding the Fatty Acid
                                                                      Desaturase enzyme, while an employee of Washington State
                  Argued: September 12, 2002                          University (“WSU”), which had a research collaboration
                                                                      agreement (“RCA”) with DuPont that assigned to DuPont
            Decided and Filed: September 17, 2003                     rights to intellectual property discovered in the course of the
                                                                      collaboration. When Okuley ceased cooperating with the
  Before: BOGGS and COLE, Circuit Judges; and BELL,                   processing of DuPont’s application for a patent on FAD2,
                Chief District Judge.*                                DuPont filed suit in the United State District Court for the
                                                                      Southern District of Ohio for a declaratory judgment that it
                                                                      owned FAD2 and for specific enforcement of Okuley’s
                                                                      agreement to cooperate with DuPont. Okuley counterclaimed
                                                                      for a declaratory judgment that he was the inventor of FAD2
                                                                      and to rescind his personal assignment of patent rights to
                                                                      DuPont. The district court granted summary judgment to
                                                                      DuPont on all issues. After initially appealing the district
    *
                                                                      court’s decision to this court, Okuley moved to transfer the
     The Honorable Robert Holmes Bell, Chief United States District   appeal to the Court of Appeals for the Federal Circuit. We
Judge for the Western District of Michigan, sitting by designation.

                                1
No. 01-3074         E.I. Du Pont de Nemours v. Okuley         3    4     E.I. Du Pont de Nemours v. Okuley             No. 01-3074

take appellate jurisdiction of this matter and affirm the             On November 3, 1997, DuPont filed a three-count
judgment of the district court.                                    complaint against Okuley in the United States District Court
                                                                   for the Southern District of Ohio. Subject matter jurisdiction
                               I                                   was based on diversity, DuPont being a Delaware
                                                                   corporation, with its principal place of business in Delaware,
   In 1991, Okuley, a Ph.D. in molecular biology, began work       and Okuley a citizen of Ohio, and the matter in controversy
at WSU on a project on plant fat metabolism, with the aim of       meeting the jurisdictional amount. The first count sought a
isolating and patenting genes that could increase the ratio        declaratory judgment that DuPont had exclusive ownership of
between beneficial fatty acids and harmful saturated fats.         the FAD2 gene, at least vis-a-vis Okuley. The second count
Under the WSU Faculty Manual (“Faculty Manual”),                   sought specific enforcement of Okuley’s contractual duties to
employees assigned to WSU any intellectual property arising        continue executing documents necessary for DuPont to pursue
out of their employment, and WSU and DuPont were                   the FAD2 patent. The third count sought the same relief on
operating under the RCA regarding the assignment of the            the basis of Okuley’s common law duties. Okuley
intellectual property arising out of this project. In August       counterclaimed, seeking rescission of his personal assignment
1992, while still employed at WSU, but while working at a          of FAD2 to DuPont and a judicial declaration that Okuley
borrowed laboratory at Ohio State University (“OSU”),              was the sole owner and inventor of FAD2. On November 1,
Okuley successfully identified the FAD2 gene and                   2000, after extensive discovery, the parties filed cross-
immediately informed both his supervisor at WSU and                motions for summary judgment on all counts. The district
DuPont of his discovery. On November 17, DuPont initiated          court granted summary judgment to DuPont on all issues. It
the patent process on FAD2. After some initial disagreement        concluded that it had no jurisdiction to entertain Okuley’s
about the inventorship of FAD2, the issue was resolved in          claim to inventorship, that DuPont owned the rights to FAD2
May 1993 by DuPont agreeing that inventorship was shared           under its agreement with WSU, that Okuley was bound by the
between Okuley and another WSU scientist and Okuley                Faculty Manual to assign all interests in FAD2 to DuPont;
agreeing to assign to DuPont his “entire right, title and          and that Okuley’s personal, written assignment to DuPont
interest” in FAD2 and obligating himself to “execute all           was valid, enforceable, and not subject to rescission. Okuley
applications, papers or instruments necessary or required” for     timely appealed the district court’s judgment to this court.
DuPont to obtain the patent. In December 1994, relations           After filing his proof brief in this court, Okuley moved to
under this agreement between DuPont and Okuley broke               transfer the appeal to the Court of Appeals for the Federal
down over Okuley’s refusal to sign any more of the papers          Circuit, on the basis that it had exclusive appellate jurisdiction
necessary for the patent application, unless he received “a        in this case.
reasonable royalty for the use of this invention.” DuPont
thereafter filed a petition with the Patent and Trademark                                         II
Office (“PTO”) to process the FAD2 patent application
without Okuley’s consent. At the time briefs in this case were        We first turn to the issue of proper appellate jurisdiction.
filed, both the petition and the application were still pending,   This court has jurisdiction over almost all appeals from final
but on April 16, 2002, the PTO issued the patent litigated         decisions of district courts within its geographical boundaries.
here.                                                              28 U.S.C. § 1294. However, the Court of Appeals for the
                                                                   Federal Circuit has exclusive jurisdiction over appeals from
                                                                   final decisions of a district court, if the jurisdiction of that
No. 01-3074         E.I. Du Pont de Nemours v. Okuley           5    6     E.I. Du Pont de Nemours v. Okuley             No. 01-3074

court was based, in whole or in part, on 28 U.S.C. § 1338(a),        contractual privity with the plaintiff. If the father was in fact,
subject to certain exceptions not applicable here. 28 U.S.C.         as the patent application claimed, an inventor of the disputed
§ 1295. District court jurisdiction under § 1338(a) extends          patent, Rustevader had no right to the assignment of his
“only to those cases in which a well-pleaded complaint               interest. If the son was the sole inventor and the contract
establishes either that federal patent law creates the cause of      assigned his rights to Rustevader, Rustevader had a right to
action or that the plaintiff’s right to relief necessarily depends   the assignment of both father’s and son’s interest. Therefore,
on resolution of a substantial question of federal patent law,       Rustevader’s claim against the father required a resolution of
in that patent law is a necessary element of one of the well-        the question of inventorship and unintentionally invoked
pleaded claims.” Christianson v. Colt Indus. Operating               federal patent jurisdiction.
Corp., 486 U.S. 800, 809 (1988). The seemingly amorphous
“substantial question of federal patent law” component of the           This court has appellate jurisdiction if, and only if,
test merely makes clear that a plaintiff cannot avoid federal        DuPont’s well-pleaded complaint necessarily requires
patent jurisdiction by leaving out an element necessary to the       resolution of the question of inventorship. The only claim in
success of his claim, any more than a plaintiff can create           DuPont’s complaint relevant to this question is the request for
federal jurisdiction by including extraneous references to           a declaratory judgment that DuPont had “sole title to [the
federal law. Ibid. Moreover, it is important to note that only       FAD2] intellectual property.” At first blush, to determine the
inventorship, the “question of who actually invented the             validity of such a broad claim would appear to require
subject matter claimed in a patent,” is a question of federal        resolution of the inventorship question, but a focus on the
patent law. Beech Aircraft Corp. v. Edo Corp., 990 F.2d              issues facing the court leads to the opposite conclusion. First,
1237, 1248 (Fed. Cir. 1993). “Ownership, however, is a               the district court only had the power to adjudicate the relative
question of who owns legal title to the subject matter claimed       rights of the parties. Even if a hypothetical third party X had
in a patent, patents having the attributes of personal property”     been the true inventor of the FAD2 gene, no judgment could
and is not a question of federal patent law. Ibid.                   have affected X’s rights, as the district court never took
                                                                     personal jurisdiction over X. Therefore, the court needed
   These principles are illustrated by Rustevader Corp. v.           concern itself only with the relative rights of DuPont and
Cowatch, 842 F. Supp. 171 (W.D. Pa. 1993). In that case,             Okuley, regardless of the language of the complaint. The
Rustevader sued its former employee, Cowatch, and                    broad language of the complaint was extraneous to the
Cowatch’s father in state court. The defendants had jointly          resolution of the matter between the parties to the case.
taken out a patent and Rustevader demanded assignment of             DuPont could not create federal patent jurisdiction by making
the patent under a breach of employment contract theory. The         the unnecessarily broad claim. Okuley cannot now use the
defendants removed to federal court on the basis of federal          overbreadth of DuPont’s complaint to claim federal patent
patent jurisdiction and Rustevader asked for remand on the           jurisdiction.
basis that there was no federal jurisdiction. The court
reasoned that if the suit had been filed exclusively against the       Second, as between Okuley and DuPont, the district court
former employee, the court could have ordered an assignment          could have resolved the relative interests in FAD2 on several
to the employer on the basis of contract, regardless of whether      theories. For example, it could have determined that one of
the son was the inventor, and a resolution of the inventorship       DuPont’s other researchers was the sole inventor of FAD2
issue would not have been necessary. However, the plaintiff          and that Okuley therefore had no right to the intellectual
also made a claim against the father, who was not in                 property.    That would have required answering the
No. 01-3074             E.I. Du Pont de Nemours v. Okuley                  7    8      E.I. Du Pont de Nemours v. Okuley                  No. 01-3074

inventorship question. Alternatively, the district court could                  proceedings below, Okuley had argued that the district court
have reasoned, as in fact it ultimately did, that if Okuley was                 had been granted jurisdiction in two sections of the patent
the inventor of FAD2, he contractually assigned all his                         code.
interests to DuPont. That would not have required answering
the inventorship question. If there are several alternative                         Whenever through error a person is named in an
theories on which a claim may succeed, patent law                                   application for patent as the inventor, or through error an
jurisdiction is only invoked when all alternative theories                          inventor is not named in an application, and such error
necessarily state a complaint under the patent law.                                 arose without any deceptive intention on his part, the
Christianson, 486 U.S. at 810.1 As DuPont’s assignment                              Director may permit the application to be amended
theory sounded in contract, not patent law, DuPont’s claim to                       accordingly, under such terms as he prescribes.
the sole ownership of the gene did not invoke patent law
jurisdiction.2 Therefore, appellate jurisdiction lies with this                 35 U.S.C. § 116 (emphases added).
court.
                                                                                    Whenever through error a person is named in an issued
  A separate jurisdictional issue arises with respect to                            patent as the inventor, or through error an inventor is not
Okuley’s counter-claim of sole inventorship, which the                              named in an issued patent and such error arose without
district court had dismissed for lack of jurisdiction.3 In the                      any deceptive intention on his part, the Director may, on
                                                                                    application of all the parties and assignees, with proof of
                                                                                    the facts and such other requirements as may be imposed,
    1                                                                               issue a certificate correcting such error. . . . The court
      The alternative rule, that federal patent jurisdiction is invoked
whenever any of the theories on the basis of which a claim may succeed
                                                                                    before which such matter is called in question may order
necessarily states a complaint under patent law, would eradicate Beech              correction of the patent on notice and hearing of all
Aircraft’s distinction between inventorship actions, arising under the              parties concerned and the Director shall issue a
federal patent law, and patent ownership actions, not arising under the             certificate accordingly.
federal patent law, as any patent ownership claim could hypothetically
succeed on the basis that the claimant was the inventor, rather than the        35 U.S.C. § 256 (emphases added).
contractual purchaser of the invention. Such an alternative rule would
also be contrary to Christianson.
                                                                                   We affirm the holding of the district court on the basis of
    2
      It is worth noting that, while of course subject matter jurisdiction is
                                                                                the language of § 116 and § 256 and their notable differences.
decided on the basis of the well-pleaded complaint and not the well-tried       At the time of the trial and the briefs, no patent had yet been
case, over the course of the four-year litigation there appears to have been    issued. Therefore, only § 116 applied. Section 116 does not
abso lutely no disagree ment betwe en the parties that Okuley was an            mention courts, but rather gives discretion to the Director of
inventor of FA D2 . All issues in this case were decided solely on the          the PTO to permit amendments to patent applications and to
validity and construction of agreements between the parties and the
involved universities.
                                                                                do so under such terms as the Director deems proper. Section
    3
      Okuley’s counter-claim does not affec t the issue o f appellate
jurisdic tion of the Federal Circuit. Even if he had standing to sue to         of the plaintiff’s complaint–cannot serve as the basis for ‘arising under’
clarify invento rship, still no federal patent ap pellate jurisdiction wo uld   jurisdiction.” Holmes Group, Inc. v. Vornado Air Circulation Sys., 535
exist, because Okuley’s inventorship claims were counter-claims. “[A]           U.S. 826 , 831 (2002). Hence a p atent-law counter-claim does not create
counterclaim–which appears as part of the defendant’s answer, not as part       federal patent jurisdiction under § 1338.
No. 01-3074         E.I. Du Pont de Nemours v. Okuley         9    10       E.I. Du Pont de Nemours v. Okuley                 No. 01-3074

256, by contrast, explicitly mentions the courts and the           the contracts WSU entered with Okuley and DuPont in
authority of the courts to compel action by the Director.          Washington is Washington law. With respect to the
Comparing these two sections, it is clear that Congress            assignment executed in Ohio and the interpretation of Ohio
intended to draw a distinction between patent applications and     statutes, the source is Ohio law.
issued patents. While the patent is still in the process of
gestation, it is solely within the authority of the Director. As     The judgment appealed was a grant of summary judgment,
soon as the patent actually comes into existence, the federal      so we apply the well-known summary judgment standard:
courts are empowered to correct any error that the Director
may have committed. Such a scheme avoids premature                   This court reviews grants of summary judgment de novo,
litigation and litigation that could become futile if the            under the same standard as the district court. Summary
Director declined to grant a patent or voluntarily acceded to        judgment is appropriate when the pleadings, depositions,
the claims of the would-be inventor prior to issue. We               answers to interrogatories, and admissions on file,
conclude, therefore, that the district court lacked jurisdiction     together with the affidavits, if any, show that there is no
to review the inventorship of an unissued patent.                    genuine issue as to any material fact and that the moving
                                                                     party is entitled to a judgment as a matter of law. In
   After the briefs in this case were filed, the PTO issued a        reviewing a summary judgment, this court reviews the
patent naming Okuley, among others, as inventor. While this          factual evidence and draws all reasonable inferences in
may have created § 256 jurisdiction to review Okuley’s               favor of the non-moving party. To prevail, the
inventorship claim, in reviewing the district court’s judgment       non-movant must show sufficient evidence to create a
we consider the facts as faced by that court, without prejudice      genuine issue of material fact. A mere scintilla of
to a § 256 claim should Okuley choose to file such an action.        evidence will not suffice for the non-movant to overturn
In this appeal, Okuley has dropped any argument that § 256           the summary judgment, but instead, the non-movant
was applicable and merely made a perfunctory statement that          must show evidence on which the jury could reasonably
§ 116 vests jurisdiction in the courts implicitly because            find for the non-movant.
“inventorship is a question of law.” However, federal courts
have not been granted jurisdiction to settle all questions of      Cornist v. B.J.T. Auto Sales, Inc., 272 F.3d 322, 326 (6th Cir.
law.                                                               2001) (internal citations and quotation marks omitted).

                              III                                     DuPont’s claim of ownership to FAD2 rests on the basis of
                                                                   two contracts: the Faculty Manual and the RCA.4 According
  Having disposed of the somewhat thorny issues of federal         to the Faculty Manual, WSU holds “ownership in patents and
patent jurisdiction, we now turn to the substance of the claims
adjudicated by the district court and appealed here. These are
questions of property and contract law and, as explained                4
                                                                          DuPo nt also argues that O kuley’s person al assignm ent was legally
above, do not arise under federal law, patent law or otherwise.    valid and sufficient to transfer whatever interest in FAD 2 rem ained with
The district court’s jurisdiction was based on the diversity of    Okuley to DuPo nt. However, Okuley executed the assignment in reliance
the parties. When sitting in diversity, a federal court applies    on DuP ont’s claims that he was legally obligated to do so. W hether these
the substantive law of the state. Erie R. Co. v. Tompkins, 304     representations were accurate in turn depends on whether DuPont had a
U.S. 64, 78 (1938). Hence, our source of law with respect to       right to FAD2 before the assignment. Therefore this ground is not in fact
                                                                   indep endent and we do not rea ch it.
No. 01-3074          E.I. Du Pont de Nemours v. Okuley           11    12       E.I. Du Pont de Nemours v. Okuley                No. 01-3074

other non-patentable intellectual products . . . developed by its      contained an assignment to Okuley of FAD2, an action
employees as a result of their employment.” The parties do             undisputedly within OSU’s power. This assignment enabled
not dispute that this manual was a legally binding part of             Okuley to fulfill his pre-existing contractual obligation to
Okuley’s employment contract with WSU. See Thompson v.                 transfer FAD2 to WSU. Okuley argues that the assignment
St. Regis Paper Co., 685 P.2d 1081, 1087 (Wash. 1984)                  transferred FAD2 to him free and clear of any obligation. But
(recognizing that under Washington law employment manuals              even setting aside the question of whether OSU had the
can give rise to contractual claims). Under the RCA between            authority to void a contract to which it was not a party and
DuPont and WSU, WSU’s interest in FAD2 was transferred                 executed in another state, the language of the assignment is
to DuPont. In combination, these two contracts serve to                unambiguous. The assignment clearly states that it was
transfer FAD2 from Okuley to WSU and from WSU to                       “subject to any rights of [WSU] or its research sponsor
DuPont. Therefore DuPont owns FAD2. Against this                       [DuPont].” Therefore Okuley’s obligation to give FAD2 to
conclusion, Okuley raises a series of objections.                      WSU remained unaltered by the Ohio statute and the OSU
                                                                       waiver/assignment.5
  Okuley’s first and most novel objection is based on the fact
that he discovered FAD2 while working under a WSU                        Next, Okuley claims that if FAD2 became property of
employment contract, but in an OSU laboratory and using                WSU under the Faculty Manual, WSU failed to follow the
OSU equipment. Under Ohio statutory law, “[a]ll rights to              manual’s procedures and thus forfeited it back to him.6 The
and interests in discoveries, inventions, or patents which             Faculty Manual states that if WSU’s “Intellectual Property
result from research or investigation conducted in any . . .           Committee fails to notify the employee in writing of
facility of any state college or university, . . . shall be the sole   determination of ownership within fifty days of full
property of that college or university” Ohio Rev. Code                 disclosure, . . . the University’s rights in the patentable
§ 3345.14(B). Therefore ab initio the ownership of FAD2                property shall automatically become the property of the
vested in OSU, not Okuley. Nevertheless, the Ohio statute              employee.” It is a disputed question of fact whether Okuley
did not abrogate Okuley’s contract with WSU. Hence Okuley              made full disclosure to WSU, triggering the clause in the
was also under an obligation to transfer FAD2 to WSU–an                Faculty Manual. But even if the clause was triggered, it will
obligation he could not satisfy as at that time he did not own
FAD2. Had matters rested in this posture, interesting, but
quite different, litigation could have ensued involving WSU                 5
                                                                             That Okuley was no longer an employee of W SU at the time the
and OSU and including questions of the statute’s                       OSU waiver/assignm ent became effective is not relevant. Okuley’s
constitutionality under the Takings Clause.                            contractual obligation to give FAD 2 to W SU, incurred during the lifetime
                                                                       of the contract, survived until fulfilled.
  However, matters did not rest there. In 1993 , at Okuley’s                6
insistence, OSU–as apparently is its practice–explicitly                    Okuley now claims that his discovery was not covered under the
                                                                       Faculty Manual, because at the time of the discovery he was working at
waived its rights to FAD2. If OSU’s waiver was effective,              OSU and was using different methods than his W SU supervisor had
releasing any statutory rights that it enjoyed, the site of the        suggested. However, it is undisputed that he was still an employee of
research and the statute ceased to have any effect on this case.       W SU, using W SU and DuPont supplies, and working on the project that
However, even if, as Okuley argues, the mandatory language             he had been given by his WS U supervisors. M oreo ver, he immediately
of the statute prevents OSU from waiving its interest in               communicated his success to his W SU supervisor and D uPo nt. Therefore,
                                                                       Okuley’s claim of independence from WSU must fail. The Fac ulty
FAD2, the outcome is no different because the “waiver” also            Manua l confirms this understanding.
No. 01-3074           E.I. Du Pont de Nemours v. Okuley             13    14   E.I. Du Pont de Nemours v. Okuley            No. 01-3074

not avail Okuley for several reasons. First, the Faculty                  Okuley argues that it had expired before he even began his
Manual explicitly exempts property developed under an                     research. According to DuPont and WSU, Okuley’s
agreement with an outside sponsor from its return clause.7                discovery of FAD2 started the period and DuPont was able to
Second, the clause only vests WSU’s rights back with the                  isolate the gene almost immediately thereafter. Even if
employee. However, under the collaboration agreement with                 Okuley had standing to challenge the interpretation of a
DuPont, WSU did not have any rights in the property and                   contract to which the parties agreed, and his interpretation
only DuPont did. Therefore, WSU had nothing to return to                  were correct, which seems highly unlikely, the effect would
DuPont.                                                                   be merely to vest the property in WSU, not Okuley. For
                                                                          Okuley to obtain the patent, the court would also have to
  Okuley also contends that the patent for FAD2 was based                 agree with the above argument regarding the reversion of the
on additional “transformation work” that he performed after               patent to Okuley by inaction of WSU. As we do not, this
the end of the agreement between WSU and DuPont and that                  issue is moot.
DuPont incorporated in later versions of its patent application.
However, this transformation work was merely used to                                                    IV
confirm the identity and use of FAD2 covered under the
original patent application. As such it was, as the district                 For the foregoing reasons, the judgment of the district court
court found, a simple extension of the original patent                    is AFFIRMED.
application and hence falls under the Faculty Manual’s
language regarding “intellectual products . . . developed by its
employees as a result of their employment” and was assigned
to WSU.
  Okuley’s final argument is based upon a reinterpretation of
the RCA, to which he was not a party and with which all
parties to the contract disagree. Under the RCA, almost all
intellectual property rights arising from the research belongs
to DuPont. However, under a clause of the RCA, if DuPont
failed to isolate a gene resulting from the research within nine
months of the identification, and WSU succeeded where
DuPont had failed, the gene would belong to WSU and
DuPont would merely receive a license. Using strained
definitions of the conditions that start the nine-month period,

    7
     Okuley raises the question that the collaboration agreem ent with
DuPo nt was not a sponsorship agreement, because DuPont did not
provide funds for the research. However, both W SU and D uPont
construed the agreement as a sponsorship agreement and DuPont provided
valuab le consideration to WSU in the form of access to its database of
genetic material.