Stark v. Advanced Magnetics, Inc.

• Decision Date: 01 July 1994
• Docket Number: No. 93-1443,93-1443
• Citation: 31 USPQ2d 1290,29 F.3d 1570
• Parties: , 31 U.S.P.Q.2d 1290 Dr. David D. STARK, Plaintiff-Appellant, v. ADVANCED MAGNETICS, INC., and Jerome Goldstein, Ernest V. Groman and Lee Josephson, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1570

29 F.3d 1570

63 USLW 2079, 31 U.S.P.Q.2d 1290

Dr. David D. STARK, Plaintiff-Appellant, v. ADVANCED MAGNETICS, INC., and Jerome Goldstein, Ernest V Groman and Lee Josephson, Defendants-Appellees.

No. 93-1443.

United States Court of Appeals Federal Circuit.

July 1, 1994.

Henry C. Dinger, Goodwin, Procter & Hoar, Boston, MA, argued for plaintiff-appellant. With him on the brief were Kenneth J. Parsigian and Mary M. Diggins.

David S. Godkin, Testa, Hurwitz & Thibeault, Boston, MA, argued for defendants-appellees. With him on the brief was Richard S. Sanders.

Before NEWMAN, CLEVENGER, and RADER, Circuit Judges.

PAULINE NEWMAN, Circuit Judge.

Dr. David D. Stark appeals the summary judgment of the United States District Court for the District of Massachusetts, ¹ denying his request for correction of inventorship of six United States patents assigned to Advanced Magnetics, Inc. (AMI) and dismissing the accompanying state law counts. We vacate the grant of summary judgment as based on an incorrect legal theory, and remand for determination of the merits of his claims.

Background

Dr. Stark, a physician specializing in radiology, collaborated with AMI in certain experimental studies that he states relate to the patented subject matter. The first of the six patents was Patent No. 4,770,183 issued on September 13, 1988, entitled "Biologically Degradable Superparamagnetic Particles for Use as Nuclear Magnetic Resonance Imaging Agents" (the '183 patent). This patent was mentioned by title in AMI's Annual Report for the year 1988. The Annual Report referred to AMI's collaboration with Dr. Stark.

Five additional patents were obtained by AMI: Patent No. 4,827,945 issued May 9, 1989, entitled "Biologically Degradable Superparamagnetic Materials for Use in Clinical Applications"; Patent No. 4,951,675 issued August 28, 1990, entitled "Biodegradable Superparamagnetic Metal Oxides as Contrast Agents for MR Imaging"; Patent No. 5,055,288 issued October 8, 1991, entitled "Vascular Magnetic Imaging Method and Agent Comprising Biodegradable Superparamagnetic Metal Oxides"; Patent No. 5,069,216 issued December 3, 1991, entitled "Silanized Biodegradable Superparamagnetic Metal Oxides as Contrast Agents for Imaging the Gastrointestinal Tract"; and Patent No. 5,102,652 issued April 7, 1992, entitled "Low Molecular Weight Carbohydrates as Additives to Stabilize Metal Oxide Compositions". Dr. Stark was not named as an inventor of any of the six patents.

On September 3, 1992 Dr. Stark filed the suit here on appeal. He asserted that he is the sole or a joint inventor of the subject matter claimed in the patents and requested correction of inventorship in accordance with 35 U.S.C. Sec. 256. Dr. Stark also charged AMI with breach of the duty of good faith and fair dealing, breach of implied contract, unjust enrichment, misappropriation of trade secrets, conversion, negligent misrepresentation, misrepresentation, and unfair trade practices, all in violation of Massachusetts law.

The district court granted summary judgment to AMI with respect to correction of inventorship. The court held that Dr. Stark knew or should have known of the existence of the '183 patent when he received the Annual Report in early 1989, and that he had not acted diligently in seeking the correction. The summary judgment was applied to all six patents. The state law tort claims were dismissed as barred by the three-year statute of limitations. The contract and unfair trade practice claims were also dismissed, the court ruling that Dr. Stark had one year from the date of dismissal to bring these claims in state court.

Summary judgment may be granted when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). When material facts are in dispute summary adjudication may nonetheless be appropriate if, with all factual inferences drawn in favor of the non-movant, the movant would nonetheless be entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 251-52, 106 S.Ct. 2505, 2511-12, 91 L.Ed.2d 202 (1986); Continental Can Co. USA v. Monsanto Co., 948 F.2d 1264, 1265, 20 USPQ2d 1746, 1747 (Fed.Cir.1991). The correct law must of course be applied, whether to undisputed facts or to disputed facts viewed favorably to the non-movant. See Anderson, 477 U.S. at 255, 106 S.Ct. at 2513-14 ("The evidence of the nonmovant is to be believed, and all justifiable inferences are to be drawn in his favor.") On these premises the appellate court determines, upon de novo review, whether the summary judgment was correctly granted as a matter of law. Quad Environmental Technologies Corp. v. Union Sanitary District, 946 F.2d 870, 872, 20 USPQ2d 1392, 1392 (Fed.Cir.1991).

I Correction of Inventorship

The statute requires that a patent application be filed in the name of the inventor or inventors, see 35 U.S.C. Secs. 111, 115, and 116, and permits the correction of non-fraudulent errors in inventorship. 35 U.S.C. Sec. 116 p 3 authorizes correction of inventorship in pending applications, and 35 U.S.C. Sec. 256 applies to issued patents. In the latter case correction may be had by application to the Commissioner, or by way of judicial action:

35 U.S.C. Sec. 256. Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent and such error arose without any deceptive intention on his part, the Commissioner may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error.

The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Commissioner shall issue a certificate accordingly.

Before the enactment of Sec. 256, incorrect inventorship of an issued patent would simply invalidate the patent. The purpose of Sec. 256 was to provide a remedy for a bona fide mistake in inventorship. S.Rep. No. 1979, 82nd Cong., 2d Sess. 7 (1952), reprinted in 1952 U.S.C.C.A.N. 2394, 2401.

Section 256 does not limit the time during which inventorship can be corrected. Advanced Cardiovascular Systems, Inc. v. SciMed Life Systems, Inc., 988 F.2d 1157, 1162, 26 USPQ2d 1038, 1042 (Fed.Cir.1993) ("Since the defense of patent invalidity based on incorrect inventorship can be raised at any time, correction of inventorship should be similarly available at any time.") Section 256 thus serves the public policy of preserving property rights from avoidable forfeiture. See Henderson v. Carbondale Coal & Coke Co., 140 U.S. 25, 33, 11 S.Ct. 691, 694, 35 L.Ed. 332 (1891) ("[F]orfeitures are never favored. Equity always leans against them, and only decrees in their favor when there is full, clear and strict proof of a legal right thereto.")

Balancing these considerations, equity disfavors undue and prejudicial delay by a person who may have an interest in the property of another. Synthesizing these equitable interests, the defenses of laches and estoppel have been applied in actions under Sec. 256. Advanced Cardiovascular, 988 F.2d at 1163, 26 USPQ2d at 1043. See generally Galliher v. Cadwell, 145 U.S. 368, 373, 12 S.Ct. 873, 875, 36 L.Ed. 738 (1892) ("laches is not like limitation, a mere matter of time; but principally a question of the inequity of permitting the claim to be enforced--an inequity founded upon some change in the condition or relations of the property or the parties.")

A

AMI moved for, and the district court granted, summary judgment based on lack of diligence on the part of Dr. Stark in seeking judicial correction of inventorship.

Lack of diligence may be an appropriate basis for barring legal action when there is an affirmative obligation on the claimant to act promptly and without significant pause in establishing a legal right. The common law has recognized that varying degrees of diligence may be required, depending on the circumstances. For example, a higher degree of diligence is appropriate when the claimant is chargeable with injury or disadvantage to another due to the claimant's failure to act expeditiously:

It is, however, a sound rule, as to diligence, that the party must proportion his care to the injury likely to accrue to others by any improvidence on his part; and the graver, more important, or valuable the interests involved, and the more imminent the peril, the more is the vigilance required to constitute diligence.

26A C.J.S. Diligence at 943-44 (1956) (citations omitted).

Thus there are circumstances wherein diligence is an appropriate requisite to pursuit of a particular legal right, whether or not the defense of laches or estoppel may be invoked against the claimant. In some circumstances the law will presume injury or disadvantage due to delay, and diligence becomes an absolute obligation. Such is the premise of 37 C.F.R. Sec. 1.48, the regulation on which the district court relied in requiring diligence of Dr. Stark. However, this reliance was incorrectly placed, for Sec. 1.48 implements not 35 U.S.C. Sec. 256, but 35 U.S.C. Sec. 116:

37 C.F.R. Sec. 1.48 Correction of inventorship.

(a) If the correct inventor or inventors are not named in an application for patent through error without any deceptive intention on the part of the actual inventor or inventors, the application may be amended to name only the actual inventor or inventors. Such amendment must be diligently made and must be accompanied by:

(1) a petition including a statement of facts verified by the original named inventor or inventors establishing when...