Ultra-Precision Mfg., Ltd. v. Ford Motor Co.

• Decision Date: 15 June 2005
• Docket Number: No. 04-1329.,04-1329.
• Citation: 411 F.3d 1369
• Parties: ULTRA-PRECISION MANUFACTURING, LTD., Plaintiff-Appellant, v. FORD MOTOR COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

411 F.3d 1369

ULTRA-PRECISION MANUFACTURING, LTD., Plaintiff-Appellant, v. FORD MOTOR COMPANY, Defendant-Appellee.

No. 04-1329.

United States Court of Appeals, Federal Circuit.

June 15, 2005.

COPYRIGHT MATERIAL OMITTED

Andrew Kochanowski, Sommers, Schwartz, Silver & Schwartz, P.C., of Southfield, Michigan, argued for plaintiff-appellant. With him on the brief was James J. Vlasic. Of counsel on the brief was Michael H. Baniak, Baniak Pine & Gannon, of Chicago, Illinois.

Ernie L. Brooks, Brooks Kushman P.C., of Southfield, Michigan, argued for defendant-appellee. With him on the brief were Frank A. Angileri and Marc Lorelli.

Before MAYER,^* CLEVENGER, and LINN, Circuit Judges.

LINN, Circuit Judge.

Ultra-Precision Manufacturing, Ltd., ("Ultra-Precision") appeals from a judgment of the United States District Court for the Eastern District of Michigan ("district court") denying Ultra-Precision's claim that Ross Herron ("Herron") and Gary Beard ("Beard") were joint inventors of U.S. Patent No. 5,236,312 ("the '312 patent"). Ultra-Precision Mfg., Ltd. v. Ford Motor Co., No. 01-70302 (E.D.Mich. March 30, 2004) ("Inventorship Opinion"); Ultra-Precision Mfg., Ltd. v. Ford Motor Co., No. 01-70302 (E.D.Mich. March 30, 2004) ("Final Judgment Order"). Ultra-Precision also appeals from the district court's grant of summary judgment to Ford on Ultra-Precision's unjust enrichment claim, which the district court held preempted, as pled, by federal patent law. Ultra-Precision Mfg., Ltd. v. Ford Motor Co., No. 01-70302 (E.D.Mich. Sept. 23, 2003) ("Nunc Pro Tunc Order"); Ultra-Precision Mfg., Ltd. v. Ford Motor Co., No. 01-70302 (E.D.Mich. Sept. 23, 2003) ("Summary Judgment Order II"). Because the district court did not abuse its discretion in permitting Ford to raise the preemption defense during pre-trial motions, because the district court did not err in holding that Ultra-Precision's unjust enrichment claim was preempted as pled, because the district court's findings of fact with respect to inventorship were not clearly erroneous, and because its conclusion of law with respect to inventorship was correct, we affirm.

I. BACKGROUND

In the mid-1980's, Ford engaged in an effort to reduce excessive noise, vibration, and harshness ("NVH") in an air conditioner compressor it referred to as "the FX-15." Ford assigned several engineers including Eugene Warman ("Warman") to work on the project. By 1987, Ford had found at least a partial solution, which became the subject of a patent application that matured into U.S. Patent No. 4,929,157 ("the '157 patent"). Ford's solution described in the '157 patent added a pulse damper ("PD") tube at the outlet port of the compressor to reduce peak-to-peak pressure pulsations thought to be a cause of NVH. Although Ford's PD tube achieved a pressure pulse reduction meeting its objective, Ford did not commercialize its PD tube because of concerns about possible damage from the accumulation of liquid refrigerant in compressors incorporating this design.

In 1988, Frank Sullivan, an employee in Ford's Climate Control Division, reached out to Herron and Beard at Ultra-Precision for help in solving the NVH problem. Herron, an industrial engineer, had worked for Ford until 1957. Beard had worked as a product design engineer at Ford until he retired in 1988. After Beard's retirement, Herron and Beard formed Ultra-Precision, which was engaged in the business of designing, engineering, and manufacturing prototype equipment for the automotive industry. Responding to Sullivan's request, Herron and Beard eventually met with Warman, who explained Ford's interest in solving the NVH problem by finding a way to lower the peak-to-peak pressure pulse level below 6.25 PSI while eliminating the need for an in-line muffler. When Herron and Beard met with Warman, Ultra-Precision believed that the in-line muffler added approximately five dollars to the cost of each unit and that it could solve the NVH problem and eliminate the in-line muffler for a fraction of the muffler's cost on a per unit basis. There is nothing in the record to indicate that Ultra-Precision and Ford ever entered into a written agreement. Notwithstanding the absence of any written agreement or confidentiality undertaking, Herron and Beard set out to work on the project. They disassembled an FX-15 compressor to determine how it functioned, studied its construction and operation, and, on January 18, 1989, conceptualized a solution.

They theorized that pulses of pressurized refrigerant from each side of the five reciprocating, cylindrically arranged cylinders within the compressor were superimposing into five large pressure pulses before the pulses left the discharge side of the compressor, thereby causing NVH. Their solution was to change or manipulate the paths of the pulses to make gas flow roughly equidistant and thereby maintain pulse separation. To accomplish that, they used a PD tube to redirect gas much like Ford's earlier PD tube. However, Ultra-Precision's tube had a tighter fit in the outlet port and employed grooves to better reroute and directionalize fluid flow. Herron and Beard delivered prototypes of their PD tube to Ford for testing. Ford conducted tests and Warman informed Herron and Beard that the peak-to-peak discharge level of their PD tube was 4.7 PSI, well within Ford's 6.25 PSI upper limit target. Herron and Beard told Warman that a compressor housing could be integrally cast to incorporate their new design. In May 1989, Herron and Beard understood that their PD tube design was approved for production by Ford. They subsequently presented Ford with a cost of $0.31 per unit.

On July 7, 1989, Herron and Beard filed a patent application on their PD tube invention. The application matured into U.S. Patent No. 4,934,482 ("the ' 482 patent"). On June 15, 1990, Herron and Beard filed a continuation-in-part application, which matured into U.S. Patent No. 5,133,647 ("the '647 patent"). Herron and Beard assigned both patents to Ultra-Precision. To obtain the '482 patent, Herron and Beard had to distinguish their invention over Ford's earlier '157 patent. The '482 patent thus called for the use of "grooves" on the PD tube's outer surface, which would direct the pulses through the valve plate in a controlled manner. See, e.g.,'482 patent, col. 5, II. 32-47. The '647 patent mentioned that the pulse damper could be integrally cast into the compressor housing. '647 patent, col. 5, II. 61-63.

In July 1990, Herron and Beard met with Jim Graham, an employee in Ford's vehicle office, to discuss installation of compressors with Ultra-Precision's PD tube into concept cars. In October 1990, Herron delivered compressors to Graham with Ultra-Precision PD tubes installed for testing. But shortly thereafter, Herron and Beard received a letter dated October 18, 1990, from Thomas E. Finn ("Finn"), a Ford engineer who had replaced Warman, complaining about Herron and Beard's "actively trying to sell the merits of the P.D. Tube to various vehicle offices" within Ford rather than Ford's Climate Control Division and the inefficiencies attendant thereto. In the letter, Finn stated that he was "well aware of the merits of the P.D. Tube" and that he was "investigating its performance with other design changes." He also remarked that the PD tube "does not work well alone in our system," and "[i]f it had, [Ford] would have implemented the change." Finn advised Herron and Beard to direct their future contacts to the Climate Control Division. After concluding that Ford was not interested, Ultra-Precision decided simply to move on to other projects, leaving Finn's letter as the last communication between Ultra-Precision and Ford.

Finn and his team continued to work on solving the FX-15's NVH problem, and sometime after December 7, 1990, studied a compressor made by Nippondenso ("Denso"). The Denso compressor had an internal cast-in muffler cavity. The gases of the Denso device exited from the center and did not have the axial offset of the FX-15, i.e., the additional distance the gas from the front had to travel to reach the rear discharge cavity. To correct for axial offset in the FX-15, Finn modified the rear cylinder head to include an internally cast "arcuate transfer cavity," as shown below.

NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE

By design, the travel length of the rear gases through the arcuate cavity was made approximately equal to the travel length of the front gases through the axial discharge cavity. In this way, Ford corrected for NVH caused by "axial offset."

Finn also theorized that because each compressor employed five double-ended pistons in a cylindrical array, the travel distances between the respective discharge ports of the cylinders and the compressor output differed circumferentially and introduced what he called "cylinder offset." He corrected for "cylinder offset" by moving the rear discharge port circumferentially by 144 to a position between cylinders (2) and (4), thereby equalizing the lengths from opposing cylinders to the discharge port of the compressor. On December 23, 1991, Finn's team filed a patent application, which matured into the '312 patent.

In 1993, Ford began to incorporate Finn's redesigned compressor, designated "the FS-10," into its vehicles. In 2000, Herron and Beard noticed a Ford vehicle with an air conditioner compressor that did not have an in-line muffler, conducted an investigation, and discovered what they believed to be their solution embodied in the FS-10.

II. PROCEDURAL HISTORY

On January 22, 2001, Ultra-Precision filed suit against Ford on four counts: (1) unjust enrichment; (2) correction of inventorship; (3) commercial misappropriation; and (4) breach of contract. (Compl. at 6-8.) Ultra-Precision did not claim infringement of its '482 or '647 patents, misappropriation of a trade secret, or breach of a confidentiality agreement. Indeed, Ultra-Precision's complaint did...