Memorylink Corp. v. Motorola Solutions, Inc.

• Decision Date: 05 December 2014
• Docket Number: No. 2014–1186.,2014–1186.
• Parties: MEMORYLINK CORP., a Wisconsin Corporation, Plaintiff–Appellant, v. MOTOROLA SOLUTIONS, INC. and MOTOROLA MOBILITY, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

773 F.3d 1266

113 U.S.P.Q.2d 1088

MEMORYLINK CORP., a Wisconsin Corporation, Plaintiff–Appellant

v.MOTOROLA SOLUTIONS, INC. and MOTOROLA MOBILITY, Inc., Defendants–Appellees.

No. 2014–1186.

United States Court of Appeals, Federal Circuit.

Dec. 5, 2014.

Matthew J. Cavanagh, McDonald Hopkins LLC, of Cleveland, OH, argued for plaintiff-appellant. With him on the brief were David B. Cupar ; and Richard N. Kessler and Peter T. Berk, of Chicago, IL.

Christopher Landau, Kirkland & Ellis LLP, of Washington, DC, argued for defendants-appellees. Of counsel on the brief were Anne M. Sidrys, Nyika O. Strickland, and Joel R. Merkin, of Chicago, IL. Of counsel was John C. O'Quinn, of Washington, DC.

Before LOURIE, MOORE, and O'MALLEY, Circuit Judges.

Opinion

LOURIE, Circuit Judge.

Memorylink Corp. (“Memorylink”) appeals from the decisions of the United States District Court for the Northern District of Illinois (i) granting summary judgment in favor of Motorola Solutions, Inc. and Motorola Mobility, Inc. (collectively, “Motorola”) on the contract and patent infringement claims, Memorylink Corp. v. Motorola, Inc., No. 08 C 3301, 2013 WL 4401676 (N.D.Ill. Aug. 15, 2013) (“Summary Judgment Opinion ”), and (ii) dismissing various tort claims as barred by the statute of limitations, Memorylink Corp. v. Motorola, Inc., No. 08 C 3301, 2009 WL 464338 (N.D.Ill. Feb. 23, 2009) (“Dismissal Opinion ”). Because we conclude that the district court did not err in granting summary judgment or in dismissing the tort claims, we affirm.

Background

In late 1997, Peter Strandwitz (“Strandwitz”) and Bob Kniskern (“Kniskern”) approached Motorola, seeking to jointly develop a handheld camera device that could wirelessly transmit and receive video signals. By early 1998, they had constructed prototypes with wireless radio boards and technical information from Motorola, and Strandwitz had formed Memorylink as a funding entity specifically for that venture.

After the first successful demonstration at Motorola's offices in January 1998, Strandwitz sent a letter to Motorola in which he “agree[d] that any patents would be jointly owned by Motorola and Memorylink” and that Motorola should “head up the patent investigation.” J.A. 4586. Strandwitz then sent Motorola a technical document that Kniskern drafted, entitled “Wireless Multimedia Core Technology Overview for Patent Review” (“Technology Overview”). After reviewing that document, Motorola's attorney Hugh Dunlop sent a letter to Strand-witz in April 1998 (the “Dunlop Letter”). J.A. 250–54. The Dunlop Letter described the features to be focused on for patent applications and stated the attorney's understanding that the inventors were Strandwitz, Kniskern, and two of Motorola's employees: Gary Schulz (“Schulz”) and Jan–Michel Wyckoff (“Wyckoff”). The letter explicitly asked for Strandwitz and Kniskern to “let [the attorney] know if [they] disagree[d] with this determination of inventorship.” J.A. 250. A proposed patent filing agreement was enclosed, which “contemplate[d] taking advantage of [Motorola's patent] department for preparation and filing of patent applications,” although “Motorola [was] open to alternative proposals” if Strandwitz and Kniskern preferred otherwise. J.A. 251. Attached to the proposed agreement was a copy of the Technology Overview, with what the Dunlop Letter explained were deletions relating to areas in which Motorola was previously involved and thus in which it could not enter into agreements that might result in joint ownership of intellectual property. Shortly thereafter, Strandwitz, Kniskern, Schulz, and Wyckoff all signed an invention disclosure.

In June 1998, all four designated inventors signed the Assignment and Agreement (“Assignment”), transferring their rights to both Motorola and Memorylink. J.A. 258–65. The Assignment begins with the statement, “[f]or and in consideration of the sum of One Dollar to us in hand paid, and other good and valuable consideration, the receipt of which is hereby acknowledged....” J.A. 258. The designated inventors also signed an inventor declaration for the patent application, which Motorola filed once the Assignment was executed. U.S. Patent 6,522,352 (“the '352 patent”), which lists Strandwitz, Kniskern, Schulz, and Wyckoff as inventors, issued in February 2003.

In December 1998, before the '352 patent issued, Memorylink retained counsel at an intellectual property law firm to “review the Memory Link/Motorola relationship” and “assess the existing Memory Link agreements.” J.A. 4241–42; see also J.A. 4244. The same law firm subsequently filed a divisional patent application in January 2003, which listed the same four inventors. However, when Memorylink conducted an external investigation in November 2007, it was advised by an unaffiliated attorney that Schulz and Wyckoff were not proper co-inventors.

Memorylink then filed suit against Motorola in June 2008, alleging patent infringement and various torts mostly sounding in fraud, and seeking a declaration that the Assignment was void for lack of consideration. In response, Motorola moved to dismiss the entire Complaint, arguing that, inter alia, the tort claims were barred by the five-year statute of limitations. The district court rejected Memorylink's argument that its claims did not accrue until the inventorship problem was discovered and dismissed most of the claims. Dismissal Opinion at *4–8. The court reasoned that because Memorylink insisted that Motorola's employees contributed nothing to the idea, Memorylink should have known that they were not co-inventors when the Assignment was signed in 1998. Id. at *5. Because Memorylink was aware of all of the underlying facts in 1998, its claims were thus untimely. Id. at *4. However, the district court revived some claims upon reconsideration a few months later. Memorylink Corp. v. Motorola, Inc., 2009 WL 3366974, at *5–6 (N.D.Ill. Oct. 15, 2009). In particular, the court chose to revive the claim of lack of consideration for the Assignment as a contract claim and therefore not time-barred, despite being originally pleaded as a fraud claim. Id. at *5.

Motorola later moved for summary judgment on the remaining claims, asserting that there was consideration to support the Assignment and it therefore could not be liable for infringement as a co-owner of the patent. The district court found that the Assignment unambiguously stated that one dollar, as well as other good and valuable consideration, was received as consideration. Summary Judgment Opinion, 2013 WL 4401676, at *5. Because Memorylink eschewed reliance on parol evidence, the court rejected the arguments on the inadequacy of the consideration. Id. The court also found that Schulz and Wyckoff transferred their ownership interests in the patent, which is what Memorylink argued was the intended consideration. Id. at *6–7. And, if parol evidence were considered, the court found that Memorylink intended for patent prosecution representation, which was indisputably provided, to be part of the bargain. Id. at *7. The court therefore concluded that there was no genuine issue of material fact, and granted summary judgment in Motorola's favor on the contract claim.Id. Because the Assignment was valid, Motorola was a joint owner of the '352 patent and therefore could not be liable for infringement. Thus, the court also granted summary judgment of noninfringement to Motorola. Id. The court then entered final judgment under Federal Rule of Civil Procedure 54(b) for the claims now on appeal.

Memorylink timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

Discussion

We review the district court's grant of summary judgment under the law of the regional circuit, here the Seventh Circuit. Lexion Med., LLC v. Northgate Techs., Inc., 641 F.3d 1352, 1358 (Fed.Cir.2011). Applying the law of the Seventh Circuit, we review the grant of summary judgment de novo. Chaklos v. Stevens, 560 F.3d 705, 710 (7th Cir.2009). Summary judgment is appropriate when, drawing all justifiable inferences in the non-movant's favor, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986), “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).

We also review the district court's dismissal of claims under Rule 12(b)(6) under the law of the regional circuit. CoreBrace LLC v. Star Seismic LLC, 566 F.3d 1069, 1072 (Fed.Cir.2009). Applying the law of the Seventh Circuit, we review the dismissal on a statute of limitations defense de novo, Perry v. Sullivan, 207 F.3d 379, 382 (7th Cir.2000), accepting all well-pleaded allegations in the complaint as true and drawing all reasonable inferences in favor of the plaintiff, Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir.2007).

A.

We first address the district court's grant of summary judgment in favor of Motorola on the issue of consideration for the Assignment. The district court applied Illinois substantive law to interpret the assignment, Summary Judgment Opinion, 2013 WL 4401676, at *5 n. 7, and the parties have not disputed that application on appeal. Illinois courts follow the “four corners” rule when interpreting contracts, which requires that “an agreement, when reduced to writing, must be presumed to speak the intention of the parties who signed it.... It is not to be changed by extrinsic evidence.” Urban Sites of Chicago, LLC v. Crown Castle USA, 365 Ill.Dec. 876, 979 N.E.2d 480, 490 (Ill.App.Ct.2012) (quotation marks omitted). Consideration is a basic requirement of a contract, Melena v. Anheuser–Busch, Inc., 219 Ill.2d 135, 301 Ill.Dec. 440, 847 N.E.2d 99, 109 (2006), but nominal consideration will suffice to support a contract, Davis v. Wells, 104 U.S. 159, 168, 26 L.Ed. 686 (1881). Courts “will not inquire into the adequacy of the consideration.” Carter v. SSC Odin Operating Co., 2012 IL 113204, 364 Ill.Dec. 66, 976 N.E.2d 344, 352 (2012) ...