Bradley v. Chiron Corp., 96-1536

Citation45 USPQ2d 1819,136 F.3d 1317
Decision Date20 February 1998
Docket NumberNo. 96-1536,96-1536
PartiesDaniel W. BRADLEY, Plaintiff-Appellant, v. CHIRON CORPORATION, William J. Rutter, Edward E. Penhoet, Michael Houghton, Qui Lim Choo, George Kuo and Ortho Diagnostic Systems, Inc., Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Brent L. English, Cleveland, OH, argued for plaintiff-appellant. Of counsel on the brief was Kenneth K. Sharples, Fairfax, CA.

Gerald Sobel, Kaye, Scholer, Fierman, Hays & Handler, LLP, New York City, argued for defendants-appellees. With him on Before NEWMAN, LOURIE, and SCHALL, Circuit Judges.

the brief were Thomas A. Smart, Gregory E. Bylinsky, and Efrem Schwalb. Of counsel on the brief were Robert P. Blackburn and Nancy J. Koch, Chiron Corporation, Emeryville, CA; and Eric I. Harris, Johnson & Johnson, New Brunswick, NJ. Also of counsel was Frederick H. Paulmann, IV, of Kaye, Scholer, Fierman, Hays & Handler, LLP.

PAULINE NEWMAN, Circuit Judge.

Daniel W. Bradley, a research scientist employed until 1994 at the Centers for Disease Control and Prevention (CDC) in Georgia, brought suit in the United States District Court for the Northern District of California, seeking to rescind a settlement agreement he had entered into with Chiron Corporation. He also requested declaration of his inventorship of certain patents, damages, and other monetary relief. The defendants (collectively "Chiron") moved to dismiss the original complaint pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief could be granted. 1 Dr. Bradley amended his original complaint as of right, and the defendants moved to dismiss the amended complaint pursuant to Rule 12(b)(6). The district court held that Dr. Bradley had not pled facts sufficient to state a claim upon which relief could be granted. However, the court granted leave to amend the first amended complaint to state additional facts in support of the asserted ground of unilateral mistake. Bradley v. Chiron Corp., No. C 94-04342 CW (N.D.Cal. Nov. 15, 1995) (order). Dr. Bradley then filed a second amended complaint. In this complaint he made several factual allegations that differed from the allegations in the first amended complaint. The district court struck the changed allegations as false and sham, and then dismissed the complaint. Bradley v. Chiron Corp., No. C 94-04342, 1996 WL 441022 (N.D.Cal. Jul. 15, 1996) (order). Dr. Bradley challenges the dismissal, asserting that his pleadings contained facts sufficient to support rescission of the settlement agreement, and that the changed allegations did not warrant being struck.

Federal Circuit jurisdiction of this appeal derives from the counts for declaration of inventorship and unenforceability under the patent laws. See 28 U.S.C. §§ 1331, 1338(a), 1295(a)(1). For the reasons we shall discuss, the decision of the district court is affirmed.

BACKGROUND

The following facts are taken primarily from the first amended complaint:

In 1977 Dr. Bradley began the research that led, after many years of effort, to his successful isolation of a concentrated and purified form of the hepatitis C virus (HCV), including characterization of various properties of the virus. This work was of scientific interest and importance. In 1982 Chiron Corporation entered into a collaboration with CDC and Dr. Bradley whereby Chiron would attempt, using recombinant procedures, to clone the virus from the samples provided by Dr. Bradley. All involved knew that a successful cloning could be of commercial value.

While this work was in progress the parties discussed the rights to any inventions that might result from the collaboration, but did not arrive at a resolution. In 1987 Chiron succeeded in cloning a portion of the virus. Dr. Bradley states that he contributed to this effort. Using this material, Chiron developed a diagnostic assay for detecting the presence of HCV, vaccines, and related technology. Chiron filed patent applications on these developments, naming its scientists as the inventors. Thereafter the collaborative relationship deteriorated. Dr. Bradley consulted with CDC's lawyers about the possibility of challenging Chiron's patents, and was directed to an attorney at the patent branch of the National Institutes of Health, Ms. Glenna Hendricks. Ms. Hendricks advised Dr. Bradley on various issues of patent law, and in September 1989 filed a patent application in which Dr. Bradley was named as an inventor along with three Chiron scientists.

This application was filed in order to provoke an interference proceeding with the Chiron application in the Patent and Trademark Office (PTO), for the purpose of resolving issues of inventorship and ownership of these inventions.

In October 1989 Chiron wrote to CDC proposing to establish "an overall mechanism that would compensate Dr. Bradley's contribution regardless of his status as an inventor, resolve any inventorship dispute and protect Chiron's commercial interests." The proposed Settlement Agreement was negotiated for CDC by Mr. Gene Matthews, a CDC lawyer. On March 12, 1990 a copy of the proposed agreement was signed by Mr. Matthews for CDC and by Dr. Bradley, and forwarded to Chiron. Chiron added some provisions to the agreement and signed it, about a month later. The additions were accepted and initialed by CDC and Dr. Bradley.

The Settlement Agreement contained the following provisions concerning patent ownership and inventorship:

§ 2.1 CDC ... the United States ... and Dr. Bradley hereby forever release, discharge and assign to Chiron their entire right, title and interest in and to, any and all claims, actions and the like based in law or equity known or unknown, now existing or which might arise hereafter, (a) against Chiron or Chiron's employees (past or present), Chiron's directors (past or present) or licensees arising from actions occurring prior to the date of this Agreement and related to any collaboration among Dr. Bradley, CDC and Chiron; or (b) regarding the inventorship, ownership or control of Chiron Patents or foreign counterparts thereof. CDC and Dr. Bradley hereby assign to Chiron any and all right title and interest in or to Chiron Patents and the inventions claimed therein.

§ 2.2 CDC and Dr. Bradley warrant that no patent application will be maintained naming Dr. Bradley as an inventor or co-inventor that now claims or is later amended to claim subject matter interfering with the subject matter claimed in Chiron Patents as filed and as set forth in confidential Exhibit 2.2.

§ 2.3 After the effective date of this Agreement, CDC and Dr. Bradley will make Dr. Bradley and any supporting documents promptly and reasonably available to Chiron for the sole purpose of evaluating his claim to inventorship. After concluding such evaluation, Chiron may, at its discretion, (i) add Dr. Bradley to one or more Chiron Patents as an inventor if in Chiron's opinion Dr. Bradley is an inventor or (ii) submit any material information regarding inventorship to the U.S. Patent and Trademark Office. If Dr. Bradley is added as an inventor to one or more Chiron Patents, whether by Chiron or by any tribunal of competent jurisdiction, CDC and Dr. Bradley will cooperate fully with and without charge to Chiron, and execute any and all necessary and proper documents related to Chiron Patents and the assignment contained in paragraph 2.1.

Chiron agreed to pay CDC $1,912,500 and to pay Dr. Bradley $337,500 over five years.

In December 1994 Dr. Bradley brought suit in the Northern District of California, seeking to rescind the settlement. He alleged mistake, fraud, and failure of consideration. Chiron moved to dismiss the complaint, stating that there was no basis for the allegations and that Dr. Bradley's requested relief was "barred by his prior release." It was not disputed that unless the settlement agreement was rescinded, Dr. Bradley's claims were barred by the release.

In keeping with the rules governing dismissal under Rule 12(b)(6) the factual statements in the complaint are accepted as true. The dismissal of a claim under Rule 12(b)(6) is proper only when, on the complainant's version of the facts, the premises of a cognizable claim have not been stated. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232-33, 81 L.Ed.2d 59 (1984); Advanced Cardiovascular Systems, Inc. v. Scimed Life Systems, Inc., 988 F.2d 1157, 1160, 26 USPQ2d 1038, 1041 (Fed.Cir.1993); Epstein v. Washington Energy Co., 83 F.3d 1136, 1139 (9th Cir.1996). The appellate court, like the district court, tests the sufficiency of the complaint as a matter of law, accepting as true all well-pleaded allegations of fact, construed in the light most Under California law 2 settlement of disputes is a strongly favored public policy, for settlement reduces costs for all parties, conserves judicial and private resources, and promotes good will. Neary v. Regents of the Univ. of California, 3 Cal.4th 273, 10 Cal.Rptr.2d 859, 860-61, 834 P.2d 119, 121 (1992); cf. Foster v. Hallco Mfg. Co., 947 F.2d 469, 477, 20 USPQ2d 1241, 1247 (Fed.Cir.1991) (there is a "strong public interest" in settlements). In Neary the court observed that "[t]he need for settlements is greater than ever before" and "[w]ithout them our system of civil adjudication would quickly break down." 10 Cal.Rptr.2d at 861, 834 P.2d at 121 (citations omitted). Although the courts well recognize the public as well as private interest in the finality of settlements, as for all contracts a settlement will not be enforced if it is tainted by fraud or another condition that warrants its rescission.

favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974); Advanced Cardiovascular, 988 F.2d at 1160-61, 26 USPQ2d at 1041; NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.1986). Conclusory allegations of law and unwarranted inferences of fact do not suffice to support a...

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