Curators of the Univ. of Mo. v. Suppes

• Decision Date: 08 January 2019
• Docket Number: WD 81278
• Parties: The CURATORS OF the UNIVERSITY OF MISSOURI, Respondent, v. Galen J. SUPPES, Appellant.
• Court: Missouri Court of Appeals

583 S.W.3d 49

The CURATORS OF the UNIVERSITY OF MISSOURI, Respondent,

v.Galen J. SUPPES, Appellant.

WD 81278

Missouri Court of Appeals, Western District.

OPINION FILED: January 8, 2019

Motion for Rehearing and/or Transfer to Supreme Court Denied February 26, 2019

Application for Transfer Denied April 30, 2019

Russell S. Jones, Jr., Kansas City, MO, for respondent.

George Swearingen Smith, Columbia, MO, for appellant.

Before Division Three: Gary D. Witt, Presiding Judge, Cynthia L. Martin, Judge and Anthony Rex Gabbert, Judge

Gary D. Witt, Judge

Appellant Galen Suppes ("Suppes") appeals the judgment of the Circuit Court of Boone County, Missouri, which, following a jury trial, found him liable to The Curators of the University of Missouri ("University") for breach of contract and breach of loyalty claims. The jury awarded the University $300,000.00 on each claim. On appeal, Suppes alleges nine points of error. We affirm.

Factual Background¹

The University hired Suppes as an associate professor in the College of Engineering's Department of Chemical Engineering in the fall of 2001. As a condition of his employment, the University required Suppes to sign an Appointment Notification document stating that he accepted his position "with the understanding that it is subject to all rules, orders and regulations of the Board of Curators." The University's governing rules are called the Collected Rules and Regulations ("CRRs") and Suppes agrees he was bound by the CRRs. The CRRs include "Patent and Plant Variety Regulations" which states, in relevant part:

The University, as the employer and as the representative of the people of the state, shall have the ownership and control of any Invention or Plant Variety developed in the course of the employee's service to the University.

There are various limitations to this requirement but, in order to allow the University to exercise its rights, the regulations require that all employees disclose all inventions to the University regardless of whether the employee believes that the invention is exempt from University ownership. The University may then exercise its rights of ownership and request assignment of the invention to the University or, if the University chooses, it may waive its rights to the invention. The disclosure form which is to be submitted with notification includes an assignment clause. Only if the University affirmative waives its rights to an invention may an employee seek a patent for the invention independently.

Between September 2001 and January 2008, Suppes filed at least 35 patent applications on his own or through an outside attorney who did not represent the University. Most, if not all, of these patent applications were for inventions that had not been disclosed or assigned to the University when the patent application was filed. To the extent Suppes did disclose some of his inventions, he often modified the University's disclosure form to modify or remove the assignment language. Eventually, the University became aware of the modifications and asked him to stop. However, Suppes continued to disclose his inventions on modified forms altering or deleting the assignment language. The University claims, generally, that Suppes's failure to notify the University about inventions and submitting notifications without proper assignment prevented the University from capitalizing on these inventions. Without clear assignment from Suppes the University could not justify investing in commercialization of the inventions.

The current suit stems from Suppes's failure to properly assign ownership of a technology to transform glycerol, a byproduct of biodiesel production, into propylene glycol ("PG"),² a valuable chemical compound used to make antifreeze.

From 2003 to 2006, Suppes's PG research was supported by a research funding agreement between the University and the Missouri Soybean Merchandising Counsel, a subsidiary of the Missouri Soybean Association ("Missouri Soybean").³

Under the funding agreement, the University would own any inventions resulting from Suppes's research, but Missouri Soybean had an option to license those inventions from the University, with 25 percent of the net revenues returning to the University and an additional 8.33 percent going directly to Suppes. Suppes established a limited liability company,⁴ Renewable Alternatives ("RA"), to conduct some of his research. RA leased an office from the University but failed to lease or pay for any laboratory space from the University. Instead, all research was done in the lab provided by the University to Suppes for his work with for the University. Pursuant to an agreement between the University and RA, any inventions developed by both University employees and RA employees would be jointly owned, and RA was given first option to lease these inventions.

Suppes developed a number of inventions related to PG. He was enthusiastic about the commercial potential for these inventions, predicting it would generate millions of dollars in royalties each year from production of PG, and millions more from the production of another chemical acetol. Suppes represented to Missouri Soybean that he owned the nonprovisional rights to the PG technology and worked with Missouri Soybean to obtain a patent for the technology. On March 15, 2005, RA then entered into a licensing agreement with a Missouri Soybean subsidiary granting to it exclusive license to the PG technology. RA represented that it was the sole owner of the PG technology. In exchange for the license, the Missouri Soybean subsidiary agreed to pay RA royalties at a rate of 33 percent for two years and twenty percent thereafter. In turn, on July 15, 2005, the Missouri Soybean subsidiary entered into a sub-license agreement with Senergy Chemicals ("Senergy") to manufacture PG using Suppes's technology. The University was not made aware of these agreements until October 2005. The University then attempted to negotiate a three-way agreement between Suppes, the University, and Missouri Soybean that recognized the University's ownership of PG.

January 14, 2007, Suppes sent an email to the University and others stating the he would not sign any documents relating to PG until a three-way agreement was completed. Around the same time, Missouri Soybean's lawyer contacted Suppes with a final notice that he needed to sign certain documents or patent rights related to the PG technology would be lost. The deadline passed without signature resulting in the abandonment of one patent application and the loss of foreign patent protection for another.

Suppes eventually executed assignments for the PG technology in June 2007, after the University Patent Committee determined the technology had been created within the scope of Suppes's employment and belonged to the University. Suppes still, however, refused to cooperate with the University further until a licensing agreement was reached with Missouri Soybean. The University and Missouri Soybean finalized an agreement regarding PG in September 2007.

In March 2008, Senergy signed a memorandum of understanding with SK Chemical, a South Korean company, for the manufacture of PG. However, once SK Chemical discovered that one of the patent applications for the PG had been abandoned in 2007, SK Chemical decided not to enter into a contract with Senergy. Senergy never produced PG on a commercial scale.

The University brought suit against Suppes in April 2009. Three claims were tried and submitted to the jury: breach of contract, tortious interference, and breach of the duty of loyalty. The University also sought equitable relief, but these claims were decided by the court following trial. The jury returned verdicts for the University on the breach of contract and breach of loyalty claims, awarding $300,000 on each claim. It found for Suppes on the tortious interference claim. After trial, the court found for the University on its equitable claims, ordering Suppes to execute an assignment to the University for any inventions related to the PG technology. The court entered final judgment on October 12, 2017 ("Judgment").

This appeal followed.

Discussion

I.

Suppes's first point on appeal alleges that the circuit court erred in ordering him to assign U.S. Patent No. 6,574,971 ("'971 Patent") to the University because such relief was not requested in the Petition. Suppes also raises in his Point Relied On that the Assignment includes patent application No. 09/945, 682 ("'682 Application") which the trial court had previously dismissed allegations regarding this patent from the proceedings.

"The circuit court is vested with considerable discretion in ruling on a motion to amend judgment, and the court of appeals will not reverse a circuit court's decision on a motion to amend judgment unless there is an abuse of discretion." Gill Constr., Inc. v. 18th & Vine Auth. , 157 S.W.3d 699, 711-12 (Mo. App. W.D. 2004).

The relevant portion of the Judgment orders Suppes to:

Execute the Assignment, Page 1 and Page 2 of which shall be unaltered and unmodified, which was attached to the letter from Plaintiff's University's attorney to Galen J. Suppes, dated November 10, 2008, which was admitted into evidence as part of Plaintiff's Exhibit No. 351a, assigning to Plaintiff University all right, title and interest in the inventions related to the glycerol to propylene glycol technologies contained on Exhibit A of Plaintiff's Exhibit No. 351a. Plaintiff's Exhibit 351a is attached hereto as Exhibit 1 and incorporated herein by reference.

The University concedes that the intent of the Judgment was for Suppes to only assign "all right, title and interest in the inventions related to the glycerol to propylene glycol technologies contained on Exhibit A " attached to the Assignment. (emphasis added). The University argues that Suppes's first point on appeal is without merit because, the '971 Patent applied to "phase change materials" and not to the "glycerol to propylene glycol...