Kucharczyk v. Regents of University of California, C-94-3886EFL.

• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
• Citation: 946 F.Supp. 1419
• Docket Number: C-94-3886EFL.
• Parties: John KUCHARCZYK, Ph.D., an individual, and Michael Moseley, Ph.D., an individual, Plaintiffs, v. The REGENTS OF the UNIVERSITY OF CALIFORNIA; Nycomed Salutar, a California corporation; Nycomed Imaging AS, a Norwegian business entity, Defendants.
• Decision Date: 11 September 1996

946 F.Supp. 1419

John KUCHARCZYK, Ph.D., an individual, and Michael Moseley, Ph.D., an individual, Plaintiffs, v. The REGENTS OF the UNIVERSITY OF CALIFORNIA; Nycomed Salutar, a California corporation; Nycomed Imaging AS, a Norwegian business entity, Defendants.

C-94-3886EFL.

United States District Court, N.D. California.

September 11, 1996.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Richard D. Harmon, Megan Tootell, Jeffrey P. Gray, San Francisco, CA, for Plaintiffs.

Aimee D. Silvers, Cadwalader, Wickersham & Taft, Los Angeles, CA, Gerald P. Dodson, Arnold, White & Durkee, Palo Alto, CA, for Defendants.

ORDER

LYNCH, District Judge.

I. INTRODUCTION

Plaintiffs, both scientists who formerly worked for the University of California San Francisco ("UCSF"), are suing the Regents of the University of California ("the University"), Nycomed Salutar ("Salutar" or "Nycomed"), and Nycomed Imaging AS ("NIAS"), Salutar's parent company, alleging a number of theories in ten causes of action. Salutar has counterclaimed against plaintiffs and cross-claimed against the University.

This suit arises out of plaintiffs' invention of a process in the magnetic resonance imaging ("MRI") field and the University's subsequent licensing of that invention. The invention was eventually patented as U.S. Patent No. 5,190,744 ("'744 Patent"), entitled "Methods for Detecting Blood Perfusion Variations by Magnetic Resonance Imaging." The invention was a method of using DyDTPA-BMA, a chemical compound. Salutar owns the patent in DyDTPA-BMA. Dr. Scott Rocklage, a Salutar employee, was named on the '744 patent as a co-inventor, thereby giving Salutar an undivided right in the patent.

Plaintiffs assigned their rights in the invention to the University pursuant to a Patent Agreement they entered into upon their employment by the University. The Patent Agreement required plaintiffs to assign all inventions to the University and in turn obligated the University to pay them 50% of all royalties collected. Upon being assigned the invention, the University entered into an exclusive License Agreement with Salutar. Salutar agreed to pay the University a total of $25,000, half of which was paid to plaintiffs.

In essence, plaintiffs allege that they were the sole inventors of the process, that it was worth significantly more than $25,000, and that plaintiffs were entitled to greater rewards for their invention. Plaintiffs have alleged ten causes of action. First, plaintiffs allege that their civil rights, including their property rights, were impaired in violation of 42 U.S.C. § 1983.¹ Second, plaintiffs seek a declaration that they were sole inventors of the invention claimed by the '744 patent. Next, they allege that when the University entered into an exclusive licensing agreement with Salutar and accepted a lump-sum payment of only $25,000, the University breached its contract with plaintiffs which required it to secure a royalty-bearing, non-exclusive license. In their third cause of action, they seek rescission of the Assignment Agreements on the grounds that there was a "fundamental lack of actual, mutual agreement." Alternately, in their fourth cause of action, they seek monetary damages for the University's breach of contract. In their fifth cause of action, plaintiffs allege a conspiracy to induce the breach of contract and seek punitive damages. In their sixth cause of action, they claim that the University's breach of its contracts was tortious and fraudulent and in breach of the implied covenant of good faith and fair dealing. The seventh cause of action claims fraud and deceit in connection with their employment contracts and Assignment Agreements. Eighthly, plaintiffs claim negligent misrepresentation. In their ninth cause of action, plaintiffs allege that they were fraudulently induced to enter into employment agreements, Assignment Agreements, and other unspecified contracts with the University. Finally, in their tenth cause of action, plaintiffs allege that defendants Salutar and NIAS have tortiously interfered with their contracts with the University.

Plaintiffs and the University have filed cross-motions for summary judgment; plaintiffs seek summary adjudication of their breach of contract claim, and the University seeks summary judgment on all of plaintiffs' causes of action except the claim seeking a declaratory judgment removing Scott Rocklage as the inventor of the '744 patent.² The Court has requested and received supplemental briefing, and the matter has been extensively briefed and argued.

For the reasons set forth below, the Court will deny plaintiffs' motion for summary judgment and grant the University's motion. However, the Court will certify this case for interlocutory review.

II. FACTS

Plaintiff Moseley was hired by the University in 1982 as an Associate Professor of Radiology at UCSF. Upon being hired, Moseley executed a form Patent Agreement that required him to assign all rights in any invention developed during his employment to the University. Plaintiff Kucharczyk joined the UCSF faculty in 1988 and was a tenured member of the UCSF Department of Radiology. Prior to his employment, Kucharczyk also signed a form Patent Agreement in which he agreed to assign all invention rights to the University.

The '744 Patent grew out of plaintiffs' work at the UCSF Department of Radiology in the late 1980s. Plaintiffs' research was initially funded by Syntex to assess therapeutic drugs used for stroke treatment. However, Syntex ended its funding, and Salutar began funding plaintiffs' research. Plaintiffs claim that on February 13, 1989, they conceived of the use of DyDTPA-BMA, a chemical compound invented by Salutar, as a contrasting agent useful in detecting strokes via MRI. On February 23, 1990, plaintiffs faxed a disclosure form to the University's Patent Office discussing the invention and identifying the funding source or sponsor for the project as "Salutar, Inc." On March 9, 1990, Salutar and the University filed a patent application for the process. That application named as inventors Rocklage and both plaintiffs. In April of 1990, the University and Salutar submitted a grant application to California Department of Commerce for a CompTech grant under which Salutar sought to contribute $150,000 toward the research, and Salutar and the University asked the state to match that amount with a $150,000 grant. The University and Salutar executed an agreement entitled Memo of Understanding Under California Competitive Technology Program Grant Application (the "Research Funding Agreement"). The Research Funding Agreement designated Kucharczyk as the Principal Investigator for the University and Moseley as co-investigator. Kucharczyk signed the Research Funding Agreement. In 1990, CompTech provided $150,000 in research funds to UCSF.

Plaintiffs assigned their rights in the invention to the University in the Assignment Agreement they signed in early 1990.³ Rocklage assigned his rights to Salutar, which in turn assigned its rights to the University on May 7, 1990. On June 13, 1990, Salutar and the University entered into their exclusive License Agreement ("License Agreement"). In accordance with the License, Salutar paid the University $12,500 upon executing the license and paid an additional $12,500 patent issued in March of 1993. The University paid plaintiffs 50% of each of those payments.

III. SUMMARY JUDGMENT

Both parties have moved for summary judgment. Summary judgment is appropriate where no genuine issue exists as to any material fact and where the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party has the burden of establishing that there is no genuine issue of material fact. Id.; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). Generally, after the moving party makes a properly supported motion, the non-moving party has the burden of presenting specific facts showing that contradiction is possible. British Airways Board v. Boeing Co., 585 F.2d 946, 950-52 (9th Cir.1978). It is not enough for the non-moving party to point to the mere allegations or denials contained in the pleadings. Instead, it must set forth, by affidavit or other admissible evidence, specific facts demonstrating the existence of an actual issue for trial. The evidence must be more than a mere "scintilla" of evidence; the non-moving party must show that the trier of fact could reasonably find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986). Summary judgment may be granted "[i]f the evidence is merely colorable ... or is not significantly probative." Eisenberg v. Insurance Co. of North America, 815 F.2d 1285, 1288 (9th Cir.1987). In reviewing a motion for summary judgment, the Court must take the non-movant's evidence as true and all inferences are to be drawn in the light most favorable to the non-movant. Id. at 1289.

IV. CONTRACTS

At issue in this case are several contracts: (1) the Patent Agreement between each of the plaintiffs and the University; (2) the Assignment Agreement between the plaintiffs and the University; (3) the CompTech Research Funding Agreement between the University and Salutar; and (4) the Licensing Agreement between the University and Salutar. Plaintiffs contend that the University was obligated by contract to obtain a reasonable running royalty upon licensing their invention. The Court's first task in this case is thus an analysis of the nature and content of the various contracts at issue here to determine whether they contain such an obligation as well as an analysis of the requirements of the Patent Policy, which plaintiffs argue obligates the University to obtain a reasonable royalty.

The Court first discusses the Patent Agreement and the Assignment Agreement. Though neither expressly requires the University...