Larson v. Correct Craft, Inc.

• Decision Date: 05 June 2009
• Docket Number: No. 2008-1209.,No. 2008-1208.,2008-1208.,2008-1209.
• Citation: 569 F.3d 1319
• Parties: Borden M. LARSON, Plaintiff-Appellant, v. CORRECT CRAFT, INC., William Snook, and Robert Todd, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

569 F.3d 1319

Borden M. LARSON, Plaintiff-Appellant, v. CORRECT CRAFT, INC., William Snook, and Robert Todd, Defendants-Appellees.

No. 2008-1208.

No. 2008-1209.

United States Court of Appeals, Federal Circuit.

June 5, 2009.

Beecher A. Larson, Law Office of Beecher A. Larson, of Longwood, FL, argued for plaintiff-appellant.

Douglas C. Spears, Stump, Dietrich, Spears & Norman, P.A., of Orlando, FL, argued for defendants-appellees.

Before GAJARSA and MOORE, Circuit Judges, and ARTERTON, District Judge.^*

ARTERTON, District Judge.

Plaintiff-Appellant Borden Larson appeals from decisions by the United States District Court for the Middle District of Florida that granted summary judgment in favor of Defendants-Appellees Correct Craft, Inc. ("Correct Craft"), William Snook, and Robert Todd. Larson originally filed suit in Florida state court, alleging multiple fraud-based claims under state law, seeking rescission of several patent assignments he executed, and requesting declaratory judgments concerning the parties' respective rights to the patents at issue. Correct Craft removed the case to federal court on the ground that the declaratory-judgment counts, although nominally pleaded under Florida law, were in substance claims to correct inventorship under 35 U.S.C. § 256. At oral argument, we raised the question of whether the district court properly exercised federal-question jurisdiction pursuant to 28 U.S.C. § 1338(a), and we permitted the parties to submit supplemental briefing on this jurisdictional issue.

As we explain below, Larson has no concrete financial interest in the correction of the patents in this case because he has assigned away all of his patent rights, and he claims no purely reputational interest in the patents. Thus, unless and until Larson obtains equitable relief that restores his ownership rights, he has no standing to bring a stand-alone action under § 256. Because his § 256 cause of action was the only basis for removal from state court, it follows that the district court had no basis for exercising subject-matter jurisdiction over the case, and so we lack jurisdiction to reach the merits of Larson's appeal. Accordingly, we vacate the judgment of the district court and remand with instructions.

I.

Correct Craft is a boat manufacturer that employed Larson as a designer from 1986 to 2001. The parties characterize his employment in different terms, but it appears undisputed that he was hired as a draftsman, worked in the engineering department making design changes to boat components, and supervised design and manufacturing work in the "plug and mold shop." By Larson's telling, his responsibilities included "[d]esigning new products that were competitive in the marketplace, whether it's the hull, the deck, the interior parts," and whatever else "needed to be done."

In mid-1996, Larson sought to re-design part of Correct Craft's "Sport Nautique" model, in particular the placement of an attachment for a tow line for wakeboarders or water skiers. His idea essentially was to mount a tower structure on a water-sports boat that would allow for added storage space as well as the attachment for an elevated tow line. Larson showed his designs for this "wakeboard tower" to William Snook, the Correct Craft engineer who originally hired Larson. At Snook's urging, Larson then presented his idea to management, which approved and directed a prototype to be built. Robert Todd's fabrication company delivered the first prototype later in 1996. Snook was then in charge of the project to improve upon this first-generation tower, during which Larson "had some input."

At issue in this case are the several patents Correct Craft eventually received for the wakeboard tower. In 1997, Snook told Larson that Correct Craft was going to seek patent protection. Larson detailed the inception of his tower idea in writing, and he spoke with Correct Craft's attorneys about what would be needed for the patenting process. The attorneys also presented Larson with patent assignments that they described as formalities and part of the necessary application paperwork. With these assignments, which he executed between 1998 and 2001, Larson transferred all of his interest in the wakeboard-tower invention to Correct Craft. In declarations filed with the Patent and Trademark Office, Larson also attested that he was a co-inventor of the wakeboard tower together with Snook and Todd. Larson received no compensation in addition to his usual salary as consideration for executing these assignments and declarations.

Larson claims that later, after Correct Craft terminated his employment, he "discovered [his] rights as the wakeboard tower inventor in February of 2003." Believing that Correct Craft misled him about his obligation to sign the patent assignments — and coupled with his belief that the company betrayed him and violated its own commitment to Christian principles — Larson sued Correct Craft, Snook, and Todd in Florida state court on April 22, 2004. Correct Craft removed the case to federal court in May 2005, citing Larson's addition of the declaratory-judgment counts in an amended complaint filed the previous month. In the operative amended complaint, Larson presses eight claims: fraud, constructive fraud, rescission, breach of contract, and unjust enrichment against Correct Craft; and three counts seeking declaratory judgments against Correct Craft, Snook, and Todd concerning the parties' rights to the wakeboard-tower patents.

II.

Following protracted disputes concerning discovery and other matters not relevant here, Larson moved for summary judgment on his declaratory-judgment claims against Snook and Todd, seeking removal of Snook and Todd as co-inventors. The district court denied this motion on January 30, 2008, on the ground that contested issues of material fact — notably, the effect of the numerous documents Larson signed attesting that Snook and Todd were co-inventors — precluded entry of summary judgment. Larson v. Correct Craft, Inc., No. 6:05-cv-686, 2008 WL 276560, at *2 (M.D.Fla. Jan. 30, 2008).

The district court then granted summary judgment in favor of the defendants in two orders. In the first, dated February 1, 2008, the court ruled that Larson had failed to offer sufficient evidence of fraud by Correct Craft to warrant a trial: "[E]ven if one assumes that CCI had no legal right to the wakeboard tower patent, Larson has failed to produce a shred of evidence that CCI knew this at the time they were impliedly telling him otherwise." Larson v. Correct Craft, Inc., 537 F.Supp.2d 1264, 1269 (M.D.Fla.2008). The district court also concluded that summary judgment was appropriate on Larson's constructive-fraud claim because there was no evidence of the confidential or fiduciary relationship required under Florida law. Id. Having granted summary judgment on the fraud claims, the district court found that the remaining claims based on the same foundation must suffer the same fate. Id. at 1269-70.

The district court further held, in this February 1 order and also in a second order dated February 4, 2008, that the entry of summary judgment on the substantive fraud-based claims meant that Larson could not succeed on his declaratory-judgment claims because there was no controversy remaining as to his patent rights. Larson v. Correct Craft, Inc., No. 6:05-cv-686, 2008 WL 321455, at *2 (M.D.Fla. Feb. 4, 2008). In the February 4 order, the district court explained that, assuming it still maintained jurisdiction over the claims involving Snook and Todd, there was no basis for removing their names from the wakeboard-tower patents pursuant to 35 U.S.C. § 256 because "[n]o reasonable factfinder could conclude that Larson was a sole inventor" and because an attack on the validity of the patent assignments "is barred by the doctrine of assignor estoppel." Id. at **2-3. Larson appeals and assigns error to virtually every aspect of these rulings.

III.

We begin with our jurisdiction. "[E]very federal appellate court has a special obligation to `satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review,'" regardless of whether "the parties are prepared to concede it." Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986) (quoting Mitchell v. Maurer, 293 U.S. 237, 244, 55 S.Ct. 162, 79 L.Ed. 338 (1934)). In its notice of removal in this case, Correct Craft characterized Larson's declaratory-judgment counts as claims for correction of inventorship under 35 U.S.C. § 256. Accordingly, the district court exercised jurisdiction pursuant to 28 U.S.C. § 1338(a)(1), which authorizes subject-matter jurisdiction over "any civil action arising under any Act of Congress relating to patents." We in turn have exclusive appellate jurisdiction over patent cases pursuant to 28 U.S.C. § 1295(a)(1).

There are two issues related to the basis for federal jurisdiction here. First, Larson's claims for declaratory relief, as he pleaded them, did not actually invoke § 256. Therefore, we must examine whether Correct Craft (in removing the case) and the district court (in exercising jurisdiction) correctly treated the declaratory-judgment claims as implicating § 256. Second, because Larson lost his ownership rights and any financial interest he had in the wakeboard-tower patents when he executed the assignments in favor of Correct Craft, we must also determine whether Larson, having not yet prevailed on his separate claim for equitable relief setting aside the patent assignments, nevertheless had standing to pursue a claim for correction of inventorship in federal court.

The appellees argue that the district court had jurisdiction based on the substance of Larson's declaratory-judgment counts — that is, even though § 256 was "not specifically pleaded," Larson was in essence seeking the correction of inventorship that § 256 authorizes. Appellees' Suppl. Br....