MCV, Inc. v. King-Seeley Thermos Co.

• Decision Date: 27 March 1989
• Docket Number: No. 88-1328,KING-SEELEY,88-1328
• Parties: , 10 U.S.P.Q.2d 1287 MCV, INC., Plaintiff-Appellant, v.THERMOS COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

Page 1568

870 F.2d 1568

57 USLW 2595, 10 U.S.P.Q.2d 1287

MCV, INC., Plaintiff-Appellant, v. KING-SEELEY THERMOS COMPANY, Defendant-Appellee.

No. 88-1328.

United States Court of Appeals, Federal Circuit.

March 27, 1989.

Rehearing Denied May 12, 1989.

Alan L. Barry, Wallenstein, Wagner, Hattis & Strampel, Ltd., Chicago, Ill., argued, for plaintiff-appellant. With him on the brief were, Robert E. Wagner and Amy L.H. Rockwell.

Robert J. Lepri, Trizna & Lepri, Chicago, Ill., argued, for defendant-appellee. With him on the brief was Daniel J. Fumagalli. Keith Miller, Harness, Dickey & Pierce, Birmingham, Mich., argued, for defendant-appellee. With him on the brief was Robert A. Dunn.

Before FRIEDMAN and MAYER, Circuit Judges, and NICHOLS, Senior Circuit Judge.

OPINION

MAYER, Circuit Judge.

MCV, Inc., appeals the judgment of the United States District Court for the Northern District of Illinois, No. 86-C-4180 (Feb. 10, 1988), dismissing MCV's complaint for a determination of inventorship and co-ownership, and for correction of inventorship of U.S. Patent No. 4,600,148. The district court held MCV equitably estopped from asserting a co-inventorship claim, and not entitled to co-inventorship status. We agree that MCV is equitably estopped, and affirm on that basis; we do not address the co-inventorship claim except to the extent necessary to our discussion of subject-matter jurisdiction.

Background

In early 1981, MCV, a marketing communications venture founded by Thomas Simon and Mark Wagner, approached the Halsey Taylor Company (Halsey Taylor), an operating division of King-Seeley Thermos Company (King-Seeley), seeking to establish a business relationship. Halsey Taylor primarily manufactures and sells water coolers. MCV offered an agreement which included a provision that Halsey Taylor would retain all rights to any patents that might eventuate from a relationship with MCV. Halsey Taylor rejected the offer.

In April of 1981, a revised agreement was reached between Halsey Taylor and MCV, pursuant to which MCV was to prepare and present a product plan and development program for Halsey Taylor. The agreement contained no provision for Halsey Taylor's retention of patent rights. However, in a memorandum entitled "Supplement To MCV's Marketing Services Proposal," Dennis Heyden, Halsey Taylor's product manager, stated that "Wagner and Simon confirmed that Halsey Taylor would retain patent and marketing rights to anything developed as a result of their involvement with us."

By contract on December 1, 1981, MCV became a marketing representative of Halsey Taylor, in which capacity Simon recommended new products and markets to Halsey Taylor. Of relevance here, Simon recommended that Halsey Taylor manufacture a "drainless water cooler," and suggested that two gooseneck faucets be mounted on top of the cooler, one for hot water, the other for cold. By November of 1982, Halsey Taylor had decided to seek a patent on the drainless water cooler. Simon conferred with Heyden on drafts of the claims, and the next month suggested to Heyden that he, Simon, be included as a co-inventor on the application. Heyden responded that company policy prohibited the naming of non-employees on company patents. Simon thereupon said that the exclusive right to market the water coolers was more valuable to MCV than patent rights, and that he would "help[ ] in any way [h]e could to facilitate the submission of the ... patent."

Through King-Seeley, Halsey Taylor filed U.S. patent application, Serial No. 542,437, on October 17, 1983, disclosing and claiming a topside dispensing drainless water cooler. Patent No. 4,600,148 ('148 patent) issued on the invention July 15, 1986, naming Doyle Raymer, Michael Eveland, and Heyden, all Halsey Taylor employees, as joint inventors.

During 1984, Halsey Taylor marketed the drainless water coolers, which featured a single topside gooseneck faucet capable of dispensing both hot and cold water. MCV represented Halsey Taylor in some of these sales, and received commissions accordingly. Relations between MCV and Halsey Taylor became acrimonious, however, and on May 30, 1985, MCV formally terminated discussion of a new contract with Halsey Taylor.

This case began with MCV's complaint filed on June 10, 1986, claiming antitrust violations, breach of contract and confidential relationship, fraudulent misrepresentation, non-disclosure and concealment, and trademark violations. By stipulation, the complaint was first amended on July 22, 1986, to identify the proper corporate entity, King-Seeley, as the defendant. (To avoid confusion, we refer to Halsey Taylor throughout, recognizing that its parent, King-Seeley, prosecuted the patent application and defended this suit.) After close of discovery, the complaint was again amended on August 11, 1987. The second amended complaint included two counts based on federal law: one for a determination of co-inventorship and co-ownership and for correction of the '148 patent, under the provisions of 35 U.S.C. Sec. 256; the other alleging violations of the Lanham Act.

The district court granted Halsey Taylor's motion for summary judgment, holding in relevant part that Simon was equitably estopped from asserting his alleged status as a co-inventor on the '148 patent because he knowingly acquiesced in the omission of his name from the application for four years. The court entered judgment dismissing the federal counts, and relinquished its pendent jurisdiction over and dismissed the remaining state claims. MCV appeals only on the co-inventorship count.

Discussion

I. Jurisdiction

The first question is jurisdiction: Is a suit in district court for determination of co-inventorship and correction of a patent under 35 U.S.C. Sec. 256 ¹ permissible, and is it an action "arising under" the patent laws for purposes of 28 U.S.C. Sec. 1338(a) so that we have jurisdiction under 28 U.S.C. Sec. 1295(a)(1)? The answer is yes.

Christianson v. Colt Operating Corp., 486 U.S. ----, 108 S.Ct. 2166, 2173, 100 L.Ed.2d 811, 7 USPQ2d 1109, 1113 (1988), held that section 1338(a) jurisdiction extends "only to those cases in which a well-pleaded complaint establishes either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims." Reviewing the count of MCV's complaint on appeal with these principles in mind, it is apparent that both criteria are met.

MCV's cause of action is created by section 256 which explicitly authorizes judicial resolution of co-inventorship contests over issued patents, although not quite as explicitly as sections 145 and 146, for example, speak of judicial access. Before the enactment of section 256, patentees and their assignees committed inventorship errors at their peril; misjoinder or nonjoinder of an inventor rendered the patent invalid. Section 256 affords the opportunity to correct the patent. S.Rep. No. 1979, 82nd Cong., 2nd Sess. at 7 (1952), U.S.Code Cong. & Admin.News 1952, pp. 2394, 2401. If the patentees and their assignees agree, correction can be had on application to the Commissioner. In the event consensus is not attained, however, the second paragraph of section 256 permits redress in federal court. See P.J. Federico, Commentary on the New Patent Act, 35 U.S.C.A. 1 (1954) ("If [the parties] do not concur, the correction can only be made on order of a court.... [S]ection 256 ... gives a court authority to order correction").

The statute prescribes only one prerequisite to judicial action: all parties must be given notice and an opportunity to be heard. If that is done, there is subject-matter jurisdiction in the district court over a dispute raising solely a joint inventorship issue among contending co-inventors. See Iowa State University Foundation v. Sperry Rand Corp., 444 F.2d 406, 170 USPQ 374 (4th Cir.1971); Dee v. Aukerman, 625 F.Supp. 1427, 228 USPQ 600 (S.D.Ohio 1986). Dee and Iowa State helpfully review the legislative history and the "broad remedial purposes of Congress in enacting Sec. 256 in 1952," which we subscribe to but do not repeat here. Dee, 625 F.Supp. at 1428, 228 USPQ at 601; see Iowa State, 444 F.2d at 410, 170 USPQ at 377.

It is also the case that "relief necessarily depends on resolution of a substantial question of federal patent law." Christianson, 486 U.S. at ----, 108 S.Ct. at 2173, 7 USPQ2d at 1113. Although we do not reach it, the dispositive issue on the merits would be the definition of the invention, as to which no fewer than three theories can be gleaned from the record. MCV argues that "patent claim language defines the invention." Asserting that this places "undue emphasis" on "naked language," Halsey Taylor counters that resort must be had to the prosecution history and prior art, because the "invention" inheres in those elements of the claims that impart patentability. Charting still a third course, the district court apparently was of the view that the invention consists only of those claim elements that individually would not "have been obvious within the meaning of 35 U.S.C.A. Sec. 103." This implicates at least several provisions of the Patent Act: section 116 for joint inventorship; section 112 for claim interpretation; and section 102(f) for originality of conception. Moreover, the patent laws are a "necessary element" of MCV's well-pleaded complaint. Unlike in Christianson where "[t]he patent-law issue, while arguably necessary to at least one theory under each [antitrust] claim, is not necessary to the overall success of either claim," 486 U.S. at ----, 108 S.Ct. at 2174, 7 USPQ at 1114, MCV's co-ownership arises from and depends solely on the patent law issue of inventorship.

Christianson also affirmed that "in order to demonstrate that a case is one 'arising under' federal patent law 'the plaintiff must set up...