Shum v. Intel Corp..
| Citation | 633 F.3d 1067 |
| Decision Date | 24 February 2011 |
| Docket Number | 2009–1419.,Nos. 2009–1385,s. 2009–1385 |
| Parties | Frank T. SHUM, Plaintiff–Appellant,v.INTEL CORPORATION, LightLogic, Inc., and Jean–Marc Verdiell, Defendants–Cross Appellants. |
| Court | U.S. Court of Appeals — Federal Circuit |
OPINION TEXT STARTS HERE
Paul F. Kirsch, Shopoff & Cavallo LLP, of San Francisco, CA, argued for plaintiff-appellant. Of counsel on the brief was Robert A. McFarlane, Townsend and Townsend and Crew LLP, of San Francisco, CA.William F. Lee, Wilmer Cutler Pickering Hale and Dorr LLP, of Boston, MA, argued for defendants-appellees. With him on the brief were Richard W. O'Neill, Mark C. Fleming; Seth P. Waxman, Brian M. Boynton, Mary K. Gardner, and Gregory H. Lantier of Washington, DC. Of counsel on the brief was Stephen E. Taylor, Taylor & Company Law Offices, LLP of San Francisco, CA.Before NEWMAN, LOURIE, and PROST, Circuit Judges.Opinion for the court filed by Circuit Judge PROST. Dissenting opinion filed by Circuit Judge NEWMAN.PROST, Circuit Judge.
In part, this case is about inventorship. Mostly, however, this case is about various claims arising under California law. While the theories as to each state law claim differ slightly, all are essentially grounded in fraud. The ones at issue on appeal include breach of fiduciary duty, fraudulent concealment, unjust enrichment, breach of contract, and intentional misrepresentation. This appeal also challenges the district court's findings regarding the inventorship of certain claims for two of the patents-in-suit.
This case was filed by an optical engineer named Frank Shum (“Shum”). Shum's amended complaint sought correction of inventorship for seven patents that listed his former business partner, Jean–Marc Verdiell (“Verdiell”), as the sole inventor. Shum contended that he should be named as a co-inventor, if not the sole inventor, of these patents.
Shum's state law claims all stem from the sale of Verdiell's company LightLogic, Inc. (“LightLogic”) to Intel Corporation (“Intel”). Before Verdiell formed and later sold LightLogic, Verdiell and Shum had been equal shareholders and co-officers of a company called Radiance Design, Inc. (“Radiance”). A mere nine months after its formation, however, Shum and Verdiell dissolved Radiance pursuant to a detailed Plan of Liquidation (“POL”). The POL gave them equal rights to exploit Radiance's intellectual property. While Shum shortly thereafter returned to a salaried position at an established company, Verdiell chose to form and continue his own company, LightLogic. Pursuant to his state law claims, Shum seeks to recover some of the $409 million Intel paid for LightLogic.
Shum's claims were decided at various stages of the proceedings below. On remand from an earlier appeal to this court, the district court granted defendants' summary judgment on Shum's breach of fiduciary duty and fraudulent concealment claims. A jury subsequently heard Shum's claims for correction of inventorship, intentional misrepresentation, breach of contract, and unjust enrichment. The jury found that Shum was a co-inventor of some claims in five of the six patents still in dispute at trial.1 More importantly for our purposes, the jury was unable to reach a verdict on any of the state law claims. It also deadlocked on correction of inventorship for claim 5 of U.S. Patent No. 6,227,724 (“'724 patent”) and claim 1 of U.S. Patent No. 6,585,427 (“'427 patent”). The district court declared a mistrial on these claims. After trial, defendants Verdiell, Intel, and LightLogic renewed their motion for judgment as a matter of law (“JMOL”) on the unresolved state law and inventorship claims. The district court granted defendants' motion, concluding that a reasonable jury would not have had a legally sufficient basis to find for Shum. Shum timely appealed.
On appeal, Shum argues that there are genuine issues of material fact entitling him to proceed to trial on his breach of fiduciary duty and fraudulent concealment claims. As for the claims on which the district court granted post-verdict JMOL, Shum argues that he presented sufficient evidence such that a reasonable jury could find for him, thus entitling him to a new trial. In support of his request for a new trial, Shum argues that various evidentiary and discovery rulings by the district court were erroneous.
We disagree and now affirm the district court's judgment.2 Under California law, Verdiell did not owe Shum a fiduciary duty; as for any fiduciary duty that Verdiell owed Radiance, their jointly owned and now-defunct corporation, Shum lacks standing to sue. Further, because Verdiell owed Shum no fiduciary duty and there is no evidence Verdiell knew or actively concealed material facts Shum did not know or could not have reasonably discover, Verdiell is not liable for fraudulent concealment.
Shum's claim for intentional misrepresentation similarly fails because there is no evidence that defendants made a false statement or that Shum suffered any actual monetary loss as a result of the alleged misrepresentation. As for Shum's breach of contract claim, there is again a dearth of evidence that Shum was harmed as a result of defendants' alleged breach. The unjust enrichment claim suffers a similar fate: no evidence supports Shum's assertion that defendants' alleged wrongful acts caused them to obtain a benefit at Shum's expense. Finally, we agree with the district court that the evidence Shum offered at trial was not sufficient for a reasonable jury to find that Shum made an inventive contribution to claim 5 of the '724 patent or claim 1 of the '427 patent.
Background
The facts below resulted in two separate appeals to this court, both of which arose from the same trial and post-trial proceedings. We combined the appeals for the purpose of oral argument, but address the discrete issues each raises in separate opinions. Here, we address the merits. Shum separately appealed the district court's award of costs pursuant to Federal Rule of Civil Procedure 54(d)(1). That appeal is the subject of a companion opinion, Shum v. Intel Corp., 629 F.3d 1360 (Fed.Cir.2010).
Shum's claims for inventorship and violations of state law are intimately bound up in his brief business venture with Verdiell, as well as Verdiell's business activities after the two parted company. That history is set forth below.
Shum and Verdiell met while working at Spectra Diode Laboratories (“SDL”). Both are engineers in the optoelectronics field. In 1996, Shum left SDL and formed his own company. Verdiell continued to work at SDL, though he helped Shum prepare grant proposals for various optoelectronic packaging products. In March 1997, Verdiell resigned from SDL. Shortly thereafter, in April 1997, Shum and Verdiell incorporated Radiance as equal shareholders and co-officers: Verdiell was President and Treasurer; Shum, Vice President and Secretary. Shum and Verdiell also executed agreements assigning all of their rights in any inventions to Radiance.
The day after Radiance was incorporated, a patent agent named Marek Alboszta (“Alboszta”) filed U.S. Patent Application No. 08/838,022 on behalf of Radiance (“'022 patent application” or “Radiance patent application”). It covered optoelectronic assemblies and methods for making them. Although Verdiell undisputedly made inventive contributions to the application, Shum was named as the sole inventor. At trial, the evidence showed that Shum and Verdiell decided to omit Verdiell's name from the application because some of the matter was conceived by Verdiell while he was still working for SDL and they wished to avoid disputes regarding ownership of the invention.
While the Radiance patent application was pending, Verdiell told patent agent Alboszta that he, not just Shum, was an inventor of the claimed subject matter. Based on this information, Alboszta concluded that the Radiance patent application was invalid and had to be withdrawn. Both Alboszta and Verdiell subsequently told Shum that the application would have to be withdrawn. Shum agreed; the Radiance patent application was withdrawn in November 1997.
By the time the Radiance patent application had been withdrawn, the relationship between Shum and Verdiell had deteriorated. Both had begun to separately prepare business plans and seek financing for new companies based on Radiance's technology. Both also hired attorneys. After buy out talks for Radiance broke down, negotiations turned to dissolving Radiance and drafting a satisfactory POL. The final version of the POL was agreed to and executed on January 5, 1998. Pursuant to the POL, Shum and Verdiell
acknowledge[d] and agree[d] that, after approval of this Plan, each of them shall be entitled, without any liability or duty to account to the Corporation or to the other, to pursue any and all such other business activities as they shall desire, even if such activities are in competition with the business of the Corporation [Radiance] and even if they take, or attempt to take, a business opportunity that the Corporation could itself have pursued.
The day after the POL took effect and Radiance was formally dissolved, patent agent Alboszta filed a new patent application on Verdiell's behalf. This first patent application related to the same subject matter as the withdrawn Radiance patent application, with Verdiell even using the Radiance patent application as a starting point and then editing it to remove portions he viewed as Shum's contribution. The application Alboszta filed in January 1998 named Verdiell as the sole inventor. Verdiell subsequently assigned his rights in the application to his new company, LightLogic. Verdiell formed LightLogic a day before Radiance withdrew its patent application. At no time before or after dissolution of Radiance did Verdiell tell Shum about his plans to form LightLogic or to file a new patent application covering the same subject matter as the Radiance...
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