Spears v. Consulting

• Decision Date: 07 September 2018
• Docket Number: Case No: 2:18-cv-286-FtM-38MRM
• Citation: 338 F.Supp.3d 1272
• Parties: Daniel C. SPEARS, Jr., Plaintiff, v. SHK CONSULTING AND DEVELOPMENT, INC. and David B. Nirenberg, Defendants.
• Court: U.S. District Court — Middle District of Florida

338 F.Supp.3d 1272

Daniel C. SPEARS, Jr., Plaintiff,

v.SHK CONSULTING AND DEVELOPMENT, INC. and David B. Nirenberg, Defendants.

Case No: 2:18-cv-286-FtM-38MRM

United States District Court, M.D. Florida, Fort Myers Division.

Signed September 7, 2018

Alexander Charles Cohen, Jerold I. Schneider, Joel B. Rothman, Schneider Rothman Intellectual Property Law Group, PLLC, Boca Raton, FL, for Plaintiff.

Gregory N. Woods, Woods, Weidenmiller.Michetti, Rudnick, and Galbranth, PL, Anthony Ross McClure, Porter, Wright, Morris & Arthur, LLP, Naples, FL, for Defendants.

OPINION AND ORDER ¹

SHERI POLSTER CHAPPELL, UNITED STATES DISTRICT JUDGE

Before the Court is Defendants SHK Consulting and Development Inc. f/k/a Unified Marine, Inc.'s and David B. Nirenberg's Motion to Dismiss Counts VI and X of the Amended Complaint with Prejudice (Doc. 37) filed on August 3, 2018, and Plaintiff's Opposition (Doc. 47).

BACKGROUND

Spears invented a depth gauge to be attached to boat trailers. The gauge gives a visual cue to the driver of the tow vehicle that the trailer is at proper depth to launch or recover a boat. (Doc. 31 at 4). Spears was granted a patent on the invention, which he licensed to SHK (formerly known as United Marine, Inc.) by way of a Licensing Agreement signed by Spears and SHK CEO David Nirenberg. (Doc. 31-2). The License Agreement contains the handwritten addition, "Modifications to the patent should be added to the patent as soon as possible." (Doc. 31-2 at 3). Spears interprets this language to give him ownership rights to any subsequent embodiments of his invention.

About a year after the Licensing Agreement was signed, SHK hired Spears as a Research and Development Supervisor. (Doc. 31 at 7). During the performance of the Licensing Agreement and his employment with SHK, Spears gave SHK and Nirenberg confidential information about improvements to his invention. (Doc. 31 at 7). Nirenberg used the information to file U.S. Patent Application No. 13/800,145, which he assigned to SHK. (Doc. 31 at 9). SHK assigned the '145 Application to Lake Red Rock, and U.S. Patent No. 9,127,940later issued, naming Nirenberg as the sole inventor and Lake Red Rock as the assignee. (Doc. 31 at 9; Doc. 31-6).

Spears sued SHK, Nirenberg, and Lake Red Rock LLC for ten causes of action relating to the '940 Patent and the Licensing Agreement. (Doc. 31). Lake Red Rock was voluntarily dismissed, and Count VII was thus abandoned because it was only asserted against Lake Red Rock. (Doc. 36). SHK and Nirenberg move to dismiss the remaining unjust-enrichment claim (Count VI) and the constructive-fraud claim (Count X) under Rule 12(b)(6) of the Federal Rules of Civil Procedure.

DISCUSSION

When considering a Rule 12(b)(6) motion to dismiss, a court must accept all factual allegations in the complaint as true and view them in a light most favorable to the plaintiff. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). This preferential standard of review, however, does not let all pleadings adorned with facts survive to the next state of litigation. The Supreme Court has been clear on this point – a district court should dismiss a claim when a party does not plead facts that make the claim facially plausible. Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible when the court can draw a reasonable inference, based on facts pled, that the opposing party is liable for the alleged misconduct. Iqbal , 556 U.S. at 678, 129 S.Ct. 1937. This plausibility standard requires "more than a sheer possibility that a defendant has acted unlawfully." Id. (citing Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ). And a plaintiff must allege more than labels and conclusions amounting to a formulaic recitation of the elements of a cause of action. Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).

A. Preemption of the Unjust-Enrichment Claim (Count VI)

SHK and Nirenberg argue that Spears' unjust-enrichment claim is preempted by federal patent law because it hinges on whether Spears is the true inventor of the '940 Patent. (Doc. 37 at 4-5). They contend that applying state law to determine rights and remedies based on inventorship would frustrate the intentions and objectives of Congress. (Doc. 37 at 4-5). Spears counters that the claim is not preempted, as it concerns ownership of the patent, not inventorship. (Doc. 47 at 2-3). Because jurisdiction here is based in part on 28 U.S.C. § 1338(a), the law of the Federal Circuit applies to the preemption issue. Clearplay, Inc. v. Nissim Corp , 555 F.Supp.2d 1318, 1324-25 (S.D. Fla. 2008).

The Supremacy Clause of the Constitution "states a clear rule that federal law ‘shall be the supreme Law of the Land; and Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.’ " Amgen Inc. v. Sandoz Inc. , 877 F.3d 1315, 1326 (Fed. Cir. 2017) (quoting U.S. Const. art. VI, cl. 2 ). Federal law can preempt state law in three ways: express preemption, field preemption, and conflict preemption. Id. (citing English v. Gen. Elec. Co. , 496 U.S. 72, 78-79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990) ). The Defendants' argument here relies on conflict preemption, which "occurs ‘where it is impossible for a private party to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ " Id. (quoting English , 496 U.S. at 79, 110 S.Ct. 2270 ).

The federal Patent Act has three objectives: "providing an incentive to invent, promoting the full disclosure of inventions, and ensuring ‘that which is in the public domain cannot be removed therefrom by action of the States.’ " Dow Chemical Co. v. Exxon Corp. , 139 F.3d 1470, 1474 (Fed. Cir. 1998) (quoting Kewanee Oil Co. v. Bicron Corp. , 416 U.S. 470, 480, 94 S.Ct. 1879, 40 L.Ed.2d 315 (1974) ). A state tort remedy that does not frustrate these objectives is not preempted by federal patent law. The analysis begins by identifying the elements of the state-law claim and the nature of the underlying factual allegations. See Daneshvar v. Kipke , 266 F.Supp.3d 1031, 1051-52 (E.D. Mich. 2017).

To establish a claim for unjust enrichment in Florida,

a plaintiff must show (1) that the "plaintiff conferred a benefit on the defendant, who has knowledge thereof"; (2) that the defendant "voluntarily accepted and retained the benefit conferred"; and (3) that "the circumstances are such that it would be inequitable for the defendant to retain the benefit without paying the value thereof to the plaintiff."

Edmondson v. Caliente Resorts, LLC , No. 8:15-CV-2672-T-23TBM, 2018 WL 1565453, at *3 (M.D. Fla. March 30, 2018) (quoting Hillman Constr. Corp. v. Wainer , 636 So.2d 576, 577 (Dist. Ct. App. Fla. 1994) ). This cause of action covers "a broad range of conduct that does not bear on federal patent policies" and thus is not generally preempted by federal patent law. Univ. of Colorado Found., Inc. v. Am. Cyanamid Co. , 196 F.3d 1366, 1371 (Fed. Cir. 1999). The Court next turns to the factual allegations to determine whether applying the cause of action in this case would "impose requirements that are inconsistent with federal law." Id.

The crux of Spears' unjust-enrichment claim is that Nirenberg and SHK wrongfully obtained the '940 Patent based on confidential information they received from Spears and claimed ownership of it in violation of the Licensing Agreement. (Doc. 31 at 10). The Court of Appeals for the Federal Circuit faced similar facts in Cyanamid and determined that a state unjust-enrichment claim was not preempted when the defendant obtained a patent through the wrongful use of information it received from the plaintiffs. Cyanamid , 196 F.3d at 1371-71. The Federal Circuit held that the unjust-enrichment claim did not spring "from an attempt to enforce intellectual property rights, but instead from [the defendant]'s alleged wrongful use of the [plaintiff]s' research results." Id. Spears' unjust-enrichment action is similarly based on the Defendants' alleged misuse of his confidential information to obtain ownership of a patent; it is not based on enforcement of patent rights.

The Defendants cite OptoLum v. Cree to support preemption here because "[f]ederal patent law ‘preempts any state law that purports to define rights based on inventorship.’ " (Doc. 4) (quoting OptoLum, Inc. v. Cree, Inc. , 244 F.Supp.3d 1005, 1014 (D. Ariz. 2017). OptoLum asserted that the defendant falsely held itself out to the public as the inventor of LED technology. OptoLum , 244 F.Supp.3d at 1013. The resulting reputational benefit was the basis for OptoLum's unjust-enrichment claim. Id. at 1014-15. The OptoLum court found that the claim was preempted because it "depend[ed] on resolution of the inventorship issue." Id. The court distinguished OptoLum's claim from one asserted in Thompson v. Microsoft Corp. , 471 F.3d 1288 (Fed. Cir. 2006) :

In that case, the unjust enrichment claim was based on the allegation that the plaintiff had shared his technology with Microsoft in confidence and with the promise that Microsoft would not appropriate the technology for its own use. In response to Microsoft's preemption argument, the plaintiff made clear that inventorship was irrelevant to his unjust enrichment claim.

OptoLum , 244 F.Supp.3d at 1014 (internal citations omitted). Spears' unjust-enrichment claim is more like Thompson's than OptoLum's because his claim is based on Defendants' misappropriation of ownership of a patent, not misappropriation of inventorship. Spears alleges that he has a contractual right to ownership of the '940 Patent, distinct from any ownership rights he may have as the true inventor. So even if a determination of inventorship is relevant to the unjust-enrichment claim, it is not essential because Spears has advanced an alternative, non-patent theory that could...