Vita-Herb Nutriceuticals Inc. v. Probiohealth LLC, Case No.: SACV 11-1463 DOC(MLGx)

• Decision Date: 06 September 2012
• Docket Number: Case No.: SACV 11-1463 DOC(MLGx)
• Court: U.S. District Court — Central District of California
• Parties: VITA-HERB NUTRICEUTICALS INC., Plaintiff, v. PROBIOHEALTH LLC, a California limited liability company, and Does 1 through 10, Defendants.

VITA-HERB NUTRICEUTICALS INC., Plaintiff,

v.PROBIOHEALTH LLC, a California limited liability company, and Does 1 through 10, Defendants.

Case No.: SACV 11-1463 DOC(MLGx)

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION

DATED: September 6, 2012

ORDER GRANTING IN PART AND

DENYING IN PART DEFENDANTS'

MOTION FOR SUMMARY

JUDGMENT

Before the Court is a Motion for Summary Judgment ("Motion") filed by Defendant Probiohealth LLC ("Defendant") against Plaintiff Vita-Herb Nutriceuticals Inc. ("Plaintiff"). (Dkt. 19). After considering the moving papers and oral argument, the Court DENIES the Motion as to Plaintiff's First Claim seeking a judicial declaration of joint inventorship of the patent-in-suit, but GRANTS the Motion as to Plaintiff's Second Claim seeking a judicial declaration of ownership of the patent-in-suit.

I. Background

This case involves the kinds of nefarious business deals and double-crosses common among the frenemies¹ on the soap opera Dallas (although, sadly, none of the romantic intrigue). The gravamen of the Complaint is that Plaintiff's principal, Bing Baksh, is a co-inventor of U.S. Patent No. 7,214,370 ("the '370 Patent") and that Defendant caused Baksh's name to be removed as a co-inventor from the patent application after another co-inventor assigned his interest in the '370 Patent to Defendant.

Unless otherwise stated the following facts are undisputed.²

a. Parties and Other Smooth Operators

Plaintiff and Defendant are California corporations. Compl. ¶ 1; Answer ¶ 2. Plaintiff's CEO and founder is Bing Baksh ("Baksh"). Pl. Responses (Dkt. 25) ¶ 30. Defendant's CEO is Yoshiteru Koide ("Koide"). Id. at ¶ 32; Koide Decl. (Dkt. 23) ¶ 1.

Dr. A. Satyanarayan Naidu ("Co-Inventor Naidu") and Baksh are listed as inventors on the '370 Patent's original provisional application. Pl. Responses (Dkt. 25) ¶ 3. Co-Inventor Naidu assigned his interest in the '370 Patent to Defendant. Id. at 8.

Louis Cullman ("Attorney Cullman") is an attorney who has either personally represented or who contracted to have his firm represent Defendant, Plaintiff, Baksh, Koide, and Co-Inventor Naidu regarding the '370 Patent and other patents—including representing the parties at the same time and regarding the same '370 Patent. See id. at ¶ 40 (December 18, 2000, Attorney Cullman acting as Koide's patent attorney); id. at ¶¶ 46, 50-51 (September 26, 2002, and September 26, 2003, Attorney Cullman acting as Koide's patent attorney files '370 Patent Application listing Baksh as a co-inventor); id. at ¶57, Baksh Decl. Ex. 28 (Dkt. 27-4)(July 1, 2004, Attorney Cullman requests time extension from USPTO on behalf of "Applicant: Naidu et al."); Pl. Responses (Dkt. 25) ¶ 60 (August 31, 2005, contract in which Attorney Cullman states that his firm is engaged to represent Plaintiff and Baksh "in connection with general intellectual property matters"); id. at ¶ 61 (October 20, 2005, Attorney Cullman bills Baksh for "US divisional application"); id. at ¶ 62 (December 19, 2005, Attorney Cullman bills Baksh to "prepare preliminary amendment in parent application to cancel claims of divisional application"); id. at ¶ 19 (March 16, 2007, Attorney Cullman acting solely as Defendant's patent attorney).

Michelle Glasky ("Glasky") is a patent agent who submitted various filings regarding the '370 Patent to the USPTO, including the request to have Baksh removed as an inventor of the '370 Patent.

b. Attorney Cullman files '370 Patent Application listing both Baksh and Co-Inventor Naidu as inventors

On September 26, 2002, Attorney Cullman, who at that point was Koide's patent attorney, filed the '370 Patent's original provisional application listing Baksh as a co-inventor. Pl. Responses (Dkt. 25) ¶¶ 46, 50-51, 57 (September 26, 2003, filings); see also Baksh Decl. Ex. 28 (Dkt. 27-4) (July 1, 2004, Attorney Cullman requests time extension from USPTO on behalf of "Applicant: Naidu et al.").³

c. Koide convinces Baksh to hire Attorney Cullman for IP work

Koide persuaded Plaintiff and Baksh to engage Attorney Cullman to handle the divisional for his NPIB claims. Pl. Responses (Dkt. 25) ¶ 60. On August 31, 2005, Baksh signed a document titled "Engagement Letter Agreement" submitted to him by Attorney Cullman. Pl. Responses (Dkt. 25) ¶ 60; Baksh Decl. Ex. 30 (Dkt. 28-2). The Engagement Letter Agreement states that Plaintiff and Baksh were engaging Attorney Cullman's firm, Preston Gates, "in connection with general intellectual property matters." Pl. Responses (Dkt. 25) ¶ 60; BakshDecl. Ex. 30 (Dkt. 28-2) at 1. According to the Engagement Letter Agreement, "based upon the information that [we] have provided," Preston Gates "located no present conflicts of interest." Pl. Responses (Dkt. 25) ¶ 60; Baksh Decl. Ex. 30 (Dkt. 28-2) at 1.

On October 20, 2005, Attorney Cullman billed Baksh for "US divisional application" work done by Glasky. P's Pl. Responses (Dkt. 25) ¶ 61. On December 19, 2005, Attorney Cullman billed Baksh for Glasky's work "prepar[ing] preliminary amendment in parent application to cancel claims of divisional application." id. at ¶ 62.

d. December 1, 2005: Attorney Cullman's firm, at Defendant's direction, asks USPTO to remove Baksh as an inventor from the '370 Patent

On December 1, 2005, while Attorney Cullman's firm was representing both Plaintiff and Defendant, the firm, at Defendant's direction, asked the USPTO to cancel certain claims and remove Plaintiff's CEO, Baksh, as an inventor from the '370 Patent Application.⁴ See Pl. Responses ¶ 11, Koide Decl. Ex. 2 (Dkt. 19-4) (December 1, 2005, letter to the USPTO on behalf of "Applicant: Naidu et al." that states "Applicant hereby cancels claims 5, 7, and 14-22. As a result of this amendment, A.S. Naidu is the sole inventor of pending claims 1-4, 6, 8-13 and 23. Therefore, Applicant hereby requests that inventorship be amended under 37 CFR § 1.48(b) and Bing Baksh deleted as an inventor on the instant application."); Baksh Decl. Ex. 31 (Dkt. 28-3) at 1 (December 1, 2005, letter to the USPTO on behalf of "Applicant: A. Satyanarayan Naidu" that states "Applicant respectfully requests that the enclosed filing receipt be corrected to remove Bing Baksh as inventor.").

Additional evidence that this action was taken by Attorney Cullman's firm is that the return address for the December 1, 2005, letter is the same firm office as that listed on the August 31, 2005, contract in which Attorney Cullman states that his firm is engaged to represent Plaintiff and Baksh in "in connection with general intellectual property matters." Compare id.with Baksh Decl. Ex. 30 (Dkt. 28-2) (containing addresses 1900 Main Street, Suite 600, Irvine, CA, 92614).

e. Koide and Co-Inventor Naidu have a falling out

At some point prior to January 30, 2006, Koide and Co-Inventor Naidu had a falling out which was resolved through a written Separation Agreement on that date. Pl. Responses ¶ 68. Baksh was not a party to this Separation Agreement. Id.

f. Baksh and Co-Inventor Naidu have a falling out

At some point prior to June 12, 2006, Baksh and Co-Inventor Naidu also had a falling out. Koide Decl. Ex. 4 (Dkt. 19-6).

g. June 1, 2006: Plaintiff and Baksh sign the General Release contract with Defendant to obtain information helpful to Baksh's dispute with Co-Inventor Naidu

On June 12, 2006, the Baksh on behalf of Plaintiff and Koide on behalf of Defendant signed a General Release contract ("General Release"). Pl. Responses (Dkt. 25) ¶ 16; Koide Decl. Ex. 4 (Dkt. 19-6). The three-page General Release states that Plaintiff and Baksh "forever release . . . [Defendant and Koide] . . . from any and all claims . . . which [Plaintiff and Baksh] have or may claim to have, known or unknown, against [Defendant and Koide] from the beginning of time to the date of this Release." Koide Decl. Ex. 4 (Dkt. 19-6). The General Release also states that Plaintiff and Baksh "expressly waive the benefit and protection of California Civil Code Section 1542," and then quotes the language of that code section, which states "[a] general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Id. (quoting Cal. Civ. Code § 1542).

The General Release states that it is being entered into "in consideration of," among other things, the fact that Plaintiff and Baksh "have a pending dispute (the 'Dispute') with Dr. A.S. Narain Naidu" and Defendant and Koide "have information relevant to the Dispute and are willing to provide truthful information" to Plaintiff and Baksh. Id.

h. March 7, 2007: Baksh discovers that he was omitted from the '370 Patent

On March 7, 2007, Baksh discovered that he had been removed from the '370 Patent's Application. Baksh Decl. (Dkt. 26) ¶ 55. Baksh's assertion is supported by his March 7, 2007, email to Plaintiff's new attorney, Schewe, in which Baksh stated "To the best of my knowledge, this is the first indication I have that I was removed from the original patent application" of the '370 Patent. Pl. Responses (Dkt. 25) ¶ 80; Baksh Decl. Ex. 41 (Dkt. 29-1).

i. March 8, 2007: '370 Patent issues with Baksh omitted as an inventor

On May 8, 2007, the claims remaining in the '370 Patent revised application issued as U.S. Patent No. 7,214,370 ("the '370 Patent") with Baksh omitted as an inventor. Pl. Responses (Dkt. 25) ¶ 15; Koide Decl. Ex. 3.

On March 9, 2007, the USPTO mailed out its "Corrected Filing Receipt," which "acknowledged" receipt of the application that requested removal of Baksh as an inventor. Baksh Decl. (Dkt. 26) ¶ 56; Baksh Decl. Ex. 42 (Dkt. 26) ¶ 55.

j. Baksh contacts Defendants asserting co-inventorship of the '370 Patent

On March 16, 2007, Plaintiff's new attorney, Schewe, sent a faxed letter to Attorney Cullman, who at this point was acting solely as Defendant's patent attorney. id. at ¶ 19. That letter...