Borden Larson appealed the decisions of the United States District Court for the Middle District of Florida that granted summary judgment in favor of Defendants-Appellees Correct Craft, Inc. 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. The Federal Circuit ruled that because Larson assigned his rights in the invention he did not have standing to sue to correct inventorship under § 256
At issue were several patents Correct Craft eventually received for the wakeboard tower. Larson, who was employed by Correct Craft, conceived of an invention related to the mounting of a tower structure on a water-sports boat, which would allow for added storage space as well as the attachment for an elevated tow line. Heshowed his designs for this “wakeboard tower” to William Snook, a Correct Craft engineer. At Snook’s urging, Larson then presented his idea to management, which approved and directed a prototype to be built by Robert Todd’s fabrication company.
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.
Subsequently, Correct Craft terminated Larson and Larson then claimed to have for the first time discovered his rights in the wakeboard tower. Exactly what his means I do not know, but it was what the Federal Circuit decision explained. Presumably, upon being terminated by Correct Craft Larson thought that it might be in his best interest to attempt to obtain ownership over the wakeboard invention he assigned to Correct Craft.
Believing that Correct Craft misled him about his obligation to sign the patent assignments, and coupled with his belief that the company betrayed him, 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 added three counts seeking declaratory judgments against Correct Craft, Snook, and Todd concerning the parties’ rights to the wakeboard-tower patents.
The district court then granted summary judgment in favor of the defendants. On appeal the Federal Circuit explained that the there were two issues regarding whether there was indeed basis for federal jurisdiction here. First, Larson’s claims for declaratory relief did not actually invoke § 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, a question existed with respect to whether Larson had standing to pursue a claim for correction of inventorship in federal court.
The Federal Circuit determined, of course, that § 256 does supplies such a valid basis for federal jurisdiction, and held that Larson’s allegations, fairly construed, reveal that he sought a judicial determination that he, not Todd or Snook, is the true and sole inventor of the wakeboard tower. Therefore, with respect to the first issue, it was determined that Larson had set forth an appropriate claim seeking redress under § 256, which could justify federal jurisdiction.
A plaintiff seeking correction of inventorship under § 256 can pursue that claim in federal court only if the requirements for constitutional standing, namely injury, causation, and redressability, are satisfied. Unfortunately for Larson, he transferred title to the patents to Correct Craft, and he stood to reap no benefit from a preexisting licensing or royalties arrangement. His only path to financial reward under § 256 in this case, therefore, requires him to first succeed on his state-law claims and obtain rescission of the patent assignments. With his ownership of the wakeboard-tower patents being contingent in this manner, Larson had no financial interest in the patents sufficient for him to have standing to pursue a § 256 claim.
Accordingly, the Federal Circuit ruled that the district court lacked jurisdiction to hear the case pursuant to 28 U.S.C. § 1338(a). The judgment of the district court was vacated and the case remanded with instructions to the district court to transfer the case back to state court.- - - - - - - - - -
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About the Author
Gene Quinn is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.