Gillig v. Nike, Inc., 602 F.3d 1354 (Fed. Cir. 2010) (DYK, Linn & Plager)GilligNike04202010
MAJOR ISSUES: inventorship correction suit; no res judicata effect of dismissal of prior trade secret suit for lack of standing; correction of pending applications
COMMENT: Stand-alone Federal court suits against patent owners seeking to correct inventorship on issued patents have a dubious pedigree. Likely, in enacting 35 U.S.C. § 256, Congress intended only to allow correction when improper inventorship is raised as an issue in an infringement suit (or suit for a declaratory judgment of noninfringement). See Chisum on Patents 2.04. However, the Federal Circuit has consistently ruled otherwise.
In this suit, an inventor and his company sought inventorship correction against a patent owner in a suit filed after the company’s prior suit against the patent owner alleging trade secrets misappropriation had been dismissed. The Federal Circuit held that the inventorship claims in the second suit were not barred by the res judicata effect of the first suit, with one exception.
1. GOLF CLUBS. An inventor, Gillig, and his company, Triple Tee, alleged that a patent owner, Nike, misappropriated the inventor’s golf club technology, which, the inventor asserted, was disclosed in confidence to a person who later joined Nike and was used by Nike to make clubs and obtain patents.
a. FIRST SUIT DISMISSED; COMPANY LACKED STANDING. In a first suit, brought in 2004, the company Triple Tee sued Nike. The court dismissed the suit on the ground that the Triple Tee lacked standing because the inventor Gillig owner the asserted trade secret rights.
i. ASSIGNMENT: NOT EFFECTIVE. The court held that a 2000 assignment by Gillig to Triple Tee was not effective.
ii. The court denied a suggestion to substitute Gillig as plaintiff.
iii. 2005 ASSIGNMENT: NO CURE FOR LACK OF STANDING. The court held that a 2005 assignment by the inventor Gillig to his company Triple Tee did not cure the defect.
b. SECOND SUIT. In a second suit, the inventor Gillig and his company Triple Tee sued as co-plaintiffs alleging both trade secret misappropriation and inventorship correction under Section 256.
i. A district court held, correctly, that the trade secret claims were barred by the statute of limitations and res judicata.
ii. The district court also held that the inventorship claims “were … barred by res judicata because they arose from the same nucleus of operative facts as the trade secret claims asserted in the first action ….” Gillig was barred because, although not a party to the first suit, he was in privity with the plaintiff Triple Tee.
iii. The inventor Gillig and the company Triple Tee appealed.
3. REQUIREMENTS FOR RES JUDICATA. Res judicata requires four elements: (1) parties identical or in privity, (2) a judgment by a court of competent jurisdiction, (3) a final judgment on the merits, and (4) same claim or cause of action.
4. LACK OF STANDING: NOT “ON THE MERITS.” To the extent the dismissal of the first action was based on lack of standing, the judgment was not “on the merits.” The court in the first suit purported to dismiss the suit on the merits as well as for lack of standing.
5. INVENTOR: IN FIRST ACTION, NOT SAME PARTY OR PRIVITY. The inventor Gillig was not a party to the first action and was barred by neither collateral estoppel nor res judicata. Neither a “control of party” exception nor a “control of litigation” exception applied so as to bind the inventor by the dismissal of the first action.
a. “CONTROL OF PARTY” EXCEPTION. The “control of party” exception required more than a showing that a person controlled a corporation through stock ownership or officership. Required instead was a showing that the corporate form was ignored. That showing was not made here.
b. “CONTROL OF LITIGATION” EXCEPTION. The “control of litigation” exception did not apply.
i. It was doubtful whether the inventor was sufficiently in control of the first suit. Ultimate control of a corporation did not necessarily establish control of particular litigation.
ii. The “control of litigation” exception applied only to “collateral estoppel” (same issue actually decided) and not to res judicata (same claim). The prior suit resolved only the issue whether the inventor had assigned his trade secret rights to the corporation (Triple Tee). That was not the same issue as inventorship.
6. COMPANY (TRIPLE TEE): NOT ENTIRELY BARRED. The inventor’s company Triple Tee was barred by res judicata from asserting inventorship claims based on the 2000 assignment but not as to claims that arose after the first suit was filed in 2004 and that were based on the 2005 assignment.
a. NEW RIGHTS ACQUIRED DURING LITIGATION THAT MIGHT HAVE BEEN, BUT WERE NOT, LITIGATED; COMPUTER ASSOCS. INT’L (1997). Res judicata did not bar new rights acquired during a suit that might have been but were not litigated. Computer Assocs. Int’l, Inc. v. Altai, Inc., 126 F.3d 365, 370 (2d Cir. 1997).
b. SUPPLEMENTAL COMPLAINT. A plaintiff may file a supplemental pleading to assert a related, after-arising claim but is not punished for failing to do so. E.g., Fla. Power & Light Co. v. United States, 198 F.3d 1358, 1360 (Fed. Cir. 1999).
7. MOST INVENTORSHIP CLAIMS: NOT ARISE UNTIL AFTER FIRST SUIT BROUGHT IN 2004; ONLY ONE OF EIGHT ALLEGED PATENTS HAD ISSUED. Most of the inventorship claims in this case could not have been brought at the time of the first suit (2004). Only one of the eight patents listed by the complaint in the second suit had issued before the 2004 filing. The Federal Circuit noted that “there is no cause of action to correct inventorship until a patent has issued. See HIF Bio, Inc. v. Yung Shin Pharms. Indus. Co., 600 F.3d 1347 (Fed. Cir. 2010).”
CROSS REFERENCES. On inventorship correction suits, see Chisum Patent Law Digest 1850; Chisum on Patents 2.04.