Stc.Unm v. Intel Corp.

STC.UNM, Plaintiff, v. INTEL CORPORATION, Defendant.

No. 10-cv-1077 RB/WDS

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO

January 17, 2013

MEMORANDUM OPINION AND ORDER

This matter is before the Court on STC.UNM's ("STC's") Motion to Correct Standing and to Reconsider, filed June 13, 2012 (Doc. 218), and Intel Corporation's ("Intel's") Cross-Motion to Dismiss STC's Remaining Claims for Lack of Standing, filed July 10, 2012 (Doc. 228). Having considered the submissions of the parties, relevant law, and being otherwise fully advised, the Court DENIES STC's motion and GRANTS Intel's cross-motion.

I. Background

This case arises from Intel's alleged infringement of a patent, owned by STC, covering photolithography techniques in the manufacture of semiconductors. The Court has previously ruled on several motions in this case, the most significant of which being Intel's Motion for Summary Judgment for Unenforceability. (See Doc. 206). The motion required the Court to consider Intel's contention that the patent at issue, United States Patent No. 6,042,998 ("the '998 patent"), was unenforceable as a matter of law because it and a prior patent, United States Patent No. 5,705,321 ("the '321 patent"), are not commonly owned. While common ownership would not ordinarily be required to render a patent enforceable, in this case, the United States Patent and Trademark Office ("USPTO") refused to issue the '998 patent until a terminal disclaimer was submitted requiring, among other things, the common ownership of the '321 patent and the pending '998 patent. (Doc. 206 at 4-5).

After extensive review and thorough consideration, the Court determined that the inventions incorporated into the patent application ultimately issued as the '321 patent were invented by four persons: three University of New Mexico ("UNM") employees, Steven Brueck, An-Shyang Chu, and Saleem H. Zaidi; and one Sandia¹ employee, Bruce Draper. (Doc. 206 at 2-3). The application was filed June 6, 1995 and the '321 patent issued January 6, 1998. (See Doc. 179 Ex. W at 1). The interests of the co-inventors in the application that became the '321 patent were ultimately assigned to their respective employers. (Doc. 206 at 3). UNM transferred its full interest in patent '321 to STC in July of 2002. (Id. at 5).

The invention resulting in the '998 patent, on the other hand, was invented by two of the '321 co-inventers, Brueck and Zaidi, as well as two other UNM employees, Steve Hersee and Kevin Malloy. (Id. at 4). The application that ultimately resulted in the '998 patent was filed on September 17, 1997, and the patent issued on March 28, 2000. (Doc. 179 Ex. G at 1). The '998 patent documents showed that the assignee was UNM and that the patent was subject to a terminal disclaimer. (Id.) The terminal disclaimer included language attesting to UNM's ownership of full interest in the application that issued as the '998 patent. (Doc. 206 at 4). UNM transferred ownership of its interest in patent '998 to STC in August of 2007. (Id. at 5). At a later date, and at STC's request, the USPTO issued a Certificate of Correction to add language that patent '998 is a continuation-in-part of patent '321. (Id.) On December 1, 2011, STC assigned an undivided interest in patents '998 and '321 to Sandia. (Id. at 15).

Based on the fact that Draper did not co-invent any claims of the '998 patent, a fact admitted by STC, the Court concluded that Draper had no interest in the '998 patent to assign to his employer, Sandia. (Doc. 206 at 11-15). Accordingly, until STC assigned the interest to Sandia on December 1, 2011, the Court concluded, Sandia did not own an interest in the '998 patent and the defect in ownership rendered it unenforceable as a matter of law. (Id. at 15, 22). However, the Court did not resolve the issue of enforceability after December 1, 2011. Intel contended that Sandia Corporation and Sandia National Laboratories were different entities and that, as a result, the issue of common ownership had not been cured by the December 1 assignment. However, the Court found the parties' evidence regarding the identity of the two entities insufficient. (Id. at 15-22). Thus, the Court did not determine whether the patent was unenforceable from December 1, 2011 through its expiration. The Court noted that STC's December 1 assignment did generate an issue of standing, and that issue is now fully briefed.

Additional background information is required to fully address the issues before the Court. First, the parties make reference to a technology disclosure that was docketed with UNM as UNM-322 and with Sandia as SD-5308. This was the original technical disclosure of the four inventors named in the '321 patent, and it is entitled "Method for Fabrication of Quantum Wires and Quantum Dots." (Doc. 218 Ex. A). Following this disclosure, a patent application was filed, terminated by the inventors, and refiled as the application resulting in the '321 patent. (Doc. 206 at 2-3).

During the patenting process for the terminated patent application and subsequently the '321 patent, Sandia and UNM sought to obtain title to the invention from the Department of Energy ("DOE") pursuant to the Atomic Energy Act, 42 U.S.C. § 5908. (Doc. 218 Ex. B). The DOE granted UNM's request for an "undivided interest" in the "invention" entitled "Method forManufacture of Quantum-Sized Periodic Structures in Si Materials" in December of 1993. (Doc. 218 Ex. C). The DOE approved Sandia's request to retain title of the same invention on June 29, 1995. (Doc. 218 Ex. B at 17). Sandia had previously expressed to UNM that, once it obtained title, it would enter an agreement with UNM to make UNM "the exclusive licensing agent for the invention." (Doc. 218 Ex. D).

In August of 2006, Sandia, UNM, and STC executed a Memorandum of Understanding ("MOU") regarding the patenting, licensing and royalty sharing of jointly owned inventions and works of authorship. (Doc. 218 Ex. E). The MOU states that one party will be responsible for the licensing, patenting, and protection of subject inventions and contemplates the creation of a Commercialization Agreement for each subject invention. (Id.)

The relevant Commercialization Agreement was executed in June of 2009, designated STC as the exclusive licensing agent, and covered jointly-owned "Intellectual Property" defined as follows:

Technology was disclosed to STC on September 20, 1993 in SD-5308 (Sandia) / UNM-322 (STC)

U.S[.] Issued Patent No. 5,605,321 issued on January 6, 1998

Title: "Method for Manufacture of Quantum Sized Periodic Structures in Si Materials"

Inventors: Steven R.J. Brueck, Saleem H. Zaidi, An-Shyang Chu, and Bruce L. Draper.

(Doc. 218 Ex. F at 1). The "Background" section of the Commercialization Agreement explains that one inventor, Draper, was a Sandia employee at the time that the Intellectual Property was developed, while the remaining three were employees of UNM. (Id.) Regarding the responsibilities of the parties, the Commercialization Agreement states that STC is the "PATENTING LEAD," requiring it to "undertake all patenting and prosecution or other protection of the INTELLECTUAL PROPERTY." (Id.) Further, the CommercializationAgreement makes STC the "LICENSING PARTY," so Sandia agreed to refrain from licensing the Intellectual Property and to refer all licensing inquiries to STC. (Id.) The Commercialization Agreement provides for the distribution of licensing income after cost reimbursements, with STC receiving 77.5% of the income and Sandia receiving 22.5%.² (Id. at 2). The worksheet to calculate the division makes clear that the distribution was based on the number of contributing inventors, with adjustments for patenting lead and licensing party. (Id. at 3).

This Commercialization Agreement was discussed by the Court in its prior order. The Court acknowledged that STC and Sandia entered into a Commercialization Agreement defining how the joint owners would work together to maintain, protect and commercialize the invention reflected in the '321 patent. (Doc. 206 at 5). The scope of the Commercialization Agreement is of central importance to the instant motion. In the Court's prior order, the Court determined that "[t]he parties did not enter into any Commercialization Agreement regarding '998, however, as STC considered itself the owner of a 100% interest in that patent." (Id.)

In its motion, STC asks the Court to remedy the prudential standing issue generated by the absence of Sandia, co-owner of the '998 patent, under either Section (a) or (b) of Federal Rule of Civil Procedure 19. (Doc. 218). Intel responded in opposition to the motion, and it simultaneously filed a motion to dismiss STC's claims based on the standing issue. (Doc. 226; Doc. 228). In addition to full briefing on the issues by the parties, Sandia filed a brief in opposition to STC's efforts to force it to involuntarily join this action. (Doc. 224). Sandia does not wish to become a party to the litigation because it would like to remain neutral with respect to this matter. (Id. at 1-2).

II. Request to Reconsider

STC asks that the Court reconsider its determination regarding ownership. District courts have inherent power to reconsider interlocutory rulings, and the Tenth Circuit has encouraged courts to do so whenever "error is apparent." Warren v. Am. Bankers Ins. of Fla., 507 F.3d 1239, 1243 (10th Cir. 2007) (citation omitted). Accordingly, if a court finds that it erred in a legal or factual determination that did not result in a final judgment, it may exercise discretion and revise its ruling at any point before a final judgment is entered. FED. R. CIV. P. 54(b). Intel and STC disagreed over whether the evidence presented in support of STC's argument constitutes new evidence, but because no final judgment has been entered, that argument is irrelevant. All that is important for purposes of STC's request is whether the Court erred in determining that the '998 patent was not co-owned...