By Donald Zuhn --
Earlier this fall, the Federal Circuit affirmed a decision by the District Court for the Western District of Missouri dismissing a complaint filed by Galen J. Suppes for lack of jurisdiction. In dismissing Mr. Suppes' complaint, the Federal Circuit concluded that neither the Constitution nor the Patent Act preclude or preempt the types of contract that Mr. Suppes had entered into with his former employer.
Mr. Suppes had been employed as a professor of chemical engineering at the University of Missouri. When hired by the University, Mr. Suppes had entered into an employment agreement that specified, in part, that the University of Missouri "shall have ownership and control of any Invention or Plant Variety developed in the course of the Employee's service to the University."
During his employment, Mr. Suppes became upset when the University of Missouri declined to file patent applications for certain of his ideas, while simultaneously prohibiting him from filing his own patent applications, and in those instances where he had filed his own applications, requiring him to assign those applications to the University. Mr. Suppes' dissatisfaction with the University's actions led him to file suit against the University, seeking declaratory judgment that the University had (1) violated his Tenth Amendment rights by exercising power reserved by the Constitution to the States or the people, (2) violated Article I of the Constitution and his Fourteenth Amendment rights in that the University had "stifled the progress of science by selectively enforcing punitive action against the Plaintiff," and (3) violated his Fifth Amendment rights by requiring him to assign inventions he created and patent applications he filed without just compensation. Mr. Suppes also sought the removal of ongoing Missouri state law cases to the District Court and sought damages of up to $7.5 million.
The District Court dismissed Mr. Suppes' complaint with prejudice for lack of subject matter jurisdiction. With respect to the first count, the District Court cited New York v. United States, 505 U.S. 144, 156–57 (1992), for the principle that the Tenth Amendment acts solely as a restraint on the power of Congress, and thus is inapplicable to the University of Missouri. With respect to the second count, the District Court cited Regents of University of New Mexico v. Knight, 321 F.3d 1111 (Fed. Cir. 2003) (holding that the explicit contemplation of assignment by the inventor in 35 U.S.C. § 261 allowed for such contracts), and rejected Mr. Suppes' contention that the Constitution bars an inventor from contractually assigning his rights to an invention. With respect to the third count, the District Court determined that because contracts that require assignment of patent rights are not presumptively invalid due to the Constitution or federal law, the requirement of assignment to the University was not a taking without just compensation. As for the fourth and fifth counts, the District Court determined that seizing jurisdiction of a state law case or entertaining a claim for damages without a supporting federal cause of action were both beyond the Court's power.
On appeal, the Federal Circuit first determined that the appeal presented the issue of whether 35 U.S.C. § 261 preempts assignment contracts which allow for the assignment of inventions prior to any effort to seek a patent on those inventions. Because this issue was actually disputed, substantial to the resolution of Mr. Suppes' appeal, and capable of narrow resolution without the disruption of Mr. Suppes' state law claims and suits, the Federal Circuit determined that it had jurisdiction over the appeal.
The Federal Circuit framed the dispute as follows:
Mr. Suppes appears to make three main arguments: (1) that the Constitution, either alone or in conjunction with federal patent law, reserves the rights of inventions for which patents are not yet sought to the inventors; (2) that the Constitution's grant of authority to create patents "for a limited time" serves as a limit on the amount of time for which the University can maintain rights to his inventions; and (3) that a contract which allows an assignee of inventions to decline to patent those inventions violates the Constitution by failing to "promote the Progress of Science." U.S. Const. art. I, § 8, cl. 8.
With regard to the first argument, the opinion noted that "[w]e have previously held in New Mexico that while it is true that, under Section 261, patents vest in the inventor by operation of law, contracts assigning interests in patents are not preempted by Section 261," and explained that "[i]t is similarly the case that a contract assigning an interest in a patent not yet filed is not preempted by Section 261, because such a contract would be endorsed by Section 261 once the patent application is filed, and Section 261 otherwise says nothing about the matter." With regard to the second argument, the opinion noted that "the Constitution's limitation of patent rights to 'a limited time' refers to the allocation of rights vis-à-vis the inventor and the public," and explained that "[t]his principle has nothing whatsoever to do with the allocation of rights between inventors and patent assignees." Finally, with regard to the third argument, the opinion noted that "[t]he determination of whether a statute prohibiting the assignment of 'inventive thoughts' would promote the Progress of Science is therefore, at least initially, allocated to Congress by the Constitution," and explained that "[t]o the extent that Mr. Suppes is arguing that the contract is void as a matter of public policy, that is once again a matter of state contract law." In view of the above, the panel determined that there was no federal question jurisdiction pursuant to the Constitution or the Patent Act, and therefore affirmed the District Court's determination to dismiss Mr. Suppes' complaint.
Suppes v. Katti (Fed. Cir. 2017)
Panel: Circuit Judges Newman, Wallach, and Chen
Per Curiam Opinion