the dose can be filled in tip or inserted into tip." Vivus Exh. 10A. The second document is Dr. Place's handwritten memorandum to Steve Stone dated October 3, 1990 which contains two crude drawings of the "plunger" device. Vivus Exh. 10B. Also, Dr. Place cites to the September 30, 1990 entry in his notebook in which he states that he spoke with Nathan Roth, an Alza employee, "about cap and cylinder of drug overcoat of rod of drug in inserter with plunger." Vivus Exh. 10D.
During the fall of 1990, Alza apparently decided not to pursue Dr. Place's erectile dysfunction therapy project. Dr. Place and Alza reached an agreement in which Alza would continue to assist Dr. Place in obtaining patent rights on his work. Alza allowed Dr. Place to use its office space and its laboratory facilities to conduct further experiments related to the project. However, Dr. Place was apparently not allowed to use Alza employees to assist in his experiments. Any patents issued to Dr. Place or his colleagues would still belong to Alza. However, Alza agreed to grant Dr. Place the option to obtain licenses under the patents. In February 1991, Dr. Place started Vivus, Inc.
Since Dr. Place could no longer use Alza employees to help in his project, he decided to consult Mr. Kercso. Dr. Place became acquainted with Mr. Kercso while both men worked for Syntex in the 1960's. Although Dr. Place left Syntex to go to Alza in the late 1960's, the two men apparently kept in touch over the years. Dr. Place knew that Mr. Kercso had set up a machine shop in his home and that he could construct models and make scale drawings.
Dr. Place went to Mr. Kercso's Palo Alto home on November 23, 1990 to discuss the erectile dysfunction therapy project. The parties do not dispute that Mr. Kercso had no involvement in the project prior to November 23, 1990. The parties disagree about the relationship established between the two men on that date. Dr. Place maintains that he merely hired Mr. Kercso as a design consultant to fabricate models and make scale drawings. Mr. Kercso contends that Dr. Place asked him to join him as a "founding member" of Vivus, Inc. The parties did not execute any written agreement on November 23, 1990.
According to Mr. Kercso, he and Dr. Place spent many hours and days together during the period after November 23, 1990 discussing improvements to the design of the "dipstick" device. Mr. Kercso states that Dr. Place never told him about the so-called "plunger" device he had apparently designed by August 19, 1990. Dr. Place does not dispute this claim. Mr. Kercso made several scale drawings of improvements to the "dipstick" which are attached as Exhibit 46 to his declaration. The drawings show five separate versions of the "dipstick" labeled TUTS-1 (Transurethral Treatment System) through TUTS-5. After reviewing the TUTS-5 design drawing, which is dated December 21, 1990, Dr. Place agreed that injection molds should be made for production-quality models. They obtained the molds and models from L&H Precision Tool & Molding Company in Hayward. A quote for same was obtained on January 3, 1991. Kercso Exh. L. The TUTS-5 models were produced by L&H by February 1991. Mr. Kercso states that he and Dr. Place tested the TUTS-5 models in February 1991 in Alza's laboratory and found serious problems obtaining a uniform coating of medication on the shaft.
Mr. Kercso states that he was quite disappointed with the test results on the TUTS-5 models and therefore decided to improve upon the "dipstick" design. Mr. Kercso relates that he was inspired by an earlier invention he made, disclosed in U.S. Patent No. 4,105,030 ("the '030 patent"), issued on August 8, 1978, entitled "Implant Apparatus." Kercso Exh. 34. The '030 patent generally describes an apparatus for subcutaneously implanting drug pellets in animals. The patent discloses a device which looks very much like a gun onto which a hollow needle containing drug pellets can be affixed. To deposit the drug pellets into the animal, the user inserts the needle into the animal and pulls the trigger device which retracts the needle. The pellets are then left in the channel made by the inserted needle. Dr. Place does not address the purported similarity between the "plunger" design and the device described in the '030 patent.
Mr. Kercso claims that he developed the "plunger" design sometime between February 10 and 20 of 1991 and made a prototype which he showed Dr. Place. He claims that he made two rough drawings for Dr. Place when he showed him the prototype at Alza's laboratory sometime between February 10 and 20 of 1991. Kercso Exhs. 49 and 50.
The drawings, however, are not dated. Mr. Kercso states that he designed the locking mechanism disclosed in claim 7 of the '391 patent at about the same time that he developed the "plunger" design.
As indicated earlier, Dr. Place states that he was working with Steve Stone on the continuation-in-part application starting in August 1990. He presented two handwritten memoranda, one dated August 19, 1990 and the other October 3, 1990, that he sent to Steve Stone to assist in the preparation of the continuation-in-part application. The next communication between Dr. Place and Mr. Stone regarding the continuation-in-part application occurred on March 4, 1991 when Dr. Place sent another handwritten memorandum to Mr. Stone. In the March 4, 1991 memorandum, Dr. Place tells Mr. Stone that:
Present inserter is model given to you last week. . . The suppository (LODE) inserted into the hollow end of the inserter with and obturator to eject has been made and looks promising. The platform I gave you has had a 1.5 mm. hole drilled to make a hollow pipe. The Lode is 1.5 mm. And made from a solid PEG and is preloaded into tip. When inserter is positioned fully into the urethra (in present manifestation that is 3 cm.) the Lode is discharged by pressing the obturator. See figure attached.
Kercso Exh. N (emphasis added). The referenced figure attached to the March 4, 1991 memorandum is a rough drawing of the "plunger" device dated February 27, 1991 disclosing a locking mechanism. Mr. Kercso correctly points out that this is the first time Dr. Place disclosed the locking mechanism to his patent attorney.
On March 1, 1991, patent attorney Steve Stone contacted Anne Mahood for the purpose of drafting figures for the continuation-in-part application. Mr. Stone's correspondence with Ms. Mahood is attached as Exhibit 93 to Mr. Kercso's declaration. Mr. Stone initially requested only that figures depicting the "dipstick" design be drawn. Then, on March 6, 1991, Mr. Stone sent a facsimile to Ms. Mahood with rough sketches of proposed figures 4 and 5. In his fax cover sheet, Mr. Stone wrote, "Anne--2 new figures to add to drawings. If you can fit all figures on 1 sheet, please do." Proposed figure 4 shows the "plunger" device with the locking mechanism and proposed figure 5 shows the pellet of medication to be used with the "plunger" delivery system.
Mr. Kercso argues that the later disclosure of the "plunger" figures proves that the continuation-in-part was only intended to include the improved "dipstick" design, but this position is not supported by the evidence or common sense. First, there simply is not enough evidence presented regarding the April 25, 1991 continuation-in-part application to determine what the parties intended to include and whether the scope of the application changed as a result of Mr. Kercso's work. Second, Mr. Kercso testifies in his declaration that he disclosed the prototype of the "plunger" device to Dr. Place between February 10 and 20 of 1991. Therefore, the addition of figures 4 and 5 on March 6, 1991 to the original drafting request submitted on March 1, 1991 does not prove that Dr. Place misappropriated Mr. Kercso's idea.
During the period from November 1990 through March 1991, Mr. Kercso was not compensated for his work on the transurethral treatment system. Mr. Kercso argues that this supports his position that he was not an employee or contractor, but was in fact a founding member of Vivus, Inc. Dr. Place explains that he told Mr. Kercso that he did not have the ability to pay him until he could obtain venture capital funding and that Mr. Kercso would be compensated, in part, through the issuance of stock. On April 16, 1991, at the first board of directors meeting of Vivus, Inc., the company was authorized to sell Mr. Kercso 40,000 shares of Vivus stock at a price of $ 0.001 per share. Kercso Exh. 24.
Beginning in December 1991, Mr. Kercso began receiving compensation as a consultant of Vivus. Kercso Exh. 61.
Facts related to the development of the "tulip" transurethral treatment system design
The "tulip" design was developed in response to the discovery of the Voss prior art patent on or about June 17, 1991. The Voss patent generally described the use of a catheter to introduce medication into the urethra. A venture capital firm that found the Voss reference and brought it to Vivus' attention. The firm withdrew its investment of several million dollars in Vivus as a result of the discovery of the Voss patent.
Dr. Place states that he and Leland Wilson
, who is also a Counterclaim defendant, were very concerned about the Voss patent. They held brainstorming sessions in Dr. Place's office at Alza to think of ways to design around the Voss patent. During one of these sessions, Dr. Place came up with the "tulip" design and sketched it on a chalkboard which was apparently in his office. Dr. Place and Mr. Wilson then walked down the hall to Mr. Stone's office and disclosed the "tulip" design to him. Mr. Stone was impressed with the idea and decided that another continuation-in-part application should be filed. He asked for engineering drawings of the "tulip" design. Dr. Place then explained the concept to Mr. Kercso and asked him to render the drawings for Mr. Stone. Mr. Kercso's drawing of the "tulip" design is dated July 22, 1991.
Mr. Kercso has a completely different version of how the "tulip" design was developed. According to Mr. Kercso, Mr. Wilson asked him to lunch sometime in late June or early July of 1991. Mr. Wilson told him that the company was in dire straits because the Voss patent appeared to anticipate or render obvious the "dipstick" and "plunger" designs and that the company had just lost millions of dollars in venture capital financing. Mr. Wilson apparently asked Mr. Kercso to make modifications to the existing designs to get around the Voss patent. After working on the problem for a few weeks, Mr. Kercso came up with the "tulip" design and set forth the design in his July 22, 1991 drawing. Mr. Kercso told Dr. Place and Mr. Wilson that he had solved the problem and invited them to his house to see the "tulip" design drawing on July 22, 1991.
Dr. Place and Mr. Wilson expressed great satisfaction with the "tulip" design and believed that it avoided the Voss patent. Mr. Wilson then apparently promised Mr. Kercso an additional 60,000 shares of Vivus stock for his enormous contribution to the company. Mrs. Kercso then wrote on the July 22, 1991 drawing "Reviewed and Understood" and signed the document. Mr. Kercso and Dr. Place then also signed the document. Mr. Kercso contends the purpose of the signature was to acknowledge that he designed the "tulip" device. Dr. Place stated in his deposition that he signed the document merely because he was asked to do so, and that he had no understanding of the purpose for the signature.
III. SUMMARY JUDGMENT STANDARDS
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. Proc. 56(c). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). However, the moving party has no burden to negate or disprove matters on which the non-moving party will have the burden of proof at trial. The moving party need only point out to the court that there is an absence of evidence to support the non-moving party's case. Id. at 325, 106 S. Ct. at 2554.
The burden then shifts to the non-moving party to "designate 'specific facts showing that there is a genuine issue for trial.'" Id. at 324, 106 S. Ct. at 2553. To carry this burden, the non-moving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986). "The mere existence of a scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202 (1986). Evidence that "is merely colorable, or is not significantly probative," is not sufficient to avoid summary judgment. Id. at 249-50, 106 S. Ct. at 2511.
Summary judgment cannot be granted where a genuine dispute exists as to any material fact. Fed. R. Civ. Proc. 56(c). A "material" fact is one which might affect the outcome of the case under the applicable law. Anderson, 477 U.S. at 248, 106 S. Ct. at 2510. A dispute about a material fact is genuine if a reasonable jury could return a verdict for the non-moving party. Id. In deciding a motion for summary judgment, the evidence is viewed in the light most favorable to the non-moving party, and all justifiable inferences are to be drawn in its favor. Id. at 255, 106 S. Ct. at 2513. Moreover, "credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge [when] he is ruling on a motion for summary judgment." Id.
Counterclaimant's inventorship causes of action are brought pursuant to 35 U.S.C. § 256, which provides:
Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent and such error arose without any deceptive intention on his part, the Commissioner may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error.