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General Electric Company v. Thomas Wilkins

July 26, 2011

GENERAL ELECTRIC COMPANY,
PLAINTIFF,
v.
THOMAS WILKINS, DEFENDANT.



The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

ORDER RE: MOTION TO DISMISS COUNTERCLAIMS (Doc. 192)

I. INTRODUCTION.

Plaintiff General Electric Company("Plaintiff") proceeds with an action against Defendant Thomas Wilkins ("Defendant") for damages and injunctive relief. On March 1, 2011, the court granted the motion to intervene filed by Mitsubishi Heavy Industries Ltd. and Mitsubishi Power Systems America, Inc. ("Mitsubishi") pursuant to Federal Rule of Civil Procedure 24(a)(2). (Docs. 161, 166).*fn1

Plaintiff filed its fist amended complaint ("FAC") on October 13, 2010. (Doc. 76). Defendant filed an answer to the FAC and a counterclaim against Plaintiff on March 29, 2011. (Doc. 177). Mitsubishi filed an answer to the FAC and a counterclaim against Plaintiff on March 29, 2011. (Doc. 178).

Plaintiff filed a motion to dismiss Defendant's counterclaim and Mitsubishi's counterclaim on May 17, 2011. (Doc. 192). Defendant filed opposition to the motion to dismiss on June 13, 2011. (Doc. 220). Mitsubishi filed opposition to the motion to dismiss on June 13, 2011. (Doc. 219). Plaintiff filed a reply on June 20, 2011. (Doc. 230).

II. FACTUAL BACKGROUND.

Plaintiff is a developer of energy technologies and the holder of U.S. Patent Nos. 6,921,985 ("'985 Patent") and 6,924,565, ("the'565 patent") (collectively "the subject technology"). Defendant is listed as one of seven inventors of the '565 Patent and asserts that he is an unnamed co-inventor of the '985 Patent. Defendant claims an ownership interest in both patents.

Defendant was employed as an electrical engineer by Enron Wind Corp. ("Enron"), Plaintiff's predecessor in interest, intermittently from approximately April 1998 to May 2002. Defendant's job responsibilities while employed by Enron included the design, development, installation and testing of wind turbine generators.

As a condition of his employment with Enron, Defendant signed a Confidentiality and Inventions Agreement ("C&I Agreement"). The C&I Agreement provided, inter alia, that Defendant agreed "upon the Company's request and without the need for further consideration, to execute any and all documents and take such actions which may be necessary in the Company's judgment to assign all rights to any Invention Idea to the Company and to obtain patent or other intellectual property protections for any Invention Idea."

Under the terms of the C&I Agreement, Defendant was obligated to assign any interest in inventions created within the scope of his employment duties to Enron. Enron filed for bankruptcy protection in 2002. In May 2002, Plaintiff purchased Enron's assets, including its intellectual property.

Defendant became Plaintiff's employee in May of 2002. A requirement of employment was that Defendant sign Plaintiff's Employee Innovation and Proprietary Information Agreement ("EIPI Agreement"). The EIPI Agreement provided, inter alia, that Defendant agreed "to disclose and assign to the Company (or as the Company may direct) as its exclusive property, all inventions, discoveries, innovations, improvements, trade secrets and technical or business information which [he] may solely or jointly develop, conceive, reduce to practice or author during the period of [his] employment." Under the terms of the EIPI Agreement, Defendant was obligated to assign any interest in inventions created within the scope of his employment to Plaintiff. Defendant was also required to sign an acknowledgment that he was required to comply with the policies described in the guide: "GE Policies. Integrity: The Spirit the Letter of our Commitment" ("GE Policy Guide"), which specified Defendant's obligations to protect and assign intellectual property Defendant worked on or invented in the course of his work for Defendant.

During the term of his employment, Defendant served as Plaintiff's lead power systems electrical engineer in California. His job was to develop new designs for wind turbine equipment. On May 31, 2002, Defendant first conceived the invention underlying the '565 Patent. Plaintiff does not allege when the invention underlying the '985 Patent was first conceived, or who first thought of it. Defendant voluntarily resigned from Plaintiff's employ in December 2002.

Plaintiff applied for the '565 and '985 Patents after Defendant terminated his employment with Plaintiff. In February 2004, Plaintiff requested that Defendant sign documents in connection with Plaintiff's application for the '565 Patent, but Defendant refused. Defendant has never signed an assignment expressly transferring his rights in the '565 Patent to Plaintiff, despite Plaintiff's requests that he do so. Plaintiff did not seek an assignment from Defendant in connection with the '985 Patent.

In 2009, Defendant purported to license his interest in the '985 Patent to Mitsubishi; Mitsubishi and Plaintiff are currently litigating infringement actions concerning the '985 patent before the ITC and the U.S. District Court for the Souther District of Texas. In May 2010, Defendant informed Plaintiff that he was offering to license the '565 Patent to others. Defendant refused Plaintiff's request to cease and desist such conduct.

III. LEGAL STANDARD.

Dismissal under Rule 12(b)(6) is appropriate where a complaint or counterclaim lacks sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1990). To sufficiently state a claim to relief and survive a 12(b) (6) motion, the pleading "does not need detailed factual allegations" but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). Mere "labels and conclusions" or a "formulaic recitation of the elements of a cause of action will not do." Id. Rather, there must be "enough facts to state a claim to relief that is plausible on its face."

Id. at 570. In other words, the "complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, --- U.S. ----, ----, 129 S.Ct. 1937, 1949 (2009) (internal quotation marks omitted).

The Ninth Circuit has summarized the governing standard, in light of Twombly and Iqbal, as follows: "In sum, for a complaint to survive a motion to dismiss, the nonconclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir.2009) (internal quotation marks omitted). Apart from factual insufficiency, a complaint is also subject to dismissal under Rule 12(b)(6) where it lacks a cognizable legal theory, Balistreri, 901 F.2d at 699, or where the allegations on their face "show that relief is barred" for some legal reason, Jones v. Bock, 549 U.S. 199, 215 (2007).

In deciding whether to grant a motion to dismiss, the court must accept as true all "well-pleaded factual allegations" in the pleading under attack. Iqbal, 129 S.Ct. at 1950. A court is not, however, "required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.2001). "When ruling on a Rule 12(b)(6) motion to dismiss, if a district court considers evidence outside the pleadings, it must normally convert the 12(b)(6) motion into a Rule 56 motion for summary judgment, and it must give the nonmoving party an opportunity to respond." United States v. Ritchie, 342 F.3d 903, 907 (9th Cir. 2003). "A court may, however, consider certain materials-documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice-without converting the motion to dismiss into a motion for summary judgment." Id. at 908.

IV. DISCUSSION.

A. Statute of Limitations

1. The 565' Patent

Plaintiff contends that Defendant's co-ownership claims are time-barred. Plaintiff contends that the '565 patent issued on August 2, 2005 "identifying General Electric as the sole owner," and invokes the four-year statute of limitations set forth in California Code of Civil Procedure § 343. (Doc. 192, Motion to Dismiss at 7). Plaintiff's contention is factually and legally incorrect. The '565 patent lists Defendant as an inventor. Accordingly, Defendant has been a presumed owner of the '565 patent since its issuance. 37 C.F.R. § 3.73("an inventor is presumed to be the owner of a patent application, and any patent that may issue therefrom, unless there is an assignment"). Plaintiff first attempted to extinguish Defendant's interest in the '565 patent with the commencement of this action on April 15, 2010. Defendant's co-ownership claim to the '565 Patent is not time barred.

In its reply, Plaintiff argues that "Wilkins had clear reason to suspect that GE viewed itself as...[the] sole owner" of the '565 patent when it issued, because GE had sought an assignment from him. (Doc. 230, Reply at 6). Assuming arguendo Plaintiff's contention is correct, the fact remains that Defendant was a presumed owner of the '565 patent upon its issuance even if he "suspected" that Plaintiff believed he was not entitled to ownership rights. Plaintiff further contends that Defendant "suffered actual and appreciable harm due to his inability to practice or license the patent without ownership rights," but offers no legal or factual support of this contention. (Id. at 7). As a presumed owner, Defendant could have exercised his ...


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