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Venture Corp. Ltd. v. Barrett

United States District Court, Northern District of California, San Jose Division

December 17, 2014

VENTURE CORPORATION LTD., et al., Plaintiffs and Counterdefendants,
v.
JAMES P. BARRETT, Defendant and Counterclaimant.

ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT AND MOTION TO EXCLUDE TESTIMONY (Re: Docket Nos. 63, 65, 66)

PAULS. GREWAL, United States Magistrate Judge

Few professions pose greater danger to life and limb than mining. Think Benxihu Colliery. Monongah. Upper Big Branch. In the immediate aftermath of these as well as other, less infamous mining disasters, time is precious.

Defendant and Counterclaimant James P. Barrett is named inventor on two United States patents and one patent application aimed at improving the odds of surviving such disasters. That much Barrett and Plaintiffs and Counterdefendants Venture Corporation Ltd. and Venture Design Services, Inc. agree on. Beyond that, they do not agree on much. After Barrett claimed he owned the patents and application despite an agreement to assign certain inventions he signed as a condition of his employment for VDSI, the Ventures filed this suit for a declaration that the patent and all other rights in the inventions in fact belong to VCL.[1] Barrett not only disputes the Ventures' claims but asserts his own counterclaims under California law.[2]

Because the parties' disagreements are genuine and go to material facts underlying each of the claims in this case, and a reasonable jury could resolve these disagreements in either side's favor, the court DENIES the parties' respective motions for summary judgment. The court also DENIES the Ventures' motion to exclude testimony from Scott Hampton, Barrett's damages expert.

I.

Even though patents are creatures of federal law, state law nevertheless plays an important role when it comes to patent ownership disputes. "Usually, federal law is used to determine the validity and terms of an assignment, " but patent ownership is determined by state law.[3] In California, Labor Code § 2870 provides that:

(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer's equipment, supplies, facilities, or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.

VDSI is a California-based corporation. On November 1, 2003 Barrett began working for VDSI after VDSI acquired the business of Barrett's previous employer. As a condition of his employment, Barrett signed an "Inventions Agreement."[4] The Inventions Agreement contains several key provisions relating to the disclosure of any inventions and the assignment to VDSI of Barrett's rights to any such invention. With regard to disclosure, Section 3.1 provides:

[Barrett] will disclose promptly to the proper officers or attorneys of the Company in writing any idea, invention, work of authorship (including, but not limited to, computer programs, software and documentation), formula, device, improvement, method, process or discovery, whether or not patentable or copyrightable (any of the foregoing items hereinafter referred to as an "Invention"), [he] may conceive, make, develop or work on, in whole or in part, solely or jointly with others during the term of [his] employment with the Company. The disclosure required by this Section applies: (a) during the term of my employment and for six months thereafter; (b) during my regular hours of employment and to my time away from work; (c) whether or not the Invention was made at the suggestion of the Company; (d) whether or not the Invention was reduced to drawings, written description, documentation, models or other tangible form; and (e) to any Invention which, in the opinion of the Company, is related to the company because it is related:
i. to the general line of business engaged in by the Company;
ii. to any actual or anticipated business (including research and ...

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