Opinion
Case No. 99 C 4495
February 18, 2000
MEMORANDUM OPINION AND ORDER
This is a dispute over royalties and the authorship of three inventions for which Dr. Bernard Roizman is listed as sole or joint inventor. The work involves the alteration of DNA to produce, say, a herpes simplex virus that is different from the virus as it is found in nature — basically changing a virulent virus into an avirulent virus by altering a single gene. All this is done to make safer live attenuated virus vaccines. The new virus lacks the capability of killing its host, but is enough like its lethal genetic ancestor that it triggers the immune response system of its host.
The inventions are titled: "Recombinant Herpes Simplex Viruses Vaccines and Methods"('688 patent, WO'050 application), "Methods for Identifying Inducers and Inhibitors of Programmed Cell Death"('713 patent, WO'993 application), and "Methods and Compositions for Treatment of HSV-2 Infections and Conditions"('328 patent, PCT '292 application).
Dr. Joany Chou holds a Ph.D. in molecular genetics and cell biology from the University of Chicago ("University" or "U. of C."). She says she is entitled to be listed as a joint (or, in one case, sole) inventor on the disputed inventions. Dr. Roizman holds an endowed chair, a distinguished service professorship in virology at the University. Dr. Roizman does not own any of the patents. The owner is either ARCH Development Corporation, a subsidiary of the University of Chicago, the mission of which is to license and secure revenues from the University's technology and intellectual property, or the University. Aviron, a private company co-founded by Dr. Roizman, is licensed by ARCH to use the patents. ARCH, its affiliates, and Dr. Roizman all have stock in Aviron and received benefits from Neuro Vir, holder of a sublicense from Aviron.
Dr. Roizman was chairman of the Department of Molecular Genetics and Cell Biology during the time that Dr. Chou conducted research there. He was her advisor, and over a 14-year period at the Virology Laboratory, the two maintained a friendly and consistent working relationship — at least until June 1996, when he told her he was going to fire her if she did not resign. At the end of December 1996, he barred her from further work in the laboratory. No one disputes that Dr. Roizman is quite significant in his field, a member, in fact, of the National Academy of Sciences; nor is anyone throwing stones at Dr. Chou's qualifications. She is listed indeed as a joint inventor with Dr. Roizman on at least one patent, and on several applications.
This patent is titled: "Screening methods for the identification of inducers and inhibitors of programmed cell death (apotosis)" ('216 patent).
The work at the laboratory was, by policy, not to be disclosed outside the laboratory until Dr. Roizman approved public disclosure, at which time he was to insure that individual scientists were properly credited for their work. Dr. Chou disclosed her work to Dr. Roizman under the belief that he (and ARCH and the University) would protect her research and inventions. Dr. Roizman helped secure the patents, wrongly claiming sole inventorship.
The complaint is not "short and plain" under Fed.R.Civ.P. 8, but useful in the context of a motion to dismiss. It is fair to say that the allegations against all defendants except Dr. Roizman are stated in mine-run language. Dr. Roizman is portrayed as villainous, leading to a motion to strike, which I address here as well as the motions to dismiss by Dr. Roizman and Aviron.
I. Dr. Roizman's Motion to Dismiss
A. The Designation of Inventorship
Count I. Correction of Inventorship, 35 U.S.C. § 256 Count II. Declaratory Judgment Act, 28 U.S.C. § 2201 2202
Dr. Chou says that she, and not Dr. Roizman, was the inventor of the three patents at issue: the '688 patent, the '713 patent and the '328 patent. She wants to be named as sole inventor or joint inventor on '688 and joint inventor on the other two. A court may correct the listed inventors on a United States Patent; correction of pending applications for a United States Patent lies with the Commissioner. Foreign patents are outside our ambit.
Dr. Roizman says that Dr. Chou has no standing to seek relief under 35 U.S.C. § 256 because, as an employee of the University during the relevant period, she surrendered all rights and interests in her inventions to it. Universities usually have statutes, as the U. of C. does, providing that every "patentable invention or discovery that results from research or other activities carried out at the University, or with the aid of its facilities or funds administered by it, shall be the property of the University . . . ." See University of Chicago § 18, Patent Policy.
The principle that one who claims no ownership of the patent has no standing to seek relief under § 256 is not disputed and, in any event, I agree with it for the reasons expressed by Judge Breyer in Kucharczyk v. Regents of the Univ. of California, 48 F. Supp.2d 964, 970-74 (N.D. Cal. 1999).
If Dr. Chou does not have standing to invoke § 256, she cannot invoke the Declaratory Judgment Act either, because she had no interest in the patent and she has no reasonable grounds to believe that Dr. Roizman intends to file suit to settle the matter. See Fina Oil Chemical Co. v. Ewen, 123 F.3d 1466, 1471 (Fed. Cir. 1997).
Dr. Chou says that she is not bound by the University's § 18, because she was never asked to sign an agreement to surrender her rights and was not provided with a copy of the statute. All of her letters of appointment did specify that her employment was subject to the administrative policies of the University, and some of them explicitly mentioned the statutes. Yet, unlike the Regents of the University of California, the Trustees of the University of Chicago do require their employees to sign an agreement to relinquish all rights and interests in their invention. See Kucharcyk, 48 F. Supp.2d at 970. It makes no difference, though. Dr. Chou was bound by the rules of her employment, which she accepted repeatedly (because her appointments were for limited periods of time). Interestingly, she never alleges that she was unaware that the University owned her work; she says only that she never signed a piece of paper which set this out in black and white. Her continued labor at the University manifests acceptance of the conditions.
It is said that a prospective employee who does not wish to accept certain conditions may invoke a procedure to resolve the matter, but Dr. Chou did not avail herself of that procedure.
In any event, I doubt that Dr. Roizman is a proper defendant in the dispute over the correction of inventorship. He is not an owner of the patent himself and has no apparent legally protected interest in whose name appears as inventor. He may be a witness to the dispute, but he is not a party.
I note that this last sentence is dicta. While it seems to me to be correct, I don't think it is appropriate to decide that Dr. Roizman (and persons in his position) could not, under any circumstance, intervene as a party in a properly plead case seeking correction of inventorship of a patent on which he was listed as inventor. In theory, the issue could arise here since the University has answered the complaint. As of today, Dr. Roizman is not trying to get into this suit; he is trying to get out.
B. The Financial Benefits of Invention Count IV: Fraud Count VI: Breach of Fiduciary Duty
There is no affirmative misrepresentation by Dr. Roizman, beyond his non-verbally expressed opinion that a particular piece of Dr. Chou's work should not be the subject of an immediate application for a patent. Statements of opinion are not ordinarily misrepresentations upon which fraud claims may be founded. At most, Dr. Chou has alleged a false statement to the Patent and Trademark Office (PTO) and not to her. Dr. Roizman concealed nothing from Dr. Chou, so that absent an affirmative duty to disclose, affirmative misrepresentation is the only ground for fraud.
Dr. Chou alleges quite clearly that she believed Dr. Roizman owed a fiduciary duty to her. Whether she has alleged the existence of such a duty is another matter. The duty apparently arises from the facts that Dr. Roizman possessed superior knowledge of the patent system and was her friend, faculty advisor, mentor. But there is no authority for the proposition that a fiduciary duty to inform about the status of patent applications arises from such a relationship. There may be duties owed by advisors to researchers, but in an academic enterprise, I find no duty to advise about the patenting of laboratory discoveries.
The result might be different if the enterprise were specifically to develop patentable devices and processes. See University of Colorado Foundation v. American Cyanamid Co., 196 F.3d 1366 (Fed. Cir. 1999). Dr. Chou alleges specifically that: "[a]t no time was Dr. Chou hired to invent by any of the Defendants." The duties owed to graduate and professional students are set forth in the U. of C. Faculty Handbook, but those duties relate only to the teaching, advising and evaluating of performance of the students, with the addition of special duties in the oversight of dissertations. It is incorrect to read these provisions to mandate the duty to inform the student about proceedings in the PTO, which might bear some relationship to the student's work product.
Nor do I find partnership to have been alleged in the complaint in a manner that would allow Dr. Chou to invoke fiduciary duties imposed upon business partners.
Count III: Unjust Enrichment Count V: Conversion
This unjust enrichment claim fails because it rests upon a premise that is indisputably false — that Dr. Roizman assigned the '688 patent to ARCH. Public record shows the assignment to have been made by Institut Merieux, a French company that had supported the research and to which Dr. Roizman assigned the patent. Dr. Chou's theory, based on the timing of the transactions and involvement by Dr. Roizman's lawyers, is that Dr. Roizman masterminded a series of assignments of the patent — from himself to Institut Merieux to ARCH, who licensed use to Aviron — so that he ultimately would benefit financially. But, nothing in the complaint permits the essential, reasonable inference that Institut Merieux exercised anything other than free will in its decision to assign the patent to ARCH. As such, the pleading is too vague even for this vague tort.
Conversion survives because Dr. Chou can arguably claim ownership in her diagrams, drawings, writings, and documentation prepared while she was an employee. In the end, she could fail on this claim, but it survives a motion to dismiss. She will fail if what Dr. Roizman did was to examine her papers, use the ideas in them, but then return them to her, because he apparently had the right to examine them as head of the laboratory. This may be what the complaint alleges, but I am not sure. The survival of this part of the conversion claim does little good, because the damages are minimal at best. What is valuable is the intellectual property recorded in these papers, and Illinois does not permit a claim of conversion for intangible property. See In re Oxford Marketing Ltd., 444 F. Supp. 399, 404 (N.D. Ill. 1978).
Alternative Count VII: Breach of Express Contract Alternative Count VIII: Breach of Implied Contract
The express contract said to exist between the two scientists is a letter of 14 June 1993, which states:
The purpose of this letter is to record in writing the agreement that the royalties resulting from the pending patent application to exploit the properties of the herpes simplex virus 34.5 gene be split equally between us, Joany Chou and Bernard Roizman, or to such beneficiaries as we may designate.
This has to be considered in light of the allegation that it was University and ARCH policy that inventors would split 25 percent of gross royalties and up-front payments from licensing activities. Dr. Roizman also argues that the contract is meaningless, because he did not own the patent and could not give away royalties. But, this reasoning fails because Dr. Roizman could contract to split his share of the royalties, and one could read the letter to say just that. So I read the letter to say that Dr. Chou would get 12.5 percent of the royalties, or half of Dr. Roizman's royalties.
It is undisputed that the letter referred to the '233 patent on which the two of them are listed as co-inventors — a patent not in dispute here. Dr. Chou's rejoinder is that the only reason that the letter says "patent" instead of "patents" is because she was unaware that the '688 patent was pending at the time, because Dr. Roizman did not tell her about it. Her response is just another way of saying there was no meeting of the minds and no contract.
An implied contract between these two parties is not alleged. Indeed there is no relevant course of dealing alleged to have occurred between them. Perhaps if Dr. Chou had alleged that Dr. Roizman had consistently been giving her a share of his royalties over the years, one could infer that he and she agreed to continue the practice until explicitly revoked. But this is not said. The only way to get to contract here under Illinois law is to use the combined implied contract-unjust enrichment, but there is no unjust enrichment adequately plead here. See Midcoast Aviation, Inc. v. General Electric Credit Corp., 907 F.2d 732, 737 (7th Cir. 1990).
If there are contracts in this case, they were not made with Dr. Roizman.
In sum, Dr. Roizman's motion to dismiss is granted, except as to count V, for conversion. The exact scope of that count should be clarified by a motion for a more definite statement of facts before the case proceeds further against Dr. Roizman.
II. Dr. Roizman's Motion to Strike
Dr. Roizman regards two allegations of the complaint as immaterial and scandalous and asks that they be stricken. The allegations against Dr. Roizman are quite severe, but lawyers are free (under Rule 11 constraints) to make them. What I have before me with respect to ¶¶ 182 and 183 are not allegations of fact or conclusions of law. If one reads the complaint as a whole, in a common-sense way, those paragraphs are nothing more than name calling, and they do not belong in the complaint. They are so unnecessary to the establishment of the cause of action and, in the case of ¶ 183, so blatantly roped into the narrative that I am forced to conclude they were put into the complaint simply because they were scandalous. I order them stricken. Dr. Roizman attacks other allegations as baseless (which they may be), but they are not scandalous and may not be immaterial. The remaining portions of the motion to strike are denied.
III. Aviron's Motion to Dismiss
Aviron seeks dismissal or judgment on the pleadings with respect to the five counts in which it is defendant — II through VI. Aviron' s grounds are simple: it is a third-party licensee and not an actor in the torts alleged to have been perpetrated against Dr. Chou, and it is not an appropriate party to declaratory judgment proceedings.
Dr. Chou argues that Dr. Roizman is an agent of Aviron, which is therefore liable for his actions against her. Dr. Roizman is alleged to be a founder, director and large shareholder of Aviron. A short answer to this is that Aviron is to be dismissed from all the tort claims now dismissed against Dr. Roizman. Aviron may well escape the conversion count too, because the acts that constitute conversion occurred before Aviron came into existence. I infer from the papers that Aviron was formed after the patent issued.
The breach of fiduciary duty claim would fail, in any event, because Aviron is not alleged to have a fiduciary duty to Dr. Chou. Perhaps if Dr. Chou had alleged that Aviron was the alter ego of Dr. Roizman, the claim could be made. She simply alleges he is an agent of the corporation. She does not allege agency particularly well, because she does not allege that he acted with the authorization of Aviron, understandably so because some of his acts occurred when there was no Aviron. She alleges only that he acted to the benefit of Aviron.
Reading the complaint as a whole, Dr. Chou simply alleges (with respect to any claimed bad act of Dr. Roizman) that Dr. Roizman is the agent of the University, ARCH and Aviron. An allegation that one is acting as an agent for multiple sophisticated entities whose interests are not always in concord should not be generously construed. This is an uncommon occurrence and some specific pleading of the scope of the agent's authority from each of the entities is required. See Landy v. Mitchell Petroleum Tech Corp., 734 F. Supp. 608 (S.D.N.Y. 1990). Without this pleading, one small aspect of the complaint bears a family resemblance to those "vast conspiracy of all in league against me" claims usually filed in handwritten form by persons who cannot find lawyers to represent them. She adequately pleads the facts showing that Dr. Roizman is an agent of the University. Dr. Roizman is conceded by Aviron to be its agent, but there is no allegation that the actions complained of here came within the scope of his authority, and Aviron does not concede this point. Were I to apply very loose rules of inference, I would say the complaint alleges that so much of what Dr. Roizman did was done before there was an Aviron that Aviron authorized none of it; it simply benefitted from the acts after it was brought into existence.
The declaratory judgment count must be dismissed for absence of an allegation of reasonable apprehension that Aviron would bring a lawsuit to foreclose any of her rights. Aviron is running from this dispute, which it regards as one between Dr. Chou and the University.
The claims against Aviron are dismissed.
Conclusion
Dr. Roizman's motion to dismiss is granted, except for count V. The motion to strike is granted as to ¶¶ 182 and 183 and denied otherwise. Aviron's motion to dismiss is granted in its entirety.