Regents of the University of California v. LTI Flexible Products, Inc.

Background

The Regents and TiMEMS, Inc. sued LTI Flexible Products, Inc., doing business as Boyd Corporation, alleging patent infringement, seeking declarations that the Regents owned several patent applications and related patents, and asserting unjust enrichment based on an alleged wrongful taking of patent rights. The plaintiffs alleged that Payam Bozorgi and Professor Carl Meinhart had agreed to assign qualifying inventions to the University of California and later signed amendments that immediately assigned covered rights. They also alleged that Bozorgi falsely represented that certain work had been done without University facilities or resources, and that Boyd acquired PiMEMS, Inc., which Bozorgi had helped found.

The court had previously dismissed or rejected parts of the plaintiffs’ earlier complaint but allowed amendment. In the amended complaint, the plaintiffs dropped a rescission claim, repeated several earlier claims, and added ownership claims concerning the ’308 and ’778 provisional applications.

Patent-infringement claim

Boyd moved to dismiss the patent-infringement claim, arguing that the plaintiffs lacked constitutional and statutory standing. Constitutional standing requires an injury, a connection between the injury and the challenged conduct, and a remedy the court can provide. In a patent case, the plaintiff generally must have an ownership interest, an assignment, or an exclusive license that includes exclusionary rights.

The court’s discussion states that the motion to dismiss the infringement claim was DENIED. It held that the plaintiffs’ allegations about the patent acknowledgments and later amendments were enough at the pleading stage. In particular, the alleged language that an inventor “do[es] hereby assign” rights could constitute an automatic assignment under Federal Circuit precedent. The court also declined to resolve factual disputes about what Meinhart contributed, when he contributed it, whether the assignment covered the patent, and whether Bozorgi had assigned rights to Boyd. The court said those issues belonged to a later merits or evidence-based proceeding, not resolution of a facial challenge based on the complaint.

The court expressed concern about whether the plaintiffs could ultimately prove ownership and encouraged the parties to focus early discovery on that issue. It said it would allow an initial motion for summary judgment focused solely on ownership.

Declaratory-judgment claims

The plaintiffs sought declarations that the Regents owned the ’556, ’308, and ’778 provisional applications and related applications. The court applied a four-year limitations period. It held that the claim concerning the ’556 provisional was not adequately pleaded to show that the discovery rule delayed the claim’s accrual. The complaint did not clearly state when the plaintiffs first suspected that Bozorgi’s statements were false, the circumstances producing that suspicion, or its factual basis. The court therefore dismissed that claim with leave to amend and warned that another dismissal on the same ground would be with prejudice.

The court denied dismissal of the claims concerning the ’308 and ’778 provisionals. Those applications were filed after the title-clearance submission concerning the ’556 provisional, and the complaint did not show on its face that the plaintiffs should have been on notice of the alleged ownership dispute concerning the later applications for the same reasons.

Unjust-enrichment claim

The plaintiffs alleged that Boyd wrongfully claimed rights in several patents and benefited from the Regents’ investments. Boyd argued that the complaint attributed the alleged wrongful conduct to Bozorgi or PiMEMS, not Boyd. The plaintiffs relied on successor liability, arguing that Boyd was PiMEMS’s successor.

The court dismissed the unjust-enrichment claim with leave to amend. It held that the complaint did not adequately allege that Boyd was PiMEMS’s legal successor. The allegation that Boyd “acquired” PiMEMS was not enough because not every acquisition creates successor liability. The court allowed amendment but stated that this would be the final amendment for that theory.

Motions to seal

The Regents sought to seal an employee identification number for Meinhart in two exhibits. The court found compelling reasons to protect that confidential number and GRANTED the motion as to exhibits F and I, but DENIED it as to the other documents covered by that request. Boyd separately sought to seal the title-clearance document filed with its reply. Because the plaintiffs had not filed the required supporting declaration, that motion was DENIED. The parties were ordered to file unredacted versions of documents for which sealing was denied within 14 days.

Disposition and ambiguity

The order states that the motion to dismiss was GRANTED IN PART with leave to amend and DENIED IN PART. Its conclusion says: “Claims one, three, and six are dismissed with leave to amend.” That conclusion conflicts with the earlier discussion, which identifies the patent-infringement claim as the first count and expressly states that dismissal of that claim was DENIED. The opinion text provided does not explain or resolve this inconsistency. The conclusion also required any amended complaint to be filed within 21 days.