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

Background

The Regents of the University of California and TiMEMS, Inc. sued LTI Flexible Products, Inc., doing business as Boyd Corporation. Among other claims, they sought a declaratory judgment that they owned a provisional patent application and later applications and patents arising from it. They alleged that inventors Payam Bozorgi and Carl Meinhart had agreed to assign rights in patentable inventions developed while working at the University of California, Santa Barbara, or using University facilities.

The provisional patent application listed Bozorgi and Meinhart as joint inventors. The inventors submitted a title-clearance request to the University on January 20, 2015. That request stated that the invention had been developed exclusively at PiMEMS, Inc., using PiMEMS facilities and resources. The plaintiffs alleged that Bozorgi actually used a University laser welder and that Meinhart later suspected Bozorgi had misrepresented the use of University facilities.

The plaintiffs filed suit in December 2020. The court had twice dismissed the ownership claim as barred by the statute of limitations while allowing the plaintiffs to amend. In the operative complaint, the plaintiffs alleged facts concerning Bozorgi but did not plead comparable facts explaining when or how they discovered Meinhart’s alleged contrary ownership claim.

Motion and analysis

Boyd’s motion challenged the declaratory-judgment claim only to the extent it was based on Meinhart’s pro-rata ownership interest. Under the court’s prior rulings, the claim was subject to a four-year limitations period. Applying California law, the court explained that a contract claim generally accrues when the contract is breached, and that the discovery rule delays accrual only when the plaintiff adequately pleads why it could not earlier discover the claim through reasonable investigation.

The court held that the claim based on Meinhart’s interest was time-barred on the face of the complaint. Meinhart had joined the title-clearance request asserting ownership of the technology, which put the plaintiffs on notice of a claim contrary to their alleged ownership. The complaint did not plead facts showing that the discovery rule or another tolling doctrine delayed accrual.

The plaintiffs offered additional theories and facts in their opposition brief, including that Meinhart relied on data from Bozorgi’s alleged use of the laser welder and that Meinhart was unaware of any breach when he submitted the title-clearance request. The court declined to consider those points as a basis for saving the claim because they were not pleaded in the complaint. The court also rejected the plaintiffs’ newly presented argument that accrual occurred when the inventors assigned their rights to PiMEMS rather than when they asserted ownership in the title-clearance request.

Leave to amend and disposition

The court denied further leave to amend. It emphasized that this was the plaintiffs’ fourth complaint and the third round of motions to dismiss, and that the plaintiffs had repeatedly introduced new allegations only in response to dismissal motions. The court found undue prejudice to Boyd, undue delay, and bad faith, and noted that it had previously warned that another dismissal on this issue would be with prejudice.

Judge Orrick concluded: “The motion to dismiss is GRANTED.” Count III was “DISMISSED WITH PREJUDICE” to the extent it was based on Meinhart’s interest or former interest in the provisional application. The opinion’s body refers to the application as the “’556 provisional,” while the conclusion refers to the “’566 provisional.”