Before Newman, Circuit Judge, Archer, Senior Circuit Judge, and
Clevenger, Circuit Judge.
The opinion of the court was delivered by: Clevenger, Circuit Judge
NOTE: Pursuant to Fed. Cir., R. 47.6, this Disposition is not citable as precedent. It is a public record. The Disposition will appear in tables published periodically.
Dr. Klaus G. Schroeder (Schroeder) appeals from the grant of summary judgment in favor of Tracor, Inc. (Tracor) and AEL Industries, Inc. (AEL) on the grounds that AEL enjoyed a shop right in Schroeder's patented inventions. Schroeder v. AEL, No. 96-0142 (C.D. Cal., July 24, 1998). We affirm the district court's ruling.
Schroeder is the owner of U.S. Patent Nos. 4,750,000 (the `000 patent) and 4,958,167 (the `167 patent), directed to "ultra-broadband impedance matched electronically small self-complementary pair antennas." Schroeder asserts that these patents were infringed by AEL in its production of the "Piranha II" jam-on-the-move mobile electronic countermeasure system and the "TACJAM-A" mobile communication countermeasure system. Tracor and AEL do not deny that these systems incorporate designs protected under the `000 and `167 patents; however, they claim a shop right in these designs based on Schroeder's employment relationship with AEL.
Schroeder was employed by AEL between 1983 and 1988 in AEL's Antenna Division, located in Lansdale, Pennsylvania. AEL was acquired by Tracor in 1996.*fn1 On May 2, 1983, Schroeder signed an employment agreement with AEL in which he agreed to "assign, transfer and set over . . . all my right, title and interest in and to any and all Inventions and Improvements." The Inventions and Improvements clause covered all inventions conceived by Schroeder, whether or not in the scope of his employment with AEL, except those inventions specifically identified and exempted by the agreement. Schroeder represented in the agreement that, prior to employment with AEL, he had conceived "10 non-patented inventions to be supplied later." Subsequently, he submitted a memorandum briefly describing nine "pre-employment proprietary techniques," including complementary pair antennas for low-profile, wide-band applications.
During the course of his employment, Schroeder offered his complementary pair antenna design to AEL as an improvement to its Piranha countermeasures product line. The parties dispute whether Schroeder demanded royalties at that time.
Schroeder applied for the `000 and `167 patents on September 16, 1987, and June 7, 1988, respectively, while employed by AEL. The `000 patent issued on June 7, 1988, while Schroeder was still employed by AEL. The `167 patent issued on September 18, 1990, after his termination. Schroeder did not inform AEL that he had applied for any patents on his complementary pair antenna design until after the `000 patent issued in 1988. Upon learning that Schroeder had independently filed two patent applications in violation of his employment agreement, AEL discharged Schroeder in September 1988.
Schroeder filed suit against Tracor and AEL in January 1997, alleging infringement of the `000 and `167 patents. AEL and Tracor moved for summary judgment based on the existence of a shop right. The district court found that Schroeder failed to raise a genuine issue of material fact sufficient to rebut AEL's shop right defense and, therefore, granted the motion for summary judgment. Schroeder appeals that decision. AEL and Tracor move for sanctions under Fed. R. App. P. 38. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1295(a)(1) (1994).
Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c) (1999). We review a grant of summary judgment de novo. See Spectrum Int'l., Inc. v. Sterilite Corp., 164 F.3d 1372, 1378, 49 USPQ2d 1065, 1068 (Fed. Cir. 1998). In doing so, we must draw all reasonable factual inferences in favor of the non-movant. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
The "shop right" rule is an equitable doctrine controlled by state law. We follow California's choice of law rules in this case. See Klaxon Co. v. Stentor Electric Mfg. Co, Inc., 313 U.S. 487, 495 (1941); A.I. Trade Finance, Inc. v. Petra Int'l Banking Corp., 62 F.3d 1454, 1464-65 (D.C. Cir. 1995) (applying Klaxon to federal question jurisdiction). California applies a "relative interest" test for determining choice of law. See Bernhard v. Harra's Club, 16 Cal.3d 313, 316 (1976) (requiring "an analysis of the respective interests of the states involved"). Because Schroeder's employment with AEL took place in Pennsylvania and was governed by a Pennsylvania contract, we follow Pennsylvania law on the issue of shop rights.
The Pennsylvania courts, and the federal courts sitting in Pennsylvania, have long applied the Supreme Court's rules on employers' and employees' rights to inventions. See, e.g. Aetna-Standard Engineering Co. v. Rowland., 343 Pa. Super. 64, 71 (1985). Thus, we may follow United States v. Dublier Condenser Corp., 289 U.S. 178 (1933), and its progeny, in deciding this case. We may also apply our own case law on shop rights, to the extent that it interprets the Supreme Court's guidance on the issue.
In McElmurry v. Arkansas Power & Light Co., 995 F.2d 1576, 1582 (Fed. Cir. 1993), we stated that "the proper methodology for determining whether an employer has acquired a shop right in a patented invention is to look to the totality of the circumstances [to] determine whether the facts of a particular case demand, under principles of equity and fairness, a finding that a shop right exists." McElmurry did not endorse any particular theory of shop rights, but called for a "factually ...