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Ali v. Carnegie Institution of Washington

United States District Court, District Circuit

November 25, 2013

MUSSA ALI, Plaintiff,

Joseph W. Berenato III, and Steven B. Kelber, Berenato & White, LLC, Joel P. Leonard, and John D. Ostrander, Elliott, Ostrander & Preston, P.C., Attorneys for Plaintiff.

Kurt G. Calia, Covington & Burling LLP, Alexa R. Hansen, and Nathan E. Shafroth, Covington & Burling, LLP, Kelly M. Jaske, Jaske Law LLC, Attorneys for Defendants.


Michael H. Simon, District Judge

Plaintiff Mussa Ali (“Ali”) brings this lawsuit against Defendants Carnegie Institution of Washington (“Carnegie”) and University of Massachusetts (“UMass”) (collectively “Defendants”) to correct the inventorship of five issued patents related to gene silencing. In an earlier Opinion and Order, the Court granted Defendants’ motion to dismiss UMass as immune from suit and deferred ruling on the remainder of Defendants’ motion. Dkts. 18, 41. For the reasons stated below, Ali’s Motion for Reconsideration re Waiver of Sovereign Immunity (Dkt. 45) is DENIED; Defendant Carnegie’s Motion for Reconsideration of the Court’s Order Granting in Part Plaintiff’s Motion for Jurisdictional Discovery is GRANTED (Dkt. 46); and Defendants’ Motion to Dismiss or Strike Plaintiff’s Amended Complaint (Dkt. 18) is GRANTED IN PART and DENIED AS MOOT IN PART. Pursuant to 18 U.S.C. § 1406(a), the Court TRANSFERS this case to the United States District Court for the District of Columbia.


This case arises out of Ali’s claim that he was erroneously omitted as a named inventor on five patents: U.S. Patent Nos. 6, 506, 559; 7, 538, 095; 7, 560, 438; 7, 622, 633 and 8, 283, 329. Dkt. 4 at ¶¶ 3, 25-26. Defendants are owners, by assignment, of the patents at issue. Id. at ¶¶ 3-4.

Defendants move to dismiss or strike Ali’s First Amended Complaint. Dkt. 18. On May 28, 2013, the Court issued an Opinion and Order resolving some of the issues in this case and setting a procedure for resolving the remaining issues. Dkt. 41. In that Opinion and Order, the Court dismissed UMass because it was entitled to sovereign immunity, and the Court granted in part jurisdictional discovery, which the Court temporarily stayed. Subsequently, and in accordance with the Court’s request, the parties briefed whether UMass is a “required party.” In addition to briefing whether UMass is a “required party, ” Carnegie argued that Ali lacks standing to bring this lawsuit. Carnegie also submitted a motion asking the Court to reconsider its grant of jurisdictional discovery. Ali submitted a motion requesting that the Court reconsider its finding that UMass is entitled to sovereign immunity.

Remaining to be decided by the Court are the following issues: (1) whether Ali has standing to bring suit pursuant to 35 U.S.C. § 256; (2) the motion to reconsider UMass’s sovereign immunity; (3) the motion to reconsider jurisdictional discovery; (4) the motion to dismiss the suit because the Court lacks personal jurisdiction over the Defendants; and (5) the motion to dismiss the suit because UMass is a necessary party that cannot be joined.


Carnegie asserts three independent grounds for complete dismissal of this case. First, Carnegie argues that Ali’s arguments regarding whether UMass is a necessary party demonstrate that Ali lacks standing to bring this lawsuit. Second, Carnegie argues that because the Court lacks personal jurisdiction over it, this case must be dismissed under Federal Rule of Civil Procedure 12(b)(2). Third, Carnegie argues that UMass, which the Court previously dismissed, is a required party that cannot be joined; thus, the case must be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(7). In the alternative to these three arguments for complete dismissal, Carnegie contends that Ali’s second count and alternative second count must be dismissed for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). In response to Defendants’ motion to dismiss, Ali sought discovery related to Carnegie’s motion, which the Court previously granted in part.

A. Article III Standing

In Carnegie’s Reply Brief, Carnegie argues for that first time that Ali lacks Article III standing to bring suit under 35 U.S.C. § 256. See Dkt. 56 at 3-5. Because Carnegie first raised this issue in a reply brief and Ali did not seek leave to file a sur-reply, Ali has not responded to this argument. Generally, any argument first raised in a reply brief is waived. See Graves v. Arpaio, 623 F.3d 1043, 1048 (9th Cir. 2010) (citing U.S. ex rel. Meyer v. Horizon Health Corp., 565 F.3d 1195, 1199 n.1 (9th Cir. 2009)). A challenge to a plaintiff’s standing, however, cannot be so easily swept aside. Because “standing is an essential and unchanging part of the case-or-controversy requirement of Article III, ” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992), courts “are required sua sponte to examine jurisdictional issues such as standing” regardless of whether the parties raise the issue. Bernhardt v. County of Los Angeles, 279 F.3d 862, 868 (9th Cir. 2001). Moreover, defects in a plaintiff’s standing cannot be waived by a defendant. See D’Lil v. Best W. Encina Lodge & Suites, 538 F.3d 1031, 1036 (9th Cir. 2008) (quoting United States v. Hays, 515 U.S. 737, 742 (1995)). Accordingly, in assuring itself of proper jurisdiction, the Court will address Carnegie’s challenge to Ali’s standing.

1. Legal Standards

It is axiomatic that “[f]ederal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Article III standing “is [a] threshold [requirement] in every federal case, ” determinative of “the power of the court to entertain the suit.” Warth v. Seldin, 422 U.S. 490, 498 (1975). The essential question is whether a plaintiff can satisfy the “case or controversy” requirement of Article III of the Constitution. U.S. Const. art. III, § 2, cl. 1; Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180 (2000). To satisfy the requirements of Article III, a plaintiff must demonstrate: (1) injury in fact, (2) that is causally connected to the conduct complained of, and (3) may be redressed by a favorable court decision. Chou v. Univ. of Chicago, 254 F.3d 1347, 1357 (Fed. Cir. 2001) (citing Lujan, 504 U.S. at 560-61).

To have Article III standing to bring a claim seeking to correct the named inventors on an issued patent, a plaintiff must have at least a non-contingent ownership interest in the patent or be able to identify some concrete financial or personal reward that would spring from the plaintiff’s listing as a named inventor. See Larson v. Correct Craft, Inc., 569 F.3d 1319, 1327 (Fed. Cir. 2009); Chou, 254 F.3d at 1358-59.[1] Without such an interest, a plaintiff cannot establish that he suffered an injury in fact and lacks standing. See Chou, 254 F.3d at 1359.

2. Analysis

In addition to Ali’s claim for correction of inventorship, Ali asserts two additional claims in the alternative, which are both styled, “Legal Damages.” See Dkt. 4, at ¶¶ 28-36. In his first claim for legal damages, Ali asserts that he is entitled to a certain percentage of the revenues derived from the licensing and monetization of the patents-in-suit pursuant to a UMass policy. See Id . at ¶¶ 28-32. Ali alleges that his entitlement to this compensation was given in exchange for the assignment of his whole interest in the patents-in-suit to UMass. Id. at ¶ 30. In his second, alternative claim for legal damages, Ali asserts that he did not assign any of his interest in the patents-in-suit to UMass, retaining it for himself; thus, Ali is entitled to a portion of the royalties and fees that Defendants’ derived from exploiting the patents-in-suit. Id. at ¶¶ 33-36. Although it is not clear how Ali intends to pursue these claims for legal damages, the Court construes Ali’s claims as arising under contract law.

Relying on Larson, Carnegie argues that Ali does not concretely allege an interest sufficient to confer Article III standing. Carnegie argues that Ali’s Opposition to Defendant’s Motion to Dismiss (Dkt. 43) concedes the issue by stating that his entitlement to financial compensation “is not an issue presented to the court.” Dkt. 43, 13-14; Dkt. 56, at 4. In Larson, the plaintiff did not have the necessary ownership or financial interests because it was undisputed that he assigned those interests to the defendants. See Larson, 569 F.3d at 1322, 1326-27. The plaintiff’s ownership interest in the patents-in-suit—necessary for standing—was predicated upon his success on state law contract claims, which would nullify the assignments. See Id . at 1326-27 (“Without first voiding his patent assignments, Larson has no ownership interest in the [patents-in-suit.]”). Unlike Larson, Ali’s success on his state law contract claims, which he styles as claims for “Legal Damages, ” will not cause any interests in the patents-in-suit to vest. Ali asserts that he has not assigned his interest in the patents-in-suit to Defendants. In the event that Ali is found to be an omitted co-inventor of one or more of the patents-in-suit, Ali alleges that his interests in those patents will vest in accordance with UMass’s policies and that he will be entitled to financial remuneration. Specifically, Ali contends that the UMass agreement will pay Ali a percentage of all revenues realized in consideration for his assignment to UMass. See Larson, 569 F.3d. at 1326-27. Based on this allegation, Ali suffers an injury due to a financial loss that is traceable to UMass’s alleged conduct in omitting Ali as a co-inventor. See Chou, 254 F.3d at 1359.

Ali alleges that he has an agreement with UMass, but does not allege any separate agreement that would entitle him to a financial benefit from Carnegie. Therefore, if Ali is named a co-inventor of some or all of the patents-in-suit and he is entitled to compensation from UMass, Ali cannot receive that compensation in this suit unless UMass is a party-defendant. This does not defeat Ali’s standing to bring suit under § 256 because Ali’s success on that claim will entitle him to an “order from the [Court] to the Director of the PTO to issue a certificate naming [him] as an inventor.” Chou, 254 F.3d at 1359. Although resolution of the § 256 claim alone will not give Ali a judgment against any party for the allegedly promised compensation, the redressability requirement of Article III is satisfied so long as a plaintiff shows “that a favorable decision will relieve a discrete injury to himself.” Massachusetts v. E.P.A., 549 U.S. 497, 525 (2007) (quoting Larson v. Valente, 456 U.S. 228, 244, n.15 (1982)). Ali “need not show that a favorable decision will relieve his every injury.” Id. Accordingly, for standing purposes, the injury suffered by Ali in his § 256 claim is, at least, partially redressable by the Court without UMass being party to this lawsuit. Chou, 254 F.3d at 1358-59 (explaining that not being named a co-inventor “would be redressable by an order from the district court to the Director of the PTO to issue a certificate naming [the plaintiff] as an inventor, which would entitle her under the University’s policy to a share of the licensing proceeds and stock”).

Ali’s two claims for legal damages appear to be alleged in the alternative: either Ali and UMass have a contract that compels Ali to assign his interests in the patents-in-suit in exchange for a fixed percentage of derived revenues, or there is no contract and Ali retains his ownership interests in the patents-in-suit. See Dkt. 4, at ¶¶ 26-36; see Fed. R. Civ. P. 8(d)(2), (3). At this preliminary stage, Ali has sufficiently alleged standing to bring suit.

B. Reconsideration of UMass’s Sovereign Immunity

Ali filed a motion to reconsider the Court’s prior dismissal of UMass from this lawsuit on the basis of sovereign immunity. See Dkt. 45. As grounds for the Court’s reconsideration of its prior decision, Ali argues that UMass waived its sovereign immunity with respect to the patents-in-suit. Ali contends that because the United States allegedly provided some or all of the funding that supported the research underlying the patents-in-suit, any patents resulting from that funding fall within the purview of the Bayh-Dole University and Small Business Patent Procedures Act, 35 U.S.C. § 200 et seq. (“Bayh-Dole Act” or “Act”). With respect to the ...

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