General Electric Company, et al. v. Wilkins

Filing 190

MEMORANDUM DECISION re plaintiff's Motion for Preliminary Injunction, documents 15 and 16 . The Court orders defendant Thomas Wilkins and those acting in concert with him, and those who have actual notice of this order, are enjoined and rest ricted from licensing or offering to license any interest in the technology described in the '565 and '985 patents, or from making any representation that Wilkins is presently legally entitled to license such technology, pending the entry of final judgment in this action or further order of the Court; order signed by Judge Oliver W. Wanger on 5/5/2011. (Rooney, M)

1
2
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4
UNITED STATES DISTRICT COURT
5
EASTERN DISTRICT OF CALIFORNIA
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7
8

GENERAL ELECTRIC COMPANY,

9

Plaintiff,

10

1:10-cv-00674–OWW-JLT
MEMORANDUM DECISION REGARDING
PLAINTIFF’S MOTION TO FOR
PRELIMINARY INJUNCTION (Docs.
15, 16)

v.

11
THOMAS WILKINS,

12

Defendant.

13

I. INTRODUCTION.

14
15

A. Plaintiff’s Allegations

16

Plaintiff General Electric Company(“Plaintiff”) brings this

17

action against Defendant Thomas Wilkins (“Defendant”) for damages

18

and

19

Plaintiff is a developer of energy technologies and the holder of

20

U.S. Patent Nos. 6,921,985 (“‘985 Patent”) and 6,924,565, (“the’565

21

patent”).1

22

‘565 patent and asserts that he is an unnamed co-inventor of the

23

’985 patent.

24

patents.

relief.

According

to

Plaintiff’s

complaint,

Defendant is listed as one of seven inventors of the

Defendant asserts an ownership interest in both

Defendant was employed as an electrical engineer by Enron Wind

25
26

injunctive

Corp.

(“Enron”),

Plaintiff’s

predecessor

in

interest,

27
1

28

Only allegations common to Plaintiff’s original complaint and first amended
complaint are included in this summary.

1

1

intermittently

2

Defendant’s job responsibilities while employed by Enron included

3

the design, development, installation and testing of wind turbine

4

generators.

5

2002,

6

intellectual property.

7

from

approximately

April

1998

to

May

2002.

Enron filed for bankruptcy protection in 2002. In May

Plaintiff

Defendant

purchased

became

Enron’s

Plaintiff’s

assets,

employee

in

including

May

of

its

2002.

8

Defendant served as Plaintiff’s lead power systems electrical

9

engineer in California, and his job was to develop new designs for

10

wind turbine equipment. On May 31, 2002, Defendant first conceived

11

the invention underlying the ‘565 patent.

12

allege when the invention underlying the ‘985 was first thought of,

13

or who first thought of it. Defendant voluntarily resigned from

14

Plaintiff in December 2002.

15

Plaintiff

applied

for

the

‘565

and

Plaintiff does not

‘985

patents

after

16

Defendant terminated his employment with Plaintiff.

17

2004,

18

connection with Plaintiff’s application for the ’565 patent, but

19

Defendant refused.

Defendant has never signed an assignment

20

expressly

the

21

Plaintiff’s requests that he do so.

22

assignment from Defendant in connection with the ‘985 patent.

23

Plaintiff

requested

assigning

that

’565

Defendant

patent

to

sign

In February
documents

Plaintiff,

in

despite

Plaintiff did not seek an

In 2009, Defendant purported to license the ‘985 patent to one

24

of Plaintiff’s competitors.2

25

Plaintiff that he was offering to license the ‘565 patent to

In May 2010, Defendant informed

26
27
28

2

On February 11, 2011, the court granted a motion to intervene filed by
Mitsubishi Heavy Industries, Ltd., and Mitsubishi Power Systems Americas, Inc.,
the competitors Defendant purported to grant licenses to.

2

1

others.

2

such conduct.

3

B. Procedural History

4

Defendant refused Plaintiff’s request to cease and desist

Plaintiff filed a motion for preliminary injunction on July 9,

5

2010. (Docs. 15, 16).

On July 12, 2010, Plaintiff filed an ex

6

parte application requesting that the court advance the hearing on

7

its motion for preliminary injunction to August 16, 2010.

8

23).3

(Doc.

9

Defendant filed a motion to dismiss Plaintiff’s original

10

complaint on July 15, 2010; the hearing on the motion was set for

11

September 27, 2010.

12

an ex parte motion seeking to “suspend briefing on the Motion for

13

Preliminary Injunction” until after the hearing on Defendant’s

14

motion to dismiss.

15

expressed Defendant’s hope that resolution of the motion to dismiss

16

would moot Plaintiff’s motion for preliminary injunction. (Doc. 27

17

at 2).

18

(Doc. 26).

On July 20, 2010,

(Doc. 27).4

Defendant filed

Defendant’s ex parte motion

On July 21, 2010, the court issued a minute order setting a

19

scheduling

conference

for

July

22,

2010

in

order

to

discuss

20

resolution of the parties’ respective ex parte requests.

21

28). After conducting the July 22 scheduling conference, the court

22

issued a minute order that directed Plaintiff to file a motion for

23

a temporary restraining order (“TRO”) by July 26, 2010 and set a

24

hearing for Plaintiff’s motion for August 6, 2010. (Doc. 29). The

(Doc.

25
3

26
27

Local Rule 230(b) provides a twenty-eight day notice requirement. E.D. Cal.
R. 230(b).
A hearing date on August 16, 2010 would have provided Defendant
thirty-eight days notice.

4

28

Defendant's motion also advanced opposition to Plaintiff's request to advance
the hearing on Plaintiff's motion for preliminary injunction. (Id).

3

1

minute

2

reciprocal depositions, “preferably” by August 3, 2010.

3

order

also

directed

the

parties

to

complete

limited
(Id.).

On July 26, 2010, Plaintiff filed a motion seeking a TRO and

4

supporting documents.

5

the parties submitted a stipulation pursuant to which

6

agreed to withdraw its TRO application and cooperate with Defendant

7

on various scheduling matters in exchange for Defendant’s agreement

8

to refrain from certain conduct.

9

stipulation on July 20, 2010 (“Stipulation”).

10
11

(Docs. 30, 31, 32, 33).

(Doc. 37).

On July 30, 2010,
Plaintiff

The court signed the
(Doc. 38).

parties’ Stipulation provided, in pertinent part:
1. GE’s motion for a temporary restraining order is
denied as moot;

12
13

2. The hearing date for GE’s motion for preliminary
injunction is taken off calendar pending the hearing on
Wilkins’ motion to dismiss;

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15
16
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18
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3. The hearing date for Wilkins’ motion to dismiss shall
be set on a date agreeable to the Court at the earliest
practicable opportunity, and the briefing schedule shall
be pursuant to the local rules; and
4. The Court will set a hearing date on briefing schedule
for GE’s motion for a preliminary injunction at the
hearing on Wilkins’ motion to dismiss.
The parties
request that the hearing on GE’s motion for a preliminary
injunction be set within 35 days of the hearing on
Wilkins’ motion to dismiss.

20
21
22
23
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THEREFORE, the parties stipulate and agree that pending
GE’s hearing on the motion for a preliminary injunction
that neither Wilkins, nor any person or entity acting in
concert with Wilkins, shall:
1. Take any steps to license, purport to license, grant,
or purport to grant rights to third parties in GE’s
Patent Nos. 6,924,565 and 6,921,985 (the “„565 and „985
Patents”); or

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26

2. Modify or extend the license agreement with Mitsubishi
Heavy Industries, Ltd. and/or related entities related to
GE’s ‘565 and ‘985 Patents; or

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28

3. Engage in any conduct that would convey or tend to
convey to third parties that Wilkins is licensing or will
4

The

1

license any ownership interest in the „565 or „985
Patents; or

2
4. Represent on his website or otherwise, unless under
oath in judicially required or requested testimony, that
he believes he has an ownership interest in the ‘565 and
‘985 Patents, or that he believes he has the lawful right
to license under the ‘565 and ‘985 Patents.

3
4
5

(Doc. 38 at 3-4).
6
On September 2, 2010, Plaintiff filed an ex parte application
7
to continue the hearing date on Defendant’s motion to dismiss due
8
to a scheduling conflict.

(Doc. 40).

Defendant filed vehement

9
opposition to Plaintiff’s request for continuance on September 7,
10
2010.5

(Doc. 41).

Defendant’s opposition argued that Defendant

11
only agreed to the Stipulation based on the assumption that his
12
motion to dismiss would be heard on September 27.

(Doc. 41 at 2).

13
Defendant’s

opposition

threatened

noncompliance

with

the

14
Stipulation if the hearing on Defendant’s motion to dismiss was not
15
held on September 27.

(Doc. 41 at 4).

16
The court conducted a hearing on Plaintiff’s ex parte request
17
to continue the hearing on the motion to dismiss on September 16,
18
2010.

In an attempt to effect a compromise solution to the

19
parties’ contentious dispute, the court issued a minute order that
20
granted Plaintiff’s request for continuance but also stated that
21
the Stipulation would expire on September 27, 2010.

(Doc. 45).

On

22
September 17, Plaintiff’s counsel emailed the court and stated that
23
Plaintiff would proceed with the September 27 hearing date for the
24
motion to dismiss in order to preserve the terms of Stipulation,
25
26
5

27
28

In the opposition to Plaintiff’s ex parte request, Defendant’s counsel accused
Plaintiff’s counsel of fraud in procurement of the Stipulation.
The court
rejected Defendant’s accusation.
Defendant’s counsel also vowed not to agree
to any further stipulations in this case. (Doc. 41 at 4).

5

1

pursuant to which the Stipulation was to remain in place until the

2

preliminary injunction hearing.

3

minute order on September 17 which provided:

4
5

(Doc. 46). The court issued a

In view of the Plaintiff electing to proceed to hearing
on 9/27/2010, Stipulated [TRO] and Scheduling Order shall
remain in full force and effect according to its original
terms.

6
7
8
9

(Doc. 46).
The court heard Defendant’s motion to dismiss on September 27,
2010.

During the hearing, the court announced its tentative

10

decision to dismiss the contract cause of action pled in the

11

complaint with leave to amend. The court expressed its belief that

12

although Plaintiff’s complaint was not technically deficient under

13

federal pleading standards, amendment of the complaint would be

14

beneficial during later stages of the litigation:

15
16
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19
20

The Court: [D]o you agree that you should, in effect,
separately state the [distinct breach of contract] claims
you have?
Mr. Hanlon: Your Honor, I think the claims are
sufficiently alleged in the four causes of action that
are stated. I don’t believe there’s a requirement under
federal procedural law that each separate contractual
breach be separately alleged as a separate cause of
action. We could certainly do that if it’s the Court’s
preference, but we don’t believe that GE was required to
so plead.

21
22
23

The Court: I think that’s probably right, but if it does
-- what is alleged doesn’t permit, if you will, the
application of the statute of limitations to what is
alleged to be breached, then you run the risk of having
that barred if you don’t amend.

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25

(Doc. 87, Trans. at 16-17).

26

close of the hearing:

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28

The court reiterated its view at the

I’ll just close my thoughts by saying this. The reason
that I mentioned amendment was because although it
doesn’t
dictate
the
Court’s
pleading
standards,
6

1

California law does utilize, to the extent that a
California contract is in dispute here, it does utilize
a primary rights theory to underlie pleading doctrine...

2
3

[I]t seems to me that there is more than one primary
right being asserted by GE in this lawsuit. There’s a
contract right, three of them, and then there’s some
intellectual property rights as well and then there is a
-- an employment property right also that is at dispute
and so down the line if GE wants to live dangerously, I
suppose they can do that...the matter stands submitted.
We’ll get a decision out to you as soon as we can.

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5
6
7

(Id. at 23-24).

A Memorandum Decision dismissing Plaintiff’s

8
complaint without prejudice was entered on October 8, 2010.

(Doc.

9
58).6
10
On

September

28,

2010, the

court

issued

a

minute

order

11
vacating as

moot

the hearing

date

on Plaintiff’s

motion

for

12
preliminary injunction; this minute order was a clerical error, as
13
there was no hearing date on calendar pursuant to the Stipulation.
14
(See Doc. 38 ¶2).
15
On

October

1,

2010,

the

court

held

a

status

conference

16
regarding yet another contentious dispute among the parties–this
17
time,

the

parties’

dispute

concerned

the

status

of

their

18
Stipulation.

Defendant argued that because the court stated its

19
tentative decision to dismiss the complaint, and because the court
20
did not set a hearing date or briefing schedule for the motion for
21
preliminary injunction at the close of the hearing on the motion to
22
dismiss, the Stipulation “expired on its own terms.”

(Doc. 52).

23
The court rejected Defendant’s position, noting that the terms of
24
the stipulation enjoined Defendant from certain actions “pending
25
GE’s hearing on the motion for preliminary injunction.”

(Doc. 108

26
27
6

28

The formal order dismissing the original complaint was signed on October 18,
2010, after Plaintiff filed the FAC.

7

1

at 8).

2

unequivocally specified that the life of the agreement was to

3

extend until the hearing on Plaintiff’s motion for preliminary

4

injunction.

5

that there was no complaint on file, the court stated:

6

The court held that the language of the Stipulation

(Doc. 108 at 8).

In response to Defendant’s argument

[W]e have a complaint...under the injunction and
declaratory relief claims for the alleged...interference
with the alleged patent rights...at least those claims
are going to survive until the next round or dispositive
motion...As of today we do have a complaint because I’ve
only announced a tentative ruling and I haven’t made a
dispositive order...We had an agreement that this interim
order would be in effect until the hearing of the
preliminary injunction motion, and that was to be within
35 days of the [September 27], which was the hearing date
on the motion [to dismiss]

7
8
9
10
11
12

(Doc. 108 at 10).7

13

order

14

stipulated temporary restraining order remains in full force and

15

effect

16

injunction...Motion for Preliminary Inunction set for 10/18/2010 at

17

11:00 AM.”

18

directed Defendant to file opposition to Plaintiff’s motion for

19

preliminary injunction on or before October 8, 2010.

20

Defendant filed opposition to Plaintiff’s motion on October 8,

21

2010.

22

opposition on October 14, 2010.

which

After the hearing, the court entered a minute

provided

pending

the

in

hearing

(Doc. 53).

(Doc.

pertinent

62).

on

part:

the

“The

motion

Court

for

ORDERED

preliminary

The Court’s October 1, 2010 minute order

Plaintiff

filed

a

reply

to

(Id.).

Defendant’s

(Doc. 77)

23

On October 12, 2010, the court ordered Plaintiff to submit an

24

amended complaint by October 14, 2010 so that Defendant would have

25

the

amended

complaint

in

his

possession

at

the

hearing

on

26
27
28

7

After the court explained its holding that the Stipulation remained in force,
Defendant's counsel informed the court that Defendant would not comply with the
court’s ruling. (Id.).

8

1

Plaintiff’s motion for preliminary injunction. Plaintiff filed its

2

First Amended Complaint (“FAC”) on October 13, 2010.

(Doc. 74).

3

The court heard Plaintiff’s motion for preliminary injunction

4

on October 18, 2010 and stated orally on the record that it would

5

issue a written decision granting a preliminary injunction.

6

83).

7

fact and conclusions of law.

(Doc.

The court directed Plaintiff to prepare proposed findings of
(Id.).

8

Defendant submitted a request for leave to file supplemental

9

opposition to the motion for preliminary injunction on October 20,

10

2010; the court denied Defendant’s request on October 21, 2010, as

11

the matter had been heard on notice. (Docs. 84, 86).

12

Plaintiff submitted proposed findings of fact and conclusions

13

of law on October 25, 2010.

(Doc. 94).

Defendant filed objections

14

to Plaintiff’s proposed findings of fact and conclusions of law on

15

October 26, 2010.

(Doc. 95).
II. LEGAL STANDARD.

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17

"A preliminary injunction is an extraordinary remedy never

18

awarded as of right." Winter v. Natural Resources Defense Council,

19

Inc., 129 S. Ct. 365, 376 (2008) (citation omitted). "A plaintiff

20

seeking a preliminary injunction must establish that he is likely

21

to succeed on the merits, that he is likely to suffer irreparable

22

harm in the absence of preliminary relief, that the balance of

23

equities tips in his favor, and that an injunction is in the public

24

interest." Id. at 374 (citations omitted).

25

be awarded upon a clear showing that the plaintiff is entitled to

26

relief. Id. at 376 (citation omitted) (emphasis added).

27

///

28

///
9

An injunction may only

1

III. FINDINGS OF FACT.

2

A. Defendant's Employment With GE and Enron

3

1.

4

employment to Defendant dated December 17, 2001 ("2001 Enron Offer

5

Letter").

6

offered to Defendant in the 2001 Enron Offer Letter was "Power

7

Systems Engineer."

8

responsibilities of a Power Systems Engineer as follows:

9

Enron Wind Corporation ("Enron") extended a written offer of

(Doc. 18, Brace Decl. at 1).

The title of the position

The 2001 Enron Offer letter described the

Will be responsible for the design, development,
installation, and testing of the Enron Wind Dynamic VAR
system.
Duties will include direct interaction with
project developers, site operators, park owners,
utilities, Enron Wind Manufacturing and vendors. Will
help establish performance criteria, testing procedures,
installation procedures, and product manuals data

10
11
12
13

Will work to assure proper electrical design of all
Ballance-of-Plant (BOP) items including pad mount
transformers, electrical infrastructure, sub-station
design
review
including
all
data
acquisition
requirements.
Will work directly with Enron Wing
Execution group, and Enron Wing engineering.

14
15
16

Will be responsible for the specification, and overall
performance of the Variable Speed Drive Converters used
on all Enron Wind Variable Speed turbines. Duties will
include specification system design, testing, and vendor
qualification. Design development engineering input for
any in-house design is also expected.

17
18
19
20

Will interact with the Advanced Technology Group as
needed to provide input for new technology developments
including control system, converter system, ptich system,
generator system, and overall wind turbine design.

21
22
23

(Doc. 18, Brace Decl., Ex. A at 1).

The 2001 Enron Offer Letter

24

stated "As part of your terms of employment, you will be required

25

to sign a Confidentiality and Inventions Agreement."

(Id. at 2).

26
27

2.

Defendant commenced employment with Enron in January 2002.

28

(Doc. 18, Brace Decl. at 2; Ex. A at 4).
10

At some point in early

1

2002, Defendant signed the 2001 Enron Offer Letter.

2

Pursuant to the terms of the 2001 Enron Offer Letter and Enron's

3

general

4

Confidentiality and Inventions Agreement ("Enron C & I Agreement")

5

as a condition of his employment.

6

A at 2).

business

practice,

Defendant

was

required

(Id.).

to

sign

a

(Doc. 18, Brace Decl. at 2; Ex.

7
8

3.

In early 2002, Norland Brace, Enron's Director of Human

9

Resources, was involved in due diligence preparations in connection

10

with the proposed sale of Enron.

(Doc. 18, Brace Decl. at 2).

11

Mr. Brace was charged with ensuring that each of Enron's employees,

12

including its engineers, had signed Enron's C & I Agreement so that

13

Enron could present the agreements to prospective buyers.

14

When Mr. Brace was unable to locate a signed copy of Defendant's C

15

& I Agreement, he personally

16

Agreement along with other employment documents, including a copy

17

of the 2001 Enron Offer Letter; these documents comprised Enron's

18

"employment packet."

(Id.).

took a copy of the Enron's C & I

(Id.).

19
20

4.

Defendant initially refused to sign the Enron C & I Agreement.

21

(Doc 18, Brace Decl. at 2).

22

signing the C & I Agreement was a condition of his employment and

23

that he would be terminated if he did not sign the agreement.

24

(Id.).

25

Agreement and the 2001 Enron Offer Letter;

26

indicates that he witnessed Defendant sign these documents on

27

February 3, 2002.

28

February 3, 2002 was a Sunday.

Mr. Brace informed Defendant that

Mr. Brace witnessed Defendant sign the Enron C & I

(Id.).

Mr Brace's declaration

The court takes judicial notice that

11

1

5.

A signed copy of Defendant's Enron C & I Agreement was sent by

2

Enron to prospective buyers as part of Enron's due diligence

3

requirement, along with the C & I Agreements of Enron's other

4

employees.

(Doc. 18, Brace Decl. at 2).

5
6

6.

A signed copy of Defendant's Enron C & I Agreement cannot be

7

located by Plaintiff.

8

experienced problems locating documents from the set of records

9

that should contain Defendant's signed Enron C & I Agreement, as

(Doc. 18, Brace Decl. at 2).

10

such records have been moved off site.

11

Plaintiff has

(Id.; Doc. 17, Hunt Decl.

at 2).

12
13

7.

Defendant worked for Enron from January 2002 until May 2002.

14

(Doc 18, Brace Decl. at 2).

15
16

8.

On May 10, 2002, Plaintiff acquired certain of Enron's assets,

17

including intellectual property related to Enron's wind turbine

18

operations.

(Doc. 19, McGinness Decl. at 2; Doc. 63, Schulte

19

Decl., Ex.

E at 5).

20

"rights...under any and all employment contracts" were expressly

21

excluded from the assets Plaintiff purchased from Enron. (Doc. 68,

22

Schulte Decl. at 5).

Pursuant to the purchase agreement,

23
24

9.

In 2002, David Hunt, GE's current Human Resources Manager,

25

Global Mergers and Acquisitions, was part of the human resources

26

team that was responsible for integrating Enron's employees into

27

Plaintiff's business.

28

the integration process, all Enron employees were required to sign

(Doc. 17, Hunt Decl. at 1-2).

12

As part of

1

various

employment

forms

2

Plaintiff.

3

provided by Plaintiff, they would have been immediately terminated.

4

(Id.).

(Id.).

as

a

condition

to

employment

with

If any employee refused to sign the forms

5
6

10.

Defendant commenced employment with Plaintiff as a Power

7

Systems Engineer in May 2002.

(Doc. 18, Brace Decl. at 3).

8
9

11.

On May 29, 2002, Defendant signed a document entitled "The

10

Spirit & Letter of Our Commitment" in which Defendant acknowledged

11

that he had received various documents that comprised the guide to

12

Plaintiff's employee policies ("Spirit and Commitment Letter").

13

(Doc. 17, Hunt Decl. at 2, Ex. B).

14

was to require employees to sign all documents that accompanied the

15

Spirit and Commitment Letter at the same time.

16

Decl. at 2). One of the documents Defendant acknowledged receiving

17

by

18

Employee Innovation and Proprietary Information Agreement ("GE EIPI

19

Agreement").

20

locate a copy of the GE EIPI Agreement signed by Defendant.

21

17, Hunt Decl. at 2).

signing

the

Spirit

and

Plaintiff's business practice

Commitment

(Doc. 17, Hunt Decl. Ex. B).

Letter

(Doc. 17, Hunt

was

Plaintiff's

Plaintiff is unable to
(Doc.

22
23

12.

The Spirit and Commitment Letter contains a provision which

24

provides "I understand that every employee is required to comply

25

with the policies described in the guide."

26

2, Ex. B).

(Doc. 17, Hunt Decl. at

27
28

13.

Defendant resigned from Plaintiff’s employ on December 1,
13

1

2002.

2

B. The ‘565 Patent

3

14.

4

a document entitled "Record of Invention" for technology described

5

as "Continuous WTG VAR Support and Prioritization."

6

McGinness Decl. Ex. B).

7

signed the form as an inventor.

8

stated that Defendant first thought of the invention on May 31,

9

2002 and indicated that the inventors' division was "General

10

(Doc. 18, Brace Decl. at

3).

On May 31, 2002 Defendant signed and submitted

Electric Wind Energy."

to Plaintiff

(Doc. 19,

A second person, Nagwa Elkachouty, also
(Id.).

The Record of Invention

(Id).

11
12

15.

On August 18, 2003, Plaintiff filed a patent application for

13

the technology described in the Record of Invention. (See Doc. 26,

14

Ex. 1 at 37; Doc. 19, McGinness Decl. at 2).

15

patent application with an unsigned Inventor Declaration and Power

16

of Attorney Form for Defendant.

Plaintiff filed the

(See Doc. 26, Ex. 1 at 37).

17
18

16.

After

receiving

19

Nonprovisional Application" in November 2003, Plaintiff, through

20

counsel,

21

requesting that Defendant sign an Inventor Declaration and Power of

22

Attorney form in connection with the patent application. (Doc. 26,

23

Ex. 1 at 38).

24

attorney of record for the patent application, spoke with Defendant

25

on the phone and Defendant stated that he was not willing to sign

26

the Inventor Declaration and Power of Attorney form.

27

Mendonsa received the unexecuted forms from Defendant on February

28

24, 2004.

sent

a

Defendant

"Notice

a

letter

to

File

dated

Missing

February

Parts

10,

of

2004,

On February 11, 2004, Paul Mendonsa, Plaintiff's

(Id.).

(Id.).

Mr.

On March 17, 2004, Plaintiff filed a petition
14

1

under 37 C.F.R. § 1.47(a) to continue the patent application in the

2

name of Defendant.

(Id.).

3
4

17.

On August 2, 2005, United States Patent No. 6,924,565 B2

5

("‘562 Patent") issued for technology titled "Continuous Reactive

6

Power Support for Wind Turbine Generators."

7

Decl. Ex. A at 1).

8

Invention established the basis for the ‘565 Patent.

9

McGinness Decl. at 2).

(Doc. 19, McGinness

The technology disclosed in the Record of
(Doc. 19,

The ‘565 Patent named seven inventors, one

10

of whom was Defendant and one of whom was Nagwa Elkchouty.

11

Each of the inventors listed in the ‘565 Patent is a current or

12

former employee of Plaintiff, and other than Defendant, each has

13

assigned his or her rights in the patent to Plaintiff.

14

McGinness Decl. at 2).

15

the assignee on the ‘565 Patent.

16

at 1).

17

(Id.).

(Doc. 19,

"General Electric Company" is listed as
(Doc. 19, McGinness Decl. Ex. A

The abstract to the ‘565 Patent provides:

Real and reactive power control for wind turbine
generator systems.
The technique described herein
provides the potential to utilize the total capacity of
a wind turbine generator system (e.g., a wind farm) to
provide dynamic VAR (reactive power support). The VAR
support provided by individual wind turbine generators in
a system can be dynamically varied to suit application
parameters.

18
19
20
21
22

(Id.).

23
24

18. Plaintiff has licensed and continues to offer licenses for the

25

use of the technology subject to the ‘565 Patent.

26

McGinness Decl. at 2).

(Doc. 19,

27
28

19.

On June 2, 2010, Defendant, through counsel, sent an email to
15

1

Plaintiff's counsel containing a document entitled "Notice of

2

Non-Abandonment and Intent to License" ("June 2010 Notice").

3

(Doc. 20, Glynn Decl. at 2, Ex. C1).

4

that

5

selling, licensing, engineering, and designing wind turbines and

6

wind farms to utilize [the technology underlying the ‘565 Patent]."

7

(Id. at Ex. C1 at 1).

Defendant

was

"actively

The June 2010 Notice stated

performing

work

in

commerce

by

8
9

C. The ‘985 Patent

10

20. On July 26, 2005, United States Patent No. 6,921,985 B2 ("‘985

11

Patent") issued for technology described as "Low Voltage Ride

12

Through for Wind Turbine Generators."

13

Ex. C at 1).

14

Defendant is not one of them. (Id.).

15

appeared on the application transmittal letter and cover sheet

16

Plaintiff initially filed with the U.S. Patent and Trademark

17

Office.

18

Patent is a current or former employee of Plaintiff and each has

19

assigned his or her rights in the patent to Plaintiff.

20

McGinness Decl. at 2). "General Electric Company" is listed as the

21

assignee on the ‘985 Patent.

22

1).

23
24
25
26
27
28

(Doc. 19, McGinness Decl.

Five inventors are named in the ‘985 Patent;

(Doc. 64).

However, Defendant's name

Each of the inventors listed in the ‘985

(Doc. 19,

(Doc. 19, McGinness Decl. Ex. C at

The abstract to the ‘985 Patent provides:
A wind turbine. The wind turbine includes a blade pitch
control system to vary a pitch of one or more blades and
a turbine controller coupled with the blade pitch control
system. A first power source is coupled with the turbine
controller and with the blade pitch control system to
provide power during a first mode of operation.
Uninterruptible power supplies coupled to the turbine
controller and with the blade pitch control system to
provide power during a second mode of operation. The
turbine controller detects a transition from the first
mode of operation to the second mode of operation and
16

1
2

causes the blade pitch control system to vary the pitch
of one or more blades in response to the transition.
(Id.).

3
4

21.

On August 7, 2009, an Administrative Law Judge ("ALJ") for

5

the United States International Trade Commission issued an "Initial

6

Determination" which held that Defendant was an inventor "of the

7

subject matter of claim 15 of the ‘985 patent."

8

On March 2, 2010 the United States International Trade Commission

9

affirmed the ALJ's finding that Defendant was an inventor of the

10

‘985 patent, but held that because Defendant's name did not appear

11

on the face of the patent, he was not an "owner" of the patent.

12

(Doc. 67 at 7).

(Doc. 66 at 3).

13
14

22.

On

May

17,

2010,

Defendant,

through

counsel,

informed

15

Plaintiff's counsel that Defendant had purported to license the

16

technology subject to the ‘985 Patent to MHI.

17

Dec. at 2, Ex. B).

(Doc. 20., Glynn

18
19

23.

On June 2, 2010, Defendant, through counsel, sent an email to

20

Plaintiff's counsel containing a document entitled "Notice of

21

Non-Abandonment and Intent to License" ("June 2010 Notice").

22

(Doc. 20, Glynn Decl. at 2, Ex. C1).

23

that

24

selling, licensing, engineering, and designing wind turbines and

25

wind farms to utilize [the technology underlying the ‘985 Patent]."

26

(Id. at Ex. C1 at 2).

27

///

28

///

Defendant

was

"actively

The June 2010 Notice stated

performing

17

work

in

commerce

by

1

D. Defendant's Recent Conduct

2

24. On July 30, 2010, the parties submitted a Stipulation pursuant

3

to which Defendant agreed to refrain from certain conduct until

4

Plaintiff's motion for preliminary injunction was heard.

5

37).

6

any rights in the subject patents to third parties; (2) engage in

7

any conduct that would convey or tend to convey to third parties

8

that Defendant is licensing or will license any ownership interest

9

in

Inter alia, Defendant agreed not to:

the

subject

patents;

or

(3)

(Doc.

(1) license or grant

represent

on

his

website

or

10

otherwise, unless under oath in judicially required or requested

11

testimony, that he believes he has an ownership interest in the

12

subject patents

13

license the subject patents. (See Doc. 38 at 3-4).

The court

14

signed the Stipulation on July 20, 2010.

On October

15

1, 2010, the court held a hearing to resolve a dispute regarding

16

the parties disparate interpretations of the Stipulation.

17

53).

18

pending a hearing on Plaintiff's motion for preliminary injunction.

19

(Doc. 53).

20

informed the court that Defendant would not comply with the court's

21

order.

or that he believes he has the lawful right to

(Doc. 38).

(Doc.

The court ordered that the Stipulation would remain in force

At the close of the hearing, Defendant's counsel

(Doc. 108, Trans. at 10-11).

22
23

25.

On October 1, 2010, Defendant represented on his personal

24

website that (1) he had the capacity to assign an interest the ‘985

25

patent; (2) entities interested in licensing "LVRT or POWER FACTOR

26

CONTROL"

technology

27

discuss;"

and (3)

28

injunction

should

"there

preventing

is

"contact

[Defendant]

no pending

[Defendant]
18

from

directly

restraining

licensing

his

to

order or
rightful

1

technology."

(Doc. 91, Eldredge Dec. Exs. B, B1).

On October 20,

2

2010, Defendant modified his website by adding the text of the

3

court's October 1 minute order and stating "if you would like to

4

discuss licensing for terms for technologies contained in United

5

States Patents 985 and 565 you will have to wait until this matter

6

is handled with the court, and then terms can be negotiated.

7

come back to this web site from time to time because you never

8

know. Things have a way of just working out for the benefit of all

9

parties."

But

(Doc. 91, Eldredge Dec. Ex. C).

10
IV. CONCLUSIONS OF LAW

11
12

A. Jurisdiction

13

1. Jurisdiction over this action is proper pursuant to 28 U.S.C. §

14

1332 based on diversity of citizenship.

15
16

2. Equitable powers are an inherent part of the judicial power

17

committed to the federal courts by Article III of the United States

18

Constitution.

19

Cir. 2010)(citing Pa. v. Wheeling & Belmont Bridge Co., 59 U.S.

20

460, 462 (1855)).

21

equitable relief; "[t]he essence of equity jurisdiction is the

22

power

23

necessities of the particular case." United States v. Odessa Union

24

Warehouse Co-op, 833 F.2d 172, 175 (9th Cir. 1987).

25

courts also have inherent power to control their dockets and to

26

promote efficient use of judicial resources.

27

Express, Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir.

28

2007) (citation omitted).

of

the

E.g. Rodriguez v. Hayes, 591 F.3d 1105, 1120 (9th

District courts have broad latitude in crafting

court

to

fashion

19

a

remedy

depending

upon

the

District

Dependable Highway

1
2

3. The court’s dismissal of Plaintiff’s original complaint with

3

leave to amend did not render Plaintiff’s motion for preliminary

4

injunction moot, as the court and both parties were aware that

5

Plaintiff intended to and did amend its complaint to clarify its

6

breach of contract claims. An order of a district court dismissing

7

a complaint with leave to amend leaves the suit pending for further

8

proceedings.

9

(1958) (citation omitted).

E.g. Jung v. K. & D. Mining Co., 356 U.S. 335, 337
Where the district court expressly

10

grants a party leave to amend its complaint, it is plain that the

11

court does not intend to relinquish jurisdiction over the case.

12

See WMX Techs. v. Miller, 104 F.3d 1133, 1137 (9th Cir. 1997)

13

(dismissal with leave to amend was not a final appealable order).

14

A district court’s dismissal of a complaint with leave to amend is

15

not a dismissal of the underlying action. Montes v. United States,

16

37 F.3d 1347, 1350 (9th Cir. 1994) (noting distinction between

17

dismissal of a complaint and dismissal of the underlying action);

18

De Tie v. Orange County, 152 F.3d 1109, 1111 (9th Cir. 1998)

19

(same); Martinez v. Flores, 299 F.2d 888.

20

misrepresentation

21

informed assumption of risk not to offer evidence to oppose the

22

injunction

23

injunction requires that Defendant be held accountable for this

24

strategic misevaluation.

at

of

the

this

October

law

and

18,

Defendant’s counsel’s

Defendant’s

2010

hearing

voluntary

on

preliminary

25
26

B. Likelihood of Success

27

4. California Labor Code Section 2860 provides:

28

Everything which an employee acquires by virtue of his
20

and

1

employment, except the compensation which is due to him
from his employer, belongs to the employer, whether
acquired lawfully or unlawfully, or during or after the
expiration of the term of his employment

2
3

Cal. Lab. Code § 2860. California Labor Code section 2860 embodies
4
the universally accepted principal that work product created by an
5
employee belongs to the employer where the employee was hired to
6
create such work product.

See e.g. Lugosi v. Universal Pictures,

7
25 Cal. 3d 813, 826 (Cal. 1979)(Mosk, J., concurring) (collecting
8
cases such as Zahler v. Columbia Pictures Corp., 180 Cal. App. 2d
9
582, 589 (Cal. Ct. App. 1960) (where an employee creates something
10
as part of his duties under his employment, the thing created is
11
the property of his employer"); accord Treu v. Garrett Corp., 264
12
Cal. App. 2d 432, 436 (1968) (an invention created by an employee
13
was held to belong to the employer because that was the very reason
14
he was hired and paid); Famous Players-Lasky Corp. v. Ewing, 49
15
Cal. App. 676 (Cal. Ct. App. 1920) (same)); Aero Bolt & Screw Co.
16
v. Iaia, 180 Cal. App. 2d 728, 736 (Cal. Ct. App. 1960) (where
17
employee is hired to invent, employer owns invention); United
18
States v. Dubilier Condenser Corp., 289 U.S. 178, 216 (1933)
19
(employer owns invention where employee is “hired or assigned to
20
evolve a process or mechanism for meeting a specific need”). There
21
is no dispute that Defendant was Plaintiff’s statutory employee at
22
all times relevant.
23
24
5. On or about May 31, 2002, Defendant signed a document entitled
25
“Record of Invention” providing that he first thought of the
26
technology underlying the ‘565 Patent on May 31, 2002.

The Record

27
of

Invention

indicated

that

the

28
21

invention

was

developed

for

1

"General Electric Wind Energy." (Doc. 19, McGinness Decl. Ex. B).

2

At the time Defendant signed the Record of Invention, he was

3

employed by Plaintiff as a Power Systems Engineer.8

4

conceived the technology underlying the ‘565 patent while employed

5

by

6

developing

7

technology presumptively belongs to Plaintiff. E.g. Treu, 264 Cal.

8

App. 2d at 436; Cal. Lab. Code § 2860.9

9

the record and applicable case law, Plaintiff has established a

Plaintiff

for

such

the

purpose

technology,

of

engineering,

pursuant

to

As Defendant

designing,

California

law,

and
the

In light of the state of

10
11
12
13
14
15
16

8

As a power system’s engineer at Enron, Defendant’s duties included “design,
development, installation, and testing of the Enron Wind Dynamic VAR system;”
“[d]esign development engineering input for any in-house design;” and
“provid[ing] input for new technology developments including control system,
converter system, pitch system, generator system, and overall wind turbine
design.” (Doc. 18, Brace Decl., Ex. A at 1). There is no admissible evidence
indicating that the scope of Defendant’s job duties changed when he transferred
from Enron to GE, and it is reasonable to infer from the evidence on the record
that Defendant’s job duties remained substantially the same at GE.
Further,
Defendant’s representations to the U.S. International Trade Commission reveal
that his job at GE was to “develop new designs” for technology used in GE’s
business. (Doc. 66, Schulte Decl. Ex. C at 4-5).

17
9

18
19
20
21
22
23
24
25
26
27
28

The cases provided in Defendant’s opposition, Dubilier Condenser Corp., 289
U.S. at 188 and Banner Metals, Inc. V. Lockwood, 180 Cal. App. 2d 728, 733 (Cal.
Ct. App. 1960) are of no help to Defendant.
Rather, these cases serve to
reinforce the point that Plaintiff presumptively owns the subject technology in
this action, as the cases highlight the differences between Defendant’s situation
and an employee who independently develops technology on his own.
In Banner
Metals, the inventor was employed by his employer as an order clerk, developed
his invention on his own time at his own expense, and prosecuted the patent for
his invention without involvement from his employer. 180 Cal. App. 2d at 731,
736 (emphasis in original). Similarly, in Dubilier, the employees’ invention was
not developed within the scope of their employment duties. 289 U.S. at 197.
Here, the evidence demonstrates that Defendant developed the subject technology
within the scope of his employment.
Williams v. Weisser, 273 Cal. App. 2d 726,
733-34 (Cal. Ct. App. 1969), cited by Intervenor Mitsubishi, is not persuasive
either. The Williams Court specifically distinguished the lectures at issue in
that case from inventions created by an employee hired to invent: “University
lectures are sui generis...they should not be blindly thrown into the same legal
hopper with valve designs.” Id. at 735 (citing Daniel Orifice Fitting Co. V.
Whalen, 198 Cal. App. 2d 791 (Cal. Ct. App. 1962)). Whalen expressly recognizes
that “[w]here a person is employed to design improvements to the product of his
employer, or to design new products for his employer, and he does so, he may not
use the results of such work for his own use and benefit, and particularly not
to the detriment of his employer.” 198 Cal. App. 2d at 798.

22

1

high probability of success on its claim for declaratory relief

2

regarding its ownership claim to the technology subject to the ‘565

3

patent.

4
5

6.

According

6

International Trade Commission, Defendant worked on developing the

7

technology underlying the ‘985 patent as an employee of Enron Wind

8

during 1999 and 2000.

9

Defendant

also

to

Defendant’s

representations

to

the

U.S.

(Doc. 66, Schulte Decl. Ex. C at 3).

represented

to

the

U.S.

International

Trade

10

Commission that in 2002, he was the lead power systems electrical

11

engineer for GE and that his job was to develop new designs for low

12

voltage ride-through. (Id. at 4-5). In connection with his duties

13

as GE’s lead power systems engineer, Defendant flew to Germany to

14

work on the technology underlying the ‘985 Patent with other GE

15

engineers.

16

Defendant incorporated into the ‘985 Patent presumptively belongs

17

to Plaintiff, as Defendant invented such technology in his capacity

18

as an employee of Plaintiff’s who was being paid to invent.

19

Treu, 264 Cal. App. 2d at 436; Cal. Lab. Code § 2860.

20

has established a high probability of success on its claim for

21

declaratory relief regarding the ‘985 patent.10

(Id.).

Accordingly,

any

technology

invented

by

E.g.

Plaintiff

22
23

C. Irreparable Harm

24

7.

25

that irreparable injury is likely in the absence of preliminary

26

relief; mere possibility of such injury is insufficient.

A plaintiff seeking a preliminary injunction must demonstrate

E.g.

27
10

28

As Plaintiff has established a high probability of success on this equitable
claim, it is unnecessary to discuss Plaintiff’s contract claims.

23

1

Winter, 129 S.Ct. At 375.

2

may constitute irreparable harm.

3

of Fayetteville, 2010 U.S. App. LEXIS 26202*14 (8th Cir. 2010);

4

BellSouth

5

Services, 425 F.3d 964, 970 (11th Cir. 2005); Gallagher Benefit

6

Servs.

7

2008)(unpublished).11

8

holder’s right to license and practice a patent supports a finding

9

of irreparable harm protected by equity and injunctive relief, as

10

the “attendant loss of profits, goodwill, and reputation cannot be

11

satisfactorily

12

Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 640 (1st Cir.

13

1992).

v.

Telecomms.,

De

La

Loss of customers and damage to goodwill

Inc.

Torre,

E.g. Rogers Group, Inc. v. City

v.

283

MCImetro

Fed.

Appx.

Access

543,

Transmission

546

(9th

Cir.

A party’s active interference with a patent

quantified.”

See,

e.g.,

Societe

Des

Produits

14
15

8.

In light of Defendant’s conduct, licensing and offering to

16

license

17

Plaintiff will suffer lost customers and damage to its goodwill

18

unless a preliminary injunction enjoins Defendant from further

19

licensing of technology that is presumptively owned by Plaintiff.

20

According to Defendant, he has already intentionally and knowingly

21

licensed a portion of the technology underlying the ‘985 Patent to

technology

claimed

by

Plaintiff,

it

is

likely

that

22
23
24
25
26
27
28

11

In eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 393-94,(2006), the Supreme
Court held that the Federal Circuit erred in adopting a categorical rule that
permanent injunctive relief was available once a patentee established the
validity of its patent and infringement by defendant. Id. at 392-94. eBay
involved a permanent injunction, but the rule espoused therein "has been applied
to preliminary, as well as permanent, injunctions, and has been read to limit the
presumption of irreparable harm [based] solely upon the finding of infringement."
Aurora World, Inc. v. TY Inc., 2009 U.S. Dist. LEXIS 129128*146-47 (C.D. Cal.
2009) (collecting cases) but see Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH
& Co., 571 F.3d 873, 877 (9th Cir. 2009)(applying presumption in trademark case).

24

1

one of Plaintiff’s competitors, and as recently as October 2010,

2

Defendant offered to license the technology at issue in this action

3

on his website despite the existence of a temporary restraining

4

order prohibiting such conduct.

5

sufficient likelihood of irreparable harm to warrant a preliminary

6

injunction. See Concrete Washout Systems, Inc., 2008 WL 5411965 at

7

* 3 (C.D. Cal. 2008) (granting injunction based on likelihood of

8

damage to goodwill); see also Oakley, Inc. v. Sunglass Hut Int'l,

9

2001 WL 1683252, * 11 (C.D. Cal. 2001) (same).

Plaintiff has established a

10
11 D. Equities
12 9.

The equities favor Plaintiff.

Based on the current record, it

13 does not appear that Defendant has rights in the subject technology
14 sufficient

to

permit

Defendant

to

license

the

technology

to

15 Plaintiff’s competitors. Accordingly, an injunction does not impose
16 a significant burden on Defendant. At most, Defendant risks losing
17 licensing

opportunities,

for

a

limited

period

18 technology that he does not hold a patent to.

of

time,

for

Such opportunities

19 are likely limited by prospective customers’ reluctance to pay
20 Defendant money for technology for which he does not hold a patent.
21 Conversely, it appears that Plaintiff owns the subject technology
22 but is at risk of losing customers, suffering diminished goodwill,
23 and having to engage in litigation against multiple parties if
24 Defendant is permitted to continue attempting to license the subject
25 technology; indeed, Plaintiff is already engaged in litigation with
26 a competitor to which Defendant has purported to license some of the
27 subject technology.
28
25

1
2
3
4
5

E. Public Interest
10.

The public has a strong interest in protecting intellectual

property rights.

LEXIS 25900*68 (Fed. Cir. 2010).
F. Conclusion
For the reasons stated, Plaintiff has established it is likely

6
7
8
9

to prevail on the merits, that it is injured by the conduct of
Defendant, that the threatened harm is irreparable, and that an
injunction is in the public interest.
ORDER

10

For the reasons stated, Defendant Thomas Wilkins and those

11
12
13
14
15
16
17
18
19

See, e.g., Spansion, Inc. v. ITC, 2010 U.S. App.

acting in concert with him, and those who have actual notice of this
order, are enjoined and restricted from licensing or offering to
license any interest in the technology described in the ‘565 and
‘985 patents, or from making any representation that Wilkins is
presently legally entitled to license such technology, pending the
entry of a final judgment in this action or further order of the
court.
IT IS SO ORDERED.

Dated:
20 hkh80h

May 5, 2011

/s/ Oliver W. Wanger
UNITED STATES DISTRICT JUDGE

21
22
23
24
25
26
27
28
26