Safety Braking Corporation et al v. Six Flags Inc. et al

Filing 505

REPORT AND RECOMMENDATIONS re 486 Granting MOTION to Correct Inventorship Under 35 U.S.C. § 256 filed by G&T Conveyor Co. and Denying Defendant's Motion For Attorney's Fees ( DI# 496 ). Please note that when filing Objection s pursuant to Federal Rule of Civil Procedure 72(b)(2), briefing consists solely of the Objections (no longer than ten (10) pages) and the Response to the Objections (no longer than ten (10) pages). No further briefing shall be permitted with respect to objections without leave of the Court. Objections to R&R due by 8/21/2017. Signed by Judge Mary Pat Thynge on 8/2/17. (kjk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

MAGNETAR TECHNOLOGIES CORP.
and G&T CONVEYOR CO.,
Plaintiffs,

v.
SIX FLAGS THEME PARKS INC.,
, et al.,
Defendants.

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C.A. No.

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REPORT AND RECOMMENDATION

I.

INTRODUCTION
In March 2007; plaintiffs Magnetar Technologies Corp. ("Magnetar") and G&T

Conveyor Co. ("G&T") (collectively, "plaintiffs") sued multiple theme park operators
("defendants"), alleging infringement of U.S. Patent Nos. 5,277,125 ("the '125 patent")
and 6,659,237 ("the '237 patent"). 1 On February 7, 2014, the court issued Reports and
Recommendations (the "February 7, 2014 R&Rs"), finding the '125 patent was invalid
on the grounds of indefiniteness, failure to name all inventors, and obviousness. 2 The
February 7, 2014 R&Rs also found the '125

pate~t

and the '237 patent were not

infringed with respect to certain accused amusement park rides. 3 On July 29, 2014, the
court adopted those Reports and Recommendations and entered judgment for

1

D.l.1.
Magnetar Techs. Corp. v. Six Flags Theme Parks, Inc., C.A. No. 07-127-LPSMPT, 2014 WL 547712 (D. Del. Feb. 7, 2014).
,
3
Id.; D.I. 406.
2

defendants and against plaintiffs. 4 On April 17, 2015, the United States Court of
Appeals for the Federal Circuit affirmed the court's rulings and the Federal Circuit's
mandate was issued on May 26, 2015. 5 On March 13, 2017, this court granted
defendants' renewed motion for attorneys' fees. 6 Presently before the court is plaintiffs'
motion to correct inventorship under 35 U.S.C. § 256 and defendants' request for
attorneys' fees. 7 For the reasons stated below, it is recommended that plaintiffs' motion
be granted and defendants' request be denied.

II.

FACTUAL AND PROCEDURAL BACKGROUND

The record details the extensive factual and procedural background in this case.
For the purposes of this motion, the court will only briefly reiterate pertinent facts.
The '125 patent claims a car and track assembly with wheels rolling on a two-rail
track and a metal fin extending down from the car and passing between linear motors. 8
Joel L. Staehs and Gene DiFonso are the named inventors for the '125 patent. 9 The
'125 patent was originally assigned to BAE Automated Systems ("BAE") and G&T
acquired BAE's assets in 2001. 10 Magnetar received an exclusive license under the
'125 patent from G&T for certain uses. 11 The patent was filed on October 28, 1992 and

4

D.I. 425.
Magnetar Techs. Corp. v. Six Flags Theme Parks Inc., 599 F. App'x 960 (Fed.
Cir. 2015); D.I. 450.
6
D.I. 477.
7
D.I. 486.
8
Magnetar Techs. Corp. v. Six Flags Theme Parks, Inc., C.A. No. 07-127-LPSMPT, 2014 WL 547712, at *1 (D. Del. Feb. 7, 2014).
9
D.I. 56, Ex. A.
10
0.1. 312at1.
11 Id.
5

2

has since expired. 12
On March 1, 2007, plaintiffs instituted the present matter, claiming braking
systems and assemblies in defendant's amusement park rides infringe claim 3 of the
'125 patent and claims 1 and 10 of the '237 patent. 13 In February 2014, this court
recommended that defendant's motions for summary judgment of invalidity and noninfringement of the '125 patent be granted. 14 One of the February 7, 2014 R&Rs
concluded the '125 patent was invalid because it was indefinite, obvious, and failed to
name Mr. Kwangho Chung as an inventor, despite his substantial contributions to
plaintiffs' technology. 15
In July 2014, Judge Stark adopted the recommendations, invalidating the '125
- patent due to indefiniteness, incorrect inventorship, on-sale bar, and obviousness. 16
Judge Stark's Memorandum Order also determined most of the accused amusement
park rides did not infringe the '125 patent. 17 Following the Memorandum Order,
defendants moved for an award of attorneys' fees, which this court granted in a Report
and Recommendation. 18 After reviewing the Report and Recommendation, the
subsequent objections, and the response, Judge Stark issued a Memorandum Order

12

D.I. 338, Ex. A.
D.I. 1. See generally D.I. 56, Ex. A-Ex. B.
14
D.I. 406; MagnetarTechs. Corp. v. Six Flags Theme Parks, Inc., C.A. No. 07127-LPS-MPT, 2014 WL 547712 (D. Del. Feb. 7, 2014) (recommending "[d]efendants'
motion for summary judgment of invalidity of the '125 patent (D.I. 337) be
granted ... [d]efendants' motion for summary judgment of non-infringement of claim 3 of
the '125 patent be granted as to certain rides and denied as to other accused rides as
identified herein").
15
Magnetar, 2014 WL 547712 at *8.
16
D.I. 425.
17 Id.
18
D.I. 426.
13

3

denying defendants' motion for attorneys' fees. 19 On November 13, 2015, defendants
filed a renewed motion for attorneys' fees. 20 This renewed motion was granted on
March 13, 2017. 21 Plaintiffs filed objections to this .Report and Recommendation and
submitted their motion to correct inventorship on May 10, 2017. 22 Defendants
submitted their response to plaintiffs' objections and their response to the· motion to
correct inventorship on June 9, 2017. 23

Ill.

LEGAL STANDARDS
Patent applications must be filed by the inventor, who "shall make [an] oath that

he believes himself to be the original and first inventor. .. "24 When an inventor is ·
omitted from a patent application, 35 U.S.C. § 256 permits correction of the mistake "if
it arose as a result of 'error and without deceptive intention .... "'25 lnventorship can be
corrected at any time and, "[i]f a patentee demonstrates that inventorship can be
corrected as provided for in section 256, a district court must order correction of the
patent, thus saving it from being rendered invalid." 26

IV.

DISCUSSION
In the instant matter, plaintiffs argue that under 35 U.S.C. § 256, if inventorship

19

D.I. 457.
D.I. 463.
21
Magnetar Techs. Corp. v. Six Flags Theme Parks, Inc., C.A. No. 07-127-LPSMPT, 2017 WL 962760 (D. Del. Mar. 13, 2017).
22
D.I. 483; D.I. 486.
23
D.I. 495; D.I. 496.
24
Long Mfg. N.C., Inc. v. Candee Corp., 1984 WL 1351, at *16 (E.D.N.C.)
(quoting 35 U.S.C. § 115).
2s Id.
26
Advanced Cardiovascular Systems, Inc. v. Scimed Life Systems, Inc., 988
F.2d 1157, 1162 (Fed. Cir. 1993); Pannu. v. Jo/ab Corp., 155 F.3d 13(4 (Fed. Cir. 1998).
20

4

can be corrected, a district court must grant the correction of the patent to save it from
invalidity. 27 Defendants, however, assert this motion is frivolous, relying on three
arguments in support. 28 First, defendants argue the motion is futile because plaintiffs
do not have legal title to Chung's interest in the invention. 29 Second, defendants
contend the court has already entered a final judgment and therefore, plaintiffs cannot
succeed in amending the judgment under FED. R. CIV. P. 59 or seek relief under FED.

°

R. CIV. P. 60. 3 Finally, defendants aver the motion is moot because the '125 patent
was found invalid for other reasons in addition to incorrect inventorship, and therefore,
correcting inventorship would not remedy the invalidity of the patent, which has since
expired. 31

A.

Correcting lnventorship
1.

Futility

Defendants contend plaintiffs' motion is futile because inventorship cannot be
corrected under 35 U.S.C. § 256, since plaintiffs do not have legal title to Chung's
interest in the invention. 32 Defendants point to one of the February 7, 2014 R&Rs,
where this court noted plaintiffs' apparent concession of the futility of correcting

27

D.I. 486. See a/so Pannu, 155 F.3d at 1350 (stating "[i]f a patentee
demonstrates that inventorship can be corrected as provided for in section 256, a
district court must order correction of the patent, thus saving it from being rendered
invalid").
28
D.I. 496 at4-7.
29
Id. at 4-5.
30
Id. at 5-6.
31
Id. at 6-7.
32
Id. at 4.
I
. I

5

inventorship. 33 Plaintiffs counter that, at the time, they maintained a ·good faith belief
that there was no inventorship error, and thus, did not seek to correct inventorship. 34
Plaintiffs further aver this court has not determined whether inventorship could be
corrected. 35 In the February 2014 R&R, this court adopted defendants' position
regarding section 256 and noted plaintiffs' apparent concession of the futility of
correcting inventorship, but never addressed plaintiffs' ability or right to correct
inventorship. 36
Defendants further assert this motion is futile because plaintiffs do not have legal
title to Chung's interest and would lack standing after correcting inventorship to include
Chung. 37 Chung was a consultant to BAE. 38 As a consultant, defendants argue that
Chung was not an employee of BAE, but an independent contractor. 39 Therefore,
defendants contend plaintiffs do not and cannot have legal title to Chung's interest in
the invention. 40
. Defendants maintain Chung's status as an independent contractor disqualifies

33

Id. See also Magnetar Techs. Corp. v. Six Flags Theme Parks; Inc., C.A. No.
07-127-LPS-MPT, 2014 WL 547712 at *9 (D. Del. Feb. 7, 2014) ("Chung was working
as a consultant, not an employee of BAE, when he developed the double-sided brake.
Consequently, defendants argue plaintiffs do not have legal title to Chung's interest in
the invention . . . . Plaintiffs did not respond to defendants' arguments regarding
section 256, apparently conceding the futility of correcting inventorship via that section.
The court, therefore, grants defendants' motion for summary judgment of invalidity
based on incorrect inventorship").
34
D.I. 501 at 4.
35 Id.
36
Magnetar, 2014 WL 547712, at *9.
37
D.I. at 501.
38
See Magnetar, 2014 WL 547712, at *9; D.I. 338, Ex. I at 52; Ex. 0 at 40.
39
D.I. 338 at 14-15; D.I. 496 at 4-5.
.
40
D.I. 338 at 14-15; D.I. 496 at 4-5 ..

6

him from the "hired to invent" doctrine. 41 The hired to invent doctrine allows inventions
made by employees to be owned by their employers. 42 The hired to ,invent doctrine
'

does not apply to independent contractors, and therefore, BAE would not have legal
title to Chung's interest. 43 Even if the hired to invent doctrine applied, the doctrine
"grants an obligation of assignment and equitable title, not legal title." 44 There is no
evidence of any assignment of Chung's legal title, so application of the hired to invent
doctrine would not grant plaintiffs legal title. 45 Patent infringement cases "cannot
proceed without the participation of all legal owners."46 To have standing, plaintiffs must
demonstrate they "held enforceable title at the inception of the lawsu,it." 47 Defendants
argue although plaintiffs have standing now and at the time they filed the present
action, they would lose standing as soon as they corrected inventorship because there
is no means for plaintiffs to obtain legal title. 48
Section 256 has been read broadly and "imposes no requirement of potential
ownership in the patent on those seeking to invoke it." 49 Section 256 has no limitations
period, and courts tend to read the statute broadly, erring on the side of providing relief

41

See Gellman v. Telular Corp., 2010 WL 5173213, at *5 (E.b. Tex. Dec. 14,
2010), aff'd, 449 Fed. Appx. 941 (Fed. Cir. 2011); D.I. 338at14-5. :
42
Gellman v. Telular Corp., 2010 WL 5173213, at *5.
43 Id.
44
Id. at *18.
45
D.I. 338 at 15. See id.
46
Crown Die & Tool Co. v. Nye Tool & Mach. Works, 261 U.S. 24, 40-1 (1923).
47
Tyco Healthcare Group LP v. Ethicon Endo-Surgery, Inc., 587 F.3d 1375,
1378 (Fed. Cir. 2009).
48
D.I. 496 at 4-5.

·
,
49
Chou v. University of Chicago, 254 F.3d 1347, 1358 (Fed. Gir. 2001) (holding
"an expectation of ownership of a patent is not a prerequisite for a p~tative inventor to
possess standing to sue to correct inventorship under§ 256").
1

7

°

in correcting inventorship. 5 Courts interpret section 256 "as a 'savings' provision' to
prevent patent rights from being extinguished simply because the inventors are not
correctly listed."51 This court similarly interprets section 256 broadly, such that plaintiffs'
lack of legal ownership of Chung's interest does not strip them of sta,nding. Thus,
plaintiffs' motion is not futile.

2.

Vehicle for Court to Entertain the Present Motion

Defendants argue there is no means for this court to entertain the motion
because it has already entered a final judgment. 52 Defendants note plaintiffs have not
filed a motion to alter or amend the judgment under FED. R. CIV. P. 59, nor sought
relief from judgment under FED. R. CIV. P. 60. 53 Therefore, they argue, plaintiffs
furnish no "procedural vehicle" for the court to consider this motion where final
judgment was entered. 54 Plaintiffs maintain their motion is procedurally proper. 55 They
argued in good faith that Chung should not have been named as an inventor of the '125
patent and now, after the decisions of this court and the Federal Circuit, believe
correcting inventorship is appropriate. 56
Plaintiffs reason section 256 provides an avenue for this court to entertain their
motion because "[i]f a patentee demonstrates that inventorship can be corrected as

50

Iowa State University Research Foundation, Inc. v. Sperry Rand Corp., 444
F.2d 406, 410 (4th Cir. 1971); Pannu v. lo/ab Corp., 155 F.3d 1344, 1348-1351 (Fed.
Cir. 1998).
51
Chou, 554 F.3d at 1358 (quoting Pannu, 155 F.3d at 1349 (Fed. Cir. 1998)).
52
D.I. 496 at 5-6.
53 Id.
54
Id. at 5.
55
D.I. 501 at 5-9.
56
Id. at 5-6.

8

provided for in section 256, a district court must order correction of the patent, thus
saving it from being rendered invalid."57 In light of the comprehensive remedial
purposes Congress intended for section 256, a broad reading of the statute is proper. 58
Despite defendants' contention regarding entry of final judgment, this court has not
entered a final judgment as to plaintiffs' right to correct inventorship. 59 The Federal
Circuit has determined "the only procedural prerequisites to maintain a correction action
in district court are notice and an opportunity for all parties to be heard." 60 Here,
defendants do not contend that plaintiffs failed to meet these two elements. 61
Therefore, section 256 provides the vehicle for considering the present motion.
3.

Mootness

In arguing plaintiffs' motion is moot, defendants emphasize two cases where
courts determined a motion to correct inventorship was moot when incorrect
inventorship was one of several reasons the patent was previously found invalid. 62
Plaintiffs maintain these cases do not support mootness, 63 and rely on Frank's Casing
Crew & Rental Tools, Inc. v. PMR Technologies, Ltd., 64 which they purport nullifies
57

D.I. 501 at 7 (quoting Pannu v. lo/ab Corp., 155 F.3d 1344, 1350 (Fed. Cir.

1998)).
58

See Stark v. Advanced Magnetics, Inc., 119 F.3d 1551 (Fed. Cir. 1997).
See Magnetar Techs. Corp. v. Six Flags Theme Parks, Inc., C.A. No. 07-127LPS-MPT, 2014 WL 547712, at *9 (D. Del. Feb. 7, 2014).
60
Stark, 119 F.3d at 1553 (citing Iowa State University Research Foi!ndation,
Inc. v. Sperry Rand Corp., 444 F.2d 406 (4th Cir. 1971); MCV, Inc. v. King-Seeley
Thermos Co., 870 F.2d 1568, 1570 (Fed. Cir. 1989)).
61
D.I. 496 at 5-6.
62
Id. at 6 (citing Garrett Corp. v. United States, 190 Ct. Cl. 858, 870 n.5 (1970);
Long Mfg. N.C., Inc. v. Candee Corp., 1984 WL 1351, at *16 (E.D.N.C. June 21, 1984)).
63
D.I. 501 at 2-3. See generally Garrett Corp., 190 Ct. Cl. 858; Long, 1984 WL
1351.
64
292 F.3d 1363, 1377 (Fed. Cir. 2002).
59

9

defendants' argument and cited caselaw. 65 Plaintiffs' reliance on this decision is
misplaced because the Federal Circuit found there was no previous determination
regarding who should have been named as the inventor for the patent at issue. 66
Moreover, Frank's Casing Crew only involved inventorship issues, unlike the '125
patent at issue which was found invalid on multiple grounds, one of which was incorrect
inventorship. 67 In Frank's Casing Crew, the appellate court remanded the matter to the
district court to determine whether correction of inventorship applied, and subsequently
correction of inventorship occurred. 68 In the present case, all inventors are identified
and there are multiple grounds on which the court found the claim 3 of the '125 patent
invalid. 69 Incorrect inventorship is not the sole reason for invalidity of the '125 patent,
and even if plaintiffs cured inventorship, claim 3 would remain invalid because of
indefiniteness and obviousness. 70
Plaintiffs further argue their motion is not moot because its outcome may impact
the defendants' request for attorneys' fees, would remove the invalidity of claims 1 and
2 of the '125 patent, and would impact rights of the owners of the '125 patent. 71
Correction of inventorship is not moot because claims 1 and 2 of the '125 patent were
found invalid based on the court's determination of invalidity of claim 3 for incorrect

65

D.I. 501 at 3. See Frank's Casing Crew, 292 F.3d at 1377.
Frank's Casing Crew, 292 F.3d at 1377.
67
Compare Frank's Casing Crew, 292 F.3d at 1371-1377 with 0.1. 407.
68
Frank's Casing Crew, 292 F.3d at 1377.
69
See generally Magnetar Techs. Corp. v. Six Flags Theme Parks, Inc., C.A. No.
07-127-LPS-MPT, 2014 WL 547712 at *2-*5, *15-*19 (D. Del. Feb. 7, 2014).
70
See id.
71
D.I. 501 at 2.
66

10

inventorship. 72 Claims 1 and 2 of the '125 were not found invalid on any other ground. 73
Additionally, in awarding attorneys' fees, this court relied on its finding of invalidity of the
'125 patent based on incorrect inventorship - specifically, in its determination of
objective unreasonableness and its analysis of the need to compensate for and deter
similar conduct.74 Therefore, plaintiffs' motion is not moot.
4.

Motion to Correct lnventorship

Section 256 permits correction of inventorship "if [incorrect inventorship] arose as
a result of 'error and without deceptive intention.'"75 In the absence of deceptive intent,
courts often provide relief by correcting inventorship, reading the statute broadly based
on Congress' remedial intent. 76 The court, in finding incorrect inventorship, did not find
plaintiffs acted with deceptive intent or were grossly negligent. 77 Defendants do not
contend plaintiffs acted with deceptive intent, and there is no evidence supporting such
conduct.78 In light of the finding that plaintiffs acted erroneously without deceptive
intent, and the determination of defendants' other arguments as unpersuasive, this
court recommends that plaintiffs' motion to correct inventorship should be granted.

72

Id. See a/so Magnetar, 2014 WL 547712, at *5-*9.
See Magnetar, 2014 WL 547712, at *2-*19 (finding claims 1 and 2 invalid only
due to incorrect inventorship ).
74
See generally Magnetar Techs. Corp. v. Six Flags Theme Parks, Inc., 2017
WL 962760 (D. Del. Mar. 13, 2017).
75
Long Mfg. N.C., Inc. v. Candee Corp., 1984 WL 1351, at *16 (E.D.N.C.)
(quoting 35 U.S.C. § 115).
76
Iowa State University Research Foundation, Inc. v. Sperry Rand Corp., 444
F.2d 406, 410 (4th Cir. 1971); Pannu v. lo/ab Corp., 155 F.3d 1344, 1348-1351 (Fed.
Cir. 1998).
77
Magnetar, 2014 WL 547712, at *5-*9.
78
See generally D.I. 496.
73

11

B.

Defendants' Request for Attorneys' Fees

District courts have broad discretion regarding the award of attorneys' fees and
consider a variety of factors. 79 Under the principle known as the American Rule, each
litigant is responsible for its attorneys' fees and costs. This principle applies equally to
prevailing and losing parties unless a specific statute authorizes the shifting of
attorneys' fees. 80 The Supreme Court has "used the bad faith exception to the
American Rule to uphold the award of attorneys fees." 81 A party's bad faith conduct is
an exception the American Rule. 82 Bad faith exists "where parties have unnecessarily
prolonged or delayed litigation, falsified records or knowingly asserted frivolous
claims."83
Defendants note plaintiffs' misconduct during discovery, but this court previously
determined the "arguments concerning discovery misconduct and spoilation do not
support an award of fees." 84 Defendants further argue that because plaintiffs' motion is
procedurally improper, moot, and futile, it "represents a situation where reimbursement
of its attorneys' fees would be appropriate." 85 As this court previously concluded herein,

79

Dow Chemical Canada Inc. v. HRD Corporation, C.A. No. 05-023-RGA, 2013
WL 3942052, at *1 (D. Del. July 29, 2013) (citing Johnston v. ArbitriLim (Cayman
Islands) Handels AG, 720 A.2d 542, 546-47 (Del. 1998).
:
80
Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 s.:ct. 1749, 1753
(2014) (quoting Marx v. Gen. Revenue Corp., 133 S. Ct. 1166, 1175 (2013)) (under the
American Rule, each litigant pays "his own attorney[s'] fees, win or lose").
81
Johnston, 720 A.2d at 545.
82
Id. at 543.
83
Johnston, 720 A.2d at 545-46 (citing Chamberes v. NASCO, Inc., 501 U.S. 32
(1991); U.S. Indus., Inc. v. Touche Ross & Co., 854 F.2d 1223, 1243 (10th Cir. 1988);
Roadway Exp., Inc. v. Piper, 447 U.S. 752 (1980)).
84
Magnetar Techs. Corp. v. Six Flags Theme Parks, Inc., C.A~ No. 07-127-LPSMPT, 2017 WL 962760 (D. Del. Mar. 13, 2017).
:
85
D.I. 496 at 7.
12

plaintiffs' motion is not procedurally improper, moot, or futile. Because defendants do
not argue other grounds on which attorneys' fees should be granted, and there is no
evidence plaintiffs acted in bad faith, defendants' request for attorneys' fees should be
denied.

V.

CONCLUSION
Consistent with the findings herein, IT IS RECOMMENDED that plaintiffs' motion

to correct inventorship under 35 U.S.C. § 256 (D.I. 486) be GRANTED.
IT IS FURTHER RECOMMENDED that defendants' motion be DENIED.
This Report and Recommendation is filed pursuant to 28 U.S.C. § 636(b)(1 )(B),
FED. R. CIV. P. 72(b )( 1), and D. DEL. LR 72.1 . The parties may serve and file specific
written objections within fourteen (14) days after being served with a copy of this Report
and Recommendation. Objections and responses are limited to ten (10) pages each.
The parties are directed to the Court's Standing Order in Non-Pro Se matters for
Objections Filed under FED. R. CIV. P. 72, dated October 9, 2013, a copy of which is
available on the Court's website, www.ded.uscourts.gov.
Mary Pat Thynqe
United States Magistrate Judge

Dated: August 2, 2017

13