Schwendimann v. Arkwright Advanced Coating, Inc.

Filing 87

MEMORANDUM OPINION AND ORDER denying AACI's 47 Motion to Dismiss for Lack of Jurisdiction; denying Schwendimann's 51 Motion for Partial Summary Judgment (Written Opinion). Signed by Judge Ann D. Montgomery on 03/19/2012. (TLU)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Jodi A. Schwendimann, f/k/a
Jodi A. Dalvey,
Plaintiff,
MEMORANDUM OPINION
AND ORDER
Civil No. 11-820 ADM/JSM

v.
Arkwright Advanced Coating, Inc.,
Defendant.
______________________________________
Arkwright Advanced Coating, Inc.,
Counterclaim Plaintiff,
v.
Jodi A. Schwendimann, f/k/a
Jodi A. Dalvey, and
Cooler Concepts, Inc.,
Counterclaim Defendants.

______________________________________________________________________________
David A. Davenport, Esq., Brent A. Lorentz, Esq., and Daniel J. Kelly, Esq., Winthrop &
Weinstine, P.A., Minneapolis, MN, on behalf of Jodi A. Schwendimann and Cooler Concepts,
Inc.
Kurt J. Niederluecke, Esq., and Laura L. Myers, Esq., Fredrikson & Byron, P.A., Minneapolis,
MN, on behalf of Arkwright Advanced Coating, Inc.
______________________________________________________________________________
I. INTRODUCTION
On February 22, 2012, the undersigned United States District Judge heard oral argument
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on Defendant and Counterclaim Plaintiff Arkwright Advanced Coating, Inc.’s (“AACI”) Motion
to Dismiss Schwendimann’s Patent Infringement Claims for Lack of Subject Matter Jurisdiction
[Docket No. 47] (“AACI’s Motion to Dismiss”) and on Plaintiff and Counterclaim Defendant
Jodi A. Schwendimann’s (“Schwendimann”) Motion for Summary Judgment on Standing
[Docket No. 51] (“Schwendimann’s Motion for Partial Summary Judgment”). For the reasons
set forth below AACI’s Motion to Dismiss and Schwendimann’s Motion for Partial Summary
Judgment are both denied.
II. BACKGROUND
Schwendimann is the proprietor of Cooler Concepts, Inc., a business which manufactures
and sells specialty paper products. Compl. [Docket No. 1] ¶ 1. Schwendimann asserts a claim
for patent infringement against Defendant AACI alleging AACI has infringed U.S. Patent Nos.
RE41,623, 7,749,581, 7,754,042, 7,766,475, 7,771,554, and 7,824,748 (collectively, the
“Patents-in-Suit”). Compl. ¶¶ 31–46. Schwendimann additionally seeks declaratory judgment
that a patent owned by AACI is invalid. Compl. ¶¶ 47–50. AACI has asserted counterclaims
alleging invalidity and unenforceability of the Patents-in-Suit and infringement by
Schwendimann of its patent. First Am. Countercl. [Docket No. 33]1 ¶¶ 42–55.
The instant motions address Schwendimann’s allegation that she is the owner of the
Patents-in-Suit. See Compl. ¶¶ 8–13. The Patents-in-Suit all related to methods for transferring
images onto a colored base. Compl. ¶ 15. An application of the Patents-in-Suit is to print an
1

AACI’s First Amended Answer and Counterclaim are a single document with separately
numbered paragraphs; the first set of numbers corresponds to the Answer, and the second set to
the Counterclaim. For ease and clarity, they will be referred to separately as the First Amended
Answer and the First Amended Counterclaim, with paragraph number designations made
accordingly.
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image from a home printer and transfer it to a T-shirt by ironing over the transfer paper. Compl.
¶ 17. The Patents-in-Suit all arise from U.S. Patent Application Serial No. 09/541,845 (the
“‘845 Application”). See Compl. Exs. A, C, D, E, F, G. The ‘845 Application was filed by
Schwendimann and her co-inventor, Nabil Nasser (“Nasser”), on April 3, 2000. See Compl. Ex.
A at [64]. At the time, Schwendimann and Nasser were employed by an entity known as
Advanced Coating Technologies, Inc. (“ACT”). See Decl. of Brent A. Lorentz in Supp. of Mot.
for Summ. J. on Standing [Docket No. 21] (“Lorentz Decl.”) Ex. D (“Schwendimann Dep.”)
8:3–13:20 (stating Schwendimann worked for ACT from 1992 to 2001); Decl. Nabil Nasser
[Docket No. 65] (“Nasser Decl.”) ¶ 2 (noting Nasser previously served as President and
Chairman of ACT, and was its majority owner). Schwendimann began employment with ACT
in a finance position, but eventually became a co-owner. Schwendimann Dep. 8:5-8, 14:5-7.
At the time the ‘845 Application was filed, Schwendimann and Nasser assigned all their
interests in the application to ACT. Decl. of Laura L. Myers in Supp. of AACI’s Mot. to
Dismiss [Docket No. 50] (“Myers Decl.”) Ex. B. In 2001, ACT began experiencing financial
difficulties and ceased business operations. Schwendimann Dep. 13:19-24. ACT had numerous
creditors, including Schwendimann and the State of Wisconsin, among others. See, e.g., Lorentz
Decl. Exs. G, H, I. In early 2002, due to ACT’s financial problems, it became apparent that
ACT would no longer be able to maintain the prosecution of its various patent applications.
Nasser Decl. ¶ 5. ACT advised its patent counsel, Janal Kalis (“Kalis”) of the law firm
Schwegman, Lundberg & Woessner, P.A. (“SLW”), that it wished to assign all its intellectual

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property to Schwendimann. Nasser Decl. ¶ 5. Since 1998, Schwendimann had also employed
Kalis and SLW as her counsel. Decl. of Schwegman, Lundberg & Woessner, P.A.2 [Docket No.
55] (“SLW Decl.”) ¶ 5. In June 2002, SLW opened three new client matters for Schwendimann,
representing three patent applications, including the ‘845 Application, that belonged at the time
to ACT. SLW Decl. ¶ 15.
On February 3, 2003, Nasser, on behalf of ACT, and Schwendimann executed an
assignment from ACT to Schwendimann of U.S. Patent Application Serial No. 09/150,983 (the
“‘983 Application”), an application distinct from the ‘845 Application. Myers Decl. Ex. E at
JS002295–96. The following day, Kalis recorded the assignment of the ‘983 Application with
the U.S. Patent and Trademark Office (“USPTO”). Id. at JS002292–96. Schwendimann now
avers she understood she owned all of ACT’s intellectual property as of February 2003.
Schwendimann Dep. 111:18-20. However, in March 2003, Kalis sent Schwendimann an email
stating:
I’m just going to throw this idea out for your review only regarding ownership of
the image transfer patents and applications. The situation arose because ACT
wanted to avoid abandonment of its invention but could not pay the fees. You
provided consideration by reviving and prosecuting the applications.
We need to provide consideration back to ACT. One possibility is for you to
provide ACT with a license to use the invention . . . . Is ACT in operation or is it
shut down?
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AACI argues the Court should not consider the SLW Declaration because its signor, Albin J.
Nelson, lacks personal knowledge of its contents. The declaration will be considered as Nelson
was SLW’s designated Rule 30(b)(6) representative. See Sunbelt Worksite Mktg., Inc. v. Metro.
Life Ins. Co., No. 8:09-cv-02188, 2011 WL 3444256, at *2 (M.D. Fla. Aug. 8, 2011).

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Do you know how many lienholders there are?
I am still working on researching case law regarding ownership transfer of an
abandoned application. I did not do this earlier because . . . . I thought it would
be safer to revive and work out ownership rather than lose all rights . . . .
Decl. of Kurt J. Niederluecke in Supp. of AACI’s Opp. to Schwendimann’s Mot. for Summ. J.
on Standing [Docket No. 69] (“Niederluecke Decl.”) Ex. 6. The next day Kalis sent
Schwendimann another email asking “whether other ACT lien holders took their liens when after
[sic] the patent applications went abandoned?” Niederluecke Decl. Ex. 7.
On April 16, 2003, the USPTO issued a rejection of the ‘845 Application and required a
shortened statutory period of three months for a response. In May 2003, Kalis sent a SLW
paralegal, Candy Buending (“Buending”), an email inquiring whether the ‘845 Application “was
covered in one of the assignments from [ACT] to [Schwendimann]” and whether Schwendimann
had an ownership in the application. Niederluecke Decl. Ex. 9. Around this time, SLW
prepared a draft assignment of the ‘845 Application, but the draft was never executed. SLW
Decl. ¶ 19, Ex. H.
On November 25, 2003, the USPTO issued a final office action rejecting or objecting to
claims in the ‘845 Application, and provided a shortened three-month statutory period for a
response. Niederluecke Decl. Ex. 10. On December 3, 2003, Kalis sent Buending another email
stating: “We need to make sure that the assignments filed assigning patents from ACT cover this
application as well as the application with the Ex Parte Quale action. THIS IS VERY
IMPORTANT. IF NOT, WE NEED TO FIX ASAP, PLEASE LET ME KNOW THE STATUS

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ASAP!!” Niederluecke Decl. Ex. 11 (emphasis in original).
The next day, December 4, 2003, Kalis sent a facsimile to the USPTO. Niederluecke
Decl. Ex. 14. It included a cover sheet identifying the contents as an assignment of the ‘845
Application from ACT to Schwendimann. Id. at SLW00015–17. Appended to the cover sheet
was a photocopy of the assignment of the ‘983 Application, sent to the USPTO in February
2003, with a minor alteration. See id. at SLW00018–19. The original ‘983 Application
document had 1010.015 USI hand-written in the upper-right hand corner, which represented the
client and matter number SLW associated with Schwendimann and the ‘983 Application. See
Myers Decl. Ex. E at JS002295 (assignment of ‘983 Application with hand-written 1010.015
USI visible in upper right-hand corner); SLW Decl. ¶ 15a (noting 1010.015 was client and
matter number SLW associated with Schwendimann and the ‘983 Application). The document
sent to the USPTO, however, had the .015 portion of the identification number crossed-out by
hand, and replaced by a hand-written .021. Niederluecke Decl. Ex. 14 at SLW00018. The client
and matter number SLW used for Schwendimann and the ‘845 Application was 1010.021 USI.
SLW Decl. ¶ 15b. A few minutes later Kalis sent another facsimile with a cover sheet
identifying the contents as the assignment of another patent application. Niederluecke Decl. Ex.
15 at SLW00107–09. Appended to the cover sheet was another photocopy of the assignment of
the ‘983 Application with the client and matter numbers changed by hand to reflect the patent
application identified in the cover sheet. Niederluecke Decl. Ex. 15 at SLW00110–11.
Subsequently, Kalis pursued the ‘845 Application on behalf of Schwendimann. See, e.g.,

6

Niederluecke Decl. Exs. 17, 18, Ultimately, the Patents-in-Suit issued and, after some
procedural maneuvering between the parties here,3 this lawsuit ensued. On July 18, 2011, after
some investigation into the Patents-in-Suit’s chain of title, AACI amended its Answer to assert
an affirmative defense premised on Schwendimann’s alleged lack of ownership. See First Am.
Answer at 6. In September 2011, a new document was executed, assigning from ACT4 to
Schwendimann certain intellectual property, including that resulting from the ‘845 Application.
Myers Decl. Ex. H. On December 8, 2011, Magistrate Judge Janie S. Mayeron issued an Order
[Docket No. 44] allowing additional discovery limited to patent ownership issues. Prior to Judge
Mayeron’s order, AACI stated during a telephone conference a desire to depose Nasser.
Niederluecke Decl. ¶ 22. However, several attempts by AACI to serve Nasser at locations in
two states proved unsuccessful. See Niederluecke Decl. Ex. 24. Nasser continues to do
consulting work for Schwendimann, often within Minnesota. Niederluecke Decl. Ex. 1
51:10–52:21. Yet, to date the only participation he has had in this case is to file a declaration in
support of Schwendimann’s present motion. See generally Nasser Decl.
III. DISCUSSION
A.

Standard of Review
The present motions raise the issue of standing. Standing is “an essential and unchanging

part of the case-or-controversy requirement of Article III” of the U.S. Constitution. Lujan v.
3

The Court’s prior Order [Docket No. 40] dated September 8, 2011 includes a more detailed
overview of the procedural history of the controversy between these parties.
4
ACT was administratively dissolved by the State of Wisconsin in 2009. Myers Decl. Ex. I. At
oral argument, the parties agreed that the September 2011 assignment does not bear on the
present motions, and therefore the effect of ACT’s dissolution need not be considered.
7

Defenders of Wildlife, 504 U.S. 555, 560 (1992) (citation omitted). “The party invoking federal
jurisdiction bears the burden of establishing [standing].” Id. at 561 (citations omitted). “A court
may exercise jurisdiction only if a plaintiff has standing to sue on the date it files suit.” Abraxis
Bioscience, Inc. v. Navinta LLC, 625 F.3d 1359, 1364 (Fed. Cir. 2010). “Only a patent owner or
an exclusive licensee can have constitutional standing to bring an infringement suit . . . .” Mars,
Inc. v. Coin Acceptors, Inc., 527 F.3d 1359, 1367 (Fed. Cir. 2008) (citation omitted). Subject
matter jurisdiction is a question of law. DDB Technologies, L.L.C. v. MLB Advanced Media,
L.P., 517 F.3d 1284 (Fed. Cir. 2008). Therefore, facts related to standing issues are resolved by
the Court. See id. at 1290–92 (holding there is no right to a jury trial on standing issues related
to contract construction in patent infringement action because standing was not sufficiently
intertwined with merits of the claims).
AACI’s Motion to Dismiss, premised on lack of standing, is made under Rule 12(b)(1) of
the Federal Rules of Civil Procedure (the “FRCP”). A motion to dismiss for lack of subject
matter jurisdiction may challenge the complaint either on its face or on the factual truthfulness of
its averments. See Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993); Osborn v. United States,
918 F.2d 724, 729 n.6 (8th Cir. 1990). AACI attacks the factual truthfulness of
Schwendimann’s allegation that she is the owner of the Patents-in-Suit. Therefore,
Schwendimann does not receive the benefits of Rule 12(b)(6)–namely to have only the pleadings
considered and to have them construed in her favor. See Osborn, 918 F.3d at 729 n.6. Rather,
the Court may consider matters outside the pleadings. Id. (citing Menchaca v. Chrysler Credit
Corp., 613 F.3d 507, 511 (5th Cir. 1980)).
8

Schwendimann’s Motion for Partial Summary Judgment is made under Rule 56 of the
FRCP. Under Rule 56(a), a “party may move for summary judgment, identifying each claim or
defense — or the part of each claim or defense — on which summary judgment is sought.” Fed.
R. Civ. P. 56(a). “The court shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Id.
B.

Writing Requirement
Schwendimann asserts she has standing as the assignee of the ‘845 Application and the

resulting Patents-in-Suit. Patents and patent applications are assignable only by an instrument in
writing. 35 U.S.C. § 261. This writing requirement imposes no form or contents requirements.
See Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., No. CV-03-0597-PHX-MHM,
2009 WL 886514, at *7 (noting that § 261 “imposes no limitations as to the form or content” of
the writing). Rather, an “assignment of a patent is interpreted in accordance with statutory and
common law of contract . . . .” Tri-Star Elecs. Int’l, Inc. v. Preci-Dip Durtal SA, 619 F.3d 1364,
1367 (Fed. Cir. 2010). AACI argues that the underlying validity of any assignment contract
between ACT and Schwendimann need not be reached because no written instrument exists
memorializing such an assignment. For her part, Schwendimann avers the documents submitted
to the USPTO are a written instrument memorializing an agreement of the parties, and any facial
deficiencies, such as the references to the ‘983 Application rather than the ‘845 Application, are
the result of a mutual mistake or scrivener’s error that should be reformed by the Court through
an exercise of its equitable authority.
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The entire set of documents submitted by Kalis cannot together form the “instrument in
writing” because the cover sheets are facially both distinct from its attachments and not an
agreement of any kind, much less an assignment, between ACT and Schwendimann. Cf.
Telepresence Techs., LLC v. Upper Deck Co., 2001 WL 36239744, at *2 (C.D. Cal. Mar. 29,
2011) (declining to consider cover sheet in construing execution date of assignment in light of
notarized execution date on contract itself). Therefore, the Court must next consider whether the
document that is a photocopy of the ‘983 Application with the hand-written alteration (the
“purported assignment”) is a writing memorializing a valid assignment contract. Because there
are no form or content requirements for what constitutes an “instrument in writing” under 35
U.S.C. § 261, the purported assignment is a sufficient writing if an underlying valid contract
amenable to reformation exists under Minnesota law5 between ACT and Schwendimann. To be
sure, the purported assignment has a number of irregularities on its face; however, AACI has
identified no authority, and the Court finds none, that any of these irregularities preclude the
finding of a written instrument under 35 U.S.C. § 261.
For instance, the lack of any “wet-ink” signature on the document could be characterized
as irregular or unusual. Nonetheless, the lack of a “wet-ink” signature is not dispositive for two
reasons. First, it is not established that the document lacks the signature of either Schwendimann
or Nasser, on behalf of ACT. Generally, a signature is any symbol executed or adopted with a
present intention to adopt or accept a writing. See Minn. Stat. § 336.1-201(37); see also
5

Since neither party advocates for a particular choice of law analysis, the parties implicitly agree
that Minnesota law applies to determine the validity of any assignment contract.
10

Restatement (Second) of Contracts § 134 (1981). A signature need not be hand-written. See,
e.g., Simplex Supplies, Inc. v. Abhe & Svoboda, Inc., 586 N.W.2d 797, 802 (Minn. Ct. App.
1998) (holding typewritten signature sufficient to satisfy Minnesota’s Statute of Frauds).
Generally, an agent may sign a writing for its principal, and both parties to a contract may be
bound by a mutual agent. See, e.g., Miller-Crenshaw Co. v. Colorado Mill & Elevator Co., 87
F.3d 457, 460 (8th Cir. 1937) (holding typewritten signature of buyer, typed by broker, was
sufficient to satisfy Arkansas’s Statute of Frauds); see also Restatement (Second) of Agency §
30 (1958). Therefore, if Kalis reproduced ACT’s and Schwendimann’s signatures, as an agent
of both, with the authority and intent to bind them to an assignment contract, the signatures may
be valid.
Second, regardless of whether the document is or is not signed, as a matter of general
contract law, a signature is not required to make a writing enforceable. See, e.g., Operating
Eng’rs Local 139 Health Benefit Fund v. Gustafson Constr. Corp., 258 F.3d 645, 649 (7th Cir.
2001) (“[I]f [a contract] is in writing, it needn’t be signed, provided there’s other evidence of
acceptance . . . .”) (citation omitted); First Nat’l Bank of Sleepy Eye, Minn. v. Sleeper, 12 F.2d
228, 230 (8th Cir. 1926) (“A contract may be made by accepting a writing containing the terms
of the proposed contract, although the one accepting it does not sign it.”); Welsh v. BarnesDuluth Shipbuilding Co., 21 N.W.2d 43, 46–47 (Minn. 1945) (noting “contract may be binding
on a party even though not signed by him” because signature is used to show assent, which may
be established through other means). Therefore, even without a signature, the document could
still be a written instrument under federal law.
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Similarly, while the form of this purported assignment contract, a photocopy of a
different contract with a minor hand-written alteration, could be characterized as irregular, the
form does not preclude a finding of a written instrument. Attorneys often re-use language from
one contract to the next. Indeed, “boilerplate” contracts–contracts with a identical terms that a
party uses for similar transactions–are not repugnant to the law absent special circumstances.
See, e.g., Hauenstein & Bermeister, Inc. v. Met-Fab Indus., Inc., 320 N.W.2d 886, 891 (Minn.
1982) (upholding forum selection clause in contract notwithstanding fact it was “boilerplate”
language). If Kalis had not merely altered the client and matter number in the upper right hand
corner of the purported assignment but also altered the patent application number, little would
distinguish this case from any other involving form or “boilerplate” contracts. The form of the
purported assignment does not preclude a finding of a written instrument.
The relevant inquiry is solely whether the purported assignment is a writing. Without
any express statutory definition, what is meant by an “instrument in writing” must be determined
in reference to its ordinary meaning. Asgrow Seed Co. v. Winterboer, 513 U.S. 179, 187 (1995)
(“When terms used in a statute are undefined, we give them their ordinary meaning.”) (citation
omitted). The ordinary meaning of writing is an intentional reduction to tangible form. Minn.
Stat. § 336.1-201(43) (“‘Writing’ includes printing, typewriting, or any other intentional
reduction to tangible form.”); Restatement (Second) of Contracts § 131, cmt. (d) (“Writing . . .
includes any intentional reduction to tangible form) (citing U.C.C. § 1-201); see also Black’s
Law Dictionary 1748 (9th ed.) (defining “writing” as “[a]ny intentional recording of words that
may be viewed or heard with or without mechanical aids”). Here, the purported assignment is in
12

a tangible form—it is a written document. Furthermore, because the purported assignment
includes the hand-written alterations, it suggests the purported assignment was an intentional
reduction (whether or not it was a reduction of a valid contract will be addressed below) rather
than an unintentional reproduction of the ‘983 Application . Therefore, the purported
assignment is an instrument in writing.
The writing requirement, however, is not the end of the inquiry. For Schwendimann to
have standing, she must be the owner of the ‘845 Application, which is determined by state law.
See Enovsys LLC v. Nextel Commc’ns, Inc., 614 F.3d 1333, 1342 (Fed. Cir. 2010) (“Who has
legal title to a patent is a question of state law.”).
C.

Validity of Underlying Assignment
On its face, the purported assignment conveys to Schwendimann rights in the ‘984

Application, not the ‘845 Application. In Minnesota, absent ambiguity, contract terms are given
their plain and ordinary meaning. Knudsen v. Transp. Leasing/Contract, Inc., 672 N.W.2d 221,
223 (Minn. Ct. App. 2003). Furthermore, extrinsic evidence may not be used to vary the terms
of an unambiguous written agreement. Alpha Real Estate Co. of Rochester v. Delta Dental Plan
of Minn., 664 N.W.2d 303, 312 (Minn. 2003). However, under Minnesota law,
A written instrument can be reformed by a court if the following elements are
proved: (1) there was a valid agreement between the parties expressing their real
intentions; (2) the written instrument failed to express the real intentions of the
parties; and (3) this failure was due to a mutual mistake of the parties, or a
unilateral mistake accompanied by fraud or inequitable conduct by the other
party.

Nichols v. Shelard Nat’l Bank, 294 N.W.2d 730, 734 (Minn. 1980) (citations omitted). Contract
13

reformation is an equitable remedy. See Fritz v. Fritz, 102 N.W. 705, 706 (Minn. 1905).6
Schwendimann argues her real intention, and that of ACT, was to assign the ‘845
Application, and the Court should reform the purported assignment to reflect those intentions.
At this procedural stage, Schwendimann’s argument is unavailing. Reformation requires more
than intentions, it requires a valid agreement. Nichols, 294 N.W.2d at 734 (emphasis added).
Under Minnesota law, a contract is formed when there is “mutual assent” of the parties. FieldMartin Co. v. Fruen Milling Co., 298 N.W. 574, 575 (Minn. 1941). “Mutual assent entails a
meeting of the minds concerning a contract’s essential elements.” SCI Minn. Funeral Servs.,
Inc. v. Washburn-McReavy Funeral Corp., 795 N.W.2d 855, 864 (Minn. 2011) (quoting
Minneapolis Cablesystems v. City of Minneapolis, 299 N.W.2d 121, 122 (Minn. 1980)). “The
formation of a contract requires communication of a specific and definite offer, acceptance, and
consideration.” Thomas B. Olson & Assocs., P.A. v. Leffert, Jay & Polglaze, P.A., 756 N.W.2d
907, 918 (Minn. Ct. App. 2008) (quoting Commercial Assocs., Inc. v. Work Connection, Inc.,
712 N.W.2d 772, 782 (Minn. Ct. App. 2006)).
Mutual assent is critical here because a valid contract can arise from ACT and
Schwendimann’s stated intentions only with mutual assent to the essential elements of the
alleged assignment—without mutual assent to the essential elements, ACT and Schwendimann’s
6

AACI contends, without citing authority, that ACT could not assign its intellectual property
because all its property was subject to security interests in favor of its many creditors. Under
Minnesota law, however, a security interest in collateral will continue notwithstanding sale of
the collateral. Border State Bank, N.A. v. AgCountry Farm Credit Servs., 535 F.3d 779, 782
(8th Cir. 2008). Therefore, AACI’s argument is rejected absent authority that the consent of a
secured party is required.

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intention to assign intellectual property is merely an agreement to assign in the future, which
does not confer standing under federal law and does not form a valid contract under Minnesota
law. See Mohrenweiser v. Blomer, 573 N.W.2d 704, 707 (Minn. Ct. App. 1998) (holding “letter
of agreement” signed by parties was “an unenforceable agreement to agree in the future”);
compare Gaia Techs., Inc. v. Reconversion Techs., Inc., 93 F.3d 774, 779 (Fed. Cir. 1996)
(noting minutes from meeting of company’s board of directors evinced only an agreement to
assign, not an assignment that vested legal title in plaintiff) with Southwest eFuel Network,
L.L.C. v. Transaction Tracking Techs., Inc., 2:07-cv-311, 2009 WL 4730464, at *3–4 (E.D. Tex.
Dec. 7, 2009) (holding plaintiff had standing despite clerical error in assignment contract).
On the present record, the Court cannot determine whether a valid agreement to assign
the ‘845 Application exists. Schwendimann has advanced no legal theories, nor offered any
supporting evidence, to support a finding of the existence of an offer, acceptance, or
consideration. The precise terms of the alleged assignment of the ‘845 Application, for example
what consideration Schwendimann provided to ACT, remain unknown.
The sole evidence offered by Schwendimann to support the existence of an agreement
between her and ACT is Nasser’s statement that “ACT intended to transfer all of its intellectual
property to [Schwendimann] many years ago and I have always believed that it did so . . . .”
Nasser Decl. ¶ 7. This statement is deficient in several respects. First, its lack of specificity as
to the terms of the assignment of the ‘845 Application, if any, make it impossible to determine
whether ACT’s intent to transfer the ‘845 Application was an agreement to assign in the future

15

or an actual present assignment. Second, an issue of fact remains whether Nasser is competent
to testify as to ACT’s intentions in the relevant time period. He states that he previously served
as President and Chairman of ACT. Nasser Decl. ¶ 1. Yet, in July 2000, Schwendimann
represented to the State of Wisconsin that she was the President and sole director of ACT.
Niederluecke Decl. Ex. 25.
Finally, Nasser’s statement is hearsay. Normally, summary judgment may be based on
affidavits and declarations that, while technically hearsay, are submitted under Rule 56 of the
FRCP. See Celotex Corp. v. Catrett, 477 U.S. 317, 324 (stating that nonmoving party need not
“produce evidence in a form that would be admissible at trial in order to avoid summary
judgment”); see also Fed. R. Civ. P. 56(c). Rule 56(c), however, includes an important
qualification of the Rule. Affidavits or declarations must “show that the affiant or declarant is
competent to testify on the matters stated.” Fed. R. Civ. P. 56(c)(4). On that basis, courts have
held that summary judgment may not be based on statements of an affiant or declarant who will
be unavailable to testify at trial due to the rules against hearsay. See J.F. Feeser, Inc. v. Serv-APortion, Inc., 909 F.2d 1524, 1542 (3d Cir. 1990) (considering evidence in affidavit on summary
judgment where contents could later be presented through direct testimony and there was no
indication affiant would be unavailable to testify at trial); Murphy v. County of Yavapai, CV-041861, 2006 WL 2460916, at *5 (D. Ariz. Aug. 23, 2006) (striking affidavit and reports of
witnesses as hearsay where witness would be unavailable at trial); Bortell v. Eli Lilly & Co., 406
F. Supp. 2d 1, 11–12 (D.D.C. 2005) (noting that on summary judgment courts may consider

16

evidence in non-admissible form only when the contents will be “reduced to admissible form at
trial” and declining to consider affidavits of unavailable witnesses). Here, it is unclear whether
Nasser would be available or unavailable were the Court to convene an evidentiary hearing on
standing. Thus far, AACI has been unable to contact Nasser, and several attempts to serve him
with a subpoena have proved unsuccessful. See Niederluecke Decl. Ex. 24. Schwendimann,
despite an ongoing business relationship with Nasser, has evinced a desire not produce him as a
witness on her behalf. See id. Of course, Schwendimann may choose the manner of meeting her
burden of establishing subject matter jurisdiction. Nonetheless, apart from Nasser’s deficient
and vague statements, Schwendimann has offered no evidence from which to infer mutual assent
to an assignment of the ‘845 Application.
Given the inadequate state of the record and the Court’s duty to investigate its own
subject matter jurisdiction, rather than grant AACI’s Motion to Dismiss, both motions are denied
without prejudice. At oral argument, the parties stated many of the evidentiary issues discussed
above are the subject of an upcoming motion hearing before Magistrate Judge Janie S. Mayeron.
Therefore, this Court will defer to Judge Mayeron to establish the precise contours of further
factual development—whether it comes as an evidentiary hearing, additional depositions, or
another form. The parties may later renew their motions subject to any scheduling set by Judge
Mayeron.
IV. CONCLUSION
Based on the foregoing, and all the files, records and proceedings herein, IT IS

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HEREBY ORDERED that AACI’s Motion to Dismiss [Docket No. 47] is DENIED and
Schwendimann’s Motion for Partial Summary Judgment [Docket No. 51] is DENIED.

BY THE COURT:

s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: March 19, 2012.

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