Caterpillar Inc., Plaintiff-Cross v. Sturman Industries, Inc., Oded E. Sturman, and Carol K. Sturman

387 F.3d 1358, 73 U.S.P.Q. 2d (BNA) 1609, 2004 U.S. App. LEXIS 22737, 2004 WL 2406597
CourtCourt of Appeals for the Federal Circuit
DecidedOctober 28, 2004
Docket03-1444, 03-1490
StatusPublished
Cited by49 cases

This text of 387 F.3d 1358 (Caterpillar Inc., Plaintiff-Cross v. Sturman Industries, Inc., Oded E. Sturman, and Carol K. Sturman) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Caterpillar Inc., Plaintiff-Cross v. Sturman Industries, Inc., Oded E. Sturman, and Carol K. Sturman, 387 F.3d 1358, 73 U.S.P.Q. 2d (BNA) 1609, 2004 U.S. App. LEXIS 22737, 2004 WL 2406597 (Fed. Cir. 2004).

Opinion

PROST, Circuit Judge.

Sturman Industries, Inc., Oded E. Stur-man, and Carol K. Sturman (collectively, Sturman) appeal from a decision of the United States District Court for the Central District of Illinois, Case No. 99-CV-1201, in which the jury found in favor of Caterpillar Inc. (Caterpillar) on its claims of trade-secret misappropriation, breach of contract, and conversion. In particular, Sturman appeals the district court’s refusal to strike a juror for causé, the denial of judgment as a matter of law, the exclusion of a defense exhibit from evidence before the jury, the assignment, of two of its United States patents to Caterpillar, and the grant of summary judgment in favor of Caterpillar on certain of Sturman’s counterclaims. Caterpillar cross-appeals the trial judge’s findings in favor of Sturman on issues of co-inventorship of various United States patents, as well as the limitation on state unjust enrichment remedies as preempted by federal law. We reverse the district court’s decision to allow a presumed biased juror to sit on the jury, vacate the jury’s verdict and resultant remedies, and remand for a new trial on the state common law and statutory claims. In addition, we reverse the grant of summary judgment in favor of Caterpillar on Sturman’s fraudulent inducement counterclaim, affirm the decision maintaining Mr. Sturman as the sole inventor of U.S. Patent Nos. 5,460,329 and 5,640,987, and reverse the decision naming Mr. Stur-man the sole inventor of U.S. Patent No. 5,479,901.

I. BACKGROUND

A. Facts

As the district court noted, “[t]he technology at issue in this case is the use of magnetic latching in a fuel injector via the use of residual magnetism.” Residual magnetism here refers to magnetism that a material continues to exert after it has been magnetized by the process of passing an electric current through a coil of wire wound around the material.

Mr. Sturman began his work in residual magnetism in the nineteen-sixties. On July 3, 1973, Mr. Sturman obtained U.S. Patent No. 3,643,898 (the ’898 patent) on technology employing this phenomenon. The ’898 patent relates to “[Batching devices which utilize the residual magnetism retained in the relatively soft magnetic materials in the magnetic circuit for the latching force.” ’898 patent, Abstract. Figure 8 of the ’898 patent (below) demonstrates relevant features of the claimed invention.

*1361 [[Image here]]

In this design, the plunger or armature (202) moves up and down between the upper and lower pole pieces (200a, 200b). Id. at col. 12, II. 15-29. This moves the attached actuating pin (204), which linearly actuates a valve or other device. Id. at col. 12, II. 7-12. For example, to move the armature downward, the lower solenoid coil (208) is energized, thus magnetizing the housing and lower pole and creating a magnetic force that attracts the armature (202). Id. at col. 12, II. 15-20. The current to the solenoid can be shut off once the armature is in contact with the lower pole because the armature will remain latched against the lower pole by the residual magnetism exerted by the material. Id. at col. 12, II. 59-66; col. 13, II. 22-24. To then move the armature upward, the upper solenoid coil (206) is energized. This, in turn, pulls the armature to the upper pole. When the armature touches the upper pole, the current to the solenoid is again shut off and the armature remains latched via residual magnetism.

In the late nineteen-eighties, Mr. Stur-man worked for Cummins Engine Co. on fuel injector valves. While at Cummins, Mr. Sturman alleges he developed a fuel injector valve using residual magnetic latching. Caterpillar notes, however, that all of the resultant designs used permanent magnets. Later, in the early nineteen-nineties, Sturman was developing applications for residual magnetism for both BKM, a California fuel injection consulting firm, and the United States Navy, among others.

In 1991, Caterpillar and Sturman executed a Consultant Agreement to develop electronically controlled actuators and related driver circuits for possible applications in fuel systems for diesel engines. In 1992, the parties replaced the Consultant Agreement with a Joint Development Agreement (JDA). The purpose of the JDA was to develop “ACTUATORS and DRIVER CIRCUITS for CATERPILLAR’S exclusive use in fuel systems for diesel engines.”

Under the JDA, Sturman agreed to assign Caterpillar “INTELLECTUAL PROPERTY made or conceived by [Stur-man] personnel, either alone or with others (a) pursuant to the [joint development program] or (b) resulting from CATERPILLAR’S PROPRIETARY INFORMATION.” The JDA defined “INTELLECTUAL PROPERTY” as “patentable inventions, patents, copyrights, technical trade secrets and/or technical PROPRIETARY INFORMATION.” *1362 Caterpillar agreed to pay Sturman royalties on any uses of such intellectual property going forward, even after termination of the JDA.

Pursuant to the JDA, Sturman and Caterpillar jointly developed actuators and driver circuits for fuel injection in diesel engines. The work related primarily to poppet valves using linear actuators, which operate under principles similar to those described above with respect to the ’898 patent. The complete systems aré known as mechanically actuated, electronically controlled unit injectors (MEUIs). Stur-man assigned its rights in these inventions to Caterpillar, which obtained U.S. Patent Nos. 5,407,131 and 5,494,219 claiming such technology (the 131 patent and ’219 patent, respectively). The MEUI designs under consideration under the JDA had demanding physical requirements. They had to open and close nine hundred times per second, with a required life of a billion cycles. In addition, they required a sixty pound latching force over a 0.002 inch air gap. Thus, to make use of residual magnetic latching (as opposed to permanent magnets), it became necessary to find a material with both the necessary magnetic and physical characteristics capable of withstanding such demanding operational requirements. Caterpillar engineers Ma-ley and Tharp engaged in this search, ultimately identifying hardened 52100 and 4140 steels as appropriate for residual magnetic latching in a MEUI.

From September 1 to September 3, 1992, Sturman and Caterpillar engineers met at Jumers Castle Lodge, a hotel in Peoria, Illinois, to discuss fuel injector designs. On the second day, the team met to “brainstorm alternate system designs.” The following morning, Mr. Sturman sketched an idea for an integrated spool valve employing residual magnetic latching using 52100 steel (below).

[[Image here]]

(Jumers Drawing.) Mr. Sturman marked his sketch “Confidential.”

The integrated spool valve works on different principles than the armature-with-connecting-pin design described above. The design eliminates the need for a separate armature and connecting pin; it integrates the armature function into the body of the spool itself. As depicted in the Jumers Drawing, an integrated spool valve *1363 comprises a spool-shaped piece — marked “plunger (52100)” — that moves back and forth within a cylindrical housing.

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387 F.3d 1358, 73 U.S.P.Q. 2d (BNA) 1609, 2004 U.S. App. LEXIS 22737, 2004 WL 2406597, Counsel Stack Legal Research, https://law.counselstack.com/opinion/caterpillar-inc-plaintiff-cross-v-sturman-industries-inc-oded-e-cafc-2004.