Shum v. Intel Corp.

630 F. Supp. 2d 1063, 2009 U.S. Dist. LEXIS 41509, 2009 WL 1227197
CourtDistrict Court, N.D. California
DecidedApril 29, 2009
DocketC-02-3262-DLJ
StatusPublished
Cited by10 cases

This text of 630 F. Supp. 2d 1063 (Shum v. Intel Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shum v. Intel Corp., 630 F. Supp. 2d 1063, 2009 U.S. Dist. LEXIS 41509, 2009 WL 1227197 (N.D. Cal. 2009).

Opinion

ORDER

D. LOWELL JENSEN, District Judge.

On February 20, 2009, the Court heard oral argument on Defendants’ renewed motions for judgment as a matter of law (JMOL). Having considered the papers submitted, the arguments of counsel, and the applicable law, the Court hereby GRANTS Defendants’ renewed motion for JMOL as to Shum’s state law claims, and GRANTS in part and DENIES in part Defendants’ renewed motion for JMOL as to inventorship.

I. BACKGROUND

A. Factual Background

Plaintiff Frank Shum (Shum) and defendant Jean-Marc Verdiell (Verdiell) are optical engineers. They met in 1994 when both worked at a company called SDL Technologies (SDL).

After leaving SDL, Shum and Verdiell incorporated Radiance Design, Inc. (Radiance) on April 22, 1999, intending to work in the field of optoelectronics. Shum and Verdiell were the sole and equal shareholders, with Verdiell as President and Treasurer and Shum as Vice President and Secretary. On the day of incorporation, a patent application related to optoelectronic technology was filed on behalf of Radiance. Marek Alboszta (Alboszta), a patent agent, had been hired by Radiance and prepared this patent application, which named Shum as the sole inventor.

While the patent application filed in April was pending, Verdiell informed Alboszta that he was also an inventor of the subject matter covered by the patent. Shum states that Alboszta informed him of this new information from Verdiell and stated, to Shum, that if Verdiell is an inventor, the application must be withdrawn. Verdiell also told Shum that the patent application would have to be withdrawn. Subsequently, Radiance withdrew the pending application on November 17, 1997.

At about this time, the relationship between Shum and Verdiell deteriorated. Both Shum and Verdiell hired individual counsel to negotiate the dissolution of Radiance and a Plan of Liquidation (POL) was drafted. The POL was agreed upon and executed on January 5, 1998. Radiance was dissolved as of that date.

After Radiance was dissolved, Shum formed a new company called Luminance in order to continue developing the technology that he and Verdiell worked on at Radiance. Shum failed to obtain financing for Luminance, however, and he abandoned the company after several months. Thereafter, Shum accepted employment as an optical engineer at a telecommunications company named Ditech.

The day after the POL took effect, Alboszta filed a patent application on Verdiell’s behalf which related to optoelectronic technology covering the same subject matter as the withdrawn patent application. This patent application named Verdiell as the sole inventor. The patent application was assigned to LightLogic, a company newly formed by Verdiell. Verdiell had formed LightLogic, without notice to Shum, three days before the original patent application was withdrawn in November 1997. Based on this application, United States Patent No. 5,977,567 ('567) was ultimately issued on November 2, 1999, listing Verdiell as the sole inventor.

Over the next several years, LightLogic applied for and obtained six additional patents: United States Patent Nos. 6,376,268 ('268); 6,207,950 ('950); 6,586,726 ('6726); 6,227,724 ('724); 6,585,427 ('427); and 6,252,726 ('2726). All of these patents *1069 named Verdiell as the sole inventor except the '427 patent, which named Verdiell as well as four co-inventors. None of the patents listed Shum as an inventor.

These seven patents cover three separate areas of optoelectronic technology. The first area can be referred to as “Dual Enclosure” technology and involves only a single patent — the '2726 patent. This invention describes an optoelectronic package which is comprised of two separate enclosures designed to regulate the temperature within the package in a cost-efficient manner. The second technology group is referred to by the parties as “Direct Bonded Copper” (DBC) or “Step” technology and two patents, '567 and '268, are involved. These patents disclose an optoelectronic package consisting of a substrate made of an insulating ceramic material, and a layer of copper that is bonded to this substrate. The third technology group is called “Flexure” technology and four patents, '950, '724, '427, and '6726, are involved. These inventions address the problem of precisely aligning a laser diode and an optical fiber during an automated fiber-optic assembly process, and of keeping the two components aligned during use.

After LightLogic was formed, Verdiell undertook extensive efforts to develop and market a device known as a transponder. A transponder is an optoelectronic device that takes in electrical signals and converts them into optical signals, enabling telecommunications providers to process a large volume of data at a very high speed. Transponders contain numerous electrical and optical components, including an optical receiver, a high speed amplifier, a high speed demultiplexer, a multiplexer driver, and an optical transmitter.

In order to develop and market a transponder, Verdiell hired a team of managers and engineers to work at LightLogic. After three rounds of venture capital investment and approximately three years of effort, LightLogic began the manufacture and sale of transponders in 2000. All of LightLogie’s transponders at that time used off-the-shelf optical components rather than any optical technology based on Verdiell’s patents.

In June 2001, Intel acquired LightLogic, its physical assets and the services of its personnel, along with the rights to Light-Logic’s transponder, the '567 patent, and the six additional patents issued to Light-Logic, for $409 million in shares of its stock. LightLogic distributed these shares directly to its shareholders. Verdiell received $58.4 million from the transaction. After Intel acquired LightLogic, Intel began manufacturing transponders which contained different optoelectronic components, including the patented flexure, which had been developed at Radiance.

Shum contends that he is an inventor of the technology claimed by the seven patents issued to Verdiell.

B. Procedural History

In 2001, Shum filed his original complaint in this action in California state court against Intel, Verdiell, Alboszta, Lumen (Alboszta’s patent firm), and John Gorman (Verdiell’s attorney during the dissolution of Radiance). The complaint contained numerous state causes of action, essentially based on claims of fraud.

’ On July 9, 2002, Intel removed the case to federal district court.

On December 19, 2002, Shum filed a second amended complaint in this Court. This complaint essentially repleaded the original state causes of action and added a federal cause of action for correction of patent inventorship pursuant to 35 U.S.C. § 256. The second amended complaint also added LightLogic as a defendant.

*1070 On January 21, 2003, Intel and Verdiell filed a motion to dismiss the second amended complaint. This Court entered an order on March 25, 2003, granting in part and denying in part Defendants’ motion to dismiss.

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Cite This Page — Counsel Stack

Bluebook (online)
630 F. Supp. 2d 1063, 2009 U.S. Dist. LEXIS 41509, 2009 WL 1227197, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shum-v-intel-corp-cand-2009.