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Daneshvar v. Kipke

United States District Court, E.D. Michigan, Southern Division

July 19, 2017

EUGENE DANESHVAR, Plaintiff,
v.
DARYL KIPKE and NEURONEXUS TECHNOLOGIES, INC., Defendants.

          OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [134]

          STEPHEN J. MURPHY, III United States District Judge.

         The case concerns a dispute between a former student at the University of Michigan and his faculty advisor. Plaintiff Eugene Daneshvar alleges that Defendant Daryl Kipke stole and patented Daneshvar's idea for a device used to facilitate deep brain stimulation. Neuronexus Technologies-a company founded by Kipke that researches and patents medical devices-is a co-defendant. Daneshvar brought an action for correction of inventorship and also raised three tort claims: fraud, breach of fiduciary duty, and unjust enrichment. Defendants raised a counterclaim seeking a declaratory judgment that Daneshvar is not an inventor of the disputed patent, and Kipke raised a counterclaim for defamation. Mediation was attempted and failed and Defendants now move for summary judgment. The Court will grant the motion in part and deny it in part.

         BACKGROUND

         I. Intellectual Property at the University of Michigan

         Significant amounts of intellectual property are created at the University of Michigan and the various colleges within it. Accordingly, the University has a host of rules, policies, and institutions to determine ownership of the property and facilitate its transfer. The Board of Regents governs the University as a whole and sets its rules and policies. ECF 134-2, ¶¶ 5-6, 8. The Regents adopted or approved two documents relevant to the case: the Bylaws of the Board of Regents and the University of Michigan Standard Practice Guide ("SPG"). Id. ¶¶ 6, 8. Section 3.10 of the Bylaws governs the ownership of patents and other property and SPG Number 303.4 ("the Policy") implements Section 3.10. ECF 134-4, PgID 6518.

         The University's Office of Technology Transfer ("OTT") administers the Policy and periodically updates it. Id. For instance, one version of the Policy took effect January 1, 2007, and another version was issued in 2009. ECF 134-2, ¶¶ 8-9. The Policy "is applicable to all units of the University including its colleges, schools, departments, centers, institutes, and hospitals, and to all of its Employees." ECF 134-4, PgID 6518. The Policy defines an "employee" as:

a person who receives a salary or other consideration from the University for performance of services, part-time or full time. A University employee with less than a full year (e.g., 9-month) appointment shall be considered an “Employee” for acts during a period of appointment. A student that is compensated (e.g., financially through a stipend, tuition, etc., including graduate student research assistants and graduate student instructors) is considered an Employee under this Policy.

Id. at 6522-23. A "student" is defined as "a person enrolled in University courses for credit except when that person is an Employee." Id. at 6519.

         The Policy also defines "intellectual property" and "inventor." Intellectual property under the Policy means "inventions, processes, compositions, life forms, computer software, copyrighted works, mask works, research tools and data, certain defined trade and service marks, Tangible Materials, and legal rights to the same." Id. at 6523. In the patent context, an "inventor" is "an Employee who has made an inventive contribution to the Intellectual Property as defined under U.S. patent laws, meaning that an Inventor must have contributed to the conception of ideas claimed in a patent." Id.

         Additionally, the Policy explains what intellectual property is owned by the University and the steps creators of intellectual property should take. On ownership, it states:

Intellectual Property made (e.g., conceived or first reduced to practice) by any person, regardless of employment status, with the direct or indirect support of funds administered by the University (regardless of the source of such funds) shall be the property of the University, except as provided by this or other University policy. Funds administered by the University include University resources, and funds for employee compensation, materials, or facilities.

Id. at 6518. In regard to intellectual property created by students, the Policy also notes that, although the University "will not generally claim ownership of Intellectual Property created by Students, " it "does claim ownership of Intellectual Property created by students in their capacity as Employees or with direct or indirect support of funds administered by the University." Id. at 6519. In those cases, "students shall be considered to be Employees for the purposes of this Policy." Id. Employees are directed to disclose their creations and co-inventors to OTT even when they believe the creations are not owned by the University. Id.

         Finally, section IV of the Policy addresses commercialization of intellectual property. That section contemplates that the University will sometimes transfer ownership of its intellectual property and explains who makes transfer decisions. Pursuant to the Policy, OTT, "[i]n consultation with Inventors, . . . [has] authority for decisions concerning the route of commercializing or transferring a particular Intellectual Property, as well as the selection and use of outside resources, including outside legal counsel, to assist in commercialization." Id. at 6520. OTT also has the "authority for those agreements that are primarily transfer of University-owned . . . patent rights[.]" Id. "Responsibility for patent administration, including the retention of patent counsel, is shared by OTT and the Offices of the Vice President for Research and the General Counsel." Id.

         II. Timeline

         2004-2007: NeuroNexus and its Patents

         Sometimes, the creation of intellectual property at the University results in spin-off companies. For example, NeuroNexus "was formed in 2004 to commercialize neural probe technologies that were developed in the College of Engineering at Michigan." ECF 134-28, PgID 6695. Prior to 2007, Kipke and others at NeuroNexus secured various patents in the neural-probe field. See generally ECF 134-16, PgID 6576-88.

         NeuroNexus's patents would sometimes build on their previous work. According to Jamille Hetke, a NeuroNexus employee, in 2005 the NeuroNexus team was in the early stages of developing what it called a "Deep Brain Mapping Array" or "DBMA." ECF 134-16, ¶ 14. That work led to another idea, the "Deep Brain Stimulating Array" or "DBSA, " in 2006. Id. ¶ 19. The DBSA is a "neural interface system" where the electrode sites are arranged circumferentially and axially around and along a cylindrical carrier. ECF 134-29.

         On February 26, 2007, members of the NeuroNexus team filed a patent application for the DBSA concept, which was assigned number 60/891, 641 (the '641 application). ECF 134-28. The '641 application would lead to the issuance of Patent No. 8, 731, 673 (the '673 patent) seven years later, ECF 134-29, but a great deal happened in the interim. Summer 2007: Daneshvar Has An Idea and Shares It In 2006 and early 2007, Eugene Daneshvar was a student pursuing a master's degree in Biomedical Engineering from the University of Michigan College of Engineering. ECF 65-10, PgID 3482; ECF 140-2, PgID 8984-85. During that time, he worked as a graduate research assistant in the Neural Engineering Lab. ECF 65-10, PgID 3477-78. Daryl Kipke was a professor in the school's Department of Engineering and was serving as Daneshvar's faculty advisor. ECF 20-1, ¶¶ 7-8. Daneshvar's degree was conferred in May of 2007, but he continued to work in the lab through September of that year. ECF 135-10, PgID 8219. During the summer of 2007, he was admitted into a Ph.D. program at the University. Id.

         In June of that year, Daneshvar had an idea for a neural probe technology. He described his idea, along with some drawings, on the pages of a notebook, each dated 6/13/07. See ECF 68-2, PgID 3984-85. At the bottom of each page were the signatures of Daneshvar (indicated as the inventor) and one Duna Raoof (indicated as witness); both signatures were dated 6/13/07. Id.

         The pages begin:

Novel Idea This novel idea of incorporating conductive polymers onto neural probes, both rigid-like silicon substrates and flexible polymers substrates, for movement guidance and manipulation has occurred to me. I have not seen any application such as this before. I have seen applications of conductive polymers being used to bend substrates such as in "micromussels" work. I wish to apply this technology to neural probes in order to manipulate placement of the probes in-vivo.

Id. The pages then described how the idea would benefit surgeons and aid in "the quest for determining whether neurons 're-wire' themselves or surrounding neurons die etc." They went on:

The idea is that when that site is stimulated it would cause the conductive polymer to excite and bend the probe at that location. Having more than one of the bands would allow more degrees of freedom. . . . I believe to achieve this effect we could use an ordinary probe (current probe from NeuroNexus) and develop a preliminary mask to selectively sputter metal on top. Then we could apply PEDOT coating or PPY coating to the deposited metal and actuate.

Id. Some simple diagrams illustrating the concept accompanied the descriptions. Id. Daneshvar now calls the ideas conceived on that day the "Pivot Probe" and the "Pivot Electrode." ECF 135-18, PgID 8377.

         Daneshvar explained his ideas to Kipke later that month, on June 21, 2007, in one of the University's buildings. Id.; ECF 65-10, PgID 3527, 3531. He sent an email to Kipke the same day, in which he confirmed their conversation, mentioned that he "would like to develop this idea as a start toward my PhD work, " and stated the idea's potential applications. ECF 68-2, PgID 3987. Also that day, Kipke allegedly agreed to become Daneshvar's Ph.D. advisor. ECF 140-2, PgID 8985.

         On July 7, 2007, Daneshvar visited Kipke in his office and struck up a conversation; Daneshvar recorded it and later had it transcribed. See ECF 23-1, PgID 195-97. Daneshvar seems to have raised concerns about protecting intellectual property prior to the conversation, and sought advice about how to talk about his work when seeking assistance from others at the University. Kipke offered some reassurances:

[H]ere's how I see what you're facing . . . You've come up with a, you know, a clever idea. We've identified this problem need and you've come up with a clever idea . . . and you know, you have to kinda figure out how to how to do it actually how to do the work. This is a university environment, it's open, it has to be open. The minute we, we kind put our IP blinders on in a university environment, the whole thing sorts to crumble. We don't do that. The . . . but what you do do is proceed in an intelligent manner by keeping a good lab notebook. Ok? . . . You don't have to hide anything, there's nothing to hide. . . . In saying that, you also don't have to . . . [s]pill the beans. Cause it's actually not even relevant for the discussion, you know the technical discussion.

Id. at 196.

         Fall 2007: NeuroNexus Files the Application

         On September 17, 2007, the NeuroNexus team submitted an invention disclosure to its attorney. ECF 140-22; ECF 140-21. According to Defendants, the invention disclosed in that document led to NeuroNexus's filing of provisional patent application 60/980, 657 (the '657 application) on October 17, 2007. ECF 140, PgID 8950; ECF 135-7. The '657 application later led to the issuance of U.S. Patent No. 8, 565, 894 (the '894 patent) on October 22, 2013. ECF 135-1. The listed inventors of the '894 patent are Rio Vetter, Daryl Kipke, and Jamille Hetke, and the sole assignee is NeuroNexus Technologies, Inc. Id. The nature of the patent is described infra.

         2008: The Pursuit to Patent the Pivot Probe

         On October 20, 2008-a little more than a year after Daneshvar initially shared his idea with Kipke-Daneshvar, Kipke, and post-doctoral researcher Mohammad Abidian submitted an Invention Disclosure (numbered 4204) to OTT that disclosed the "Pivot Probe." ECF 134-9. According to Daneshvar, Kipke had advised him to submit the disclosure and had added that NeuroNexus "was interested in licensing Daneshvar's invention." ECF 20-1, ¶ 13. Daneshvar also claims that "[o]n November 4, 2008, Kipke advised Daneshvar that a NeuroNexus lawyer would draft a provisional patent for Daneshvar's pivot probe invention." Id., ¶ 14.

         The day after that alleged conversation, Daneshvar, Kipke, and Abidian met with Robin Rasor, the OTT Director of Licensing. ECF 134-7, ¶ 5. She claims to have warned them that publication of concepts prior to applying for a patent could result in the loss of patent rights. Id. She also claims she explained to them "what constituted a publication" and instructed them to notify OTT before sending abstracts or presenting concepts at public venues. Id. She followed up the meeting with a brief email, explaining that she intended to engage Jeffrey Snyder, an attorney at the Harness Dickey law firm, and she did so on December 2, 2008. ECF 136-1; ECF 134-7, ¶ 6. In her declaration, Rasor explained that Snyder's role was "to evaluate the patentability of any concepts disclosed in the [Pivot Probe disclosure] and, if any material was determined to be patentable, to potentially prepare any patent application based on it." ECF 134-7, ¶ 6. Snyder would also assist "in determining whether it would be worthwhile to spend additional University funds to file and prosecute a patent application covering concepts in the [Patent Probe disclosure]." Id. ¶ 9 .

         Rasor sent an email to an attorney at Harness Dickey on November 6, 2008. ECF 140-3. She attached the 4204 Disclosure, along with other documents, and briefly mentioned some of the challenges they faced in patenting the technology. She ended: "So, take a look and then let's talk before we plan the application. Kipke's company has an IP counsel so we may also have them do some heavy lifting down the road and have you review and file." Id. Daneshvar was not a party to the email.

         2009-2010: What Happened to the Pivot Probe IP

         In the months that followed, Daneshvar corresponded with Snyder in an effort to prepare a patent application. ECF 65-10, PgID 3567-68, 3575, 3584. On February 20, 2009, Rasor emailed Kipke, Daneshvar, and Abidian and relayed Snyder's conclusion that it would be better to further develop the Pivot Probe concept before applying for a patent. Id. at 3585; ECF 136-3. Daneshvar did not respond to the email. ECF 134-7, ¶ 11; ECF 65-10, PgID 3578.

         Two months later, Daneshvar "submitted his work on pivot probes to be included in a conference presentation." ECF 20-1, ¶ 15. OTT learned of the presentation more than a year and a half later, in November 2010. ECF 134-7, ¶ 12. Snyder concluded that Daneshvar's submission to the presentation would preclude the patentability of the Pivot Probe as laid out in the 4204 Disclosure, and Daneshvar agreed. Id., ¶ 13. Consequently, OTT's efforts to patent the Pivot Probe ceased. Id.

         Daneshvar then asked the University to assign to him its rights to the 4204 Disclosure and on November 17, 2011, the Regents approved the reassignment. ECF 140-11, PgID 9061, 9072. Next, Daneshvar sought and received the patent rights to the Pivot Probe from the NIH, confirmed by a letter dated May 14, 2012. ECF 140-12.[1]

         Late 2010-2012: Efforts Concerning the Pivot Electrode

         Although OTT's efforts to patent the Pivot Probe ceased in late 2010, a new effort began. According to Rasor, during the November 2008 meeting that kicked off the effort to patent the Pivot Probe, Daneshvar had also shared the concept of the "Pivot Electrode." ECF 134-7, ¶ 14. She reasoned that since the Pivot Electrode had not been part of Daneshvar's submission to the April presentation, it might still be patentable, so she instructed Snyder to look into it. Id. OTT assigned a new number (4204.1) to the Pivot Electrode concept and directed Snyder to file a provisional patent application for it in March 2011. Id. ¶ 15. Snyder did so and the U.S. Patent Office assigned serial number 61/449, 913 to the application. Id.

         By the next year, however, OTT had "determined it would not pursue a non-provisional patent application for the 'Pivot Electrode' because the potential market and value did not justify further investment in the patent application." Id. ¶ 17. Because the National Institute of Health ("NIH") "had sponsored the research that led to the pivot electrode disclosure 4204.1 and the 61/449, 913 application . . . OTT waived and released to the NIH its interests in the provisional patent application serial number 61/449, 913 on or about March 6, 2012." ECF 134-2, ¶¶ 22-23; ECF 140-4, PgID 9041.

         Defendants claim that Daneshvar sought and secured the rights to the patent application from NIH, but later abandoned the effort to secure a patent. ECF 134, PgID 6496. Daneshvar does not dispute the point.

         2011: Daneshvar's Discovery

         According to Daneshvar, it was not until August of 2011, "while researching prior art relating to the pivot electrode, " that he discovered the '657 application. ECF 20-1, ¶ 19. He later discovered three other patents-Nos. 13/236, 973, 11/932, 903, and 12/848, 828-and claims that these patents include his ideas for "spatial 3D placement." Id. Daneshvar believes the application and patents contain his ideas.

         2012: The Sale of NeuroNexus

         In February 2012, a company called Greatbatch, Inc. acquired NeuroNexus, allegedly including "all of the intellectual property at issue in this lawsuit." Id. ¶ 20; ECF 17, ¶ 20.

         III. The '894 Patent

         Since much of the case concerns the '894 Patent, a brief description is pertinent. The invention contained within the '894 patent is described as a "three dimensional system of electrode leads, " ECF 135-1, PgID 7157, and utilizes the concept from the '673 Patent by essentially marrying three of the '673 arrays into a single, three-pronged unit. The diagram included in the '894 Patent depicts three prongs, called "subsystems, " that are joined together. These subsystems are connected to "guiding elements" that allow a user to move and manipulate each subsystem. According to the patent, the carrier in each subsystem is "rigid." Id., col.8.

         The patent explains that a guiding element is "preferably one of several variations, " id., col.2, and describes two variations. In the first variation, the guiding element contains several "joints or connections" that a user can manipulate by using "a system of cables or robotics, " or may be guided "remotely and/or wirelessly or in any other suitable fashion with any suitable combination of elements." Id. The second variation does not use joints, but rather, is "biased, " meaning it has a particular, fixed shape but is made of a "material with shape memory or high elasticity." Id. In that variation, the biased subsystems are sheathed in a tube to keep them straight, but when the tube is pulled back, the subsystems spread out or otherwise re-arrange themselves. The patent further explains:

[t]he material of the biased guiding element [] is preferably an elastic material such as metal or plastic, or shape memory material such as nitinol. The material may alternatively be made from any suitable material. The shape memory material may change shape due to temperature, electrical stimulus, or any other suitable mechanism.

Id., col.3.

         STANDARD OF REVIEW

         Summary judgment is proper if there is "no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A fact is material for purposes of summary judgment if its resolution would establish or refute an "essential element[] of a cause of action or defense asserted by the ...


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