In an appeal originating out of a state court action, the U.S. Court of Appeals for the Federal Circuit found that a co-inventor of certain patents lacked standing to seek correction of inventorship under 35 U.S.C. §256 because he assigned his rights in the patents to his employer. Borden M. Larson v. Correct Craft, Inc. et al., Case Nos. 08-1208, -1209 (Fed. Cir., June 5, 2009) (Arterton, J., sitting by designation).

The action underlying the appeal was brought by Larson, a co-inventor of the patents-in-suit, in Florida state court, alleging multiple fraud-based claims under state law, seeking rescission of patent assignments and requesting declaratory judgments concerning the respective parties’ rights to the patents-in-suit. Defendant Correct Craft Inc. (CCI) removed the case to federal court on the ground that Larson’s declaratory judgment counts, although pled under Florida law, were effectively claims to correct inventorship under §256. The district court considered the action and on summary judgment ruled in favor of the defendants on all counts. Larson appealed.

While working at CCI, Larson designed a tower structure on a water-sports boat that allowed for storage space and the attachment for an elevated tow line. Larson subsequently showed his design to his supervisor, William Snook, for approval and to Robert Todd to build a prototype. Snook and Todd were later listed as co-inventors on the relevant patent applications.

Larson, at CCI’s request, executed assignments and declarations transferring his rights to the patents to CCI. Larson received no compensation in addition to his usual salary as consideration for executing these assignments and declarations. Later, after leaving CCI, Larson allegedly discovered he had rights in the patents and, believing that CCI misled him about the patent assignments, sued CCI for rescission of the assignments and Snook and Todd for a declaration that Larson was the sole inventor.

As an initial matter, the Federal Circuit concluded that the district court correctly treated Larson’s claims for declaratory relief as implicating §256. Next, the Federal Circuit determined that ownership is not necessarily a prerequisite to standing if the party seeking to establish standing has a financial interest in the patents. However, here the Court found that Larson had neither an ownership interest nor a financial interest and therefore lacked standing. The Court concluded that Larson had no ownership and financial interests in the patents without a finding that the underlying patent assignments were void.

The Federal Circuit concluded that the district court cannot exercise supplemental jurisdiction over any surviving state-law claims because Larson’s declaratory judgment claims, the only claims conferring federal question jurisdiction, were dismissed for lack of standing. The Court remanded the case with instructions to return the action back to Florida state court.