CAFC in Shukh: concrete and particularized reputational injury can give rise to Article III standing

SHUKH v. SEAGATE contains a most interesting discussion of
inventor-employer interactions, in the context of a
correction of inventorship case.

From the decision-->


Alexander Shukh appeals from the district court’s
dismissal of some of his claims for failure to state a claim
and its grants of summary judgment on his remaining
claims in favor of the defendants, Seagate Technology,
LLC; Seagate Technology, Inc.; Seagate Technology; and
Seagate Technology PLC (collectively, “Seagate”).
Dr. Shukh also appeals from several of the court’s discovery
orders and other ancillary orders. For the reasons
discussed below, we vacate and remand the court’s grant
of summary judgment on Dr. Shukh’s claim for correction
of inventorship under 35 U.S.C. § 256 and affirm its
remaining holdings.

BACKGROUND

Dr. Shukh, a native of Belarus, is a leading scientist
in the field of semiconductor physics, with a Ph.D. in
Condensed Matter Physics and a B.S. and an M.S. in
Electronics and Electronic Engineering. In 1997, Seagate
recruited Dr. Shukh to move to the United States and
work for it. Dr. Shukh was employed at Seagate from
September 1997 until his termination in early 2009.
During his employment, Seagate sponsored Dr. Shukh for
an H-1B work visa, a visa extension, and eventually
permanent residency.

(...)

He received numerous awards for his achievement and innovation generally and
on specific products, and was named to the Seagate
Technology Inventor’s Hall of Fame. The district court
found that Dr. Shukh had a reputation as “an extremely
successful innovator in the hard disk drives engineering
community.” Shukh v. Seagate Tech., LLC, No. CIV. 10-
404 JRT/JJK, 2013 WL 1197403, at *3 (D. Minn. Mar. 25,
2013) (“Summary Judgment Order”).
When he was hired, Dr. Shukh executed Seagate’s
standard At-Will Employment, Confidential Information,
and Invention Assignment Agreement (“Employment
Agreement”), in which Dr. Shukh agreed to “hereby
assign to [Seagate] all [his] right, title, and interest in and
to any inventions” made while at Seagate. J.A. 600.
Seagate policy prohibited Seagate employees from filing
patent applications themselves for their inventions.
Instead, they were required to submit Employee Invention
Disclosure Forms to Seagate’s Intellectual Property
(“IP”) Department. Inventors were responsible for identifying
co-inventors of their inventions on these forms. The
IP Department would then forward the form to the internal
Patent Review Board, which would determine whether,
for example, to pursue a patent application for the
invention or to protect it as a trade secret.
Dr. Shukh’s time at Seagate was undisputedly tumultuous.
His performance evaluations indicated that he did
not work well with others due to his confrontational style.
Moreover, Dr. Shukh’s conduct interfered with his
productivity. For example, Dr. Shukh applied a “threestrikes”
rule to interactions with his coworkers, under
which he would stop communicating with coworkers who
had engaged three times in behavior he considered dishonest.
Dr. Shukh also frequently accused others of
stealing his work, and his managers criticized him for his
insistence on receiving credit for his work. To avoid
accusations of plagiarism, some Seagate employees refused
to attend presentations by Dr. Shukh.
In 2009, Seagate terminated Dr. Shukh and 178 other
employees. Although he has submitted many job applications
to other potential employers, Dr. Shukh has not yet
secured employment. Dr. Shukh claims that the hiring
manager of Hitachi, a company to which he applied,
contacted a Seagate employee to discuss rumors the
Hitachi manager had heard about Dr. Shukh. Moreover,
a Hitachi engineer told Dr. Shukh during his interview
that he would never find employment at Hitachi with his
reputation.

This lawsuit stems, in part, from Dr. Shukh’s allegations
that Seagate has not properly credited him for his
inventions.

(...)

In his original complaint, Dr. Shukh asserted thirteen
claims against Seagate, including claims for correction of
inventorship of the disputed patents pursuant to
35 U.S.C. § 256, rescission of his Employment Agreement,
breach of contract, fraud, breach of fiduciary duty, unjust
enrichment, and federal and state retaliation and national
origin discrimination claims.

(...)

Seagate moved to dismiss Dr. Shukh’s § 256 claim for
lack of standing. Dr. Shukh alleged three distinct interests
in the patents: an ownership interest, a financial
interest, and a reputational interest. At the motion to
dismiss stage, the district court held that Dr. Shukh had
no ownership or financial interest in the patents because
he automatically assigned all of his inventions to Seagate
in his Employment Agreement. The court left open the
possibility that Dr. Shukh had standing to sue based on
reputational harm caused by his omission from the disputed
patents. The district court also dismissed for
failure to state a claim Dr. Shukh’s claims for rescission of
his Employment Agreement, breach of contract, breach of
fiduciary duty, unjust enrichment, and declaratory judgment.

Two years later, Seagate moved for summary judgment
on Dr. Shukh’s § 256 claim. The court granted
Seagate’s motion, holding that there was no genuine
dispute of material fact as to whether Dr. Shukh suffered
reputational harm from not being named an inventor on
the patents. Summary Judgment Order at *13. It also
granted Seagate’s motion for summary judgment on Dr.
Shukh’s fraud claim. One week later, the district court
granted Seagate’s motion for summary judgment on Dr.
Shukh’s federal and state retaliation and national origin
discrimination claims.



Of importance here -->

Today, we hold that concrete and particularized reputational
injury can give rise to Article III standing. As we
noted in Chou, “being considered an inventor of important
subject matter is a mark of success in one’s field, comparable
to being an author of an important scientific paper.”
254 F.3d at 1359. We reasoned that “[p]ecuniary consequences
may well flow from being designated as an inventor.”
Id. This is particularly true when the claimed
inventor is employed or seeks to be employed in the field
of his or her claimed invention. For example, if the
claimed inventor can show that being named as an inventor
on a patent would affect his employment, the alleged
reputational injury likely has an economic component
sufficient to demonstrate Article III standing.

As to allegations about reputational injury:


first, it harmed his reputation as an
inventor in the field of semiconductor physics, and second,
it contributed to his reputation for poor teamwork due in
part to his accusations that others were stealing his work.
Moreover, Dr. Shukh presented evidence from which a
trier of fact could conclude that these reputational harms
had economic consequences—namely, that Dr. Shukh was
unable to find employment after he was terminated from
Seagate




Footnote 2 is of relevance to "invention disclosures" and
"performance evaluations":


The district court discounted this evidence because
the manager “clarified in his deposition testimony
that he was concerned with the decrease in the number of
invention disclosures that [Dr.] Shukh made to Seagate,
and not concerned with the decrease in the total number
of patent applications filed with the USTPO that listed
[Dr.] Shukh as an inventor.” Summary Judgment Order
at *12. In doing so, the district court improperly made a
factual finding on summary judgment. Cf. Anderson, 477
U.S. at 249–50. Moreover, this interpretation contradicts
the plain language of the evaluation. The district court
erred when it discounted Dr. Shukh’s performance evaluation
at this stage.



Of relevance to various bean-counting schemes, such as
patent citation analysis:



Finally, the court wrote that
Dr. Shukh’s former co-workers testified that their impression
of Dr. Shukh as an “excellent inventor with good
technical skills” would not change based on the number of
patents he was named on.


The CAFC was critical of the way the district court
handled summary judgment:



In coming to this conclusion, the district court improperly
made findings of fact on summary judgment and
did not make all factual inferences in Dr. Shukh’s favor.
A trier of fact could conclude that Dr. Shukh’s omission
from the disputed patents had a concrete impact on his
reputation in his field. There is significant evidence that
the number of patents an inventor is named on influences
his reputation in the field of the patents. Dr. Shukh’s
professional reputation is based on his work in semiconductor
physics—the same field as the disputed patents.
Moreover, Dr. Shukh is named as an inventor on seventeen
issued patents for work done at Seagate; he argues
here that he should be named as an inventor on an additional
six issued patents and four pending applications.
The disputed patents would therefore form a significant
portion of the patents granted to Dr. Shukh during his
tenure at Seagate.

True, it is undisputed that Dr. Shukh had a reputation
as an excellent inventor, and that this reputation did
not decrease while he was at Seagate. However, this does
not mean that Dr. Shukh’s omission from the patents did
not harm his reputation. The evidence supports the
conclusion that Dr. Shukh’s reputation as an inventor
would have been higher had he been named on the patents.

(...)

Dr. Shukh’s
coworkers had years of experience working directly with
Dr. Shukh, unlike potential employers, who likely lack
that first-hand knowledge and are therefore more likely to
rely on their knowledge of Dr. Shukh’s reputation in
evaluating their impression of him. Considering all of the
evidence, we find there is a genuine dispute of material
fact as to whether Dr. Shukh’s reputation as an inventor
was harmed by his omission from the disputed patents




Part of a performance review of Shukh appears in the
decision -->

In his Fiscal Year 2007 Performance
Evaluation, Dr. Shukh’s manager wrote:
[Dr. Shukh’s] insistence on getting appropriate
credit for all design ideas and implementations
stifles open discussion and adoption of his ideas.
Since this issue has become more important to
[Dr. Shukh] as time goes on, and since he believes
he has not been fairly recognized for his past contributions,
it’s an emotional issue. Most unfortunately,
it appears to others that [Dr. Shukh] is
more interested in being right and in getting credit
than in ensuring that Seagate wins.
[Dr. Shukh] will become more effective, and his
contributions will increase significantly, if he can
find ways to let others see that he truly is inter-
ested primarily in Seagate’s success, rather than
in his own advancement or preventing theirs.
J.A. 5222.

Dr. Shukh’s manager also indicated that
Dr. Shukh demonstrated “unsatisfactory” teamwork
skills, explaining that he “is often insistent on getting
appropriate or complete credit for his work” and that he
“repeatedly accused” Seagate workers of “stealing his
work.” J.A. 5223; see also Summary Judgment Order
at *4. Dr. Shukh argues that if he is named an inventor
on the disputed patents, it may rehabilitate his reputation
for seeking credit for his ideas.

<-- Shukh's unemployment arises -->
Finally, Dr. Shukh presented evidence that his alleged
reputational harm had an economic component.
Dr. Shukh has been unemployed since 2009, and he seeks
a job in the field of technology covered by the disputed
patents. A trier of fact could infer that the stronger
Dr. Shukh’s reputation as an inventor, the more likely he
is to be hired. This is particularly true in light of his
difficult personality. Furthermore, there is evidence tying
Dr. Shukh’s negative reputation at Seagate—including,
one presumes, his reputation for seeking credit for his
own inventions—to his unemployment. Summary Judgment
Order at *5 (writing that an engineer at a company
Dr. Shukh interviewed with allegedly told Dr. Shukh that
he would never get a job there because of his reputation
at Seagate). Thus, a trier of fact could conclude that Dr.
Shukh’s employment prospects have been harmed by the
impact of his alleged omission from the disputed patents
on his reputation as an inventor and his reputation for
seeking credit for his own ideas. Moreover, a trier of fact
could infer that Dr. Shukh’s employment prospects would
improve if the inventorship of the disputed patents was
corrected. Dr. Shukh’s inability to obtain employment is
a concrete and particularized financial harm that suffices
to create Article III standing.

<--

Link to case
http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/14-1406.Opinion.9-30-2015.1.PDF

**UPDATE on 7 August 2017

Related to the "reputational interest" concept, see Jason Rantanen on
"Patent as Credentials"

See
https://patentlyo.com/patent/2017/08/patent-as-credentials.html