1209 Borden M. Larson v. CORRECT CRAFT, INC., WILLIAM SNOOK, and ROBERT TODD

United States Court of Appeals for the Federal Circuit
2008-1208, -1209
BORDEN M. LARSON
Plaintiff-Appellant,
v.
CORRECT CRAFT, INC., WILLIAM SNOOK,
and ROBERT TODD,
Defendants-Appellees.
Beecher A. Larson, Law Office of Beecher A. Larson, of Longwood, Florida,
argued for plaintiff-appellant.
Douglas C. Spears, Stump, Dietrich, Spears & Norman, P.A., of Orlando, Florida,
argued for defendants-appellees.
Appealed from: United States District Court for the Middle District of Florida
Judge Gregory A. Presnell

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United States Court of Appeals for the Federal Circuit
2008-1208, -1209
BORDEN M. LARSON,
Plaintiff-Appellant,
v.
CORRECT CRAFT, INC., WILLIAM SNOOK,
and ROBERT TODD,
Defendants-Appellees.
Appeals from the United States District Court for the Middle District of Florida in case
no. 6:05-CV-686, Judge Gregory A. Presnell.
__________________________
DECIDED: June 5, 2009
__________________________
Before GAJARSA and MOORE, Circuit Judges, and ARTERTON, District Judge.∗
ARTERTON, District Judge.
Plaintiff-Appellant Borden Larson appeals from decisions by the United States
District Court for the Middle District of Florida that granted summary judgment in favor of
Defendants-Appellees Correct Craft, Inc. (“Correct Craft”), William Snook, and Robert
Todd. Larson originally filed suit in Florida state court, alleging multiple fraud-based
claims under state law, seeking rescission of several patent assignments he executed,
∗ Honorable Janet Bond Arterton, District Judge, United States District
Court for the District of Connecticut, sitting by designation.

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and requesting declaratory judgments concerning the parties’ respective rights to the
patents at issue. Correct Craft removed the case to federal court on the ground that the
declaratory-judgment counts, although nominally pleaded under Florida law, were in
substance claims to correct inventorship under 35 U.S.C. § 256. At oral argument, we
raised the question of whether the district court properly exercised federal-question
jurisdiction pursuant to 28 U.S.C. § 1338(a), and we permitted the parties to submit
supplemental briefing on this jurisdictional issue.
As we explain below, Larson has no concrete financial interest in the correction
of the patents in this case because he has assigned away all of his patent rights, and he
claims no purely reputational interest in the patents. Thus, unless and until Larson
obtains equitable relief that restores his ownership rights, he has no standing to bring a
stand-alone action under § 256. Because his § 256 cause of action was the only basis
for removal from state court, it follows that the district court had no basis for exercising
subject-matter jurisdiction over the case, and so we lack jurisdiction to reach the merits
of Larson’s appeal. Accordingly, we vacate the judgment of the district court and
remand with instructions.
I.
Correct Craft is a boat manufacturer that employed Larson as a designer from
1986 to 2001. The parties characterize his employment in different terms, but it
appears undisputed that he was hired as a draftsman, worked in the engineering
department making design changes to boat components, and supervised design and
manufacturing work in the “plug and mold shop.” By Larson’s telling, his responsibilities
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included “[d]esigning new products that were competitive in the marketplace, whether
it’s the hull, the deck, the interior parts,” and whatever else “needed to be done.”
In mid-1996, Larson sought to re-design part of Correct Craft’s “Sport Nautique”
model, in particular the placement of an attachment for a tow line for wakeboarders or
water skiers. His idea essentially was to mount a tower structure on a water-sports boat
that would allow for added storage space as well as the attachment for an elevated tow
line. Larson showed his designs for this “wakeboard tower” to William Snook, the
Correct Craft engineer who originally hired Larson. At Snook’s urging, Larson then
presented his idea to management, which approved and directed a prototype to be built.
Robert Todd’s fabrication company delivered the first prototype later in 1996. Snook
was then in charge of the project to improve upon this first-generation tower, during
which Larson “had some input.”
At issue in this case are the several patents Correct Craft eventually received for
the wakeboard tower. In 1997, Snook told Larson that Correct Craft was going to seek
patent protection. Larson detailed the inception of his tower idea in writing, and he
spoke with Correct Craft’s attorneys about what would be needed for the patenting
process. The attorneys also presented Larson with patent assignments that they
described as formalities and part of the necessary application paperwork. With these
assignments, which he executed between 1998 and 2001, Larson transferred all of his
interest in the wakeboard-tower invention to Correct Craft. In declarations filed with the
Patent and Trademark Office, Larson also attested that he was a co-inventor of the
wakeboard tower together with Snook and Todd. Larson received no compensation in
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addition to his usual salary as consideration for executing these assignments and
declarations.
Larson claims that later, after Correct Craft terminated his employment, he
“discovered [his] rights as the wakeboard tower inventor in February of 2003.” Believing
that Correct Craft misled him about his obligation to sign the patent assignments—and
coupled with his belief that the company betrayed him and violated its own commitment
to Christian principles—Larson sued Correct Craft, Snook, and Todd in Florida state
court on April 22, 2004. Correct Craft removed the case to federal court in May 2005,
citing Larson’s addition of the declaratory-judgment counts in an amended complaint
filed the previous month. In the operative amended complaint, Larson presses eight
claims: fraud, constructive fraud, rescission, breach of contract, and unjust enrichment
against Correct Craft; and three counts seeking declaratory judgments against Correct
Craft, Snook, and Todd concerning the parties’ rights to the wakeboard-tower patents.
II.
Following protracted disputes concerning discovery and other matters not
relevant here, Larson moved for summary judgment on his declaratory-judgment claims
against Snook and Todd, seeking removal of Snook and Todd as co-inventors. The
district court denied this motion on January 30, 2008, on the ground that contested
issues of material fact—notably, the effect of the numerous documents Larson signed
attesting that Snook and Todd were co-inventors—precluded entry of summary
judgment. Larson v. Correct Craft, Inc., No. 6:05-cv-686, 2008 WL 276560, at *2 (M.D.
Fla. Jan. 30, 2008).
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The district court then granted summary judgment in favor of the defendants in
two orders. In the first, dated February 1, 2008, the court ruled that Larson had failed to
offer sufficient evidence of fraud by Correct Craft to warrant a trial: “[E]ven if one
assumes that CCI had no legal right to the wakeboard tower patent, Larson has failed to
produce a shred of evidence that CCI knew this at the time they were impliedly telling
him otherwise.” Larson v. Correct Craft, Inc., 537 F. Supp. 2d 1264, 1269 (M.D. Fla.
2008). The district court also concluded that summary judgment was appropriate on
Larson’s constructive-fraud claim because there was no evidence of the confidential or
fiduciary relationship required under Florida law. Id. Having granted summary
judgment on the fraud claims, the district court found that the remaining claims based
on the same foundation must suffer the same fate. Id. at 1269–70.
The district court further held, in this February 1 order and also in a second order
dated February 4, 2008, that the entry of summary judgment on the substantive fraud-
based claims meant that Larson could not succeed on his declaratory-judgment claims
because there was no controversy remaining as to his patent rights. Larson v. Correct
Craft, Inc., No. 6:05-cv-686, 2008 WL 321455, at *2 (M.D. Fla. Feb. 4, 2008). In the
February 4 order, the district court explained that, assuming it still maintained
jurisdiction over the claims involving Snook and Todd, there was no basis for removing
their names from the wakeboard-tower patents pursuant to 35 U.S.C. § 256 because
“[n]o reasonable factfinder could conclude that Larson was a sole inventor” and
because an attack on the validity of the patent assignments “is barred by the doctrine of
assignor estoppel.” Id. at *2–*3. Larson appeals and assigns error to virtually every
aspect of these rulings.
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III.
We begin with our jurisdiction. “[E]very federal appellate court has a special
obligation to ‘satisfy itself not only of its own jurisdiction, but also that of the lower courts
in a cause under review,’” regardless of whether “the parties are prepared to concede
it.” Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986) (quoting Mitchell
v. Maurer, 293 U.S. 237, 244 (1934)). In its notice of removal in this case, Correct Craft
characterized Larson’s declaratory-judgment counts as claims for correction of
inventorship under 35 U.S.C. § 256. Accordingly, the district court exercised jurisdiction
pursuant to 28 U.S.C. § 1338(a)(1), which authorizes subject-matter jurisdiction over
“any civil action arising under any Act of Congress relating to patents.” We in turn have
exclusive appellate jurisdiction over patent cases pursuant to 28 U.S.C. § 1295(a)(1).
There are two issues related to the basis for federal jurisdiction here. First,
Larson’s claims for declaratory relief, as he pleaded them, did not actually invoke § 256.
Therefore, we must examine whether Correct Craft (in removing the case) and the
district court (in exercising jurisdiction) correctly treated the declaratory-judgment claims
as implicating § 256. Second, because Larson lost his ownership rights and any
financial interest he had in the wakeboard-tower patents when he executed the
assignments in favor of Correct Craft, we must also determine whether Larson, having
not yet prevailed on his separate claim for equitable relief setting aside the patent
assignments, nevertheless had standing to pursue a claim for correction of inventorship
in federal court.
The appellees argue that the district court had jurisdiction based on the
substance of Larson’s declaratory-judgment counts–-that is, even though § 256 was
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“not specifically pleaded,” Larson was in essence seeking the correction of inventorship
that § 256 authorizes. Appellees’ Suppl. Br. 1, 6–8. Larson does not dispute this; he
concedes that his complaint mistakenly cited Florida law. Nevertheless, Larson—now
taking a different position than the one he expressed at oral argument—contends that
he has no standing to sue under § 256 because he has assigned away his patent rights
and because he has pleaded no reputational injury.
A.
The statute on which federal jurisdiction is based in this case, 35 U.S.C. § 256,
permits correction of a patent’s named inventors as follows:
Whenever through error a person is named in an issued patent as the
inventor, or through error an inventor is not named in an issued patent and
such error arose without any deceptive intention on his part, the Director
may, on application of all the parties and assignees, with proof of the facts
and such other requirements as may be imposed, issue a certificate
correcting such error.
The error of omitting inventors or naming persons who are not inventors
shall not invalidate the patent in which such error occurred if it can be
corrected as provided in this section. The court before which such matter
is called in question may order correction of the patent on notice and
hearing of all parties concerned and the Director shall issue a certificate
accordingly.
35 U.S.C. § 256. By our construction, § 256 “provides a cause of action to interested
parties to have the inventorship of a patent changed to reflect the true inventors of the
subject matter claimed in the patent.” Fina Oil & Chem. Co. v. Ewen, 123 F.3d 1466,
1471 (Fed. Cir. 1997). “We have previously interpreted § 256 broadly as a ‘savings
provision’ to prevent patent rights from being extinguished simply because the inventors
are not correctly listed.” Chou v. Univ. of Chi., 254 F.3d 1347, 1358 (Fed. Cir. 2001)
(quoting Pannu v. Iolab Corp., 155 F.3d 1344, 1349 (Fed. Cir. 1998)).
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Just as the “well-pleaded complaint” rule governs federal-question jurisdiction in
general, jurisdiction under § 1338 “extend[s] only to those cases in which a well-pleaded
complaint establishes either that federal patent law creates the cause of action or that
the plaintiff’s right to relief necessarily depends on the resolution of a substantial
question of federal patent law, in that patent law is a necessary element of the well-
pleaded claims.” Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808–09
(1988). There is no doubt that § 256 supplies such a valid basis for federal jurisdiction:
an action to correct inventorship under § 256 “aris[es] under” the patent laws for the
purpose of § 1338(a). MCV, Inc. v. King-Seeley Thermos Co., 870 F.2d 1568, 1570
(Fed. Cir. 1989).
Larson’s amended complaint includes three counts seeking declaratory
judgments–-count eight (against Correct Craft), count nine (against Todd), and count
ten (against Snook). In each of these three counts, Larson alleges:
An actual and justiciable controversy now exists between LARSON and
defendant[s] . . . in that plaintiff LARSON asserts that the defendant[s’]
claim[s] to the aforesaid inventions and patents are invalid and
defendant[s] assert[] that [their] claims are valid, and until such
controversy is settled, plaintiff LARSON cannot properly proceed to
license or assign his right, title, and interest in and to the inventions and
patents, or to manufacture, use, and sell the inventions under the patents.
J.A. 78–80. Count eight seeks a declaration that Larson’s assignments do not clearly
transfer title to the wakeboard-tower patents and that Correct Craft has only a
nonexclusive license to the patents. Counts nine and ten, in turn, seek declarations that
Todd and Snook have “no rights to claim co-inventorship of the tower.” J.A. 80–81.
Each count purports to arise under Florida Statutes § 86.011, which provides, in part:
“The circuit and county courts have jurisdiction within their respective jurisdictional
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amounts to declare rights, status, and other equitable or legal relations whether or not
further relief is or could be claimed.”
These allegations, fairly construed, reveal that Larson seeks a judicial
determination that he, not Todd or Snook, is the true and sole inventor of the wakeboard
tower. In substance, that is the same relief that the patent statute provides in § 256,
and in other contexts we have treated requests for declaratory relief relating to
inventorship as functional equivalents of actions formally brought pursuant to § 256.
See, e.g., Chou, 254 F.3d at 1360 (opining that “a declaratory judgment under
28 U.S.C. § 2201 and 2202 . . . would not afford [plaintiff] any relief that is not also
available through the § 256 action”); MCV, 870 F.2d at 1571 (“That [plaintiff] misstated
the nature of its suit [as a declaratory-judgment action] was harmless and is not fatal to
its otherwise well-pleaded cause of action.”). Given the true nature of Larson’s
declaratory-judgment claims, we will accept that Larson pleaded an action for correction
of inventorship pursuant to § 256.
B.
Larson must not only allege a well-pleaded patent claim, however. He must also
have standing to pursue that claim. Whether the plaintiff has Article III standing “is the
threshold question in every federal case, determining the power of the court to entertain
the suit.” Warth v. Seldin, 422 U.S. 490, 498 (1975). “‘Since the question of standing
goes to this court’s jurisdiction[,] we must decide the issue even though the court below
passed over it without comment.’” Corus Group PLC v. Int’l Trade Comm’n, 352 F.3d
1351, 1357 (Fed. Cir. 2003) (quoting Jenkins v. McKeithen, 395 U.S. 411, 421 (1969)).
More than just our appellate jurisdiction is at stake: if the jurisdiction-conferring patent
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claim is dismissed for lack of standing, the district court cannot exercise supplemental
jurisdiction over surviving state-law claims because there was never an Article III case
or controversy. Textile Prods., Inc. v. Mead Corp., 134 F.3d 1481, 1486 (Fed. Cir.
1998); Gaia Techs., Inc. v. Reconversion Techs., Inc., 93 F.3d 774, 781, as amended,
104 F.3d 1296, 1297 (Fed. Cir. 1996); see also Salmon Spawning and Recovery
Alliance v. U.S. Customs and Border Prot., 550 F.3d 1121, 1133 (Fed. Cir. 2008)
(noting that “supplemental jurisdiction cannot be exercised when a court does not have
original jurisdiction over at least one claim in the suit”).
We previously confronted the relationship between a suit under § 256 and the
elements of constitutional standing in Chou v. University of Chicago. In that case, the
plaintiff, a university research scientist, alleged that her name had been improperly
omitted from several patents and foreign applications. 254 F.3d at 1353–54. Although
the terms of her academic appointment obliged her to assign her inventions to the
university, Chou sought correction of inventorship under § 256, citing the fact that she, if
identified as an inventor, would be entitled (under university policy) to royalties,
licensing revenue, and equity in start-up companies. Id. at 1355. After surveying our
own case law, we declined to hold that a plaintiff in an action under § 256 must have an
ownership interest at stake in the suit to have standing:
We conclude that an expectation of ownership of a patent is not a
prerequisite for a putative inventor to possess standing to sue to correct
inventorship under § 256. The statute imposes no requirement of
potential ownership in the patent on those seeking to invoke it. . . . Chou
should have the right to assert her interest, both for her own benefit and in
the public interest of assuring correct inventorship designations on
patents.
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Id. at 1358. Rather, we found that Chou’s “concrete financial interest” in the patents,
owing to her relationship with the university, was enough to satisfy the three
requirements for standing under Article III:
If Chou has indeed been deprived of an interest in proceeds from licensing
the invention and in stock ownership by the conduct that she alleges, then
she will have suffered an injury-in-fact, i.e., the loss of those benefits.
That loss would be directly traceable to Roizman’s alleged conduct in
naming himself as the sole inventor of discoveries that she at least partly
made, and it would be redressable by an order from the district court to
the Director of the PTO to issue a certificate naming Chou as an inventor,
which would entitle her under the University’s policy to a share of the
licensing proceeds and stock already received by Roizman. We therefore
determine that Chou is entitled to sue for correction of inventorship under
§ 256.
Id. at 1359.
Chou thus teaches that a plaintiff seeking correction of inventorship under § 256
can pursue that claim in federal court only if the requirements for constitutional
standing—namely injury, causation, and redressability—are satisfied. Larson is in a
different position than the plaintiff in Chou, however. Larson has affirmatively
transferred title to the patents to Correct Craft, and he stands to reap no benefit from a
preexisting licensing or royalties arrangement. His only path to financial reward under
§ 256 in this case involves him first succeeding on his state-law claims and obtaining
rescission of the patent assignments. With his ownership of the wakeboard-tower
patents being contingent in this manner, Larson has no financial interest in the patents
sufficient for him to have standing to pursue a § 256 claim.
We addressed a similar issue in Jim Arnold Corp. v. Hydrotech Systems, Inc.,
109 F.3d 1567, 1571–72 (Fed. Cir. 1997), in which a plaintiff who had assigned away all
his patent rights sued for patent infringement and also sought to rescind the
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assignments through claims brought under state law. Reaffirming that questions of
patent ownership are determined by state law, we explained that the plaintiff lacked
standing to pursue his infringement claim because, “absent judicial intervention to
change the situation,” he did not have an ownership interest in the patents. Id. at 1572.
Although Jim Arnold involved an infringement claim rather than an action to correct
inventorship, the reasoning of that case nevertheless applies here. Without first voiding
his patent assignments, Larson has no ownership interest in the wakeboard-tower
patents. Just as Larson would lack standing to sue for infringement unless and until he
regains title to the patents, so, too, he has no non-contingent interest in the patents on
which to support his standing to correct inventorship under § 256.
Chou and Jim Arnold together compel the following conclusion: Larson’s financial
stake in the patents is contingent on him obtaining relief that a federal court has no
jurisdiction under § 1338 to provide. Because Larson lacks an ownership interest, and
because being declared the sole inventor will not generate any other direct financial
rewards as in Chou, Larson has no constitutional standing to sue for correction of
inventorship in federal court.
C.
As a final matter, appellees argue that even without a direct financial interest in
the patents, Larson has standing based on his reputational interest in being correctly
named as the sole inventor of the wakeboard tower. Quoting Larson’s allegations in the
declaratory-judgment counts, appellees contend: “By these allegations Larson is
expressly seeking a court determination that only he can hold himself out as the
inventor of the tower,” which “is the reputational aspect of invention possessed by the
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inventor which this Court discussed in Chou.” Appellees’ Suppl. Br. 8. In Chou,
however, we declined to go so far as to say that a reputational interest is sufficient,
standing alone, to confer constitutional standing in a § 256 action. 254 F.3d at 1359.
Although we noted that it was “not implausible,” we did not resolve the matter because
Chou in fact had alleged a sufficient financial interest. Id.
Appellees correctly point out that, in the three counts for declaratory relief,
Larson asserts his right “to claim sole inventorship of the tower invention.” That
statement, however, is then directly linked to the financial benefits associated with sole
inventorship, which Larson defines as “including the right to license or assign his
interest, and the right to manufacture, use, and sell the subject matter of the patents to
his inventions.” Larson confirms this by alleging that there is a justiciable controversy
because, until his rights are restored, he “cannot properly proceed to license or assign
his right, title, and interest in and to the inventions and patents, or to manufacture, use,
and sell the inventions under the patents.” Furthermore, in his supplemental brief,
Larson emphasized that the injuries he claimed were financial, not reputational.
Thus, we need not answer the question we left open in Chou—whether a purely
reputational interest is sufficient to confer standing for a § 256 claim—because the issue
is simply not presented by these facts. Larson claims no reputational injury, and so that
cannot be a basis on which to find standing.
IV.
In conclusion, Larson lacks constitutional standing to assert his claims for
correction of inventorship under 35 U.S.C. § 256 in federal court. We therefore find that
the district court lacked jurisdiction to hear the case pursuant to 28 U.S.C. § 1338(a).
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2008-1208, -1209 14
Accordingly, we vacate the judgment of the district court in favor of the defendants-
appellees and remand the case to that court with instructions to return the case to the
Circuit Court of the Ninth Judicial Circuit, in and for Orange County, Florida.
VACATED AND REMANDED WITH INSTRUCTIONS
COSTS
Each party shall bear its own costs.

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