No. 97CA0076Colorado Court of Appeals.
June 25, 1998
Appeal from the District Court of Boulder County, Honorable Richard C. McLean, Judge, No. 94CV88
JUDGMENT AFFIRMED IN PART AND REVERSED IN PART
Cooksey, Cooksey Hyland, P.C., John T. Hyland, Michael G. Cooksey, Denver, Colorado, for Plaintiff-Appellee.
Lowe, Meyer, LLC, James A. Lowe, Englewood, Colorado, for Defendants-Appellants.
Division I
Opinion by JUDGE KAPELKE
[1] Defendants, Rotating Production Systems, Inc., (RPS) and John Larry Land, appeal the judgment entered by the trial court rescinding the patent assignment made by plaintiff, Rodger Lacy, to RPS. Land also appeals the judgment in favor of Lacy on Land’s counterclaim against him for breach of an alleged loan agreement. We reverse the judgment allowing rescission and affirm the judgment on the counterclaim. [2] In May 1991, RPS was incorporated to exploit the potential of inventions designed to rotate oil well tubing underPage 1145
tension. A reliable system for rotating well tubing under tension was achieved in what was described as the “tubing anchor catcher with rotating mandrel” (anchor catcher). A patent application for the anchor catcher was filed in May 1992 as a continuation, in part, of the “tubing rotator with downhole swivel” (swivel) invention. Land applied for both patents, initially identifying himself as the sole inventor.
[3] In August 1993, Land and Lacy, who at that time was president and a minority shareholder of RPS, executed a verified statement of facts for submission to the Patent and Trademark Office. In the statement, both affirmed under oath that Lacy was a co-inventor of the anchor catcher. They also executed an assignment of their respective rights in the anchor catcher patent to RPS for “ten dollars and other good and valuable consideration.” [4] Land terminated Lacy’s employment with RPS in December 1993. Lacy then filed this action for rescission of the assignment to RPS of his rights in the anchor catcher patent. Land filed a counterclaim alleging that Lacy was in default on a loan he had received from Land. [5] Following a bench trial, the court determined that there had been no meeting of the minds between Lacy and RPS as to the meaning of the material phrase “other good and valuable consideration” in the written assignment. The court therefore concluded that the assignment was void. Additionally, the court held that, in the absence of an enforceable agreement to the contrary, Lacy had no legal duty to assign the patent to RPS. The court also held in favor of Lacy on Land’s counterclaim. I.
[6] RPS contends that Lacy had a legal duty as an officer of the corporation to assign the patent for the anchor catcher to RPS and that the trial court, therefore, erred in invalidating the assignment. We agree.
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to do anything that we could to reduce our manufacturing cost.”
[12] Significantly, Lacy testified that all the work he had done on the anchor catcher had been for the benefit of RPS. Lacy’s initial drawings for the anchor catcher either bore the name RPS or were prepared on RPS letterhead. RPS paid all expenses relating to the development and manufacture of the anchor catcher, and Lacy represented to others that RPS owned the rights to it. [13] In light of Lacy’s position with RPS and his own assertions that the anchor catcher was developed for the benefit of RPS, and because the anchor catcher was manufactured and designed at RPS’ expense, Lacy had a fiduciary duty to assign to RPS the patent for the anchor catcher. See Kennedy v. Wright, supra (inventor, who was the president, treasurer, and chairman of the board of his employer, had fiduciary duty to assign patent because of his position in the company, because he used company time and money to build and patent the invention, and because he treated the patents as if the business owned them). See also Great Lakes Press Corp. v. Froom, supra; Davis v. Alwac International, Inc., supra; Michaelson v. Michaelson, supra. [14] In concluding that Lacy had no legal duty to assign his rights in the anchor catcher to RPS, the trial court here relied on Hewett v. Samsonite Corp., 32 Colo. App. 150, 507 P.2d 1119(1973). In Hewett, a division of this court invalidated an employee’s patent assignment to his employer on the basis of a failure of consideration and concluded that, in the absence of any agreement, the company had no right to the inventions or patents. Unlike Lacy, however, the employee in Hewett, who was a shop foreman rather than a corporate officer, may not have owed the same high duty of loyalty to the corporation. See Jet Courier Service, Inc. v. Mulei, 771 P.2d 486, 503 (“[T]he duty of loyalty and the test for a breach of that duty may well be different if the employee is not an agent.” (Mullarkey, J., concurring)) Thus, Hewett is distinguishable from the present case. In addition, there is no indication in the Hewett opinion that the issue of breach of fiduciary duty was even raised or considered. [15] Accordingly, we conclude that the trial court erred here in holding that Lacy had no duty to assign the patent rights to RPS and in invalidating the assignment. Further, because Lacy was an officer of RPS and acknowledged in his own testimony that his work on the anchor catcher invention was done for the benefit of the corporation and at its expense, we conclude that reversal without any remand is appropriate.
II.
[16] Land contends that the trial court erred in ruling against him on his counterclaim against Lacy because it improperly failed to consider the testimony he gave in support of his claim. We disagree.
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