[00:00:00] Speaker 00: The next case for argument is 22-1317, Van Dyke versus Wake Forest University. [00:00:09] Speaker 00: In order to avoid a little bit of a dog's breakfast here, the panel would like each side to begin your presentation by addressing the subject matter jurisdiction question. [00:00:22] Speaker 00: And that may or may not have questions. [00:00:26] Speaker 00: And with respect to this side, since you have three folks arguing, I'm hoping that the first person that stands up, since you filed a joint response, would be able to address it so that we don't have to address subject matter jurisdiction. [00:00:40] Speaker 00: Yes, Your Honor, that's what we have. [00:00:43] Speaker 00: OK, very good. [00:00:44] Speaker 00: Thank you. [00:00:44] Speaker 00: Let's proceed. [00:00:45] Speaker 00: Mr. Edwards. [00:00:47] Speaker 05: Thank you, Your Honor. [00:00:47] Speaker 05: Chris Edwards on behalf of Dr. Mark Van Dyke. [00:00:50] Speaker 05: I'll begin with the subject matter jurisdiction question. [00:00:53] Speaker 05: This court has appellate jurisdiction under 28 USC 1295. [00:00:58] Speaker 05: Supreme Court in Christiansen against cold operating industry said that there are two tests for the district courts arising under jurisdiction. [00:01:06] Speaker 05: That jurisdiction is tied to this court's appellate jurisdiction. [00:01:09] Speaker 05: And so in MCV, this court concluded that the correction of inventorship claim satisfied both prongs of those tests. [00:01:17] Speaker 05: And we think that's the entire inquiry that's needed. [00:01:21] Speaker 00: Well, the suggestion seems to be like a well-pleaded complaint, that that's what the district court has. [00:01:29] Speaker 00: And given her findings with respect to the failure of notice, et cetera, does that come within the bucket of a well-pleaded complaint in the first instance? [00:01:37] Speaker 05: I believe it does for several reasons. [00:01:40] Speaker 05: First off, as we pointed out in our supplemental briefing, this court regularly reviews subject matter jurisdiction dismissals for lack of standing. [00:01:49] Speaker 05: And I don't know that there is a distinction here. [00:01:51] Speaker 05: I don't know that there's a meaningful distinction between those two different types of subject matter jurisdiction dismissals. [00:01:59] Speaker 05: Moreover, I question whether the notice requirement is jurisdictional. [00:02:03] Speaker 05: I don't believe that is the holding of MCV. [00:02:06] Speaker 05: MCV discusses the Iowa State University Research Foundation case and the D case from the Southern District of Ohio. [00:02:12] Speaker 05: It adopts their reasoning without really discussing it. [00:02:15] Speaker 05: But the point of those cases, as I read them, is to say, [00:02:19] Speaker 05: 256 allows a perspective inventor to bring a claim. [00:02:24] Speaker 05: It's not a holding about whether notice is or is not required. [00:02:28] Speaker 01: And so from our perspective, that's... It does define the claim, right? [00:02:31] Speaker 01: It does tell you what the claim looks like. [00:02:34] Speaker 05: That's correct, Your Honor. [00:02:35] Speaker 01: And you have to have a substantial question of federal patent law in that claim to make the claim. [00:02:42] Speaker 01: Correct, Your Honor. [00:02:43] Speaker 01: And if you don't have that, then you don't have a claim. [00:02:45] Speaker 05: And I believe the substantial question of federal patent law is whether or not Dr. Grandyke is an inventor of the patents that we've alleged in the complaint. [00:02:56] Speaker 01: It could be, but that claim, that issue doesn't seem to be in controversy right now. [00:03:01] Speaker 01: It was not appealed. [00:03:03] Speaker 05: Correct, Your Honor. [00:03:04] Speaker 05: It was not appealed. [00:03:05] Speaker 01: How can it be property before us? [00:03:06] Speaker 01: It hasn't even been appealed. [00:03:09] Speaker 05: Your Honor, as the court's aware, appeals are based on judgments, not opinions or orders. [00:03:13] Speaker 05: And this court in Abbott Labs against Brennan said that if you're going to appeal, that the path of appeal is determined at the time the complaint is filed. [00:03:23] Speaker 05: So when we filed the complaint, we contend we had a well-pleaded patent claim. [00:03:27] Speaker 05: We had a well-pleaded complaint. [00:03:29] Speaker 01: The court dismissed that claim, right? [00:03:33] Speaker 01: You amended your complaint to include a 256-type allegation. [00:03:37] Speaker 01: That's correct. [00:03:38] Speaker 01: the district court dismissed that claim for lack of subject matter jurisdiction, you did not appeal it. [00:03:44] Speaker 01: I view section 256 as that we have no authority to hear your case. [00:03:51] Speaker 05: Without the appeal, Your Honor, or without the notice issue? [00:03:54] Speaker 01: Right now. [00:03:55] Speaker 01: Because you did not appeal that particular issue. [00:03:59] Speaker 01: It's not before the court. [00:04:01] Speaker 01: Now, it could be [00:04:04] Speaker 01: Now I'm not sure I believe this all the way, but it could be that we could hear the case anyway. [00:04:10] Speaker 01: We could extend our jurisdiction to decide the issue or things of that nature. [00:04:16] Speaker 01: But I haven't seen from your side, anything that convinces me that we have subject matter jurisdiction here. [00:04:25] Speaker 05: Your honor, I think that Abbott Labs is directly on point when it says that [00:04:29] Speaker 05: This court has jurisdiction irrespective of what the issues appealed are, irrespective of what's in the district court's order. [00:04:34] Speaker 05: It starts at the beginning of the case. [00:04:36] Speaker 00: So under the other side's view, when the notice of appeal is filed here, nobody would know. [00:04:45] Speaker 00: You may not have decided what issue you want to appeal. [00:04:48] Speaker 00: I mean, I understand their point of view to draw the distinction. [00:04:51] Speaker 00: If you had appealed it, we'd have subject matter jurisdiction. [00:04:54] Speaker 00: But your failure to appeal, and except for the Schwarzkopf case, which seems [00:05:00] Speaker 00: pretty discreet in terms of its things. [00:05:02] Speaker 00: Are there any cases that you're aware of? [00:05:05] Speaker 00: Or on the other side, are there not cases in which we've taken up only issues that are outside of our jurisdiction because of early existence of a patent issue? [00:05:16] Speaker 05: I think Abbott is that case, Your Honor. [00:05:18] Speaker 05: The appellant in that case abandoned all of the patent claims, all the claims that would have given this court subject matter jurisdiction. [00:05:25] Speaker 05: and the court said it doesn't matter, that it's still allowed to proceed with the state claims. [00:05:31] Speaker 00: So how do you get around Schwarzkopf? [00:05:34] Speaker 00: You have to say that's unique. [00:05:36] Speaker 05: As we said in our response brief on the jurisdictional issue, I think that that fits into a discrete subset of cases where a district court [00:05:45] Speaker 05: either dismisses a patent claim without prejudice before entering a final judgment, or the appellant, the plaintiff, amends the complaint under Civil Rule 41 to take the patent claim out of the case. [00:05:58] Speaker 05: Here, the district court's decision actually, page 19 of the appendix, the district court says it's dismissing all of our claims with prejudice, and we were not given the opportunity to amend. [00:06:07] Speaker 05: We were not given, so unlike Schwarzkopf, where there's this affirmative action that [00:06:13] Speaker 05: is essentially acquiescence that says, well, I don't care about the patent claim. [00:06:18] Speaker 05: Here, we argued against its dismissal. [00:06:20] Speaker 05: That's at 2020 and 2021 of the appendix. [00:06:23] Speaker 05: And the district court never gave us, you know, didn't provide us leave to amend, didn't give us any additional time to fix that. [00:06:32] Speaker 05: And by throwing the entire case out at once, I think that is the dispositive fact. [00:06:35] Speaker 05: And that's what makes Schwarzkopf different. [00:06:38] Speaker 00: Unless my colleagues have questions. [00:06:40] Speaker 02: Just one more. [00:06:41] Speaker 02: On the well-pleaded complaint, what is the relationship between having a well-pleaded patent claim and a complaint versus having subject matter jurisdiction of the district court over that claim versus stating a claim on which relief could be granted? [00:06:59] Speaker 02: That is, the district court shot your claim down under 12B1 and 12B6, I think, but yet you're still maintaining that it was a well-plead complaint. [00:07:09] Speaker 02: How could that be? [00:07:12] Speaker 05: Your Honor, 12B1 dismissals, I think, encompass more than just the well-pleaded complaint. [00:07:16] Speaker 05: There's also the issue of standing that would go into 12B1. [00:07:19] Speaker 05: I don't see a meaningful way in the law to distinguish between an appeal based on a standing issue versus an appeal based on [00:07:27] Speaker 05: the well-pleading complaint rule. [00:07:28] Speaker 05: This is unlike the cases that my friends on the other side have cited, where there's this transient or insubstantial patent claim, because those claims, if you look down the rabbit hole, the published opinions on that are only about allegations of ownership. [00:07:41] Speaker 05: And there's no dispute, I think Keranetics has even agreed, essentially, that Dr. Van Dyke would have stated a claim for the 095 patent, but for [00:07:49] Speaker 05: the failure to allege notice. [00:07:52] Speaker 05: I don't see that there is any meaningful distinction that this court should hear both types of those appeals, even if we are not contesting the district court's patent decision. [00:08:04] Speaker 05: Because I think, again, this court has already determined that the path of appeal is determined at the time the complaint is filed. [00:08:13] Speaker 05: OK, let's move on to... Yeah, if there are no further questions, I'll move to the substantive issues in the order in which we brief them. [00:08:20] Speaker 05: First, I'd like to talk about the unfair trade practices claim. [00:08:23] Speaker 05: The district court erred when it dismissed that claim. [00:08:25] Speaker 05: Its opinion essentially holds that Dr. Van Dyke failed to state a claim under North Carolina General Statute 75-1.1 because he didn't allege a tortious interference with contract claim to support that. [00:08:37] Speaker 05: That's directly contrary to law from the Supreme Court of North Carolina, which has construed this statute to apply to any oppressive, immoral, unscrupulous, unethical conduct. [00:08:48] Speaker 00: The time is short, obviously. [00:08:50] Speaker 00: Your allegations with respect to the employment agreement? [00:08:53] Speaker 05: Yes, Your Honor. [00:08:55] Speaker 00: When you look at the employment agreement, and your friend does raise this, besides the fact that it seems maximum return seems a little ambiguous. [00:09:04] Speaker 00: But there's a provision in that agreement that says that the other side, the university, and finally the university president, I believe, is going to decide any dispute that arises between anything and everything dealing with the employment agreement. [00:09:25] Speaker 00: isn't why would there be any authority or jurisdiction in the court to adjudicate those claims if it says, and the president's decision is binding on all parties, in the case of a difference of opinion on the division of proceeds or other provisions of this policy, they have final say on that. [00:09:45] Speaker 00: So how is that reviewable under any of them? [00:09:47] Speaker 05: I think that the dispute we've raised here, the discrete issue we've raised here falls outside of that language. [00:09:53] Speaker 05: This isn't a dispute about the division of proceeds. [00:09:55] Speaker 05: I don't think anybody is contesting that Dr. Van Dyke has a 46th split. [00:09:59] Speaker 00: Or other provisions of this policy. [00:10:01] Speaker 00: I thought maybe you're right. [00:10:03] Speaker 00: It's not about division of proceeds because you never got any proceeds. [00:10:06] Speaker 00: But it is about provisions of this policy. [00:10:09] Speaker 00: Wasn't the claim predicated on this word maximum return, and they feel to live up to their obligation to provide maximum return for Mr. Van Dyke, Dr. Van Dyke? [00:10:21] Speaker 05: I still don't think that that's a difference of opinion. [00:10:23] Speaker 05: As White Forest argues, there are issues in the policy about what does the university get to decide versus how does the university get to balance its competing interests. [00:10:35] Speaker 05: I think that's where the [00:10:36] Speaker 05: the president or his appointees discretion would come in. [00:10:40] Speaker 00: What's the claim here that they didn't collect the money under the license agreement? [00:10:44] Speaker 05: The claim is that Wake Forest has not taken reasonable efforts or best efforts to enforce the maximum financial or to provide financial return of any kind for Dr. Van Dyke. [00:10:54] Speaker 00: Well, they have a difference of opinion with respect to the provision that you just referred to about taking maximum efforts to achieve maximum return or whatever. [00:11:04] Speaker 00: There's a difference of opinion on that. [00:11:06] Speaker 00: And under my read of the agreement, the president's decision is binding on all parties. [00:11:13] Speaker 05: Your Honor, I don't know that there is a difference of opinion on that because I've never seen anyone from the other side contest that there's been a breach. [00:11:19] Speaker 05: There's not been any. [00:11:20] Speaker 00: I thought that was it. [00:11:21] Speaker 00: What are you complaining? [00:11:21] Speaker 00: What's your complaint with them? [00:11:25] Speaker 05: Their entire argument is just that it is aspirational. [00:11:28] Speaker 00: What's your argument on the employment agreement? [00:11:31] Speaker 05: That Wake Forest has failed to take any steps to enforce the license agreement and to fulfill the maximum financial return language that it's required to do under the employment agreement. [00:11:41] Speaker 01: If there's no numbers attached to that, then why isn't it just aspirational? [00:11:47] Speaker 05: Your Honor, again, North Carolina law has, in the bicycle transit authority case we cite in the blue brief, duty of good faith and fair dealing. [00:11:54] Speaker 05: It's the same as if you engage a realtor to sell your house. [00:11:58] Speaker 05: They have to use reasonable efforts to sell the house. [00:12:00] Speaker 05: And so the distinction is not between, it's not about picking numbers, but it's about, well, are you doing anything or are you doing something reasonable? [00:12:10] Speaker 05: And I think viewing the facts in the light most favorable to Dr. Van Dyke, we've alleged that White Forest hasn't done anything. [00:12:16] Speaker 05: And so it's not about, [00:12:17] Speaker 05: whether Wake Forest has been reasonable, but instead about its failure to do anything to fulfill its contractual obligations. [00:12:24] Speaker 02: Did you push the district court to look away from the employment agreement and look to the license agreement when you were trying to articulate the basis for your employment agreement claim? [00:12:38] Speaker 02: Didn't you say this really isn't about the employment agreement, it's about the license agreement? [00:12:45] Speaker 05: Your Honor, I'm about to go into my rebuttal time. [00:12:47] Speaker 05: May I respond? [00:12:48] Speaker 01: Oh, yeah, of course. [00:12:50] Speaker 05: Judge Stark, I disagree with that characterization. [00:12:52] Speaker 05: We did not say that. [00:12:53] Speaker 05: Instead, we said that the provision in the employment agreement is to give effect. [00:13:00] Speaker 05: The license agreement gives effect to the provision in the employment agreement. [00:13:04] Speaker 05: So it's not trying to recast this as a third party beneficiary claim. [00:13:10] Speaker 05: Instead, what we've argued is that Dr. Van Dyke [00:13:13] Speaker 05: He didn't have any expectation until the university implemented the program. [00:13:17] Speaker 05: This is how we determine whether or not these are the parameters under which he is to be provided maximum financial return. [00:13:23] Speaker 05: But the claim still sounds as violation of the maximum return language on 1245 of the appendix. [00:13:27] Speaker 02: Well, you said at 2077 of the appendix, Wake Forest's argument trying to dismiss the claim is not only strained, it's misplaced in as much as it seems to rely solely on the language of the handbook, the handbook being [00:13:43] Speaker 02: incorporated into the employment agreement, right? [00:13:46] Speaker 02: Yes, Your Honor. [00:13:47] Speaker 02: And then you write, which is not at all the basis of plaintiff's claim. [00:13:51] Speaker 02: Doesn't that mean the handbook and the employment agreement are not at all the basis of your claim? [00:13:55] Speaker 02: It's just the license agreement? [00:13:57] Speaker 05: I disagree, Your Honor. [00:13:58] Speaker 05: If you read 2077 and 2078 in context, the argument that we are making is it's not just about a violation of the handbook. [00:14:05] Speaker 05: It's about what the handbook means in this world where there is a license agreement to provide Dr. Van Dyke with maximum return. [00:14:13] Speaker 05: I'm into my rebuttal time, so the court doesn't have any further questions. [00:14:15] Speaker 00: Thank you. [00:14:18] Speaker 00: OK. [00:14:19] Speaker 00: So are you Mr. Long? [00:14:21] Speaker 00: I am, Your Honor. [00:14:22] Speaker 00: OK. [00:14:22] Speaker 00: And you're going to carry. [00:14:23] Speaker 00: I wanted to address the subject matter jurisdiction first. [00:14:27] Speaker 00: Personally, you never raised it in the first instance. [00:14:30] Speaker 00: It was initiated by the panel, right? [00:14:33] Speaker 06: That's correct, Your Honor. [00:14:34] Speaker 06: We flagged the issue in the brief that the claim had been abandoned, but not the consequences of it. [00:14:39] Speaker 00: OK. [00:14:40] Speaker 00: Now, you would agree, the difference is, if they had appealed it, clearly we would have jurisdiction, even if at the ultimate we were to agree with the district court that they failed on establishing a notice requirement that was necessary for 256. [00:14:56] Speaker 00: We would still have jurisdiction over that. [00:14:58] Speaker 00: So the only dividing line is that they didn't appeal it. [00:15:03] Speaker 06: Not exactly from my perspective, Your Honor. [00:15:05] Speaker 06: This is a unique combination of events. [00:15:08] Speaker 06: You have an inventorship without notice to other inventors, which I read MCV to suggest is subject matter jurisdiction, not cured with an opportunity below. [00:15:16] Speaker 06: And by the way, below, this was their second amended complaint, so there have been many opportunities. [00:15:21] Speaker 06: And then third, it was abandoned and waived on both levels, below and here. [00:15:26] Speaker 06: So this unique combination of events, it may be a case of bad facts making bad law, but this unique combination of events [00:15:32] Speaker 06: where there never was a well-planned complaint, and it was abandoned with an opportunity to address below and above, creates a unique situation where there is at least substantial uncertainty from our perspective as a jurisdiction. [00:15:44] Speaker 06: I don't pretend to have as much clarity on that as I do on the merits. [00:15:47] Speaker 06: I think the merits are crystal clear, in my view. [00:15:49] Speaker 06: But in terms of this issue, I think there's uncertainty. [00:15:52] Speaker 06: I will say that Abbott Labs is different in critical ways. [00:15:56] Speaker 06: There was no dispute there over whether the patent claim was well-planned. [00:16:00] Speaker 06: It was. [00:16:01] Speaker 06: And that's a critical difference. [00:16:02] Speaker 06: And also Abbott involved a host of patent issues, but they didn't remain on appeal after a trial. [00:16:08] Speaker 06: So there was a full trial. [00:16:10] Speaker 06: There's nothing transient at all about Abbott. [00:16:12] Speaker 06: There was a full trial. [00:16:14] Speaker 06: And after that, the patent issues weren't appealed, but they clearly existed. [00:16:17] Speaker 06: And there was no dispute as to their existence. [00:16:19] Speaker 01: So this case really is more like Schwarzkopf, because- Was there an opportunity after trial to bring motions to the court, stating motions for reconsideration and things of that nature? [00:16:31] Speaker 06: In our case? [00:16:33] Speaker 06: I suppose under the district court, women have the opportunity to move to reconsider. [00:16:39] Speaker 06: That didn't occur. [00:16:40] Speaker 06: What occurred in the district court is the motion dismissed was granted. [00:16:44] Speaker 06: But this case started in the state court in Virginia, found its way all the way to North Carolina federal court, second amended complaint in federal court after an initial complaint in state court. [00:16:52] Speaker 06: So they're on their third complaint and still failed to state a claim and still have this jurisdictional defect. [00:16:58] Speaker 00: So your view is that even if they don't appeal it, [00:17:01] Speaker 00: it's fine if there's still no patent issues in the appeal, that the distinction between this case is because of the nature of what they did or didn't do or what the complaint did or didn't do. [00:17:16] Speaker 06: I think that the critical difference is that in Abbott, you had a well-planned complaint. [00:17:22] Speaker 06: Here, you never had an issue that genuinely existed because the fundamental subject matter jurisdiction requirement of notice to the inventors was not alleged. [00:17:30] Speaker 06: So to me, this is analogous to if someone were to assert patent infringement on a non-existent patent. [00:17:38] Speaker 02: But maybe that's putting the answer before the question. [00:17:44] Speaker 02: Wouldn't you acknowledge you can have a well-planned complaint on a claim that ultimately you fail on, right? [00:17:51] Speaker 02: Those are not the same question. [00:17:53] Speaker 02: Correct, Your Honor. [00:17:55] Speaker 02: You can have a well-planned complaint, I think, on a claim that ultimately the district court doesn't have jurisdiction over. [00:18:00] Speaker 02: Couldn't you? [00:18:02] Speaker 02: Or could you point me to something, particularly I think we're in the Fourth Circuit, that says you can't? [00:18:08] Speaker 02: That if the district court finds it lacks subject matter jurisdiction, well then it per se was not a well-pled claim. [00:18:14] Speaker 06: I wish I could, Your Honor. [00:18:16] Speaker 06: I think as we looked at it, there didn't seem to be clarity on this issue. [00:18:20] Speaker 06: And that's why we're somewhat agnostic about it. [00:18:23] Speaker 06: I think the merits were not. [00:18:24] Speaker 06: But on this issue, it seems to be unclear. [00:18:27] Speaker 06: We haven't found a case directly on point. [00:18:29] Speaker 06: My point is that our cases are much closer, and this is a very unique combination of events where below and here on a jurisdictional basis, the claim was nonexistent, abandoned, and never well-planned. [00:18:41] Speaker 02: I just want to make sure you did agree with Judge Prost, I think, that had the appellant tried to appeal the 256 claim to us, we would have jurisdiction. [00:18:51] Speaker 06: I believe so, and I would frankly not have thought to challenge it. [00:18:55] Speaker 00: OK, on the merits, since you're awake for it, you can deal with the employment agreement, right? [00:18:59] Speaker 00: I sure can, Your Honor. [00:19:00] Speaker 00: I think you heard the questions that were raised with your friend with regard to why anything he says about a dispute with regard to the employment agreement is not subject to unilateral control by the university. [00:19:15] Speaker 00: Well, unilateral decision by the university at the end of the day. [00:19:19] Speaker 06: Yes, Your Honor, and they're really [00:19:21] Speaker 06: five reasons why the patent policy doesn't create a contract claim. [00:19:24] Speaker 06: But the question there, I think, was very informing, which is Wake has full discretion in the management of this program under the policy. [00:19:31] Speaker 00: And what did you understand his argument to be with respect to the employment agreement? [00:19:38] Speaker 06: What I understand his argument to be, in reality, as I hear it, is he's trying to indirectly use a policy to enforce a license agreement to which he's not a party or a third party beneficiary. [00:19:49] Speaker 06: In other words, [00:19:50] Speaker 06: trying to take a policy that just talks about the development and implementation of a program, which in fact happened, and use that as a basis to assert claims under a license that he has no rights to enforce because he's not a party or a third party beneficiary under. [00:20:04] Speaker 06: So as I understand it, he's simply claiming that this policy gives him the rights to control a program to trump a license agreement when, in fact, in our view, [00:20:20] Speaker 02: policies that exactly the opposite but he alleges you did absolutely nothing uh... put aside maximized he says he told you you all should be getting money from care and that's and told you repeatedly and you just did nothing to try to collect it and uh... and that harmed him in connection with his employment agreement why is that not at least possible well it's not possible your honor because of one of the plightings and in reality we [00:20:50] Speaker 06: contest that assertion. [00:20:51] Speaker 06: But factually, on the pleadings, it's not plausible because we negotiated, entered into the license agreement, and then Exhibit 4, to his own complaint, shows the preliminary minor royalties that were paid and the proper division of those. [00:21:06] Speaker 06: So my point is that the system was set up, the license was negotiated, initial royalties were paid and provided pursuant to Exhibit 4, Joint Appendix, page 321. [00:21:16] Speaker 00: Well, how does that help you? [00:21:17] Speaker 00: I mean, I thought the problem with the license agreement is that you never enforced it under its terms. [00:21:25] Speaker 00: And his complaint is that he would have gotten a division of the proceeds, and you had an agreement. [00:21:31] Speaker 00: It's not like he's saying you should have a license with them and you didn't. [00:21:34] Speaker 00: You decided to enter into the agreement, and now you're not enforcing an agreement. [00:21:40] Speaker 00: You're letting the money sit there. [00:21:42] Speaker 00: And he would otherwise, I think we would agree, maybe be entitled to a division of the proceeds from that agreement. [00:21:49] Speaker 06: And the question, Your Honor, would be, what is the source of that duty? [00:21:52] Speaker 06: What Judge Eagles did is she analyzed it. [00:21:54] Speaker 06: And as you may recall, originally there was a breach of fiduciary duty claim as well. [00:21:58] Speaker 06: It started against Wake. [00:21:59] Speaker 06: And what the judge found was there was no contractual or legal basis under applicable North Carolina law for his claim. [00:22:07] Speaker 06: So even if the alleged breach of duty [00:22:10] Speaker 06: breach were true, which it's not. [00:22:11] Speaker 06: There was no duty. [00:22:12] Speaker 06: And the reason there was no duty is because the only source that he identified and the one that he conceded was his sole basis below before the district court was the license agreement. [00:22:24] Speaker 06: And now with this new argument of the patent policy to bootstrap it, it doesn't go anywhere in our view for five very simple reasons. [00:22:32] Speaker 06: The first reason is that that's not what it says. [00:22:38] Speaker 06: It doesn't say maximize his personal [00:22:40] Speaker 06: personal financial return. [00:22:43] Speaker 06: It's implemented to provide maximum return for the university and the inventors collectively. [00:22:48] Speaker 06: And that program was established. [00:22:50] Speaker 06: It exists for all inventors, many of them, not just Dr. Vendike. [00:22:54] Speaker 06: And what he's doing is taking a single sentence in the patent policy section of a 115-page employee handbook that doesn't even include the word financial and trying to cobble together a claim that doesn't exist. [00:23:05] Speaker 00: So as you can tell from my other questions, I find this argument has some heft, largely because of this provision that says that it's the president that's going to adjudicate any differences with regard to differences of opinion with regard to the public opinion. [00:23:22] Speaker 00: But the district court didn't rely on that at all. [00:23:25] Speaker 00: Was that an argument you made before her? [00:23:27] Speaker 00: I know you made it in the briefs here. [00:23:29] Speaker 06: I made it in my briefs below. [00:23:30] Speaker 06: The reason the district court didn't address that was because below, [00:23:35] Speaker 06: I was anticipating his arguments, but below, that was not argued. [00:23:38] Speaker 06: As you recall in that brief, the direct quote is, the patent policy is not at all the basis of plaintiff's claim, appendix 2077. [00:23:44] Speaker 06: So the district court didn't have the opportunity to fully vet that, despite me raising the arguments in the brief. [00:23:50] Speaker 06: But your honor's question, I think, was directly right, which is, Wake has the discretion. [00:23:55] Speaker 06: The president has the final say. [00:23:57] Speaker 06: But there's another consequence to that. [00:23:59] Speaker 06: This is an agreement. [00:24:01] Speaker 06: It's a binding dispute resolution process that he didn't engage in. [00:24:05] Speaker 06: So if he thought he had a claim under this, he would have had to pursue that process, and he didn't. [00:24:10] Speaker 06: So not only does Wake have the discretion, but also he didn't engage in the very process that would be a prerequisite for any lawsuit. [00:24:17] Speaker 06: Did the court address this? [00:24:18] Speaker 06: No, Your Honor, because below, this was characterized as solely a license agreement question. [00:24:25] Speaker 00: Your two other gentlemen were supposed to split time. [00:24:29] Speaker 00: I'm sorry. [00:24:31] Speaker 00: No, don't apologize. [00:24:32] Speaker 00: Somebody had to step up on the subject matter jurisdiction. [00:24:35] Speaker 00: So I'd like to truncate, if we can, the other two periods of time to two and a half to three minutes for each other side, if you need it. [00:24:43] Speaker 00: So just to try to even it out. [00:24:46] Speaker 00: We have questions, obviously. [00:24:47] Speaker 00: That will be explained. [00:24:48] Speaker 00: Yes, Your Honor. [00:24:49] Speaker 00: Thank you. [00:24:49] Speaker 06: Thank you, Your Honor. [00:24:53] Speaker 00: So Mr. Stafford, you represent for two labs. [00:24:57] Speaker 04: Yes, Your Honor, that's correct. [00:24:58] Speaker 04: Good morning. [00:25:00] Speaker 00: Do you have anything to add to what we heard today? [00:25:02] Speaker 04: Yes, Your Honor. [00:25:04] Speaker 04: I would contend that the district court correctly held that Dr. Van Dyke failed to state a plausible claim of relief for trade secret misappropriation. [00:25:12] Speaker 04: That's the sole claim pled against my client, Virtue Labs. [00:25:15] Speaker 04: And so if I may, I'd like the opportunity to briefly explain why that claim was not adequately pled. [00:25:20] Speaker 01: Was that claim affected by the settlement agreement? [00:25:27] Speaker 04: Yes, Your Honor. [00:25:28] Speaker 04: That's one of the reasons that the claim failed, but the principal reasons that the district court held that Dr. Vendike failed to see the plausible claim for their three principal reasons. [00:25:36] Speaker 04: First, Dr. Van Dyke is not the owner of the alleged trade secret information at issue, so he lacks standing to assert the claim under the North Carolina Trade Secret Protection Act. [00:25:44] Speaker 04: Second principal reason is that Dr. Van Dyke failed to adequately identify the alleged trade secret information at issue or how it was misappropriated under the North Carolina Supreme Court decision in Craywood v. Manley. [00:25:55] Speaker 04: And third, Dr. Van Dyke failed to adequately identify the reasonable measures that he took to guard the secrecy of the alleged information. [00:26:02] Speaker 04: Because I have a limited amount of time, I'd like to focus on what I see as the principal reason that the claim fails, which is that Dr. Van Dyke failed to adequately identify as alleged trade secrets. [00:26:12] Speaker 04: The core problem with Dr. Van Dyke's fleeting is that it stacked ambiguity on top of ambiguity, such that it was impossible for either the district court or the defendants to discern which of these processes was owned by Van Dyke as opposed to Wake Forest, because you're again in the second... But the standard is pretty low, plausibility. [00:26:29] Speaker 04: You're correct. [00:26:29] Speaker 04: That's correct, Your Honor. [00:26:30] Speaker 04: The standard is low. [00:26:32] Speaker 04: Dr. Van Dyke failed to meet it here. [00:26:34] Speaker 04: The Supreme Court in Craywick held that a plaintiff must identify his alleged trade secret information with specific facts sufficient to put the defendants on notice of what they allegedly misappropriated. [00:26:44] Speaker 04: And that didn't occur here, because as we sit here today, we don't know what Dr. Van Dyke owned, first what we forest owners. [00:26:49] Speaker 04: We don't know which of these processes is even a secret. [00:26:52] Speaker 04: And we don't know which process was allegedly misappropriated by Virtue Labs. [00:26:56] Speaker 04: For all these reasons, we respectfully request that the court affirm the district court's decision. [00:26:59] Speaker 04: I see my time has expired. [00:27:01] Speaker 04: I'm happy to answer any questions. [00:27:03] Speaker 04: Thank you. [00:27:09] Speaker 03: May it please the court, James Derrick on behalf of the Karenetics Appellees. [00:27:13] Speaker 03: Wake Forest and VirtuLab's arguments also apply to the Karenetics Appellees, so I'd like to focus on the claim that's pled just against Karenetics for unfair and deceptive trade practices. [00:27:25] Speaker 03: This claim was properly dismissed by the district court because Dr. Van Dyke failed to allege the elements of tortious interference. [00:27:32] Speaker 03: And earlier today, Dr. Van Dyke began by criticizing the decision to focus on tortious interference. [00:27:38] Speaker 03: But he had two opportunities to brief this claim below. [00:27:40] Speaker 03: The court actually ordered supplemental briefing on this exact claim. [00:27:44] Speaker 03: And despite those opportunities, the only case law he presented was for tortious interference to contract. [00:27:50] Speaker 03: So the district court analyzed the claim as he presented it. [00:27:53] Speaker 03: And this court should not expand it now to something broader than tortious interference. [00:27:57] Speaker 03: But at the end of the day, all he's actually alleged that Karen Enix has done [00:28:01] Speaker 03: is not make payments owed under a license agreement. [00:28:04] Speaker 03: And that is a guard variety breach of contract principle. [00:28:08] Speaker 03: And North Carolina courts are very clear that a breach of contract, even intentional one, is not sufficient to state a claim for unfair and deceptive trade practices. [00:28:17] Speaker 03: Unless a plaintiff can show substantial aggravating circumstances, which is a very high bar. [00:28:22] Speaker 03: It's generally things like forgery, or destruction of documents, or affirmative misrepresentations. [00:28:28] Speaker 03: That's not what's alleged here. [00:28:30] Speaker 03: Again, it's a breach of contract that's alleged by Karenetics that indirectly impacted Dr. Van Dyke, which is not a claim for unfair and deceptive trade practices under North Carolina law. [00:28:42] Speaker 03: And there's a good reason for that. [00:28:43] Speaker 03: In fact, really the only allegations in the complaint [00:28:47] Speaker 03: aside from breach of contract, relates to the theory about corporate reformation, essentially saying that these parties change names. [00:28:55] Speaker 03: But that's something that doesn't even fall within the purview of the act here, which only applies to the day-to-day services or activities of a company. [00:29:02] Speaker 03: And I see that I'm running out of time here. [00:29:05] Speaker 03: Happy to answer any questions, of course, but we'll rest on the briefing as the remaining issues, except to say that Judge Eagles here applied North Carolina law appropriately when she dismissed the claims, and this court should affirm. [00:29:21] Speaker 00: We'll give you three minutes on the phone. [00:29:25] Speaker 05: Thank you, Your Honor. [00:29:25] Speaker 05: I have a lot to respond to. [00:29:28] Speaker 05: First off, I want to start by talking about the jurisdictional issue. [00:29:31] Speaker 05: We point to the cases on page six of our supplemental response brief, or supplemental brief, Papilodardo case and the Zenith case. [00:29:37] Speaker 05: This court there considers claims that are essentially 256 claims, particularly in the Papilodardo case, where the notice issue, it's not pleaded under 256. [00:29:46] Speaker 05: It's pleaded as a DAC judgment claim. [00:29:48] Speaker 05: And so the court considers the state [00:29:50] Speaker 05: claim says it has appellate jurisdiction. [00:29:52] Speaker 05: There's been representations made that we had the opportunity to cure our deficiency. [00:29:56] Speaker 05: That's simply not true. [00:29:57] Speaker 05: Judge Eagles never gave us leave to amend the completing. [00:30:00] Speaker 05: That's a statement from our briefing saying that if we need to provide notice, we'll file a supplemental pleading. [00:30:05] Speaker 05: We were never asked to file a supplemental pleading. [00:30:08] Speaker 05: And even though this was the second amended complaint, it was the first complaint filed that included the 256 claim. [00:30:16] Speaker 05: Finally, this is not a transient claim. [00:30:18] Speaker 05: Again, the published authority on the transience issue that my friends on the other side have cited relates exclusively to patent ownership. [00:30:25] Speaker 05: This is not about that. [00:30:26] Speaker 05: Turning to the unfair trade practices claim, I think that Karenetics has misstated North Carolina law. [00:30:33] Speaker 05: It's not about expanding public policy. [00:30:35] Speaker 05: The cases they cite in the red brief on that issue are about expanding the common law. [00:30:39] Speaker 05: This is a statute, and the Supreme Court of North Carolina has tied it to Section 15 of the Federal Trade Commission Act. [00:30:44] Speaker 05: Supreme Court of the United States has said that's supposed to be defined by whatever comes up in business. [00:30:50] Speaker 05: Again, I'd note that the district court did not address that argument. [00:30:55] Speaker 05: I also heard Mr. Derrick to be suggesting that the corporate transactions piece was not in effect in commerce. [00:31:01] Speaker 05: That argument's been waived. [00:31:02] Speaker 05: It's not been raised or made anywhere. [00:31:05] Speaker 05: So again, on the unfair trade practices piece, [00:31:08] Speaker 05: We've not alleged a simple breach of contract by Kirinettiks. [00:31:11] Speaker 05: This is why tortious interference with contract is the closest analog. [00:31:17] Speaker 05: Nobody disputes Wake Forest has the obligation to pay Dr. Van Dyke. [00:31:21] Speaker 05: It's never been able to fulfill that obligation because Kirinettiks, as we've alleged at pages 11, 49 through 54 of the appendix, Kirinettiks has withheld payment purposefully to harm Dr. Van Dyke. [00:31:33] Speaker 05: That is an unfair trade practice, because it's an inequitable assertion of power, even if it doesn't cause a breach of contract by Wake Forest, because Wake Forest never has the chance. [00:31:44] Speaker 05: With respect to the employment agreement contract, I believe Wake Forest has waived the argument that you identified, Judge Prost. [00:31:53] Speaker 05: I don't see where Wake Forest has ever [00:31:55] Speaker 05: prevailed on the dispute resolution proceeding provision. [00:31:59] Speaker 05: Instead, it's just said that the university has discretion to implement. [00:32:02] Speaker 05: And as we've alleged, the license agreement is the implementation of the program as it relates to Dr. Van Dyke. [00:32:09] Speaker 05: Finally, with the Trade Secrets Protection Act claim, I direct the court to page 1139, paragraph 67. [00:32:15] Speaker 05: There we've identified seven discrete aspects of our trade secrets. [00:32:19] Speaker 05: Dr. Van Dyke only assigned inventions and discoveries to Wake Forest. [00:32:23] Speaker 05: He didn't assign processes, what have you. [00:32:27] Speaker 05: Viewing those facts in the light most favorable to Dr. Van Dyke, I think we've done enough to nudge this across the line from conceivable to plausible. [00:32:40] Speaker 05: And the court should view those facts in the light most favorable to Dr. Van Dyke and conclude that these inventions and discoveries, whatever that means, that's a question of fact for fact discovery. [00:32:53] Speaker 00: We ask that the court reverse and remand.