Addressing for the first time the issue of whether a party is entitled to a jury trial for equitable claims, where the party has a right to a jury trial based on other (legal) claims, the U.S. Court of Appeals for the Federal Circuit reversed the district court, holding that when there are common factual issues underlying the equitable and legal claims, both claims should be tried to a jury. Frank T. Shum v. Intel Corp., LightLogic Inc. and Jean-Marc Verdiell., Case No. 06-1249 (August 24, 2007) (Lourie, J.; Friedman, Sr. J., dissenting).
The plaintiff, Frank Shum, is an optical engineer. In 1996, Shum formed an optoelectronic company called Radiance Design. A year later, Shum and defendant Jean-Marc Verdiell, incorporated Radiance. Shum filed a patent application entitled "Optoelectronic Assembly and Method of Making the Same" on behalf of Radiance, naming himself as the sole inventor. Verdiell later encouraged Shum to let the patent go abandoned. The relationship between Shum and Verdiell soured, and Radiance was dissolved. The following day, Verdiell filed a patent application on behalf of LightLogic, a company that Verdiell had previously formed. This application, which Shum claims is virtually identical to Shum’s abandoned patent application and others claiming similar subject matter, matured into several patents.
LightLogic and all its intellectual property was acquired in 2001 by Intel. Shum learned of the acquisition and sued defendants in state court for fraud, unjust enrichment and other tort claims. The case was removed to federal court, and Shum added a cause of action for correction of inventorship under 35 U.S.C. §256.
The district court bifurcated the inventorship issue from the state law claims and ordered the inventorship issue be tried to the court before the state law claims were tried to a jury. Shum lost the inventorship issue, and the court granted defendant’s summary judgment on the remaining claims.
Shum appealed, arguing that under the 1959 Supreme Court Beacon Theaters decision, the district court’s decision to conduct a bench trial on the inventorship issue prior to a jury trial on the state law claims violated his constitutional right to a jury. Shum argued that the inventorship claim and state claims were factually "inextricably intertwined" and that therefore a jury trial should have been conducted before the bench trial.
In a 2-1 decision, the Federal Circuit noted that an action to correct inventorship under §256, standing alone, is an equitable claim to which there is no right to a jury trial. The decision also noted that the state law fraud claims, standing alone, are legal claims to which a right to a jury trial attaches. The Court then proceeded to analyze the factual predicate for both the state law fraud claim and §256 inventorship claim, finding substantial commonality. The majority concluded that "given the co-pendency of the asserted fraud claim, and common factual issues, a jury should determine the facts regarding inventorship." The case was remanded for a jury trial.
Judge Friedman dissented, stating that unlike the situation in Beacon Theaters—in which the district court determined that it would try an antitrust issue, which otherwise would have been tried to a jury—the district court here properly determined to try the §256 inventorship claim first. Judge Friedman saw the jury trial issue in this case as more closely aligned with the 1962 Supreme Court Dairy Queen decision, a case in which the Supreme Court distinguished Beacon Theaters and its Markman decision, in which the Supreme Court (without even a mention of Beacon Theaters) ruled that it was proper for a court to determine the legal issue of claim construction in advance of a jury trial on infringement and/or validity.
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