Q: If Sam invents a lucrative product while working for Jane at ABC Corp., who has dibs on the invention and its proceeds? Sam, Jane and/or ABC?
A: All of the above, a federal judge has ruled.
And on that basis, CTS Cement Manufacturing Corp. has successfully vanquished its last patent infringement claim by arch-rival Ultimax Cement Corp. after 10 long years.
Putting an end to patent litigation that began in 2002, U.S. District Court Judge Andrew J. Guilford ruled April 20 that CTS founder and chairman Edward K. Rice has a “shop right” to the patent that Ultimax had accused him of infringing.
CTS Cement, founded in the 1960s, is the largest manufacturer of specialty fast-setting hydraulic cement and shrinkage compensating cement.
A shop right, under patent law, is an implied license under which a firm may use a patented invention that was developed by an employee who was using the firm’s equipment or inventing at its expense.
Both California-based companies manufacture a rapid-hardening, high-strength cement used for repair applications on highways, bridges, runways, sidewalks, and other major structures.
The ruling brought an end to a long and painful case involving two men who were once mentor and protégé.
The relationship between Rice and Ultimax owner Hassan Kunbargi dates to 1984, when Kunbargi was a graduate student at the University of California- Los Angeles. There, Kunbargi began experimenting with cement chemistry. Rice became Kunbargi’s mentor and sought an adjunct faculty position at UCLA so that he could serve as Kunbargi’s advisor.
In late 1985, Kunbargi began to work for Rice’s company, CTS, which had been founded in the 1960s. (Rice, who holds 19 patents in concrete and building technology, had founded two other companies before that.) In addition, Kunbargi and Rice worked as independent contractors for another company, Fibermesh Inc.
Inventions and Patents
In 1989, Kunbargi left Rice’s company after showing him a new invention—“Very Early Setting High Strength Early Cement”—that Kunbargi would patent a year later. Kunbargi also patented two other inventions.
In June 2002, Ultimax, Kunbargi, Heartland Cement Sales Company and the K.A. Group sued CTS for infringement of 47 claims involving the three patents, misappropriation of trade secrets, and several business torts.
Following a lengthy legal battle, CTS successfully prevailed on all but one claim involving the initial patent. That claim went to two jury trials in 2011. The first resulted in a mistrial because the judge became ill.
The second trial left a jury divided on several significant issues, which Guilford’s ruling last month finally resolved.
Rights and Delays
Guilford ruled April 20 that CTS had an irrevocable and royalty-free right to use the patented invention, because evidence showed that Kunbargi had used CTS’s facilities, resources, and personnel to develop it.
The judge ruled that that “shop right” gave CTS and Rice a free license to practice the patent for the duration of its existence.
“CTS is vindicated by the Court’s finding that we have shop rights in this alleged invention,” said CTS president Jerry Hoyle. “The innovations in cement technology that Mr. Kunbargi claimed to have pioneered would not have been possible without the financial and scientific resources that CTS provided him while he was working for CTS.”
Added Eric Bescher, Ph.D., Vice President of Technology for CTS: “The Ultimax patents, which clearly refer to calcium sulfoaluminate clinker blends with Portland Cement, were not infringed in the first place. Rapid Set contains no Portland Cement.”
Ultimax did not respond Wednesday (May 2) to a request for comment.