This case involves a dispute over a policy of the Regents of the University of California (the University) which provides that, as a condition of employment by the University, an employee must assign to the University any of the employee's inventions and patents conceived in the course of employment; as consideration for the assignment, the employee will get a percentage of those net royalties and fees received by the University for a patented invention.
When Associate Professor Douglas V. Shaw was hired by the University to teach and do research, the patent policy specified that employees would get 50 percent of the net royalties and fees received from their inventions. The University later revised the policy to reduce this percentage. When the University announced it would pay Shaw the reduced percentage for his patented inventions conceived after the policy change, Shaw brought this action, seeking a declaration that he is entitled to 50 percent of the net royalties and fees.
The University appeals from the judgment entered in Shaw's favor following an order granting summary judgment on his complaint for declaratory relief. According to the University, the patent policy in effect at the time Shaw was hired was not part of the patent agreement signed by Shaw as a condition of his employment; rather, it is a personnel policy that the University may modify unilaterally at any time.
We shall affirm the judgment. As we shall explain, the patent agreement between Shaw and the University is a contract which incorporates the terms of the patent policy in effect at the time Shaw was hired. Although the University is entitled to revise its patent policy, it cannot do so with respect to Shaw because of its written agreement with him, specifying that he would receive 50 percent of the net royalties and fees from his inventions patented by the University.
FACTS AND PROCEDURAL BACKGROUND
Shaw was hired in 1986 to teach and do research in the department of pomology at the University of California, Davis. Pomology is the science of the cultivation of fruits. In recent years, Shaw has concentrated his research on the genetics of strawberries.
At the time he became a member of the University faculty, Shaw was asked to sign a single-page, two-sided University form document entitled
The Patent Policy begins on one side of the document and continues onto the next side. It states that the University, "in administering intellectual property rights for public benefit, desire[s] to encourage and assist members of the faculties, employees, and others associated with the University in the use of the patent system with respect to their discoveries and inventions in a manner that is equitable to all parties involved."
The Patent Policy provides that "[a]n agreement to assign inventions and patents to the [University] ... shall be mandatory for all employees, for persons not employed by the University but who use University research facilities and for those who receive grant or contract funds through the University." It also provides that exceptions to this assignment requirement may be authorized when "the mission of the University is better served" thereby.
As to those who have agreed to assign their inventions to the University, the Patent Policy states that "[t]he [University] agree[s], for and in consideration of said assignment of patent rights, to pay annually to the named inventor(s), the inventor(s)' heirs, successors, or assigns 50 percent of the net royalties and fees received by [the University]."
The patent agreement obligates the signatory to inform the University promptly of "every possibly patentable device, process, plant or product, hereinafter referred to as `invention,'" which the signatory may conceive in the course of University employment. Should the University deem the invention patentable, the signatory promises thereafter "to assign to University all rights, title and interest" in the invention.
Directly under the title of the patent agreement appear the words: "Please read the Patent Policy on reverse side and above." The first paragraphs of the patent agreement state: "This agreement is made by me with The Regents of the University of California, a corporation, hereinafter called `University,' in part consideration of my employment, and of wages and/or salary to be paid to me during any period of my employment, by University, and/or my utilization of University research facilities. [¶] By execution of this agreement, I understand I am not waiving any rights to a percentage of royalty payments received by University, as set forth in University Policy Regarding Patents, hereinafter called `Policy.'"
At or near the time he assumed his position at the University, Shaw also received a pamphlet from the University entitled "Patent Practices at the University of California." It summarizes the Patent Policy and states that, in exchange for their agreement to assign patents to the University, employees shall receive 50 percent of net royalties and fees received by the University for their inventions.
The Revised Patent Policy and Shaw's Inventions
In 1989, the University announced its intention to revise the Patent Policy to reduce the percentage of royalties it would pay to inventors.
In written memoranda to the University, Shaw objected to the application of a revised Patent Policy to individuals who, like him, had signed the patent agreement under the then existing Patent Policy.
In April 1990, the University officially revised its Patent Policy to reduce an inventor's share of net royalties and fees from a flat rate of 50 percent to a sliding scale in which the inventor would receive 50 percent of the first $100,000, 35 percent of the next $400,000, and 20 percent of any additional net royalties and fees. The University's president announced that the creation of this sliding scale "responds to internal criticisms of the present system and to concerns that — particularly in a public institution — the goal of such a policy should be to provide support and incentives for further productive research rather than the highest earnings for individual inventors." In the University's view, its 1990 Patent Policy increases the percentage of royalties that can be used to fund additional research and "is much more in line with what most of the other universities in the states do."
In December 1992, Shaw (as coinventor with two other University professors) disclosed to the University his invention of six new strawberry cultivars. The University informed Shaw that these inventions "will be governed by the UC Patent Policy at the time of the disclosure," i.e., by the 1990 Patent Policy which calculates an inventor's share of net royalties on declining sliding scale.
Shaw objected and argued the University should instead "meet its obligation under the Patent Agreement that [Shaw] signed" to pay inventors 50 percent of the net royalties. The University declined, asserting that the Patent Policy is not a contract but merely a "personnel policy grounded in the employment relationship" and the University "may prospectively change its
The University directed Shaw to execute an assignment of his interest in the patents of the six strawberry cultivars. The assignment provided that net royalties for the new plants would be divided in accordance with the "benefits stipulated for the inventor in the `University of California Patent Policy' revised effective April 16, 1990, which document is made by reference a part hereof and in fulfillment of the Assignor's Patent Agreement with the University of California...." When Shaw refused to sign the assignment, the University agreed to modify its terms to provide that consideration for the assignment includes a share of net royalties in accordance with "the applicable University of California Patent Policy," so as to preserve the parties' respective positions on what policy should apply.
Shaw then brought this action, seeking a declaration that, (1) in consideration for his execution of the patent agreement, the University agreed to distribute to him 50 percent of the net royalties and fees accruing from any invention he might conceive, and (2) the University may not unilaterally modify the terms of the patent agreement without Shaw's written consent.
Shaw moved for summary judgment on the grounds that (1) absent the patent agreement, the University has no right or interest in any of Shaw's inventions; (2) in the text of the patent agreement, Shaw expressly reserves his rights to "a percentage of royalty payments received by University, as set forth in the University Policy Regarding Patents"; (3) the University may not unilaterally modify the patent agreement's terms without his consent; and (4) Shaw continues to own those patent rights which he did not waive, i.e., 50 percent of the net royalties and fees with respect to any invention.
In opposition to Shaw's motion, the University did not challenge Shaw's statement of undisputed facts; it opted instead to supplement the record with further undisputed facts of its own. The University also argued in pertinent part that (1) because Shaw's employment is governed by statute, not contract, he can maintain no contract action against the University; (2) the "Patent Policy" in effect at the time Shaw signed the patent agreement is not a contract and thus may be changed unilaterally by the University, so long as Shaw received notice of the new policy and a reasonable time within which to decide whether to continue under the new policy or to seek different employment; (3) the patent agreement operates as a complete transfer of Shaw's rights in all as-yet-uninvented plants or processes to the University; and (4) the University has done nothing to modify the patent agreement.
The trial court entered judgment in favor of Shaw, and this appeal ensued.
To support this argument, the University relies principally on the decision in Bunnett v. Regents of University of California (1995) 35 Cal.App.4th 843 [41 Cal.Rptr.2d 567], which was issued after the entry of judgment in this case.
As a general proposition, mandamus is not an appropriate remedy for enforcing a contractual obligation against a public entity. (California Teachers Assn. v. Governing Board (1984) 161 Cal.App.3d 393, 399 [207 Cal.Rptr. 659]; Wenzler v. Municipal Court (1965) 235 Cal.App.2d 128, 132 [45 Cal.Rptr. 54].) Thus, the trial court correctly applied contract principles in resolving the parties' dispute over the patent agreement.
A motion for summary judgment "shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).)
The University does not contend that there are material issues of triable fact. Rather, the parties' chief disagreement concerns the legal effect of the patent agreement. This poses a legal question which we consider de novo on appeal. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865 [44 Cal.Rptr. 767, 402 P.2d 839] [where the interpretation of written instrument does not turn on the credibility of extrinsic evidence, it poses a pure question of law].)
The clear language of the patent agreement does not, as the University argues, effect a contemporaneous and "complete transfer of plaintiff's rights to the University." Accordingly, the University's reliance upon cases in which the parties' agreement so provides is misplaced. (E.g., Cubic Corp. v. Marty (1986) 185 Cal.App.3d 438, 444, 448 [229 Cal.Rptr. 828] [invention agreement provided that all inventions by employee "shall be the sole and exclusive property" of the employer] and Treu v. Garrett Corp. (1968) 264 Cal.App.2d 432, 433 [70 Cal.Rptr. 284] [same].)
We turn now to the critical issue: Does the patent agreement entitle Shaw to 50 percent of the net royalties of any invention that he may create and thereafter assign to the University?
It is undisputed that the text of the patent agreement itself contains no provision identifying what percentage, if any, of net royalties shall be paid to an employee who creates a patentable invention in the course of University employment. It also is undisputed that the Patent Policy, which is printed on the same document as the patent agreement signed by Shaw, contains an agreement by the University to pay 50 percent of the net royalties to an inventor who has assigned an invention to the University.
Shaw contends that the patent agreement incorporates the Patent Policy and its 50 percent royalty provision. We agree.
The contract need not recite that it "incorporates" another document, so long as it "guide[s] the reader to the incorporated document." (Compare Baker v. Aubry, supra, 216 Cal. App.3d at p. 1264 with Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, 644 [223 Cal.Rptr. 838].)
Our review of the patent agreement persuades us that, when Shaw signed the agreement, the parties intended it to incorporate the Patent Policy. The patent agreement (1) directs Shaw to "Please read the Patent Policy on reverse side and above," and (2) states that, in signing the patent agreement, Shaw is "not waiving any rights to a percentage of royalty payments received by University, as set forth in University Policy Regarding Patents[.]" (Italics added.)
Not only is reference to the Patent Policy "`clear and unequivocal,'" and its terms "`easily available to the contracting parties'" (Williams Constr. Co. v. Standard-Pacific Corp., supra, 254 Cal. App.2d at p. 454), the language we have italicized above expressly defines the "percentage of royalty payments received by [the] University" that Shaw may expect to receive on his invention as that which is "set forth in" the Patent Policy, i.e., 50 percent of net royalties and fees.
We are unconvinced by the University's assertion that it "did not intend to incorporate the Patent Policy as part of the Patent Agreement."
In the trial court, the University argued that it is not bound by the terms of the pre-1990 Patent Policy because that document is not a contract. Documents which are not contracts may be incorporated into a contract, however. (See, e.g., Baker v. Aubry, supra, 216 Cal. App.3d at pp. 1262, 1264 [document deemed incorporated was New York Stock Exchange Rules] and King v. Larsen Realty, Inc., supra, 121 Cal. App.3d at pp. 353, 357 [documents deemed incorporated were bylaws of realtors' association and arbitration manual].)
In each of the two cases upon which the University relied for this proposition, the public employee bringing a contract action had no written contract with his public employer. (Kemmerer v. County of Fresno (1988) 200 Cal.App.3d 1426, 1431-1432 [246 Cal.Rptr. 609] [civil service employee had no contract of employment which included an implied covenant of good faith and fair dealing]; Gabe v. County of Clark (9th Cir.1983) 701 F.2d 102, 103 [county policy which changed employee's status to "at will" cannot affect the status of her employment without her knowledge].)
When a public employer chooses instead to enter into a written contract with its employee (assuming the contract is not contrary to public policy), it cannot later deny the employee the means to enforce that agreement.
In sum, we conclude that the patent agreement signed by Shaw incorporates the Patent Policy, and the University may not refuse to allocate the 50 percent net royalty payments attributable to Shaw's inventions in accordance with the terms of the document.
The judgment is affirmed. The University shall pay Shaw's costs on appeal.
Sims, Acting P.J., and Sparks, J.,
Appellant's petition for review by the Supreme Court was denied December 23, 1997.