February 18, 1999
To: Dr. Nelson
From: Gerald Biby

RE: Meeting without Dr. Helmuth's Office regarding Corn Card International

The Board of Regents specifically created the Industrial Agricultural Products Center (IAPC) on May 6, 1988. " . . . to increase the economic base of Nebraska and the nation by increasing the number and types of industrial/non-food uses of agricultural commodities." The IAPC has a particular responsibility for the commercial exploitation of inventions derived from research and to ensure that we carry out commercialization to the benefit of the inventors, their Departments and to the University itself.

Successful collaborations demand realistic assessments of the aims and objectives of the participants and flexible approaches to establishing the bases for cooperation. Against a strong background of individual relationships with companies, the IAPC has positioned itself in this process, to encourage new forms of collaboration with industry and other external agencies and to explore the range of possible benefits that may accrue to industry, that will further enhance the University's current standing in research and teaching.

It is within this framework that the following research activities were achieved in the recent past. We negotiated research agreements directly (by the IAPC) with companies and typically included a fee for the research and a residual fee to be paid to the University if the research project was successful.
 

September 1996	Peak Labs	Syracuse, NE	$69,000	$0.75kg.
February 1997	Banner Pharma Caps	High Point, SC	$38,000	2.0% sales
March 1997	Natl. Corn Growers	St. Louis, MO	None	50.0%a
November 1997	MCC Technologies	Omaha, NE	$40,000	3.0% sales
September 1997	Bio-Plastics	Denver, CO	$2,500	5.0% sales
October 1997	Corn Card Inter.	Central City, NE	None	$0.15kg.
December 1997	Bruning Grain	Bruning, NE	None	$0.12 gal.
December 1998	GemPlus	France	Pending	Pendingb

a= Royalty payment is 50% of any royalties paid to the National Corn Growers Association by others.
b =Research agreement was given to Turan on January 5, 1999

The research proposal submitted to the University regarding GemPlus was handled in the same manner as all research agreements (with a residual fee) since September 1996. Turan was contacted about the project, then we asked him to draft and returned the research and royalty agreement to IAPC for signatures by our client.

On January 5, 1999, the research agreement (attachment A) and company specifics (attachment B) were sent to Turan. On January 8, 1999, Turan stated that he could not issue the agreement until either you or Dr. Helmuth approved. Initially, Dr. Helmuth stated in December that he would approve the research proposal and assignment by Corn Card International, but only if GemPlus would sign the research agreement "first." Therefore, on the last work day before the Christmas break I called Turan's office. He was out so I left a message that we would need an agreement for Gemplus immediately after the break.

Almost two months have elapsed since we submitted this to Dr. Helmuth's office. Although there were issues raised about the ownership of the intellectual property (Cargill vs. University), when you read the proposed GemPlus research agreement you should note that the first phase was to do a survey of degradable materials and report on the feasibility of them being used for "cards." The second issue was whether Corn Card could assign its rights to GemPlus. Clearly Corn Card wants to assign its rights and GemPlus, in the proposed research agreement, wanted those rights. Whether or not Corn Card had the right to expand its territory or product line does not have any impact on the substance of the ultimate outcome for GemPlus and the University. At the end of "whatever" transaction, GemPlus and the University would have an agreement and the agreement with Corn Card would no longer exist.

Many discussions have occurred about the confidentiality agreement that IAPC signed with Cargill for PLA films and lossefill packaging. This now might be the major point of contention whether or not the University should sign a research agreement with GemPlus. As a nonprofessional I recently reviewed Federal Appeal Court Cases on situations where things change and no one has included them in a written agreement and still do not believe that Cargill has a "legal" interest in the IAPC technology.

An implied-in-fact contract is one "founded upon a meeting of the minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding." Baltimore & Ohio R.R. Co. v. United States, 261 U.S. 592, 597 (1923); see also Hercules, Inc. v. United States, 516 U.S. 417, 424 (1996).

"It is axiomatic that, regardless of a party's actual intent, if he conducts himself so as to lead the other party reasonably to conclude that he is accepting an offer to contract, acceptance has taken place as a matter of law." , 448 A.2d at 187; , 621 A.2d at 762.

Plaintiffs did not question the terms set forth in the confirmation letters. This acquiescence, coupled with performance under the contract for a period ranging from nine years (in the case of Adkins) to 27 years (in the case of Nardello), entitled defendant justifiably to conclude that the letters' terms had been accepted. As a matter of law, plaintiffs accepted the terms of the confirmatory letters and assented to the writings as integrated agreements with Thomas. Were we to hold otherwise, the recipient of a writing confirming the terms of a contemporaneous oral agreement could escape an unfavorable written provision that the recipient believes differs from the oral understanding simply by silence. The recipient could perform under the agreement and years later renounce the written terms of the contract to the surprise of the offeror. Such a rule would nullify the benefits of reducing an agreement to written form, and is one we decline to make. United States Court of Appeals for the Second Circuit, Nos. 192, 193 -- August Term 1994, Argued August 29, 1994, Decided August 18, 1995,Docket Nos. 93-9293, 93-9299, Robert Petereit; Robert J. Nardello; Richard Sanangelo, V. S.b. Thomas, Inc.

Therefore, because of not being allowed to talk with GemPlus or Corn Card we need your help in determining what the status is with GemPlus and our research agreement. Has GemPlus renounced it or is it still pending? Once we know this answer, we can complete our financial and personnel budget.

A second and more critical issue goes to the heart of the University and Corn Card agreement. Based upon a phone conversation on February 26, 1999 with Susan Wharton, patent attorney with Shook, Hardy & Bacon L.L.P., the applicants and current owners for the licensed technology are Hanna, Biby and Fang. There has never been a request for us to assign the technology to the University; additionally, there was never an acceptance by the University of the offer of invention.

History

On March 7, 1997, we submitted an offer of invention to the University of Nebraska as provided for in the Board of Regents By-Laws as provided for under its patent policy. The question is, does the University have legal title to the licensed technology? The University never accepted the offer within the six months required in the By-Laws. In fact, to this date, none of the inventors has any record of the University accepting the offer of invention or any assignment of the technology to the University.

The Board encourages members of the staff to seek patents on discoveries and inventions as a method of bringing recognition and remuneration to the individual and to the University. Patentable discoveries by staff members that result from the performance of duties owed to the University, or from the use of University properties or facilities, except where such use is minimal, shall be offered to the University in writing prior to making a patent application. If the University accepts the offer within six months, it shall pursue the patent application with the help of the inventor at no cost to the latter. . . . If the Board rejects the offer, the inventor is free to pursue the patent application at his or her own expense. In the event that a third party assists the Board and the inventor in pursuing the patentability of a discovery or invention, the conditions and financial arrangements shall be specified by contract signed by all parties to the agreement. The President, or any administrative officers designated by the President, shall have authority to accept or reject patentable discoveries offered to the University as required by this section and the Board's patent procedures policy.

This project was a fast moving one in the Spring of 1997, with the pending sale of phone cards to Congressman Bill Barrett by Corn Card International. Because the inventors were concerned of the loss of patent protection for the intellectual property, I wrote the offer of invention (March 7^th) and a provisional patent disclosure (March 14^th) and Turan arranged for it to be filed. The inventors (Hanna, Biby and Fang) executed an affidavit, under an oath that we were hiring Shook, Hardy and Bacon L.L.P. as their patent attorney. The provisional patent was converted to a non provisional patent on March 13, 1998 (The applicants the same as the provisional patent).

The only overt action by the University to claim ownership of the technology was the license it issued to Corn Card International, an electronic copy was sent to Gerald Biby in October 1997, with no dates or signatures. This was more than six months after the Offer of Invention in March 1997 .

Although the interpretation of license and assignment agreements is generally a state law question, there are important federal provisions that one needs to pay attention to, in particular regarding the recording of assignments in the Patent and Trademark Office as set forth in 35 U.S.C. sec. 261, which reads in part as follows:

". . . A certificate of acknowledgment under the hand and official seal of a person authorized to administer oaths within the United States, . . . shall be prima facie evidence of the execution of an assignment, grant or conveyance of a patent or application for patent. An assignment, grant or conveyance shall be void as against any subsequent purchaser or mortgagee for a valuable consideration, without notice, unless it is recorded in the Patent and Trademark Office within three months from its date or prior to the date of such subsequent purchase or mortgage."

It appears the University did not own the technology at the time it executed the license. Therefore, under Patent Law it appears that the following statements in the licensing agreement are not correct:

"WHEREAS, the UNIVERSITY is the owner of technology relating to the production of certain biodegradable polymers; and ..."

"PATENT RIGHTS shall include the technology embodied in the patent applications identified in Appendix A of this Agreement and any continuations or derivatives thereof..."

"UNIVERSITY hereby grants to LICENSEE the exclusive right to, within the TERRITORY, use the PATENT RIGHTS to develop, market and sell the LICENSED PRODUCTS."

Attached is the March 13, 1998 acknowledgment receipt from the Patent and Trademark Office specifically identifying the inventors as applicants for the nonprovisional patent. This is dated more that 2 months after the University signed a license with Corn Card stating it was the owner of the technology (copy attached, faxed to me on September 11, 1998).

These facts are going to become common knowledge to Corn Card when they begin discovery during any legal proceedings. Although the University's attorney may be able to impeach and discredit Corn Card's claims, it appears to be a fact that the University did not own the technology as stated in the license agreement. Whether it is owned by the inventors or not, is not the question that will be asked, the question will be who was the owner of the patent at the time the agreement with Corn Card was signed? If this is true, then Corn Card invested in a technology that the University did not own and it is probably entitled to recover all amounts it spent on developing the "non-existent" license. As a layman, I recently reviewed Federal Appeal Court Cases on situations where there is no written agreement:

Like an express contract, an implied-in- fact contract requires "1) mutuality of intent to contract; 2) consideration; and, 3) lack of ambiguity in offer and acceptance." City of El Centro v. United States, 922 F.2d 816, 820 (Fed. Cir. 1990); see also H.F. Allen Orchards v. United States, 749 F.2d 1571, 1575 (Fed. Cir. 1984); Russell Corp. v. United States, 537 F.2d 474, 482 (Ct. Cl. 1976).

Clearly from my point of view I do not see anything that I can construe as an acceptance by the University of the offer of invention.