v.
Atm Shafiqul Khalid
THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
ATM SHAFIQUL KHALID, an individual ) No. 80508-8-I and on behalf of similarly situated , ) Xencare Software, Inc., ) DIVISION ONE ) Appellant, ) UNPUBLISHED OPINION ) v. ) ) MICROSOFT CORPORATION, a ) Washington Corporation, ) ) Respondent. ) )
ANDRUS, A.C.J. — ATM Shafiqul Khalid appeals the dismissal of his lawsuit against Microsoft pursuant to CR 12(b)(6). He argues the trial court erred in concluding that many of his fourteen causes of action were time-barred and that he failed to state cognizable claims as to others. We affirm in substantial part but reverse the dismissal of one of Khalid’s Consumer Protection Act (CPA) claims, 1 his claims of breach of contract and breach of the implied covenant of good faith and fair dealing, and his request for declaratory relief under the Uniform Declaratory Judgment Act (UDJA). 2 No. 80508-8-I/3 akin to a Roku stick, that can be inserted into any monitor and (b) connection with a subscription provider in the cloud and (c) connection to a mini-cloud host device to deliver computing resources using specific integration techniques outlined in the patent.
[*2]In December 2011, Microsoft offered Khalid a position as Senior Program Manager in their Bing division. As part of the hiring process, Microsoft recruiter Shannon Carlsen asked Khalid to sign a Microsoft Corporation Employee Agreement (the Employee Agreement or Agreement). This agreement contains two provisions concerned with employee inventions. Section 5, “Inventions,” states:
I will promptly and fully disclose to MICROSOFT any and all inventions, discoveries, designs, developments, improvements and trade secrets, whether or not patentable (collectively "Inventions") that I solely or jointly may conceive, develop, reduce to practice or otherwise produce during my employment with MICROSOFT, including those Inventions I contend that MICROSOFT does not own. Subject to the NOTICE below, I agree to grant and I hereby grant, transfer and assign to MICROSOFT or its designee all my rights, title and interest in and to such Inventions. I waive and quitclaim to MICROSOFT or its designee any and all claims of any nature whatsoever that I now or hereafter may have for infringement of any patent application, patent, or other intellectual property right relating to any Inventions so assigned to MICROSOFT or its designee.
NOTICE: My obligation to assign shall not apply to any Invention that I can establish:
a) was developed entirely on my own time without using any equipment, supplies, facilities, or trade secret information owned or supplied to me by MICROSOFT;
b) does not relate (i) directly to the business of MICROSOFT or (ii) to the actual or demonstrably anticipated research or development of MICROSOFT; and No. 80508-8-I/4 c) does not result, in whole or in part, from any work performed by me for MICROSOFT.
[*3]I agree to grant and I hereby grant, transfer and assign to MICROSOFT or its designee all my rights, title and interest in and to any and all Inventions full title to which may be required to lie in the United States government by law or by any contract between MICROSOFT and the United States government or any of its agencies. In addition to the rights provided to MICROSOFT under paragraph 6 below, as to any Invention complying with 5(a)-(c) above that results in any product, service or development with potential commercial application, MICROSOFT shall be given the right of first refusal to obtain exclusive rights to the Invention and such product, service or development. 4 (Emphasis added). Section 6, “Excluded and Licensed Inventions,” states, in part: “I have attached a list describing all Inventions belonging to me and made by me prior to my employment with MICROSOFT that I wish to have excluded from this Agreement. If no such list is attached, I represent that there are no such Inventions.” The first page of the Employee Agreement contains a line that reads: “If you wish to attach a list of inventions, per paragraph 6 below, please contact your recruiter.”
On December 19, 2011, Khalid signed the Employee Agreement and emailed it to Carlsen. In accordance with section 6, Khalid sent Carlsen an invention exclusion list. Carlsen acknowledged receipt of the attached list and copied her email to Microsoft recruitment coordinator Ricardo Bustamante. Khalid’s attachment disclosed the following (among other inventions):
Following list covers items that I would like [to] list under section 6 of employee agreement. I did those works with a team to participate in some start-up accelerator program. I’ve significant equity in those start-ups and would like to disclose here.
4 Khalid contends this “right of first refusal” obligation violates RCW 49.44.140.
[*4]No. 80508-8-I/5
1. THIN DEVICES TO DELIVER COMPUTING POWER (pending patent application) .... 2. HOME ACCESS GATEWAY TO DELIVER VIRTUAL DESKTOP TO HOME USER (pending patent application) .... 3. A system and method to support subscription based Infrastructure and software as a service (pending patent application) .... 4. A home cloud system with hybrid hypervisor to virtualize home digital equipment .... 5. SAFE AND SECURE PROGRAM EXECUTION FRAMEWORK (to be issued) .... 6. SAFE AND SECURE PROGRAM EXECUTION FRAMEWORK WITH GUEST APPLICATION SPACE (pending patent application)
On January 9, 2012, Khalid attended an employee orientation program at Microsoft where he was required to sign a hard copy of the Employee Agreement. During orientation, Khalid again submitted the invention exclusion list and made a hand-written note on the signed Employee Agreement indicating the attachment of the exclusion list. Khalid received no further instruction pertaining to his invention exclusion list and went on to work for Microsoft from January 2012 until February 2015.
After Microsoft terminated Khalid in February 2015, he sent an email to Microsoft officers, informing it of his patents and alleging that Microsoft was using his patented mini cloud technology. On February 19, 2015, Microsoft attorney Patrick Evans responded and informed Khalid that, since he did not disclose these inventions or provide an exclusion list of inventions to the company as permitted No. 80508-8-I/6 by section 6 of the Employee Agreement, Khalid was obligated to assign his intellectual property to Microsoft under section 5 of the Agreement. Khalid objected to Microsoft’s claimed assignment right to the ‘637 and ‘219 Patents and informed Evans that he had in fact submitted an invention exclusion list under section 6 of the Agreement. Two weeks later, Evans sent another email to Khalid, again asserting Microsoft held assignment rights to the ‘219 and ‘637 Patents and provided Khalid with a form to sign to effectuate the patent assignment process. In March 2015, Khalid provided Evans a copy of the invention disclosure list he had provided to Microsoft in 2011. In June 2015, Khalid notified Evans that he believed Microsoft’s Xbox One was infringing Khalid’s ‘637 Patent. Khalid and Evans had further email exchanges discussing possible resolutions of the disputes but reached no agreement.
[*5]In May 2016, Khalid received a letter from Microsoft’s outside counsel at Merchant and Gould (M&G letter). In this letter, Microsoft’s attorneys refuted Khalid’s allegations that Microsoft was infringing the ‘637 Patent and again asserted that Microsoft had no evidence that Khalid had submitted an invention exclusion list, and that his “failure to exclude the inventions described in the '219 and '637 patents resulted in a grant of an exclusive, royalty-free, irrevocable, worldwide license to these inventions to Microsoft.” The letter also contained Microsoft’s terms of settlement: in return for a grant of a non-exclusive, royalty- free, perpetual, irrevocable, worldwide license to the disputed patents and a full release of all claims and liability, Microsoft would transfer all of its ownership interest in the ‘219 and ‘637 Patents to Khalid. Khalid declined this offer.
[*6]No. 80508-8-I/7
When Khalid received the M&G letter, he was in the middle of a lawsuit against Citrix Systems, Inc. (Citrix), a Microsoft vendor with whom Khalid had been previously employed. Like Microsoft, Citrix claimed title of the ‘219 and ‘637 Patents. Khalid had filed suit against Citrix in October 2015 in King County Superior Court in order to clear the cloud on the title to the patents. Khalid prevailed on his claims and a $5.8 million judgment was entered against Citrix.
Khalid brought a lawsuit against Microsoft on January 28, 2019, alleging fourteen causes of action. 5 Microsoft filed a CR 12(b)(6) motion to dismiss, arguing that the claims of fraud, tort, wage statute, and breach of the duty of good faith were time-barred. Microsoft argued that the remainder of the claims did not satisfy pleading requirements and that a pro se litigant may not represent a class in a class action. The trial court agreed and dismissed all claims, finding each to be either time-barred, unsupported by the Employee Agreement, or inadequately pled. Khalid appeals the dismissal of each claim.
DISCUSSION
We review a CR 12(b)(6) dismissal de novo. Trujillo v. Nw Tr. Servs., Inc., 183 Wn.2d 820, 830, 355 P.3d 1100 (2015). Dismissal is appropriate if the trial
5 Counts 1 and 2 allege violations of the Washington Consumer Protection Act (CPA). Count 3 alleges breach of contract. Count 4 alleges breach of the covenant of good faith and fair dealing. Count 5 alleges tortious interference with business. Count 6 alleges a tort “impacting full damage recovery.” Count 7 alleges violations of Washington wage statutes. Count 8 alleges fraudulent inducement to contract. Count 9 alleges the infliction of “discomfort and inconvenience by interfering with plaintiff’s business property right.” Count 10 alleges a violation of the Washington Racketeering Act. Count 11 seeks declaratory relief on the ownership of the ‘219 and ‘637 Patents. Count 12 seeks declaratory and injunctive relief on the unenforceability of a provision of Section 5 of the Agreement. Count 13 seeks class action certification for the above violations, and count 14 alleges fraud.
[*7]No. 80508-8-I/8 court concludes that the plaintiff can prove no set of facts consistent with the complaint to justify recovery. A plaintiff's factual allegations are presumed true for purposes of a CR 12(b)(6) motion. Lawson v. State, 107 Wn. 2d 444, 448, 730 P.2d 1308 (1986). “A complaint survives a CR 12(b)(6) motion if any state of facts could exist under which the court could sustain the claim for relief. Thus, a court may consider hypothetical facts not part of the formal record in deciding whether to dismiss a complaint pursuant to CR 12(b)(6).” Haberman v. Washington Pub. Power Supply Sys., 109 Wn.2d 107, 120, 744 P.2d 1032 (1987) (citations omitted).
CPA Claims under RCW 19.86.020 (Count 1)
Khalid contends the trial court erred in dismissing his CPA claims under RCW 19.86.020. To establish a CPA claim, a plaintiff must prove: (1) an unfair or deceptive act or practice that (2) affects trade or commerce and (3) impacts the public interest, and (4) the plaintiff sustained damage to business or property that was (5) caused by the unfair or deceptive act or practice. Keodalah v. Allstate Ins. Co., 194 Wn.2d 339, 349-50, 449 P.3d 1040 (2019).
Khalid’s CPA claim under RCW 19.86.020 can be separated into three distinct alleged “unfair acts:” (1) Sections 5 and 6 of the Employee Agreement, requiring Khalid to assign his personal inventions to Microsoft and granting the company the right of first refusal to personal inventions, are inherently unfair and violate RCW 49.44.140; 6 (2) Microsoft concealed Khalid’s invention exclusion list No. 80508-8-I/9 in order to “intimidate or extort” Khalid to gain access to his patents; and (3) Microsoft claimed it had rights to inventive services from Khalid starting December 19, 2011, but did not start paying him for that service until January 9, 2012.
[*8]Khalid’s CPA claims are governed by the four-year statute of limitations under RCW 19.86.120. Generally, a cause of action accrues and a statute of limitations is triggered when the plaintiff has the right to seek relief from the courts. Gazija v. Nicholas Jerns Co., 86 Wn.2d 215, 219, 543 P.2d 338 (1975). A party has the right to apply to a court for relief when it “can establish each element of the action.” Shepard v. Holmes, 185 Wn. App. 730, 739, 345 P.3d 786 (2014). Accrual is not delayed, however, because more extensive harm flows from the wrongful conduct. Green v. Am. Pharm. Co., 136 Wn.2d 87, 96, 960 P.2d 912 (1998).
Microsoft argues Khalid’s RCW 19.86.020 claims accrued in either December 2011, when Khalid executed the Employee Agreement, or January 2012, when he began working for Microsoft, and were therefore time-barred under the four-year statute of limitations. We agree in part and disagree in part.
With regard to Khalid’s claim that provisions of the Employee Agreement are unfair under RCW 19.86.020 because they violate RCW 49.44.140, this claim accrued when Khalid signed the agreement. At that point, Khalid had the right to
invention to the employer does not apply to an invention for which no equipment, supplies, facilities, or trade secret information of the employer was used and which was developed entirely on the employee's own time, unless (a) the invention relates (i) directly to the business of the employer, or (ii) to the employer's actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by the employee for the employer. Any provision which purports to apply to such an invention is to that extent against the public policy of this state and is to that extent void and unenforceable.
[*9]No. 80508-8-I/10 seek judicial relief from any provisions he contends violate the CPA or RCW 49.44.140. This CPA claim is time-barred and the trial court did not err in dismissing it.
The CPA claim based on the alleged concealment of Khalid’s exclusion list, however, did not accrue when Khalid began working for Microsoft because he had no reason to know Microsoft would deny the list’s existence until February 2015, when Khalid received Evans’ email informing him that Khalid had not excluded any inventions pursuant to section 6 of the Employee Agreement. The alleged unfair act was Microsoft’s assertion that Khalid’s invention exclusion list did not exist. This particular cause of action accrued in February 2015 and Khalid’s CPA claim, filed in January 2019, was timely.
The trial court alternatively concluded that this claim was inadequately pleaded because Khalid failed to allege damage. We disagree with this conclusion as well. Khalid clearly alleged “[t]he plaintiff[] suffered damages caused and proximately caused by the actions of the Defendant as set forth below.” The trial court erred in dismissing this CPA claim at the CR 12(b)(6) stage.
With regard to the claim that Microsoft did not pay Khalid for inventive services between December 2011 and January 2012, Khalid alleged he signed the Employee Agreement, assuming it became effective on the first day of this employment with Microsoft, on January 9, 2012. Khalid further contends he filed three patent applications on January 8, 2012, after signing the Employee Agreement and before he began working for Microsoft. Khalid appears to believe that Microsoft’s assertion of rights, in February 2015, to inventions is an unfair and
- 10 - No. 80508-8-I/11 deceptive practice under RCW 19.86.020 because Microsoft claimed a right of first refusal to inventions he developed and for which he sought patent protection before he actually started working for the company.
The trial court did not dismiss this claim on statute of limitations grounds. The court instead dismissed it because “[t]he contract says the inventive service runs from the employee’s start date” and “[t]he right of first refusal does not apply.” Indeed, section 5 of the Employee Agreement provides for the assignment of inventions and the right of first refusal only on inventions developed “during my employment with MICROSOFT.” The trial court concluded that the Employee Agreement’s effective date is not the date he initially signed that document, but was his first day of employment with Microsoft. Under this reading of the agreement, Microsoft gained no rights to inventions developed prior to the date he started working unless Khalid subsequently incorporated them into a Microsoft product or assented to Microsoft doing so. We agree with this reading of the Employee Agreement. Because he cannot establish that Microsoft automatically gained rights to his inventions pre-dating his employment with the company, the trial court did not err in dismissing this CPA claim.
We affirm the dismissal of Khalid’s CPA claim that sections 5 and 6 of the Employee Agreement are per se unfair under RCW 19.86.020 because they violates RCW 49.44.140. We also affirm the dismissal of the CPA claim that Microsoft claimed rights to inventive services between December 19, 2011 and January 9, 2012. But we reverse the dismissal of Khalid’s CPA claim that Microsoft