Tate v. Scanlan International, Inc.
403 N.W.2d 666 (1987)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
An unpatented, abstract idea is a legally protectable property interest that can be the subject of an express or implied contract if the idea is both novel and concrete.
Facts:
- Karen Tate, an operating room nurse, conceived of an idea for pre-cut, sterile, radiopaque tips to place on surgical clamps to protect delicate sutures, solving a common problem for which nurses were using an inefficient, non-sterile method.
- In September 1979, Tate presented her idea to Timothy Scanlan, president of Scanlan International, with the mutual understanding that the idea would be kept confidential and that she would be compensated if the company used it.
- During their meeting, Tate used a 'Kittner' sponge holder, a foam block, to illustrate how the tips could be organized for easy access and accountability in the operating room.
- Over the next two years, Scanlan consulted with Tate on the design of the product, which was named 'Suture Boots'.
- In February 1981, Scanlan verbally offered Tate a royalty of approximately $.35 per box, which was just under six percent of gross sales.
- After the product was launched in May 1981, Scanlan International sent Tate two formal contract proposals: one for a 5% royalty on net profit and another for a $3,000 lump sum payment.
- In July 1981, Scanlan revoked both proposals after its patent attorney discovered that the foam block holder concept Tate had shown was already covered by a pre-existing patent held by another company.
- Scanlan then offered Tate a final, reduced offer of $1,000 plus a sales commission, which she did not accept.
Procedural Posture:
- Karen Tate filed an action against Scanlan International in trial court, alleging breach of contract, unjust enrichment, conversion, and breach of confidence.
- A jury trial resulted in a verdict in favor of Tate, awarding her $520,313 in damages.
- Scanlan International filed a motion for judgment notwithstanding the verdict (JNOV) or, in the alternative, for a new trial, and also sought to reduce the amount of prejudgment interest.
- The trial court denied Scanlan's motions for JNOV and a new trial but partially reduced the prejudgment interest award.
- Scanlan International, as appellant, appealed the trial court's denial of its post-trial motions to the intermediate appellate court; Tate, as respondent, cross-appealed the reduction of her prejudgment interest.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Is an unpatented idea for a commercial product, which combines existing elements into a new system, sufficiently novel and concrete to constitute a legally protectable property interest that can form the basis of an enforceable contract for compensation?
Opinions:
Majority - Forsberg, J.
Yes. An unpatented idea that combines existing elements into a new system is sufficiently novel and concrete to be a legally protectable property interest that can form the basis of an enforceable contract. For an idea to be protectable, it must be novel and concrete. An idea is novel if it is original and not already in use; even an aggregation of known elements is novel if their combination produces a new or different result or achieves a synergistic effect. Here, Tate's idea for a complete system solved a long-felt but unsolved need, was commercially successful, and followed failed attempts by others, all of which support the jury's finding of novelty. An idea is concrete if it is sufficiently developed to be ready for immediate use without extensive additional embellishment. Tate presented a well-defined concept with specific elements and goals, which was sufficient for Scanlan to develop and produce the product, thus satisfying the concreteness requirement.
Analysis:
This case clarifies the standard for protecting unpatented ideas under contract law, establishing that novelty can be found in a synergistic combination of existing elements, not just in a wholly new invention. It affirms that the concreteness requirement is met when an idea is developed enough for a company to implement it without substantial further research. This decision provides a crucial pathway for inventors and creators to receive compensation for their commercially valuable ideas through contractual agreements, even without patent protection, thereby encouraging the disclosure of such ideas to businesses.
Unlock the full brief for Tate v. Scanlan International, Inc.