Martin L. Peterson

Bar No. 15838600

P. O. Box 368

Meridian, Texas 76665

(254) 366-5338

Attorney for Appellant

Cases

American 10-Minute Oil Change, Inc. v. Metropolitan Nat. Bank-Framers Branch,

783 S.W.2d 598 12

Armbruster v. Memorial Southwest Hosp., 857 S.W.2d 938 3

Atlantic Richfield Co. v. Exxon Corp., 663 S.W.2d 858 10

A. W. Wright & Assoc., P.C. v. Glover, Anderson, Chandler & Uzick, L.L.P.,

993 S.W.2d 466 11

Bond v. Crill, 906 S.W.2d 103 5

Cubic Corp. v. Marty, 229 Cal.Rptr.2d 828 11

Cuyler v. Minns, 60 S.W.3d 209 12

Edwards v. Roberts, 209 S.W. 247 7

Feldman v. Kohler, 918 S.W.2d 615 10

Gibson v. John D. Sampbell & Co., 624 S.W.2d 728 3

Goldwasser v. Smith Corona Corp., 817 F.Supp. 263 11

Hallmark v. Port/Cooper T. Smith Stevedoring Co., 907 S.W.2d 586 11

Herschbach v. City of Corpus Christi, 883 S.W.2d 720 7

Howard v. INA County Mut. Ins. Co., 933 S.W.2d 212 5

In re Estate of Fawcett, 55 S.W.3d 214 10

Johnson v. Americana Motel, 604 S.W.2d 293 5

J. M. Davidson, Inc. v. Webster, 128 S.W.3d 223 8

Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642 7, 8

Cases

M. D. Anderson Hosp. and Tumor Institute v. Willrich, 28 S.W.3d 22 4

Mobil Oil Corp v. Matagorda County Drainage Dist. No. 3, 580 S.W.2d 634 5

Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217 12

Robbins v. Reliance Ins. Co., 102 S.W.3d 739 10

Robnett v. City of Big Spring, 26 S.W.3d 535 5

Rios v. Texas Commerce Bancshares, Inc., 930 S.W.2d 809 6

Shirey v. Albright, 404 S.W.2d 152 7

Spencer v. Allied Van Lines, 937 S.W.2d 587 5

Tenet Healthcare, Ltd. v. Cooper, 960 S.W.2d 386 9

Texas Farm Bureau Cotton Ass'n v. Stovall, 253 S.W.1101 9

Wilson & Wilson Tax Services, Inc. v. Mohammed, 131 S.W.3d 231 9

Rules

Texas Rules of Appellate Procedure

Rule 47.4 2

Rule 49.1 1

Texas Rules of Civil Procedure

Rule 166a 1, 2, 4, 5

Rule 166a (c) 10

Treatises

Restatement of the Law (Contracts, 2d) (1981)

Section 45 9

Section 71, comment b. 8

Section 73, comment a. 9

TO THE HONORABLE COURT OF APPEALS:

Pursuant to Tex.R.App.P. 49.1, Appellant requests the Court to reconsider its decision of June 28, 2004. In addition to the arguments and authorities set forth in his prior Briefs, to further show the points relied upon for rehearing, Appellant directs the Court's attention to the following:

It is a daunting task for any lawyer to undertake to convince a group of three judges that they have collectively grievously erred in declaring the law applicable to a case, particularly when those judges have already concluded that the legal issues presented are settled and that the case does not call for anything new or different, involves no legal issue important to the jurisprudence of the State, and creates no conflicts of authority. Even so, Appellant's counsel feels compelled to exert every effort in that regard.

We recognize that, as written, the court's opinion may have none of the characteristics expressed in Tex.R.App.P. 47.4 that would prevent its designation as a "memorandum opinion". But, through a misapplication of Tex.R.Civ.P. 166a the court effectively glosses over the fact that this case is actually one of first impression in Texas and involves very important issues of contract law that affect Texas employers and employees on an ongoing basis. Hence, we ask the court to most carefully reassess its decision, in the earnest hope the court will now find: (1) that our law gives inventive employees the right to demand true consideration for (or gives them some ability to negotiate for) ownership of their creations and (2) that, because there was a genuine dispute presented about the status and character of Brown's idea ⁽¹⁾, it cannot not be said Alcatel established its right to recover any relief as a matter of law. But perhaps of equal importance, even if the court remains convinced there was consideration provided by Alcatel and that an employer can appropriate its employee's pre-invention thoughts, we express the hope that the court will see that it is applying an existing concept about the formation of unilateral contracts to a new, but recurring fact situation such that all Texas employers and employees deserve proper notice of how that law affects invention assignment agreements.

The court seems to acknowledge that, in order to show Brown breached the contract or for Alcatel to be entitled to any relief under the contract or its attorneys fees, Alcatel must have offered conclusive proof that Brown made or conceived an invention. Yet, the court says such burden was met by referring to a statement made by Brown (in a letter on April 19, 1996), which was later disavowed and which time has proved was false. Furthermore, although (1) the letter described what Brown then possessed as a mere "idea" ⁽²⁾ and (2) Alcatel offered no proof that the idea actually engendered elements of novelty and utility in kind and measure different from and greater than that already available or known or that his idea was in fact useful and advantageous in a pursuit of life and capable of adding to the enjoyment of mankind ⁽³⁾, the court nevertheless concludes Brown created an "invention" in 1996 within the meaning of the contract. Thus, while the court acknowledges that Brown presented summary judgment evidence ⁽⁴⁾ tending to contradict the claim made in his letter, it chooses to ignore such evidence because in its words, it was not "credible".

This is a gross miscarriage of justice and a perversion of Tex.R.App.P. 166a (and its intended purpose ⁽⁵⁾). That rule clearly states that the movant must establish the truth of all material facts constituting a valid cause of action as a matter of law before the non-movant has any burden whatsoever. M. D. Anderson Hosp. and Tumor Institute v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000). Furthermore, rather than judging the credibility of the non-movant's evidence, the court should (as it states earlier in its opinion): take evidence favorable to him as true and allow every reasonable inference is his favor and resolve all doubts in his favor, and therefore recognize that ordinary minds could differ as to the conclusion to be drawn from the evidence presented here.

Effectively, the court rewrites Rule 166a so that it no longer means: (1) that a summary judgment should be granted, and if granted should be affirmed, only if the summary judgment record establishes the right thereto as a matter of law ⁽⁶⁾ ; (2) that a court must grant a summary judgment not on nonmovant's default, but on merit of summary judgment proof movant adduces ⁽⁷⁾; (3) that the failure of a party upon the hearing of a motion for summary judgment to discharge the burden which would rest on him at trial on the merits is not a ground for entering summary judgment in favor of the other party ⁽⁸⁾; and (4) that a court of appeals reviews de novo whether a party's right to prevail was established as a matter of law ⁽⁹⁾.

Alcatel never even attempted to show Brown's idea qualified as an invention. Instead it referred only to the fact that Brown alleged or promised that he had developed an automated method of converting machine executable code into high-level source code. See e.g., page 7 of the Motion for Summary Judgment. (First Supp. C.R. at 8). The court erroneously treats the statements made in the April 19, 1996 letter as though they were judicial admissions. ⁽¹⁰⁾ While he may not have so stated categorically, it seems evident that Brown was withdrawing such statements when he wrote in his response to the motion for summary judgment that in later trying to reduce his ideas to a tangible, working form he had encountered "unexpected problems". (First Supp. C.R. at 90). Furthermore, Brown plainly stated in his response that his thoughts were not in a tangible form at any time while he was employed by Alcatel. Also, Brown correctly asserted that the contract did not require disclosure or transfer of ownership of mere thoughts or ideas (even if novel or useful) because, as a matter of law, those things have never (before) been considered as "inventions".

The court says that Alcatel performed under the contract by employing Brown for a period of ten years after he signed the contract and by paying him a salary during that time. It then posits that the fact Alcatel (as the employer) was not bound to so perform at the time Brown made his promise (to assign certain inventions he might make or conceive) is irrelevant. The court thus seems to adopt the argument put forth by Alcatel that allowing an employee to perform his assigned duties and earn a living can provide the benefit needed to "support" (serve as consideration for) the employee's earlier promise. The court, however, overlooks a critical factor necessary to the formation of a unilateral contract. ⁽¹¹⁾ "To form such a unilateral contract (1) the performance must be bargained-for so that it is not rendered past consideration." Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642, 648 fn. 6 (Tex. 1994).

Here, Brown was the only promisor ("I will give you the benefit of my inventions".) The only thing Alcatel did to bargain for such benefit was to pay Brown for his services after they were rendered. ⁽¹²⁾ In this situation, the employer's promise to pay a certain wage is accepted by the employee and becomes binding, though neither party was initially bound to perform. But, because Brown received nothing at the time he made his promise, not even a remote benefit (but only the illusory promise of continued employment), Alcatel's subsequent performance under the separate employment arrangement (exchanging cash for prior services) was always destined to be "past consideration" (and no consideration for the assignment agreement). Even adopting the notion that fulfilling its promise of continued employment could serve as the consideration required to later make Brown's promise binding, the court forgets that though the at-will nature of the employment does not preclude formation of other contracts between employer and employee, "neither party [must rely] on continued employment as consideration for the contract." J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 228 (Tex. 2003). It seems obvious that Alcatel was relying on Brown's continued employment to ever form a contract.

The example given by the Supreme Court in Light illustrates the distinction between what happened here and the formation of a unilateral contract. The court said that if an employer promised some new or additional benefit to an employee or to incur some additional detriment (e.g. to share a trade secret) in return for the employee's promise to protect such secret, that the employee could become bound to his promise once the employer performed (incurred the detriment). Merely giving the employee work to do or a salary, however, would not be enough because although it could perhaps be construed as a detriment (i.e. the employer must then reduce its earnings or profits), all the employer truly "bargained for" was the services and there was no additional detriment associated with the additional benefit it seeks. In the words of the Restatement (Second) of Contracts (A.L.I. 1981), §71 comment b: "it is not enough that the promise induces the conduct of the promisee". Or, looking at the issue from the reverse angle, a promise (i.e. offer to perform) is accepted (becomes binding) by the invited performance of the offeree (in reliance thereon). Restatement (Second) of Contracts §45. "If the performance was not in fact bargained for and given in exchange for the promise, . . . there is no consideration." Restatement (Second) of Contracts 2d, §73, comment a.

When Alcatel approached its employee, Brown, and said: "you can continue to work here (if you so choose) and receive what we have already agreed as your compensation, but you must now give me something more, i.e. your inventions, if any, that you may be making if completed while you remain in my employ", it was not bargaining for the inventions. It was only imposing a detriment upon Brown without any valid consideration.

Another example of why Brown's performance under the employment contract has no effect is found in Tenet Healthcare, Ltd. v. Cooper, 960 S.W.2d 386, 389 (Tex.App.- Houston[14th Dist.] 1998, writ dism'd w.o.j.). There the employee wanted to say an enforceable contract had formed by reason of her continuing to perform labor for Tenet after Tenet had proposed certain employment-related disputes be submitted to arbitration (with Tenet reserving, however, the right not to arbitrate as it chose). The court responded there was no contract because Cooper was providing all the consideration for a term she did not desire or negotiate.

The law which should be applied in this case was stated in Wilson & Wilson Tax Services, Inc. v. Mohammed, 131 S.W.3d 231,242 (Tex.App.- Houston [14^th Dist.] 2004):"A contract in which there is no consideration moving from one party, or no obligation upon him, lacks mutuality, is unilateral, and unenforceable. Texas Farm Bureau Cotton Ass'n v. Stovall, 113 Tex. 273, 253 S.W. 1101, 1105 (1923)."

The court also disparages Brown's attempt to challenge in this court certain legal issues associated with the validity or enforceability of the contract ⁽¹³⁾. It concludes that each of the following reasons for refusing to grant the motion were waived because not properly raised: (1) the ambiguity of certain wording of the contract, (2) its adhesive, unconscionable character, and (3) that it was against public policy. All of these issues, however, relate to the legality of the contract and thus were encompassed in the plaintiff's burden to show that it had a viable cause of action under the contract. One of the elements of Alcatel's cause of action was the existence of a valid contract.

While at least one court has said that the term "issues" within the purview of subdivision (c) of Tex.R.Civ.P. 166a means both legal and factual issues ⁽¹⁴⁾ , it remains clear that a non-movant may always attack the legal sufficiency of grounds expressly presented to the trial court by the movant's motion ⁽¹⁵⁾ and that the "precision" of legal arguments may be honed upon appeal so long as an entirely new theory is not involved. See Feldman v. Kohler, 918 S.W.2d 615, 626-7 (Tex.App.- El Paso 1996, rev. denied). The issues which Appellant seeks to have reviewed were part and parcel of the plaintiff's cause of action and thus should be considered raised by its motion. ⁽¹⁶⁾

Furthermore, they were raised in Appellant's answer or response to the motion for summary judgment. This court is wrong to say otherwise. ⁽¹⁷⁾ Certainly it is wrong for the court to pretend this case does not involve the interpretation of the contract or the meaning of the words "conceived" and "invention" as used therein. See Hallmark v. Port/Cooper T. Smith Stevedoring Co., 907 S.W.2d 586, 590 (Tex.App.- Corpus Christi 1995, no pet.); see also A. W. Wright & Assoc., P.C. v. Glover, Anderson, Chandler & Uzick, L.L.P., 993 S.W.2d 466, 470 fn. 3 (Tex.App.- Houston [14^th Dist.] 1999, rev. denied).

In any event, Appellant's challenge to the award of attorney's fees was based primarily on the ambiguity and insufficiency of the evidence of reasonableness contained in the plaintiff's summary judgment evidence. No such attack need have been presented in the trial court before this court is required to assess de novo Alcatel's entitlement to such an obviously unreasonable amount of attorney's fees. Mr. Pinker's conclusion in his affidavit is not controlling, particularly when the amount he says is reasonable and the services he says were necessary should shock the conscience of the both the trial and appellate court. The summary judgment concerning attorney's fees must stand on its own merits. Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 223 (Tex. 1999). Furthermore, "[i]n order to support a summary judgment, an expert's affidavit must offer an opinion (1) which has a reasoned, demonstrable basis." Cuyler v. Minns, 60 S.W.3d 209, 215 (Tex.App.-Houston [14th Dist.] 2001, rev. denied). The evidence submitted by Pinker in support of his subjective conclusions demonstrates the falsity and outrageous character of those conclusions. At a minimum, Appellant is entitled to have this court review whether the summary judgment proof in this regard was indeed "clear, positive and direct, otherwise credible and free from contradictions and inconsistencies." American 10-Minute Oil Change, Inc. v. Metropolitan Nat. Bank-Farmers Branch , 783 S.W.2d 598, 602 (Tex.App.- Dallas 1989, no writ).

Appellant prays that the panel will grant a rehearing and correct its prior holdings.

Respectfully submitted,

_____________________________

Martin L. Peterson

Bar No. 15838600

P. O. Box 368

Meridian, Texas 76665

(254) 366-5338

Attorney for Appellant

I hereby certify that a true copy of the foregoing Appellant's Reply Brief was served by hand delivery upon Mr. Eric W. Pinker, Attorney for Appellee, at Lynn Tillotson & Pinker, L.L.P., 750 N. St. Paul St., Ste. 1400, Dallas, Texas 75201 on this 13^th day of July, 2004.

__________________________

1. We are not unaware that the nature of Brown's idea places him in an unenviable position given his first description of it. Obviously, the trial judge and the plaintiff had very little means of knowing the true contents of Brown's mind and thus the plaintiff could only operate on assumptions in protecting its perceived interests. But, that difficulty alone should not alter the requirements of Tex.R.Civ.P. 166a or, indeed, the quantum of proof at trial. Without any proof that Brown or anyone else has ever actually performed an automated translation of computer languages or that his idea was as good as a working software program, it can only be said that Alcatel and the trial court jumped the gun. Alcatel filed suit to recover something other than an invention, indeed something that has no real value at all. A non-functional set of steps is not even a true "algorithm" (which can be defined as "a logical sequence of steps for solving a problem, often written out as a flow chart, that can be translated into a computer program"). While it is certainly true that Brown could have purposely provided less information about his "algorithm" than he possesses, in order to say that his conduct constitutes a breach of the contract one must say that the term "conceived invention" reaches the mere memory of the human brain. If that is what this court intends to say, then it should clearly so state in its opinion.

2. The thing at issue was again described as an "idea" in Brown's sworn testimony of May 1, 1997, which was made a part of his summary judgment evidence. Brown Deposition at 71. (First Supp. C.R. at 113). In his affidavit of September 29, 1997 (Exhibit 13 to his second response to the Motion for Summary Judgment) he made clear that his idea (also called a "theory" ) had never actually been put into practice and needed a great deal of further development and refinement before [it had] any chance of . . . functioning." (C.R. II at 682). Thus, even if the language of his letter could be construed to mean Brown had invented a working computer program, other evidence showed it was no more than an unproved intangible idea, i.e. something other than an "invention". If the court wants to assume Brown committed perjury in his affidavit (as Alcatel always has), then he must concede that he cannot defend against Alcatel's claim, particularly if the court has no concern over the meaning of the term "invention" as previously established by other courts. But, he remains hopeful the court will not make such false assumption merely for expediency. He further trusts the court will recognize: (1) that where the ultimate conclusion to be drawn from uncontradicted evidence would not necessarily be the only conclusion possible to be made from the same evidence by reasonable minds, that such conclusion would be conclusion of fact (precluding summary judgment), and not a conclusion of law as stated in Gibson v. John D. Campbell & Co., 624 S.W.2d 728, 732 (Tex.App.- Fort Worth 1981, no writ) and (2) that a movant's own summary judgment evidence may establish existence of a genuine issue of material fact as stated in Armbruster v. Memorial Southwest Hosp., 857 S.W.2d 938, 941(Tex.App.- Houston [1^st Dist.] 1993, no writ).

3. In fact, Alcatel pleaded just the opposite without any reservations. In its motion it stated: "When Brown finally made his disclosure, it contained programs that were incomplete, did not work, and did not conform" to the description of the "Solution" described in his letter of April 19, 1996. Motion for Summary Judgment at 17. (First Supp. C.R. at 18). How much more clearly could one say that there was (by October 9, 2001) no evidence, despite his earlier claim, that Brown's "invention" ever existed? But, if there was no invention, then Alcatel had no cause of action for breach of the contract. At worst (from Brown's perspective), it must have been apparent to the trial court- after reading the portion of the motion just quoted- that there was now a question of fact concerning the extent to which Brown had "disclosed" his ideas. Even so, the trial judge apparently found Brown should be punished for his "recalcitrance" under the guise of having breached the contract. It is most unfortunate that each of parties failed to recognize the problems with the Solution much earlier, but that fact should not change the ultimate outcome of the suit. Brown did his best to point out in his Motion for Summary Judgment (C.R. I at 203) very early in the litigation that

the subject of this dispute is nothing more than the seed of an idea which is [in] Evan Brown's mind. There is no invention made or conceived by Brown. There is only the remote, speculative and future possibility that Brown's idea will some day blossom into a practical and useful invention. Brown's untested, undocumented and uncertain notion is not an invention and does not fall within the parameters of his Agreement with DSC.

Under the circumstances of this case, that motion must be considered as a response to the motion subsequently filed by Alcatel. In any event, as the trial court noted in its judgment, it considered those arguments in ruling upon the motion, and they were repeated in large measure in Brown's Amended Response to Alcatel's Motion. (Second Supp. C.R. at 238).

4. In addition to the evidence already mentioned, the court might be referring to Brown's sworn testimony on May 1, 1997 that the solution had never been recorded in any format and that it had (as of that date) never been "tested". Brown Deposition at 80. (First Supp. C.R. at 114).

5. The purpose of the rule is to eliminate patently untenable defenses and not to deprive a defendant of his right to a full hearing on the merits if doubt remains about an issue of material fact. Ellert v. Lutz, 930 S.W.2d 152, 155 (Tex.App.- Dallas 1996, no writ).

6. Johnson v. Americana Motel, 604 S.W.2d 293, 295 (Tex.Civ.App.- San Antonio), rev'd on another ground, 610 S.W.2d 143 (Tex. 1980); Bond v. Crill, 906 S.W.2d 103, 105-6 (Tex.App.- Dallas 1995, no writ); Robnett v. City of Big Spring, 26 S.W.3d 535, 539 (Tex.App.- Eastland 2000, no writ).

7. Spencer v. Allied Van Lines, 937 S.W.2d 587, 589 (Tex.App.- Texarkana 1996, no writ).

8. Mobil Oil Corp. v. Matagorda County Drainage Dist. No. 3, 580 S.W.2d 634, 643 (Tex.Civ.App.- Corpus Christi 1979), rev'd on another ground, 597 S.W.2d 910 (Tex. 1980).

9. Howard v. INA County Mut. Ins. Co., 933 S.W.2d 212, 216 (Tex.App.- Dallas 1996, rev. denied).

10. Even quasi-admissions are not treated as conclusive unless they were deliberately made, are clear and unequivocal, and a hypothesis of mistake or mere slip-of-the-tongue is eliminated. See Rios v. Texas Commerce Bancshares, Inc., 930 S.W.2d 809, 817 (Tex.App.- Corpus Christi 1996, rev. denied).

11. We presume the court uses "unilateral" as defined in Herschbach v. City of Corpus Christi, 883 S.W.2d 720, 733 (Tex.App.-Corpus Christi 1994, rev. denied), to wit:

A contract is unilateral when one party furnishes no consideration of value to the other party and does not obligate itself to do anything which may result in injury to itself, or a benefit to the opposite party. Edwards v. Roberts, 209 S.W. 247, 250-51 (Tex.Civ.App.--Austin 1918, no writ), motion for reh'g denied, 212 S.W. 673 (Tex.Civ.App.--Austin 1919, writ dism'd). This type of contract is completed by the promisee's performing the act or acts called for, not by such promisee making any reciprocal promise or promises. Shirey v. Albright, 404 S.W.2d 152, 156 (Tex.Civ.App.--Corpus Christi 1966, writ ref'd n.r.e.).

12. In its Motion for Summary Judgment, Alcatel argued that "in exchange for" Brown's promise it "offered Brown [continued] employment" and that Brown then "consented" to the new burdens being attached to such employment. It also argued that the agreement became enforceable when it "rendered full performance of its obligations under the contract." Of course, it had no obligations under the contract and that is the very reason there was nothing for it to "perform". Motion for Summary Judgment at 7, 14. (First Supp. C.R. at 8, 15)

13. In its opinion, the court erroneously says these are presented as issues of fact. Slip op. at 3. Actually, there was no dispute in the evidence that would give rise to these issues and thus they represent issues of law.

14. Atlantic Richfield Co. v. Exxon Corp., 663 S.W.2d 858, 863 (Tex.App.- Houston [14^th Dist.] 1983), rev'd on another ground, 678 S.W.2d 944 (Tex. 1984) ; see also, In re Estate of Fawcett, 55 S.W.3d 214, 217(Tex.App.- Eastland 2001, rev. denied)("Once the movant establishes his right to a summary judgment, the non-movant must come forward with evidence or law that precludes summary judgment.").

15. Robbins v. Reliance Ins. Co., 102 S.W.3d 739, 749 (Tex.App.- Corpus Christi 2001, no pet.).

16. The cases cited by Alcatel in its motion (at page 15, fn. 61), Cubic Corporation v. Marty, 185 Cal.App.3d 438, 229 Cal Rptr.2d 828 (1986) and Goldwasser v. Smith Corona Corp., 817 F.Supp 263 (D. Conn. 1993), specifically deal with enforceability of invention assignment agreements and discuss the same issues now raised by Appellant. Furthermore, the unconscionability of the contract and whether it contravenes public policy are but extensions of the concern over lack of consideration. While each may fall under a separate heading, they are all facets of the same legal issue: i.e., whether the contract was binding upon Brown. The court should therefore take those concerns into account in determining whether a valid unilateral contract was formed.

17. On page 24 of his Amended Response he argued "this Court must construe any ambiguities against DSC" and then said that "invention" should not be construed to include an idea, particularly since this would require courts to attempt to read inventor's minds in order to determine when the essential idea behind an invention was conceived and likely engage in retrospective telepathy (assuming the idea was ever reduced to practice or demonstrated to be a "true" invention). (C.R. II at 628, 633-4)