in order to submit it for review. (Tr. 37 [Delaney testimony], 58 [Shackelford testimony]) Moreover, even Playmates' president testified that he did not understand the waiver provision in Playmates' new product submission form to include a waiver of copyright, trademark, or patent claims. (Tr. 24)
CONCLUSIONS OF LAW
1. California law governs the agency law issue of whether FASA is bound by the purported waiver of its agent, Allen. FASA Corp., 869 F. Supp. at 1343-44.
2. Under the California Civil Code, "an agent has such authority as the principal, actually or ostensibly, confers upon him," CAL. CIVIL CODE § 2315, and "an agent represents his principal for all purposes within the scope of his actual or ostensible authority." CAL. CIV. CODE § 2330. Only those liabilities "which would accrue to the agent from transactions within [his actual or ostensible authority], if they had been entered into on his own account, accrue to the principal." Id.
3. Playmates failed to establish that Allen had either actual or ostensible authority to bind FASA when he signed Playmates' waiver.
4. "Actual authority is such as a principal intentionally confers upon the agent, or intentionally, or by want of ordinary care, allows the agent to believe himself to possess." CAL. CIVIL CODE § 2316.
5. FASA did not intentionally confer upon Allen authority to sign a waiver of FASA's intellectual property rights.
6. Allen did not believe himself to have authority to sign a waiver of FASA's intellectual property rights.
7. Because FASA did not confer authority on Allen to waive its intellectual property rights in BATTLETECH, and because Allen did not believe that he had authority to waive FASA's intellectual property rights, the Court finds that Allen did not have actual authority to waive FASA's intellectual property rights.
8. Nor can Playmates prevail by invoking section 2319 of the California Civil Code, which provides that "an agent has authority: (1) to do everything necessary or proper and usual in the ordinary course of business, for effecting the purpose of his agency." CAL. CIV. CODE § 2319. The overwhelming trial testimony reveals that while the signing of some sort of disclosure is standard practice in the industry, the signing away of all of an inventor's intellectual property rights is by no means standard. Therefore, Mr. Allen's signing of the general waiver was not necessary to accomplish the purpose of his agency--to make a preliminary business presentation to Playmates.
9. Playmates has failed to establish that Allen had ostensible authority to waive FASA's intellectual property rights in BATTLETECH. "Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes a third person to believe the agent to possess." CAL. CIVIL CODE § 2317.
10. Ostensible authority, under California law, "arises as a result of conduct of the principal which causes the third party reasonably to believe that the agent possesses the authority to act on the principal's behalf." United States Credit Bureau, Inc. v. Cheney, 235 Cal. App. 2d 357, 360, 45 Cal. Rptr. 525, 527 (1965).
11. Ostensible authority is predicated on the doctrine of estoppel: If a principal, by its acts, leads another to believe that it has conferred authority upon an agent, it will be estopped from asserting - as against the person who has justifiably relied on the principal's acts - that it did not intend to confer such authority. Yanchor v. Kagan, 22 Cal. App. 3d 544, 549, 99 Cal. Rptr. 367, 370 (1971). Thus, ostensible authority is predicated on the acts or declarations of the principal vis-a-vis the third party. Dill v. Berquist Constr. Co., 24 Cal. App. 4th 1426, 1438, 29 Cal. Rptr. 2d 746, 752 (1994); People v. Surety Insurance Co., 136 Cal. App. 3d 556, 562, 186 Cal. Rptr. 385, 389 (1982).
12. FASA did not give Playmates any valid factual reasons to reasonably believe Allen was authorized to bind FASA to a complete, total waiver of its rights. Simply put, there was no conduct on FASA's part that reasonably could have led Playmates to believe that Allen had authority to sign the purported waiver.
Instead, Playmates relies on little more than that Allen was acting as FASA's agent and as we have noted in the Court's summary judgment opinion, this does not establish ostensible authority. FASA Corp., 869 F. Supp. 1334 at 1346 (citing Turner v. Citizens Nat'l Bank, 206 Cal. App. 2d 193, 23 Cal. Rptr. 698, 704 (1962)). Accordingly, we conclude that Allen did not have ostensible authority to waive FASA's intellectual property rights.
13. We conclude that under California's law of agency, FASA cannot be bound by Allen's purported act of waiving FASA's intellectual property rights in BATTLETECH.
14. Having determined that FASA cannot be bound by Allen's purported waiver of its intellectual property rights, our inquiry could be at an end. However, we proceed to offer an alternate basis for our holding that FASA is not bound by Allen's purported waiver--namely, that Playmates' waiver form is unenforceable as a matter of law. This issue, as the parties concede, seems to be one of first impression.
15. As a threshold consideration in assessing the enforceability of the purported waiver, we must address what law governs this issue. Playmates contends that since the underlying claims at issue are federal claims, federal law controls. And, in this limited sense, they are correct. However, as FASA correctly notes, in Lumpkin v. Envirodyne Industries, Inc., 933 F.2d 449 (7th Cir. 1991), the Seventh Circuit adopted the position that
The federal law [in the area of the scope of the validity of a release of a federal cause of action] arises through the incorporation of "state rules of decision" which "furnish an appropriate measure of the governing federal law."