Factory Direct Wholesale, LLC v. Office Kick, Inc.

• Decision Date: 27 February 2023
• Docket Number: Civil Action 4:21-cv-00368
• Parties: FACTORY DIRECT WHOLESALE, LLC, Plaintiff, v. OFFICE KICK, INC.; CKNAPP SALES, INC., Defendants.
• Court: U.S. District Court — Southern District of Georgia

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FACTORY DIRECT WHOLESALE, LLC, Plaintiff, v. OFFICE KICK, INC.; CKNAPP SALES, INC., Defendants.

Civil Action No. 4:21-cv-00368

United States District Court, S.D. Georgia, Savannah Division

February 27, 2023

ORDER

R STAN BAKER, UNITED STATES DISTRICT JUDGE.

Presently before the Court is Defendants Office Kick, Inc., and CKNAPP Sales, Inc.'s (collectively “Defendants”) Motion to Dismiss. (Doc. 32). Plaintiff Factory Direct Wholesale, LLC, brought this suit alleging, inter alia, that Defendants engaged in a civil conspiracy to tortiously interfere with Plaintiff's contractual relationship with non-party Amazon, Inc. (“Amazon”). (Doc. 15.) Plaintiff alleges that Defendants filed frivolous notices to Amazon that certain desk converters sold by Plaintiff on Amazon's website were infringing Defendants' patents, resulting in Amazon removing the products from the site. (Id.) Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants filed the at-issue Motion to Dismiss, arguing that Plaintiff failed to state claims for tortious interference and civil conspiracy. (Doc. 32.) The Motion has been fully briefed. (See id.; docs. 43, 49-50.) For the reasons stated below, the Court DENIES Defendants' Motion. (Doc. 32.)

BACKGROUND

I. The Parties and Defendants' Patents

The following allegations are set forth in Plaintiff's Amended Complaint. (Doc. 15.) Plaintiff sells various models of adjustable standing desk converter units, which allow users to either stand or sit while using the work surface. (Id. at p. 5.) Plaintiff has sold at least fifteen different models of desk converters on Amazon's website. (See Id. at pp. 6, 29-30.) Defendants are Plaintiff's competitors, selling desk converters on their own respective websites. (Id. at p. 4.) Defendant CKNAPP Sales, Inc., also known as Vivo (“Vivo”), is a parent or related company of, or is otherwise affiliated with, Defendant Office Kick, Inc. (“Office Kick”). (Id. at p. 3.) Specifically, Vivo owns and/or exercises managerial control over Office Kick, and Chance Knapp, Vivo's President, is Office Kick's registered agent. (Id. at p. 5.)

According to the records of the United States Patent Office, Office Kick is the holder of three patents related to desk converter designs: (1) Patent No. 11,134,773 (the “773 Patent”), (2) Patent No. 11,134,774 (the “774 Patent”), and (3) Patent No. 10,575,630 (the “630 Patent,” and, collectively with the 773 and 774 Patents, the “Patents”). (Id. at pp. 7-8, 22, 25; see docs. 15-1, 15-5, 15-6.) Both Office Kick and Vivo identified the Patents as part of their respective intellectual property (“IP”) portfolios on their websites. (Doc. 15, p. 5.)

II. Amazon's Seller Agreement and IP Policies^[1]

Sellers on Amazon are bound by the Amazon Services Business Solutions Agreement (the “Seller Agreement”). (See doc. 32-1, p. 2 (“By registering for or using [Amazon's] services, you . . . agree to be bound by the terms of [the Seller Agreement].”).) Paragraph 18 of the Seller Agreement gives Amazon “the right to immediately halt any [seller's] [transactions, prevent or restrict access to the Services or take any other action to restrict access to or availability of . . . any unlawful items[] or any items otherwise prohibited by applicable Program Policies.” (Id. at p. 12.) “Service” includes selling on Amazon. (Id. at p. 17.) The Seller Agreement also binds sellers to Amazon's “service terms and program policies” for the country in which the seller is authorized to use Amazon's services. (Id. at p. 2.)

A separate webpage, titled “Intellectual Property for Rights Owners,” (the “IPRO page”) indicates that a patent holder (i.e. “rights owner”) may submit a notice of patent infringement to Amazon by submitting a report. (Doc. 32-2, pp. 2, 8.) The IPRO page is contained in a section of Amazon's website titled “Policies, agreements, and guidelines.” (See id. at p. 1.) According to the IPRO page, to be “valid,” the report must identify the infringing products and include “information that will help Amazon in processing [the] complaint.” (Id. at p. 8.) Furthermore, the webpage states that, if the notice is “valid,” Amazon will inform the responsible seller of the infringement claim and provide the seller with the claimant's contact information. (Id. at p. 10.) Additionally, if the notice of infringement is “accepted,” Amazon “will remove the [reported] content . . . and take appropriate action against the responsible sellers.” (Id.) Finally, the IPRO page provides a link to “[r]elated articles” on Amazon's site, including “Program Policies.” (Id.)

III. Defendants' Infringement Notifications and the Removal of Plaintiff's Products from Amazon's Website

On October 6, 2021, Defendants' counsel wrote to Amazon and demanded that it remove two of Plaintiff's best-selling models-which were sold under the Amazon Standard Identification Numbers (ASINs) B07G36F79M (the “79M desk converter”) and B07WDV1GDV (the “GDV desk converter”)-from its website because, counsel claimed, the products were infringing the 773 Patent. (Doc. 15, pp. 6-8.) On that same day, Amazon notified Plaintiff of Defendants' request. (Doc. 15, p. 8; see doc. 15-2.) Soon after, Plaintiff contacted Defendants and asked them to withdraw their takedown request because, in Plaintiff's view, the products were not infringing the 773 Patent. (Id. at p. 9.) Defendants refused, however, and, on November 2, 2021, Amazon removed the 79M and GDV models from its website. (Id.)

Ultimately, at Defendants' request, Amazon removed thirteen other models of desk converters Plaintiff offered for sale on the site for infringing one of the Patents. (See id. at pp. 1930.) Although Plaintiff asked Amazon to re-list the removed products, Amazon refused to do so because Defendants never withdrew their infringement claims. (Id. at pp. 9, 2124, 28.) According to Plaintiff, the product removals have caused it to suffer damages, including lost sales and profits, as well as reputational harm. (Id. at pp. 2, 6, 21, 24, 28-29.)

IV. Procedural History

On December 31, 2021, Plaintiff brought this suit, asserting, inter alia, tortious interference and civil conspiracy claims against Defendants.^[2] (Doc. 1 (original Complaint); see doc. 15 (Amended Complaint).) Plaintiff alleges that Defendants conspired to hire counsel to wrongfully notify Amazon that Plaintiff's desk converters infringed the Patents, thereby inducing Amazon to remove the products from its site. (Doc. 15, pp. 40-43.) According to Plaintiff, Defendants lacked a “colorable or good faith argument” that its products were infringing, and, thus, Defendants' notices were “frivolous and objectively baseless.” (Id. at pp. 40, 43.) Plaintiff alleges that its products cannot possibly infringe any independent claim of the Patents, and, therefore, as a matter of law, cannot infringe any dependent claim of the Patents. (Id. at pp. 17, 21, 2427-28.) Additionally, with respect to the 79M and GDV models, Plaintiff alleges that these products constitute “prior art” to the 773 Patent, and, thus, any claim that these products infringe that patent are frivolous. (Id. at pp. 17-19.) Moreover, the Amended Complaint states that Defendants acted improperly, without privilege, and with the specific intent to injure Plaintiff. (Id. at pp. 40-43.) Plaintiff seeks, among other relief, an award of actual and punitive damages, an order requiring Defendants to attempt to persuade Amazon to reinstate Plaintiff's desk converters, and attorneys' fees and costs. (Id. at pp. 43-44.)

Defendants filed the at-issue Motion to Dismiss, seeking dismissal of Plaintiff's tortious interference and conspiracy claims pursuant to Rule 12(b)(6) for failure to state a claim. (Doc. 32.) Plaintiff filed a Response, (doc. 43), and Defendants filed a Reply, (docs. 49, 50).

STANDARD OF REVIEW

When evaluating a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must “accept[] the allegations in the complaint as true and constru[e] them in the light most favorable to the plaintiff.” Belanger v. Salvation Army, 556 F.3d 1153, 1155 (11th Cir. 2009). However, this tenet “is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Rather, “[a] complaint must state a facially plausible claim for relief, and ‘ [a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'” Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1215 (11th Cir. 2012) (quoting Iqbal, 556 U.S. at 678). “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action'” does not suffice. Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

The plausibility standard is “not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief” and dismissal is proper. Id. (internal quotation marks and citation omitted). Dismissal under Rule 12(b)(6) is also permitted “when, on the basis of a dispositive issue of law, no construction of the factual allegations will support the cause of action.” Marshall Cnty. Bd. of Educ. V. Marshall Cnty. Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993); see also Neitzke v. Williams, 490 U.S. 319, 326-27 (1989) (explaining that Rule 12 allows a court “to dismiss a claim on the basis of a dispositive...