Khalid v. Citrix Sys., Inc.
| Decision Date | 14 April 2021 |
| Docket Number | CASE NO 2:20-CV-00711-RAJ |
| Court | U.S. District Court — Western District of Washington |
| Parties | ATM SHAFIQUL KHALID, an individual, and on behalf of similarly situated, XENCARE SOFTWARE, INC., Plaintiff, v. CITRIX SYSTEMS, INC., a Delaware corporation, AKA John Doe n. Defendants. |
HONORABLE RICHARD A. JONES
This matter comes before the Court on Defendant Citrix Systems, Inc.'s ("Defendant") Motion to Dismiss. Dkt. # 10. Having considered the parties' briefing, the record, and the applicable law, the Court finds that oral argument is unnecessary. For the reasons below, the motion is GRANTED.
Plaintiff ATM Shafiqul Khalid1 ("Plaintiff" or "Khalid") is an engineer who hadbeen employed by Defendant Citrix Systems, Inc. ("Defendant" or "Citrix") for approximately five years beginning on September 18, 2006. Dkt. # 8 ¶ 13.2 On the day of his hire, Khalid signed an employment agreement that included a patent assignment clause ("Invention Assignment Clause"). Dkt. # 8 ¶ 14; Dkt. # 16 at 4. During his employment with Citrix, Khalid filed two patent applications that resulted in US Patent No. 8,286,219 ("'219 patent") and US Patent No. 8,782,637 ("'637 patent"). Dkt. # 8 ¶ 16.
On October 3, 2011, Citrix terminated Khalid. Id. ¶ 16. On October 25, 2011, Citrix counsel claimed ownership of all patent applications filed by Khalid "which may be used in relation" with "products . . . sold by Citrix." Id. ¶ 18. On October 26, 2011, Khalid asked Citrix to reinterpret the employment agreement to align with what he alleged to be violations of RCW 49.44.140. Id. ¶ 19. Citrix declined to do so and maintained that it possessed ownership rights to the patent applications filed by Khalid. Id. ¶¶ 20-21.
On October 2, 2015, Khalid sued Citrix in King County Superior Court "to clear patent ownership issue of '219 and '637 patent along with damage." Id. ¶ 22. He alleged violations of Washington's Consumer Protection Act ("CPA"), breach of employee contract, wrongful termination in retaliation, breach of the duty of good faith and fair dealing, and tortious interference, and sought declaratory judgment that the Invention Assignment Clause was unenforceable under RCW 49.44.140 and that Citrix had no ownership rights to the '219 or '637 patents. Dkt. # 11-4 at 23-26; Khalid v. Citrix Sys.,Inc., 15 Wash. App. 2d 1043 at *8.3
On May 5, 2016, Citrix attempted to remove the case to federal district court based on diversity and filed several counterclaims, including breach of contract, unjust enrichment, and infringement of Citrix's "Xen" trademark in violation of the Lanham Act. Khalid v. Citrix Systems, No. C16-0650 JCC, 2016 WL 9412678 (W.D. Wash. May 5, 2016) (Dkt. # 1). A month later, Khalid filed a motion to remand the case back to state court. Id. (Dkt. # 19). On July 21, 2016, the Honorable John C. Coughenour remanded the case after concluding that removal was untimely. Khalid v. Citrix Sys. Inc., No. C16-0650 JCC, 2016 WL 9412678, at *1 (W.D. Wash. July 21, 2016). Three weeks later, on May 27, 2016, Microsoft sent a letter to Khalid ("M&G letter") claiming that Microsoft had rights to patents '219 and '637 based on its vendor agreement with Citrix. Dkt. # 8 ¶ 24.
After remand to state court, Khalid moved for partial summary judgment claiming, among other things, that the Invention Assignment Clause was unenforceable because it violated RCW 49.44.140 and that Citrix's actions constituted unfair or deceptive acts under RCW 19.86.020 and an unlawful restraint of trade under RCW 19.86.030. Khalid v. Citrix Sys., Inc., 15 Wash. App. 2d 1043 at *8. Citrix filed a cross motion for summary judgment seeking dismissal of all of Khalid's claims and for summary judgment on its infringement claim against Khalid's use of "Xen." Id.
In 2018, the trial court granted in part Khalid's motion for summary judgment with respect to his CPA claim under RCW 19.86.020 finding that his employment agreement with Citrix violated RCW 49.44.140. Id. at *9. The court concluded that the remedy for the violation, however, was "to strike the offending language and amend the language to conform to the requirements of the statute." Id. The trial court denied theremaining claims, including the ownership of the patents at issue. Id. Finally, the court concluded that Khalid had infringed Citrix's trademarks based on his use of Citrix's "Xen" trademarks for his startup businesses but otherwise denied Citrix's motion for summary judgment. Id. Citrix filed a motion for summary judgment on Khalid's restraint of trade claim alleging that Khalid had no evidence that Citrix had conspired with any other entity to restrict competition. Id. The trial court granted the motion and dismissed Khalid's claim under RCW 19.86.030. Id. Khalid's remaining claims for the jury included the following: (1) alleged breach of the Employment and Severance Agreements; (2) alleged breach of the covenant of good faith and fair dealing related to these two agreements; CPA violation; and (4) tortious interference with Khalid's business expectancies. Id.
In 2018, a jury found that Citrix had breached Khalid's employment agreement and severance agreement and awarded Khalid over $3 million in damages. Id. The trial court concluded that "Citrix has no ownership or other rights to or arising under US Patent No. 8,286,219 and 8,782,637," and entered a declaratory judgment in Khalid's favor with respect to patent ownership. Id. In post-trial motions, Khalid was awarded $2.6 million in attorney fees and costs, and Citrix was awarded $117,816 in legal fees and costs for prevailing in part on summary judgment in its trademark infringement counterclaim. Id. Both Khalid and Citrix appealed various pre-trial, trial, and post-trial decisions. Id.
In 2019, Khalid filed suit pro se against Microsoft, where he was employed from 2012 through 2015, alleging various claims related to the patents at issue in the state case. Dkt. # 11-6; Khalid v. Microsoft Corp., No. C19-130-RSM, 2020 WL 1674123, at *1 (W.D. Wash. Apr. 6, 2020). He asserted violations of Sections 1 and 2 of the Sherman Act; violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO") 18 U.S.C. § 1962(c-d); Actual or Attempted Forced Labor 18 U.S.C. § 1589 predicated on a RICO violation 18 U.S.C. § 1964; violation of civil rights under 42 U.S.C. § 1983 and1985; and violation of 18 U.S.C. § 1595(a), among others. Dkt. # 11-6 ¶¶ 97-165. After dismissing his initial complaint with leave to amend, the Honorable Ricardo S. Martinez dismissed with prejudice Khalid's second amended complaint on April 6, 2020. Khalid, 2020 WL 1674123, at *11.
On May 11, 2020, Khalid filed suit pro se against Citrix in this Court. Dkt. # 1. In his amended complaint, Khalid alleged that Citrix violated various federal statutes by "claiming free ownership to '219 and '637 patents." Dkt. # 8 ¶¶ 96-163. He asserted violations of three provisions of the Clayton Act; violations of Sections 1 and 2 of the Sherman Act; attempted violation of involuntary servitude under 18 U.S.C. § 1594(a); violation of RICO, 18 U.S.C. § 1962(c-d); conspiracy - obstruction of justice under 42 U.S.C. § 1985(1)-(2); violations of civil rights under 42 U.S.C. § 1983, and others. Id. On August 26, 2020, Citrix filed the pending motion to dismiss under Federal Rules of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and 12(b)(6) for failure to state a claim upon which relief can be granted. Dkt. # 10.
After the motion to dismiss was fully briefed before this Court, the Court of Appeals of Washington issued its ruling on the parties' state court appeals. Khalid v. Citrix Sys., Inc., 15 Wash. App. 2d 1043. On December 7, 2020, the appeals court "affirm[ed] the decisions of the trial court and the judgment entered on the jury's verdicts." Id. *1. The court remanded with instructions to adjust attorney fee awards and prejudgment interest based on its finding that the trial court erred in denying Khalid pre-judgment interest on the jury's $3 million damages award and in awarding Citrix attorney fees on its trademark infringement claim. Id.
Citrix moves the Court to dismiss Khalid's amended complaint under Rules 12(b)(1) and 12(b)(6). Under Federal Rule of Civil Procedure 12(b)(1), a court may dismiss a claim for lack of subject matter jurisdiction. An argument against jurisdiction may be facial or factual. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.2004). In a facial attack, the moving party claims that the allegations in the complaint "are insufficient on their face to invoke federal jurisdiction." Id. In a factual attack, the moving party disputes the truth of the allegations that would invoke federal jurisdiction. Id.
Under Federal Rule of Civil Procedure 12(b)(6), a court may dismiss a complaint for failure to state a claim. Fed. R. Civ. P. 12(b)(6). The court must assume the truth of the complaint's factual allegations and credit all reasonable inferences arising from those allegations. Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007). A court "need not accept as true conclusory allegations that are contradicted by documents referred to in the complaint." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Instead, the plaintiff must point to factual allegations that "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 568 (2007). If the plaintiff succeeds, the complaint avoids dismissal if there is "any set of facts consistent with the allegations in the complaint" that would entitle the plaintiff to relief. Twombly, 550 U.S. at 563; Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
On a motion to dismiss, a court typically considers only the contents of the complaint. However, a court is permitted to take judicial notice of facts that are incorporated by reference in the complaint. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 200...
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