Krauser v. Evollution IP Holdings, Inc.

• Decision Date: 19 September 2013
• Docket Number: CASE NO. 12-80977-CIV-MARRA
• Parties: JACK T. KRAUSER, D.M.D., Plaintiff, v. EVOLLUTION IP HOLDINGS, INC. and BIOHORIZONS IMPLANT SYSTEMS, INC., Defendants.
• Court: U.S. District Court — Southern District of Florida

JACK T. KRAUSER, D.M.D., Plaintiff, v. EVOLLUTION IP HOLDINGS, INC. and BIOHORIZONS IMPLANT SYSTEMS, INC., Defendants.

CASE NO. 12-80977-CIV-MARRA

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

Dated: September 19, 2013

OPINION AND ORDER

This cause is before the Court upon Defendants' Joint Motion to Dismiss or Transfer (DE 45). The Court has reviewed the briefs and the record, and is otherwise advised in the premises.

I. Background

This case involves competing claims of ownership and inventorship of a dental implant system. Plaintiff Jack T. Krauser, D.M.D. ("Dr. Krauser") is a noted periodontist and implant surgeon, a lecturer, author, and educator, and a consultant to several major dental implant companies. He alleges that he "first conceived" the dental implant system in question in 1987. (DE 35: Am. Compl. ¶ 11).¹

In 1988, Dr. Krauser retained a medical job and machine shop to produce drawings and manufacture prototypes of the system, including implants, attachments, and related products. (Am. Compl. ¶ 12). To assist the shop in performing its work, Dr. Krauser provided the shop with writtenmemoranda, initial drawings and sketches, work product, and intellectual property, including copyrighted materials expressing his ideas in connection with the system. (Am. Compl. ¶ 13). The shop was not manufacturing or selling any dental implant systems of its own at that time. (Am Compl. ¶ 12).

Once the manufacturing process began, Dr. Krauser worked with the shop's principals and employees to develop the system. (Am. Compl. ¶ 14). According to the complaint, "[t]his collaboration included face-to-face communications as part of a broader exchange of documents, sketches, drawings and ongoing discussions pertinent to in vitro and in vivo animal studies and human clinical evaluations." Id. Dr. Krauser alleges that he contributed to the evolution and improvement of the system with his experience in the implant field, his prior consulting with other dental implant manufacturers, his knowledge and ideas gained through giving and attending lectures in the field, "and his thoughts generating further ideas for such improvements." (Am. Compl. ¶ 15).

While Dr. Krauser and the shop's principals and employees developed the system over the next several years, some of the principals and employees applied for and received five patents on different aspects of it. (Am. Compl. ¶ 16).² Dr. Krauser was not named as an inventor on the applications, and he now seeks to correct the inventorship of four of the five patents.³ He alleges that he has a reputational interest in correcting the omission of his name because of his stature in the dental implant field, and he further claims that he has an economic interest in the patents and, byextension, Article III standing to bring this action. (Am. Compl. ¶¶ 20-21).

This is not the first time Dr. Krauser has initiated an action related to the system. In an earlier case before this Court, Dr. Krauser brought a claim for declaratory relief seeking a declaration that he was both the inventor and owner of the system.⁴ He also sought attorney's fees. The inventorship claim was voluntarily dismissed without prejudice, but the Court addressed the remaining ownership claim at summary judgment. The Court concluded that "it is not enough for [Dr. Krauser] to claim ownership of the at-issue intellectual property by stating that the dental implant system incorporates certain features that reflect his ideas. The Court therefore finds, as a matter of law, that [Dr. Krauser] has no ownership rights to the aforementioned intellectual property," i.e., the dental implant system. (Case No. 10-CV-80454-KAM: DE 169 at 20).

In this case, Dr. Krauser seeks an order directing the USPTO to correct the patents by naming him an inventor pursuant to 35 U.S.C. § 256. That statute provides:

(a) Correction—Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent, the Director may, on application of all the parties and assignees, with proof of the facts and such other requirements as may be imposed, issue a certificate correcting such error.

(b) Patent valid if error corrected—The error of omitting inventors or naming persons who are not inventors shall not invalidate the patent in which such error occurred if it can be corrected as provided in this section. The court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Director shall issue a certificate accordingly.⁵

Section 256 "provides a cause of action to interested parties to have the inventorship of a patent changed to reflect the true inventors of the subject matter claimed in the patent." Larson v. Correct Craft, Inc., 569 F.3d 1319, 1324 (Fed. Cir. 2009) (citation and internal quotations omitted). The Federal Circuit has interpreted § 256 broadly "as a 'savings provision' to prevent patent rights from being extinguished simply because the inventors are not correctly listed." Id. (quoting Chou v. Univ. of Chi., 254 F.3d 1347, 1358 (Fed. Cir. 2001)).

Defendants Evollution IP Holdings, Inc. ("Evollution") and BioHorizons Implant Systems, Inc. ("BioHorizons") move to dismiss Dr. Krauser's inventorship claim on three grounds: first, it is barred by the doctrine of res judicata; second, Dr. Krauser is collaterally estopped from asserting any ownership interest in the patents, and his alleged reputational injury is insufficient to establish standing under Article III; and third, Evollution is not subject to personal jurisdiction in Florida.⁶ As to this last argument, Defendants request that the Court transfer this action to the District of Delaware—which presumably has jurisdiction over both defendants—as opposed to dismissing Evollution and subjecting Defendants to two lawsuits in two separate venues.

II. Legal Standards

Defendants move to dismiss Dr. Krauser's claim as barred by res judicata under Federal Rule of Civil Procedure 12(b)(6). A motion to dismiss based on res judicata is problematic in the sense that res judicata is an affirmative defense that requires the Court to look outside of the pleadings, and Federal Rule of Civil Procedure 12(d) instructs the Court to convert such a motion into one forsummary judgment.⁷ But "[a] district court may take judicial notice of certain facts without converting a motion to dismiss into a motion for summary judgment," Horne v. Potter, 392 F. App'x 800, 802 (11th Cir. 2010) (citing Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1278 (11th Cir. 1999)), and the Court accordingly takes judicial notice of the pleadings and documents in Dr. Krauser's first case before this Court (Case No. 10-CV-80454-KAM) as public records, see Horne, 392 F. App'x at 802; see also Lobo v. Celebrity Cruises, Inc., 704 F.3d 882, 892-93 (11th Cir. 2013) (comparing complaints from two separate cases to determine whether the same facts were involved for purposes of res judicata and ultimately affirming district court's dismissal under Rule 12(b)(6)); Davila v. Delta Air Lines, Inc., 326 F.3d 1183, 1184-85 (affirming district court's dismissal on grounds of res judicata under Rule 12(b)(6)). Consequently, Defendants' 12(b)(6) motion will not be converted into a motion for summary judgment.

A. Motions to dismiss under Rule 12(b)(6)

Rule 8(a) of the Federal Rules of Civil Procedure "requires only 'a short and plain statement of the claim showing that the pleader is entitled to relief' in order to give the defendant fair notice of what the plaintiff's claim is . . . and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed. R. Civ. P. 8(a)(2)). The Supreme Court has held that "[w]hile a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level." Id.(citations omitted).

"To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570). "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." Id.; see also Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1261 (11th Cir. 2009). Thus, "only a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 129 S. Ct. at 1950. When considering a motion to dismiss for failure to state a claim, the court must "accept[] the allegations in the complaint as true and constru[e] them in the light most favorable to the plaintiff." Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1288 (11th Cir. 2010) (internal quotation marks omitted).

B. Res judicata and the declaratory judgment exception

As to res judicata, the Eleventh Circuit has held that,

[a]s a general rule, res judicata bars the filing of claims which were raised or could have been raised in an earlier proceeding. A party asserting res judicata bears the burden of showing these elements: (1) the prior decision must have been rendered by a court of competent jurisdiction; (2) there must have been a final judgment on the merits; (3) both cases must involve the same parties or their privies; and (4) both cases must involve the same causes of action. Only if all four of those requirements are met do we consider whether the claim in the new suit was or could have been raised in the prior action; if the answer is yes, res judicata applies.

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