Speedfit LLC v. Woodway USA, Inc.

• Decision Date: 28 December 2016
• Docket Number: 13–CV–1276 (KAM)
• Citation: 226 F.Supp.3d 149
• Parties: SPEEDFIT LLC and Aurel A. Astilean, Plaintiffs, v. WOODWAY USA, INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

226 F.Supp.3d 149

SPEEDFIT LLC and Aurel A. Astilean, Plaintiffs,

v.WOODWAY USA, INC., Defendant.

13–CV–1276 (KAM)

United States District Court, E.D. New York.

Signed December 28, 2016

Thomas B. Decea, Yenisey Rodriguez–McCloskey, Douglas E. Robinson, Danzig Fishman and Decea, White Plains, NY, Jacob E. Lewin, Fishman & Decea, Armonk, NY, John F. Vodopia, John F. Vodopia, Esq., Huntington, NY, for Plaintiffs.

Kadie M. Jelenchick, Jeffrey N. Costakos, Stephanie Quick, Foley & Lardner LLP, Milwaukee, WI, Sara Madavo, Yonaton Aronoff, Foley & Lardner LLP, New York, NY, for Defendant.

MEMORANDUM & ORDER

MATSUMOTO, United States District Judge:

Plaintiffs Speedfit LLC ("Speedfit") and Aurel A. Astilean ("Astilean") (collectively, "plaintiffs") commenced this action against Woodway USA, Inc. ("Woodway" or "defendant"), alleging that Woodway wrongfully infringed upon United States Patent No. 8,308,619 ("the '619 Patent") and United States Patent No. 8,343,016 ("the '016 Patent"), both of which relate to a manually-powered treadmill design.¹ Plaintiffs allege that Woodway has infringed upon the '619 and '016 Patents through the following patents owned by Woodway, which also relate to manually-powered treadmills: United States Patent No. 8,864,627 ("the '627 Patent"), United States Patent No. 8,986,169 ("the '169 Patent"), United States Patent No. 9,039,580 ("the '580 Patent"), and United States Patent No. 9,114,276 ("the '276 Patent") (collectively, the "Woodway Patents"). Plaintiffs seek a finding that Woodway wrongfully infringed on the '619 and '016 Patents, a correction of inventorship on the Woodway Patents, damages for alleged conversion, and a declaratory judgment that Astilean and his co-inventor Daniel Bostan ("Bostan") are the sole or joint inventors of the Woodway Patents. (ECF No. 125, Plaintiffs' Third Amended Complaint ("Am. Compl.").)

Presently before the court is Woodway's motion to dismiss plaintiffs' Third Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) ( " Rule 12(b)(1)") for lack of subject matter jurisdiction, and Federal Rule of Civil Procedure 12(b)(6) (" Rule 12(b)(6)") for failure to state a claim upon which relief can be granted. For the reasons set forth below, defendant's motion is granted in part and denied in part.

BACKGROUND

Familiarity with the factual and procedural history is assumed, as set forth comprehensively in this court's prior orders concerning this litigation. See Speedfit LLC, et. al. v. Woodway USA, Inc. , No. 13–cv–1276, 2015 WL 6143697 (E.D.N.Y. October 19, 2015) (granting leave to file a Third Amended Complaint); Speedfit LLC, et. al. v. Woodway USA, Inc. , 53 F.Supp.3d 561 (E.D.N.Y. 2014) (denying Woodway's motion to dismiss and motion to transfer). Thereafter, plaintiffs filed their Third Amended Complaint on October 23, 2015, adding claims for correction of inventorship, conversion, and declaratory judgment. On October 30, 2015, defendant filed a motion to dismiss the Third Amended Complaint, and plaintiffs filed an opposition on November 6, 2015. (See ECF No. 126, Motion for Pre–Motion Conference to Dismiss by Woodway USA, Inc. ("Def. Mot."); ECF No. 129, Reply in Opposition to Woodway USA, Inc.'s Letter Motion Requesting a Pre–Motion Conference ("Pl. Opp.").)² Plaintiffs filed a supplemental opposition on November 19, 2015, (ECF No. 133, Response in Opposition re Motion to Dismiss ("Pl. Supp. Opp.").) and defendant filed a reply on November 25, 2015. (ECF No. 137, Reply in Support re Status Conference ("Def. Repl.").)

In its motion to dismiss, defendant argues that the court lacks subject matter jurisdiction over plaintiffs' infringement claims because Bostan, who is a co-inventor of the '619 and '016 Patents is not named as a plaintiff in this suit and plaintiffs Speedfit and Astilean therefore lack standing to bring claims for infringement. Defendant further asserts that plaintiffs' claims for correction of inventorship should be dismissed because Speedfit and Astilean lack standing to bring these claims on Bostan's behalf. Finally, defendant asserts that plaintiffs' claim for conversion is preempted by federal patent law and should therefore be dismissed.

LEGAL STANDARDS

I. Rule 12(b)(1)

"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). It is well-settled that the "plaintiff bears the burden of proving subject matter jurisdiction by a preponderance of the evidence." Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir. 2005) (citing Luckett v. Bure, 290 F.3d 493, 497 (2d Cir. 2002) ).

In reviewing a Rule 12(b)(1) motion to dismiss, the court "must accept as true all material factual allegations in the complaint, but [the court is] not to draw inferences from the complaint favorable to plaintiff." J.S. ex rel. N.S. v. Attica Cent. Sch., 386 F.3d 107, 110 (2d Cir. 2004). A court may exercise jurisdiction "only if a plaintiff has standing to sue on the date that it files suit." Abraxis Bioscience, Inc. v. Navinta LLC , 625 F.3d 1359, 1364 (Fed. Cir. 2010) (citing Keene Corp. v. United States , 508 U.S. 200, 207, 113 S.Ct. 2035, 124 L.Ed.2d 118 (1993) ). Furthermore, courts " ‘have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party.’ " Banks–Gervais v. Medicare Contractor , No. 12–cv–6339, 2013 WL 1694870, at *2 (E.D.N.Y. Apr. 16, 2013) (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006) ). Where subject matter jurisdiction is lacking, "dismissal is mandatory." Id. ; see also Fed. R. Civ. P. 12(h)(3) ("If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.").

II. Rule 12(b)(6)

To survive a motion to dismiss pursuant to Rule 12(b)(6), 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 , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "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 conduct alleged." Id. A complaint providing only "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Twombly , 550 U.S. at 555, 127 S.Ct. 1955. In deciding a motion to dismiss pursuant to Rule 12(b)(6), the court may refer to "documents attached to the complaint as an exhibit or incorporated in it by reference, to matters of which judicial notice may be taken, or to documents either in plaintiffs' possession or of which plaintiffs had knowledge and relied on in bringing suit." Brass v. Am. Film Tech., Inc. , 987 F.2d 142, 150 (2d Cir. 1993) (internal citations omitted); see also Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002) (clarifying that "reliance on the terms and effect of a document in drafting the complaint is a necessary prerequisite to the court's consideration of a document on a dismissal motion; mere notice of possession is not enough.") (emphasis in original).

DISCUSSION

I. Plaintiffs' Patent Infringement Claims

Plaintiffs allege that Woodway wrongfully infringed upon the '016 and '619 Patents through its manufacture and sale of the Curve treadmill, which is also manually-powered. At issue is whether plaintiffs' infringement claims should be dismissed for lack of subject matter jurisdiction, as asserted by Woodway. Defendant argues that because the Third Amended Complaint does not name co-inventor Bostan as a plaintiff and because Bostan was not named as a plaintiff when this action was initially filed on March 11, 2013, plaintiffs Astilean and Speedfit lack standing to bring an infringement claim relating to the '016 and '619 Patents, and their claims should therefore be dismissed.

a. Standing to Bring an Infringement Claim

A patent serves to protect an inventor's right to exclude others from making, using, offering to sell, or selling his or her invention during the term of the patent. 35 U.S.C. § 271(a) ("Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent."). In general, an individual owns the patent rights to the subject matter of which he or she is an inventor. Banks v. Unisys Corp. , 228 F.3d 1357, 1359 (Fed. Cir. 2000). In cases of co-inventors, each individual "owns a pro rata undivided interest in the entire patent, no matter what their respective contributions." Ethicon, Inc. v. Surgical Corp. , 135 F.3d 1456, 1465 (Fed. Cir. 1998). As such, each co-inventor individually retains the right to exclude others from infringing upon his or her patent, and the Federal Circuit has consistently required that all co-inventors be joined as plaintiffs at the time that an infringement suit is filed in order for there to be proper standing to proceed with an infringement claim. See, e.g., Int'l Nutrition Corp. v. Horphag Research Ltd. , 257 F.3d 1324, 1331 (Fed. Cir. 2001) ("[T]he right to bring suit on the United States patent in the district court is governed by United States patent law, which requires that all co-owners normally must join as plaintiffs in an infringement suit."); Ethicon , 135 F.3d at 1467–68 ("An action for infringement must join as plaintiffs all co-owners.") (citing Waterman v. Mackenzie , 138 U.S. 252, 255, 11 S.Ct. 334, 34 L.Ed. 923 (1891) ).

In the present suit, the initial complaint, filed on March 11, 2013, named Speedfit LLC and Astilean as plaintiffs (See...