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Battle Sports Science, LLC v. Shock Doctor, Inc.

United States District Court, D. Nebraska

December 2, 2016

BATTLE SPORTS SCIENCE, LLC, AND ACTIVE BRANDS COMPANY, LLC, Plaintiffs,
v.
SHOCK DOCTOR, INC., Defendant.

          MEMORANDUM AND ORDER

          Robert F. Rossiter, Jr. United States District Judge.

         Battle Sports Science, LLC (“Battle Sports”) and Active Brands Company, LLC (“Active Brands”), both Nebraska limited liability companies with their principal places of business in Nebraska, bring this action against Shock Doctor, Inc. (“Shock Doctor”), a Delaware corporation with its principal place of business in Minnesota. In their Amended Complaint (Filing No. 18), Battle Sports and Active Brands allege, among other things, that Shock Doctor infringed U.S. Patent No. 8, 931, 488 (the “'488 Patent”), U.S. Patent No. 9, 333, 413 (the “'413 Patent”), U.S. Design Patent No. D760, 889 (the “D'889 Patent”), and U.S. Trademark Registration No. 4, 616, 238 (the “Registered Trademark”) in violation of 35 U.S.C. § 271 and 15 U.S.C. §§ 1114, 1125. Now before the Court is Shock Doctor's Motion to Dismiss the Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) or, in the Alternative, Transfer Venue pursuant to 28 U.S.C. § 1404(a) (Filing No. 21). For the reasons explained below, the Motion is granted in part and denied in part.

         I. BACKGROUND[1]

         In or around 2011, Battle Sports, an athletic apparel and equipment company, designed, developed, and marketed the Oxygen Lip Protector mouth guard (“OLP”). Convinced the OLP was like “no other mouth guard on the market” in terms of appearance and function, Battle Sports applied for the patents listed above to protect the innovative features of its product.

         On January 13, 2015 and May 10, 2016, respectively, the U.S. Patent and Trademark Office issued the '488 Patent and the '413 Patent. On July 5, 2016, Battle Sports received the D'889 Patent. On June 20, 2016, Battle Sports sold, assigned, and transferred its “entire right, title and interest” in the OLP patents to Active Brands, “including all rights to damages for any and all past infringement of the any patents covering the” OLP. That same day, Battle Sports also sold, assigned, and transferred to Active Brands its “entire right, title, and interest in and to” the Registered Trademark, including the right to past damages.

         The OLP became a quick success. Soon after sales began to grow, Shock Doctor began selling “a nearly identical mouth guard”-the Max Airflow. In January 2015, Battle Sports advised Shock Doctor that the Max Airflow infringed Battle Sports's intellectual-property rights. Despite that notice, Shock Doctor continued to sell the infringing Max Airflow in 2015 and 2016 with only “superficial changes.”

         On June 21, 2016, Battle Sports sued Shock Doctor in the District of Nebraska (8:16CV288), alleging patent infringement and other violations of its intellectual property rights under federal and state law. On July 29, 2016, Battle Sports voluntarily dismissed that case pursuant to Federal Rule of Civil Procedure 41(a)(1).

         On July 15, 2016, Battle Sports and an entity described as Active Brands, Inc. in the case caption and signature block and Active Brands, LLC in the body of the Complaint (Filing No. 1) sued Shock Doctor in the District of Nebraska, again alleging patent infringement and other violations of federal and state law. On August 29, 2016, Shock Doctor moved to dismiss the Complaint pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction and Rule 12(b)(6) for failure to state a claim upon which relief could be granted (Filing No. 14). More specifically, Shock Doctor asserted the named plaintiffs did not have constitutional standing to raise an intellectual-property claim based on the OLP because Battle Sports had “assigned away all of its ownership interests in the asserted intellectual property” and neither Active Brands, Inc. nor Active Brands, LLC was the current owner of the OLP intellectual property rights-which, according to the assignment documents, belonged to Active Brands.

         On August 19, 2016, Shock Doctor filed its own intellectual-property claims against Battle Sports and Active Brands in two separate cases in the District of Minnesota. The first Minnesota case, 16-cv-02907, alleges Battle Sports and Active Brands infringed a Shock Doctor patent for compression shorts (the “Minnesota shorts case”). The second Minnesota case, 16-cv-02908, sets forth Minnesota state-law claims of false advertising, deceptive trade practices, and unfair competition with respect to the OLP (the “Minnesota OLP case”). On September 28, 2016, Battle Sports and Active Brands moved to dismiss the Minnesota OLP case, arguing Shock Doctor's claims were compulsory counterclaims in this case. They alternatively moved to transfer both Minnesota cases to Nebraska. It appears those motions are still pending.

         In response to Shock Doctor's Motion to Dismiss in this case, Battle Sports and Active Brands filed an Amended Complaint (Filing No. 18) on September 21, 2016. The Amended Complaint listed Battle Sports and Active Brands as plaintiffs, deleting any reference to Active Brands, Inc. and Active Brands, LLC. In light of the filing of the Amended Complaint, this Court terminated Shock Doctor's Motion to Dismiss (Filing No. 14).

         On October 7, 2016, Shock Doctor filed the present Motion to Dismiss, or in the Alternative, Motion for Transfer. Shock Doctor maintains the Court should dismiss this case with prejudice because (1) “the original plaintiffs lacked constitutional standing” and (2) the allegations in the Amended Complaint are insufficient to “state a plausible claim to relief.” Should the Court find dismissal unwarranted, Shock Doctor urges the Court to transfer this case to the District of Minnesota to be tried with the Minnesota OLP case, which Battle Sports and Active Brands agree are related. Resisting dismissal and transfer, Battle Sports and Active Brands counter that jurisdiction and venue are proper in this Court and that the “amended complaint states a plausible claim under Rule 12(b)(6).”

         II. DISCUSSION

         A. Subject-Matter Jurisdiction

         Shock Doctor argues this Court lacks subject-matter jurisdiction in this case because neither of the plaintiffs listed on the original Complaint owned the OLP intellectual property when they filed suit and thus lack constitutional standing to sue. See Brooks v. City of Des Moines, No. 15-2781, 2016 WL 6471225, at *1 (8th Cir. Nov. 2, 2016) (“Where a plaintiff lacks standing, the court has no subject matter jurisdiction.”). A jurisdictional challenge under Rule 12(b)(1) can be presented as either a “facial” or “factual” challenge. Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990); accord 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1378 (Fed. Cir. 2012).

         In a facial attack, “the court restricts itself to the face of the pleadings, and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6).” Osborn, 918 F.2d at 729 n.6 (internal citations omitted). “In a factual attack, the court considers matters outside the pleadings, and the non-moving party does not have the benefit of 12(b)(6) safeguards.” Id. (internal citation omitted). Shock Doctor states that it presents both facial (as to Battle Sports) and factual (as to Battle Sports and Active Brands) challenges, but both parties rely on matters outside the pleadings, so the Court will treat the challenges as factual attacks.

         1. Battle Sports

         “The irreducible constitutional minimum of standing is that a plaintiff show (1) an injury-in-fact that (2) is ‘fairly . . . traceable to the challenged action of the defendant and (3) is likely . . . to be redressed by a favorable decision in court.” ABF Freight Sys., Inc. v. Int'l Bhd. of Teamsters, 645 F.3d 954, 958 (8th Cir. 2011) (internal marks omitted) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)); accord 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1377 (Fed. Cir. 2012). An injury in fact is “an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560. “The party invoking federal jurisdiction bears the burden of establishing” standing. Id. at 561. Battle Sports does not satisfy that burden.

         “Standing in a patent infringement case is derived from the Patent Act, which provides: ‘A patentee shall have remedy by civil action for infringement of his patent.'”[2]Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1345 (Fed. Cir. 2001) (quoting 35 U.S.C. § 281). “The word ‘patentee' includes not only the patentee to whom the patent was issued but also the successors in title to the patentee.” 35 U.S.C. § 100(d); accord Morrow v. Microsoft Corp., 499 F.3d 1332, 1339-40 (Fed. Cir. 2007). “[T]o assert standing for patent infringement, the plaintiff must demonstrate that it held enforceable title to the patent at the inception of the lawsuit.” Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d 1304, 1309 (Fed. Cir. 2003). Battle Sports contends it has standing because the Complaint “alleges direct injury in fact to Battle Sports during the period Battles Sports was the patentee.”

         But, as Shock Doctor points out, under the terms of the Patent Assignment Agreement, Battle Sports sold, assigned, and transferred its “entire right, title and interest” in the OLP patents to Active Brands, “including all rights to damages for any and all past infringement of the any patents covering the” OLP before filing the Complaint. Thus, at the relevant time, i.e., the inception of the lawsuit, Battle Sports no longer had any interest in the patents or any past infringement claims. See, e.g., Paradise Creations, Inc., 315 F.3d at 1309. “If a party lacks title to a patent, that party ‘has no standing to bring an infringement action' under that patent.” Lans v. Digital Equip. Corp., 252 F.3d 1320, 1328 (Fed. Cir. 2001) (quoting FilmTec Corp. v. Allied-Signal, Inc., 939 F.2d 1568, 1571 (Fed. Cir. 1991)) (deciding a plaintiff did not have standing to sue for patent infringement because he had transferred title to the patent before filing suit); accord Schreiber Foods, Inc. v. Beatrice Cheese, Inc., 402 F.3d 1198, 1203 (Fed. Cir. 2005) (concluding the plaintiff “lost standing to sue for infringement” when it assigned its patent and “all causes of action” related to the patent).

         Battle Sports next claims it “has standing to pursue equitable claims for relief as the assignor of the patents.” According to Battle Sports, it “has a direct interest in establishing the validity of the patents transferred because an adverse adjudication of the validity of the patents could form the basis of [a] claim arising out of the assignment.” Battle Sports provides no authority supporting its assertion of standing on that basis, which is dubious at best, particularly given the nature of Battle Sports's assignment and the underlying allegations in this case.

         The Court also rejects Battle Sports's undeveloped assertion that it “has an equitable interest in seeking enforcement of the patent as a corporate affiliate of Active Brands.” Battle Sports's corporate disclosure statement lists Active Brands as a parent. Battle Sports's cited cases and meager argument do not convince the Court that Active Brands's ownership of Battle Sports creates some equitable interest in Battle Sports sufficient to confer standing under the circumstances of this case. Cf. Digitech Image Techs., LLC v. Newegg Inc., No. 2:12-CV-01688-ODW, 2013 WL 1871513, at *4 (C.D. Cal. May 3, 2013) (“The Federal Circuit has never held that a corporate parent has equitable title in a subsidiary's patents.”). Shock Doctor's motion to dismiss Battle Sports for lack of constitutional standing is granted.

         2. Active Brands

         Active Brands maintains this Court has subject-matter jurisdiction because “Active Brands possessed constitutional and prudential standing at the time this case was filed, and any amendment to the original complaint relates back to the date of filing.” Noting its status “as the assignee of Battle Sports' patents and trademarks related to the [OLP], ” Active Brands explains that the references to Active Brands, Inc. and Active Brands, LLC in the Complaint were “mere” misnomers of its corporate status. As Active Brands sees it, Federal Rules of Civil Procedure 15 and 17 allow Active Brands to “cure any misnomer of its corporate status” and relate the change back to the Complaint.

         Under Rule 15(c)(1), which applies to proposed changes of plaintiffs as well as defendants, an amendment changing a party or the naming of a party relates back to the date of the original complaint if the defendant knew or should have known it would be asked to defend claims by the new plaintiff and would not be unfairly prejudiced by the change. See, e.g., Plubell v. Merck & Co., 434 F.3d 1070, 1072 (8th Cir. 2006); Fed.R.Civ.P. 15 Advisory Committee Notes (1966) (explaining “[t]he relation back of amendments changing plaintiffs is not expressly treated in revised Rule 15(c) since the problem is generally easier, ” but that “the attitude taken in revised Rule 15(c) toward change of defendants extends by analogy to amendments changing plaintiffs”).

         Rule 17(a)(1) requires that an action “be prosecuted in the name of the real party in interest.” Under Rule 17(a)(3),

The court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action. After ratification, joinder, or substitution, the action proceeds as if it had been originally commenced by the real party in interest.

         In support of its claim that its Amended Complaint relates back to the date of the Complaint under the Federal Rules, Active Brands relies on Hilgraeve Corp. v. Symantec Corp., 212 F.R.D. 345, 346-47 (E.D. Mich. 2003), in which the court granted a patent holder's motion for leave to amend its complaint under Rules 15 and 17 to change the plaintiff's name from “Hilgraeve Corporation, ” an entity that did not exist, to the plaintiff's correct name of Hilgraeve, Inc.” Rejecting the defendant's argument that the court lacked subject-matter jurisdiction because the named plaintiff did not have constitutional standing, the court concluded the proposed amendment “would merely correct a technical error in the complaint.” Id. at 348.

         The court reasoned “[a] little common sense goes a long way to show that the complaint contains a mere misnomer, and that [Hilgraeve Inc. and Hilgraeve Corporation] are one and the same.” Id. at 348 (alteration in original) (quoting Hemphill Contracting Co. v. United States, 34 Fed.Cl. 82, 86 (Fed. Cl. 1995)). The court also decided the amendment should relate back to the complaint under Rules 15(c) and 17(a) because the defendant failed to demonstrate any prejudice. Id. at 348-49. Active Brands urges the same result here.

         In response, Shock Doctor (1) emphasizes that Active Brands has to prove that it had constitutional standing “when the original complaint was filed, ” see, e.g., Sicom Sys., Ltd. v. Agilent Techs., Inc., 427 F.3d 971, 975-76 (Fed. Cir. 2005) (“Standing must be present at the time the suit is brought.”), and (2) argues Active Brands “cannot cure a defect in subject matter jurisdiction by amending the Complaint, ” see, e.g., Paradise Creations, Inc., 315 F.3d at 1310 (“[A] defect in standing cannot be cured after the inception of the lawsuit.”). According to Shock Doctor, Rules 15 and ...


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