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Battle-ABC, LLC v. Soldier Sports, LLC

United States District Court, D. Nebraska

July 8, 2019

BATTLE-ABC, LLC, Plaintiff,
v.
SOLDIER SPORTS, LLC, and JEFFREY EVANS, Defendants.

          MEMORANDUM AND ORDER

          Laurie Smith Camp Senior United States District Judge.

         This matter is before the Court on the Motion for Partial Summary Judgment, ECF No. 43, filed by Plaintiff Battle-ABC, LLC (“Battle-ABC”). For the reasons stated below, the Motion will be granted in part.

         BACKGROUND

         Unless otherwise indicated, the following facts are those stated in the parties' briefs supported by pinpoint citations to admissible evidence in the record, in compliance with NECivR 56.1[1] and Federal Rule of Civil Procedure 56.

         Battle-ABC is a Nebraska limited liability company with its principal place of business in Nebraska. Defendant Soldier Sports, LLC (“Soldier Sports”) is also a Nebraska limited liability company with its principal place of business in Nebraska. Defendant Jeffrey Evans (“Jeffrey”) is an individual residing in Nebraska and is the founder and Chief Executive Officer (CEO) of Soldier Sports.

         Battle-ABC manufactures and sells a mouth-and-lip guard called the Oxygen Lip Protector (“the OLP”) that allows the wearer to breathe and drink water without obstruction. Soldier Sports manufactures a similar device called the Elite Air Lip Protector, giving rise to this litigation.

         Jeffrey and Michael Evans (“Michael”) invented the OLP while they worked with Battle Sports Science, LLC (Battle Sports), the predecessor of Battle-ABC.[2] The OLP is covered by three utility patents: Patent Nos. 8, 931, 488 (“the '488 Patent”), 9, 333, 413 (“the '413 Patent”), and 9, 717, 975 (“the '975 Patent”) (collectively the “Asserted Patents”).

         Utility patent protection for the OLP was first sought in provisional patent application 61/554, 331 (“the '331 Provisional Application”), filed with the United States Patent and Trademark Office (USPTO) on November 1, 2011.[3] On November 1, 2012, patent application 13/666, 698 (“the '698 Application”), claiming priority from the '331 Provisional Application, was filed with the USPTO resulting in the issuance of the '488 Patent on January 13, 2015. On December 5, 2014, patent application 14/562, 301 (“the '301 Application”), a continuation of the '698 Application, was filed with the USPTO resulting in the issuance of the '413 Patent on May 10, 2016. On May 6, 2016, patent application 15/148, 684 (“the '684 Application”), a continuance of the '301 Application was filed with the USPTO resulting in the issuance of the '975 Patent on August 1, 2017.

         In October 2011, when Battle Sports began the process of seeking patent protection for the OLP, Michael asked to be listed as “the Inventor.” Emails, ECF No. 47-2, Page ID 1109. Chris Circo, CEO of Battle Sports, responded “[Michael] can be listed but only if an assignment is made contemporaneously.” Id. at 1108. An Assignment purporting to assign all rights in the OLP to Battle Sports was drafted. The Assignment stated that Michael, Circo, and Jeffrey invented the OLP. Jeffrey confronted Circo about Circo being listed as a co-inventor and said he did not want to sign the Assignment because Circo was not an inventor. Jeffrey Aff., ECF No. 47-1, Page ID 1100. Circo told Jeffrey that he had to sign the Assignment exactly as it was written if he “wanted a fucking paycheck.” Id. “Circo has also threatened [Jeffrey's] life and said he was going to kill [Jeffrey].” Id. Jeffrey signed the Assignment on October 23, 2011, because he felt that he had no choice except to sign the Assignment as written. Id. Michael also noticed the alleged error and confronted Circo, who demanded Michael sign the agreement as written. Michael Aff., ECF No. 47-2, Page ID 1106. Michael signed the Assignment on October 24, 2011, and Circo signed on October 31, 2011. Jeffrey, Michael, and Circo were listed as the inventors on the '331 Provisional Application, [4] the '698 Application, the '301 Application, and the '684 Application.

         The Assignment stated as follows:

NOW THEREFORE, for valuable consideration, receipt and adequacy of which is hereby acknowledged, we have sold, assigned, and set over, and do hereby sell, assign, and set over, unto the Assignee and said Assignee's legal representatives, successors, and assigns, the entire right, title, and interest in and to said invention, said application, and the Letters Patent, both foreign and domestic, that may or shall issue thereon including all original, divisional, continuation, continuation-in-part, reissue, certificate of reexamination, and related applications.

Assignment, ECF No. 45-2, Page ID 328. In the Assignment, Jeffrey did “covenant and agree” not to “execute any writing or do any act whatsoever conflicting with” the terms of the Assignment, and to “render all necessary assistance in making application for . . . Letter Patent of the United States . . . on said invention.” Id. at 328-29. The Assignment was recorded with the USPTO with respect to the '698 Application, '301 Application, and '684 Application.

         On July 5, 2012, Circo fired Jeffrey from Battle Sports. Michael, who was paid for sales by commission and was not a regular employee, ceased working with Battle Sports around the time Jeffrey was fired. Michael Aff., ECF No. 47-1, Page ID 1103-06. Michael never received the royalties or sales commissions he allegedly was promised as “consideration” for his work on the OLP and the assignment of his rights in the OLP to Battle Sports. Id. at 1106.

         On October 13, 2014, Anthony Schrager, Chief Operating Officer of Battle Sports, filed Substitute Statements in Lieu of an Oath of Declaration for Utility or Design Patent Application (Substitute Statements) with the patent filing for the ‘488 Patent regarding Michael and Jeffrey. On December 5, 2014, Schrager filed Substitute Statements with the patent filing for the '413 Patent regarding Michael and Jeffrey. On May 6, 2016, Schrager filed Substitute Statements with the patent filing for the '975 Patent regarding Michael and Jeffrey. On each Substitute Statement form under “[c]ircumstances permitting execution of this substitute statement” the box “Inventor has refused to execute the oath or declaration under 37 CFR 1.63” is checked. Hale Aff., ECF No. 47-3, Page ID 1115-19. Jeffrey and Michael were unaware of the patent applications that were filed after their relationship with Battle Sports ended in July 2012 until sometime after the patents that are the subject of this case were issued, and neither Michael nor Jeffrey refused to sign an oath and declaration in connection with the patent applications or amendments.[5]

         In June 2016, Battle Sports assigned its right, title, and interest in the Assignment to Active Brands Company, LLC, which later assigned its interest and right to sue for past infringement to Battle-ABC.

         Battle-ABC's Amended Complaint, ECF No. 16, asserts claims for patent infringement and inducement of infringement based on Soldier Sports' manufacture of the Elite Air Lip Protector. Defendants have raised the affirmative defenses that the patents on the OLP are invalid or unenforceable by operation of 35 U.S.C. § 102 (invalidity due to lack of novelty), § 103 (invalidity due to obviousness), and § 112 (invalidity due to deficiencies in the specifications). Defendants have also asserted counterclaims for declaratory relief regarding invalidity and inequitable conduct. Jeffrey has also asserted counterclaims for unenforceability of the '488 patent family and tortious interference with economic relations, as well as the defense of lack of standing.

         Battle-ABC seeks summary judgment on Defendants' defenses and counterclaims of invalidity, unenforceability, inequitable conduct, and the contention that Battle-ABC lacks standing. Battle-ABC also argues that because Jeffrey is estopped from asserting invalidity, Battle-ABC is entitled to summary judgment on Jeffrey's counterclaim for tortious interference.

         STANDARD OF REVIEW

         “Summary judgment is appropriate when the evidence, viewed in the light most favorable to the nonmoving party, presents no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Garrison v. ConAgra Foods Packaged Foods, LLC, 833 F.3d 881, 884 (8th Cir. 2016) (citing Fed.R.Civ.P. 56(c)). “Summary judgment is not disfavored and is designed for every action.” Briscoe v. Cty. of St. Louis, 690 F.3d 1004, 1011 n.2 (8th Cir. 2012) (quoting Torgerson, 643 F.3d at 1043). In reviewing a motion for summary judgment, the Court will view “the record in the light most favorable to the nonmoving party . . . drawing all reasonable inferences in that party's favor.” Whitney v. Guys, Inc., 826 F.3d 1074, 1076 (8th Cir. 2016) (citing Hitt v. Harsco Corp., 356 F.3d 920, 923-24 (8th Cir. 2004)). Where the nonmoving party will bear the burden of proof at trial on a dispositive issue, “Rule 56(e) permits a proper summary judgment motion to be opposed by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves.” Se. Mo. Hosp. v. C.R. Bard, Inc., 642 F.3d 608, 618 (8th Cir. 2011) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)). The moving party need not produce evidence showing “the absence of a genuine issue of material fact.” Johnson v. Wheeling Mach. Prods., 779 F.3d 514, 517 (8th Cir. 2015) (quoting Celotex, 477 U.S. at 325). Instead, “the burden on the moving party may be discharged by ‘showing' . . . that there is an absence of evidence to support the nonmoving party's case.” St. Jude Med., Inc. v. Lifecare Int'l, Inc., 250 F.3d 587, 596 (8th Cir. 2001) (quoting Celotex, 477 U.S. at 325).

         In response to the moving party's showing, the nonmoving party's burden is to produce “specific facts sufficient to raise a genuine issue for trial.” Haggenmiller v. ABM Parking Servs., Inc., 837 F.3d 879, 884 (8th Cir. 2016) (quoting Gibson v. Am. Greetings Corp., 670 F.3d 844, 853 (8th Cir. 2012)). The nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts, and must come forward with specific facts showing that there is a genuine issue for trial.” Wagner v. Gallup, Inc., 788 F.3d 877, 882 (8th Cir. 2015) (quoting Torgerson, 643 F.3d at 1042). “[T]here must be more than the mere existence of some alleged factual dispute” between the ...


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