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MISSION I-TECH HOCKEY LTD. v. OAKLEY

September 22, 2005.

MISSION I-TECH HOCKEY LTD., Plaintiff,
v.
OAKLEY, INC., Defendant.



The opinion of the court was delivered by: LEO PAPAS, Magistrate Judge

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS (15-1) AND GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO STRIKE (15-2)
This action arises from a Settlement and License Agreement between Plaintiff Mission I-Tech Hockey Ltd.'s (hereafter "Plaintiff" or "Mission") predecessor and Defendant Oakley, Inc. (hereafter "Defendant" or "Oakley") in case number 01-2374, a case previously litigated in this Court (hereafter "the Oakley case"). In the Oakley case, on February 18, 2003, the parties agreed that the undersigned would have jurisdiction to decide, inter alia, "all disputes arising out of the terms of the Settlement Agreement once completed and that any decision by the undersigned shall be FINAL AND BINDING WITH NO APPEAL . . ." (Consent to Jurisdiction of A Magistrate Judge and Order of Reference, February 18, 2003, case no. 01-2374) On May 5, 2005, Mission filed the instant action against Oakley, asserting causes of action for Breach of the Settlement and License Agreement and for Patent Infringement. On May 26, 2005, the parties stipulated that the instant case be transferred to the undersigned for all purposes. They further stipulated that the instant case arises from the terms and conditions of the Settlement and License Agreement noted above.

Oakely has filed a Motion to Dismiss Mission's Second Cause of Action for Patent Infringement and a Motion to Strike Mission's Request and Prayer for Damages and Request for Jury Trial. Mission has filed an Opposition to the Motions to Dismiss and Strike. Oakley has filed a Reply to the Opposition.

  STANDARD FOR MOTION TO DISMISS

  Generally under Federal Rule of Civil Procedure 12(b) (6), a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff could prove no set of facts in support of his or her claim for relief. Church of Scientology v. Flynn, 744 F.2d 694, 696 (9th Cir. 1984). In applying this standard, the court must treat all of the plaintiff's factual allegations as true. Experimental Eng'g, Inc. v. United Technologies Corp., 614 F.2d 1244, 1245 (9th Cir. 1980). However, the court is not bound to assume the truth of legal conclusions simply because they are stated in the form of factual allegations. Western Mining Counsel v. Watt, 643 F.2d 618, 624 (9th Cir.), cert. denied, 454 U.S. 1031 (1981). To dismiss with prejudice, it must appear to a certainty that the plaintiff would not be entitled to relief under any set of facts that could be proven. Reddy v. Litton Indus., 912 F.2d 291, 293 (9th Cir. 1990), cert. denied, 502 U.S. 921 (1991).

  Dismissal is also proper if a complaint is vague, conclusory, and does not set forth any material facts in support of the allegation. North Star Intern v. Arizona Corp. Comm'n, 720 F. 2d 578, 583 (9th Cir. 1983). Plaintiff bears the burden of pleading sufficient facts to state a claim; a court will not supply essential elements of the claim that were not initially pled even in the context of a pro se plaintiff. Richards v. Harper, 864 F.2d 85, 88 (9th Cir. 1988); Ivey v. Board of Regents of University of Alaska, 673 F.2d 266, 268 (9th Cir. 1982). Although the Federal Rules of Civil Procedure are very liberal as to pleading, a complaint is subject to dismissal if the pleading fails to reasonably inform the adverse party of the asserted cause of action. Haines v. Kerner, 404 U.S. 519, 520 (1972). The court must give a litigant leave to amend his complaint unless it is "absolutely clear that the deficiencies of the complaint could not be cured by amendment." Noll v. Carlson, 809 F.2d 1446, 1447 (9th Cir. 1987).

  A. Mission Does Not Have Standing To Assert a Cause of Action for Patent Infringement

  1. Mission's Complaint

  Mission contends that it has an exclusive renewable license to manufacture, sell and offer for sale hockey face shield products incorporating Oakley's '848 and '705 patent technology, in exchange for a certain agreed annual royalty payments, or a minimum annual payment. (Complaint at paragraph 9) Under the Settlement and License Agreement, Oakley is obligated to enforce the '848 patent against third party infringers. (Complaint at paragraph 10) The Settlement and License Agreement provides that Oakley shall not license any third party infringer nor manufacture for the benefit of any third party similar products incorporating the '848 and the '705 patents or any foreign equivalent thereof. (Complaint at paragraph 11) Mission asserts that, during the term of the Settlement and License Agreement, no party other than Itech would thereafter have the right to manufacture, sell or offer for sale products covered by the '848 patent. (Complaint at paragraph 13, emphasis added) Mission contends that as the exclusive licensee of the '848 and '705 patents in the limited field of hockey shield products, it has the standing to assert the claim of patent infringement against Oakley. (Complaint at paragraph 20) Mission asserts that Oakley has engaged in intentional acts to infringe and/or induce infringement of the '848 and '705 patents by manufacturing hockey shield products covered by the '848 patent, for the benefit of a competitor, allowing the competitor to sell and offer for sale such products to its customers and to the general public. (Complaint at paragraphs 32, 33) Oakley denies these allegations.

  2. Settlement and License Agreement

  Since the parties have stipulated that their dispute arises from the Settlement and License Agreement, the pertinent parts of that Agreement are stated here: [EDITORS' NOTE: THIS PAGE IS BLANK.] [EDITORS' NOTE: THIS PAGE IS BLANK.] 3. Analysis

  a. Mission's Complaint Fails to Allege That It Has Standing to Sue Oakley for Patent Infringement

  The only support for the reference in Mission's Complaint that it has standing to sue Oakley for patent infringement is that, as an exclusive licensee of the '848 patent, it has standing to assert a patent infringement claim. This statement is supported by Mission's reference to U.S. Valves v. Dray 212 F3d 1368 (Fed. Cir. 2000)

  However, U.S. Valves does not discuss an exclusive licensee's standing to sue a patentee. Rather, it discusses the court's jurisdiction to hear the appeal in that case. Therefore, the holding of U.S. Valves does not support Mission's allegation of standing to sue Oakley for patent infringement. Mission cites no other cases to buttress its position.

  b. Oakley Has Retained Substantial Rights to the Patent

  Oakley contends that it has retained substantial rights in the patent, even though it granted an "exclusive" license to Mission. Mission asserts that as an "exclusive" licensee, it has standing to sue Oakley.

  It is well settled "that before a federal court can consider the merits of a legal claim, the person seeking to invoke the jurisdiction of the court must establish the requisite standing to sue." Whitmore v. Arkansas 495 U.S. 149, 154, 110 S.Ct. 1717 (1990). A Plaintiff has the burden "clearly to allege facts demonstrating it is a proper party to invoke ...


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