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MARATHON COACH, INC. v. PHASE FOUR INDUSTRIES

October 24, 2005.

Marathon Coach, Inc., Plaintiff,
v.
Phase Four Industries, Inc., et al., Defendants.



The opinion of the court was delivered by: JAMES WARE, District Judge

ORDER GRANTING MARATHON'S MOTION TO DISMISS COUNTERCLAIMS

I. INTRODUCTION

Marathon Coach, Inc. ("Marathon" or "Plaintiff") filed a patent infringement action against Phase Four Industries, Inc. ("Phase Four"), and Monaco, Inc. ("Monaco") (collectively "Defendants"), in November 2004. Currently before this Court is Marathon's Motion to Dismiss Defendants' Counterclaims for failure to state a claim upon which relief may be granted pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. This Court deemed Plaintiff's motion submitted pursuant to Civil Local Rule 7-1(b). Based on the briefs filed to date, this Court GRANTS Plaintiff's Motion to Dismiss Counterclaims.

  II. BACKGROUND

  Marathon is an Oregon corporation with its principal place of business in Coburg, Oregon. Marathon is involved in the business of producing hand built, high-end RV's from the chassis up. Marathon is the owner-by-assignment of the U.S. Patent No. 6,607,009 (hereinafter '009), entitled "Sewage Systems for Vehicles." The patent was issued on August 19, 2003. Phase Four is a California corporation with its principal place of business in Hollister, California. Phase Four is also involved in the RV industry. In October 2002, Phase Four filed a provisional application for an automatic sewer hose. Monaco is an Oregon corporation with its principal place of business in Oregon. Monaco is a developer and manufacturer of RVs. Pursuant to a business relationship with Phase Four, Monaco purchases RV parts from Phase Four and incorporates them into its RVs.

  This case essentially involves the technology development of the RV waste disposal system. RV waste disposal is typically done manually, through the manipulation of valves and a sewer hose. The user must manually connect a sewer hose from the RV to a sewer receptacle. After the waste has been emptied from the RV, the hose is manually disconnected and stored within the RV. This process is generally thought to be an unpleasant experience. Both Marathon and Phase Four have developed and claim inventorship to automated waste disposal systems that use a pre-attached sewer hose that extends and retracts without the need for manual manipulation of the hose.

  Marathon contends that Defendants manufacture, use, sell and or offer to sell the "Waste Master" sewage system, which infringes on Marathon's '009 patent. On October 29, 2004, Marathon sent a "cease and desist" letter to Monaco. The letter informed Monaco that the "Waste Master" product infringed on Marathon's patents and requested an accounting of sales. In late November 2004, Marathon filed a patent infringement suit against Defendants in the District Court in Oregon. The lawsuit was later transferred to the Northern District of California and is currently before this Court. Defendants have filed separate counterclaims against Marathon's infringement claims. Specifically, Phase Four's counterclaims include (1) intentionalinterference with business relationships, (2) intentionalinterference with existing contractualrelations, (3) intentional interference with prospective contractual relations, (4) defamation, and (5) libel. Monaco has asserted only one counterclaim for intentional interference with business relationship against Marathon. Marathon now moves to dismiss all of Defendants' counterclaims pursuant to Rule 12(b)(6). Fed.R.Civ.P. 12(b)(6).

  Anticipating that Marathon would sue it for patent infringement, on November 11, 2004, Phase Four filed a preemptive action against Marathon in the Northern District of California, seeking a declaratory judgment that it does not infringe the '009 patent and that the '009 patent is invalid. (See C 04-4801-JW.) Two of the bases for claimed invalidity urged by Phase Four are priority of inventorship and derivation. On October 20, 2005, this Court granted Marathon's Motion for Partial Summary Judgment as to the affirmative defenses of invalidity based on priority of inventorship and derivation and orders these affirmative defenses dismissed. (See C 04-4801-JW, Docket Item No. 65.)

  III. STANDARDS

  A. Dismissal under Rule 12(b)(6)

  A complaint may be dismissed for failure to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). A claim may be dismissed as a matter of law for: "(1) lack of a cognizable legal theory or (2) insufficient facts under a cognizable legal theory." Robertson v. Dean Witter Reynolds, Co., 749 F.2d 530, 534 (9th Cir. 1984). "A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). The court "must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the nonmoving party." Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). In determining the propriety of a FED. R. CIV. P. 12(b)(6) dismissal, a court may not look beyond the complaint. Schneider v. California Dept. of Corrections, 151 F.3d 1194, 1197 (9th Cir. 1998) ("The focus of any Rule 12(b)(6) dismissal . . . is the complaint"). A court may dismiss a case without leave to amend if the Plaintiff is unable to cure the defect by amendment. Lopez v. Smith, 203 F.3d 1122, 1129 (9th Cir. 2000).

  B. Choice of Law

  Title 28 U.S.C. § 1404(a) permits a party to a litigation to request transfer of any civil action to any other district court or division where it might have been brought. 28 U.S.C. § 1404(a). The United States Supreme Court has, however, held that a transfer of venue under § 1404(a) should effect only a change of court and not a change of law. Van Dusen v. Barrack, 376 U.S. 612 (1964). Thus, the transferee court should apply the law that the transferor court would have applied if the case had not been transferred. Hence, this Court will apply the law that the Oregon court would have applied, had the case not been transferred to California. IV. DISCUSSION

  As a preliminary matter, the Court finds that Marathon, the owner of the '009 Patent, has a statutory right to enforce its patent by contacting possible infringers and advising them of possible infringement suits. A patentee who has a good faith belief that its patents are being infringed violates no protected right when it notifies infringers. Mallinckrodt, Inc. V. Mediapart, Inc., 976 F.2d 700, 709 (Fed. Cir. 1992). Patents would be of little value if infringers of them could not be notified of the consequences of infringement or proceeded against in the courts. Id. Marathon is the owner of the U.S. Patent No. 6,607,009 (the '009 Patent), describing a novel automatic sewer hose for RVs. As the owner of this Patent, Marathon is granted a statutory presumption of validity and therefore has the right to enforce its Patent. 35 U.S.C. § 282. The federal circuit has held that "threatening alleged infringers with suit" is contained within a patent owner's right to enforce his patent. Concrete Unlimited, Inc. V. Cementcraft, Inc., 776 F.2d 1537, 1539 (Fed. Cir. 1985). Thus, Marathon clearly had a right to send an infringement letter to Monaco, informing them of a possible lawsuit. The letter was sent from the law firm of Chernoff, Vilhauer, McClung & Stenzel, LLP, and addressed to Mr. John Nepute, President, CEO of Monaco. The letter reads, in pertinent parts:
We represent Marathon Coach, Inc., in its intellectual property mattes. It has come to our attention that Monaco Coach equips its coaches with Waste Master products from Phase Four Industries. The Waste Master product infringes U.S. Patent No. 6,607,009, assigned to Marathon Coach. Accordingly, your resale of this product ...

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