IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
March 28, 2012
TRENT WEST, PLAINTIFF,
QUALITY GOLD, INC.,
The opinion of the court was delivered by: Edward J. Davila United States District Judge
United States District Court For the Northern District of California
ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND; TERMINATING MOTION TO STAY AS MOOT; AND DENYING MOTION TO TRANSFER [Re: Docket Item No. 11]
In this false patent marking action, Plaintiff Trent West ("West") alleges that Defendant Quality Gold, Inc. ("QGI") falsely has advertised to the public that QGI holds a patent covering 21 tungsten jewelry finger rings. West asserts a single claim of false marking in violation of 35 U.S.C. 22 § 292. On August 8, 2011, QGI filed a motion to dismiss the complaint pursuant to Federal Rule of 23 Civil Procedure 12(b)(6). QGI also raised a constitutional challenge to § 292*fn1 and asserted 24 alternative motions to stay the litigation pending enactment of patent reform law and to transfer the 25 action to the Southern District of Ohio pursuant to 28 U.S.C. § 1404(a). West filed an opposition on 26 August 22, 2011, and QGI filed a reply on August 29, 2011. The Court held a hearing on March 23, 27 2012. Having considered the parties' submissions and argument and the relevant law, the Court hereby GRANTS the motion to dismiss with leave to amend, TERMINATES the motion to stay as 2 moot, and DENIES the motion to transfer.
West alleges that in the late 1990s he began investigating ways to "utilize the unique esthetic and durability properties of tungsten carbide in jewelry finger rings." Complt. ¶ 7. He first applied 6 for a patent covering tungsten carbide jewelry finger rings in 1998 and he now owns several patents 7 in this field. Id. West began selling tungsten carbide jewelry finger rings in 2000, and he claims 8 that by 2002 he was recognized as a pioneer in the "previously unrecognized market for tungsten 9 carbide jewelry finger rings." Id. ¶ 8. West asserts that QGI has distributed finger rings covered by 10 his patents; on July 16, 2010, West filed suit against QGI for patent infringement. See Trent West v. Quality Gold, Inc., Case No. 5:10-cv-03124-EJD. That case is pending before the undersigned and it has been related to the present case under this Court's Civil Local Rules. patent application no. 12,141,791 has been "granted" when in fact that application has not been 15 granted. Complt. ¶¶ 12-13. 19 claim upon which relief may be granted. "Dismissal can be based on the lack of a cognizable legal 20 theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). For purposes of evaluating a motion to 22 dismiss, 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 However, mere conclusions couched as factual allegations are not sufficient to state a claim.
On May 24, 2011, West filed the present action, claiming that QGI falsely advertises that its
II. MOTION TO DISMISS
A. Legal Standard
Pursuant to Fed. R. Civ. P. 12(b)(6), a complaint may be dismissed for failure to state a 556, 561 (9th Cir. 1987).
See Papasan v. Allain, 478 U.S. 265, 286 (1986); see also McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir. 1988). The complaint must plead "enough facts to state a claim to relief that isplausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible 2 on its face "when the plaintiff pleads factual content that allows the court to draw the reasonable 3 inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S.Ct. 1937, 4 1949 (2009). Thus, "for a complaint to survive a motion to dismiss, the non-conclusory 'factual 5 content,' and reasonable inferences from that content, must be plausibly suggestive of a claim 6 entitling the plaintiff to relief. " Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009).
provision that allowed any private individual to sue manufacturers who labeled their products with 10 false or expired patent numbers 'for the purpose of deceiving the public.'" Brooks v. Dunlop Manufacturing Inc., No. C-10-04341-CRB, 2011 WL 6140912, at *1 n.1 (N.D. Cal. Dec. 9, 2011).
"If the plaintiff won the lawsuit, he would split the penalty or settlement proceeds with the 13 America Invents Act, H.R. 1249, 112th Cong. (1st Sess. 2011), amending 35 U.S.C. § 292 to 15 eliminate the qui tam provision" relied upon by West. FLFMC, LLC v. Wham-O, Inc., 444 Fed. 16 Appx. 447, 448 (Fed. Cir. 2011). The statute now provides that only the United States may sue for 17 the statutory penalty of $500 per false marking offense. See 35 U.S.C. § 292(a). However, the 18 amendment added a new subsection to § 292, providing that "[a] person who has suffered a 19 competitive injury as a result of a violation of this section may file a civil action in a district court of 20 the United States for recovery of damages adequate to compensate for the injury." 35 U.S.C. § 21
In light of the amendment to § 292 eliminating the rights of private individuals to bring qui
West filed the present action under 35 U.S.C. § 292, which at that time included "a qui tam Government." Id. "On September 16, 2011, the President signed into law the Leahy--Smith 14 292(b). The amendments apply retroactively to all cases. See Wham-O, 444 Fed. Appx. at 448. 22 23 tam actions under § 292, West's qui tam claim is subject to dismissal for lack of standing. 24
However, under the statute as amended, West may pursue a claim under § 292 to the extent that he 25 can plead and prove a "competitive injury" arising from QGI's alleged false marking. At the 26 hearing, West's counsel stated that although he believed that the original complaint does allege facts 27 sufficient to show a competitive injury, he could amend the complaint to add more facts if given 28 leave to do so. The Court has reviewed the complaint in light of counsel's comments, and it 2 concludes that more particularity regarding competitive injury is required. Moreover, because the § 3 292 claim presently is framed as a qui tam action under the prior version of the statute, amendment 4 will avoid confusion going forward. Accordingly, the Court GRANTS the motion to dismiss with 5 leave to amend. 6
When QGI filed its motion to dismiss, it made an alternative motion to stay the litigation 8 pending an expected amendment to § 292. The amendment since has been enacted. The Court 9 therefore TERMINATES the motion to stay as moot.
13 transfer any civil action to any other district or division where it might have been brought or to any 14 district or division to which all parties have consented." 28 U.S.C. § 1404(a). A district court "has 15 discretion to adjudicate motions for transfer according to an individualized, case-by-case 16 consideration of convenience and fairness." Jones v. GNC Franchising, Inc., 211 F.3d 495, 498 17
(9th Cir. 2000) (internal quotation marks and citation omitted). "[T]he court may consider: (1) the 18 location where the relevant agreements were negotiated and executed, (2) the state that is most 19 familiar with the governing law, (3) the plaintiff's choice of forum, (4) the respective parties' 20 contacts with the forum, (5) the contacts relating to the plaintiff's cause of action in the chosen 21 forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of 22 compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of 23 access to sources of proof." Id. at 498-99. The court also may consider the presence of a forum 24 selection clause and the relevant public policy of the forum state. See id. at 499. The court must 25 bear in mind that §1404(a) provides for transfer to a more convenient forum, "not to a forum likely 26 to prove equally convenient or inconvenient." Van Dusen v. Barrack, 376 U.S. 612, 645-46 (1964). 27
Transfer should not be granted if the effect is simply to shift the inconvenience to the plaintiff. See 28 Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). "The defendant
III. MOTION TO STAY
IV. MOTION TO TRANSFER
A. Legal Standard
"For the convenience of parties and witnesses, in the interest of justice, a district court may must make a strong showing of inconvenience to warrant upsetting the plaintiff's choice of forum." 2 Id. 3 5 the action be transferred to the Southern District of Ohio pursuant to 28 U.S.C. § 1404(a). The 6 present action could have been brought in the Southern District of Ohio because QGI's principal 7 place of business is located there.*fn2 See Langhammer Decl. ¶ 2.*fn3 8
9 significant weight. This is particularly true given the pendency of a related patent infringement 10 action in this Court, Trent West v. Quality Gold, Inc., Case No. 5:10-cv-03124-EJD. The Court has
devoted substantial resources to the latter case -- claim construction has been completed, and
dispositive motions are pending. Continuing to manage the two cases together would further 13 judicial efficiency and conservation of judicial resources.*fn4 14
15 weight when the plaintiff is a qui tam relator. See San Francisco Tech. Inc. v. Glad Products Co., 16
No. 10-CV-00966 JF (PVT), 2010 WL 2943537, at *7-8 (N.D. Cal. July 26, 2010). As is noted 17 above, the qui tam provision of § 292 has been eliminated; if West goes forward with this action, it 18
In the event that the Court declines to dismiss the action with prejudice, QGI requests that Turning to the other factors to be considered, West's choice of forum must be given QGI cites authority for the proposition that a plaintiff's choice of forum is entitled to little will be as an ordinary plaintiff seeking to recover actual damages for "a competitive injury." See 35 2
U.S.C. § 292(b). Thus West is entitled to the same deference to his choice of forum as would be 3 afforded to any civil plaintiff. 4 5 courts are equally capable of addressing claims brought under federal statute. West resides in this 6 district, see West Decl. ¶ 2, while QGI has its principal place of business in Ohio, see Langhammer Most of the other factors are neutral. There are no relevant agreements and the two district Decl. ¶ 2. It is not clear that it would be any less expensive to litigate the action in Ohio; QGI 8 presently pays counsel to travel to California, but if the case were transferred West would have to 9 pay counsel to travel to Ohio. There is no forum selection clause. Presumably, both states would 10 have an interest in the litigation -- California to protect its resident, West, and Ohio to protect its resident, QGI.
At the hearing, QGI's counsel discussed a declaratory relief action that QGI has filed against
West in the Southern District of Ohio. The Court gathers that QGI's action is the mirror of the § 14 Ohio action was filed on December 19, 2011, approximately eight months after West filed his § 292 16 action in this Court. While the "first to file" rule is not strictly applied, "[t]he general rule favors the 17 forum of the first-filed action." Micron Tech., Inc. v. Mosaid Tech., Inc., 518 F.3d 897, 904 (Fed. 18 Cir. 2008). Thus the pendency of QGI's recently filed declaratory relief action in Ohio does not 19 weigh in favor of transfer; if anything it cuts against transfer. QGI has identified one witness 20 located in Ohio, Jason Langhammer. Mr. Langhammer's presence in Ohio, and the likelihood that 21 evidence relevant to the false marking claim is located at corporate headquarters in Ohio, do weigh 22 in favor of transfer. However, the Court concludes that these factors are insufficient to satisfy 23 DENIED.
292 action pending in this Court. The parties' joint case management statement indicates that the 15 QGI's burden to make a "strong showing of inconvenience." Accordingly, the motion to transfer is 24
Good cause therefor appearing,
(1) the motion to dismiss is GRANTED WITH LEAVE TO AMEND; any amended pleading shall be filed on or before April 18, 2012;
(2) the motion to stay is TERMINATED as moot; and
(3) the motion to transfer is DENIED.