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Eakin Enterprises, Inc v. Specialty Sales LLC

June 25, 2012

EAKIN ENTERPRISES, INC.,
PLAINTIFF,
v.
SPECIALTY SALES LLC,
DEFENDANT.



The opinion of the court was delivered by: Lawrence J. O'Neill United States District Judge

ORDER DENYING WITHOUT PREJUDICE SPECIALTY'S MOTION FOR SUMMARY JUDGMENT AND EAKIN ENTERPRISES' REQUEST FOR A STAY (DOC. 43)

I.INTRODUCTION

This is a patent infringement case brought by Eakin Enterprises, Inc. ("Eakin Enterprises") against Specialty Sales LLC ("Specialty"). Eakin Enterprises' first amended complaint ("FAC") alleges infringement of U.S. Patent No. 7,987,820 ("the '820 Patent"), a violation of the Clayton Act, and violations of California's Unfair Practices Act and Unfair Competition Law. Specialty has filed a counter claim against Eakin Enterprises and its President and Chief Executive Officer John W. Eakin ("Mr. Eakin"). Doc. 41. In the instant motion, Specialty seeks to dismiss Eakin Enterprises' patent infringement claim for failure to state a claim. Doc. 43. In the alternative, Specialty seeks partial summary judgment as to the patent infringement claim as well as on Specialty's own counterclaim for a declaratory judgment that the '820 Patent is invalid. Id. Eakin Enterprises filed an opposition, Doc. 45, to which Specialty replied, Doc. 48. The motion was originally set for hearing on June 7, 2012, but the hearing was vacated by an order that also requested supplemental filings. Doc. 49. On June 8, 2012, Eakin Enterprises filed the requested declaration of Mr. Eakin. Doc. 50. Specialty filed objections on June 13, 2012. Doc. 53. The matter was then submitted for decision on the papers pursuant to Local Rule 230(g).

II.BACKGROUND

A.Facts.

Eakin Enterprises manufactures and licenses the use of a cattle foot-bath system that is covered by the '820 patent. Doc. 41, First Amended Complaint ("FAC"), at ¶ 8. The product and system applies formaldehyde to dairy cattle's feet before they are moved into milking parlors in order to prevent hoof diseases and contamination of the work area. Id. Specifically, the product and system is designed to provide a precise and safe means of measuring and distributing formaldehyde into the foot-bath. Id. Generally, Eakin Enterprises provides the equipment to the farmer or rancher, with the understanding that the formaldehyde solution used in the system will be purchased from Eakin Enterprises. Id.

Eakin Enterprises alleges that Specialty manufactures, uses, sells and offers to sell, or provides for use, a cattle foot-bath system that infringes on one or more claims of the '820 patent. Id. at ¶¶ 9, 11-16. Eakin Enterprises further alleges that Specialty offers formaldehyde solutions to farmers and ranchers at prices substantially below market value and that the low pricing causes Eakin Enterprises' customers to switch to Specialty's cattle foot-bath system. Id. at ¶ 10, 17-19. In addition, Eakin Enterprises alleges that Specialty's sale of formaldehyde is tied to the customers continuing use of Specialty's cattle foot-bath system. Id.

B.Procedural History.

On September 23, 2011, Eakin Enterprises filed a complaint against Specialty in the U.S. District Court for the Eastern District of Washington. Doc. 1. Specialty's motion to transfer the matter to this Court was granted. Docs. 5 & 16. Once the case was transferred, Specialty filed an answer containing counterclaims for declaratory relief that: (1) Specialty had not infringed the '820 patent (against Eakin Enterprises); (2) the '820 patent is invalid (against Eakin Enterprises); and (3) the '820 patent is unenforceable (against Eakin Enterprises and Mr. Eakin). Doc. 30. Specialty also included a counterclaim for unfair competition, in violation of Cal. Bus. & Prof. Code § 17200 (against Eakin Enterprises). Doc. 30. Eakin Enterprises and Mr. Eakin answered Specialty's counterclaims. Doc. 32.

On April 16, 2012, Eakin Enterprises filed its FAC, which alleges the following claims for relief against Specialty: (1) infringement of the '820 patent; (2) attempt to monopolize the industry, in violation of the Clayton Act; (3) violations of California's Unfair Practices Act, Cal. Bus. & Prof. Code § 17000, et seq.; and (4) violations of California's Unfair Competition law, Cal. Bus. & Prof. Code § 17200, et seq. Doc. 41. On April 26, 2012, Specialty filed the instant motion. Doc. 43.

III.LEGAL STANDARDS

A.Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6).

A motion to dismiss pursuant to Fed R. Civ. P. 12(b)(6) is a challenge to the sufficiency of the allegations set forth in the complaint. A 12(b)(6) dismissal is proper where there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). In considering a motion to dismiss for failure to state a claim, the court generally accepts as true the allegations in the complaint, construes the pleading in the light most favorable to the party opposing the motion, and resolves all doubts in the pleader's favor. Lazy Y. Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).

To survive a 12(b)(6) motion to dismiss, the plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556). "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility for entitlement to relief.'" Id. (quoting Twombly, 550 U.S. at 557).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). Thus, "bare assertions ... amount[ing] to nothing more than a 'formulaic recitation of the elements'... are not entitled to be assumed true." Iqbal, 129 S. Ct. at 1951. A court should "dismiss any claim that, even when construed in the light most favorable to plaintiff, fails to plead sufficiently all required elements of a cause of action." Student Loan Marketing Ass'n v. Hanes, 181 F.R.D. 629, 634 (S.D. Cal. 1998). In practice, "a complaint ... must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." Twombly, 550 U.S. at 562. To the extent that the pleadings can be cured by the allegation of additional facts, the plaintiff should be afforded leave to amend. Cook, Perkiss and Liehe, Inc. v. Northern California Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir. 1990) (citations omitted).

B.Motion for Partial Summary Judgment.

Fed. R. Civ. P. 56(a) permits a party to move for summary judgment on a claim or defense or a party of any claim or defense. Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The moving party bears the initial burden of "informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation marks omitted). A fact is material if it could affect the outcome of the suit under the governing substantive law; "irrelevant" or "unnecessary" factual disputes will not be counted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

If the moving party would bear the burden of proof on an issue at trial, that party must "affirmatively demonstrate that no reasonable trier of fact could find other than for the moving party." Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). In contrast, if the non-moving party bears the burden of proof on an issue, the moving party can prevail by "merely pointing out that there is an absence of evidence" to support the non-moving party's case. Id. When the moving party meets its burden, the non-moving party must demonstrate that there are genuine disputes as to material facts by either:

(A) citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or

(B) showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

Fed. R. Civ. P. 56(c).

In ruling on a motion for summary judgment, a court does not make credibility determinations or weigh evidence. See Anderson, 477 U.S. at 255. Rather, "[t]he evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Id. Only admissible evidence may be considered in deciding a motion for summary judgment. Fed. R. Civ. P. 56(c)(2). "Conclusory, speculative testimony in affidavits and moving ...


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