United States District Court, E.D. California
matter is before the court on a motion to dismiss and for
sanctions brought by defendants X-Body Equipment (X-Body) and
Jewell Attachments, LLC (Jewell). Mot., ECF No. 13. Plaintiff
Advanced Steel Recovery, LLC (Advanced Steel) opposes,
Opp’n, ECF No. 28, and defendants have replied. Reply,
ECF No. 36-1. As explained below, the court GRANTS
defendants’ motion to dismiss with leave to amend and
DENIES the motion for sanctions.
owns United States Patent 9, 056, 731 (the ‘731 Patent)
by virtue of an assignment, which is the patent at issue
here. Compl. ¶ 14, ECF No. 1. The ‘731 Patent,
titled “Container Packer System and Method, ” was
issued on June 16, 2015. Id. ¶ 15. It is a
continuation-in-part (CIP) application of United States
Patent 8, 061, 950 (the ‘950 Patent), which itself was
a CIP application of United States Patent 7, 744, 330 (the
‘330 Patent). The ‘330 Patent and the ‘950
Patent previously were litigated in another case in this
district that was later appealed to the Federal Circuit
(Prior Litigation). See Case No. 12-1004-GEB-DAD;
Advanced Steel Recovery, LLC v. X-Body Equip., Inc.,
808 F.3d 1313 (Fed. Cir. 2015). On appeal, the Federal
Circuit affirmed the district court’s decision that the
Acculoader device, the same device at issue here, did not
infringe the asserted claims of the ‘950 Patent
literally or under the doctrine of equivalents. See generally
‘731 Patent describes a system and method for packing
overseas containers with materials. Compl. ¶ 16. The
system described includes a transfer base and a container
packer. Id. The transfer base contains control
systems, among other things, to operate the system and
receive the container. Id. Defendants make, use,
offer to sell, and/or sell a product known as the Acculoader
that infringes at least one claim of the ‘731 Patent.
Id. Specifically, defendant Jewell manufactures the
Acculoader and sells it to defendant X-Body. Id.
¶ 18. X-Body then resells the Acculoader to users,
including defendants Standard Industries and Allstate Paper
& Metal Recycling Co., Inc., who have purchased or
otherwise make arrangements to use the Acculoader for loading
various materials into transport containers. Id.
Plaintiff provided a written notice to defendants of the
‘731 Patent on July 16, 2015. Id. ¶ 17.
has not licensed or authorized defendants, or its dealers,
customers, or affiliates, to sell or use a system within the
scope of the claims in the ‘731 Patent. Id.
¶ 20. Defendants have known about the ‘731 Patent
since July 16, 2015 and the Prior Litigation, in which the
complaint was filed by plaintiff on April 16, 2012, but have
not altered their conduct with respect to the Acculoader.
Id. ¶ 22; Compl., Advanced Steel Recovery,
LLC v. X-Body Equipment, Inc., No. 12-1004 (E.D. Cal.
Apr. 16, 2012), ECF No. 1.
January 25, 2016, plaintiff filed the complaint in this
action for monetary damages, alleging defendants infringed
the ‘731 Patent within the meaning of 35 U.S.C §
284, from at least July 16, 2015, when defendants were
notified of the existence of the ‘731 Patent, if not as
early as June 16, 2015, the issue date of the ‘731
Patent. Compl. ¶ 23. Plaintiff also seeks a permanent
injunction to prevent defendants’ further violation of
the ‘731 Patent, and attorneys’ fees and costs.
Id. On March 22, 2016, defendants filed the pending
motion, supported by declarations and exhibits.
RULE 12(b)(6) MOTION TO DISMISS OR RULE 56 SUMMARY
threshold issue here is whether defendants can move to
dismiss on the basis that defendants’ alleged violation
of the patent predated the patent’s priority date.
Plaintiff argues defendant’s motion to dismiss under
Federal Rule of Civil Procedure 12(b)(6) should be denied,
because defendants’ argument is a factual issue that
cannot be resolved at the motion to dismiss stage.
Opp’n at 6. Plaintiff further argues the Rule 12(b)(6)
motion to dismiss should not be converted to a Rule 56 motion
for summary judgment, despite defendant’s submission of
materials outside the complaint, because claim construction
and expert discovery are required to resolve the issue of
priority date, and even if not, a substantial continuance
should be provided for plaintiff to respond to the motion if
so converted. Opp’n at 9-10. Defendant agrees the
motion need not be converted. Reply at 8. Defendant argues
plaintiff’s claims are not plausible based on the
complaint, its attachments, and matters properly subject of
judicial notice. Id. Finally, both plaintiff and
defendants also address the determination of a priority
claim, which the court will not address at this point for
reasons explained below.
Legal Standards in Patent Cases
complaint need contain only a “short and plain
statement of the claim showing that the pleader is entitled
to relief, ” Fed.R.Civ.P. 8(a)(2), not “detailed
factual allegations, ” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). But this rule demands
more than unadorned accusations; “sufficient factual
matter” must make the claim at least plausible.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A party
may thus move to dismiss for “failure to state a claim
upon which relief can be granted.” Fed.R.Civ.P.
12(b)(6). The motion may be granted only if the complaint
lacks a “cognizable legal theory” or if its
factual allegations do not support a cognizable legal theory.
Hartmann v. Cal. Dep’t of Corr. & Rehab.,
707 F.3d 1114, 1122 (9th Cir. 2013). In making this
context-specific evaluation, this 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). This rule does not apply to
“‘a legal conclusion couched as a factual
allegation, ’” Papasan v. Allain, 478
U.S. 265, 286 (1986) quoted in Twombly, 550 U.S. at
555, nor to “allegations that contradict matters
properly subject to judicial notice” or to material
attached to or incorporated by reference into the complaint.
Sprewell v. Golden State Warriors, 266 F.3d 979,
988-89 (9th Cir. 2001).
deciding a motion to dismiss, “courts generally
consider only the allegations contained in the complaint,
exhibits attached to the complaint and matters of public
record” when reviewing a motion to dismiss. Outdoor
Media Group, Inc. v. City of Beaumont, 506 F.3d 895,
899-900 (9th Cir. 2007) (citing Swartz v. KPMG LLP,
476 F.3d 756, 763 (9th Cir. 2007)). Rule 12(d) addresses the
use of materials which are outside the pleadings in motions
to dismiss under Rule 12(b)(6). Fed.R.Civ.P. 12(d); see
also Olsen v. Idaho State Bd. of Medicine, 363 F.3d 916,
922 (9th Cir. 2004). When such materials are presented, the
motion is treated as one for summary judgment.
Olsen, 363 F.3d at 922. However, certain additional
materials may be considered without converting the motion to
dismiss into a motion for summary judgment. While a court is
generally limited to the four corners of the complaint, the
court may consider exhibits attached to the complaint,
see Hal Roach Studios, Inc. v. Richard Feiner & Co.,
Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1989), and
documents incorporated by reference into the complaint.
See Van Buskirk v. Cable News Network, Inc., 284
F.3d 977, 980 (9th Cir. 2002). Documents upon whose contents
the complaint necessarily relies-even if the complaint does
not explicitly allege their contents-and whose authenticity
and relevance are uncontested, are considered incorporated by
reference. See Coto Settlement v. Eisenberg, 593
F.3d 1031, 1038 (9th Cir. 2010); Knievel v. ESPN,
393 F.3d 1068, 1076-77 (9th Cir. 2005). The court may, in
addition, take into ...