United States District Court, S.D. California
ORDER DENYING MOTION TO DISMISS [DOC. NOS. 7,
25]
Hon.
Cathy Ann Bencivengo United States District Judge.
This
matter comes before the Court on Defendants California
Extraction Ventures, Inc.'s (“CEV”) and
Stephen Corey's (collectively “Defendants”)
motion to dismiss. [Doc. No. 7.] The motion has been fully
briefed and the Court finds it suitable for determination on
the papers submitted. See S.D. Cal. CivLR 7.1(d)(1).
Defendants' request for oral argument [Doc. No. 25] is
therefore denied. For the reasons set forth below,
Defendants' motion to dismiss is denied.
I.
BACKGROUND[1]
Since
1993, Plaintiff Javo Beverage Co., Inc. (“Javo”)
has been engaged in the business of coffee, tea, and
botanical extracts, ingredients, and flavor systems, which
are sold across the country. [Doc. No. 1 at ¶
13.[2]
Javo researched and developed a proprietary process for its
manufacture of extracts of coffee, tea, and other botanicals
which includes, among other things, introducing purified,
deionized water within particular temperature and pressure
ranges into a proprietary columnar extraction vessel
containing an extractable material (e.g., roasted coffee)
that has been ground into multiple particle sizes and
specially packed into the vessel into which deionized water
is introduced, eventually resulting in a pure, concentrated
extract flowing from the top of the vessel. [Doc. No. 1 at
¶¶ 1, 14.] Javo alleges it has continually
maintained this process as a proprietary trade secret within
the industry. [Id.] Defendant Corey was an original
co-founder of Javo and its predecessors, and a principal
inventor of Javo's trade secret extraction process.
[Id. at ¶ 2.] During his time as an employee,
Corey assigned all rights and interests he may have had in
the proprietary process to Javo through his Employment
Agreement (“EA”) and the associated Employee
Confidentiality and Invention Assignment Agreement
(“CIAA”), executed on December 5, 2001.
[Id. at ¶ 3.]
On
January 24, 2011, Javo commenced a Chapter 11 bankruptcy
proceeding to, among other things, restructure its debt.
[Id. at ¶ 42.] In or about August 2011, Javo
terminated Corey without cause because of the elimination of
his position due to the restructuring under the bankruptcy
plan. [Id. at ¶ 47.]
Kurt
Toneys, a former President/CEO of one of Javo's
predecessors, is now involved with Defendant CEV as its
current CEO, alongside Defendant Corey who is CEV's
current President. [Id. at ¶ 7, 22.] Javo
alleges that Corey and CEV misused Javo's trade secrets
and other confidential information to benefit CEV,
constituting a breach of Corey's EA and CIAA with Javo,
when Corey improperly disclosed the information in
publicly-available patent applications he filed with the
United States Patent and Trademark Office and assigned to
CEV. [Id. at ¶¶ 15, 18.] CEV offered and
sold securities to fund, at least in part, the preparation
and filing of Corey's provisional patent application,
U.S. Pat. App. No. 62/134, 497, which Corey filed on March
17, 2015 (the “'497 Provisional
Application”). [Id. at ¶ 49-50.] The
'497 Provisional Application lists Corey as the inventor
and contains terminology frequently used by Corey at Javo and
refers to “Javo” processes in certain figures.
[Id. at ¶ 51.] Thus far, Corey has obtained
seven issued patents and has seven additional published
patent applications all claiming priority to Corey's
'497 Provisional Application which have all been assigned
to CEV. [Id. at ¶ 65.] According to the
complaint, the issued patents and published patent
applications disclose material that substantially describes
and overlaps with the proprietary confidential information
and trade secrets of Javo, constituting a violation of
Corey's obligations to refrain from disclosing
confidential information of Javo and to transfer all interest
in any inventions to Javo. [Id. at ¶ 66.]
On May
30, 2019, Javo demanded, among other things, that Defendants
immediately assign rights in the patents and applications
claiming priority to the '497 Provisional Application.
[Id. at ¶ 68.] Javo then filed its complaint on
September 26, 2019, alleging: (1) Misappropriation of Trade
Secrets Under the Defend Trade Secrets Act
(“DTSA”), 18 U.S.C. § 1836, et
seq.; (2) Misappropriation of Trade Secrets Under the
California Uniform Trade Secrets Act (“CUTSA”),
Cal. Civ. Code §§ 3426-3426.11; (3) Declaratory
Judgment of Ownership of the Patents; and (4) Intentional
Interference with Contractual Relations.
II.
REQUEST FOR JUDICIAL NOTICE
At the
motion to dismiss stage a court may consider materials
incorporated into the complaint or matters of public record,
without converting the motion to dismiss into a motion for
summary judgment. Coto Settlement v. Eisenberg., 593
F.3d 1031, 1038 (9th Cir. 2010) (citation omitted); see
also Federal Rules of Evidence 201(b): “The court
may judicially notice a fact that is not subject to
reasonable dispute because it: (1) is generally known within
the trial court's territorial jurisdiction; or (2) can be
accurately and readily determined from sources whose accuracy
cannot reasonably be questioned.”
Defendants
request the Court take judicial notice of the patent
applications and the corresponding patents that are
implicated in this case. [Doc. No. 7-2.] Javo filed a
statement of non-opposition to Defendants' request for
judicial notice. [Doc. No. 11.] Accordingly, the Court takes
judicial notice of Defendants' exhibits.
III.
LEGAL STANDARD
To
survive a motion to dismiss under Rule 12(b)(6), “a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on
its face.'” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). Thus, the Court
“accept[s] factual allegations in the complaint as true
and construe[s] the pleadings in the light most favorable to
the nonmoving party.” Manzarek v. St. Paul Fire
& Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.
2008). On the other hand, the Court is “not bound to
accept as true a legal conclusion couched as a factual
allegation.” Iqbal, 556 U.S. at 678; see
also Lee v. City of Los Angeles, 250 F.3d 668, 679 (9th
Cir. 2001) (“Conclusory allegations of law are
insufficient to defeat a motion to dismiss”). Nor is
the Court “required to accept as true allegations that
contradict exhibits attached to the Complaint or . . .
allegations that are merely conclusory, unwarranted
deductions of fact, or unreasonable inferences.”
Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d
992, 998 (9th Cir. 2010). A claim may be dismissed under Rule
12(b)(6) on the grounds that it is barred by the applicable
statute of limitations when “the running of the statute
is apparent on the face of the complaint.” Huynh v.
Chase Manhattan Bank, 465 F.3d 992, 996 (9th Cir. 2006)
(quotations omitted).
IV.
DISCUSSION
Defendants
contend that Javo's complaint is time-barred. In
addition, Defendants contend that Javo's claim for
intentional interference with contractual relations is
preempted by the California Uniform Trade Secrets Act
...