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Copperhead Industrial Inc. v. G.E. Schmidt, Inc.

United States District Court, S.D. Ohio, Western Division

May 29, 2018

COPPERHEAD INDUSTRIAL INC. and JEC DISTRIBUTORS INC., Plaintiffs,
v.
G.E. SCHMIDT, INC. and KYOKUTOK CO., LTD., Defendants.

          Dlott, J.

          REPORT AND RECOMMENDATIONS

          Stephanie K. Bowman, United States Magistrate Judge

         This civil action is before the Court on the Motions to Dismiss for Lack of Subject-Matter Jurisdiction filed by Defendant G.E. Schmidt, Inc. (Doc. 7) and Defendant Kyokutoh Co., Ltd. (Doc. 15) and the parties' responsive memoranda (Docs. 14, 21, 22), including Plaintiffs' Notice of Supplemental Authority (Doc. 25) and the briefs that followed (Docs. 28, 29). Upon careful review, the undersigned finds that Defendants' Motions[1] are not well-taken.

         I. OVERVIEW

         Plaintiff Copperhead Industrial Inc. (“Copperhead”) is a Canadian corporation with its principal place of business at 1416 Rebecca Street, Oakville, Ontario, Canada. (Doc. 1 at PageID 1 (¶ 1).) Copperhead alleges that it owns U.S. Patent Numbers 8, 742, 281; 9, 168, 609; 9, 393, 639; and 9, 757, 814 (collectively, the “patents-in-suit”). (Id. at PageID 4 (¶¶ 14-18).) Specifically, Copperhead alleges that it is the “owner of the entire right, title, and interest in and to each of the patents-in-suit with the right to sue for past, present, and future infringement.” (Id. (¶ 18).) Plaintiff JEC Distributors Inc. (“JEC”) also is a Canadian corporation with its principal place of business at the same address. (Id. at PageID 1 (¶ 2).) JEC claims to be a nonexclusive licensee of each of the patents-in-suit. (Id. at PageID 4 (¶ 19).) Plaintiffs accuse Defendants G.E. Schmidt, Inc. and Kyokutoh Co., Ltd. of patent infringement in violation of 35 U.S.C. § 271. (Id. at PageID 4-14 (¶¶ 20-74).)

         Defendants move to dismiss the Complaint for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). They assert that Plaintiffs lack Article III standing because they do not have any rights or interests in the patents-in-suit and therefore cannot suffer the requisite injury. See Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). Moreover, because neither Plaintiff is the inventor, the successor-in-interest to the inventor, or an exclusive licensee with all substantial rights in the patents-in-suit, they are not patentees with standing to sue under 35 U.S.C. § 281. Plaintiffs respond that Copperhead does have standing, and submit the Declaration of Giuseppe (Joseph) Ruggiero-and its attached exhibits-in support. Plaintiffs also submit as supplemental authority a favorable judgment recently issued by a Canadian federal court relating to ownership of Canadian patents that are counterparts to the patents-in-suit.

         II. STANDARD OF LAW

         Federal Rule of Civil Procedure 12(b)(1) provides for the dismissal of an action for lack of subject matter jurisdiction. There are two types of challenges pursuant to Rule 12(b)(1), facial and factual. A facial attack “goes to the question of whether the plaintiff has alleged a basis for subject matter jurisdiction, ” and in this instance, the court “takes the allegations of the complaint as true for purposes of [its] analysis.” Cartwright v. Garner, 751 F.3d 752, 759 (6th Cir. 2014). A factual attack, on the other hand, “challenges the factual existence of subject matter jurisdiction.” Id. Here, “a court has broad discretion with respect to what evidence to consider in deciding whether subject matter jurisdiction exists, including evidence outside of the pleadings, and has the power to weigh the evidence and determine the effect of that evidence on the court's authority to hear the case. Id. at 759-60. In the pending Motions, Defendants challenge the factual existence of this Court's subject matter jurisdiction over Plaintiffs' claims. Thus, the undersigned properly may consider evidence outside the pleadings, mindful that Plaintiffs bear the burden of proving that subject matter jurisdiction exists. Id. at 760 (citing DLX, Inc. v. Commonwealth of Ky., 381 F.3d 511, 516 (6th Cir. 2004).)

         III. BACKGROUND

         A. The Patent Purchase Agreement, and the Original and Corrective Assignments

         Copperhead is a corporation provincially incorporated under the laws of Ontario, Canada, and is in the business of distributing automotive manufacturing industry products, including spot welding cap changers that are the subject of the patents-in-suit. (Ruggiero Decl., Doc. 14-1 at PageID 309 (¶¶ 2, 3).) According to Plaintiffs, all Ontario provincial corporations are assigned a corporation number that is unique to that corporation, cannot be transferred to another corporation, and cannot be changed.[2] Copperhead's Ontario corporation number is “2152706.” (Id. at PageID 311 (¶ 12(b)); Corporation Profile Report, Province of Ontario Ministry of Government Services, Doc. 14-4 at PageID 322-29.)

         Giuseppe (Joseph) Ruggiero is the sole owner, sole director, and president of Copperhead. (Doc. 14-1 at PageID 308 (¶ 1).) Between November 2012 and February 2013, Ruggiero engaged in discussions with Werner Kaeseler, the inventor named in the patents-in-suit, regarding Copperhead's purchase of Kaeseler's intellectual property rights. (Id. at PageID 309 (¶ 4).) These negotiations concluded when Ruggiero and Kaeseler finalized the terms for purchase of Kaeseler's issued patent in the United States relating to spot welding cap changers, as well as pending patent applications in the United States and Canada (collectively, the “Patent and Patent Applications”). (Id. at PageID 309-10 (¶¶ 5, 6).) The terms were reduced to writing in the “Patent Purchase Agreement” signed by both Kaeseler and Ruggiero on February 16, 2013. (Id. at PageID 310 (¶¶ 7, 8).) Kaeseler was listed as “Vendor” and “002152706 Ontario Ltd.”-with an address of “1416 Rebecca Street, Oakville, Ontario, Canada”-was listed as “Purchaser.” (Doc. 14-2 at PageID 315.) On the same date and in connection with the Patent Purchase Agreement, Kaeseler assigned his rights as “inventor and sole owner of the patent and patent applications” to “002152706 Ontario Ltd.” (Id. at PageID 310 (¶ 8); Doc. 14-3.) As with the Patent Purchase Agreement, the address listed for 002152706 Ontario Ltd. is “1416 Rebecca Street, Oakville, Ontario, Canada.” (Doc. 14-3 at PageID 319.) Both Kaeseler and Ruggiero signed this document also. (Doc. 14-1 at PageID 310 (¶ 8); Doc. 14-3 at PageID 320.) These assignments were later filed with the United States Patent and Trademark Office (“USPTO”). (Dolive Decl., Doc. 7-1 at PageID 172-73 (¶¶ 3-7); Docs. 7-2, 7-3, 7-4, 7-5 (collectively, the “original” assignment).)

         On December 14, 2016, Copperhead filed four “corrective” assignments with the USPTO, which were identical to the original assignments except that the name “002152706 Ontario Ltd.” was crossed out by hand and replaced with “Copperhead Industrial Inc.” (Dolive Decl., Doc. 7-1 at PageID 172-74 (¶¶ 3, 8-11); Doc. 7-6 at PageID 202-03, Doc. 7-7 at PageID 225-26, Doc. 7-8 at PageID 245-46, Doc. 7-9 at PageID 267-68) (collectively, the “corrective” assignment).) Ruggiero initialed and dated each change on behalf of Copperhead. Ruggiero included a declaration in support of each corrective assignment. (Doc. 7-6 at PageID 205-06, Doc. 7-7 at PageID 228-29, Doc. 7-8 at PageID 248-49, Doc. 7-9 at PageID 270-71.) In it, he asserted that he is Copperhead's sole owner and sole director, as well as its president. (See, e.g., Doc. 7-6 at PageID 205 (¶ 1).) He further asserted that it was an “inadvertent mistake” to identify Copperhead by its “Ontario corporation number (2152706)” rather than by its corporate name, Copperhead Industrial Inc., in the original assignment. (Id. (¶ 2).) Ruggiero explained that, when he executed the original assignment, he “mistakenly believed that 002152706 Ontario Ltd. was the legal corporate name for Copperhead, and that Copperhead was ‘doing business as' Copperhead. I now know and understand that 2152706 is, in fact, merely Copperhead's Ontario corporation number, rather than its legal corporate name, ‘Copperhead Industrial Inc.'” (Id. (¶ 3).) Ruggiero stated that “inclusion of ‘002152706 Ontario Ltd.' as a party to the [original a]ssignment was due to an error that did not accurately reflect my, Copperhead's, or Mr. Kaeseler's intentions. The [original a]ssignment was always intended to be between Mr. Kaeseler and Copperhead.” (Id. at PageID 206 (¶ 4).) Regarding Kaeseler, Ruggiero understood him to be “suffering from a chronic illness in Germany and may not be available to correct the [original a]ssignment or execute a new assignment.” (Id. (¶ 5).)

         B. Ruggiero Declaration Filed in this Civil Action

         Ruggiero's declaration filed in support of Copperhead's memorandum in opposition in this civil action largely reprises his declaration included in support of the corrective assignment filed with the USPTO. He states again that it was an “inadvertent mistake” to identify Copperhead by its “Ontario corporation number (2152706)” rather than by its corporate name-Copperhead Industrial Inc.-in the original assignment. (Doc. 14-1 at PageID 310 (¶ 9).) He also reiterates his “mistaken belief” that “002152706 Ontario Ltd.” was the “legal corporate name” for Copperhead, and his now corrected understanding “that 2152706 is, in fact, merely Copperhead's Ontario corporation number, rather than its legal corporate name, “‘Copperhead Industrial Inc.'” (Id. at PageID 311 (¶¶ 10, 11, 12).) To further corroborate his “mistaken belief” that “002152706 Ontario Ltd.” was the “legal corporate name” for Copperhead, Ruggiero attaches a “Sales Agreement” on Copperhead stationery dated April 30, 2011. (Doc. 14-5.) That agreement reads as follows:

Glen Keleher agrees to transfer ownership of his 50% share of 002152706 Ontario Limited, operating as Copperhead Industrial Inc., to Joseph ...

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