United States District Court, S.D. Ohio, Western Division
COPPERHEAD INDUSTRIAL INC. AND JEC DISTRIBUTORS, INC. Plaintiffs,
G.E. SCHMIDT, INC. AND KYOKUTOH CO., LTD., Defendants.
STEPHANIE K. BOWMAN UNITED STATES MAGISTRATE JUDGE.
matter is before the Court pursuant to Defendants' motion
for partial judgment on the pleadings (Doc. 56) and
Plaintiffs' motion for leave to amend the complaint (Doc.
60). Both motions are fully briefed, including
Plaintiffs' Notice of Supplemental Authority and
Defendants response there to, and are ripe for decision. This
case has been referred to the undersigned pursuant to 28 USC
§636. (See Doc. 26).
move to dismiss Plaintiff JEC Distributors Inc.
(“JEC”) and all claims that it brings from this
action. As this court previously mentioned in a footnote in a
prior Report and Recommendation, the current complaint
alleges only that JEC is a “nonexclusive
licensee” of the asserted patents - which,
Defendants' argue, means JEC lacks standing to bring its
claims. This Court all but invited Defendants to raise the
standing issue by stating, “the parties may wish to
revisit the question of JEC's standing at a later point
in the litigation.” (See Doc. 31, FN6). Defendants then
raised JEC's lack of standing as an affirmative defense
in its answer and then subsequently filed this motion arguing
that JEC suffers from no legal injury from infringement.
Defendants rely on Ortho Pharmaceutical Corp. v.
Genetics Institute, Inc., 52 F.3d n 1026 (Fed. Cir.
2005) and Morrow v. Microsoft Corp., 499 F.3d 1332
(Fed. Cir. 2007) to support their argument. Defendants are
correct. As alleged in the original complaint, JEC does not
have standing. However, in response to Defendants' motion
for partial judgement on the pleadings, Plaintiffs have moved
for leave to file its first amended complaint.
15(a) of the Federal Rules of Civil Procedure provides that
“[t]he court should freely give leave [to amend] when
justice so requires.” Fed.R.Civ.P. 15(a)(2). Rule 15
reinforces “the principle that cases ‘should be
tried on their merits rather than the technicalities of
pleadings.'” Moore v. City of Paducah, 790
F.2d 557, 559 (6th Cir. 1986) (quoting Tefft v.
Seward, 689 F.2d 637, 639 (6th Cir.1982)). The grant or
denial of a request to amend a complaint is left to the broad
discretion of the trial court. Gen'l Elec. Co. v.
Sargent & Lundy, 916 F.2d 1119, 1130 (6th Cir.
1990). In exercising this discretion, the trial court may
consider such factors as “undue delay, bad faith or
dilatory motive on the part of a movant, repeated failure to
cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the
amendment [and] futility of the amendment[.]” Foman
v. Davis, 371 U.S. 178, 182 (1962). See also
Brumbalough v. Camelot Care Ctrs., Inc., 427 F.3d
996, 1001 (6th Cir. 2005).
of a complaint is futile when the proposed amendment would
not permit the complaint to survive a motion to
dismiss.” Miller v. Calhoun Cnty., 408 F.3d
803, 817 (6th Cir. 2005). To survive a motion to dismiss, a
complaint must contain sufficient factual allegations to
state a claim that is plausible. Ashcroft v. Iqbal,
556 U.S. 662 (2009); Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570.
now argue that the allegations set forth in the first amended
complaint are sufficient to show that JEC does, in fact, have
standing. The Court agrees. Plaintiffs ask to amend their
complaint to allege that JEC has a non-written license with
its related entity Copperhead thereby requiring the Court to
“look to the parties' intentions and the realities
of their arrangement to determine whether the licensee
maintains sufficient rights over the patents-in-suit.”
(Doc. 60, PageID 1820-1821, 1847). Plaintiffs propose to
allege that one person, Giuseppe Ruggiero, owns and controls
both JEC and Copperhead and that the relationship between the
two corporations is “an extremely close one.”
(Id. at PageID 1822, 1844). They further propose to
allege that “JEC is the only party authorized to
practice the patented invention in the United States, and has
always been the sole licensee of the patents-in-suit”
and that “Copperhead intended to grant JEC all rights
needed to make, use and sell the patented products in the
United States.” (Id. at PageID 1823,
response, Defendants argue that the amendment is futile, is
too late, is prejudicial and is brought in bad faith.
Defendants argue Copperhead has the ability to grant a
license to others and therefore JEC lack's standing.
However, the proposed allegations state otherwise. Defendants
argue that prior to this litigation being filed Copperhead
had offered to grant a license to Defendants thereby
demonstrating that JEC was not the exclusive licensee of the
patents-in-suit. The weakness in this argument is two-fold.
First, there is evidence that Defendants were, in fact,
negotiating with Mr. Ruggiero on behalf of JEC. (See Doc.
65-6, PageID1949). Second, the amended complaint alleges that
Mr. Ruggiero is the decision maker for both Copperhead and
JEC. Thus, in contemplating any agreement that Copperhead
would make in regards to a licensee, it is alleged that it
was done so with the consent and knowledge of JEC.
addition, Defendants argue that Mr. Ruggiero's deposition
testimony contradicts the proposed allegations and his
“unsupported declaration.” Mr. Ruggiero testified
in his deposition that JEC was a nonexclusive licensee.
However, a review of the entire deposition transcript shows
that Mr. Ruggiero was “getting confused.” At a
hearing in the Alabama action the Court asked Plaintiffs'
counsel to confirm that JEC is a non-exclusive licensee. (See
Doc. 65, PageID 1883). Counsel responded by stating
“there's a question about that” but then
ultimately does confirm that there is no written
agreement prohibiting Copperhead from granting a license to
an entity other than JEC. (emphasis added). The Court is not
permitted to make credibility determinations at this stage.
this case has been pending for two years, the Court does not
find that Plaintiffs unduly delayed in requesting leave to
amend. It was not until September of last year that an answer
was finally filed, with an amended answer being filed in
October, 2018. The motion to amend the complaint was filed in
March, only in response to Defendants' motion for
judgment on the pleadings. Defendants argue that the proposed
amended complaint would be prejudicial because if JEC remains
a Plaintiff its potential exposure increases. However, that
is not a relevant factor for the court to consider at this
time. The theory of Plaintiffs' case has not changed and
the opportunity for Defendants to pursue discovery on the
issue of the license agreement has been known to Defendants
for quite some time, and in fact, Mr. Ruggiero was asked
about it his disposition. However, should additional
discovery be necessary, the Court will permit it .
for the reasons set forth above, the Court hereby GRANTS,
Plaintiffs' motion for leave to amend their complaint.
(Doc. 60). Plaintiffs shall, within 7 days, electronically
file the amended complaint as a stand-alone document.
Defendants' motion for judgment on the pleadings (Doc.
56) is hereby DENIED as MOOT in light of the granting of
Plaintiffs' motion for leave to file an amended