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D&R Communications, LLC v. John Garett and Garett Group

June 13, 2011

D&R COMMUNICATIONS, LLC, PLAINTIFF,
v.
JOHN GARETT AND GARETT GROUP, INC., DEFENDANTS.



The opinion of the court was delivered by: Brown, Chief Judge

NOT FOR PUBLICATION

MEMORANDUM OPINION

I. Background

This matter comes before the Court upon the motion of Defendants John Garett and Garett Group, Inc. (collectively "Defendants" or "Garett") to dismiss counts I, II, and III of the Complaint filed by D&R Communications, LLC ("Plaintiff" or "D&R") for lack of subject matter jurisdiction. (Doc. No. 25). The Court has considered the parties' submissions and decided the matter without oral argument pursuant to Federal Rule of Civil Procedure 78, and for the reasons discussed below, denies Defendants' motion to dismiss.

A.Facts

Plaintiff D&R and Defendants Garrett Group, Inc. had a business relationship lasting about eight months. In February 2009, Plaintiff D&R hired Defendant Garett, through Garett Group, Inc., as an independent contractor to generate business for D&R's Rx HealthAdvantage program, which included a patient starter kit, "a device and method for packaging pharmaceutical product samples together with patient drug and disease state information, literature and other forms of media, and related consumer products, consumer package goods, devices, or services." (See U.S. Patent No. 7,677,601 (the "'601 Patent" at 1:11-15); Am. Compl. ¶ 12; Doc. No. 27-2). However, their relationship went sour, and D&R and Garett terminated their consulting agreement in October 2009. (Am. Compl. ¶ 16; Doc. No. 27-2).

After Garett approached D&R's clients alleging D&R's patient starter kits infringed upon Garett's then non-existent patent, (Am. Compl. ¶ 19; Doc. No. 27-2), D&R and Garett entered into a Settlement and Release Agreement. (Am. Compl. at Ex. E; Doc. No. 27-3). In the agreement, D&R "acknowledged that it had no proprietary rights in the Rx HealthAdvantage brand name, and that Defendant Garett owned the still-pending Garett Patent Application directed to a certain type of patient starter kit." (Am. Compl. ¶ 23; Doc. No. 27-2). However, the agreement allowed D&R to continue to market other non-infringing patient starter kits. (Am. Compl. ¶ 24; Doc. No. 27-2). Garett agreed "not to assert any proprietary or exclusive rights in any patient starter kit that D&R is permitted to use or make under the terms of this Agreement and which will not be covered by any patent claim that may issue to Garett." (Am. Compl. at Ex. E; Doc. No. 27-3) (emphasis added). Thereafter, in March 2010, Garett obtained United States Patent No. 7,677,601, protecting certain patient starter kits and methods recited by 15 patent claims. (Am. Compl. ¶¶ 18, 30; Doc. No. 27-2).

However, Garett again began approaching D&R's clients alleging possible patent infringement. In January 2011, Garett sent letters to at least two of D&R's clients, ALCON Laboratories, Inc. and DUSA Pharmaceuticals (collectively, the "Clients"), (Am. Compl. ¶19), stating that the Clients "may be using a service and product, provided by D&R . . . that violates [Garett's] Intellectual Property for a "Patient Kit" and US Patent No. 7,677,601, as of March, 2010." (Compl. at Ex. G; Doc. No. 1-2). The Clients informed D&R of these letters because D&R agreed to indemnify its Clients for any patent infringement claims arising from the commercial use of D&R patient kits. (Am. Compl. ¶ 35; Doc. No. 27-2). To put the dispute to rest, D&R filed a declaratory judgment action alleging it did not infringe the patent as well as other affirmative claims.

B.Procedural History

Plaintiff commenced this action on January 21, 2011. Defendants filed the motions to dismiss counts I, II, and III for lack of subject matter jurisdiction and counts IV-X for failure to state a claim on April 8, 2011. Plaintiff then filed a brief in opposition to Defendant's motions to dismiss as well as a cross motion to amend the complaint on May 23, 2011. Defendants filed a reply brief in support of the motions to dismiss and in response to Plaintiff's cross motion to amend its complaint on May 31, 2011. This opinion involves only the motion to dismiss based on subject matter jurisdiction.

II. Discussion

A. Motion to Dismiss

1. Subject Matter Jurisdiction

Federal Rule of Civil Procedure 12 provides that a challenge to subject matter jurisdiction may be asserted by a motion to ...


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