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Telebrands, Corp. v. National Express, Inc.

United States District Court, Third Circuit

July 17, 2013

TELEBRANDS, CORP., Plaintiff,
v.
NATIONAL EXPRESS, INC., et al. Defendants.

OPINION & ORDER

FAITH S. HOCHBERG, District Judge.

This matter comes before the Court upon Defendant, Michael Berardi's Renewed Motion to Dismiss Plaintiff's Declaratory Judgment action against himself, individually, for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1). Previously, Defendants collectively moved to dismiss Plaintiff's Complaint for lack of subject matter jurisdiction, lack of personal jurisdiction, and improper venue, but on April 11, 2013, this Court denied that motion. This Court has reviewed the submissions of the parties and has decided the motion on the papers pursuant to Fed.R.Civ.P. 78.

I. BACKGROUND

Defendant is the Managing Member of Blue Gentian, LLC (Dkt. 75-3, ¶1) and is the sole inventor of the two patents at issue. (Dkt. 75-3, ¶3). On March 16, 2012, Berardi assigned to Blue Gentian, all rights, title and interest in and to the invention which thereafter became the subject of the 941 Patent at issue. (Dkt. 75-3, ¶4). Further, on June 2, 2012, Berardi assigned to Blue Gentian, all rights, title and interest in and to the invention which thereafter became the subject of the 942 Patent at issue. Id. The 941 and 942 Patents were issued by the United States Patent & Trademark Office ("USPTO") on October 23, 2012. Id. Both assignments were recorded with the USPTO. Id. at Exhibit A.

In or around August 2012, Defendant, Blue Gentian, entered into a "License and Distribution Agreement" ("License Agreement") with Defendant, National Express, Inc. ("NEI"), granting patent and trademark rights to NEI and authorizing NEI to manufacture (or have manufactured), use, sell and promote the XHose product. (Dkt. 75-3, ¶5). Pursuant to that agreement, NEI is Blue Gentian's exclusive licensee for the "retail" and "direct-to-consumer" markets, as those markets are specifically defined in the License Agreement. Id. Blue Gentian, however, maintains exclusive rights to make, use, sell and promote the XHose to the "commercial, " "premium" and "live show" markets, as defined in the License Agreement. Id.

Berardi, individually, is not a party to the License Agreement between Blue Gentian and NEI (Dkt. 75-3, ¶6), nor is Berardi a party plaintiff in the actions filed by Blue Gentian against Telebrands Corp. or Tristar Products, Inc., respectively, for the enforcement of the 941 and '942 Patents. (Dkt. 75-3, ¶7). Moreover, despite being a named defendant in this declaratory judgment action, Berardi did not file a counterclaim against Plaintiff for patent infringement. Id.

Blue Gentian's mailing address is the same as Berardi's home address. (Dkt. 82-1, ¶4). Plaintiff alleges that it has not been able to discern that Blue Gentian conducts any business other than to hold title to the patents-in-suit to receive licensing revenue for those patents for Berardi. (Dkt. 82-1, ¶5). Further, Plaintiff alleges that it has not been able to identify any other fixed assets held by Blue Gentian. (Dkt. 82-1, ¶6).

II. DISCUSSION

1. Standard of Review

Pursuant to the Federal Rules of Civil Procedure, "[i]f the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action." Fed.R.Civ.P. Rule 12(h)(3). Further, there are two distinct types of motions to dismiss pursuant to Rule 12(b)(1): facial challenges and factual challenges. Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884 (3d Cir. 1977). In a facial challenge, "the court must consider the allegations of the complaint as true." Id. at 891. In contrast, with a factual challenge, "no presumptive truthfulness attaches to plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims." Id. In factual challenges, the Plaintiff has the burden of proof that jurisdiction exists. Id. In evaluating making that determination, "the trial court may examine facts outside the pleadings." Robinson v. Dalton, 107 F.3d 1018, 1021 (3d Cir. 1997).

The Federal Circuit governs whether a district court may entertain an action for declaratory judgment for non-infringement and/or invalidity. 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1377 (Fed. Cir. 2012). In actions for declaratory judgment, courts should look to "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 127 (2007).

2. Berardi's Motion to Dismiss for lack of subject matter jurisdiction

Defendant, Michael Berardi, moves to dismiss the complaint against him, individually, for lack of subject matter jurisdiction. Berardi argues that because he assigned all of his rights, title and interest in the disputed patents to Blue Gentian, he is unable to enforce the patents and is therefore not a proper defendant in Plaintiff's declaratory judgment action.

Berardi first argues that this matter should be dismissed with regard to his individual involvement because there cannot be a case or controversy between Plaintiff and Berardi sufficient to establish subject matter jurisdiction. This is because Berardi does not hold sufficient rights to the disputed patents such that he would be able to sue for their infringement (because those rights were assigned to Blue Gentian and later licensed by Blue Gentian to NEI). In support of this point, Berardi cites Plaintiff's Opposition Brief to Defendants' original Motion to Dismiss. In that brief, Plaintiff wrote that if facts supported Defendants' claim that Berardi had assigned his rights to the disputed patents several months prior to the patents being issued, without ...


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