Heinz Kettler GMBH & Co. v. RAZOR USA, LLC

750 F. Supp. 2d 660, 77 Fed. R. Serv. 3d 1255, 2010 U.S. Dist. LEXIS 119954, 2010 WL 4608714
CourtDistrict Court, E.D. Virginia
DecidedNovember 5, 2010
DocketCase 1:10cv708
StatusPublished
Cited by43 cases

This text of 750 F. Supp. 2d 660 (Heinz Kettler GMBH & Co. v. RAZOR USA, LLC) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Heinz Kettler GMBH & Co. v. RAZOR USA, LLC, 750 F. Supp. 2d 660, 77 Fed. R. Serv. 3d 1255, 2010 U.S. Dist. LEXIS 119954, 2010 WL 4608714 (E.D. Va. 2010).

Opinion

MEMORANDUM OPINION

T.S. ELLIS, III, District Judge.

This patent infringement suit was brought by the foreign owner of the patents in suit and its affiliated Virginia distributor. Defendant seeks first the threshold dismissal of the Virginia distributor for lack of standing, and then a transfer of venue pursuant to 28 U.S.C. § 1404(a) given that dismissal of the Virginia plaintiff. To remedy the standing deficiency, plaintiffs then, without leave of court, file an amended complaint alleging that subsequent to the filing of the complaint, the foreign owner of the patents in suit transferred ownership of the patents to its affiliated Virginia distributor. Defendant counters that the amended complaint is in fact a supplemental complaint, which may not be filed without a leave of court and that leave to do so should be denied as futile given that the Virginia distributor did not have standing when the original complaint was filed and a post-suit assignment cannot retroactively confer standing.

For the reasons stated from the Bench, and elucidated here, the motion to file the supplemental complaint is not futile and is appropriately granted as settled Federal Circuit precedent makes clear that where, as here, an original plaintiff has standing, that plaintiff may assign the patents in suit during the course of the litigation and the assignee then has standing to maintain the action. And because the transfer calculus weighs decisively against transfer, the motion to transfer must be denied.

I.

Plaintiff, Heinz Kettler GMBH & Co., KG (“Heinz Kettler”), is a German corporation that manufactures children’s ride-on vehicles, including various models of bicycles, tricycles, and scooters. Plaintiff, *663 Kettler International, Inc., (“Kettler International”), is a Virginia corporation with its principal place of business in Virginia Beach, Virginia. Kettler International is the exclusive distributor of Heinz Kettler’s products in the United States. Defendant, Razor USA, LLC (“Razor”), is a Delaware limited liability company with its principal place of business in Cerritos, California. Razor also manufactures children’s ride-on toys.

On June 24, 2010, Heinz Kettler and Kettler International initiated the instant action by filing a complaint against Razor, alleging a single count of patent infringement. Specifically, the complaint alleges that Heinz Kettler is the sole owner of a group of patents that prevent children from over-steering ride-on vehicles. Comp. ¶¶ 11-12. According to the complaint, Razor unlawfully incorporated Heinz Kettler’s patented technology into one or more of its tricycle models sold in the United States. Id. ¶ 13. Importantly, the complaint states that Kettler International is “Heinz Kettler’s exclusive United States distributor of Kettler products.” Id. ¶ 9.

On August 27, 2010, Razor filed a motion to dismiss Kettler International for lack of standing, contending that Kettler International lacked standing to sue for patent infringement because it was only the exclusive distributor of the patents in suit, and not an owner or exclusive licensee. On the same date, Razor also filed a motion to transfer venue, pursuant to 28 U.S.C. § 1404(a). According to Razor, once Kettler International is dismissed from the action, the interests of justice favor transferring the lawsuit to the Central District of California.

On September 9, 2010, plaintiffs responded to the motion to dismiss by filing, purportedly as a matter of right, an amended complaint, pursuant to Rule 15(a)(1)(B), Fed.R.Civ.P. The amended complaint drops Heinz Kettler as a plaintiff and alleges that Kettler International is the sole owner, by assignment, of the patents in suit. Specifically, the amended complaint alleges as follows:

By virtue of assignment, [Kettler International] is presently the sole owner of the '988 patent, '884 patent, the '772 patent, and the '408 patent. [Kettler International], by virtue of assignment, is presently the sole and exclusive holder of the patents-in-suit, and has exclusive rights to import, distribution [sic], marketing [sic], offer for sale and sell in the United States of [sic] any commercial embodiment of the patents-in-suit. Also by virtue of assignment, [Kettler International] is vested with the exclusive right to enforce, defend and prosecute the patents-in-suit in the United States.

First Amended Comp. ¶ 9. In conjunction with their amended complaint, plaintiffs filed a response to Razor’s motion to dismiss, arguing that the motion to dismiss is moot because Kettler International is now the owner of the patents in suit.

On September 15, 2010, Razor filed a reply in support of its motion to dismiss, arguing that plaintiffs’ “amended complaint” is actually a “supplemental complaint” because it sets forth a transaction or occurrence (ie., the post-suit assignment) that occurred after the filing of the original complaint. Pursuant to Rule 15(d), a party may file a supplemental pleading only by leave of court. Razor argues that because Kettler International failed to comply with this requirement, the so-called “amended complaint” should be stricken as improper supplementation. 1 *664 Further, Razor argues that even if Kettler International were allowed to file the supplemental complaint, Kettler International should still be dismissed for lack of standing because Kettler International did not have standing to sue for patent infringement at the time the initial complaint was filed and a post-filing assignment of patent rights does not retroactively confer standing.

On September 17, 2010, plaintiffs filed a motion requesting: (i) leave to drop Heinz Kettler as a party plaintiff; and (ii) permission to supplement the allegations in the original complaint to include the fact that Kettler International is, by virtue of assignment dated September 1, 2010, the sole and exclusive owner of the patents at issue in this lawsuit. 2 Plaintiffs counter that the motion to file a supplemental complaint should be granted because it is neither futile nor unfairly prejudicial; instead, the supplemental complaint serves to remedy Kettler International’s lack of standing and provides an economical and expeditious means of reaching the merits of the case.

II.

The four motions at issue are: (1) defendant’s motion to dismiss for lack of standing; (2) defendant’s motion to transfer, pursuant to 28 U.S.C. § 1404(a); (3) defendant’s motion to strike the amended complaint as improper supplementation; and (4) plaintiffs’ motion to file a supplemental complaint. Each motion is separately addressed.

A. Motion to Dismiss

The crux of the motion to dismiss is Razor’s contention that Kettler International, as the exclusive distributor of Heinz Kettler’s products, lacks standing to sue for patent infringement.

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750 F. Supp. 2d 660, 77 Fed. R. Serv. 3d 1255, 2010 U.S. Dist. LEXIS 119954, 2010 WL 4608714, Counsel Stack Legal Research, https://law.counselstack.com/opinion/heinz-kettler-gmbh-co-v-razor-usa-llc-vaed-2010.