USPPS, Ltd. v. Avery Dennison Corp.

326 F. App'x 842
CourtCourt of Appeals for the Fifth Circuit
DecidedJune 17, 2009
Docket08-50664
StatusUnpublished
Cited by14 cases

This text of 326 F. App'x 842 (USPPS, Ltd. v. Avery Dennison Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
USPPS, Ltd. v. Avery Dennison Corp., 326 F. App'x 842 (5th Cir. 2009).

Opinion

PER CURIAM: *

Plaintiff-Appellant USPPS, Ltd. alleges that defendants-appellees Avery Dennison Corporation; law firm Renner, Otto, Boi-selle & Sklar, L.L.P.; and one of its partners, Neil DuChez, failed to prosecute effectively USPPS, Ltd.’s patent applications regarding personalized postage stamps before the United States Patent and Trademark Office. USPPS, Ltd. brought claims under Texas law for fraud and breach of fiduciary duty in the United States District Court for the Western District of Texas based on diversity of citizenship. The. court granted the defendants’ motions to dismiss on the ground that the claims were barred by the four-year statute of limitations. It reasoned that USPPS, Ltd. knew or should have known of any wrongful injury by May 14 or 15, 2003, when it was informed that the patent applications had been abandoned. For the following reasons, we reverse the judgment of the district court and remand for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

When reviewing a court’s grant of a motion to dismiss, we accept all well-pleaded facts as true. United States ex rel. Willard v. Humana Health Plan of Tex. Inc., 336 F.3d 375, 379 (5th Cir.2003). The facts which we describe below are drawn from plaintiffs First Amended Complaint. Joe Pat Beasley is the sole manager, sole member, and chief executive officer of USPPS Management, L.L.C. (“USPPS Management”). USPPS Management is the sole general partner of USPPS, Ltd. (“USPPS”), which is a Texas limited partnership with its principal place of business in San Antonio, Texas. Terry Kerr is the President of USPPS Management and USPPS. In 1999, Beasley filed his First *844 Patent Application with the United States Patent and Trademark Office (the “PTO”) for his invention of personalized postage stamps and designated a law firm to act on his behalf.

In late 2000 and early 2001, while the First Patent Application was pending, Beasley began negotiating a licensing and manufacturing subcontract with Avery Dennison Corporation (“Avery Dennison”). Avery Dennison is incorporated in Delaware with its principal place of business in California. As part of the licensing agreement negotiations, Beasley interacted many times with A1 Green, Vice President of Avery Dennison. During this time, Green informed Beasley:

(1) that Avery Dennison had patent experts; (2) that Avery Dennison was the best in the industry at procuring patents; (3) that Avery Dennison had hundreds of patents; (4) that Avery Dennison wanted to take over the management of Beasley’s intellectual property; (5) that Avery Dennison had used the patent law firm of Renner, Otto on many patents; (6) that Renner, Otto was the best; (7) that Beasley needed the best patent lawyers; (8) that Avery Dennison wanted to improve and broaden the patent; (9) that Beasley needed to get rid of [its current] [l]aw [f]irm and go with Renner, Otto; and (10) that Avery Dennison would get Beasley a power of attorney which would enable Renner, Otto to take over the patent process and transfer the matter ... to Renner, Otto.

(Pl.’s First Am. Compl. 3^t.) Renner, Otto, Boiselle & Sklar, L.L.P. (“Renner Otto”) is a law firm and limited liability partnership organized under Ohio law with its principal place of business in Ohio. Neil DuChez is a partner at Renner Otto.

In March 2001, Beasley was notified that the First Patent Application had been approved and that he would receive the patent once he had paid processing fees. In May 2001, Avery Dennison agreed that it would assume responsibility for prosecuting Beasley’s patent application and pay all patent prosecution expenses for the First Patent Application or any subsequent related applications or proceedings before the PTO. Beasley signed a Revocation and Power of Attorney that revoked all previous powers of attorney and appointed certain Renner Otto attorneys to prosecute the patent application. DuChez reassured Beasley multiple times that he represented Beasley and never informed Beasley or Kerr that neither Beasley nor USPPS was Renner Otto’s client. In June 2001, Renner Otto submitted the Power of Attorney; a Continued Prosecution Application, which expressly abandoned the First Patent Application; and a Second Patent Application to pursue additional claims. At this time, Renner Otto did not pay the necessary processing fees for the First Patent Application. In August 2001, USPPS and Avery Dennison entered into a Supply Agreement, whereby Avery Den-nison would pay USPPS a 5% royalty on sales of personalized stamps.

In April 2002, DuChez informed Kerr that the patent examiner had withdrawn “the patent application” from issue. The following month, Renner Otto informed Avery Dennison that the First Patent Application had been rejected. In June, Ren-ner Otto informed Avery Dennison that the PTO had rejected the Second Patent Application. Renner Otto filed responses, but the PTO ultimately rejected both applications in November 2002. The following month, Avery Dennison informed Kerr that it was unable to come up with any further claim language that would overcome the PTO’s objections and that it had no hope for the applications going further.

On or about May 14, 2003, DuChez informed Avery Dennison, Beasley, and *845 Kerr that the patent applications had been abandoned. Avery Dennison and USPPS continued to do business under the terms of the Supply Agreement. On March 17, 2004, Avery Dennison informed USPPS via e-mail that the Supply Agreement would be terminated on August 2, 2004; that Avery Dennison intended to begin selling personalized postage stamps to third parties; and that it would only pay royalties until that date. On August 13, 2004, Avery Dennison sent a termination letter confirming these intentions.

On April 30, 2004, Beasley and Kerr conferred with another attorney, who reviewed the Supply Agreement. The attorney believed that there was a potential conflict of interest in Renner Otto and DuChez (who represent Avery Dennison) representing Beasley and USPPS in the patent prosecution process. The alleged conflict of interest was rooted in Avery Dennison’s benefitting from a rejection of the patent applications because it would not have to pay future royalties on personalized postage stamps. None of the other parties had alerted Beasley, Kerr, or USPPS about this conflict.

B. Procedural Background

1. The Beasley litigation

This litigation was preceded by an initial lawsuit filed by Beasley in the United States District Court for the Western District of Texas, alleging breach of fiduciary duty and negligence. Beasley v. Avery Dennison Corp., No. 04-CA-866, 2007 WL 1558621 (W.D.Tex. May 25, 2007). According to the First Amended Complaint filed in this litigation, over the course of discovery in the initial lawsuit, USPPS learned that:

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Bluebook (online)
326 F. App'x 842, Counsel Stack Legal Research, https://law.counselstack.com/opinion/uspps-ltd-v-avery-dennison-corp-ca5-2009.