Xidrone Systems v. Fortem Technologies

District Court, D. Utah·Decided October 9, 2024·No. 2:24-cv-00080·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH

XIDRONE SYSTEMS, INC., MEMORANDUM DECISION AND ORDER ON DEFENDANT’S Plaintiff, MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

v. Case No. 2:24-cv-00080

FORTEM TECHNOLOGIES, INC., District Judge Ann Marie McIff Allen

Defendant.

This action arises as a peripheral battle in an ongoing patent war over drone technology development. Before the Court is Defendant Fortem Technologies, Inc.’s (“Fortem”) Motion to Dismiss for Failure to State a Claim.1 Fortem contends that res judicata principles bar the claims in this suit.2 Plaintiff XiDrone Systems, Inc. (“XiDrone”) opposes the Motion.3 Upon consideration of the Motion, the Opposition and Reply4 thereto, the relevant law, and underlying facts of the case, the Court GRANTS Plaintiff’s Motion and dismisses the case because of impermissible claim splitting.

1 See Def.’s Mot. to Dismiss for Failure to State a Claim, ECF No. 15 (“Motion”). 2 See id. at 6-9. 3 See Pl.’s Mem. in Opp’n, ECF No. 17 (“Opposition”). 4 See Def.’s Reply to Mem. in Opp’n, ECF No. 18 (“Reply”). I. BACKGROUND XiDrone and Fortem are drone systems development companies. XiDrone is based in Naples, Florida. Fortem operates from Pleasant Grove, Utah. The parties

have been engaged in a patent infringement conflict in the District of Utah since July 6, 2023.5 A. XiDrone’s First Suit XiDrone originally claimed that Fortem infringed two patents, 9,689,976 (“’976”) and 11,378,651 (“’651”), related to the functionality of its drone systems.6 Fortem denied the allegations and counterclaimed noninfringement and patent

invalidity.7 After filing an answer to Fortem’s counterclaim, the Court issued a Patent Case Scheduling Order.8 This order set deadlines and limitations for the case to proceed, including the date to amend pleadings (January 12, 2024) and a limitation of twenty-five requests for production.9 XiDrone and Fortem’s conflict advanced to discovery where XiDrone sought more requests for production than allowed.10 The parties also exchanged proposals to amend the PCSO.11

5 See Docket No. 2:23-cv-00430 [hereinafter First Suit]. 6 First Suit ECF No. 2, at 24-34. 7 First Suit ECF No. 18, at 11-13, 27-28. 8 First Suit ECF No. 21. 9 Id. at 2-3. 10 Docket No. 2:24-cv-00080, ECF No. 17, at 21. 11 See id.; ECF No. 18, at 4-5. On January 12, 2024, XiDrone timely moved the Court for leave to amend its complaint.12 XiDrone sought to add a related third patent to the suit, 10,795,010 (“’010”).13 Fortem opposed the motion.14 XiDrone then withdrew its motion.15 The first

case is now in the patent scope determination and claim construction phase.16 B. XiDrone’s Second Suit The same day XiDrone withdrew its motion for leave to amend, it filed a separate and second suit against Fortem in the District of Utah claiming patent infringement of the ’010 patent.17 XiDrone’s second complaint is an almost-verbatim copy of the first complaint, substituting the ’010 claim language.18 Fortem moves the

Court to dismiss the second suit under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.19 Fortem contends the second suit is barred under res judicata principles: (1) impermissible claim splitting, (2) improper collateral attack, and (3) claim preclusion for voluntary withdrawal in the first suit.20 Fortem also asks the Court to judicially notice documents from the first suit: the Patent Case Scheduling Order; XiDrone’s

12 First Suit ECF No. 22. 13 Id. 14 First Suit ECF No. 23. 15 First Suit ECF No. 24. 16 See ECF Nos. 29-34, 38, 66. 17 Docket No. 2:24-cv-00080. 18 See ECF No. 2. 19 ECF No. 15. 20 Id. at 2. motion to amend; Fortem’s opposition to the motion to amend; XiDrone’s withdrawal of the motion to amend; and other documents in the docket.21 II. LEGAL STANDARDS

A. Motion to Dismiss under FRCP 12(b)(6) An action may be dismissed when the plaintiff fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6); Jones v. Bock, 549 U.S. 199, 215 (2007). The complaint must have “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citation and quotation marks omitted). “A claim has facial plausibility when

the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The complaint must allege more than labels or legal conclusions and its “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). B. Res Judicata

1. General Claim Preclusion Principles “Claim preclusion requires: (1) a final judgment on the merits in an earlier action; (2) identity of the parties in the two suits; and (3) identity of the cause of action in both suits.” City of Euroda v. Rural Water Dist. No. 4, 875 F.3d 1030, 1035 (10th Cir. 2017) (internal citation and quotation marks omitted). A final judgment “ends litigation on the merits and leaves nothing for the district court to do but execute the

21 Id. at 9. judgment.” Hooker v. Cont’l Life Ins. Co., 965 F.2d 903, 904 (10th Cir. 1985). And claim preclusion “will prevent a party from relitigating a legal claim that was or could have been the subject of a previously issued final judgment.” MACTEC, Inc. v.

Gorelick, 427 F.3d 821, 831 (10th Cir. 2005); see also Nikols v. Chesnoff, 435 Fed. Appx. 766, 769 (10th Cir. 2011) (under Utah law a claim is precluded when the claim “could and should have been raised in the first action.”). In other words, a plaintiff is required to “assert all of its causes of action arising from a common set of facts in one lawsuit.” Katz v. Gerardi, 655 F.3d 1212, 1218 (10th Cir. 2011). “Even if these three elements are satisfied, there is an exception to the application of claim preclusion where the party resisting it did not have a ‘full and

fair opportunity to litigate’ the claim in the prior action.” Johnson v. Spencer, 950 F.3d 680, 693 (10th Cir. 2020) (internal citation and quotation marks omitted). 2. The Bar on Claim Splitting In the family of res judicata, claim preclusion and claim splitting are sisters. Both bar a litigant from bringing specific claims in subsequent litigation. But claim preclusion requires a final judgment on the merits where claim splitting does not.

Katz, 655 F.3d at 1218. The general test for claim splitting is “whether the first suit, assuming it were final, would preclude the second suit.” Id. Therefore, claim-splitting requires a court to consider whether (1) the parties are the same, and (2) the suits involve the same cause of action. See id. “Whether two claims for patent infringement are identical is a claim preclusion issue that is ‘particular to patent law,’ and therefore [the Federal Circuit will] analyze it under Federal Circuit law.” Acumed, 525 F.3d at 1323.

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Xidrone Systems v. Fortem Technologies, (D. Utah 2024).

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