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Xp Innovations Inc. v. Black Rapid, Inc.

United States District Court, Fifth Circuit

December 2, 2013

XP INNOVATIONS INC., Plaintiff,
v.
BLACK RAPID, INC., Defendant.

MEMORANDUM OPINION & ORDER

GRAY H. MILLER, District Judge.

Pending before the court is defendant Black Rapid, Inc.'s ("Black Rapid") motion to dismiss plaintiff XP Innovations, Inc.'s ("XP Photo") complaint. Dkt. 7. After considering the complaint, the motion, and the applicable law, the court is of the opinion that Black Rapid's motion to dismiss should be GRANTED.

I. BACKGROUND

Millionway International, Inc. ("Millionway") and Black Rapid are competitors in the camera strap market. ( Millionway Int'l, Inc. v. Black Rapid, Inc., 4:13-CV-01780, Dkt. 1). XP Photo sells Millionway's products. Dkt. 1 ¶ 17 (Original Complaint). On November 1, 2011, the United States Patent and Trademark Office ("Patent Office") granted Black Rapid a utility patent on a camera transport system and method, known as the 729 Patent. Dkt. 1 ¶ 10. The Patent Office issued a reexamination certificate confirming the validity of the 729 Patent on March 5, 2013. Id. On March 6, 2013, Black Rapid filed suit against Millionway in the United States District Court for the Central District of California ("California Court") for infringement of the 729 Patent. Id. ¶ 12. Millionway did not answer, and Black Rapid filed a motion for default judgment on April 5, 2013. Dkt. 7, Ex. F.[1] The California Court entered default judgment against Millionway on June 10, 2013, and additionally permanently enjoined Millionway and its agents from infringing the 729 Patent. Dkt. 7, Ex. B (granting Black Rapid's motion for default judgment). Therefore, the California Court deemed Black Rapid's factual allegations in its original complaint as true, including a determination that Millionway's camera straps including the "Carry Speed" line of products, infringed the 729 Patent. Id.

On June 25, 2013, XP Photo filed its original complaint against Black Rapid seeking a declaratory judgment invalidating the 729 Patent. Dkt. 1. XP Photo alleges that Black Rapid's 729 Patent is invalid and unenforceable because Black Rapid allegedly failed to provide material information to the Patent Office while the 729 Patent was being reexamined. Id. XP Photo also asserts claims for unfair competition and tortious interference with business relations. Id. On August 19, 2013, Black Rapid filed its motion to dismiss XP Photo's claims, arguing that they are barred by res judicata and that XP Photo fails to state a claim upon which relief can be granted. Dkt. 7. XP Photo did not file a response.

II. LEGAL STANDARD

A. Rule 12(b)(6) Motion to Dismiss

A complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955 (2007). 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." Ashcroft v. Iqbal, 556 U.S. 662, 677, 129 S.Ct. 1937 (2009). Though a complaint does not need detailed factual allegations, the "allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Twombly, 550 U.S. at 555.

As part of the Twombly-Iqbal analysis, the court proceeds in two steps. First, the court separates legal conclusions from well-pled facts, as legal conclusions are not entitled to the presumption of truth. Iqbal, 556 U.S. at 678-80. Second, the court then reviews the well-pled factual allegations, assumes that they are true, and then determines whether they "plausibly give rise to an entitlement to relief." Id. at 679.

B. Res Judicata

Generally, a res judicata contention "cannot be brought in a motion to dismiss" but must instead "be pleaded as an affirmative defense." Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 570 n.2 (5th Cir. 2005). However, when it is "apparent on the face of the pleadings, res judicata may be an appropriate grounds for dismissal." Ray v. Kindred Hosp., No. 4:12-CV-1033, 2013 WL 4041334, at *2 (S.D. Tex. Aug. 6, 2013) (citation omitted); see also Clark v. Amoco Prod. Co., 794 F.2d 967, 970 (5th Cir. 1986) ("[A] claim may... be dismissed if a successful affirmative defense appears on the face of the pleadings."). Additionally, when the court reviews a Rule 12(b)(6) motion to dismiss, "the court may consider documents attached to or incorporated in the complaint and matters of which judicial notice may be taken." U.S. ex rel. Willard v. Humana Health Plan of Tex. Inc., 336 F.3d 375, 379 (5th Cir. 2003).

III. ANALYSIS

The validity and infringement of the 729 Patent were the central claims in the previous California suit. The affirmative defense of res judicata is apparent on the face of XP Photo's pleadings, which discuss the California litigation. It is clear from the complaint that both cases involve enforcement of the same patent. The doctrine of res judicata bars claims that either were litigated or should have been litigated in an earlier suit. See Test Masters, 428 F.3d at 571. For res judicata to apply, four elements must be established: "(1) the parties are identical or in privity; (2) the judgment in the prior action was rendered by a court of ...


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