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Taylor v. Walmart Prepaid Money Cards

United States District Court, Fifth Circuit

December 3, 2013



E. SCOTT FROST, Magistrate Judge.

Before the Court is a Complaint filed by Plaintiffs John D. Taylor and Steve K. Taylor (collectively, the "Taylors"), who are proceeding pro se and in forma pauperis, against Defendants Walmart Prepaid Money Cards and Walmart Corporate Office (collectively, "Walmart"). Pursuant to 28 U.S.C. § 636(b)(1), the District Court referred this matter to the United States magistrate judge on September 17, 2013. (Doc. 7.) This Court granted permission for the Taylors to proceed in forma pauperis on November 19, 2013. (Doc. 10.) In their Complaint, the Taylors allege, inter alia, that Walmart is infringing upon their various intellectual property rights in the "first and original prepaid money card products." ( See Doc. 3.) Based on applicable law, the relevant filings, and the Taylors' history of vexatious litigation, the magistrate judge recommends that this case be dismissed with prejudice and that the Taylors be sanctioned monetarily and barred from filing any future complaint, which is rooted in the same allegations, without permission from the Court.


The Taylors are not new to litigating these claims in federal court. In 2001, the Taylors brought copyright and patent infringement claims in an action against twenty-six corporate defendants. See Taylor v. I.B.M., 7:01-CV-0216-R (N.D. Tex. Feb. 19, 2002) (Buchmeyer, J.). Specifically, believing they had conceived of and created the first "pre-paid cash cards, " the Taylors asserted that the defendants had infringed upon their copyrights and pending patent application by making, promoting, and issuing such cards. As a remedy, the Taylors asked for $1 trillion in actual damages, $3 trillion in special exemplary damages, court costs, reasonable attorneys' fees, and 51% of any future profits in such cards sold by the defendants. The District Court dismissed the case with prejudice with respect to all defendants and ordered costs taxed against the plaintiffs. The Taylors appealed, and the Fifth Circuit affirmed the District Court's decision, stating that the "plaintiffs failed to plead an actionable claim." Taylor v. IBM., 54 Fed.Appx. 794, *1 (5th Cir. 2002) (unpublished decision). The Fifth Circuit also sanctioned the Taylors, stating that "[i]n light of the time and money expended by appellees in defending this wholly frivolous lawsuit, appellants are hereby ordered to pay to this court the sum of $500."[1] Id. (citing Farguson v. Mbank Houston, N.A., 808 F.2d 358, 360 (5th Cir. 1986); Prather v. Neva Paperbacks, Inc., 410 F.2d 698, 700 (5th Cir. 1969)).

In 2006, the Taylors returned to District Court and brought practically indistinguishable copyright and patent infringement claims against twenty-four corporate defendants, of which some had been defendants in the 2001 lawsuit. See Taylor v. MasterCard Int'l. Inc., 7:06-CV-0123-R (N.D. Tex. Oct. 27, 2006) (Buchmeyer, J.). Apparently applying a different computational method for damages, the Taylors asked for $87 million in actual damages, $187 million in special exemplary damages, court costs, attorneys' fees, and an injunction "against Defendants to remove their prepaid cash cards off all markets, without exception and punish the Defendants to the full extent of the Law." The District Court again dismissed the case with prejudice with respect to all defendants and again ordered costs taxed against the plaintiffs. In addition to submitting statements of court costs and attorneys' fees, totaling approximately $140 thousand, [2] several defendants moved for sanctions against the Taylors, which the District Court denied.

The Taylors have now returned to District Court for a third time and are alleging that Walmart has infringed upon the Taylors' intellectual property rights in the same prepaid cash cards at issue in the previous lawsuits, by producing, marketing, and selling Walmart prepaid money-card products. ( See Doc. 3.) In addition to alleging copyright and patent infringement claims, the Taylors have also alleged trademark infringement under the Lanham Act and Texas common law.[3] Id. To support their claims, the Taylors submitted various exhibits, including documents filed with the Copyright Office; images of the Taylors' prepaid cash cards and text describing and marketing the cards; screen images captured from various Walmart websites, which market the Walmart MoneyCard; documents filed with the Patent and Trademark Office ("PTO") regarding the Taylors' patent application; corporate documents filed with the Texas Secretary of State; and stock certificates in the Taylors' company. ( See Doc. 6.) Regarding damages, the Taylors are asking for a permanent injunction to enjoin Walmart from infringing on their intellectual property rights, that Walmart pay "to John Taylor and Steve Taylor each statutory damages in the amount of $1, 000, 000 per counterfeit infringement, " as well as lost profits and other damages "suffered as a result of Defendants intentional and willful conduct...." ( See Doc. 3, pp. 20-21.)


In proceedings in forma pauperis, the court is required to "dismiss the case at any time if the court determines that" the complaint is frivolous or malicious or fails to state a claim upon which relief may be granted. 28 U.S.C. § 1915(e)(2)(B) (2012). "An [ in forma pauperis ] complaint may be dismissed as frivolous pursuant to 28 U.S.C. § 1915(e)(2)(B)(i) if it has no arguable basis in law or in fact." Ruiz v. United States, 160 F.3d 273, 274-75 (5th Cir. 1998). A claim has no arguable basis in law or fact if it is based on an indisputably meritless legal theory or if, after providing the plaintiff the opportunity to present additional facts when necessary, the facts alleged are clearly baseless. Talib v. Gilley, 138 F.3d 211, 213 (5th Cir. 1998). In § 1915 cases, the court is authorized sua sponte to test whether the case is frivolous or malicious before the service of process or before a defendant is required to file an answer. Ali v. Higgs, 892 F.2d 438, 440 (5th Cir. 1990).

Further, dismissal is proper if the complaint has not provided both fair notice of the nature of the claims and plausible factual allegations to support the claims. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-60, 127 S.Ct. 1955, 1964-67, 167 L.Ed.2d 929 (2007); see also Anderson v. U.S. Dep't of Hous. & Urban Dev., 554 F.3d 525, 528 (5th Cir. 2008). Thus, to avoid dismissal for failure to state a claim, a plaintiff must plead sufficient facts, not mere conclusory allegations or "blanket assertions." See Twombly, 550 U.S. at 555-56 & n.3; Sullivan v. Leor Energy, LLC, 600 F.3d 542, 546 (5th Cir. 2010). Although pro se complaints are held to less stringent standards, a pro se complaint must still "show specific, well-pleaded facts, not mere conclusory allegations to avoid dismissal." Fantroy v. First Fin. Bank, N.A., No. 3:12-CV-82-N-BH, 2013 WL 4434913 at *3 (N.D. Tex. August 19, 2013) (citing Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992)).


This lawsuit, as well as the two previous lawsuits, appears to stem from the Taylors' unwavering misunderstanding about fundamental principles of intellectual property law. Namely, the Taylors believe that because they conceived of the idea for the first prepaid cash card, they are entitled to copyright, patent, and trademark protection in such products. Notwithstanding the fact the Taylors have failed to plead sufficient factual allegations to state any claim under copyright, patent, or trademark law, their claims are also frivolous because they have no arguable basis in law or fact.

A. Copyright

To establish copyright infringement, a plaintiff must prove (1) ownership of a valid copyright, and (2) copying by a defendant of copyrightable expression from the plaintiff's work. See Feist Publ'ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, 111 S.Ct. 1282, 1296, 113 L.Ed.2d 358 (1991); Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 141 (5th Cir. 2004).

While a certificate of registration is prima facie proof of a valid copyright and that the registrant owns the copyright, registration is not dispositive as to whether an expression is copyrightable. See id.; Lakedreams v. Taylor, 932 F.2d 1103, 1108 n.10 (5th Cir. 1991). Only "original works of authorship fixed in any tangible medium of expression" are afforded copyright protection. 17 U.S.C. § 102(a). To be original, the fixed expression must have been independently created by the author and must contain some "modicum of creativity." See Feist, 499 U.S at 346-47. "In no case does copyright protection... extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work." Id. § 102(b); see also Feist, 499 U.S. at 356 (explaining that § 102 preserves the ...

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