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IIITEC Limited v. Weatherford Technology Holdings, LLC

United States District Court, S.D. Texas, Houston Division

December 20, 2019




         This case is before the Court on the Motion to Dismiss or for More Definite Statement (“Motion to Dismiss”) [Doc. # 25] filed by Defendant Weatherford Technology Holdings, LLC (“Defendant” or “Weatherford”).[1] Plaintiff iiiTec, Limited (“Plaintiff” or “iiiTec”) filed a Response [Doc. # 37], and Weatherford filed a Reply [Doc. # 44]. Having reviewed the record and the applicable legal authorities, the Court denies the Motion to Dismiss.[2]

         I. BACKGROUND

         Plaintiff iiiTec alleges in the First Amended Complaint that Petrowell Limited (“Petrowell”) developed a “radio frequency identification device (“RFID”) controlled circulating sub for use in the drilling market of the oilfield service industry.” First Amended Complaint [Doc. # 14], ¶ 9. Petrowell later discovered that Marathon Oil Company (“Marathon”) held United States patents covering the use of RFID in downhole operations. See Id. Plaintiff alleges that in early 2006, “Petrowell signed an exclusive license agreement with Marathon for all applications in the downhole environment for RFID technology.” Id., ¶ 10. Later that same year, Marathon moved its RFID technology to a new company, In-Depth Systems, Inc. (“In-Depth”). See id., ¶ 11.

         Plaintiff alleges that in August 2008, it entered into a Technology Development Agreement (“TDA”) with Marathon and Petrowell.[3] See id., ¶ 14. Under the TDA, Marathon is granted rights to new developments and/or improvements to the RFID technology made during the course of the TDA, which are defined as “Assigned IP” in the TDA. See id., ¶ 16 (citing TDA ¶ 9.9). The TDA provides further that Marathon “shall grant to In-Depth or Developers [Petrowell and Plaintiff] licenses in any Assigned IP” depending on Marathon's agreement with In-Depth and others. Id. (quoting TDA ¶ 9.9). The TDA states that if assigned to the Developers, the Assigned IP license to Plaintiff shall be exclusive in the Drilling Field or Coiled Tubing Field. Id. (citing TDA ¶ 9.9).

         Plaintiff alleges that the TDA included a “Program Plan” for “Program Tools” to be developed, and for the Developers to pay a technology development fee to Marathon. See id., ¶¶ 21-22. Plaintiff alleges that as it developed a specific “Program Tool, ” it received a license covering that tool.[4] See id., ¶ 22. Plaintiff alleges that the amount of the technology development fee was calculated based on a stated value for each tool and the “Gross Revenues” Plaintiff received from selling, renting, or using the tool. See id., ¶ 23. Plaintiff alleges that, pursuant to the terms of the TDA, it paid a 17.5% fee, totaling $290, 801.24, to Marathon in February 2013. See id., ¶ 24.

         In April 2017, Weatherford and Marathon entered into an IP Purchase Agreement which stated that Marathon assigned ownership rights in the Assigned IP. See id., ¶ 26. Plaintiff alleges that the TDA prevents Marathon from assigning its rights or obligations under that agreement “without the prior written consent of the Developers [and] any purported assignment or delegation without such consent [is] voidable and ineffective.” Id. (quoting TDA ¶ 23). Plaintiff alleges that it has not consented to any assignment of the Assigned IP to Weatherford. See id., ¶ 29. Plaintiff alleges that the IP Purchase Agreement provides also that the RFID Technology “shall remain subject to any and all rights and licenses granted” under the TDA. Id., ¶ 27.

         Plaintiff filed this lawsuit against Weatherford seeking primarily a declaratory judgment that any assignment of the Assigned IP by Marathon to Weatherford is invalid. See First Amended Complaint, Count 1. As an alternative, and only if there is a finding that the assignment to Weatherford is valid without Plaintiff's consent, Plaintiff seeks a declaratory judgment that it has a valid license under the TDA that is binding on Weatherford (Count 2), and asserts a breach of contract claim (Count 3). In Count 4 of the First Amended Complaint, Plaintiff seeks to recover its reasonable and necessary attorney fees.

         Weatherford filed its Motion to Dismiss and Motion for Sanctions. Weatherford argues that the transfer of the Assigned IP from Marathon to Weatherford does not require Plaintiff's consent, that the TDA does not grant Plaintiff a license in the Assigned IP, and that there is no viable breach of contract claim because Weatherford is not a party to the TDA. The pending motions have been fully briefed and are now ripe for decision. The Court denies the Motion to Dismiss and the Motion for Sanctions.


         A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure “is viewed with disfavor and is rarely granted.” See Leal v. McHugh, 731 F.3d 405, 410 (5th Cir. 2013) (quoting Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011)); Shaikh v. Texas A&M Univ. Coll. of Med., 739 Fed.Appx. 215, 218 (5th Cir. June 20, 2018). The Court accepts the factual allegations in the complaint as true, and construes the facts in the light most favorable to the plaintiff. See Alexander v. Verizon Wireless Servs., L.L.C., 875 F.3d 243, 249 (5th Cir. 2017) (citing Kelly v. Nichamoff, 868 F.3d 371, 374 (5th Cir. 2017)). The complaint must, however, contain sufficient factual allegations, as opposed to legal conclusions, to state a claim for relief that is “plausible on its face.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Cicalese v. Univ. of Texas Med. Branch, 924 F.3d 762, 765 (5th Cir. 2019); Patrick v. Wal-Mart, Inc., 681 F.3d 614, 617 (5th Cir. 2012). When there are well-pleaded factual allegations, a court should presume they are true, even if doubtful, and “then determine whether they plausibly give rise to an entitlement to relief.” See Iqbal, 556 U.S. at 679; Doe v. Robertson, 951 F.3d 383, 387 (5th Cir. 2014).

         “The court's review is limited to the complaint, any documents attached to the complaint, and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint.” Lone Star Fund V (U.S.), L.P. v. Barclays Bank PLC, 594 F.3d 383, 387 (5th Cir. 2010) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000)); see also Ironshore Europe DAC v. Schiff Hardin, L.L.P., 912 F.3d 759, 763 (5th Cir. 2019); Walch v. Adjutant General's Dep't of Tex., 533 F.3d 289, 294 (5th Cir. 2008) (on a Rule 12(b)(6) motion, documents attached to the briefing may be considered by the Court if the documents are sufficiently referenced in the complaint and no party questions their authenticity).

         III. ANALYSIS

         A. Count 1 - Assignment to Weatherford ...

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