McGlothlin et al v. Drake et al

Filing 42

OPINION AND ORDER granting Frank Drake's 24 MOTION to Dismiss for Lack of Personal Jurisdiction and pltfs' 33 Motion to Non-Suit Drake Individually; all claims against Drake are dismissed without prejudice; pltfs' 40 Motion to Amend Complaint is GRANTED; pltfs must file their amended complaint within seven days after entry of this Opinion and Order; Cequent's 26 Motion to Dismiss is GRANTED IN PART AND DENIED IN PART; Frank Drake terminated. Signed by Chief Judge J. Leon Holmes on 5/16/12. (vjt)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
NORTHERN DIVISION
DANNY MCGLOTHLIN; and MCB SALES
& INSTALLATION SERVICES, INC.
v.

PLAINTIFFS

No. 1:11CV00055 JH

FRANK DRAKE; and CEQUENT
PERFORMANCE PRODUCTS, INC.

DEFENDANTS

OPINION AND ORDER
Danny McGlothlin and MCB Sales & Installation Services, Inc., initiated this action against
Frank Drake and Cequent Performance Products, Inc., seeking monetary damages and injunctive
relief for patent infringement, patent interference, misappropriation of trade secrets in violation of
Arkansas and Wisconsin’s trade secrets acts, violations of the Arkansas Deceptive Trade Practices
Act, and tortious interference with contractual relations. The plaintiffs also seek a declaration that
two patents belonging to Cequent are invalid.
Both defendants have filed a motion to dismiss the complaint pursuant to Rules 12(b)(1) and
12(b)(6) of the Federal Rules of Civil Procedure. Document #26. The plaintiffs have responded, and
also have filed a motion for leave to file an amended complaint. Documents #34, #40. The plaintiffs
have provided their proposed amended complaint, which adds specific factual allegations but
otherwise is similar to the original complaint. Document #40-1. In their response to the motion to
dismiss, the plaintiffs have relied upon factual allegations contained in the proposed amended
complaint but not in the original complaint. The defendants contend that the proposed amendments
would be futile and ask the Court to deny the motion to amend and dismiss all claims with prejudice.
See Documents #39, #41.

Separately, Drake has also filed a motion to dismiss the complaint pursuant to Rules 12(b)(2)
and 12(b)(3). Document #24. Drake contends that the Court cannot exercise personal jurisdiction
over him because he lacks minimum contacts with Arkansas.1 The plaintiffs, apparently conceding
that the Court lacks personal jurisdiction over Drake, have filed a motion to non-suit Drake and
dismiss all claims against him without prejudice. Document #33. In response, Drake contends that
he is entitled to have the claims against him dismissed with prejudice for the reasons articulated in the
motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6). See Document #37. However, the Court
must possess personal jurisdiction over Drake before it “can reach the merits of a dispute and enter
legally binding orders[.]” Falkirk Min. Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 374 (8th Cir.
1990) (finding personal jurisdiction to be a threshold issue which must be resolved before considering
whether the complaint failed to state a claim). Consequently, Drake’s motion to dismiss pursuant to
Rules 12(b)(2) and 12(b)(3), and the plaintiffs’ motion to non-suit Drake will be granted. The claims
against Drake will be dismissed without prejudice.
Furthermore, for reasons discussed hereafter, the Court will grant the plaintiffs’ motion to
amend their complaint. However, the Court will construe the motion to dismiss pursuant to Rules
12(b)(1) and 12(b)(6) as applying to the proposed amended complaint. See, e.g., Reddy v. JPMorgan
Chase Bank, N.A., No. 2:09CV1152, 2010 WL 3447629, at *4 (S.D. Ohio Aug. 30, 2010)
(considering defendants’ motion to dismiss as applying to the proposed amended complaint); Hentz
v. E. Or. Corr. Inst. Admin., No. CIV 98-993, 1999 WL 562698, at *1 (D. Or. July 30, 1999)
(“[T]he court will hereby construe [the defendant]’s motion to dismiss as applying to the Second

1

Alternatively, Drake asks the Court to transfer the action to the Western District of
Wisconsin.
2

Amended Complaint.”). Construed in this manner, the Court will grant that motion to dismiss in part
and deny it in part.
I.
McGlothlin is the named inventor of United States Patent No. 7,311,331, a utility patent that
claims a powered jacking device which can be installed on a trailer and used to raise or lower the
trailer. It appears from the face of the patent, which the plaintiffs attached to the complaint, that
McGlothlin assigned the patent to MCB Sales. The patent application was filed in 20032 and the
patent issued on December 25, 2007.
The proposed amended complaint alleges that the plaintiffs began to market the product to
potential buyers in 2005. According to the proposed amended complaint, the plaintiffs approached
Cequent and one of its engineers, Drake. The proposed amended complaint alleges that Drake
initially expressed interest but that Cequent subsequently refused to purchase any products from MCB
Sales. The proposed amended complaint alleges further that the plaintiffs provided Cequent and
Drake with two prototypes marked with the phrase “patent pending.” According to the proposed
amended complaint, Drake did not return the two prototypes, claiming they were lost.
The proposed amended complaint alleges that approximately three months later Cequent
began selling a powered jacking device that is similar, if not identical, in design and utility to the
invention claimed in the 331 patent. Furthermore, according to the proposed amended complaint,
Cequent subsequently acquired two design patents for a powered drive for a jack—Nos. D560,324
and D561,424—purportedly invented by Drake.

2

The proposed amended complaint identifies both 2003 and 2005 as the years wherein the
patent application was filed. The patent itself reveals that the application was filed on October 3,
2003.
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II.
The pleading standards, and the correlative standards for ruling on a motion to dismiss under
Rule 12(b)(6), are well known. A complaint must contain “a short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While Rule 8(a)(2) does not
require a complaint to contain detailed factual allegations, it does require a plaintiff to state the
grounds of his entitlement to relief, which requires more than labels and conclusions. Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1964-65, 167 L. Ed. 2d 929 (2007). In ruling on
a motion to dismiss, the Court must accept as true all factual allegations in the complaint and review
the complaint to determine whether its allegations show that the pleader is entitled to relief. Schaaf
v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008). All reasonable inferences from the
complaint must be drawn in favor of the nonmoving party. Crumpley-Patterson v. Trinity Lutheran
Hosp., 388 F.3d 588, 590 (8th Cir. 2004). The Court need not, however, accept as true legal
conclusions, even those stated as though they are factual allegations. Ashcroft v. Iqbal, 556 U.S.
662, 129 S. Ct. 1937, 1949-50, 173 L. Ed. 2d 868 (2009).
III.
Cequent contends that the Court lacks subject matter jurisdiction over the plaintiffs’ request
for a declaratory judgment that the design patents are invalid. Cequent also contends that the
plaintiffs have failed to state a claim for patent interference, patent infringement, misappropriation of
trade secrets, tortious interference with business contacts, and deceptive trade practices. Finally,
Cequent challenges McGlothlin’s standing to bring any of the claims asserted in the proposed
amended complaint.

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A.

Declaratory Judgment
The plaintiffs seek a declaratory judgment that Cequent’s two design patents are invalid.

Cequent contends that the Court lacks subject matter jurisdiction over this claim inasmuch as there
is no case or controversy as required by the Declaratory Judgment Act, 28 U.S.C. § 2201(a), because
Cequent has not attempted to enforce its patents against the plaintiffs. “A court has subject matter
jurisdiction under the Declaratory Judgment Act only if ‘the facts alleged, under all the circumstances,
show that there is a substantial controversy, between parties having adverse legal interests, of
sufficient immediacy and reality to warrant the issuance of a declaratory judgment.’ ”
Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1361 (Fed. Cir. 2009) (quoting MedImmune,
Inc. v. Genentech, Inc., 549 U.S. 118, 127, 127 S. Ct. 764, 771, 166 L. Ed. 2d 604 (2007)).
“[D]eclaratory judgment jurisdiction will not arise merely on the basis that a party learns of the
existence of an adversely held patent, or even perceives that such a patent poses a risk of
infringement, in the absence of some affirmative act by the patentee.” Ass’n for Molecular Pathology
v. U.S. Patent & Trademark Office, 653 F.3d 1329, 1344 (Fed. Cir. 2011), vacated on other grounds
by 132 S. Ct. 1794 (2012); see also SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372,
1380-81 (Fed. Cir. 2007).
The proposed amended complaint does not allege that Cequent performed any “an affirmative
act[s] . . . related to the enforcement of [its] patent rights[.]” Ass’n for Molecular Pathology, 653
F.3d at 1343. Consequently, the Court lacks subject matter of the plaintiffs’ claim that Cequent’s two
patents are invalid. This claim must be dismissed.

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B.

Patent Interference
The plaintiffs allege that Cequent’s two patents interfere with the 331 patent. The parties

agree that patents only interfere if they claim the same subject matter. See Albert v. Kevex Corp., 729
F.2d 757, 758 n.1 (Fed. Cir. 1984) (“Two or more patents ‘interfere’—a term of art in patent
law—when they claim the same subject matter.”); see also Medichem, S.A. v. Rolabo, S.L., 353 F.3d
928, 934 (Fed. Cir. 2003). “By definition, a utility patent encompasses ‘any new and useful process,
machine, manufacture, or composition of matter.’ ” Safco Prods. Co. v. Welcom Prods., Inc., 799
F. Supp. 2d 967, 974 (D. Minn. 2011) (quoting 35 U.S.C. § 101). “In contrast, a design patent
claims [only] ornamental features[.]” Id. (citing 35 U.S.C. § 171 and OddzOn Products, Inc. v. Just
Toys, Inc., 122 F.3d 1396, 1405 (Fed. Cir. 1997)); see also Pepitone v. Am. Standard, Inc., 983 F.2d
1087, 1992 WL 336539, at *2 (Fed. Cir. Nov. 17, 1992) (Table) (design patents “cannot include
claims to the structural or functional aspects of the article or device.”) (citing 37 C.F.R. § 1.153(a)
and Lee v. Dayton-Hudson Corp., 838 F.2d 1186, 1188 (Fed. Cir. 1988)). Consequently, “a design
patent and a utility patent cannot interfere because they cannot claim the same subject matter.”
Pepitone, 1992 WL 336539, at *2.
According to the proposed amended complaint, the 331 patent is a utility patent while both
of Cequent’s patents are design patents. Therefore, the plaintiffs’ patent interference claim fails as
a matter of law, and must be dismissed.
C.

Patent Infringement
The plaintiffs allege that one of Cequent’s products infringes on the 331 patent. Cequent

argues that this claim must be dismissed because the complaint fails to “allege the specific [Cequent]
product that allegedly infringes on [the 311] patent[].” Trading Techs. Int’l., Inc. v. BCG Partners,

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Inc., Nos. 10C715, 10C716, 10C718, 10C720, 10C721, 10C726, 10C882, 10C883, 10C884,
10C885, 10C929, 10C931, 2011 WL 1706136, at *2 (N.D. Ill. May 5, 2011). Regardless, the
plaintiffs do identify a specific Cequent product in their proposed amended complaint. Specifically,
the plaintiffs point to a “powered drive jack” that allegedly “embodies” the 331 patent and is “placed
in the stream of commerce under Cequent’s brand name BULLDOG® under serial No. BS01197;
Part No. 1046130; and Vendor ID No. 102279.”
Cequent contends that the proposed amended complaint, vis-a-vis the infringement claim, is
nonetheless futile “because it is impossible for [the Cequent] product to infringe the ‘331 patent.”
Specifically, Cequent argues that “every claim of the ‘331 patent requires that an intermediate ‘cross
member’ connect the motor’s ‘drive shaft’ to each jack[,]” whereas “ the Cequent drive shaft
connects directly to the jack without an intermediate ‘cross member’ component[.]” See Uniloc USA,
Inc. v. Microsoft Corp., 632 F.3d 1292, 1301 (Fed. Cir. 2011) (“To prove infringement, the plaintiff
bears the burden of proof to show the presence of every element or its equivalent in the accused
device.”); see also BMC Res., Inc. v. Paymentech, L.P., 498 F.3d 1373, 1378 (Fed. Cir. 2007) (citing
Warner-Jenkinson Co., Inc. v. Hilton Davis Corp., 520 U.S. 17, 117 S. Ct. 1040, 137 L. Ed. 2d 146
(1997)). Additionally, Cequent contends that “because every claim of the ‘331 patent requires a
‘trailer,’ it is impossible that Cequent selling a motor kit without the trailer could directly infringe
under 35 U.S.C. § 271(a).” See Rotec Indus., Inc. v. Mitsubishi Corp., 215 F.3d 1246, 1252 (Fed.
Cir. 2000) (“The Supreme Court . . . held that in order to infringe under § 271(a), the accused device
must include all of the limitations contained within the patent claim, not just any one limitation.”)
(citing Deepsouth Packing Co. v. Laitram Corp., 406 U.S. 518, 528, 92 S. Ct. 1700, 1701, 32 L. Ed.
2d 273 (1972)).

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Determining whether a particular product infringes on a patent requires a two-step analysis.
Innovention Toys, LLC v. MGA Entm’t, Inc., 637 F.3d 1314, 1318-19 (Fed. Cir. 2011) (“A
determination of infringement involves two steps: First, the court determines the scope and meaning
of the asserted patent claims. The court then compares the properly construed claims to the allegedly
infringing device to determine whether all of the claim limitations are present, either literally or by a
substantial equivalent.”) (citing Cybor Corp. v. FAS Techs., Inc., 138 F.3d 1448, 1454 (Fed. Cir.
1998) (en banc)). Cequent’s arguments turn on the scope and ultimate meaning of the 331 patent’s
claims. However, “[a] motion to dismiss is not the proper time to initiate claim construction[.]”
Fujitsu Ltd. v. Belkin Intern., Inc., 782 F. Supp. 2d 868, 890 (N.D. Cal. 2011) (“Claim construction
and infringement analysis should not be resolved on a motion to dismiss.”); see also Karl Kiefer
Mach. Co. v. U.S. Bottlers Mach. Co., 113 F.2d 356, 357 (7th Cir. 1940) (“[I]t is impossible for [the
court] to appraise the claims or determine the extent of their scope, or the range of equivalents of
their elements, without knowledge of the prior art, the history of the art, [et cetera.]”). Therefore,
the motion to dismiss is denied as to the plaintiffs’ patent infringement claim.
D.

Trade Secret
The plaintiffs allege that the invention covered by the 331 patent was a trade secret that

Cequent misappropriated in violation of Arkansas and Wisconsin law. Cequent argues that this claim
should be dismissed because the allegations contained in the complaint are too vague. Pursuant to
the Arkansas Theft of Trade Secrets Act, a “trade secret” is any
information, including a formula, pattern, compilation, program, device, method,
technique, or process, that:
(A) Derives independent economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use; and
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(B) Is the subject of efforts that are reasonable under the circumstances to maintain
its secrecy.
Ark. Code Ann. § 4-75-601(4); see also Wis. Stat. § 134.90(1)(c).3 In their proposed amended
complaint, the plaintiffs allege that their jacking device is unique because it contains a gear box that
increases the lifting strength of the motor and a hand crank. “Whether a particular type of
information constitutes a trade secret is a question of fact and cannot be resolved on a motion to
dismiss.” Greenberg v. Miami Children’s Hosp. Research Inst., Inc., 264 F. Supp. 2d 1064, 1076
(S.D. Fla. 2003) (construing Florida’s Trade Secret Act); see BondPro Corp. v. Siemens Power
Generation, Inc., 463 F.3d 702, 704 (7th Cir. 2006) (Because Wisconsin has adopted the Uniform
Trade Secrets Act, “decisions by other jurisdictions [than Wisconsin] on questions involving the
UTSA are to be given careful consideration.”) (quoting Minuteman, Inc. v. Alexander, 147 Wis. 2d
842, 434 N.W.2d 773, 779-80 (1989)); see also In re Iowa Freedom of Info. Council, 724 F.2d 658,
663 (8th Cir. 1983) (whether a trade secret is involved is a question of fact). Even if the allegations
in the initial complaint were overly vague, the proposed amended complaint is sufficiently particular
as to the nature of the alleged trade secret to pass muster for the purposes of a motion to dismiss.
Cequent also contends that the plaintiffs have failed to allege misappropriation as required by
both the Arkansas and Wisconsin acts. In Arkansas, “misappropriation” means:
(A) Acquisition of a trade secret of another by a person who knows or has reason to
know that the trade secret was acquired by improper means; or
(B) Disclosure or use of a trade secret of another without express or implied consent
by a person who:
(i) Used improper means to acquire knowledge of the trade secret; or

3

Both Arkansas and Wisconsin have adopted, more or less, the Uniform Law Commission’s
Uniform Trade Secrets Act.
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(ii) At the time of disclosure or use, knew or had reason to know that his
knowledge of the trade secret was:
(a) Derived from or through a person who had utilized improper
means to acquire it;
(b) Acquired under circumstances giving rise to a duty to maintain its
secrecy or limit its use; or
(c) Derived from or through a person who owed a duty to the person
seeking relief to maintain its secrecy or limit its use; or
(iii) Before a material change of his position, knew or had reason to know that
it was a trade secret and that knowledge of it had been acquired by accident
or mistake[.]
Ark. Code Ann. § 4-75-601(2); see also Wis. Stat. § 134.90(2).
In the motion to dismiss, Cequent does not attack the plaintiffs’ allegations that Cequent used
the alleged trade secret. Rather, Cequent contends that it did not acquire any knowledge about the
plaintiffs’ invention under circumstances giving rise to a duty to maintain its secrecy or limit its use
because none of Cequent’s representatives signed a non-disclosure or confidentiality agreement. The
proposed amended complaint alleges that the devices shown and provided to Cequent were stamped
with the phrase “patent pending.” Until, and if, they are published, applications for patents are kept
confidential. See 35 U.S.C. § 122(a). Thus, the plaintiffs’ use of the phrase “patent pending” on the
devices, if proved, provides a basis for concluding that Cequent had reason to know that it should
keep its knowledge of the plaintiffs’ invention a secret. See Roach Mfg. Corp. v. Northstar Indus.
Inc., No. 3:09CV29, 2011 WL 3625587, at *7 (E.D. Ark. Aug. 17, 2011); Sentinel Prods. Corp. v.

10

Mobile Chem. Co., No. Civ. A. 98-11782, 2001 WL 92272, at *10 (D. Mass. Jan. 17, 2001).4 The
plaintiffs have stated a claim for misappropriation of a trade secret.
Nevertheless, Cequent contends that it is entitled to dismissal of this claim because the
plaintiffs’ patent application was published on April 7, 2005. See BondPro Corp., 463 F.3d at 707
(“Published patent applications are in fact studied by inventors in the relevant field, and so a secret
disclosed in them will ordinarily (we need not decide whether invariably) lose its status as a trade
secret.”). Assuming that the publication of the application for the 331 patent destroyed the status of
any trade secret vis-a-vis the plaintiffs’ device, the plaintiffs’ proposed amended complaint only states
that Cequent was made aware of and began to use the alleged trade secret in 2005. Because it is
possible, based on the face of the proposed amended complaint, that Cequent misappropriated the
plaintiffs’ trade secret before the plaintiffs’ patent application was published, dismissal of this claim
is inappropriate at this time.
E.

Tortious Interference
The plaintiffs allege that Cequent tortiously interfered with contracts between the plaintiffs

and third parties for the sale of the plaintiffs’ invention. In Arkansas,
[t]he elements of tortious interference are: (1) the existence of a valid contractual
relationship; (2) knowledge of the relationship on the part of the interfering party; (3)
intentional interference inducing or causing a breach or termination of the relationship;
and (4) resultant damage to the party whose relationship has been disrupted.

4

Similarly, and despite Cequent’s argument to the contrary, the alleged use of the phrase
“patent pending” on the devices is evidence that, if proved, provides a basis for finding that the
plaintiffs’ took reasonable efforts under the circumstances to protect the secrecy of their trade secret.
See Roach Mfg. Corp., 2011 WL 3625587, at *7; see also Ark. Code Ann. § 4-75-601(4)(B); Wis.
Stat. § 134.90(1)(c)2.
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Faulkner v. Ark. Children’s Hosp., 347 Ark. 941, 959, 69 S.W.3d 393, 405 (2002); see also
Ga.-Pac. Consumer Prods. LP v. Myers Supply, Inc., 621 F.3d 771, 777 (8th Cir. 2010). Further,
“the conduct of the defendants [must] be at least ‘improper[.]’ ” Dodson v. Allstate Ins. Co., 345
Ark. 430, 444, 47 S.W.3d 866, 875 (2001).5
In their complaint, the plaintiffs allege that they had contracts to sell their devices to two
companies. However, the plaintiffs do not allege that Cequent was aware of these contracts.
Moreover, the proposed amended complaint does not allege any facts that, if proved, would tend to
establish that Cequent was aware of these contracts. Therefore, the plaintiffs have failed to state a
claim for intentional interference with their contractual relations.
F.

Deceptive Trade Practices
The plaintiffs allege that Cequent violated the Arkansas Deceptive Trade Practices Act by

stealing and using the plaintiffs’ trade secrets. However, the Arkansas Theft of Trade Secrets Act
“displaces conflicting tort, restitutionary, and other laws of this state pertaining to civil liability for
misappropriation of a trade secret.” Ark. Code Ann. § 4-75-602(a). “The Arkansas Supreme Court
has read the plain meaning of this section to create an absolute bar to double recovery under other
civil claims.” Roach Mfg. Corp., 2011 WL 3625587, at *7 (citing R.K. Enter., LLC v. Pro-Comp
Mgmt., Inc., 356 Ark. 565, 571-74, 158 S.W.3d 685, 688-90 (2004) (“[T]he statutory language of
the Trade Secret Act displaces or preempts the award of damages based upon tort claims . . . that
may arise under a claim for misappropriation of trade secrets.”)). “[T]he ATSA [is] the exclusive
remedy for misappropriation of trade secrets.” Id. (citing Vigoro Indus., Inc. v. Cleveland Chem. Co.

5

Wisconsin law provides substantially similar elements for a claim of tortious interference
with contractual relations. See Duct-O-Wire Co. v. U.S. Crane, Inc., 31 F.3d 506, 509 (7th Cir.
1994).
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of Ark., Inc., 866 F. Supp. 1150, 1160-61 (E.D. Ark. 1994), rev’d on other grounds by Vigoro
Indus., Inc. v. Crisp, 82 F.3d 785 (8th Cir. 1996)). Consequently, the plaintiffs’ deceptive trade
practices claim must be dismissed.
G.

McGlothlin’s Standing
Cequent challenges McGlothlin’s standing to bring the patent claims because the complaint

alleges that McGlothlin assigned the patent to MCB Sales. “A patentee shall have remedy by civil
action for infringement of his patent.” 35 U.S.C. § 281. “The word ‘patentee’ includes not only the
patentee to whom the patent was issued but also the successors in title to the patentee.” 35 U.S.C.
§ 100(d); see also 35 U.S.C. § 261 (addressing assignment of patents). However, where the inventor
or patentee relinquishes all of his legal interest in a patent to another, the patentee no longer has
standing to sue for patent infringement occurring thereafter. See Bhandari v. Cadence Design Sys.,
Inc., 485 F. Supp. 2d 747, 750 (E.D. Tex. 2007); see also Arachnid, Inc. v. Merit Indus., Inc., 939
F.2d 1574, 1579 (Fed. Cir. 1991) (“The general rule is that one seeking to recover money damages
for infringement of a United States patent (an action ‘at law’) must have held the legal title to the
patent during the time of the infringement.”) (emphasis in original); Moore v. Marsh, 74 U.S. 515,
522, 19 L. Ed. 37 (1868) (“[T]he right of action is given to the person or persons owning the
exclusive right at the time the infringement is committed[.]”).
Here, it appears from the face of the patent that McGlothlin, the inventor, assigned the patent
to MCB Sales at least from the date that the patent issued. Nevertheless, the Court declines to
dismiss McGlothlin on standing grounds for two reasons. First, it is not clear from the face of the
proposed amended complaint whether the assignment was a total assignment of McGlothlin’s legal
interests or only a partial assignment. Indeed, the proposed amended complaint, which appears to

13

identify McGlothlin as the “Plaintiff” in the first sentence, refers to the “Plaintiff’s patent” and
“damages.” Construing the complaint in McGlothlin’s favor, the complaint appears to allege that he
maintained an ownership interest in the patent. Furthermore, even assuming McGlothlin surrendered
all legal interest in the 331 patent on the date it was issued, he may have standing to recover for any
infringement occurring before then. See 35 U.S.C. § 154(d). The Court can address this standing
issue once the nature of the assignment becomes more transparent.6
Similarly, it is unclear at this stage in the litigation whether McGlothlin suffered any injury,
separate and apart from MCB Sales’ injury, based on Cequent’s alleged misappropriation of the
plaintiffs’ trade secret. Consequently, the Court declines to dismiss McGlothlin’s trade secret claim
at this time. Finally, the Court will not address Cequent’s argument that McGlothlin lacks standing
to assert a tortious interference claim because that claim will be dismissed for failure to state a claim.
CONCLUSION
For the foregoing reasons, Frank Drake’s Motion to Dismiss for Lack of Personal
Jurisdiction, and the plaintiffs’ Motions to Non-Suit Drake Individually are GRANTED. Documents
#24, #33. All claims asserted against Drake are dismissed without prejudice.
The plaintiffs’ Motion to Amend their Complaint is GRANTED. Document #40. Cequent’s
Motion to Dismiss under Rules 12(b)(1) and 12(b)(6) is GRANTED in part and DENIED in part.
Document #26. The motion is denied with respect to the plaintiffs’ patent infringement claim and
misappropriation of trade secrets claim. The motion is granted with respect to all of the plaintiffs’

6

The plaintiffs may have brought the present action on behalf of both McGlothlin and MCB
Sales based on the rule that “[a]n action for infringement must join as plaintiffs all co-owners.”
Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1467 (Fed. Cir. 1998).
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other claims, which are dismissed without prejudice. The plaintiffs must file their amended complaint
within seven days after entry of this Opinion and Order.
IT IS SO ORDERED this 16th day of May, 2012.

J. LEON HOLMES
UNITED STATES DISTRICT JUDGE

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