IPS Group, Inc. v. Civicsmart, Inc. et al

Filing 65

ORDER For Argument on Motion to Dismiss. Signed by Judge Cathy Ann Bencivengo on 8/1/2017. (jjg)

1
2
3
4
5
6
7

UNITED STATES DISTRICT COURT

8
9
10

SOUTHERN DISTRICT OF CALIFORNIA
IPS GROUP, INC., a Pennsylvania
corporation,

13

ORDER FOR ARGUMENT ON
MOTION TO DISMISS

Plaintiff,

11
12

Case No.: 3:17-CV-0632-CAB-(MDD)

v.
CIVICSMART, INC., et al.,
Defendants.

14
15

On May 26, 2017, Plaintiff IPS Group, Inc., filed a First Amended Complaint against

16

Defendants CivicSmart, Inc., Duncan Parking Technologies, Inc., and Duncan Solutions,

17

Inc. (collectively “Defendants”). [Doc. No. 23.] Defendants moved to dismiss asserting

18

improper venue, claim splitting, failure to state a claim and lack of subject matter

19

jurisdiction. [Doc. No. 41.] The motion has been fully briefed. [Doc. No. 57 and 58.]

20

Having reviewed the submissions, the Court finds that oral argument would be helpful. A

21

hearing on this motion will therefore be held on Monday, August 7, 2017 at 11:00 a.m.

22

in Courtroom 4C.

23

At the hearing the parties should be prepared to address the following issues.

24

1.

25

With regard to the patent infringement claims, Plaintiff alleges in the amended

26

complaint that venue is proper in this district as to Defendants CivicSmart and Duncan

27

Parking, under 28 U.S.C. § 1400(b), because they both have committed acts of

28

infringement in this district and maintained a regular and established place of business in

Venue for the Patent Infringement Claims

1
3:17-CV-0632-CAB-(MDD)

1

this district.

2

circumstances of this litigation, Defendants did not waive their right to contest venue by

3

not raising it in their motion to dismiss the initial complaint. The Supreme Court’s decision

4

in TC Heartland intervened, and as a result Plaintiff found it necessary to revise its venue

5

allegation in the amended complaint. This is therefore Defendants’ first opportunity to

6

contest Plaintiff’s venue assertion on the challenged allegation.

Defendants challenge that allegation.

The Court finds that under the

7

Defendants CivicSmart and Duncan Parking argue that Plaintiff’s conclusory

8

allegation that they have committed acts of infringement in this district is insufficient to

9

demonstrate that venue is proper. They contend that neither CivicSmart nor Duncan

10

Parking has made, sold, offered for sale or used the accused device in this district. [Doc.

11

No. 41-1, at 11.]1 Plaintiff responds that an allegation of infringement is itself sufficient

12

to establish venue so Defendants’ venue challenge must fail. [Doc. No. 57, at 12, 18.] The

13

law on this issue is far from clear. E.g., compare 17 Moore’s Federal Practice—Civil §

14

110.01 (defendant has the burden of establishing that venue is improper) with 15 C. Wright,

15

A. Miller & E. Cooper, Federal Practice and Procedure § 3826 (4th Ed. 2017) (when the

16

defendant has made a proper objection, the burden is on the plaintiff to establish that the

17

chosen district is a proper venue.)

18

Whichever party bears the burden, at this juncture neither party has provided the

19

Court with a factual basis for its position. Plaintiff’s allegation on information and belief,

20

that “Duncan Parking and CivicSmart have made, used, sold, offered for sale, or imported

21

into California (and this District) the products that are the subject of IPS Group’s claims”

22

is a conclusory allegation devoid of factual support. Defendants’ blanket denial is also

23

argument without factual support. If the Court granted leave to amend, what evidence

24

would support Plaintiff’s allegation of acts of infringement in this District? What evidence

25

would Defendants offer to contest that assertion?

26
27
28

1

Pinpoint page citations to documents in the record are to the ECF page number at the top of the page.
2
3:17-CV-0632-CAB-(MDD)

1

2.

2

Plaintiff alleges that CivicSmart directly and indirectly infringes U.S. Patent No.

3

8,595,054 (First Cause of Action) and U.S. Patent No. 7,854,310 (Second Cause of Action)

4

as a result of its marketing and sales of the accused Liberty Meters. The Court understands

5

these accused devices to be the same devices and patents at issue in IPS v. Duncan

6

Solutions, Case No. 3-15-cv-1526.

7

infringement by CivicSmart raised in the present case are independent of the acts of

8

Duncan Solutions and Duncan Parking in the 2015 case? If yes, again what is the evidence

9

CivicSmart independently committed acts of infringement of these patents in this District?

10

If not, what is the purpose of asserting infringement against CivicSmart for the same

11

products at issue in the 2015 case?

Claim Splitting

Therefore, is it correct that the allegations of

12

3.

13

Plaintiff alleges that CivicSmart and Duncan Parking violated the Lanham Act by

14

falsely relating to unidentified city employees in Milwaukee, Wisconsin, in response to a

15

request for proposal, that IPS acknowledged that the Liberty Meter without a solar panel

16

would not infringe any IPS Group patents. Plaintiff contends this is a material false

17

statement made as part of a commercial transaction intended to deceive its audience and

18

that it injured IPS by diverting the Milwaukee contract from IPS. Assuming these factual

19

allegations to be true, Plaintiff has not however demonstrated how Defendants caused this

20

false statement made to a city employee in a bidding process to enter interstate commerce.

21

There are no facts supporting this necessary element in the complaint. What facts can

22

Plaintiff proffer to demonstrate that each of the Defendants caused the alleged false

23

statement to enter interstate commerce?

24
25

The Lanham Act Claim

The general and unsupported allegations that Defendants have made this false claim
to other consumers at other times and in this District, are not sufficient.

26

4.

27

The complaint offers only speculative assertions without any factual information that

28

Defendants made, or will make, false and misleading statements to California municipal

California State Law Violations under B&P Code §§ 17200 and 17500

3
3:17-CV-0632-CAB-(MDD)

1

employee to induce the purchase of Liberty Meters instead of IPS Group’s meters. If

2

granted leave to amend, what facts can Plaintiff proffer to support these causes of action?

3

It is SO ORDERED.
Dated: August 1, 2017

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

4
3:17-CV-0632-CAB-(MDD)