Visual Merchandising, Inc. v. Creative New Leader, Inc.

Filing 50

ORDER granting 18 Plaintiff's Motion to Amend the Complaint. Plaintiff's proposed Amended Complaint and Jury Demand (Doc. # 18-1) is accepted as filed. By Judge Christine M. Arguello on 7/12/12.(mnfsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 12-cv-00009-CMA-KMT
FUSION SPECIALTIES, INC.,
Plaintiff,
v.
CHINA NETWORK LEADER, INC., a California corporation,
d/b/a CNL Mannequins,
Defendant.

ORDER GRANTING PLAINTIFF’S MOTION TO AMEND THE COMPLAINT

This matter is before the Court on Plaintiff Fusion Specialties, Inc.’s Motion to
Amend the Complaint (Doc. # 18), filed on May 2, 2012. In this motion, Plaintiff seeks
to amend its initial Complaint (Doc. # 1) by adding a third claim for relief, “Breach of
Settlement Agreement,” against Defendant China Network Leader, Inc. (Doc. # 18.)
Defendant responded on May 25, 2012, and Plaintiff replied on June 8, 2012. (Doc.
## 36, 39.)
I. BACKGROUND
In 2008, three years prior to the initiation of the instant case, Plaintiff filed a
lawsuit in this district (Case No. 08-cv-00001), alleging that Defendant infringed
Plaintiff’s U.S. Patents 7,144,179 (“the 179 Patent”) and 6,705,794 (“the 794 Patent”),
the latter of which is also at issue in the instant case.1 (Doc. ## 21 at 2; 22 at 1.)
1 The parties are competing mannequin manufacturers, and the patents in both cases involved
mannequin components. (Doc. # 21.)

The parties entered into a settlement agreement on April 10, 2008, which provides
“[Defendant] hereby stipulates and agrees that the [179 and 794] patents are valid and
enforceable patents.” (Doc. # 22 at 1.)
Plaintiff filed its original Complaint in this case on January 3, 2012, alleging
that Defendant “is infringing, contributing to the infringement and/or inducing the
infringement of Claim 37 of the ‘794 Patent.” (Doc. # 1, ¶ 7.) Claim 37 involves the
concept of using magnetic joints in mannequins with a “depth-of-pull of at least 120
gauss at a distance of one inch.” (Doc. 1-1 at 1.) On April 2, 2012, Defendant
submitted a request for ex parte reexamination of the 794 Patent to the United States
Patent and Trademark Office (“PTO”).2 (Doc. # 12-1.) Plaintiff then filed the instant
Motion seeking to add a claim for breach of the settlement agreement. (Doc. # 18.)
Plaintiff claims that Defendant breached the settlement agreement by challenging the
validity of the 794 Patent because Defendant had stipulated that (1) the 794 Patent
was “valid and enforceable” and (2) agreed to release “any and all actions, causes
of actions, suits . . . which were brought in or related to the Patents or the litigation.”
(Doc. # 22 at 1-2.)
II. DISCUSSION
Under Federal Rule of Civil Procedure 15, after a defendant has answered,
a plaintiff may amend its complaint after a defendant has answered only with leave of
court. Fed. R. Civ. P. 15(a)(2) (providing that “a party may amend its pleadings only
with the opposing party's written consent or the court's leave” after a responsive

2

PTO has since granted the request for reexamination of the 794 Patent. (Doc. # 47.)
2

pleading has been served). “The Court should freely give leave when justice so
requires.” Id.; see Anderson v. Merrill Lynch Pierce Fenner & Smith Inc., 521 F.3d
1278, 1288 (10th Cir. 2008). However, the Court may exercise its discretion to deny
a motion to amend “upon a showing of undue delay, undue prejudice to the opposing
party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously
allowed, or futility of the amendment.” Frank v. U.S. West, Inc., 3 F.3d 1357, 1365
(10th Cir. 1993).
Plaintiff filed the instant motion promptly after learning that Defendant was
challenging the 794 Patent by requesting reexamination. Defendant argues that the
proposed amendment would be futile and that Plaintiff’s motion should therefore be
denied. The Court disagrees. “An amendment to a complaint is futile only if the
plaintiff[] can prove no set of facts in support of [its] amendment that would entitle [it] to
relief. Corporate Stock Transfer, Inc. v. AE Biofuels, Inc., 663 F.Supp.2d 1056, 1061
(D. Colo. 2009). The issue is “not whether plaintiff will ultimately prevail, but whether
the claimant is entitled to offer evidence to support the claims.” Swierkiewicz v. Sorema
N.A., 534 U.S. 506, 511, (2002) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236
(1974)). In light of this liberal standard, the Court will not evaluate the merits of the case
at this preliminary stage of litigation. The Court agrees with Plaintiff that the merits of its
breach of contract claim would be best analyzed after the parties have had opportunity
to fully develop the issue.

3

III. CONCLUSION
Accordingly, IT IS ORDERED that Plaintiff’s Motion to Amend the Complaint (Doc.

# 12) is GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s proposed Amended Complaint and Jury
Demand (Doc. # 18-1) is ACCEPTED AS FILED.

DATED: July 12 , 2012
BY THE COURT:

_______________________________
CHRISTINE M. ARGUELLO
United States District Judge

4