Markham Concepts, Inc. v. Hasbro, Inc.

Filing 128

MEMORANDUM AND ORDER granting in part and denying in part 37 Motion for Judgment on the Pleadings; denying 49 Motion to Dismiss for Failure to State a Claim. So Ordered by Chief Judge William E. Smith on 10/17/2017. (Jackson, Ryan)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
_______________________________________
)
MARKHAM CONCEPTS, INC.; SUSAN GARRETSON;)
and LORRAINE MARKHAM, individually and )
in her capacity as Trustee of the Bill )
and Lorraine Markham Exemption Trust
)
and the Lorraine Markham Family Trust, )
)
Plaintiffs,
)
)
v.
)
C.A. No. 15-419 WES
)
HASBRO, INC.; REUBEN KLAMER; DAWN
)
LINKLETTER GRIFFIN; SHARON LINKLETTER; )
MICHAEL LINKLETTER; LAURA LINKLETTER
)
RICH; DENNIS LINKLETTER; THOMAS FEIMAN, )
in his capacity as co-trustee of the
)
Irvin S. and Ida Mae Atkins Family
)
Trust; ROBERT MILLER, in his capacity
)
as co-trustee of the Irvin S. and Ida
)
Mae Atkins Family Trust; and MAX
)
CANDIOTTY, in his capacity as
)
co-trustee of the Irvin S. and Ida Mae )
Atkins Family Trust.
)
)
Defendants.
)
_______________________________________ )
MEMORANDUM AND ORDER
WILLIAM E. SMITH, Chief Judge.
This case involving the intellectual property rights to the
Game of Life (“Game”) is now before the Court on two motions. One
is Defendant Klamer’s Motion to Dismiss Count III of the Second
Amended Complaint (“Klamer’s Motion”) (ECF No. 49). 1 The other is

1

On October 13, 2017, the parties entered a stipulation
wherein Defendants consented to the filing of a third amended
complaint, (Stip. 4, ECF No. 126), which Plaintiffs filed the same
day, (Pls.’ Third Am. Compl., ECF No. 127). Although the Court

Plaintiffs’ Motion for Judgment on the Pleadings and/or to Dismiss
Certain of Defendant Klamer’s Counterclaims and to Strike Certain
Affirmative

Defenses

(“Plaintiffs’

Motion”)

(ECF

No.

37).

Plaintiffs’ Motion is granted to the extent it asks the Court to
dismiss Defendant Klamer’s request for a declaratory judgment
stating that claims concerning the intellectual property in the
Game are barred by claim and issue preclusion. Plaintiff’s motion
is otherwise denied. Klamer’s Motion is denied in full. 2

could treat Klamer’s Motion as moot for being directed at a nowsuperseded complaint, see Collins v. Winex Invs., LLC, Civil No.
08cv51-L(CAB), 2008 WL 927572, at *1 (S.D. Cal. Apr. 4, 2008), the
Court declines to do so here because Plaintiffs’ third claim of
relief in their second amended complaint and in their third amended
complaint are nearly identical. Consequently, Defendant Klamer’s
arguments to dismiss the third claim of relief in the second
amended complaint are just as applicable to the third amended
complaint. Therefore, in the interest of efficiency, the Court
deems Klamer’s Motion applicable to Plaintiffs’ third amended
complaint: Discussion below testing Klamer’s Motion against the
second amended complaint serves also as the Court’s determination
of Klamer’s Motion as applied to the third amended complaint.
2

Both Plaintiffs and Klamer argue in their respective Motions
as to why the other party lacks standing to bring certain claims.
The parties have since resolved these issues to the extent stated
in their stipulation entered October 13, 2017. (See Stip. 2-4).
Therefore, the Court denies the Motions’ standing sections – to
the extent they relate to issues resolved in the parties’
stipulation - as moot. Klamer’s right to raise arguments relying
on the work-for-hire doctrine against the third (or any subsequent)
amended complaint is reserved. (See id. at 3-4).
2

DISCUSSION 3
I.

Klamer’s Motion
In his Motion, Klamer urges the Court to dismiss Plaintiffs’

third claim of relief in their second amended complaint. (Klamer’s
Mot. 15-18).

The Court will grant a motion to dismiss when a

complaint fails to plead “sufficient factual matter . . . to state
a claim to relief that is plausible on its face.” Guadalupe-Baez
v.

Pesquera,

819

F.3d

509,

514

(1st

Cir.

2016)

(quotations

omitted). Klamer’s argument is that Plaintiffs’ third claim for
relief

–

which

asks

the

Court

for

a

declaratory

judgment

determining ownership of the intellectual property associated with
the Game – is barred by claim and issue preclusion stemming from
litigation in the late 1980s that ended in settlement (“1989
Litigation”). (Klamer’s Mot. 15-18).
Klamer’s argument lacks merit. The 1989 Litigation was in
state court, (Decl. of Erica J. Van Loon, Ex. 3, ECF No. 39-1) –
that

is,

in

a

court

without

subject

matter

jurisdiction

to

determine the federal intellectual property rights at issue in
Plaintiff’s third claim of relief, see 28 U.S.C. § 1338(a) (“The
[federal] district courts shall have original jurisdiction of any
civil action arising under any Act of Congress relating to . . .

3

The Court may, if necessary, expand on the discussion
contained herein in its post-trial findings of fact and conclusions
of law.
3

copyrights and trademarks. No State court shall have jurisdiction
over any claim for relief arising under any Act of Congress
relating to . . . copyrights.”). Applying California preclusion
law, 4 claim preclusion does not apply here because the first forum
lacked subject matter jurisdiction over the claim at issue. Le
Parc Cmty. Ass’n v. Workers’ Comp. Appeals Bd., 2 Cal. Rptr. 3d
408, 415-16 (Cal. Ct. App. 2003) (finding that claim preclusion
does not apply where “plaintiff was unable to rely on a certain
theory of the case or to seek a certain remedy or form of relief
in the first action because of the limitations on the subject
matter jurisdiction of the courts . . . and the plaintiff desires
in the second action to rely on that theory or to seek that remedy
or form of relief.”) (citing Restatement (Second) of Judgments §
26 (Am. Law Inst. 1982)).
Nor is Plaintiffs’ third claim of relief subject to issue
preclusion. In order for issue preclusion to apply, an issue must
have been “actually litigated” in the first proceeding. Pac. Lumber
Co. v. State Water Res. Control Bd., 126 P.3d 1040, 1054 (Cal.
2006) (quotations omitted). And when a case ends in settlement, as
the 1989 Litigation did, “nothing was actually litigated.” Le Parc,

4

See Goldstein v. Galvin, 719 F.3d 16, 22 (1st Cir. 2013)
(“When a federal court considers the preclusive effect of an
earlier state court judgment, it must apply that state’s preclusion
principles.”).
4

2 Cal. Rptr. 3d at 419. Therefore, Klamer’s issue preclusion
argument fails.
II.

Plaintiffs’ Motion

Plaintiffs’ Motion asks that paragraph 52(d) of Klamer’s
first counterclaim be dismissed. (Pls.’ Mem. of Law 11-15, ECF.
No. 37-1). This part of Klamer’s counterclaim essentially contends
that Plaintiffs’ intellectual property claims are subject to claim
and issue preclusion. (Id.) Paragraph 52(d) is based on the same
legal premise as his Motion to Dismiss discussed above. (Def.’s
Answer and Countercls. 27, ¶ 52(d), ECF No. 27). The Court grants
dismissal of this part of Klamer’s first counterclaim, for the
same reason it denies Klamer’s Motion. See supra pp. 2-4.
Plaintiffs’ Motion also seeks to dismiss, (Pls.’ Mem. of Law
15-19),

another

of

Klamer’s

alternative

declaratory

judgment

requests that, if entered, would limit Bill Markham’s ownership in
the Game to that of joint author, (Def.’s Answer and Countercls.
27, ¶ 52(e)). 5 Considered in the light most favorable to Klamer, 6
the relevant facts are as follows: Klamer hired Bill Markham to

5

Section 201 of the Copyright Act provides that “[c]opyright
in a work protected under this title vests initially in the author
or authors of the work. The authors of a joint work are co-owners
of copyright in the work.”
6

When deciding a motion to dismiss, the Court must “accept
as true the factual allegations of the complaint and draw all
reasonable inferences in favor of the nonmoving party.” Davis v.
Coakley, 802 F.3d 128, 132 (1st Cir. 2015).
5

assist with the physical creation of the game board after Klamer
had “creat[ed] and conceiv[ed]” of the Game; Markham “produced a
prototype of the Game built around [Klamer’s] concepts”; but beyond
that, Markham “had no further contribution to the development of
the Game, or any subsequent revision thereof, beyond offering
opinions and feedback which were not implemented into any version
of the Game.” (Def.’s Answer and Countercls. 19, ¶¶ 11, 12). Klamer
also alleged he “significantly revised the design of the game board
with Milton Bradley” after receiving Markham’s prototype. (Id. at
¶ 13). The Court finds that these allegations plead a plausible
claim for a determination that the Game was a “joint work” as
defined by the Copyright Act, 17 U.S.C. § 101.
Finally, the Court denies Plaintiffs’ Motion insofar as it
asks the Court to strike Klamer’s seventh and eighth affirmative
defenses. (Pls.’ Mem. of Law 15). Plaintiffs’ attempt to strike is
untimely. See Fed. R. Civ. P. 12(f)(2); FTC v. Instant Response
Sys, LLC, No. 13 Civ. 00976(ILG)(VMS), 2014 WL 558688, at *2
(E.D.N.Y. Feb. 11, 2014) (“Rule 12 requires that a motion to strike
be filed within 21 days of the service of the Answer.”).
Moreover, Plaintiffs have not met their burden to show that
no question of fact or law might allow these defenses to succeed.
See United States v. Kennebec Scrap Iron, Inc., Docket no. 1:16cv-191-GZS, 2016 WL 6651302, at *2 n.2 (D. Me. Nov. 10, 2016) (“To
prevail on a motion to strike an affirmative defense, a plaintiff
6

must establish three criteria: (1) there is no question of fact
which might allow the defense to succeed; (2) there is no question
of law which might allow the defense to succeed; and (3) the
plaintiff would be prejudiced by inclusion of the defense.”)
(quotations omitted); Honeywell Consumer Prods., Inc. v. Windmere
Corp., 993 F. Supp. 22, 24 (D. Mass. 1998) (“Motions to strike
defenses are disfavored and should be granted only when it is
beyond cavil that the defendant[ ] could not prevail on them.”)
(quotations

omitted).

Klamer’s

seventh

and

eighth

affirmative

defenses – asserting that Plaintiffs’ claims are precluded “in
whole or in part” – are broader than the preclusion Klamer asks
for in paragraph 52(d) of his first counterclaim. (Def.’s Answer
and Countercls. 16). Therefore, Plaintiffs’ attempt to rely on the
same arguments to strike the affirmative defenses as it does to
dismiss the counterclaim in paragraph 52(d), see (Pls.’ Mem. of
Law 14-15), is for now unavailing.
CONCLUSION
For these reasons, Plaintiffs’ Motion (ECF No. 37) is GRANTED
as to Klamer’s Counterclaim in paragraph 52(d), but otherwise
DENIED. Defendant Klamer’s Motion (ECF No. 49) is DENIED.
IT IS SO ORDERED.

William E. Smith
Chief Judge
Date: October 17, 2017
7