Facts

In July 2012, EDCO Plastics Inc., owner of United States Patent 6,962,013, sued Allynce Inc., Ralph Dudley, and Cassandra Samano ("Allynce defendants") for infringing the '013 Patent based on activities that occurred in 2012. In its answer to the complaint, the Allynce defendants asserted a generic invalidity defense. Apparently, one of the Allynce defendants obtained copies of invoices that purported to show that there may have been an alleged premature public disclosure of the subject matter of the '013 Patent.

In 2009, EDCO purchased the '013 Patent, among numerous other items, in an Asset Purchase Agreement with a predecessor of Dispensing Dynamics International ("DDI"). As a result of the alleged premature public disclosures, EDCO filed a first amended complaint in which it named DDI as a defendant, suing for fraud and breach of contract.

EDCO claimed that DDI's predecessor had misrepresented the validity of the '013 Patent during the negotiation of the Asset Purchase Agreement in 2009.

DDI responded to the first amended complaint by filing a motion to dismiss/strike and for a more definite statement. The Court granted the motion in part by dismissing with prejudice EDCO's breach of contract claim against DDI based on the provisions of the Asset Purchase Agreement that specified the available remedies, none of which included a claim for breach of contract. The Court also granted DDI's motion for more definite statement relating to the plea for special damages. EDCO thereafter filed a second amended complaint.

DDI responded to the second amended complaint by filing a motion to dismiss EDCO's remaining fraud claim against for lack of subject matter jurisdiction, asserting that subject matter jurisdiction was not available under "arising under" jurisdiction, nor under supplemental jurisdiction. DDI also asserted that the fraud claim against it was not ripe because the '013 Patent was presumed valid and no determination of invalidity had been made by a court or the USPTO.

Result

The Court granted DDI's second motion to dismiss, determining that the Court lack subject matter jurisdiction under "arising under" jurisdiction as well as supplemental jurisdiction. The Court relied upon the recently decided U.S. Supreme Court case, Gunn v. Minton, and decided against exercising its supplemental jurisdiction based on the fact that the patent infringement claim against the Allynce defendants and the fraud claim against DDI did not arise from a common nucleus of operative facts. The case for fraud continues in Edco Plastics Inc. v. Dispensing Dynamics International (30-2013-00639525).

Other Information

MEDIATOR: Lester Savit. FILING DATE: July 18, 2012.