Elide Fire U.S. Corp. v. Auto Fire Guard, LLC

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ELIDE FIRE USA CORP., Plaintiff, v. AUTO FIRE GUARD, LLC, GRANT VAN DER JAGT, and DOES 1-10, Defendants.

Civil Action No. 21-cv-00943-NYW

United States District Court, D. Colorado

January 31, 2022

ORDER ON MOTION TO DISMISS AND ORDER TO SHOW CAUSE

Nina Y. Wang, United States Magistrate Judge.

This matter comes before the court on Auto Fire Guard's Motion to Dismiss the First Amended Complaint and Memorandum in Support of Defendant Auto Fire Guard's Motion to Dismiss the First Amended Complaint (collectively, the “Motion” or “Motion to Dismiss”) [Doc. 44; Doc. 44-1] filed on August 25, 2021 by Defendant Auto Fire Guard (“Defendant” or “AFG”). The undersigned considers the Motion pursuant to 28 U.S.C. § 636(c) and Order of Reference for all purposes dated July 30, 2021. [Doc 29].^[1] Upon review of the Motion and the related briefing the applicable case law, and the entire docket, and being fully advised in the premises, the Motion to Dismiss is DENIED without prejudice.

BACKGROUND

The court draws the following facts from Plaintiff's First Amended Complaint Against Defendants for Patent Infringement Unfair Competition; and Colorado Consumer Protection Act (“CCPA”) C.R.S. § 6-1-101, Et Seq. (the “Amended Complaint”) [Doc. 30] and presumes they are true for purposes of the instant Motion. Plaintiff Elide Fire USA Corp. (“Plaintiff” or “Elide Fire”) is “an importer, marketer and seller” of a fire prevention and/or suppression product called the “Fireball.” [Doc. 30 at ¶ 1]. The Fireball “practices one or more claims of” United States Patent No. 6, 796, 382 (“the '382 Patent”). [Id. at ¶ 3].

The '382 Patent was issued by the United States Patent and Trademark Office (“USPTO”) on September 28, 2004. [Id. at ¶ 21]. Claim 1 of the '382 Patent recites a fire extinguishing device comprising:

a. a frangible containment vessel formed from a low-density rigid plastic foam;

b. a fire extinguishing material contained within the containment vessel; and c. an explosive device contained within the containment vessel, whereby activation of the explosive device breaks the containment vessel and disperses the fire extinguishing material.

Ultimately, because the court finds that the Motion to Dismiss should be denied without prejudice and thus this disposition is not dispositive of any claim, defense, or party in this action, the court finds that it may enter an order disposing of the Motion to Dismiss, notwithstanding the lack of consent from Defendant Grant Van Der Jagt. However, as set forth below, Plaintiff is ORDERED to SHOW CAUSE why the claims against Defendant Van Der Jagt and the Doe Defendants should not be dismissed without prejudice for failure to serve under Rule 4(m) of the Federal Rules of Civil Procedure.

[Id. at ¶ 24]; see also [Doc. 30-2 at 11 (the '382 Patent)].^[2] In addition, Claim 2 of the '382 Patent claims “[t]he fire extinguishing device of [Claim 1], wherein the containment vessel comprises a substantially spherical body formed from two complimentary half-sections.” [Doc. 30 at ¶ 26; Doc. 30-2 at 11].

Plaintiff is the exclusive licensee of the '382 Patent in the United States and the exclusive distributor of products covered by the '382 Patent in the United States. [Doc. 30 at ¶ 2]. Thus, Plaintiff has “exclusive rights within the [United States] to use, sell and import the Fireball.” [Id. at ¶ 53]. Plaintiff sells the Fireball through its own website as well as third-party e-commerce websites, such as Amazon. [Id. at ¶ 1].

Defendant Auto Fire Guard, LLC (“Defendant” or “AFG”) is a direct competitor of Plaintiff. [Id. at ¶ 5]. Defendant markets itself as a supplier of a fire suppressant and/or fire extinguisher product (the “Accused Product” or “Accused Products”) and sells the Accused Product through its website and its Facebook page, as well as third-party e-commerce websites. [Id. at ¶ 4]. Plaintiff alleges that the Accused Product infringes upon one or more claims of the '382 Patent. [Id. at ¶ 6]. More specifically, Plaintiff alleges that the Accused Product “utilize[s] the fire suppression technology claimed in the '382 Patent, ” [id. at ¶ 41], and is thus covered by the '382 Patent. [Id. at ¶ 59].

Plaintiff alleges that all Defendants-AFG; Grant Van Der Jagt, an officer and director of AFG (“Mr. Van Der Jagt”), see [id. at ¶ 12]; and ten Doe Defendants-are “suppliers of the [Accused Product], and, without permission or authorization, manufacture, use, sell, offer for sale, and/or import the [Accused Product], which is marketed under various names, sizes, colors and labels . . . either directly or indirectly through [their] subsidiaries or affiliates, to customers throughout the United States.” [Id. at ¶ 30]. Plaintiff asserts that Defendants “intentionally had the Accused Products use or incorporate one or more of the claims of the '382 Patent because of the claims' application in the '382 Patent; and there is no substantial non-infringing use for the Accused Products, ” [id. at ¶ 31], and/or have induced or contributed to “the use or incorporation” of one of more claims of the '382 Patent by selling or supplying the Accused Products to third parties with knowledge that these third parties will use or sell these products in the United States. [Id. at ¶¶ 35-36].

Moreover, AFG holds itself out as “the American manufacturer and distributor of innovative fire equipment, including the decorative Automatic ‘Fireball' Extinguisher.” [Id. at ¶ 47]. According to Plaintiff, while AFG claims that its products are designed or manufactured in the United States by using language such as “Made in the U.S.” and “Made in Colorado” with respect to its products, [id. at ¶¶ 49-50], the Accused Products are manufactured in and imported from China through a company named Safety Life Fire Equipments Co., Ltd. [Id. at ¶ 51]. In addition, Plaintiff alleges that AFG falsely claims that it owns patent rights “to the operation and function of” the Accused Products, [id. at ¶ 45], and that Mr. Van Der Jagt “falsely claims that he is the ‘inventor' of the Fireball products.” [Id. at ¶ 46]. Finally, Plaintiff alleges that AFG falsely claims that it has “UL certification”^[3] for the Accused Product. [Id. at ¶ 52]. Plaintiff claims that it has been damaged by customers' decisions, based on AFG's false claims, to purchase the Accused Product from AFG rather than the Fireball from Elide Fire. [Id. at ¶ 53].

Plaintiff initiated this lawsuit on April 5, 2021, naming only AFG as a Defendant. See [Doc. 2]. After AFG filed a motion to dismiss, see [Doc. 23], Plaintiff filed an Amended Complaint as a matter of right on August 3, 2021, asserting claims against AFG, Mr. Van Der Jagt, and ten Doe Defendants. [Doc. 30].^[4] In the Amended Complaint, Plaintiff asserts the following claims for relief: (1) infringement of the '382 Patent against all Defendants; (2) false or misleading advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1), against all Defendants; and (3) false or misleading advertising under the Colorado Consumer Protection Act (“CCPA”), Colo. Rev. Stat. § 6-1-101 et seq., against all Defendants. See generally [id.]. Mr. Van Der Jagt has not entered an appearance in this matter, and the docket does not reflect that he has been served.

Defendant AFG filed a Motion to Strike, see [Doc. 34], which this court denied. [Doc. 37]. Thereafter, AFG filed the instant Motion to Dismiss. [Doc. 44-1]. In its Motion, AFG argues that Plaintiff's claims against it should be dismissed on the following grounds: (1) Plaintiff fails to allege sufficient facts to state a claim for direct patent infringement; (2) Plaintiff fails to allege sufficient facts to state a claim for indirect patent infringement; (3) the allegations against the Doe Defendants are insufficiently pled; and (4) Plaintiff fails to allege facts demonstrating that Plaintiff has the right to bring this patent-infringement lawsuit. [Id. at 1]. In Response, Plaintiff argues that (1) it has standing to bring this lawsuit; and (2) its patent-infringement claims are sufficiently pled. [Doc. 49 at 2-5]. AFG has since replied. [Doc. 50]. Because the Motion is ripe for consideration, I consider the Parties' arguments below.

LEGAL STANDARD

Under Rule 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In deciding a motion under Rule 12(b)(6), the court must “accept as true all well-pleaded factual allegations . . . and view these allegations in the light most favorable to the plaintiff.” Casanova v. Ulibarri, 595 F.3d 1120, 1124 (10th Cir. 2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)). A plaintiff may not rely on mere labels or conclusions, “and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Rather, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see also Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (explaining that plausibility refers “to the scope of the allegations in a complaint, ” and that the allegations must be sufficient to nudge a plaintiff's claim(s) “across the line from conceivable to plausible.”). The court must ultimately “determine whether the complaint sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed.” Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007).

ANALYSIS

I. The Right to Bring Suit

Among other arguments, AFG asserts that Plaintiff has not demonstrated that it has a right to sue for infringement of the '382...