United States District Court, D. Colorado
A. Brimmer Chief United States District Judge.
matter comes before the Court on Tegu's Rule 12(c) and
12(b)(1) Motion for Judgment on the Pleadings and to Dismiss
Vestal's Counterclaims [Docket No. 23]. The Court has
jurisdiction pursuant to 28 U.S.C. §§ 1338(a) and
allegations in the Second Amended Answer, Second Amended
Counterclaim Complaint, and Jury Demand [Docket No. 26] are
to be taken as true in considering a motion for judgment on
the pleadings. Adams v. Jones, 577 Fed.Appx. 778,
781-82 (10th Cir. 2014) (unpublished).
and counterclaim defendant Tegu (“Tegu”) is a toy
company. Docket No. 26 at 10, ¶ 2. In late 2007, Tegu
sought the help of defendant and counterclaim plaintiff
Vestal Design Atelier LLC (“Vestal”) in
developing its first toy line. Id. at 11, ¶ 4.
Vestal is a consulting firm specializing in design projects
for early-stage startup companies. Id. at 10, ¶
1. In December 2007, Tegu and Vestal entered into a written
consulting agreement (the “agreement”).
Id. at 12, ¶ 7. The agreement provided that
Vestal would provide design and consulting services for
Tegu's new product line. Under a section called
“Compensation, ” Tegu agreed to pay Vestal $7,
200 for 90 hours of work. Docket No. 23-2 at 3. Paragraph 1
of Section 2.0 in the agreement, entitled “Ownership of
Intellectual Property, ” states in full:
Ownership. Intellectual property rights of each party will be
governed by the following: For the purpose of this contract,
any work product or new invention related to or arising from
the Services provided hereunder, including all intellectual
property rights created, invented or authored by Contractor
in connection with the Services, will be the exclusive
property of the Client. The Client will own all right, title
and interest in such work product or new invention, except as
stipulated in [ ] item 4 below. Contractor hereby assigns all
such right, title and ownership to Client.
Id. at 4.
4” is paragraph 4, which states in full:
For any work product, invention and/or intellectual property
generated under this Agreement that [Vestal] and [Tegu]
mutually agree may be patented under a utility
(non-aesthetic) patent, [Vestal] shall own at least 50% of
any utility patent generated from [Vestal]'s research and
design. In addition, [Vestal] will be granted by [Tegu] a
fair and agreeable share in revenue generated by
commercialization. A separate agreement shall be established
in writing, which specifies the precise nature of
[Vestal]'s and [Tegu]'s ownership of Intellectual
Property rights and share in revenue generated from the
commercialization of the invention or Intellectual Property
at a time no later than the filing date of the patent
application (provisional or full application).
to the agreement, Vestal created prototypes for Tegu of a new
toy based around the idea of embedding magnets in wooden
blocks. Docket No. 26 at 13-14, ¶¶ 12-14. The
prototype led Tegu to develop an entire line of
magnet-embedded wooden blocks. Id. at 14, ¶ 15.
The wooden blocks encompassed both patentable and
non-patentable contributions made by Vestal. Id.,
¶ 16. On March 14, 2009, Christopher Harwood Haughey
(“Haughey”), one of the owners of Tegu, emailed
Vestal's members to “resolve the outstanding IP and
upside issue left hanging by [the agreement]” in light
of Tegu's plan to commercialize the wooden blocks.
Id. at 15, ¶ 18. In the email, Haughey stated
that Tegu anticipated “that any utility patent(s)
related to the magnetic blocks [would] relate to the method
of manufacturing, which has . . . no relation to the project
with Vestal.” Id., ¶ 20. On March 26,
2009, Tegu filed a patent application that incorporated
Vestal's contributions to the wooden block project.
Id. at 16, ¶ 21. On October 7, 2014, the U.S.
Patent and T rademark Office issued U.S. Patent No. 8, 850,
683 (the “'683 patent”) to Tegu.
Id., ¶ 21. Tegu and its investor, counterclaim
defendant Clipper Investments, Ltd. (“Clipper”),
subsequently obtained two more patents based on the '683
patent: U.S. Patent Nos. 9, 266, 032 (the “'032
patent”) and 9, 662, 592 (the “'592
patent”). Id, ¶ 22. In 2017, Vestal
principal Michael Lin (“Lin”) became aware of the
magnetic wooden blocks and learned that they had been
patented and commercialized. Id. at 16-17, ¶
10, 2018, Tegu filed a declaratory judgment action in the
District Court for Adams County, Colorado, against Vestal.
Docket No. 1-1. Vestal removed the case to this Court. Docket
No. 1. Tegu seeks a declaratory judgment that the three-year
statute of limitations for breach of contract claims under
Colorado law bars Vestal's claims arising under the
agreement. Docket No. 1-1 at 8, ¶ 41. Vestal
counterclaimed, asserting six correction of inventorship
claims pursuant to 35 U.S.C. § 256, alleging that Tegu
failed to name Lin and Alexander Ko (“Ko”) as
inventors of the '683 patent, '032 patent, and
'592 patent. Docket No. 26 at 17-20, ¶¶ 28-45.
Vestal also asserts state-law claims for breach of contract,
breach of the covenant of good faith and fair dealing,
quantum meruit, and fraud. Id. at 20-25,
moves for judgment on the pleadings on its request for
declaratory judgment and Vestal's state-law counterclaims
pursuant to Fed.R.Civ.P. 12(c). Docket No. 23 at 7-13. Tegu
also moves for dismissal of Vestal's correction of
inventorship claims pursuant to Fed.R.Civ.P. 12(b)(1),
asserting that Vestal lacks standing to bring such claims.
Id. at 13-15.
motion under Fed.R.Civ.P. 12(b)(1) is a request for the Court
to dismiss a claim for lack of subject matter jurisdiction.
Fed.R.Civ.P. 12(b)(1). A plaintiff bears the burden of
establishing that the Court has jurisdiction. Basso v.
Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir.
1974). When the Court lacks subject matter jurisdiction over
a claim for relief, dismissal is proper under Rule 12(b)(1).
See Jackson v. City and Cty. of Denver, No.
11-cv-02293-PAB-KLM, 2012 WL 4355556 at *1 (D. Colo. Sept.
12(b)(1) challenges are generally presented in one of two
forms: “[t]he moving party may (1) facially attack the
complaint's allegations as to the existence of subject
matter jurisdiction, or (2) go beyond allegations contained
in the complaint by presenting evidence to challenge the
factual basis upon which subject matter jurisdiction
rests.” Merrill Lynch Bus. Fin. Servs., Inc. v.
Nudell, 363 F.3d 1072, 1074 (10th Cir. 2004) (quoting
Maestas v. Lujan, 351 F.3d 1001, 1013 (10th Cir.
2003)). The court may review materials outside the pleadings
without converting the Rule 12(b)(1) motion to dismiss into a
motion for summary judgment. Davis ex rel. Davis v.
U.S., 343 F.3d 1282, 1296 (10th Cir. 2003).
Court reviews a motion for judgment on the pleadings under
Federal Rule of Civil Procedure 12(c) much as it does a
motion to dismiss pursuant to Rule 12(b)(6). See
Adams, 577 Fed.Appx. at 781-82 (“We review a
district court's grant of a motion for judgment on the
pleadings de novo, using the same standard that applies to a
Rule 12(b)(6) motion.”) (quoting Park Univ.
Enters., Inc. v. Am. Cas. Co. of Reading, PA, 442 F.3d
1239, 1244 (10th Cir. 2006)). The Court must “accept
all facts pleaded by the non-moving party as true and grant
all reasonable inferences from the pleadings in favor of the
same.” Id. at 782. To prevail, the moving
party must show that “no material issue of fact remains
to be resolved and the party is entitled to judgment as a
matter of law.” United States v. Any & All
Radio Station Transmission Equip., 207 F.3d 458, 462
(8th Cir. 2000). A party may raise arguments that could be
made in a motion under Rule 12(b)(6) in a motion under Rule
12(c). Fed.R.Civ.P. 12(h)(2).
survive a motion to dismiss under Rule 12(b)(6) of the
Federal Rules of Civil Procedure, a complaint must allege
enough factual matter that, taken as true, makes the
plaintiff's “claim to relief . . . plausible on its
face.” Khalik v. United Air Lines, 671 F.3d
1188, 1190 (10th Cir. 2012) (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007)). “[W]here the
well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has
alleged-but it has not shown-that the pleader is entitled to
relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009) (internal quotation marks and alteration marks
omitted); see also Khalik, 671 F.3d at 1190
(“A plaintiff must nudge [his] claims across the line
from conceivable to plausible in order to survive a motion to
dismiss.” (quoting Twombly, 550 U.S. at 570)).
If a complaint's allegations are “so general that
they encompass a wide swath of conduct, much of it innocent,
” then plaintiff has not stated a plausible claim.
Khalik, 671 F.3d at 1191 (quotations omitted). Thus,
even though modern rules of pleading are somewhat forgiving,
“a complaint still must contain either direct or
inferential allegations respecting all the material elements
necessary to sustain a recovery under some viable legal
theory.” Bryson v. Gonzales, 534 F.3d 1282,
1286 (10th Cir. 2008) (alteration marks omitted).