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Kee Action Sports, LLC v. Shyang Huei Industrial Co. Ltd.

United States District Court, D. Oregon

June 2, 2014

KEE ACTION SPORTS, LLC, a Delaware limited liability company Plaintiff,
v.
SHYANG HUEI INDUSTRIAL CO., LTD, a Taiwan company, dba SUNWORLD INDUSTRIAL CO., LTD, also dba DANGEROUS POWER, also dba DP ENGINEERING, and AMAZONE, INC., a California corporation, Defendants.

Craig R. Rogers Matthew C. Phillips Renaissance IP Law Group, LLP Portland, OR, Attorneys for Plaintiff.

Devon Zastrow Newman Schwabe, Williamson & Wyatt, PC Portland, OR, Thomas J. Daly G. Warren Bleeker Christie, Parker & Hale, LLP Glendale, CA, Attorneys for Defendants.

OPINION & ORDER

MARCO A HERNNDEZ, District Judge.

Plaintiff KEE Action Sports brings this action for breach of contract, breach of covenant of good faith and fair dealing, and patent infringement. Defendant Amazone moves to dismiss for failure to mediate and improper venue, or in the alternative, to transfer the case. I find that the parties are required to mediate before filing suit; and that the proper venue for any such proceeding is Portland, Oregon. Therefore, I deny the motion [10] to dismiss or transfer, and stay the case so that the parties can complete mediation before the case may proceed.

BACKGROUND

Plaintiff KEE owns several electronic paintball gun patents and has a principal place of business in New Jersey. Compl. Ex. A at 2. Defendant SunWorld, a company based in Taiwan, also owns patents related to electronic paintball guns. Id . Defendant Amazone, a California company, is the exclusive U.S. distributor for Defendant SunWorld's paintball gun products. Id. at 2, 10.

In January 2012, KEE, SunWorld, and Amazone entered into a settlement agreement to resolve a dispute over a patent license agreement and unpaid royalties. Compl. Ex. A. at 2, 6-7. [REDACTED/] [REDACTED/]

KEE and SunWorld also entered into an amended license agreement, effective October 1, 2011. Id. at 4. Although Amazone is not a signatory to the amended license agreement, Amazone is recognized as a "Related Company" that is bound by the terms of the amended license agreement. Id. at 10, 15. [REDACTED/]

SunWorld made its first royalty payment under the amended license agreement in the last quarter of 2011. Compl. ¶ 65. Since then, SunWorld has not paid any royalties to KEE. Compl. ¶¶ 19, 65. SunWorld stopped paying royalties because it believed that it did not infringe on any valid claim of KEE's electronic paintball gun patents. Id. at ¶ 22. KEE alleges that SunWorld continues to use KEE's patented technology despite not complying with the terms of the amended license agreement. Id. at ¶¶ 24-26.

KEE filed suit in January 2014, alleging claims of breach of contract, breach of good faith and fair dealing, and patent infringement. Compl. 15-18. Amazone moves to dismiss, arguing that KEE was required to mediate any dispute before filing suit and that Portland is not the proper venue. In the alternative, Amazone requests transfer of the case to the Central District of California.

STANDARDS

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the claims. Navarro v. Block , 250 F.3d 729, 732 (9th Cir. 2001). "All allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Am. Family Ass'n, Inc. v. City & Cnty. of S.F. , 277 F.3d 1114, 1120 (9th Cir. 2002). However, the court need not accept conclusory allegations as truthful. Warren v. Fox Family Worldwide, Inc. , 328 F.3d 1136, 1139 (9th Cir. 2003) ("[W]e are not required to accept as true conclusory allegations which are contradicted by documents referred to in the complaint, and we do not necessarily assume the truth of legal conclusions merely because they are cast in the form of factual allegations.") (quotation and citations omitted).

A motion to dismiss under Rule 12(b)(6) will be granted if plaintiff alleges the "grounds" of his "entitlement to relief" with nothing "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action[.]" Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)[.]" Id . (citations and footnote omitted).

To survive a motion to dismiss, the complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face[, ]" meaning "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (quotation omitted). Additionally, "only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 679. ...


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