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Case 1:15-cv-04244-JGK Document 224 Filed 09/16/16 Page 1 of 88
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`15-cv-4244 (JGK)
`
`AMENDED OPINION AND
`ORDER
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
`(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)
`GYM DOOR REPAIRS, INC. ET AL.,
`
`Plaintiffs,
`- against –
`
`YOUNG EQUIPMENT SALES, INC. ET AL.,
`
`Defendants.
`(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)(cid:326)
`JOHN G. KOELTL, District Judge:
`The plaintiffs Gym Door Repairs, Inc. (“GDRI”) and Safepath
`Systems LLC (“SPS”) (collectively, the “plaintiffs”) bring this
`suit against nineteen defendants to obtain permanent injunctive
`relief, damages, and attorneys’ fees and costs for the
`defendants’ alleged infringement of the plaintiffs’ patent,
`copyrights, and trademarks, and---under New York State law---for
`unfair competition, tortious interference with business
`relationships, and civil conspiracy. The plaintiffs assert that
`the defendants have illegally inspected, maintained or repaired
`safety systems for electrically operated folding partitions,
`called the “Safe Path System,” that the plaintiffs sold to New
`York State schools.
`The defendants are Young Equipment Sales, Inc., YES Service
`and Repairs Corporation, Richard Young, Brian Burke, Dennis
`Schwandtner (collectively, “YES” or the “Young defendants”);
`Guardian Gym Equipment, Qapala Enterprises, Inc., James
`
`
`
`
`
`1
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`Case 1:15-cv-04244-JGK Document 224 Filed 09/16/16 Page 2 of 88
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`Petriello (collectively, the “Guardian defendants”); Tri-State
`Folding Partitions, Inc., Peter Mucciolo (collectively, the
`“Tri-State defendants”); Educational Data Services, Inc.
`(“EDS”); Total Gym Repairs, Inc. (“Total Gym”); Carl Thurnau
`(“Thurnau”), who is sued both individually and as the Director
`of the New York State Department of Education Office of
`Facilities Planning; the New York State School Facilities
`Association (“SFA”); the School Facilities Management Institute
`(“SFMI”); Eastern Suffolk Board of Cooperative Educational
`Services, or BOCES (“ESBOCES”); Nassau BOCES; Bellmore Public
`Schools (“Bellmore”); and the New York City Department of
`Education (“NYCDOE”) (collectively, “the defendants”). The
`defendants filed nine motions to dismiss the Second Amended
`Verified Complaint (the “SAC”).1
`For the reasons that follow, these motions are granted in
`part and denied in part.
`
`I.
`In deciding a motion to dismiss pursuant to Rule 12(b)(6),
`the allegations in the complaint are accepted as true, and all
`reasonable inferences must be drawn in the plaintiff’s favor.
`McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir.
`
`1 The plaintiffs and EDS have entered into a settlement agreement
`and the claims against EDS have been dismissed. ECF Dkt. Nos.
`209-10. Accordingly, EDS’s motion to dismiss is denied without
`prejudice.
`
`2
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`2007). The Court’s function on a motion to dismiss is “not to
`weigh the evidence that might be presented at a trial but merely
`to determine whether the complaint itself is legally
`sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.
`1985). The Court should not dismiss the complaint if the
`plaintiff has stated “enough facts to state a claim to relief
`that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550
`U.S. 544, 570 (2007). “A claim has facial plausibility 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).
`While the Court should construe the factual allegations in
`the light most favorable to the plaintiff, “the tenet that a
`court must accept as true all of the allegations contained in
`the complaint is inapplicable to legal conclusions.” Id.; see
`also Springer v. U.S. Bank Nat’l Ass’n, No. 15-cv-1107 (JGK),
`2015 WL 9462083, at *1 (S.D.N.Y. Dec. 23, 2015). When presented
`with a motion to dismiss pursuant to Rule 12(b)(6), the Court
`may consider documents that are referenced in the complaint,
`documents that the plaintiff relied on in bringing suit and that
`are either in the plaintiff’s possession or that the plaintiff
`knew of when bringing suit, or matters of which judicial notice
`may be taken. Chambers v. Time Warner, Inc., 282 F.3d 147, 153
`
`3
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`(2d Cir. 2002); see Springer, 2015 WL 9462083, at *1; see also
`Mercator Corp. v. Windhorst, No. 15-CV-02970 (JGK), 2016 WL
`519645, at *1 (S.D.N.Y. Feb. 10, 2016).2
`II.
`The following facts alleged in the SAC are accepted as true
`
`for purposes of the defendants’ motion to dismiss.
`In 2001, the New York State legislature passed, and the
`governor signed into law, N.Y. Educ. Law § 409-f, which requires
`all public and private schools in New York State to install and
`maintain safety devices on all electrically operated partition
`doors to stop the forward and stacking motion of the doors when
`a body or other object is present. N.Y. Educ. Law § 409-f and
`the regulations that the New York Commissioner of Education
`promulgated in response to it require school districts to post
`conspicuous notices in the immediate vicinity of the equipment
`regarding its proper use and supervision and establish
`procedures concerning the training of employees who regularly
`
`2 The Guardian and Tri-State defendants moved to dismiss pursuant
`to Rule 12(b)(6) and Rule 12(d). Rule 12(d) allows the Court to
`treat a Rule 12(b) motion as one for summary judgment when all
`parties are “given a reasonable opportunity to present all the
`material [outside the pleadings] that is pertinent to the
`motion.” Fed R. Civ. P. 12(d). The plaintiffs did not receive
`notice about converting this motion to dismiss into a motion for
`summary judgment and there has been no discovery. The motion
`should be decided on the basis of the sufficiency of the SAC.
`Under the circumstances of this case, converting this Rule
`12(b)(6) motion to dismiss into a Rule 56 motion for summary
`judgment, pursuant to Rule 12(d), is unwarranted.
`4
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`use the equipment. See New York State Education Department
`Commissioner’s Regulation § 155.25. Pursuant to the law and the
`regulation, districts must inform their employees of the
`penalties for disabling the safety devices on the doors and
`maintain records indicating that training has been done and that
`the safety devices have been maintained in accordance with the
`manufacturer’s instructions. The plaintiffs allege that this
`legislation was adopted in 1991 after the tragic death of two
`New York school children. SAC ¶¶ 25-29
`The plaintiffs are the manufacturer of the Safe Path
`System, a safety device used on electrically operated doors in
`New York State. The plaintiffs’ device was patented until the
`patent expired on October 17, 2011. SAC ¶¶ 34-36 (citing Patent
`No. 5,244,030 (the “‘030 Patent”) for “Electrically Operated
`Folding Operable Walls”). According to the SAC, between 2003 and
`2012, the Safe Path System was the only device approved for use
`in New York City public schools. SAC ¶ 32. According to the SAC,
`Safe Path Systems are currently installed in more than 4,700
`schools throughout the State. SAC ¶ 45.
`Although they had been urging compliance with N.Y. Educ.
`Law § 409-f and Regulation § 155.25 since 2003, the plaintiffs
`began in earnest in 2009 to voice their concerns that some
`schools in New York State were still out of compliance because
`they had electrically operated partitions without safety
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`systems. SAC ¶ 48. The plaintiffs assert that they knew in 2009
`that the Safe Path Systems that had been installed were not
`being properly inspected and maintained by the schools that had
`them. Id.
`The plaintiffs allegedly raised their concerns with the New
`York State Department of Education (“NYSED”). SAC ¶ 52. In
`February, 2009, when circumstances had not improved, the
`plaintiffs took their complaints to the offices of New York’s
`Governor and Attorney General, to the office of the Mayor of New
`York City, and to the Senate and Assembly sponsors of N.Y. Educ.
`Law 409-f. SAC ¶ 50. The plaintiffs’ concerns were referred to
`Carl Thurnau, the Director of the Office of Facilities Planning
`for the NYSED. SAC ¶ 51.
`The plaintiffs allege that Thurnau was very angry and said:
`“Compliance with the law is a financial decision on my part . .
`. . I am putting you out of business. You are done. You are a
`rat. I told you to stop poking your nose where it does not
`belong.” SAC ¶ 52.
`The plaintiffs allege that Thurnau then conspired with
`Joseph Van De Loo, the Executive Director of the SFMI, a non-
`profit organization founded by Thurnau and Van De Loo, to
`disseminate information and educate school officials about
`facilities matters, and with others to use the meetings and
`newsletters of that organization to harm the plaintiffs’
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`business. SAC ¶ 53. The plaintiffs allege that many other state
`and local officials joined Thurnau and Van De Loo in conspiring
`to harm the plaintiffs. SAC ¶ 53.
`The plaintiffs allege that, in August 2009, Thurnau changed
`the official NYSED interpretation of N.Y. Educ. Law § 409-f and
`Regulation 155.25, allowing “any competent person” to work on
`Safe Path Systems instead of solely the manufacturer’s
`authorized and trained technicians. SAC ¶¶ 54-55. The plaintiffs
`also allege that Thurnau and his alleged coconspirators
`blackballed the plaintiffs with facilities directors and
`superintendents across New York State. SAC ¶¶ 56-59.
`The plaintiffs allege that within months of Thurnau’s
`threat, defendants Richard Young and Dennis Schwandtner
`incorporated YES Service and Repairs Corporation and started to
`perform maintenance and repair work on Safe Path Systems. SAC ¶
`57. The plaintiffs allege that YES and the other Young
`defendants rigged bids in New York State school districts and
`hijacked cooperative bids administered by defendants ESBOCES and
`Bellmore as well as bids administered by EDS. SAC ¶¶ 60-61, 65-
`78, 79-87, 99-106; K. Cole Aff. ¶¶ 4, 6, 8-9. These schemes
`allegedly enabled YES and the other Young defendants to
`circumvent the competitive bidding process and block the
`plaintiffs from bidding on jobs to service the Safe Path
`Systems. SAC ¶ 75. The SAC also alleges that the Young
`
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`defendants defrauded individual school districts by charging
`rates four to seven times higher than the plaintiffs would have
`charged for the same work. SAC ¶ 76.
`The plaintiffs allege that the Young defendants bypassed or
`disabled the Safe Path Systems in violation of the law. SAC ¶
`95. The plaintiffs allege that, in New York City, the NYCDOE
`hired the Young defendants to train their electricians how to
`bypass and disable Safe Path Systems. SAC ¶ 95.
`The plaintiffs allege that, because school districts are
`obligated to comply with the reporting requirements of § 409-f
`and § 155.25, YES and the other Young defendants made and used
`unauthorized copies of Safe Path’s price lists, product
`specifications, compliance certificates, and other copyrighted
`materials, altered them by replacing the plaintiffs’ name with
`their own name, raised the prices, and submitted them to the
`districts while holding themselves out, falsely, as being
`certified to repair Safe Path Systems. SAC ¶¶ 133, 135. The
`plaintiffs allege that Guardian, Tri-State, and Total Gym made
`similar copies and misrepresentations. See SAC ¶ 176-77.
`The plaintiffs allegedly notified officials from ESBOCES,
`Nassau BOCES, Bellmore, and EDS about the allegedly wrongful
`acts committed by the Young defendants. SAC ¶¶ 65-78, 79-87, 99-
`106. The plaintiffs allege that ESBOCES and EDS acknowledged
`that their bids were being misused by the Young defendants but
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`continued to award the bids to them for three more years anyway.
`As a result, the Young defendants continued to use the bids to
`perform maintenance and repair work on Safe Path Systems and
`perpetrate the alleged fraud against New York school districts.
`SAC ¶¶ 65-78, 103.
`The plaintiffs allege that they met with officials from the
`NYCDOE on numerous occasions to discuss their concerns. SAC ¶
`89. The plaintiffs allege that in 2009, not long after Thurnau
`allegedly threatened the plaintiffs, NYCDOE began using other
`vendors to install, maintain, and repair Safe Path Systems in
`New York City. SAC ¶ 89. The SAC alleges that the NYCDOE
`canceled contracts and requests for proposals for the
`plaintiffs’ services, and instructed NYCDOE general contractors
`not to use the plaintiffs’ services. SAC ¶¶ 64, 88-98; see also
`SAC ¶¶ 65, 90-92 (alleging that in 2010 the NYCDOE Brooklyn
`Borough Manager abruptly switched from plans to use SPS for
`repair work to YES). The plaintiffs allege that these actions
`caused significant harm to their reputation and business
`interests. See, e.g., SAC ¶¶ 138, 143.
`In March 2011, the plaintiffs brought an Article 78
`proceeding, a New York State administrative appeal, against the
`NYCDOE in which they alleged that N.Y. Educ. Law § 409-f and
`Reg. § 155.25 require Safe Path System safety devices to be
`maintained in accordance with the manufacturer’s instructions
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`by, and only by, an SPS certified maintenance technician. SAC at
`¶ l41; see also Glotzer Decl. ¶ 5, Ex. B. The plaintiffs’ claims
`were dismissed for want of standing and the Appellate Division
`of the New York State Supreme Court affirmed the judgment of
`dismissal, holding that GRDI and SPS failed to demonstrate an
`injury in fact that fell within the zone of interests protected
`by N.Y. Educ. Law § 409-f and Reg. § 155.25. Gym Door Repairs,
`Inc. v. New York City Dep’t of Educ., 977 N.Y.S.2d 478, 480
`(App. Div. 2013).
`In 2012, the plaintiffs filed a 42 U.S.C § 1983 civil
`rights action against the NYCDOE and others based on the theory
`that N.Y. Educ. Law § 409-f and Reg. § 155.25 require the
`exclusive use of the plaintiffs’ services for repairs of Safe
`Path devices and that the NYCDOE was violating the plaintiffs’
`Substantive and Procedural Due Process rights by using
`contractors other than and in addition to the plaintiffs or
`those certified by the plaintiffs. The plaintiffs also alleged
`that the NYCDOE violated the plaintiffs’ First Amendment rights
`by directing the NYCDOE’s general contractors not to subcontract
`for the plaintiffs’ services in retaliation to the plaintiffs’
`complaints. SAC at ¶ 142. The district court held, and the Court
`of Appeals for the Second Circuit affirmed, that the statute and
`regulation did not create a property right or require the
`appointment of the plaintiffs as a sole source provider of
`
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`maintenance services for Safe Path devices. Gym Door Repairs,
`Inc. v. New York City Dep’t of Educ., No. 12-cv-7387, 2013 WL
`4934868, at *4-5 (S.D.N.Y. Sept. 10, 2013), aff’d in part,
`vacated in part, remanded sub nom., Safepath Sys. LLC v. New
`York City Dep’t of Educ., 563 F. App’x 851, 854-56 (2d Cir.
`2014) (summary order). The district court also dismissed the
`plaintiffs’ First Amendment retaliation claim. The Court of
`Appeals remanded on that issue, holding that the plaintiffs
`adequately alleged adverse action for complaining of, and making
`public, the defendants’ alleged failure to comply with
`regulatory mandates. Safepath, 563 F. App’x at 856. The Court of
`Appeals held that factual questions as to whether the city
`agencies acted with retaliatory intent could not be determined
`on a motion to dismiss. Id. at 857-58. The Court of Appeals
`vacated the district court’s dismissal of the First Amendment
`claim and remanded the case to the district court. Discovery in
`that case is ongoing.
`On June 2, 2015, the plaintiffs filed the present action.
`On July 29, 2015, the plaintiffs filed an amended complaint. On
`October 15, 2015, the plaintiffs filed the SAC. The plaintiffs
`assert five causes of action against all of the defendants: 1)
`direct and induced patent infringement in violation of 35 U.S.C.
`§ 271; 2) direct and contributory copyright infringement in
`violation of 17 U.S.C. § 501(b); 3) direct and contributory
`
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`trademark infringement in violation of 15 U.S.C. § 1125(a) and
`deceptive acts and practices in violation of New York General
`Business Law §§ 133, 349, and 360-l; 4) tortious interference
`with existing and prospective business relationships under New
`York common law; and 5) civil conspiracy under New York common
`law. The defendants filed nine motions to dismiss.3
`III.
`
`A. Patent Infringement
`According to the SAC, the Coles, the founders of GDRI, held
`the ‘030 patent to the Safe Path System, a method patent, which
`expired on October 17, 2011. Given the six-year statute of
`limitations, the plaintiffs allege that the defendants infringed
`the patent from June 1, 2009 to October 17, 2011. They allege
`that the Young defendants, Total Gym, and the Guardian and Tri-
`State defendants directly infringed the patent, SAC ¶¶ 151-53,
`and that the other defendants induced infringement of the
`patent, see SAC ¶¶ 118-19, in violation of 35 U.S.C. § 271(b),
`which provides that, “[w]hoever actively induces infringement of
`a patent shall be liable as an infringer.”
`
`3 On July 8, 2016, the plaintiffs filed a letter stating their
`intent to move for an order to show cause for a preliminary
`injunction and temporary restraining order. The Court denied the
`application for a temporary restraining order. The Court held an
`evidentiary hearing on the plaintiffs’ motion for a preliminary
`injunction, which the Court addresses in a separate Memorandum
`Opinion and Order.
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`In order to sue for patent infringement, “the plaintiff
`must have held legal title to the patent during the time of
`infringement.” Leighton Techs. LLC v. Oberthur Card Sys., S.A.,
`531 F. Supp. 2d 591, 593 (S.D.N.Y. 2008) (quoting Arachnid, Inc.
`v. Merit Indus., Inc., 939 F.2d 1574, 1579 (Fed. Cir. 1991)).
`The defendants argue that the SAC is defective because the
`plaintiffs did not attach to the SAC written documentation of
`the transfer of the patent to the plaintiffs, GDRI or SPS.
`Stephen Cole, the President of GDRI, allegedly invented the Safe
`Path System with his father Fred Cole. He allegedly purchased
`his father’s interest in the patent from his father’s estate and
`thereafter assigned the patent to GDRI.
`At this stage of the litigation, GDRI has made a sufficient
`showing that it has standing to sue for patent infringement.
`Stephen Cole submitted an affidavit and attached a “Patent
`Assignment” seemingly assigning the ‘030 patent from Cole to
`GDRI on August 1, 2008. See S. Cole Aff. ¶¶ 3-5, ECF Dkt. No.
`128-1; see also SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d
`1319, 1327-28 (Fed. Cir. 2010) (“The recording of an assignment
`. . . with the PTO is not a determination as to the validity of
`the assignment . . . . [but] it creates a presumption of
`validity as to the assignment and places the burden to rebut
`such a showing on one challenging the assignment.”); Seoul Laser
`Dieboard Sys. Co. v. Serviform, S.r.l., 957 F. Supp. 2d 1189,
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`1195 (S.D. Cal. 2013) (relying on party’s declaration of
`plaintiff’s corporate structure to support claim of patent
`assignment in denying Rule 12(b)(1) motion).
`However, regardless of standing, the plaintiffs have failed
`to state a claim for either direct patent infringement or
`induced patent infringement.
`The plaintiffs allege that the Young defendants, Total Gym,
`and the Guardian and Tri-State defendants directly infringed
`their patent by repairing the patented Safe Path Systems.
`However, under the doctrine of permissible repair, repairs and
`maintenance performed on a patented item (short of
`reconstruction of a new product) do not constitute infringement.
`See Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094, 1101-
`02 (Fed. Cir. 2001). The doctrine “allows one to repair and
`replace a spent, disposable unpatented component of a patented
`product.” Canon Inc. v. GCC Int’l Ltd., 450 F. Supp. 2d 243, 247
`(S.D.N.Y. 2006), aff’d, 263 F. App’x 57 (Fed. Cir. 2008).
`The repair doctrine is an affirmative defense, see Jazz
`Photo, 264 F.3d at 1101-02, and the plaintiffs contend that it
`is improper for the Court to reach the issue on a motion to
`dismiss. However, a complaint is subject to dismissal for
`failure to state a claim when an affirmative defense clearly
`appears on the face of the complaint. See, e.g., Jones v. Bock,
`549 U.S. 199, 215 (2007) (“A complaint is subject to dismissal
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`for failure to state a claim if the allegations, taken as true,
`show the plaintiff is not entitled to relief.”). Here, the
`allegations---taken as true---plead an affirmative defense of
`repair. See, e.g., SAC ¶¶ 65, 79, 108, 147-48, 151-55.
`
`The plaintiffs’ claims are also insufficient because the
`doctrine of patent exhaustion bars the claim of direct
`infringement. The “longstanding doctrine of patent exhaustion
`provides that the initial authorized sale of a patented item
`terminates all patent rights to that item.” Quanta Computer,
`Inc. v. LG Elecs., Inc., 553 U.S. 617, 625 (2008). “The law is
`well settled that an authorized sale of a patented product
`places that product beyond the reach of the patent.” Ergowerx
`Int’l, LLC v. Maxell Corp. of Am., 18 F. Supp. 3d 430, 447–48
`(S.D.N.Y. 2014) (quoting Intel Corp. v. ULSI Sys. Tech., Inc.,
`995 F.2d 1566, 1568 (Fed. Cir. 1993)). Here, the SAC alleges
`that schools contacted or serviced by various defendants
`purchased the Safe Path Systems, see, e.g., SAC ¶¶ 65, 69, 88,
`and that those products were then repaired by the alleged direct
`infringers at the behest of the alleged inducing infringers,
`see, e.g., SAC ¶¶ 147-48. Such allegations do not state a claim.
`See Aro Mfg. Co. v. Convertible Top Replacement Co., 365 U.S.
`336, 346 (1961).
`
`The plaintiffs argue in their opposition papers that, in
`patent cases filed prior to December 1, 2015, the applicable
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`pleading standard is found in former Official Form 18 in the
`Appendix of Forms to the Federal Rules of Civil Procedure (“Form
`18”). Form 18 required only (i) an allegation of jurisdiction;
`(ii) a statement that the plaintiff owns the patent; (iii) a
`statement that the defendant has been infringing the patent by
`making, selling, and using the device embodying the patent; (iv)
`a statement that the plaintiff has given the defendant notice of
`its infringement; and (v) a demand for an injunction and
`damages. The plaintiffs argue that, pursuant to case law from
`the Court of Appeals for the Federal Circuit, the Court should
`hold that former Form 18 controls the pleading standard in
`patent cases---like this one---filed before December 1, 2015 and
`that the SAC is sufficient to state a claim under this forgiving
`standard. See K-Tech Telecomms, Inc. v. Time Warner Cable, Inc.,
`714 F.3d 1277, 1283 (Fed. Cir. 2013).
`The Court of Appeals for the Second Circuit has not weighed
`in on the proper relationship between former Form 18 and the
`more demanding Iqbal/Twombly requirements for pleading patent
`infringement cases, and the district courts in this district are
`divided on their interpretation of Second Circuit and Federal
`Circuit precedent. Compare Regeneron Pharm., Inc. v. Merus B.V.,
`No. 14-cv-1650 (KBF), 2014 WL 2795461, at *2 (S.D.N.Y. June 19,
`2014) (holding there is “no basis in Second Circuit precedent to
`treat patent cases differently from other cases in which forms
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`exist and to which Twombly applies”), with 3D Sys., Inc. v.
`Formlabs, Inc., No. 13-cv-7973, 2014 WL 1904365, at *6 (S.D.N.Y.
`May 12, 2014) (applying Federal Circuit case law on using Form
`18, even though the “Form 18 requirements are lean”).
`In any event, former Form 18 should not be the standard in
`this case. Former Form 18 was appended to the Federal Rules of
`Civil Procedure by Rule 84, which was abrogated by the
`Amendments to the Federal Rules of Civil Procedure that became
`effective on December 1, 2015. The Amendments are to be applied
`to cases filed after that date and all pending proceedings
`“insofar as just and practicable.” Fed. R. Civ. P. Refs & Annos
`(Order of April 29, 2015). It is just and practicable to apply
`the standard pleading requirements to this patent case rather
`than the bare-bone former Form 18. If the plaintiffs cannot
`plead sufficient facts to state a plausible claim for patent
`infringement, they should not be allowed to proceed with a
`patent infringement claim simply because they could check the
`boxes on former Form 18. The plaintiffs should have been aware
`of the imminent demise of former Form 18 when they filed the SAC
`on October 15, 2015.
`Moreover, the SAC is insufficient to state a claim for
`direct or indirect patent infringement even under former Form
`18. Former Form 18 required a statement that the defendant had
`been infringing the patent by making, selling, and using the
`
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`

`
`Case 1:15-cv-04244-JGK Document 224 Filed 09/16/16 Page 18 of 88
`
`device embodying the patent. See K-Tech, 714 F.3d at 1283. As
`noted, the only relevant allegation in the SAC is that various
`defendants repaired the patented systems and that other
`defendants induced those repairs. That action does not
`constitute infringement.
`Finally, the SAC fails to state a claim against Total Gym
`for the additional reason that Total Gym was only incorporated
`in May 2013, two years after the ‘030 patent had expired. The
`plaintiffs argue in their responsive papers that Total Gym
`infringed the ‘030 patent through its purported predecessor, Gym
`Equipment Repairs, Inc. However, Gym Equipment Repairs is not a
`party to this lawsuit, and the SAC does not allege that Total
`Gym is liable for the acts of its predecessor. Accordingly, the
`SAC fails to state a claim against the proper party. See, e.g.,
`Mercator, 2016 WL 519645, at *5 (dismissing claim raised against
`improper party).
`In short, the plaintiffs’ allegations do not state a claim
`for direct infringement of the ‘030 patent by the Young
`defendants, Total Gym, and the Guardian and Tri-State
`defendants.
`“In order to succeed on a claim of inducement, the patentee
`must show, first that there has been direct infringement, and
`second, that the alleged infringer knowingly induced
`infringement and possessed specific intent to encourage
`
`18
`
`

`
`Case 1:15-cv-04244-JGK Document 224 Filed 09/16/16 Page 19 of 88
`
`another’s infringement.” MEMC Elec. Materials, Inc. v.
`Mitsubishi Materials Silicon Corp., 420 F.3d 1369, 1378 (Fed.
`Cir. 2005) (quoting Minn. Mining & Mfg. Co. v. Chemque, Inc.,
`303 F.3d 1294, 1304–05 (Fed. Cir. 2002)). Because the plaintiffs
`have not alleged a plausible claim of direct infringement, the
`claim for induced infringement also fails. See Desenberg v.
`Google, Inc., No. 09-cv-10121 (GBD)(AJP), 2009 WL 2337122, at *8
`(S.D.N.Y. July 30, 2009) (“Indirect infringement requires, as a
`predicate, a finding that some party amongst the accused actors
`has committed the entire act of direct infringement.” (citation
`and internal quotation marks omitted)), report and
`recommendation adopted, No. 08-cv-10121 (GBD)(AJP), 2010 WL
`100841 (S.D.N.Y. Jan. 11, 2010), aff’d, 392 F. App’x 868 (Fed.
`Cir. 2010).
`Because there can be no induced infringement without direct
`infringement, and because the SAC has failed to allege a
`plausible claim of direct infringement, the plaintiffs’ claims
`of patent infringement against all of the defendants are
`dismissed without prejudice.4
`
`4 The Guardian and Tri-State defendants make the additional
`argument that the plaintiffs’ claim of patent infringement is
`barred by the defense of laches. Because the Court dismisses the
`plaintiffs’ patent infringement claims without prejudice on
`other grounds, that argument is moot.
`19
`
`

`
`Case 1:15-cv-04244-JGK Document 224 Filed 09/16/16 Page 20 of 88
`
`B. Copyright Infringement
`Under 17 U.S.C. § 501(a), “[a]nyone who violates any of the
`exclusive rights of the copyright owner . . . is an infringer of
`the copyright . . . . ” “To establish infringement, two elements
`must be proven: (1) ownership of a valid copyright, and (2)
`copying of constituent elements of the work that are original.”
`Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340,
`361 (1991).
`In substance, the plaintiffs allege that the Young
`defendants, Total Gym, Bellmore, ESBOCES, and the Guardian/Tri-
`State defendants engaged in direct copyright infringement by
`using the plaintiffs’ “Manufacturer Materials” to either prepare
`bid materials or conduct repairs on the Safe Path Systems. SAC
`¶¶ 162-64, 166. The plaintiffs allege that the other defendants
`knowingly induced infringement by, in substance, allowing the
`Young defendants to “hijack” cooperative bids to service Safe
`Path Systems and make or use unauthorized reproductions of the
`plaintiffs’ materials. See, e.g., SAC ¶ 165.
`1.
`Standing
`As a threshold matter, Thurnau contends that the plaintiffs
`lack standing to sue for copyright infringement because the
`plaintiffs do not allege that GDRI owned the copyright at the
`time of the alleged infringement. Only copyright owners and
`exclusive licensees may sue for infringement under the Copyright
`
`20
`
`

`
`Case 1:15-cv-04244-JGK Document 224 Filed 09/16/16 Page 21 of 88
`
`Act. See Urbont v. Sony Music Entm’t, No. 15-1778-CV, 2016 WL
`4056395, at *5 n.6 (2d Cir. July 29, 2016). And “[c]opyright
`registration is a jurisdictional prerequisite to an infringement
`suit. Therefore, to the extent that the complaint fails to
`allege proper statutory registration of the copyrights in
`question, this Court lacks jurisdiction over the infringement
`action.” Kelly v. L.L. Cool J., 145 F.R.D. 32, 37 n.6 (S.D.N.Y.
`1992) (citations omitted), aff’d sub nom., Kelly v. L.L. Cool J,
`23 F.3d 398 (2d Cir. 1994).
`“To withstand a motion to dismiss, a complaint based on
`copyright infringement must allege: (1) which original works are
`the subject of the copyright claim; (2) that the plaintiff owns
`the copyrights in those works; (3) that the copyrights have been
`registered in accordance with the statute; and (4) ‘by what acts
`during what time’ the defendant infringed the copyright.” Carell
`v. Shubert Org., Inc., 104 F. Supp. 2d 236, 250 (S.D.N.Y. 2000)
`(quoting Kelly, 145 F.R.D. at 35).
`Contrary to Thurnau’s assertion, the SAC clearly alleges
`that the “Plaintiffs are and at all relevant times have been the
`owner of the exclusive rights under the United States Copyright
`Act of the copyrighted Manufacturer Materials, which are the
`subject of valid Certificates of Registration issued by the
`Register of Copyrights.” SAC ¶ 160; see also SAC ¶¶ 43, 122.
`Additional documents before the Court are unclear as to the
`
`21
`
`

`
`Case 1:15-cv-04244-JGK Document 224 Filed 09/16/16 Page 22 of 88
`
`extent of the assignment. An exhibit included with the SAC shows
`that the copyright to the “Manufacturer’s Instructions” was
`registered by the U.S. Copyright Office on March 27, 2012 to
`Stephen Cole (Registration Number TXu 1-803-046), who is a non-
`party. See SAC, Ex. 5. Stephen Cole f

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