Case 5:18-cv-00990-C Document 62 Filed 10/18/19 Page 1 of 16
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF OKLAHOMA
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`MILLER MENDELL, INC., a Washington
`Corporation; TYLER MILLER, an Oregon
`state resident,
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`Plaintiff,
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`vs.
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`THE CITY OF OKLAHOMA CITY, a
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`municipal corporation,
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`Defendant.
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`) Case No. CIV-18-990-HE
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`DEFENDANT CITY OF OKLAHOMA CITY’S
`RESPONSE IN OPPOSITION TO PLAINTIFFS’ MOTION
`FOR LEAVE TO FILE SECOND AMENDED COMPLAINT
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`Douglas J. Sorocco, OBA # 17347
`Evan W. Talley, OBA # 22923
`DUNLAP CODDING PC
`609 W. Sheridan Avenue
`Oklahoma City, OK 73102
`Tel: 405.607.8600
`Fax: 405.607.8686
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`Attorneys for Defendant
`The City of Oklahoma City
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`October 18, 2019
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`Tyler Miller Exhibit 2021
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`Page 1 of 16
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`Case 5:18-cv-00990-C Document 62 Filed 10/18/19 Page 2 of 16
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`TABLE OF CONTENTS
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`TABLE OF AUTHORITIES ........................................................................................... iii
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`INTRODUCTION ............................................................................................................. 1
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`FACTUAL BACKGROUND ........................................................................................... 2
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`ARGUMENT AND AUTHORITIES .............................................................................. 3
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`I. THE COURT SHOULD DENY LEAVE TO AMEND WHEN AMENDMENT
`WOULD BE FUTILE. ................................................................................................... 3
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`II. AMENDMENT WOULD BE FUTILE BECAUSE VENUE IS IMPROPER
`AS TO GUARDIAN FOR PLAINTIFFS’ CLAIMS OF PATENT
`INFRINGEMENT. ......................................................................................................... 4
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`III. GUARDIAN DID NOT WAIVE VENUE FOR CLAIMS OF PATENT
`INFRINGEMENT. ......................................................................................................... 6
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`CONCLUSION ................................................................................................................ 10
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`ii
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`Case 5:18-cv-00990-C Document 62 Filed 10/18/19 Page 3 of 16
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`TABLE OF AUTHORITIES
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`Page(s)
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`Cases
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`ARP Wave, LLC v. Salpater,
`364 F.Supp.3d 990 (D. Minn. 2019) ............................................................................ 5, 9
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`Bauchman for Bauchman v. West High School,
`132 F.3d 542 (10th Cir. 1997) ..................................................................................... 3, 4
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`Bettcher Indust., Inc. v. Hantover, Inc.,
`No. 3:14-cv-406, 2018 WL 1942179 (N.D. Ohio Apr. 25, 2018) ............................... 8, 9
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`Brunswick Corp. v. Suzuki Motor Co.,
`575 F. Supp. 1412 (E.D. Wis. 1983)................................................................................ 5
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`Coastal Steel Corp. v. Tilghman Wheelabrator,
`709 F.2d 190 (3d Cir. 1983) ............................................................................................ 7
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`Cocona, Inc. v. Columbia Sportswear Co.,
`No. 17-cv-01195-CMA-CBS, 2017 WL 4029860 (D. Colo. Sept. 12, 2017) ................. 9
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`Forman v. Davis,
`371 U.S. 178, 83 S. Ct. 227, 9 L. Ed. 2d 222 (1962) ....................................................... 3
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`G.A. Mosites Co. of Ft. Worth, Inc. v. Aetna Cas. & Sur. Co.,
`545 P.2d 746 (Okla. 1976) ............................................................................................... 7
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`General Protecht Group, Inc. v. Leviton Mfg. Co.,
`No. CIV-10-1020, 2010 WL 5559750 (D.N.M. Nov. 30, 2010) ..................................... 7
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`In re Cray, Inc.,
`871 F.3d 1355 (Fed. Cir. 2017) ....................................................................................... 4
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`Knapp-Monarch Co. v. Casco Products Corp.,
`342 F.2d 622 (7th Cir.1965) ............................................................................................ 5
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`Logistics, Inc. v. Nat'l Passenger R.R. Corp,
`272 F. Supp. 2d 784 (E.D. Wis. 2003)............................................................................. 5
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`Lowrimore v. Severn Trent Environmental Services, Inc.,
`No. CIV-15-475-RAW, 2016 WL 799127 (E.D. Okla. Feb. 29, 2016) .......................... 7
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`TC Heartland LLC v. Kraft Foods Group Brands LLC,
`137 S. Ct. 1514 (2017) ............................................................................................. 1, 3, 4
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`Union Steel Am. Co. v. M/V Sanko Spruce,
`14 F. Supp. 2d 682 (D.N.J. 1998) .................................................................................... 7
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`Uni-Systems, LLC v. United States Tennis Association, Inc.,
`350 F. Supp. 3d 143 (E.D.N.Y. 2018) ............................................................................. 5
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`Xantrex Technology Inc. v. Advanced Energy Industries, Inc.,
`No. 07-cv-02324-WYD-MEH, 2008 WL 2185882 (D. Colo. May 23, 2008) ............ 7, 8
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`Statutes
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`28 U.S.C. § 1400(b) ................................................................................................. 1, 4, 5, 6
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`Rules
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`Fed. R. Civ. P. 15(a) ............................................................................................................ 3
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`INTRODUCTION
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`OKC opposes Plaintiffs’ request for leave to amend their First Amended Complaint
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`to add claims against Guardian Alliance Technologies, Inc. for patent infringement,
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`defamation, and a declaration of no inequitable conduct or patent fraud. [See, Dkt. Nos.
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`55-1 and 57-1].1 The Court should deny Plaintiffs’ motion because the patent infringement
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`claim at the heart of Plaintiffs’ proposed amended complaint would be subject to dismissal
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`for improper venue thus making amendment futile.
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`Under 28 U.S.C. § 1400(b), venue in a patent infringement action is only proper
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`where the defendant (1) resides, or (2) has committed acts of infringement and has a regular
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`and established place of business. TC Heartland LLC v. Kraft Foods Group Brands LLC,
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`137 S. Ct. 1514 (2017). Guardian neither resides in Oklahoma, nor has a regular and
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`established place of business in Oklahoma.
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`Recognizing the lack of patent infringement venue over Guardian in Oklahoma,
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`Plaintiffs argue that Guardian waived its right to object to improper patent venue. However,
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`Plaintiffs’ patent venue waiver theory fails as a matter of law. Plaintiffs were not a party
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`the Subscription Agreement between OKC and Guardian, they are not third-party
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`1 OKC files this response outside of the 21-day response period of LCvR7.1(g). OKC does so
`pursuant to an agreement between counsel that OKC would be afforded an additional seven
`calendar days to respond Plaintiffs’ Motion for Leave, see, Exhibit 1 hereto, and at the direction
`of the Court. Even though the Court has already granted Plaintiffs’ request for leave [Dkt. No.
`60], based on communications between the Court and counsel for all parties on October 18,
`2019, it is OKC’s understanding that, upon filing of this Response, the Court’s previous order
`granting Plaintiffs leave will be stricken.
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`1
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`beneficiaries of that agreement, and Plaintiffs’ claims against Guardian do not require
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`interpretation or enforcement of that agreement.
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`As Plaintiffs cannot show venue is proper over Guardian for their proposed patent-
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`infringement-based claims, Plaintiffs’ proposed Second Amended Complaint is futile, and
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`the Court should deny Plaintiffs’ request for leave.
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`FACTUAL BACKGROUND
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`Guardian is a California corporation and maintains its principal place of business at
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`11 S. San Joaquin St., Suite 804, Stockton, California 95292. Guardian California Articles
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`of Incorporation of a General Stock Corporation, a true and correct copy of which is
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`attached hereto as Exhibit 2. Guardian maintains no “brick-and-mortar” place of business
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`outside of California. Exhibit 3, Decl. of Mr. Adam V. Anthony, at ¶¶ 7–8.
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`On September 23, 2019, Plaintiffs moved for leave to file a Second Amended
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`Complaint [Dkt. Nos. 55 and 57] that would serve to add Guardian as a purported infringer
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`of U.S. Patent No. 10,043,188 and raise other claims ancillary to its status as alleged patent
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`infringer. The ’188 Patent issued on August 7, 2018. In arguing that Guardian waived its
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`rights under the patent venue statute, Plaintiffs point to the Subscription Agreement entered
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`into between OKC and Guardian on February 28, 2018. A true and correct copy of that
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`agreement is attached hereto as Exhibit 4. The agreement includes a forum selection clause,
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`which states that:
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`All claims arising out of or related to this Agreement will be
`governed by Oklahoma law, and will be litigated exclusively
`in the federal or state courts of Oklahoma; the parties consent
`to the personal jurisdiction of those courts.
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`2
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`Ex. 4, OKC-0001571–72 (emphasis added). The agreement recites the rights and
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`obligations (e.g., scope of services, license grants and restrictions, security, payment, term,
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`termination, and indemnification) as between OKC and Guardian for access to Guardian’s
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`web-based background investigation software. With respect to the issue of indemnification,
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`the agreement only requires that Guardian
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`indemnify, defend or, at its option, settle any third party claim,
`suit or proceeding against [OKC] to the extent based on a claim
`that the Services (excluding any Third Party Software)
`infringes any United States patent, copyright, trademark or
`trade secret and Guardian shall pay any final judgment entered
`against [OKC] in any claim, suit, or proceeding or agreed to in
`settlement.
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`Id. at OKC-0001571. Nowhere does the agreement between OKC and Guardian require
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`Guardian to join the suit or agree to be sued by any intellectual property rights holder. For
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`that matter the agreement does not mention the ’188 Patent, the Plaintiffs, or any third party
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`by name.
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`ARGUMENT AND AUTHORITIES
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`I.
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`THE COURT SHOULD DENY LEAVE TO AMEND WHEN
`AMENDMENT WOULD BE FUTILE
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`Fed. R. Civ. P. 15(a) directs that “[t]he court should freely give leave [to amend]
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`when justice so requires.” However, this directive is not absolute and must yield under
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`certain circumstances. Forman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L. Ed. 2d
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`222 (1962); Bauchman for Bauchman v. West High School, 132 F.3d 542, 562 (10th Cir.
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`1997). One of the clearly recognized exceptions to the liberality of Rule 15 is when the
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`proposed amendment would be futile. Id. A proposed amended complaint is futile if it
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`would not survive a motion to dismiss. Bauchman, 132 F.3d at 562.
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`Granting Plaintiffs’ Motion to file their proposed Second Amended Complaint to
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`add Guardian would be futile because the proposed Second Amended Complaint would be
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`subject to dismissal for improper venue.
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`II.
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`AMENDMENT WOULD BE FUTILE BECAUSE VENUE IS
`IMPROPER AS TO GUARDIAN FOR PLAINTIFFS’ CLAIMS OF
`PATENT INFRINGEMENT
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`Plaintiffs seek to add Guardian as a defendant in their proposed Second Amended
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`Complaint with respect to their claims of patent infringement of the ’188 Patent. [Dkt. No.
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`57-1, ¶¶ 26–36].
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`Venue in patent infringement actions is limited to judicial districts where the
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`defendant either: (1) resides; or (2) has a regular and established place of business and has
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`committed acts of alleged infringement. 28 U.S.C. § 1400(b). The U.S. Supreme Court
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`recently held in TC Heartland LLC v. Kraft Foods Group Brands LLC recently held that a
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`domestic corporation, such as Guardian, is deemed only to reside in its state of
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`incorporation for the purposes of 28 U.S.C. § 1400(b). 137 S. Ct. 1514, 197 L. Ed. 2d 816
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`(2017). Guardian is incorporated under the laws of the State of California. Ex. 1. Moreover,
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`Guardian does not maintain a “regular and established place of business” outside of
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`California, let alone in this District. Ex. 3, at ¶¶ 7–8. See, e.g. In re Cray, Inc., 871 F.3d
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`1355, 1362 (Fed. Cir. 2017) (“regular and established place of business” requires a
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`“physical, geographical location in the district from which the business of the defendant is
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`carried out”). See also, Brunswick Corp. v. Suzuki Motor Co., 575 F. Supp. 1412, 1424
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`(E.D. Wis. 1983) (having a “regular and established place of business” involves more than
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`“doing business” in a district) (quoting Knapp-Monarch Co. v. Casco Products Corp., 342
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`F.2d 622, 624–25 (7th Cir.1965)). In fact, Plaintiffs’ proposed Second Amendment
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`Complaint fails to plead any facts as Guardian that would establish it is either incorporated
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`in Oklahoma2 or maintains a “regular and established place of business” in this District.
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`That deficiency alone is enough to render Plaintiffs’ Motion for Leave to Amend futile.
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`See, e.g., Uni-Systems, LLC v. United States Tennis Association, Inc., 350 F. Supp. 3d 143,
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`159 (E.D.N.Y. 2018). As noted above, the real facts are no better for Plaintiffs’ quest to
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`find venue in Oklahoma. As such, venue is improper under 28 U.S.C. § 1400(b), in this
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`District as to Plaintiffs’ patent-infringement-based claims against Guardian.
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`Plaintiffs alternatively assert that the claims they proposed to add against Guardian
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`are “integrally related” to the case, so as to create some type of pendent venue. Every court
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`that has addressed the notion of pendent venue following the Supreme Court’s recent TC
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`Heartland decision has found that there is no such thing as pendent venue where a patent
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`infringement claim is involved. ARP Wave, LLC v. Salpater, 364 F.Supp.3d 990, 997 (D.
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`Minn. 2019). See also, Pacer Glob. Logistics, Inc. v. Nat'l Passenger R.R. Corp, 272 F.
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`Supp. 2d 784, 790 (E.D. Wis. 2003) (“[I]f any of the claims making up the cause of action
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`are governed by a special venue provision of the type that limits venue to specified districts,
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`2 The proposed Second Amended Complaint incorrectly states that Guardian is
`incorporated in Delaware. [Dkt. No. 57-1, at ¶ 4]. That mistake, though, makes no
`difference with respect to the futility of Plaintiffs’ proposed addition of Guardian to
`patent infringement claims in Oklahoma.
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`the cause of action may be brought only in a district specified by such provision.”). In this
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`case, the special venue provision governing patent claims, i.e. 28 U.S.C. § 1400(b), does
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`not permit Plaintiffs’ proposed patent infringement action to be brought against Guardian
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`in this District because Guardian is not incorporated here and does not maintain any type
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`of place of business here. So, to find some type of pendent venue right in these
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`circumstances would circumvent congressional intent.
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`III. GUARDIAN DID NOT WAIVE VENUE FOR CLAIMS OF PATENT
`INFRINGEMENT
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`Tacitly acknowledging that their quest for patent infringement venue against
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`Guardian in this District is doomed under 28 U.S.C. § 1400(b), Plaintiffs next argue that
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`venue should be proper here because Guardian somehow waived its rights under the patent
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`venue provision when it agreed to indemnify OKC. [Dkt. No. 57, at pp. 9–10]. Plaintiffs’
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`argument here also misses the point.
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`To support their argument, Plaintiffs point to the following forum selection clause
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`from the OKC-Guardian Subscription Agreement, which states that:
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`All claims arising out of or related to this Agreement will be governed by
`Oklahoma law, and will be litigated exclusively in the federal or state courts
`of Oklahoma; the parties consent to the personal jurisdiction of those courts.
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`Ex. 4, OKC-0001571–72. Neither this forum selection clause (nor the rest of the
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`Subscription Agreement for that matter) mentions Plaintiffs, by name or by reference to
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`the ’188 Patent. “Where two parties contract to litigate any dispute arising under their
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`contract in a specified forum, this Court presumes that they are speaking only of disputes
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`with each other in the absence of language about disputes with third parties.” Union Steel
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`Am. Co. v. M/V Sanko Spruce, 14 F. Supp. 2d 682, 693 (D.N.J. 1998). In fact, “[s]everal
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`courts have stated that, when the forum selection clause governs only a dispute arising out
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`of the contract containing the forum selection clause … the form [sic] selection clause is
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`inapplicable.” General Protecht Group, Inc. v. Leviton Mfg. Co., No. CIV-10-1020, 2010
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`WL 5559750, at *14 (D.N.M. Nov. 30, 2010).
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`It is true that non-signatories to a contract, e.g. Plaintiffs, may enforce a forum
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`selection clause in the contract if that party is a third-party beneficiary of the contract.
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`Lowrimore v. Severn Trent Environmental Services, Inc., No. CIV-15-475-RAW, 2016
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`WL 799127, at *3 (E.D. Okla. Feb. 29, 2016) (citing Coastal Steel Corp. v. Tilghman
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`Wheelabrator, 709 F.2d 190, 203 (3d Cir. 1983)). Under Oklahoma law, the “determining
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`factor” as to the right of a third-party beneficiary is the intention of the parties who actually
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`made the contract.” G.A. Mosites Co. of Ft. Worth, Inc. v. Aetna Cas. & Sur. Co., 545 P.2d
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`746, 749 (Okla. 1976). Non-signatories have been able to enforce forum selection clauses
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`where the court finds a close relationship to the contractual relationship. See, e.g. Xantrex
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`Technology Inc. v. Advanced Energy Industries, Inc., No. 07-cv-02324-WYD-MEH, 2008
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`WL 2185882, at *2 (D. Colo. May 23, 2008) (finding that “no such [close] relationship
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`exists here because at the time of the signing of the contract … [the party attempting to
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`enforce the forum selection clause] had absolutely no connection to the contractual
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`relationship”).
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`Here, there is no evidence whatsoever that OKC and/or Guardian intended for
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`Plaintiffs to benefit from the Agreement, let alone of the forum selection clause. The
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`opposite is true. The indemnification clause of the Subscription Agreement, itself, only
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`contemplates situations where OKC alone is sued for intellectual property infringement or
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`misappropriation. Ex. 4, at OKC-0001571. Nowhere does the agreement between OKC
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`and Guardian require Guardian to join the suit or agree to be sued by any intellectual
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`property rights holder. The agreement also contemplates that OKC will provide Guardian
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`notice in writing that OKC has been sued, acknowledging situations where OKC is a party
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`to a lawsuit but Guardian is not. Id. Moreover, Plaintiff Miller Mendel, Inc. participated in
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`the same RFP process that led to OKC entering into the Subscription Agreement with
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`Guardian. [See, Dkt. No. 57-1, at ¶ 15]. In other words, Guardian was awarded the contract
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`to provide background investigation services to OKC to the specific exclusion of Guardian
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`and other RFP respondents. Accordingly, it is hard to fathom how Plaintiffs could claim
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`status as third-party beneficiaries to the Subscription Agreement. Thus, Plaintiffs cannot
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`enforce the forum selection clause against Guardian.
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`The cases cited by Plaintiffs in support of their argument that Guardian waived its
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`rights under the patent venue statute fail to support their position. Plaintiffs cite Bettcher
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`Indust., Inc. v. Hantover, Inc., No. 3:14-cv-406, 2018 WL 1942179, at *3-4 (N.D. Ohio
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`Apr. 25, 2018), for the proposition that “[n]othing in TC Heartland limits the longstanding
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`general rules about waiver of venue and forum selection clauses.” [Dkt. No. 57, at p. 10].
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`Generally, that proposition may be true, but the facts of Bettcher have no applicability here.
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`In Bettcher, the forum selection clause was in an agreement settling patent infringement
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`claims between the same parties before TC Heartland was decided. Id. The asserted
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`infringement arose due to an alleged breach of the same settlement agreement. Id. The
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`Bettcher court further observed that the underlying patent infringement claims must be
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`adjudicated in order to resolve the breach of contract claim. Id. at *3. None of these peculiar
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`facts can be found here.
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`Plaintiffs also cite ARP Wave, LLC v. Salpeter, 364 F.Supp.3d 990 (D. Minn. 2019),
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`but their reliance on this case is similarly misplaced. In ARP Wave, the defendant, a licensee
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`of the plaintiff, moved to dismiss a patent infringement action for improper venue, claiming
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`a forum selection clause present in a license agreement between the parties did not apply
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`to the patent infringement claim. Id. The district court held that, in order for ARP Wave’s
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`patent infringement claim to fall within the scope of the forum clause, either “(1) that claim
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`must be brought ‘for the enforcement of [the] Agreement’ or (2) that claim must be a claim
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`“relating to [the] agreement or any related agreements.” Id. at 996–97. The court found
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`neither alternative to be true. It found that the patent infringement claims did not relate to
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`the agreements because “none of the agreements sa[id] a word about any of ARPwave's
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`patents—which is not surprising, given that none of ARPwave's [asserted] patents even
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`existed until . . . years after the agreements were signed.” Id. at 999. The court then
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`observed that other courts confronted with the same question have concluded that a “patent-
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`infringement claim does not relate to a license agreement when the claim can be fully
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`adjudicated without reference to the agreement.” Id. (citing Sanford L.P. v. Esselte AB, No.
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`14-CV-7616 (VSB), 2015 U.S. Dist. LEXIS 193868, at *19–24 (S.D.N.Y. Sept. 16, 2015)).
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`Thus, the ARPwave court found that the patent infringement claim did not “relate to” the
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`agreement, even where the agreement (and forum selection clause) was between the actual
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`parties to the litigation. See generally Cocona, Inc. v. Columbia Sportswear Co., No. 17-
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`cv-01195-CMA-CBS, 2017 WL 4029860, at *3 (D. Colo. Sept. 12, 2017) (refusing to find
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`“regarding” language in forum selection clause of non-disclosure agreement between
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`parties to include patent infringement claims because the agreement “governs a specific set
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`of activities over a limited duration”).
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`Here, Plaintiffs seek to enforce a forum selection clause from an agreement to which
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`they are not a party. Even if they were a party to the Subscription Agreement, following
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`the guidance of other courts confronted with the question, Plaintiffs’ patent infringement
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`claim against Guardian does not “relate to” the Subscription Agreement because (1) the
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`case can be fully adjudicated without reference to that agreement; and (2) there is no
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`mention of the ’188 Patent or the Plaintiffs in the Subscription Agreement. In fact, the ’188
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`Patent did not even issue until nearly six months after OKC and Guardian executed the
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`Subscription Agreement. Plaintiffs even cite ARP Wave for this distinction, stating “[t]his
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`is in contrast to a situation where an agreement with forum selection occurred long in
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`advance of any patent considerations.” [Dkt. No. 57, at p. 10]. Consequently, Plaintiffs’
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`patent infringement claim does not fall within the scope of the forum selection clause of
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`the Agreement.
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`The Court should deny Plaintiffs’ Motion for Leave to File the proposed Second
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`CONCLUSION
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`Amended Complaint, which accuses Guardian of infringing the ’188 Patent, because it
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`would futile, as those claims would be subject to dismissal for improper venue. First, venue
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`for a patent infringement claim against Guardian is improper in any state other than
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`California, where it is incorporated and maintains its only “regular and established place
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`of business.” Second, Guardian did not waive proper venue as to Plaintiffs’ claims by
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`10
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`Tyler Miller Exhibit 2021
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`Page 14 of 16
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`Case 5:18-cv-00990-C Document 62 Filed 10/18/19 Page 15 of 16
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`entering into the Agreement with OKC, as Plaintiffs are not a party to the Agreement, are
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`not third-party beneficiaries of the Agreement, and none of Plaintiffs’ proposed claims
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`against Guardian require interpretation or enforcement of the Agreement. Accordingly, the
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`Court should deny Plaintiffs’ Motion for Leave to file the Second Amended Complaint.
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`Dated: October 18, 2019.
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`Respectfully submitted,
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`/s/ Evan W. Talley
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`Douglas J. Sorocco, OBA # 17347
`Evan W. Talley, OBA # 22923
`DUNLAP CODDING PC
`609 W. Sheridan Avenue
`Oklahoma City, OK 73102
`Telephone:
`(405) 607-8600
`E-mail: etalley@dunlapcodding.com
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`ATTORNEYS FOR DEFENDANT
`THE CITY OF OKLAHOMA CITY
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`11
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`Tyler Miller Exhibit 2021
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`Page 15 of 16
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`Case 5:18-cv-00990-C Document 62 Filed 10/18/19 Page 16 of 16
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`CERTIFICATE OF SERVICE
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`I certify that on October 18, 2019, I electronically transmitted the foregoing
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`document to the Clerk of the Court using the ECF system for filing and transmittal of a
`Notice of Electronic Filing to the following ECF registrants:
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`Todd A. Nelson
`Paul E. Rossler
`Kurt Rylander
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`/s/ Evan W. Talley
`Evan W. Talley
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`12
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`Tyler Miller Exhibit 2021
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`Page 16 of 16
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