Case 2:16-cv-02464-SRC-CLW Document 52 Filed 10/27/16 Page 1 of 10 PageID: 1109
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`NOT FOR PUBLICATION
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`UNITED STATES DISTRICT COURT
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`DISTRICT OF NEW JERSEY
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`Civil Action No. 16-2464 (SRC)(CLW)
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`OPINION
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`CURLIN MEDICAL INC., ZEVEX, INC.,
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`and MOOG INC.,
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` Plaintiffs,
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`v.
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`ACTA MEDICAL, LLC, et al.
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`Defendants.
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`CHESLER, District Judge
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`This matter comes before the Court upon the motion filed by Defendant ACTA Medical,
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`LLC (“ACTA”)1 to dismiss Plaintiffs’ patent infringement claims pursuant to Federal Rules of
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`Civil Procedure 12(b)(1) and 12(b)(6) [Docket Entry 37]. Plaintiffs Curlin Medical Inc.
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`(“Curlin”), ZEVEX, Inc. (“Zevex”), and Moog Inc. (“Moog”) (collectively “Plaintiffs”) have
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`opposed the motion [Docket Entry 40]. The Court has considered the parties’ submissions and
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`proceeds to rule without oral argument, pursuant to Federal Rule of Civil Procedure 78. For the
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`reasons set forth below, the Court will deny Defendant’s motion to dismiss.
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`1 Although Plaintiffs named James Bruno as a Defendant in the Complaint, the parties have
`entered into a stipulation dismissing James Bruno from the lawsuit [Docket Entry 48].
`Therefore, the Court will refer to the moving Defendant as ACTA Medical, LLC only.
`1
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`Case 2:16-cv-02464-SRC-CLW Document 52 Filed 10/27/16 Page 2 of 10 PageID: 1110
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`I.
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`BACKGROUND
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`Plaintiff Curlin is the assignee of United States Patent No. 6,164,921 (“the ‘921 patent”)
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`and United States Patent No. 6,371,732 (“the ‘732 patent”), issued on December 26, 2000, and
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`April 16, 2002, respectively. (Compl. ¶¶ 21-26, 32-33). These patents describe and claim novel
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`configurations for a Curvilinear Peristaltic Pump Having Insertable Tubing Assembly and a
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`Curvilinear Peristaltic Pump. (Compl. ¶¶ 22, 24). Caregivers use both products to intravenously
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`administer medication to patients. (Compl. ¶ 12). Curlin, along with Moog, the company that
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`acquired Curlin in 2006, and Zevex, Curlin’s wholly-owned subsidiary, contend that Defendant
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`ACTA has infringed and continues to infringe both of Plaintiffs’ patents, by making, using,
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`selling, offering for sale, and importing medical products that it advertises as compatible with
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`Plaintiffs’ patented products. (Compl. ¶ 32).
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`Defendant has not yet answered the Complaint,2 but Defendant argues in a pre-answer
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`motion that both patents expired ten years ago because Curlin paid maintenance fees to the
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`United States Patent & Trademark Office (“USPTO” or “PTO”) as a small entity when it did not
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`qualify for small entity status. (Mov. Br. at 2-3). Defendant suggests that Curlin lost its small
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`entity status when it entered into two agreements with larger companies. (Mov. Br. at 3). First,
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`according to Defendant, on November 30, 2001, Curlin entered into an agreement with B. Braun
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`Medical Inc. (“B. Braun”), a company with more than 28,000 employees, to be the exclusive
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`distributor of its devices. (Mov. Br. at 2-3). Second, in February 2006, Moog Inc., a company
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`with over 7,000 employees, purchased Curlin. (Mov. Br. at 3). Defendant argues that neither B.
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`2 Although Defendant James Bruno answered the Complaint [Docket Entry 28], Defendant
`ACTA has not answered it.
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`2
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`Braun nor Moog qualifies as a small entity, and thus after Curlin made agreements with the two
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`companies, Curlin no longer qualified to pay small entity fees. (Id.).
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`Plaintiffs respond that the agreement with B. Braun was not a license to sell Curlin’s
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`patented products and the agreement did not divest Curlin of its small entity status. (Opp. at 3).
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`But, Plaintiffs argue, even if they did pay small entity fees erroneously, they made deficiency
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`payments in August 2016 in accordance with 37 C.F.R. §§ 1.27(g)(2) and 1.28(c) that made up
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`for any underpayments. (Opp. at 3, 7-8). The USPTO processed Plaintiffs’ deficiency payments
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`and thus Plaintiffs argue that the USPTO excused any errors Plaintiffs may have made. (Id.).
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`Defendant responds that Plaintiffs’ filings did not include necessary petitions and fees
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`and that the USPTO’s processing of Plaintiffs’ payments does not necessarily mean that the
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`USPTO considers the patents valid. (Rep. Br. at 4-5). Defendant thus argues that the patents
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`remain unenforceable.
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`II. MOTION TO DISMISS UNDER RULE 12(B)(1)
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`Defendant argues that Plaintiff’s patent infringement claims should be dismissed for lack
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`of subject matter jurisdiction under 12(b)(1). Defendant makes a factual jurisdictional attack,
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`arguing that this Court lacks subject matter jurisdiction over a patent infringement case when the
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`relevant patents are invalid.
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`Federal Rule of Civil Procedure 12(b)(1) permits the dismissal of a complaint for lack of
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`subject matter jurisdiction at any point during the case. Mortensen v. First Fed. Sav. & Loan
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`Ass’n, 549 F.2d 884, 891 (3d Cir. 1977). Rule 12(b)(1) challenges may be either facial or factual
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`attacks on the Court’s subject matter jurisdiction. Id. “A motion to dismiss on the basis of Fed.
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`R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction made prior to the filing of the
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`defendant’s answer is a facial challenge to the complaint.” Bennett v. City of Atl. City, 288 F.
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`Supp. 2d 675, 678 (D.N.J. 2003) (citing Mortensen, 549 F.2d at 891). In fact, the Third Circuit’s
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`recent cases suggest that only facial attacks, and not factual attacks, can be brought in a motion
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`to dismiss before an answer is filed. Smalls v. Jacoby & Meyers, LLP, No. CV 15-6559, 2016
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`WL 354749, at *2 (D.N.J. Jan. 26, 2016) (denying a motion to dismiss for lack of subject matter
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`jurisdiction because defendants made a procedurally improper factual attack before they filed an
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`answer) (citing Constitution Party of Pennsylvania v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014)
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`(“The Commonwealth filed the attack before it filed any answer to the Complaint or otherwise
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`presented competing facts. Its motion was therefore, by definition, a facial attack.”) (citing
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`Mortensen, 549 F.2d at 892 n.17); Askew v. Trustees of Gen. Assembly of Church of the Lord
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`Jesus Christ of the Apostolic Faith Inc., 684 F.3d 413, 417 (3d Cir. 2012) (“A Rule 12(b)(1)
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`standing challenge may attack the complaint facially or may attack the factual basis for standing.
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`As the defendants had not answered and the parties had not engaged in discovery, the first
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`motion to dismiss was facial.”) (citing Mortensen, 549 F.2d at 891); see also, e.g., Moore v.
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`Angie’s List, 118 F. Supp. 3d 802, 806 (E.D. Pa. 2015) (“Such an evaluation [a factual attack]
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`may occur at any stage of the proceeding, but only once the defendant has filed an answer.”)
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`(citing Mortensen); Edelglass v. New Jersey, No. 14-760, 2015 WL 225810, at *5 (D.N.J. Jan.
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`16, 2015) (“A factual attack may be made at any time after the answer has been filed.”) (citing
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`Mortensen, 549 F.2d at 892 n.17).3
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`3 One Third Circuit case, Berardi v. Swanson Memorial Lodge No. 48 of the Fraternal Order of
`Police, 920 F.2d 198 (3d Cir. 1990), holds that defendants can bring a facial or factual attack
`before filing an answer. The Third Circuit’s more recent cases, however, do not support this
`assertion. Smalls v. Jacoby & Meyers, 2016 WL 354749, at *2.
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`4
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`A facial challenge asserts that the Complaint does not allege sufficient grounds to
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`establish subject matter jurisdiction or that there is a legal bar to the court hearing the case, such
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`as sovereign immunity. Bennett v. City of Atl. City, 288 F. Supp. 2d at 679-80. When reviewing
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`a facial challenge under Rule 12(b)(1), Rule 12(b)(6)’s standards apply – requiring that the Court
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`must accept all factual allegations in the Complaint as true, and that the Court may only consider
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`the Complaint and documents referenced in or attached to the Complaint. Gould Elecs., Inc. v.
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`United States, 220 F.3d 169, 176 (3d Cir. 2000).
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`When the 12(b)(1) motion is “factual,” in that it challenges the facts underpinning the
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`Court’s jurisdiction, the Court may “consider and weigh evidence outside the pleading and
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`properly place[ ] the burden of establishing jurisdiction” on the plaintiff. U.S. ex rel. Atkinson v.
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`PA. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir. 2007). The Court may not place any
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`“presumption of truthfulness” on a plaintiff’s allegations in the Complaint when analyzing a
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`factual attack under Rule 12(b)(1). CNA v. United States, 535 F.3d 132, 139 (3d Cir. 2008). The
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`plaintiff bears the burden to prove that subject matter jurisdiction exists over a complaint once it
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`has been challenged. Mortensen, 549 F.2d at 891. “Dismissal for lack of subject-matter
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`jurisdiction because of the inadequacy of the federal claim is proper only when the claim is so
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`insubstantial, implausible, foreclosed by prior decisions of [the Supreme Court], or otherwise
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`completely devoid of merit as not to involve a federal controversy.” Steel Co. v. Citizens for a
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`Better Env’t, 523 U.S. 83, 89 (1998) (internal quotation marks omitted).
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`Here, Defendant brings a pre-answer motion to dismiss for lack of subject matter
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`jurisdiction and thus it should be treated as a facial attack. This facial challenge fails, however,
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`because the Complaint adequately establishes subject matter jurisdiction. Under 28 U.S.C. §
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`1338(a), federal district courts have exclusive original subject matter jurisdiction over any civil
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`action “arising under any Act of Congress relating to patents”. In a patent infringement suit,
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`plaintiff meets its burden of proving subject matter jurisdiction “when a well-pleaded complaint
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`establishes that federal patent law creates the cause of action or that the plaintiff’s right to relief
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`necessarily depends on resolution of a substantial question of federal patent law, in that patent
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`law is a necessary element of one of the well-pleaded claims.” Exxon Chem. Patents, Inc. v.
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`Lubrizol Corp., 935 F.2d 1263, 1265 (Fed. Cir. 1991), as modified, 64 F.3d 1553 (Fed. Cir.
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`1995) (citing Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 808-09 (1988)).
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`All a plaintiff must do to invoke federal jurisdiction for a patent infringement claim is plead that
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`it owns a patent still in force, that the defendant has infringed the patent, and that the plaintiff is
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`entitled to relief under the Patent Act. Kunkel v. Topmaster Int’l, Inc., 906 F.2d 693, 695 (Fed.
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`Cir. 1990). Here, Plaintiffs provide a well-pleaded complaint, claiming that Curlin owns the
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`‘921 patent and the ‘732 patent, that Defendant made and sold a product that is compatible with
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`the patented products and thus infringed, and that Plaintiffs are entitled to both an injunction and
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`damages under federal patent laws. (Compl. ¶¶ 6-7, 21-26, 32-33, 40-58). Because Plaintiffs
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`properly pleaded the required elements of a patent infringement claim, section 1338(a)
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`jurisdiction inures.
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`Defendant classifies its challenge to subject matter jurisdiction as a factual attack, rather
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`than a facial attack. It claims there is no factual basis for jurisdiction because the patents are
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`invalid. Because Defendant’s motion to dismiss is a pre-answer motion, however, it can only
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`challenge the Complaint on its face. But, even if Defendant could bring a factual attack here, it
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`would not succeed. A jurisdictional challenge fails when it is “in fact directed only to the merits
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`of a question of patent law.” Exxon Chem. Patents, 935 F.2d at 1265 (denying a defendant’s
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`motion to dismiss for lack of subject matter jurisdiction in which the defendant argued that the
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`patent was invalid and stating that “[a]t this stage the question of validity (including the date of
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`its validity) of the patent remains to be tried as a question of patent law.”) (citing Bell v. Hood,
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`327 U.S. 678 (1946)). Here, the question of the patent’s enforceability is a merits issue, not a
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`subject matter jurisdiction issue.4 Therefore, this Court denies Defendant’s motion to dismiss
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`under 12(b)(1).
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`III. MOTION TO DISMISS UNDER RULE 12(B)(6)
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`Next, Defendant argues that Plaintiffs fail to state a claim upon which relief can be
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`granted because the patents have expired and thus no patents could have been infringed. A
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`complaint will survive a motion under Rule 12(b)(6) if it states “sufficient factual allegations,
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`accepted as true, to ‘state a claim for relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
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`U.S. 662, 678 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544, 570 (2007)). “A claim
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`has facial plausibility when the plaintiff pleads factual content that allows the court to draw the
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`reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing
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`Twombly, 550 U.S. at 556). Following Iqbal and Twombly, the Third Circuit has held that, to
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`prevent dismissal of a claim, the complaint must show, through the facts alleged, that the
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`plaintiff is entitled to relief. Fowler v. UPMC Shadyside, 578 F.3d 203, 211 (3d Cir. 2009).
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`While a court must accept all factual allegations as true and construe the complaint in the light
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`most favorable to the plaintiff, it need not accept a “legal conclusion couched as a factual
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`allegation.” Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007); Fowler, 578 F.3d at 210-
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`11; see also Iqbal, 556 U.S. at 679 (“While legal conclusions can provide the framework of a
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`4 Defendant cites Kearns v. Chrysler Corp, 32 F. 3d 1541 (Fed. Cir. 1994), a case that discusses
`the right to injunctive relief after a patent becomes invalid. (Mov. Br. at 4-5). This case is
`irrelevant to Defendant’s 12(b)(1) argument because the Kearns Court did not discuss subject
`matter jurisdiction over patent cases.
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`complaint, they must be supported by factual allegations.”). “Threadbare recitals of the elements
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`of a cause of action, supported by mere conclusory statements, will not suffice.” Iqbal, 556 U.S.
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`at 678. In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court may
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`consider only the allegations of the complaint, documents attached or specifically referenced in
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`the complaint if the claims are based upon those documents, and matters of public record. Winer
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`Family Trust v. Queen, 503 F.3d 319, 327 (3d Cir.2007); Sentinel Trust Co. v. Universal
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`Bonding Ins. Co., 316 F.3d 213, 216 (3d Cir.2003).5
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`Construing the Complaint in the light most favorable to Plaintiffs, as this Court must, the
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`Plaintiffs set forth a clear and plausible claim for relief. The Complaint states that the Plaintiffs
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`are the owners of the ‘921 and ‘732 patents and that Defendant infringed the patents by making
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`and selling products that it advertised as compatible with the patented products. (Compl. ¶¶ 21-
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`26, 32-33). Defendant makes no contention that Plaintiffs do not set forth relief that can be
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`granted in its Complaint. Rather, Defendant argues that the patent infringement claims must be
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`dismissed because the patent is unenforceable. Under the standard for a motion to dismiss for
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`failure to state a claim, this Court is to accept sufficient, plausible factual allegations in the
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`Complaint as true and therefore must deny the motion to dismiss under 12(b)(6).
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`Moreover, even if the Court were to consider Defendant’s arguments that go beyond the
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`allegations of the Complaint, the Court would not make a decision at this stage regarding the
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`patents’ validity. “[T]he sole provision governing expiration [of a patent] for failure to pay the
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`5 Federal Rule of Civil Procedure 12(d) provides that the Court can treat a motion to dismiss as a
`motion for summary judgment if matters outside the pleadings are presented to, but the Rule
`explicitly allows a court to exclude material outside of the pleadings and rule on the motion as a
`motion to dismiss. Here, because Defendant was free to move for summary judgment if it
`wanted to, this Court treats this motion as a motion to dismiss under Rule 12(b)(6).
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`full maintenance fee because of an erroneous claim to small entity status is section 1.28(c) of the
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`regulations.” Ulead Sys., Inc. v. Lex Computer & Mgmt. Corp., 351 F.3d 1139, 1149 (Fed. Cir.
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`2003). 37 C.F.R. § 1.28(c) provides that if a patentee pays a small entity fee in good faith but
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`later discovers that it did not qualify for small entity status, the patentee can cure the defect by
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`separately submitting a deficiency payment and itemization for each patent. A patentee can
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`submit a deficiency payment to remedy a wrong small entity status payment under 1.28(c) at any
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`time; the patentee does not have a deadline for when it can submit the deficiency payment.6 DH
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`Tech, Inc. v. Synergystex Int’l, Inc., 154 F.3d 1333, 1342 (Fed. Cir. 1998). Additionally, “the
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`PTO views the submission of ‘[a] fee deficiency payment under § 1.28(c) . . . as a representation
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`by the party submitting the payment that small entity status was established in good faith and that
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`the original payment of small entity fees was made in good faith.’” Ulead Sys., 351 F.3d at 1149
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`(quoting 62 Fed. Reg. 53,132, 53,135 (Oct. 10, 1997)) (explaining that a submission of a
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`deficiency payment corrects an erroneous filing as a small entity and no inquiry into the
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`patentee’s good faith is required).7 As long as the patentee complies with the procedures for
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`6 Defendant argues that there is a time limit for when payment is due under 35 U.S.C. § 41(b)(2).
`(Mov. Br. at 6). However, this statute is inapplicable to underpayments resulting from erroneous
`claims of small entity status. See Ulead Sys., 351 F.3d at 1149.
`7 In its reply brief, Defendant argues that Plaintiffs acted in bad faith because, according to
`Defendant, Curlin was aware that it did not qualify for small entity status but paid maintenance
`fees as a small entity anyway. (Rep. Br. at 5). If a challenger believes that a patentee who
`makes a deficiency payment did not act in good faith in making its initial small entity payment,
`the challenger bears the burden of showing that the patentee engaged in inequitable conduct by
`knowingly misrepresenting that it was entitled to have the error excused under section 1.28(c).
`DH Tech, Inc., 154 F.3d at 1342; Ulead Sys., 351 F.3d at 1150. To prove inequitable conduct,
`the challenger must show by clear and convincing evidence both materiality of the conduct and
`intent to deceive. Ulead Sys., 351 F.3d at 1146-50; Outside the Box Innovations, LLC v. Travel
`Caddy, Inc., 695 F.3d 1285, 1294 (Fed. Cir. 2012). In Outside the Box Innovations, the Federal
`Circuit held that the challenger could not prove the patentee’s specific intent to deceive when the
`patentee claimed small entity status even though it had a commercial arrangement with a large
`entity because there was a reasonable dispute on whether that arrangement was a patent license
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`filing a deficiency payment in § 1.28(c), the USPTO will excuse an erroneous small entity
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`payment. 37 C.F.R. § 1.28(c). A district court does not have authority to determine if a patent
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`has expired if the USPTO has accepted a deficiency fee payment pursuant to 37 C.F.R. § 1.28(c).
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`Ulead Sys., 351 F.3d at 1149-50.
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`Here, even if Defendant is correct that Plaintiffs were not entitled to pay small entity fees,
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`Defendant’s argument is moot if Plaintiffs corrected their errors with the later payments.
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`Plaintiffs argue that they complied with the procedures in the statute for making a deficiency
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`payment. Therefore, the USPTO is entitled to accept their deficiency payment and excuse their
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`errors. Absent a determination from the USPTO on whether the Plaintiffs properly complied and
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`whether the PTO will accept the deficiency payment, it is inappropriate for this Court to deem
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`the patents unenforceable. Therefore, this Court will not decide on the patent’s validity at this
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`stage and denies Defendant’s motion to dismiss for failure to state a claim on which relief can be
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`granted.
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`IV. CONCLUSION
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`For the foregoing reasons, the Court will deny Defendant’s motion to dismiss. An
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`appropriate Order will be filed herewith.
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`Dated: October 27, 2016
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` s/ Stanley R. Chesler
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` STANLEY R. CHESLER
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`United States District Judge
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`or a distribution agreement and thus whether the patentee still qualified for small entity status
`after it made the arrangement. 695 F.3d at 1294. Similarly, Plaintiffs here dispute what type of
`agreement Curlin made with B. Braun and whether it stripped Curlin of small entity status.
`Defendant does not meet its burden of showing by clear and convincing evidence that Plaintiffs
`engaged in inequitable conduct.
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