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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`ARSUS, LLC,
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`Plaintiff,
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`v.
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`TESLA, INC.
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`Defendant.
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`6:22-CV-00276-ADA-DTG
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`REPORT AND RECOMMENDATION OF
`THE UNITED STATES MAGISTRATE JUDGE
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`TO: THE HONORABLE ALAN D. ALBRIGHT,
`UNITED STATES DISTRICT JUDGE
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`This Report and Recommendation is submitted to the Court pursuant to 28 U.S.C.
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`§ 636(b)(1)(C), Fed. R. Civ. P. 72(b), and Rules 1(f) and 4(b) of Appendix C of the Local Rules
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`of the United States District Court for the Western District of Texas, Local Rules for the
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`Assignment of Duties to United States Magistrate Judges. Before the Court is Defendant’s Motion
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`to Dismiss Pursuant to Rule 12(b)(6) (“Motion”) (ECF No. 11). For the following reasons, the
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`Court RECOMMENDS that Defendant’s Motion be DENIED.
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`I. FACTUAL BACKGROUND
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`Plaintiff Arsus, LLC filed Arsus, LLC v. Tesla, Inc., No. 3:20-cv-03313-RS (N.D. Cal.)
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`(“Arsus I”) on January 14, 2020, accusing Defendant Tesla, Inc. of infringing United States Patent
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`No. 8,634,989 (“the ’989 patent”), titled “Rollover prevention apparatus.” Based on the court’s
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`constructions in that case, the parties filed a stipulation for dismissal on January 5, 2022. ECF No.
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`11 at 6-7; ECF No. 13 at 2.
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`Case 6:22-cv-00276-ADA-DTG Document 31 Filed 10/12/22 Page 2 of 5
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`Plaintiff filed the instant lawsuit on March 15, 2022 (“Arsus II”), accusing Defendant
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`Tesla, Inc. of infringing United States Patent No. 11,077,877 (“the ’877 patent”), titled “Rollover
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`Prevention Apparatus.” ECF No. 1 ¶ 6. Defendant filed this Motion to Dismiss Pursuant to Rule
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`12(b)(6) based on the doctrine of claim preclusion on May 19, 2022. ECF No. 11. On July 13,
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`2022, the undersigned held a hearing on Defendant’s Motion. ECF No. 24.
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`A.
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`Rule 12(b)(6) Standard
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`II.
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`LEGAL STANDARDS
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`A party may move to dismiss a claim if the complaint has “fail[ed] to state a claim upon
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`which relief can be granted.” Fed. R. Civ. P. 12(b)(6). To survive a Rule 12(b)(6) motion to
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`dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
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`relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
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`Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the pleaded
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`factual content allows the court to draw the reasonable inference that the defendant is liable for the
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`misconduct alleged.” Ashcroft, 556 U.S. at 663. When considering a Rule 12(b)(6) motion, a court
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`must assume that all well-pled facts are true and view them in the light most favorable to the non-
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`moving party. See Bowlby v. City of Aberdeen, 681 F.3d 215, 218 (5th Cir. 2012). However, courts
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`“are not bound to accept as true a legal conclusion couched as a factual allegation.” Ashcroft, 556
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`U.S. at 678.
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`B.
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`Claim Preclusion
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`“Under the doctrine of claim preclusion, a judgment on the merits in a prior suit involving
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`the same parties or their privies bars a second suit based on the same cause of action.” SimpleAir,
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`Inc. v. Google LLC, 884 F.3d 1160, 1165 (Fed. Cir. 2018) (quoting Lawlor v. Nat’l Screen Serv.
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`Corp., 349 U.S. 322, 326 (1955)) (internal marks omitted). “Unlike the related doctrine of issue
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`preclusion, claim preclusion forecloses successive litigation of the same cause of action whether
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`Case 6:22-cv-00276-ADA-DTG Document 31 Filed 10/12/22 Page 3 of 5
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`or not relitigation of the cause of action involves the same issues as the earlier suit.” SimpleAir,
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`884 F.3d at 1165 (citing New Hampshire v. Maine, 532 U.S. 742, 748–49 (2001); see also Duffie
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`v. United States, 600 F.3d 362, 372 (5th Cir. 2010) (“Claim preclusion bars the litigation of claims
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`that either have been litigated or should have been raised in an earlier suit.”).
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`Claim preclusion is assessed under the law of the regional circuit in which the district court
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`sits, here the Fifth Circuit. SimpleAir, 884 F.3d at 1165. The test for claim preclusion in the Fifth
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`Circuit has four elements: (1) the parties in the later action are identical to, or in privity with, the
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`parties in the earlier action; (2) the judgment in the earlier case was rendered by a court with proper
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`jurisdiction; (3) there has been a final judgment on the merits; and (4) the earlier case and later
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`case involve the same cause of action. Duffie v. United States, 600 F.3d 362, 372 (5th Cir. 2010).
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`“Whether a particular cause of action in a patent case is the same as or different from
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`another cause of action has special application to patent cases,” thus Federal Circuit law is applied
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`to that issue. SimpleAir, 884 F.3d at 1165 (internal marks omitted). A cause of action is defined
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`based on the transactional facts from which it arises. Id. “In a patent suit, essential transactional
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`facts include both the asserted patents and the accused activity.” Id. “If the overlap between the
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`transactional facts of the suits is substantial, the later action should ordinarily be precluded.” Id.
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`Claim preclusion is not foreclosed where the asserted patent in the second case was not
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`before the district court in the first case. Id. at 1166. Instead, “where different patents are asserted
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`in a first and second suit, a judgment in the first suit will trigger claim preclusion [] if the scope of
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`the asserted patent claims in the two suits is essentially the same.” Id. at 1167. Thus, “the claim
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`preclusion analysis requires comparing the patents’ claims along with other relevant transactional
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`facts.” Id. at 1168.
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`Case 6:22-cv-00276-ADA-DTG Document 31 Filed 10/12/22 Page 4 of 5
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`III. DISCUSSION
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`Defendant argued that “[t]he doctrine of claim preclusion forecloses Arsus’s current
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`lawsuit (i.e., Arsus II)” because “[t]his case involves the same parties and the same cause of action
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`as Arsus I that resulted in a final judgment on the merits.” ECF No. 11 at 13. Defendant contended
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`that Arsus I and Arsus II involve the same cause of action because the overlap of transactional facts
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`between the two cases is substantial, including that “the scope of the claims of the ’989 patent
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`(asserted in Arsus I) and the ’877 patent (asserted in Arsus II) is essentially the same.” Id. at 14-
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`19.
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`Plaintiff argued that Arsus I and Arsus II do not involve the same cause of action. ECF No.
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`13 at 1-4. Plaintiff contended that “[u]nlike the NDCA asserted claims, from the ‘989 patent, the
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`asserted claims in Arsus II, claims 1 to 21 of the ‘877 patent, the WDTX asserted claims, are not
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`means-plus-function claims, in part because each of them does call for sufficient apparatus
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`structure to avoid interpretation as means-plus-function-claims.” Id. at 2 (emphasis in original).
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`As set forth by the Federal Circuit, where different patents are asserted in a first and second
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`suit, “the claim preclusion analysis requires comparing the patents’ claims.” SimpleAir, 884 F.3d
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`at 1168. To ascertain whether the claim of the present patent contains sufficient structure so as to
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`evade a means-plus-function analysis, the Court finds that claim construction is necessary to
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`determine the scope of the claims asserted in this case (i.e., Arsus II). Furthermore, the Court would
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`need to construe the claims in this case before it could even compare their scope against that of the
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`claims asserted in Arsus I. As such, the Court finds that Defendant’s Motion is premature and
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`inappropriate for a motion on the pleadings. Defendant is welcome to file an appropriate motion
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`after claim construction or fact discovery has been completed.
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`Accordingly, the Court recommends that Defendant’s Motion (ECF No. 11) be denied.
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`IV. RECOMMENDATION
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`4
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`Case 6:22-cv-00276-ADA-DTG Document 31 Filed 10/12/22 Page 5 of 5
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`For the above reasons, it is the RECOMMENDATION of the United States Magistrate
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`Judge to the United States District Judge that Defendant’s Motion (ECF No. 11) be DENIED.
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`V.
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`OBJECTIONS
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`The parties may wish to file objections to this Report and Recommendation. Parties filing
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`objections must specifically identify those findings or recommendations to which they object. The
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`District Court need not consider frivolous, conclusive, or general objections. See Battle v. U.S.
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`Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987).
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`A party’s failure to file written objections to the proposed findings and recommendations
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`contained in this Report within fourteen (14) days after the party is served with a copy of the
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`Report shall bar that party from de novo review by the District Court of the proposed findings and
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`recommendations in the Report. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150–
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`53 (1985); Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415 (5th Cir. 1996) (en banc). Except
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`upon grounds of plain error, failing to object shall further bar the party from appellate review of
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`unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See
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`28 U.S.C. § 636(b)(1)(C); Thomas, 474 U.S. at 150–53; Douglass, 79 F.3d at 1415.
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`SIGNED this 12th day of October, 2022.
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`___________________________________
`DEREK T. GILLILAND
`UNITED STATES MAGISTRATE JUDGE
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