Free Response to Motion - District Court of Delaware - Delaware

Case 1:07-cv-00286-JJF

Document 63

Filed 04/25/2008

Page 1 of 8

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE IOVATE HEALTH SCIENCES U.S.A., INC., et al., Plaintiffs, v. WELLNX LIFE SCIENCES INC. (d.b.a. NV INC.), et al., Defendants. ) ) ) ) ) ) ) ) ) )

C.A. No. 07-286 (JJF)

DEFENDANTS' RESPONSE TO PLAINTIFFS' MOTION TO SUBSTITUTE

MORRIS, NICHOLS, ARSHT & TUNNELL LLP Mary B. Graham (#2256) Rodger D. Smith II (#3778) James W. Parrett, Jr. (#4292) 1201 N. Market Street P.O. Box 1347 Wilmington, DE 19899-1347 [email protected] (302) 658-9200 Attorneys for WellNx Life Sciences Inc. (d/b/a NV Inc.), NxCare Inc., NxLabs Inc., Slimquick Laboratories, and Biogenetix

OF COUNSEL: Roger Colaizzi Jeffrey A. Dunn Lisa M. Kattan Tamany Vinson Bentz VENABLE, LLP 575 7th Street, NW Washington, DC 20004-1601 (202) 344-4000 Dated: April 25, 2008

Case 1:07-cv-00286-JJF

Document 63

Filed 04/25/2008

Page 2 of 8 1.

Defendants Wellnx Life Sciences Inc.1 ("Defendant" or "Wellnx") oppose Plaintiffs' Iovate Health Sciences U.S.A., Inc. and Iovate T&P, Inc.'s (collectively "Plaintiffs") motion to substitute Iovate Health Sciences, Inc. I. PLAINTIFFS' MOTION DOES NOT COMPLY WITH THIS COURT'S RULES OR THE FEDERAL RULES AND SHOULD BE DENIED A. Plaintiffs' Motion Is Untimely

Plaintiffs' Motion to Substitute is untimely. The Court's Scheduling Order requires that "all motions to join other parties shall be filed on or before November 16, 2007." See D.I. 32 at ¶ 2.2 The Court also required that "all motions to amend the pleadings shall be filed on or before January 11, 2008." Id. at ¶ 5. As explained below, United States Patent No. 5,973,199 ("the `199 patent") was purportedly assigned to Iovate Health Sciences, Inc. in June 2007.3 Iovate Health Sciences U.S.A., Inc. was never assigned rights to the `199 patent and never had ownership over the patent. Since corporations with both names appear to exist, the proposed "substitution" involves more than fixing a typographical error and it is not a substitution of parties; it is to add one plaintiff and remove another. Either way, Plaintiffs' motion is untimely. Federal Rule of Civil Procedure 6(b)(1)(B) requires that "[w]hen an act may or must be done within a specified time, the court may, for good cause, extend the time ... (B) on motion
1

The First Amended Complaint also includes NxLabs, Inc., Slimquick Laboratories and Biogenetix, which are not separate legal entities from Wellnx, but rather registered trade names under which Wellnx does, or in the past has done, business. Plaintiffs' Motion also fails to comply with Del. L.R. 7.1.1, which requires it to make a "reasonable effort" to reach an agreement on an issue before seeking the Court's intervention. See fn. 5, infra. Original plaintiff Flamma S.p.A. filed its complaint on May 24, 2007. Just one month later on June 27, 2007, Flamma purportedly assigned the `199 patent to Iovate Health Sciences, Inc. Defendants were not required to respond to the Complaint until July 16, 2007. Thus, the Complaint could and should have been amended before the Defendants' initial responses.

2

3

Case 1:07-cv-00286-JJF

Document 63

Filed 04/25/2008

Page 3 of 8 2.

made after the time has expired if the party failed to act because of excusable neglect." Here, the time for Plaintiffs' action has expired (November 16, 2007 to join other parties; January 11, 2008 to amend pleadings), but Plaintiffs have not acknowledged that their request is untimely, much less shown that its failure to act was due to excusable neglect. Indeed, Plaintiffs may have known of this issue for at least nine months.4 For this reason alone, Plaintiffs' Motion should be denied. B. Federal Rule of Civil Procedure 25(c) Is Not Applicable

Plaintiffs' Motion is not proper under Federal Rule of Civil Procedure 25(c) because there was no transfer of interest between Iovate Health Sciences, Inc. and Iovate Health Sciences U.S.A., Inc. Indeed, there is no plaintiff to substitute because none of the current Plaintiffs own the `199 Patent. Plaintiffs' original complaint named Flamma S.p.A. ("Flamma") as a plaintiff. Flamma was the purported original assignee and owner of the `199 patent. See D.I. 1 at 19. Plaintiffs, however, amended their Complaint on January 31, 2008 to remove Flamma. Plaintiffs did not add any new parties at that time. Rather, Plaintiffs' First Amended Complaint claimed that "Iovate Health Sciences U.S.A., Inc. is the owner through assignment of the `199 patent." D.I. 43 at 3. Now, however, Plaintiffs contend that Iovate Health Sciences U.S.A., Inc. never had an ownership interest in the `199 patent. As a result, Iovate Health Sciences U.S.A., Inc. never had standing to assert a claim. The only Plaintiff that ever had standing was Flamma S.p.A., but when Plaintiffs amended the Complaint in January they removed Flamma and any standing to
4

The purported assignment is dated June 27, 2007, and the one-page USPTO Recordation Form Cover Sheet, which was prepared by Kenyon & Kenyon, counsel of record for Plaintiffs in this case, was signed on September 18, 2007.

Case 1:07-cv-00286-JJF

Document 63

Filed 04/25/2008

Page 4 of 8 3.

assert the `199 Patent. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1546 (9th Cir. 1989) ("The fact that a party was named in the original complaint is irrelevant; an amended pleading supersedes the original."); 3 Moore's Federal Practice § 15.17 (2007) (noting that an amended pleading supersedes the original pleading). Plaintiffs cannot cure this defect in jurisdiction by trying to add a new party through substitution or amendment. Lans v. Gateway 2000, Inc., 84 F. Supp. 2d 112, 115 (D.D.C. 1999) ("plaintiff may not amend the complaint to substitute a new plaintiff in order to cure a lack of jurisdiction, because a plaintiff may not create jurisdiction by amendment when none exists"). Hence, the patent that proposed new party Iovate Health Sciences, Inc. would like to assert does not, and never did, belong to any of the current Plaintiffs. Iovate Health Sciences, Inc. is not the successor in interest to any of the Plaintiffs and, therefore, Rule 25(c) does not apply. See Luxliner P.L. Export, Co. v. RDI/Luxliner, Inc., 13 F.3d 69, 71 (3d Cir. 1993) ("A `transfer of interest' in a corporate context occurs when a corporation becomes the successor to another by merger or other acquisitions of the interest the original corporate party had in the lawsuit."). In this regard, Plaintiffs' request under Rule 25(c) is not the same as the request the Court considered in General Battery Corp. v. Globe-Union, Inc., 100 F.R.D. 258, 263 (D. Del. 1982) ("Globe III's claim is Globe I's claim"). Indeed, "rule [25] is intended only to cover specific cases where the proper parties have been joined and, because of death, incompetency, transfer of interest, and death or separation from office of public officers, another may be substituted." Schwartz v. Metro. Life Ins. Co., 2 F.R.D. 167, 167 (D. Mass. 1941).

Case 1:07-cv-00286-JJF

Document 63

Filed 04/25/2008

Page 5 of 8 4.

II.

IOVATE REFUSES TO ADEQUATELY PROVE IT OWNS THE `199 PATENT, THUS ITS MOTION SHOULD BE DENIED.

Aside from Plaintiffs' failure to follow this Court's Rules and the inapplicability of Federal Rule 25(c), Wellnx opposes Plaintiffs' Motion for one simple reason: While Iovate T & P claims to own all the patents-in-suit except the `199 patent, and while Plaintiffs claim Iovate Health Sciences, Inc. owns the `199 patent, Plaintiffs have failed to provide adequate proof of any of these ownership claims. Wellnx made the unremarkable request that Plaintiffs provide documentation of ownership of the patents-in-suit before Wellnx would consider consenting to further amendment of the Complaint.5 So far, they have refused. On March 14, 2008, Plaintiffs provided Wellnx with page "3 of 3" of what is purported to be an assignment of the `199 patent from Flamma to Iovate Health Sciences, Inc. and a one-page USPTO Recordation Form Cover Sheet dated September 18, 2007. The same documentation is attached to Iovate's Motion as Exhibit A. See D.I. 58-2. However, this is not the entire assignment document and Iovate has not provided any ownership information concerning the other patents-in-suit. Wellnx requested this information so it could confirm ownership of all three patents-in-suit and avoid any more requests from Plaintiffs to further amend the pleadings.

5

Wellnx also advised Plaintiffs that it would prefer to do a global correction to the named parties in the suit to minimize further amendments to the pleadings. Specifically , Wellnx sought Plaintiffs' agreement to: (1) remove NxCare Inc., NxLabs Inc., and Biogenetix from the lawsuit, as none of them are corporate entities separate from Wellnx, Inc. (they are in fact only registered trade names); (2) remove Derek and Brad Woodgate from the litigation as individually named defendants; and (3) not use the proposed change in parties as a basis to object to discovery requests that Wellnx had already served, but rather respond to them as if they had been served upon Iovate Health Sciences, Inc. Wellnx first learned that Plaintiffs rejected all of these proposals when they filed the instant motion.

Case 1:07-cv-00286-JJF

Document 63

Filed 04/25/2008

Page 6 of 8 5.

If none of the current Plaintiffs own the `199 patent, or the other patents-in-suit, they simply do not have standing to assert them, much less correct their standing problem. See Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1579 (Fed. Cir. 1991) (holding that a plaintiff must have legal title to a patent in order to have standing to sue for patent infringement); Lans, 84 F. Supp. 2d at 115 ("plaintiff may not amend the complaint to substitute a new plaintiff in order to cure a lack of jurisdiction, because a plaintiff may not create jurisdiction by amendment when none exists"). The fact that Plaintiffs refuse to provide Wellnx with adequate

documentation of their proof of ownership calls into question the Plaintiffs ownership fo the patents-in-suit. If they do not own the patents-in-suit, the Amended Complaint should be

dismissed. See generally Lans, 84 F. Supp. 2d 112 (granting summary judgment to defendant because plaintiff concealed ownership information and in fact did not own the asserted patent). Since April 8, when Plaintiffs filed the instant Motion, Plaintiffs' responses to Wellnx's written discovery have come due on April 18, 2008. This discovery directly sought information about the ownership of the patents-in-suit.6 Plaintiffs responded that ownership would be proven by the documents produced in this case, but then objected to the production of any non-public documents until a protective order is entered in this case, and in fact has not produced any documents. See Ex. A (Iovate responses to Wellnx First Set of Requests for Production). Plaintiffs have maintained this untenable position despite Local Rule 26.2. See Ex. B letter from R. Colaizzi (April 23, 2008).

6

For example, Wellnx's Request No. 16 for the Production of Documents to Plaintiffs sought documents "which establish Iovate's right, title, and ownership in the patents-insuit." See also, e.g, Wellnx Request No. 15. Wellnx's Interrogatory No. 13 sought information concerning "assignments, grants, conveyances, agreements not to sue, or licenses of the patents-in-suit."

Case 1:07-cv-00286-JJF

Document 63

Filed 04/25/2008

Page 7 of 8 6.

Wellnx again informed Iovate in an April 23 letter, that if Plaintiffs would provide adequate proof of its ownership of the patents, Wellnx would not oppose Iovate seeking leave to amend its pleadings out of time. But Iovate refused. Hence, if the Court is inclined to allow Plaintiffs to seek leave to amend its Complaint, rather than deny Iovate's Motion outright because of procedural defects, Wellnx respectfully requests that the Court direct Plaintiffs to immediately supplement their responses to Wellnx's discovery concerning ownership of the patents-in-suit and also to allow Wellnx further briefing on the issue, if necessary. III. CONCLUSION

Plaintiffs' Motion should be denied because it is untimely and does not comport with this Court's Rules and the Federal Rules. Should the Court be inclined to consider Plaintiffs' motion for leave to amend their Complaint, Wellnx respectfully requests that the Court direct Plaintiffs to establish their ownership over all three patents-in-suit, and permit Wellnx supplemental briefing on the issue once receiving such discovery. MORRIS, NICHOLS, ARSHT & TUNNELL LLP

/s/ James W. Parrett, Jr.
Mary B. Graham (#2256) Rodger D. Smith II (#3778) James W. Parrett, Jr. (#4292) 1201 N. Market Street P.O. Box 1347 Wilmington, DE 19899-1347 [email protected] [email protected] [email protected] (302) 658-9200 Attorneys for WellNx Life Sciences Inc. (d/b/a NV Inc.), NxCare Inc., NxLabs Inc., Slimquick Laboratories, and Biogenetix

OF COUNSEL: Roger Colaizzi Jeffrey A. Dunn Lisa M. Kattan Tamany Vinson Bentz VENABLE, LLP 575 7th Street, NW Washington, DC 20004-1601 (202) 344-4000 Dated: April 25, 2008

Case 1:07-cv-00286-JJF

Document 63

Filed 04/25/2008

Page 8 of 8

CERTIFICATE OF SERVICE I hereby certify that on April 25, 2008, I caused the foregoing to be electronically filed with the Clerk of the Court using CM/ECF which will send electronic notification of such filing to the following: John W. Shaw, Esq. Karen L. Pascale, Esq. Karen E. Keller, Esq. YOUNG CONAWAY STARGATT & TAYLOR LLP

Additionally, I hereby certify that true and correct copies of the foregoing were caused to be served on April 25, 2008 upon the following individuals in the manner indicated: BY EMAIL AND HAND DELIVERY Josy W. Ingersoll, Esq. Karen L. Pascale, Esq. Karen E. Keller, Esq. YOUNG CONAWAY STARGATT & TAYLOR LLP The Brandywine Building 100 West Street, 17th Floor P.O. Box 391 Wilmington, DE 19899-0391 [email protected] [email protected] [email protected] BY EMAIL Richard L. DeLucia, Esquire KENYON & KENYON LLP [email protected] Howard J. Shire, Esquire KENYON & KENYON LLP [email protected] Jerry Canada, Esquire KENYON & KENYON LLP [email protected]

/s/ James W. Parrett, Jr.
James W. Parrett, Jr. (#4292)
969792

Case 1:07-cv-00286-JJF

Document 63-2

Filed 04/25/2008

Page 1 of 10

EXHIBIT A

Case 1:07-cv-00286-JJF

Document 63-2

Filed 04/25/2008

Page 2 of 10

Case 1:07-cv-00286-JJF

Document 63-2

Filed 04/25/2008

Page 3 of 10

Case 1:07-cv-00286-JJF

Document 63-2

Filed 04/25/2008

Page 4 of 10

Case 1:07-cv-00286-JJF

Document 63-2

Filed 04/25/2008

Page 5 of 10

Case 1:07-cv-00286-JJF

Document 63-2

Filed 04/25/2008

Page 6 of 10

Case 1:07-cv-00286-JJF

Document 63-2

Filed 04/25/2008

Page 7 of 10

Case 1:07-cv-00286-JJF

Document 63-2

Filed 04/25/2008

Page 8 of 10

EXHIBIT B

Case 1:07-cv-00286-JJF

Document 63-2

Filed 04/25/2008

Page 9 of 10

Case 1:07-cv-00286-JJF

Document 63-2

Filed 04/25/2008

Page 10 of 10