Satchell v. United States ( 2022 )

3Jn tbe Wniteb $)tates qtourt of jfeberal �!aims
No. 19-1984C
(Filed: April 18, 2022)
NOT FOR PUBLICATION
)
JAMES A. SATCHELL Jr. and )
VENDONET INC., )
)
Plaintiffs, )
v. )
)
UNITED STATES, )
)
Defendant. )
__________ )
James A. Satchell Jr., pro se plaintiff.
Joshua I Miller, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department
of Justice, Washington, D.C., for defendant.
OPINION AND ORDER
BONILLA, Judge.
Plaintiff prose James A. Satchell Jr., on behalf of himself and VendoNet Inc., filed this
action against the United States alleging: patent infringement by various government agencies,
including the United States Postal Service (USPS); delays, i1Tegularities, and fraud committed
by the United States Patent and Trademark Office (USPTO) in examining VendoNet patents,
denying patent term extensions, and listing inaccurate patent infonnation; patent enforcement
and licensing interference by the United States Department of Justice (DOJ) in issuing an Office
of Legal Counsel (OLC) opinion on the Wire Act, 18 U.S.C. § 1084; and discrimination by the
United States against VendoNet as a small, minority-owned business. Plaintiffs seek $80 million
in damages.
Pending before the Court are plaintiffs' two motions to fmiher supplement their pleadings
pursuant to Rule 15( d) of the Rules of the United States Comi of Federal Claims (RCFC), 1 and
defendant's motion to dismiss the Complaint for lack of subject matter jurisdiction and for
failure to state a claim upon which relief can be granted pursuant to RCFC l 2(b )(1) and (b)(6),
1
On October 30, 2020, this Court granted plaintiffs' initial, unopposed RCFC l 5(d) motion.
1
respectively. For the reasons set fmih below, the Court grants plaintiffs' motions to supplement
the pleadings and defendant's motion to dismiss.
BACKGROUND
In the original Complaint, filed on December 26, 2019, plaintiffs allege "VendoNet Inc.
has been issued over 100 claims to cover 'internet vending machines/kiosk[s]. "' ECF 1 at 1.
The Complaint continues: "USPS has unjustly awarded IBM a[n] $80 million dollar contract
[with] knowledge and view of VendoNet's USPTO issued patents," and, fmiher, that other
federal (and state) government agencies used VendoNet's patents. Id. at 1-2. In addition to
patent infringement, the Complaint alleges that the USPS discriminated against VendoNet
in "avoid[ing] business" with the self-identified small, minority-owned business. Id. at 1.
Plaintiffs demand $80 million dollars in relief. ECF 1-2.
Submissions accompanying the Complaint identify three reissue patents (RE): RE41,543
('543 patent); RE43,656 ('656 patent); and RE44,791 ('791 patent). See ECF 1-1 at 1-2. Each
of these patents is a reissue based on U.S. Patent No. 5,822,216 ('216 patent). 2 See ECF 7-1 at
12. All four patents list Mr. Satchell and non-party Johnson A. Asumadu as the co-inventors.
See ECF 1-1 at l ; ECF 7-1 at 55, 97 ('543 patent); ECF 7-1 at 34, 99 ('656 patent); ECF 7-1 at
77 ('791 patent); ECF 7-1 at 16, 101 ('216 patent). Relevant here, all four patents were formally
assigned to and, thereafter, owned by VendoNet. 3 See ECF 7-1 at 97 ('543 patent); ECF 7-1 at
99 ('656 patent); ECF 7-1 at 77 ('791 patent)4; ECF 7-1 at 101 ('216 patent). By operation of
law, all four VendoNet patents expired on August 17, 2015, when the original patent (i.e. , the
'216 patent) expired. Compare 35 U.S.C. § 154(a)(2) and§ 251(a) with ECF 7-1 at 27 (priority
patent application filed August 17, 1995).
On Februaiy 10, 2020, with the Cami's approval, plaintiffs supplemented their
Complaint, asse1iing:
2 The '791 patent is a divisional of the '656 patent, which is a divisional of the '543 patent, which is a reissue of
the '216 patent. See ECF 7-1 at 89 (Cross-Reference to Related Application). Upon reissuance, the '216 patent
was surrendered by operation of law. 35 U.S.C. § 252; 37 C.F.R. § 1.1 78(a) (201 3).
3 For clarity, the four identified patents will be hereinafter collectively refened to as the "VendoNet patents."
4No formal assignment was separately recorded for the '791 patent. See ECF 7-1 at I 04; ECF 13 at 3. Instead,
by regulation, as a reissue of the '216 patent, the '791 patent was automatically granted to VendoNet as the cwTent
assignee. 37 C.F.R. § 1.172 (2013); see ECF 7-1 at 77. Moreover, as noted above, the '791 patent is a divisional
of the '656 patent, see ECF 7-1 at 77, which is also assigned to VendoNet. See ECF 7-1 at 99. As such, the
assignment of the '656 patent applies to the '791 patent. See MPEP § 306 (8th ed. Rev. 9, Aug. 2012) ("In the
case of a division or continuation application, a prior assignment recorded against the original application is
applied (effective) to the division or continuation application because the assignment recorded against the original
application gives the assignee rights to the subject matter common to both applications."), current version at
MPEP § 306 (91" ed. Rev. 10.2019, June 2020) (same).
2
USPS/IBM's (PS) use of "Internet vending machines/kiosk[s]" that connect to
[w]ebsites that display/utilize database information, which dispense physical
items upon/after payment is VendoNet's contention. Our additional focus[] is on
many other claims in our 3 USPTO issued patents, covering over 110 claims.
ECF 5 at 1. Augmenting their discrimination claim, plaintiffs alleged that USPTO delays
adversely impacted the small, minority-owned business' competitiveness in the marketplace. Id.
In filings dated May 6, and November 19, 2021 , plaintiffs again seek leave of the Com1
to further supplement their pleadings. ECF 15, 16. In sum and substance, plaintiffs reiterate
that the USPTO's delays and discriminato1y actions hmmed VendoNet's ability to profit in
the "internet gambling vending machines" industry by effectively devaluing their patented
technology. See, e.g. , ECF 15 at 1. Plaintiffs further allege that the DOJ's 2002 to 2021
regulatmy activities, including a 2011 OLC opinion addressing the Wire Act, interfered with
VendoNet's ability to enforce its patents and induced state lotteries to infringe the company' s
patents. See, e.g. , ECF 16 at 1-2. Also pending before the Com1 is the United States'
Februmy 24, 2020 motion to dismiss plaintiffs' Complaint for lack of subject matter jurisdiction
and failure to state a claim upon which relief can be granted. ECF 7.
ANALYSIS
A. Plaintiffs' Motions to Supplement Pleadings
Pleadings filed by pro se plaintiffs, and the allegations therein, must be construed
liberally. See Roche v. U.S. Postal Serv., 828 F.2d 1555, 1558 (Fed. Cir. 1987) ("Prose
petitioners m·e not expected to frame issues with the precision of a common law pleading.").
Accordingly, in evaluating the Complaint filed in this case and the accompanying submissions,
the Comt construes Mr. Satchell's factual asse11ions and legal arguments in the most generous
and plausible fashion. See Haines v. Kerner, 404 U.S. 519, 520 (1972) ("allegations of[a] prose
complaint ... [m·e] h[e]ld to less stringent standards than formal pleadings drafted by lawyers").
To that end, the Court previously granted Mr. Satchell's February 10, 2020 motion to
supplement the allegations in the original Complaint. To ensure a comprehensive evaluation of
plaintiffs' allegations in deciding the government's dispositive motion, the Comt similarly grants
Mr. Satchell' s May 6, and November 19, 2021 motions to further supplement pleadings in this
case, the substance of which is summarized above. See, e.g., Harrison v. United States, No. 19-
1785, 2020 WL 1492211, at *2 (Fed. Cl. Mar. 23, 2020) ("In considering Defendant's Motion to
Dismiss, the Court fully reviewed and considered all the arguments and factual allegations
contained in Plaintiffs Motion to Supplement the Record.").
B. Defendant's Motion to Dismiss
1. Lack of Capacity: VendoNet
On September 21, 2010, VendoNet registered in the State of Georgia as a domestic
for-profit corporation with its principal place of business located in Tuskegee, Alabama.
See ECF 7-1 at 5. According to the state registration documents, Mr. Satchell is listed as the
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Chief Executive Officer (CEO) and Corporate Secretary; Mr. Asumadu is listed as the Chief
Financial Officer (CFO). Id. The company was administratively dissolved on December 7,
2016, for failure to comply with annual registration and fee requirements. 5 See ECF 13 at 23-24.
Under Georgia state law, as of December 8, 2021, VendoNet's demise was complete, and the
company is no longer eligible to apply for reinstatement. See GA. CODE ANN. § 14-2-1422
(West 2016).
To pursue claims against the United States before this Court, corporations must be
represented by counsel. See RCFC 83.l(a)(3) ("An individual who is not an attorney may
represent oneself or one's immediate family, but may not represent a corporation, an entity,
or any other person in any proceeding before this comi." (emphasis added)). The Court's Rule
is strictly enforced without regard to VendoNet's dissolved status. See Talasila, Inc. v. United
States, 240 F.3d 1064, 1066-67 (Fed. Cir. 2001) (per cmiam) (successor-in-interest to a dissolved
corporation's claimed assets may not represent those interests prose if, under state law,
dissolved corporations continue to exist for a fixed period of time beyond the date of dissolution
for the purpose of prosecuting, in the corporation's name, any action or proceeding by the
dissolved corporation). At the time this action was filed (i.e., December 26, 2019), under
Georgia law, VendoNet continued to exist for the purpose of winding up its business (GA. CODE
ANN.§ 14-2-1421(c) (West 2019)), and it could have sought reinstatement under Georgia's five­
year wind-up period (§ 14-2-1422(a)). Mr. Satchell is not an attorney, see ECF 8 at 18, 19-20,
and, thus, cannot represent VendoNet in this matter.
Initially, the Court contemplated affording VendoNet an opportunity to retain counsel
prior to rnling upon the pending motion to dismiss. Ultimately, however, the Court concluded
that such an exercise would be futile. First, as noted above, as of December 8, 2021, VendoNet's
demise is complete and the company no longer exists for any purpose. As such, it lacks capacity
to litigate this action. 6 See Gas Pump, Inc. v. Gen. Cinema Beverages ofN Florida, Inc.,
12 F.3d 181 (11th Cir. 1994) (per curiam) (corporation lacks capacity under Georgia law to
initiate federal antitrust action after statutory wind-up period expired). Second, as explained
below, Mr. Satchell lacks standing to bring this action in his own right. Third, also explained
below, the claims alleged, construed liberally, either lack merit or are beyond the Court's
prescribedjmisdiction. Accordingly, dismissal is appropriate. See, e.g., Buel, Inc. v. United
States, 153 Fed. Cl. 402, 403-04 (2021) ("Where a corporate-plaintiff fails to obtain counsel, the
ordinary remedy is to dismiss its complaint for lack of prosecution." (citations omitted)).
5
VendoNet previously registered in Georgia as a domestic for-profit corporation with its principal place of business
in Tuskegee, Alabama, on December 21, 2000; it was thereafter administratively dissolved effective July 9, 2005.
See ECF 7-1 at 7-8. In those state registration documents, Mr. Satchell is listed as the CEO and CFO; non-party
Patricia Satchell is listed as the Corporate Secretary. Id. at 7.
6
lt is unfortunate that the five-year wind-up period expired during the pendency of this action, prior to the Court's
resolution of this issue. Nonetheless, Mr. Satchell was placed on actual notice of RCFC 83. l(a)(3) and the need to
retain counsel for VendoNet with the December 24, 2020 filing of the United States' motion to dismiss, nearly a
year before the expiration of the five-year statutory period. See ECF 7 at 13-14.
4
2. Lack of Standing: Mr. Satchell
Title 28, United States Code, Section 1498 provides in relevant part:
Whenever an invention described in and covered by a patent of the United States
is used or manufactured by or for the United States without license of the owner
thereof or lawful right to use or manufacture the same, the owner's remedy
shall be by action against the United States in the United States Corni of Federal
Claims for the recovery of his reasonable and entire compensation for such use
and manufacture.
28 U.S.C. § 1498(a) (emphasis added). The plain language of the governing statute
makes clear that only patent owners have standing to bring infringement actions against
the United States in this Court. Cf Paradise Creations, Inc. v. UV Sales, Inc. , 315 F.3d
1304, 1309 (Fed. Cir. 2003) ("(I]n order to assert standing for patent infringement, the
plaintiff must demonstrate that it held enforceable title to the patent at the inception of the
lawsuit." (citing cases)).
In this case, as documented above, at all times relevant hereto, ownership in and
title to all the patents at issue were assigned to VendoNet. These assignments divested
co-inventors Messrs. Satchell and Asumadu of standing to bring this patent infringement
action. See Israel Bio-Eng 'g Project v. Amgen, Inc. , 475 F.3d 1256, 1264-68 (Fed. Cir.
2007) (assignment of interest in patent conveys ownership and standing to sue for patent
infringement to the assignee); Lans v. Digit. Equip. Corp., 252 F .3d 1320, 1328 (Fed. Cir.
2001) (" If a paiiy lacks title to a patent, that paiiy 'has no standing to bring an
infringement action' under that patent." (quoting FilmTec Corp. v. Allied-Signal, Inc.,
939 F.2d 1568, 1571 (Fed. Cir. 1991)).
VendoNet's administrative dissolution does not change the standing analysis. At the time
the Complaint was filed, under Georgia state law, VendoNet could have sought reinstatement to
pursue the asse1ied claims of patent infringement as the sole patent owner. The company also
could have (re)assigned title and ownership back to Messrs. Satchell and/or Asumadu. Neither
took place. Nor is there any basis upon which the Corni can find that reversion could have or
did occur. Indeed, the Assignment and Assumption Agreement executed by Messrs. Asumadu
and Satchell on September 28, and October 10, 2010, respectively, does not include a reversion
clause. See Assignment and Assumption Agreement (recorded Oct. 13, 2010) (Reel/Frame:
025126/0742 to 0747), available at https://assignment.uspto.gov/patent/index.html#/patent/
search/resultAbstract?id=RE43656&type=patNum. It is too late now. See Gas Pump, Inc.,
12 F.3d at 181 (corporation cannot assign claims to sole shareholder after statutory wind-up
period expires).
3. Lack of Merit: Patent Infringement Claims
"To survive a motion to dismiss under Rule 12(b)(6), a complaint must 'contain sufficient
factual matter, accepted as true, to "state a claim to relief that is plausible on its face."' Bot M8
LLC v. Sony Corp. ofAm. , 4 F.4th 1342, 1352 (Fed. Cir. 2021) (quoting Ashcroft v. Iqbal,
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556 U.S. 662, 678, (2009) (quoting Bell Atlantic Cmp. v. Twombly, 550 U.S. 544, 570 (2007))).
To satisfy this standard, a plaintiff must plead facts "'that allow[] the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged."' Id. In assessing
the motion to dismiss, moreover, "the comt must accept as true the complaint's undisputed
factual allegations and should construe them in a light most favorable to the plaintiff."
Cambridge v. United States, 558 F.3d 1331, 1335 (Fed. Cir. 2009) (citing cases).
In patent cases, more specifically, although "[a] plaintiff is not required to plead
infringement on an element-by-element basis," the complaint must present "factual allegations
that, when taken as true, aiticulate why it is plausible that the accused product infringes the
patent claim." Bot MB LLC, 4 F.4th at 1352, 1353. " [R]eciting the claim elements and merely
concluding that the accused product has those elements" is not sufficient to state a plausible
infringement claim. Id. The complaint must contain sufficient facts to "place the 'potential
infringer . . . on notice of what activity ... is being accused of infringement. "' Nalco Co. v.
Chem-Mod, LLC, 883 F.3d 1337, 1350 (Fed. Cir. 2018) (quoting K-Tech Telecomm. v. Time
Warner Cable, Inc., 714 F.3d 1277, 1284 (Fed. Cir. 2013)).
The Complaint filed in this case does not satisfy these basic pleading requirements.
In sum and substance, Mr. Satchell takes issue with an unspecified multimillion dollar USPS
contract presumably awarded to IBM involving vending machines/kiosks that somehow infringe
one or more of the VendoNet patents. Mr. Satchell fmther alleges that other government
agencies (federal and state) somehow infringe the VendoNet patents in the areas of public
transpmtation and lotteries. These generic allegations are devoid of the necessary specificity
regarding the identification of the asserted patent claims and the infringing products, let alone
how the unspecified products purpmtedly infringe the VendoNet patents. At bottom, the
Complaint fails to provide the government fair notice of what the infringement claims are
and the grounds upon which they rest.
4. Lack of Subject Matter Jurisdiction: Discrimination, Tmt, and APA Claims
The remaining allegations in the Complaint are outside the Court's jurisdiction and,
accordingly, must be dismissed. First, Mr. Satchell generally alleges that the United States
discriminated against him and VendoNet as a small, minority-owned business. Such claims
do not have the requisite nexus to a money-mandating statute and, thus, fall outside of this
Comt's jurisdiction. See Snowton v. United States, 216 F.App'x 981, 983 (Fed. Cir. 2007)
("The Due Process and Equal Protection clauses do not create []aright [to money damages] and
therefore claimed violations of these clauses do not fall within the jurisdiction of the Comt of
Federal Claims."); Johnson v. United States, 135 Fed. CL 565, 575 (2017) (civil rights claims
fall within the exclusive jurisdictional province of federal district courts).
Next, Mr. Satchell alleges that the USPTO engaged in a pattern of delays, irregularities,
and fraud in examining the VendoNet patents, and thereafter denied patent te1m extensions and
listed inaccurate patent information. Relatedly, Mr. Satchell fmther claims that the 2011 OLC
opinion on the Wire Act interfered with VendoNet's patent enforcement and licensing abilities.
These claims either sound in tort or constitute Administrative Procedure Act (APA) challenges.
Under either interpretation, jurisdiction lies exclusively in federal district court. See
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Zainulabeddin v. United States, 138 Fed. Cl. 492, 504-05 (2018) ("Claims of fraud, conspiracy,
harassment, breach of fiduciary duty, and negligence sound in tort .... [U]nder the Federal T01t
Claims Act, 28 U.S.C. §§ 1346(b)(l), 2671-2680, jurisdiction over t011 claims against the United
States lies exclusively in federal district courts." (citing cases)); id. at 506-07 (review of federal
agency actions under the APA, a non-money-mandating statute, lies exclusively in federal
district courts).
Mr. Satchell's eff01ts to challenge the 2011 OLC opinion is fmther complicated by the
fact that the validity of the 2011 OLC opinion was conclusively resolved by the United States
Comt of Appeals for the First Circuit. See Whether Proposals by lllinois and New York to Use
the Internet and Out-ofState Transaction Processors to Sell Lottery Tickets to In-State Adults
Violate the Wire Act, 35 Op. O.L.C. 134 (2011) (on1ine sales of state lotte1y tickets not covered
by Wire Act), rev 'd, Reconsidering Whether the Wire Act Applies to Non-Sports GambUng,
42 Op. O.L.C. _ , 2018 WL 7080165 (Nov. 2, 2018), set aside, New Hampshire Lotte,y
Comm 'n v. Barr, 386 F.Supp.3d 132 (D.N.H. 2019), aff'd in part, vacated in part sub nom.
New Hampshire Lottery Comm 'n v. Rosen, 986 F.3d 38 (1st Cir. 2021). That decision is not
subject to collateral attack in this Court. See Zainulabeddin, 138 Fed. Cl. at 509 (citing
Shinnecock Indian Nation v. United States, 782 F.3d 1345, 1352 (Fed. Cir. 2015); Vereda, Ltda.
v. United States, 271 F.3d 1367, 1375 (Fed. Cir. 2001)).
CONCLUSION
For the reasons stated above, plaintiffs' motions to fmther supplement their pleadings
(ECF Nos. 15 and 16) are GRANTED and defendant's motion to dismiss for lack of subject
matter jurisdiction and failure to state a claim upon which relief can be granted (ECF No. 7)
is GRANTED. The Clerk is directed to ENTER judgment accordingly. No costs.
IT IS SO ORDERED.
mando l>. Bonilla
Judge
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