DocketNumber: No. C.A. 12-256-RGA
Citation Numbers: 288 F.R.D. 84
Judges: Andrews
Filed Date: 12/6/2012
Status: Precedential
Modified Date: 11/26/2022
MEMORANDUM OPINION
Defendant Dow Agrosciences LLC (“DAS”) moves to dismiss this suit under both Fed.R.Civ.P. 12(b)(6) and Fed.R.Civ.P. 12(b)(7). Plaintiffs Bayer Cropscience AG and Bayer S.A.S. (“Bayer”) filed a patent infringement suit against DAS. (D.I. 1). The seven patents-in-suit claim a soybean technology known as a “Triple Gene Event,” (see D.I. 9, p. 2; D.I. 11, p. 1) which comprises three soybean genes genetically engineered for herbicide resistance. Bayer- alleges that DAS plans to commercialize the soybean technology in violation of its patent rights.
Bayer granted two licenses relevant to this litigation.
MS Tech in turn entered into an agreement with DAS, with MS Tech sublicensing its licensed Bayer patent interests to DAS (“the MS Tech-DAS Sublicense”). (D.I. 11, Exh. C at ¶¶4.1, 4.5). That agreement
DAS now moves to dismiss Bayer’s complaint under Rule 12(b)(6) and Rule 12(b)(7), arguing that (1) Bayer failed to state a claim for which relief can be granted, and (2) Bayer failed to join and cannot join MS Tech, who is a necessary and indispensable party to the action.
DISCUSSION
I. Motion to Dismiss under Rule 12(b)(6)
DAS first moves to dismiss under Rule 12(b)(6), arguing that Bayer failed to state a claim for which relief can be granted. When considering a motion to dismiss, the Court must accept as true all well-pleaded facts of the complaint. Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 642 n. 1, 128 S.Ct. 2131, 170 L.Ed.2d 1012 (2008). DAS argues that its actions in connection with the soybean technology are validly licensed, and therefore, it cannot infringe Bayer’s patents. This argument, however, asserts a factual defense. It is not an attack on the pleadings and is misplaced within the context of a 12(b)(6) motion. Bayer’s claim for patent infringement “need only plead facts sufficient to place the alleged infringer on notice as to what he must defend” to survive this motion. See In re Bill of Lading Transmission and Processing System Patent Litigation, 681 F.3d 1323, 1336 (Fed.Cir. 2012); McZeal v. Sprint Nextel Corp., 501 F.3d 1354, 1357 (Fed.Cir.2007). DAS makes no argument that Bayer failed to meet this standard. For this reason, DAS’s motion to dismiss for failure to state a claim is denied.
II. Motion to Dismiss under Rule 12(b)(7)
DAS moves to dismiss under Rule 12(b)(7), arguing that MS Tech is both a necessary and indispensable party who cannot be joined to this lawsuit. Rule 19 determines when joinder of a particular person is required. This involves a three-part test: (1) the Court must determine whether the absent party is a necessary party; (2) if an absent party is necessary, the Court must then determine whether the absent party may be joined to the case; and (3) if the absent party cannot be joined, the Court must determine whether the absent party is indispensable. See HB Gen. Corp. v. Manchester Partners, L.P., 95 F.3d 1185, 1190 (3d Cir.1996). If the absent party is indispensable, the action must be dismissed. Id.
The Court must first determine whether MS Tech is a necessary party to Bayer’s infringement suit.
At first glance, it would appear that MS Tech’s absence from this case indeed places it at risk of suffering significant losses. The amended MS Tech-DAS License makes apparent that there is significant ongoing collaboration between DAS and MS Tech to commercialize the soybean technology. Bayer seeks to shut that collaboration down. Party prejudice, however, is mitigated when the interests of the absent party are adequately protected by those who are present. See Janney Montgomery Scott, Inc. v. Shepard Niles, Inc., 11 F.3d 399, 410 (3d Cir. 1993); Surgical Laser Technologies, Inc. v. Laser Indus., Ltd., 1991 WL 255827 (E.D.Pa. 1991). This is the ease here. MS Tech’s interests are aligned with DAS, and DAS is perfectly capable of protecting their joint interests. The prejudice DAS argues will befall MS Tech by virtue of its absence will flow from the precise result that DAS seeks to avoid. Namely, DAS will use its litigation resources to legitimize the soybean technology collaboration with MS Tech. DAS will advance the position that the Bayer-MS Tech License grants MS Tech the right to commercialize the soybean technology and also to sublicense in furtherance of that effort. DAS is clearly a sophisticated consumer of legal services and has chosen able counsel in furthering its goals of this litigation. DAS will thus be competently advancing virtually the same legal and factual positions that MS Tech would advance if present. All of this strongly suggests that MS Tech’s interests in the commercial development of the soybean technology are well-protected.
DAS also points out that MS Tech may be subject to a suit litigating these same exact issues should Bayer choose to file a later action against MS Tech. Arguably, this raises the possibility of inconsistent interpretations of the various licensing agreements and corresponding inconsistent judgments, making it important for MS Tech to be joined in the suit. Any suit between Bayer and MS Tech, however, would be subject to arbitration, as would, for that matter, any suit between DAS and MS Tech. Only the current dispute between Bayer and DAS is not subject to an arbitration clause, as there is no agreement between them. These arbitration provisions make it unlikely that the dispute would ever be resolved in a single venue, presenting a compelling reason to allow these two parties to litigate their differences without forcing MS Tech into the case. DAS has argued that the existence of the arbitration provisions is irrelevant as to whether MS Tech is a necessary party to the dispute, and further, no party has yet exercised the right to arbitrate, thus making it speculative to assume that the issues would necessarily be resolved in different venues. The Court, however, considers practical considerations when confronted with a 12(b)(7) motion. As a practical matter, it is not probable that these arbitration provisions would go unexercised should MS Tech join the case. The addition of MS Tech would thus likely do nothing to lessen the risk of inconsistent judgments or to promote efficiency, as any dispute between MS Tech and one of the current parties would most likely be resolved within the
The Court’s finding that MS Tech is not a necessary party is bolstered by the fact that MS Tech has not claimed an interest in this suit or moved to intervene despite being aware of the suit’s filing. An absent party’s decision to forgo intervention may indicate that the party does not deem its own interests substantially threatened by the litigation. See United States v. San Juan Bay Marina, 239 F.3d 400, 406-07 (1st Cir.2001); United States ex rel. Morongo Band of Mission Indians v. Rose, 34 F.3d 901, 908 (9th Cir.1994) (holding that, because the absent party “did not feel that it was necessarily in his interest to remain a party in this action,” “it is inappropriate for one defendant to attempt to champion [the] absent party’s interests”).
For all these reasons, the Court denies DAS’s motion to dismiss under Rule 12(b)(7).
. The following discussion of the two license agreements is meant to give background and is not intended as a definitive interpretation of them.
. The Bayer-Stine License allows "affiliates” of Stine to commercialize the soybean technology, and MS Tech is an affiliate of Stine. MS Tech may thus be free to commercialize the soybean technology according to the Bayer-Stine License, but may not be allowed to sublicense commercially.
. Bayer argues that Rule 19(a)(1) expressly excludes from the definition of a necessary party those whose joinder would deprive the court of subject-matter jurisdiction. Bayer argues that because the arbitration agreement between MS Tech and Bayer would divest the Court of subject-matter jurisdiction should MS Tech be joined to the case, MS Tech cannot be a necessary party and the motion should be denied. Bayer, however, misreads the rule. The cited subsection merely implies the absence of a necessary party whose presence would destroy subject matter jurisdiction should be analyzed to see whether that absent party is indispensable. See Estate of McFarlin ex rel. Laass v. City of Storm Lake, 277 F.R.D. 384, 390 (N.D.Iowa 2011). To hold otherwise would create an exception that swallows the rule. The Rule 19 analysis often occurs in diversity cases where an absent, nondiverse party has an important interest in the subject matter of the case, but cannot be joined because the absent party’s joinder would destroy diversity jurisdiction. See, e.g., Janney Montgomery Scott, Inc. v. Shepard Niles, Inc., 11 F.3d 399, 404 (3d Cir. 1993). According to Bayer, such a nondiverse party would render the Rule 19 analysis dead on arrival. The entire purpose of the Rule 19 analysis, however, is to analyze whether the case can go on without the absent party. It would thus be error to deny the 12(b)(7) motion because MS Tech’s presence would divest the court of jurisdiction. Rather, the Court should analyze the possible harms flowing from MS Tech's absence.
. MS Tech assuredly has knowledge of this suit, as the MS Tech-DAS Sublicense requires those parties to "fully cooperate with each other in the defense of any [patent] infringement suit[.]” (D.I. 11, Exh. Cat§ 10.4(a)).