Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-01539/USCOURTS-casd-3_17-cv-01539-2/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:0271 Patent Infringement

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

STRATEGIC OPERATIONS, INC.,

Plaintiff,

v.

BREA K. JOSEPH, et al.,

Defendants.

Case No.: 17-CV-1539-JLS (NLS) 

ORDER GRANTING DEFENDANTS’ 

MOTION TO DISMISS

(ECF No. 10)

Presently before the Court is Defendants Brea K. Joseph and KBZ FX, Inc.’s Motion 

to Dismiss, (“MTD,” ECF No. 10). Also before the Court is Plaintiff Strategic Operations, 

Inc.’s Response in Opposition to the Motion, (“Opp’n,” ECF No. 11), and Defendants’ 

Reply in Support of the Motion, (“Reply,” ECF No. 13). The Court vacated oral argument 

on the Motion and took the matter under submission without oral argument. (ECF No. 12.) 

After considering the Parties’ arguments and the law, the Court rules as follows.

BACKGROUND 

Plaintiff Strategic Operations, Inc. (“StOps”) filed a Complaint against Brea Joseph, 

Kasey Erokhin, KBZ FX, and KBX FX, Inc. (“Compl.,” ECF No. 1.) Plaintiff brings 

causes of action of patent infringement, breach of nondisclosure agreement, and unfair 

competition. 

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Plaintiff is the executive licensee of United States Patent No. 8,840,403 (“the ’403 

patent”). (Id. ¶ 17.) The ’403 patent “pertains to devices and methods for simulating 

realistic-looking, dynamic injuries that a person may receive during a traumatic event.” 

(Id. ¶ 18.) For example, the devices claimed in the patent “can be worn by ‘role players’

during a simulated traumatic event to mimic a plurality of different combat-related 

bleeding wounds and internal injuries and allow first responders to perform medical 

treatment on the same.” (Id.)

Defendants Joseph and Erokin were previously employed by Plaintiff as injury 

simulation makeup artists. (Id. ¶ 19.) During their employment, Joseph and Erokin were 

exposed to role players wearing and using the “Cut Suit,” which is one of Plaintiff’s humanworn trauma and medical training products. (Id. ¶¶ 19–20.) The “Cut Suit” embodies or 

uses one or more inventions claimed in the ’403 patent. (Id. ¶ 19.) Plaintiff previously 

sued Joseph and Erokin for breach of loyalty, interference with employment relationship, 

and violation of the Uniform Trade Secrets Act. (Id. ¶ 22.) As part of the settlement 

agreement in that case, “Joseph and Erokhin agreed to refrain from using Strategic 

Operations’ confidential and proprietary technology and trade secret information for any 

purpose.” (Id. ¶ 23.) 

In June 2011, Joseph and Erokin left Plaintiff’s company and formed KBZ FX which 

is “a special effects medical training support system,” which provides “injury simulations.” 

(Id. ¶ 24.) One of KBZ FX’s products is a “trauma training kit” (hereinafter, “TTK”), 

which is “a human body replica suit used to perform actual treatments on for medical 

training.” (Id. ¶ 25.) Plaintiff alleges the TTK infringes the ’403 patent. Plaintiff also 

brings causes of action for breach of nondisclosure agreement and unfair competition. 

Finally, Plaintiff alleges Defendants have failed to respect the corporate form of KBZ FX. 

Defendants Joseph and KBZ FX, Inc. move to dismiss Plaintiff’s infringement claim 

and alter ego allegations pursuant to Federal Rule of Civil Procedure 12(b)(6). 

LEGAL STANDARD 

Federal Rule of Civil Procedure 12(b)(6) permits a party to raise by motion the 

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defense that the complaint “fail[s] to state a claim upon which relief can be granted,” 

generally referred to as a motion to dismiss. The Court evaluates whether a complaint 

states a cognizable legal theory and sufficient facts in light of Federal Rule of Civil 

Procedure 8(a), which requires a “short and plain statement of the claim showing that the 

pleader is entitled to relief.” Although Rule 8 “does not require ‘detailed factual 

allegations,’ . . . it [does] demand more than an unadorned, the-defendant-unlawfullyharmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 

Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In other words, “a plaintiff’s obligation to 

provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and 

conclusions, and a formulaic recitation of the elements of a cause of action will not do.” 

Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). A 

complaint will not suffice “if it tenders ‘naked assertion[s]’ devoid of ‘further factual 

enhancement.’” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 557). 

In order to survive a motion to dismiss, “a complaint must contain sufficient factual 

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Id. (quoting 

Twombly, 550 U.S. at 570); see also Fed. R. Civ. P. 12(b)(6). A claim is facially plausible 

when the facts pled “allow the court to draw the reasonable inference that the defendant is 

liable for the misconduct alleged.” Iqbal, 556 U.S. at 677 (citing Twombly, 550 U.S. at 

556). That is not to say that the claim must be probable, but there must be “more than a 

sheer possibility that a defendant has acted unlawfully.” Id. Facts “‘merely consistent 

with’ a defendant’s liability” fall short of a plausible entitlement to relief. Id. (quoting 

Twombly, 550 U.S. at 557). Further, the Court need not accept as true “legal conclusions” 

contained in the complaint. Id. This review requires context-specific analysis involving 

the Court’s “judicial experience and common sense.” Id. at 678 (citation omitted). 

“[W]here the well-pleaded facts do not permit the court to infer more than the mere 

possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the 

pleader is entitled to relief.’” Id. 

/ / / 

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ANALYSIS 

I. Patent Infringement 

Plaintiff attached as an exhibit to its Complaint screenshots of KBZ FX’s website. 

The first image is one of a skeleton with “TTK: Trauma Training Kit” written on top of the 

image. (Compl. 29.)1 The text above the image provides: 

Introducing KBZ FX’s Trauma Training Kit (TTK). The TTK is an effective 

and economical way to train your First Responders, Medical Professionals, 

and Combat Medics on live Role Players. In the past, in-field medical 

procedure training has been limited to practicing on rescue dummies and 

mannequins with limited audio and visual feedback resulting in a lack of 

realism. The TTK is a wearable chest prosthetic as well as a line of limb 

attachments that are worn by a live person that can give immediate realistic 

feedback in real time training scenarios. Please contact us 

(KBZFXmakeup1@gmail.com) for options and pricing. 

(Id.) Below are more images of products, which appear to be part of the TTK. These 

images include an image of a “skin vest,” an image of “rib cage and organs” depicting 

simulated organs, followed by multiple other images of “attachments” which are products 

for all body parts. (Id. at 30–43.)

Defendants’ main argument is that these images from the website do not depict a 

product made, used or sold by KBZ but reflect “old marketing materials that were briefly 

posted on KBZ’s website from January through April[] 2017 purely for marketing 

purposes.” (MTD 6.) KBZ’s actual product “lacks an outer raiment having at least one 

fluid reservoir (as required by the ’403 patent) and lacks a cavity for containing prosthetic 

internal human organs (as required by the ’403 patent).” (Id. at 6–7.) For these reasons, 

Defendants argue they do not infringe the ’403 patent.

A. Attached Declarations 

Defendants state they have never sold or offered for sale any infringing product, and 

include declarations by Ms. Joseph to this effect. (ECF Nos. 10-2; 13-1.) In a footnote, 

1 Pin citations refer to the CM/ECF page numbers electronically stamped at the top of each page. 

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Defendants ask the Court to consider the declarations when analyzing the motion to 

dismiss. (MTD 6 n.1.) 

As a general rule, “a district court may not consider any material beyond the 

pleadings in ruling on a Rule 12(b)(6) motion.” Lee v. City of Los Angeles, 250 F.3d 668, 

688 (9th Cir. 2001). The only exceptions to this rule are for (1) material which is submitted 

with or necessarily relied on in the complaint and (2) matters of public record. Id. at 688–

89. The attached declarations are not pleadings, see Fed. R. Civ. P. 7(a), were not attached

to or relied on in the Complaint, nor are they a matter of public record. To consider the 

declarations would convert the Motion to Dismiss into a motion for summary judgment, 

and the Court declines to do so at this stage. Therefore, the Court cannot consider the 

declarations here.2 See Cooper v. Pickett, 137 F.3d 616, 623 (9th Cir. 1997) (refusing to 

consider declarations submitted in support of a motion to dismiss because they were not 

“referenced in the complaint” or matters of public record).

B. “Offer for Sale” Analysis

An act of direct patent infringement occurs when an entity “without authority makes, 

uses, offers to sell, or sells any patented invention, within the United States or imports into 

the United States any patented invention during the term of the patent.” 35 U.S.C. § 271(a). 

The issue here is whether Plaintiff has sufficiently alleged Defendants offered for sale an 

infringing product. The statute broadly defines “offer for sale” or “offer to sell” as “that in 

which the sale will occur before the expiration of the term of the patent.” 35 U.S.C. 

§ 271(i). The Federal Circuit has held an “offer to sell” occurs when the alleged infringer

sends “a description of the allegedly infringing merchandise and the price at which it can 

be purchased.” 3D Sys., Inc. v. Aarotech Labs, Inc., 160 F.3d 1373, 1379 (Fed. Cir. 1998). 

The Federal Circuit later revisited the issue and defined “‘offer to sell’ liability according 

2 For the same reasons, the Court does not consider the declaration and exhibits attached to Plaintiff’s 

Opposition. (ECF No. 11-1.) See also Frenzel v. AliphCom, 76 F. Supp. 3d 999, 1009 (N.D. Cal. 2014) 

(noting that “[i]t is axiomatic that the complaint may not be amended by the briefs in opposition to a 

motion to dismiss”).

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to the norms of traditional contractual analysis.” Rotec Indus., Inc. v. Mitsubishi Corp., 

215 F.3d 1246, 1254–55 (Fed Cir. 2000). The next year, the Federal Circuit reaffirmed 

this general definition after interpreting the Supreme Court’s opinion in Pfaff v. Wells 

Electronics, Inc., 525 U.S. 55 (1998). See Group One, Ltd. v. Hallmark Cards, Inc., 254 

F.3d 1041, 1046 (Fed. Cir. 2001). The court held the language from Pfaff “strongly 

suggests that the offer must meet the level of an offer for sale in the contract sense, one 

that would be understood as such in the commercial community. Such a reading leaves no 

room for ‘activity which does not rise to the level of a formal “offer” under contract law 

principles.’” Id. at 1046–47. The court “note[d] in passing that contract law traditionally 

recognizes that mere advertising and promoting of a product may be nothing more than an 

invitation for offers, while responding to such an invitation may itself be an offer.” Id. at 

1048 (citing Restatement (Second) of Contracts § 26 (1981)). 

Here, accepting all Plaintiff’s allegations as true, and even disregarding Defendants’ 

declarations, the Court finds the posting of TTK, as depicted exhibit 2 to the Complaint, is 

not an “offer for sale.” There is no information on pricing of the product; instead the post 

specifically invites the consumer to send an email to request pricing information. This is 

merely an “invitation for offers.” Id. The posting is not sufficiently alleged to be an “offer 

for sale.”

The Complaint specifically alleges “[d]espite being informed of StOps’ ’403 Patent 

and StOps concerns that the TTK infringes the ‘403 Patent, Joseph, Erokhin, KBZ FX, and 

now KBZ FX, INC. nevertheless continue to make, use, sell, and offer for sale, the TTK.” 

(Compl. ¶ 29.) But this is merely a conclusory allegation, and, without the attached exhibit, 

has no support.3 Because Plaintiff has failed to sufficiently plead an element of patent 

infringement, the Court GRANTS Defendants’ Motion to Dismiss this claim.

3

 Further, Defendants admit they do make a product, which is not the product depicted on the website 

(TTK), but argue that it is not infringing. (MTD 6 (referring to “the actual KBZ product”).) Plaintiff has 

not alleged that this product is sold or offered for sale by Defendants, thus the Court does not analyze this 

unspecified product. 

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II. Alter Ego Allegations

Plaintiff alleges: 

On information and belief, Defendants Erokhin, Joseph, KBZ 

FX, and KBZ FX, Inc., and each of them, among other things: 

(a) commingled funds and other assets; (b) treated corporate 

assets as personal assets; (c) failed to observe corporate 

formalities and adhere to corporate bylaws; (d) used the 

corporate structure as a subterfuge for illegal transactions; and 

(e) were undercapitalized; and, therefore, there exists a unity of 

interest and ownership between each of these named Defendants 

such that Defendant KBZ FX, Inc. is the Alter Ego of Defendants 

Erokhin, Joseph, KBZ FX and that any separateness between 

them has ceased to exist and that to adhere to the fiction of their 

separate identities would result in injustice. 

(Compl. ¶ 9.) Defendants move to dismiss these allegations because they are not pled with 

particularity. (MTD 8.) 

“Conclusory allegations of ‘alter ego’ status are insufficient to state a claim.” 

Neilson v. Union Bank of Cal., N.A., 290 F. Supp. 2d 1101, 1116 (C.D. Cal. 2003). “Rather, 

a plaintiff must allege specifically both the elements of alter ego liability, as well as facts 

supporting each.” Id. These elements are: “(1) such a unity of interest and ownership 

exists that the personalities of the corporation and individual are no longer separate, and 

(2) an inequitable result will follow if the acts are treated as those of the corporation alone.” 

RRX Indus., Inc. v. Lab–Con, Inc., 772 F.2d 543, 545–46 (9th Cir. 1985). In analyzing the 

doctrine, courts consider factors such as: 

commingling of funds and other assets of the two entities, the 

holding out by one entity that it is liable for the debts of the other, 

identical equitable ownership in the two entities, use of the same 

offices and employees, and use of one as a mere shell or conduit 

for the affairs of the other. 

Sonora Diamond Corp. v. Superior Court, 83 Cal. App. 4th 523, 538–39 (Ct. App. 2000) 

(internal quotations omitted).

For the first alter ego element, Plaintiff merely alleges the basic Sonora factors: 

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mixing funds, lack of corporate formalities, and undercapitalization. (Compl. ¶ 9.) 

Plaintiff provides no facts in support of these allegations. For the second alter ego element, 

Plaintiff alleges “to adhere to the fiction of [Defendants’] separate identities would result 

in injustice.” (Compl. ¶ 9.) Again, this is conclusory, has no support, and Plaintiff has not 

alleged how or why injustice would result if the corporate veil is not pierced. It is also 

unclear to which cause of action the alter ego allegations apply, and why piercing the 

corporate veil is necessary for an equitable result. Plaintiff has not sufficiently pled either 

element of alter ego and the Court GRANTS Defendants’ Motion to Dismiss the alter ego 

allegations. 

CONCLUSION 

For the foregoing reasons, the Court GRANTS Defendants’ Motion to Dismiss. The 

Court GRANTS Plaintiff leave to amend its Complaint. Plaintiff MAY file an amended 

complaint on or before thirty (30) days of the electronic docketing of this Order. Should 

Plaintiff choose not to file an amended complaint by this time, this case will proceed on 

the remaining allegations. 

IT IS SO ORDERED. 

Dated: August 13, 2018

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