Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_14-cv-01214/USCOURTS-azd-2_14-cv-01214-0/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 28:1441 Petition for Removal- Declaratory Judgement

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Wintrode Enterprises Incorporated,

Plaintiff, 

v. 

PSTL LLC, et al., 

Defendants.

No. CV-14-01214-PHX-DGC

ORDER 

Defendants GunVault, Inc. (“GunVault”), Thomas and Sharon Loeff, and Aaron 

and Jalyn Baker have filed a motion to dismiss pursuant to Federal Rule of Civil 

Procedure 12(b)(6). Doc. 11. The Court will deny the motion as moot.1

 

Defendant PSTL, LLC (“PSTL”) has filed a motion to join the motion to dismiss 

filed by Defendants GunVault, Inc., Thomas and Sharon Loeff, and Aaron and Jalyn 

Baker. Doc. 22. The Court will grant the motion. 

Plaintiff Wintrode Enterprises, Inc. (“Wintrode”) has filed a motion to remand 

pursuant to 28 U.S.C. § 1447(c). Doc. 23. The motion is fully briefed. The Court will 

grant the motion and remand the case to Maricopa County Superior Court. 

Defendants GunVault, PSTL, Thomas and Sharon Loeff, and Aaron and Jalyn 

Baker have filed a motion to transfer. Doc. 24. The Court will deny the motion as moot. 

 

1

 The request for oral argument is denied as to all pending motions because the issues have been fully briefed and oral argument will not aid the Court’s decision. See

Fed. R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 

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Wintrode has filed a motion to stay briefing on and consideration of Defendants’ 

motion to dismiss (Doc. 11) and motion to transfer (Doc. 24). Doc. 25. The Court will 

grant the motion in part and deny it in part. 

I. Background. 

Defendant Thomas Loeff owns two entities that are also defendants in this action, 

PSTL and ASP. Doc. 1-1, ¶ 20. On March 12, 1997, PSTL and ASP entered into an 

agreement (the “Assignment Agreement”) to assign PSTL’s interest in U.S. Patent No. 

5,161,396 to ASP. Id., ¶ 24. The Assignment Agreement did not include any reference 

to U.S. Patent No. 5,549,337 (“the ’337 Patent”). Id. No other agreement between PSTL 

and ASP assigned any interest in the ’337 Patent. On November 23, 2004, GunVault 

agreed to purchase the ’337 Patent from Lazy Red Dog, LLC, which is another entity 

owned by Loeff. Id., ¶ 30. Lazy Red Dog, LLC obtained its interest in the ’337 Patent 

from ASP. Id., ¶ 32. Wintrode alleges, however, that Lazy Dog, LLC never owned the 

’337 Patent due to a chain of title error. Id., ¶¶ 31-32, 34. 

Believing that it owned the ’337 Patent, GunVault filed a patent infringement 

action against Wintrode on August 29, 2012 in the United States District Court for the 

Central District of California. Id., ¶ 35. During the course of discovery, GunVault was 

unable to produce a complete chain of title for the ’337 Patent (Id., ¶ 36) and Wintrode 

filed a motion to dismiss the patent infringement action on the basis that GunVault did 

not own the ’337 Patent (id., ¶ 38). GunVault opposed Wintrode’s motion, contending 

that the defect in the chain of title was due to a scrivener’s error or, in the alternative, that 

the defective link in the chain of title could be reformed under Arizona law. Id., ¶ 39. In 

connection with the motion to dismiss, Loeff provided a declaration in which he stated: 

“If the Court deems it necessary, it should feel free to reform [the Assignment 

Agreement] to include explicit reference to the assignment of all interest in Patent no. 

5,549,337. I have no objection to this.” Id., ¶ 40. Wintrode replied that GunVault could 

not meet the standard for reformation of the Assignment Agreement and that any attempt 

to reform the Assignment Agreement would be an end run around the nunc pro tunc

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doctrine, which provides that acquiring retroactive ownership of a patent is insufficient to 

confer standing to sue for patent infringement. Id., ¶ 41. 

The district court denied Wintrode’s motion to dismiss and entered an order 

staying the patent infringement action for thirty days to permit GunVault to file a separate 

action in state court to reform the Assignment Agreement. Id., ¶ 42. The district court’s 

order stated that if reformation was granted, the district court would then rule on 

Wintrode’s argument that reformation was an end run around the nunc pro tunc doctrine. 

Id. On April 3, 2014, GunVault filed a complaint in Orange County Superior Court 

against PSTL and Loeff for declaratory judgment seeking reformation of the Assignment 

Agreement between PSTL and ASP. Id., ¶ 43. 

Wintrode instituted this action in Maricopa County Superior Court on April 14, 

2014, to “protect its interests as Arizona, not California, is the proper venue for any 

determination as to the reformation question.” Id. Wintrode named PSTL, GunVault, 

Thomas and Sharon Loeff, and Aaron and Jalyn Baker as defendants. Wintrode’s 

complaint seeks a declaration that reformation of the Assignment Agreement is improper 

as the statute of limitations bars reformation, the Assignment Agreement did not create a 

valid assignment, GunVault is not a legitimate successor in interest to the ‘337 Patent, 

and GunVault cannot meet its burden of showing that reformation as an available remedy 

under Arizona law. Wintrode’s complaint also asserts state law claims for unfair 

competition, consumer fraud, and conspiracy. Defendants removed the case to federal 

court on June 2, 2014. 

II. Plaintiff’s Motion to Stay Briefing and Consideration of Defendants’ Motions. 

Wintrode urges the Court to stay briefing and consideration of Defendants’ motion 

to dismiss (Doc. 11) and motion to transfer (Doc. 24) in order to consider jurisdictional 

arguments raised in Wintrode’s motion to remand (Doc. 23). Doc. 25 at 2 (citing Orient 

v. Linus Pauling Inst. of Sci. & Med., 936 F. Supp. 704, 706 (D. Ariz. 1996) (“Federal 

subject matter jurisdiction is a threshold issue that goes to the power of the court to hear 

the case . . . . Therefore, a 12(b)(1) motion must be decided before other motions, as they 

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will become moot if dismissal is granted.”)). Defendants argue that there is no good 

cause to suspend the briefing schedule for its motions. Doc. 26 at 3. 

The Court will deny Wintrode’s motion in part because Wintrode’s request to stay 

the briefing schedule of Defendants’ motions is moot. Defendants’ motions have been 

fully briefed. The Court will grant Wintrode’s motion in part, however, and address the 

threshold issue of jurisdiction first. 

III. Plaintiff’s Motion to Remand. 

A. Legal Standard. 

Pursuant to the removal statute, 28 U.S.C. § 1441, any civil action brought in state 

court over which the federal district courts have original jurisdiction may be removed to 

the federal district court for the district where the action is pending. 28 U.S.C. § 1441(a); 

see Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987) (“Only . . . actions that 

originally could have been filed in federal court may be removed to federal court by the 

defendant.”). Courts strictly construe the statute against removal jurisdiction. Gaus v. 

Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Indeed, there is a “strong presumption” 

against removal and “[f]ederal jurisdiction must be rejected if there is any doubt as to the 

right of removal in the first instance.” Id. “The ‘strong presumption’ against removal 

jurisdiction means that the defendant always has the burden of establishing that removal 

is proper.” Id. “If at any time before final judgment it appears that the district court lacks 

subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). 

B. Analysis. 

1. Federal Question Jurisdiction. 

The Court has subject matter jurisdiction over cases involving “federal questions” 

pursuant to 28 U.S.C. § 1331. With respect to patent claims, federal courts have 

exclusive jurisdiction over cases “arising under any Act of Congress relating to patents.” 

28 U.S.C. § 1338(a). Federal Courts also have original jurisdiction over “any civil action 

asserting a claim of unfair competition when joined with a substantial and related claim 

under the . . . patent . . . laws.” 28 U.S.C. § 1338(b). 

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The presence or absence a federal question is governed by the “well-pleaded 

complaint rule,” which provides that federal question jurisdiction exists only when a 

federal question is presented on the face of the plaintiff’s complaint. Caterpillar 

Inc., 482 U.S. at 392. “The rule makes the plaintiff master of the claim; he or she may 

avoid federal jurisdiction by exclusive reliance on state law.” Id. Federal jurisdiction 

over state law claims will lie, however, if a federal issue is (1) necessarily raised, 

(2) actually disputed, (3) substantial, and (4) capable of resolution in federal court 

without disrupting the federal-state balance approved by Congress. Grable & Sons Metal 

Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005). 

Wintrode’s claims do not arise under federal patent law. Defendants argue that 

resolution of a federal issue is necessary because Wintrode must prove that it did not 

infringe the ’377 Patent to prevail on its claims. Doc. 32 at 6. The Court does not agree. 

Wintrode’s claims assert violations of state law only and none of the claims depend on 

the invalidity or Wintrode’s non-infringement of the ’337 Patent. Instead, the claims 

require a court to determine whether GunVault owns the ’337 Patent. Ownership of a 

patent is typically “determined exclusively under state law.” Int’l Nutrition Co. v. 

Horphag Research Ltd., 257 F.3d 1324, 1329 (Fed. Cir. 2001) (citing Jim Arnold Corp. v. 

Hydrotech Sys., Inc., 109 F.3d 1567, 1572 (Fed. Cir. 1997)). As such, no federal issue 

will necessarily be triggered in resolving Wintrode’s claims. 

Defendants also argue that Wintrode is attempting to plead around federal patent 

law, which preempts Wintrode’s unfair competition claims. Defendants argue that the 

unfair competition claim is based on letters sent to customers about the alleged patent 

infringement, but that a patentholder is entitled to publish its patent in the marketplace. 

Doc. 32 at 7. While a party may publicize its patent(s) in the marketplace, it may not do 

so in bad faith. Hunter Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318, 1336 

(Fed. Cir. 1998), rev’d on other grounds, Midwest Indus., Inc. v. Karavan Trailers, Inc., 

175 F.3d 1356 (Fed. Cir. 1999) (en banc) (“[F]ederal patent law bars the imposition of 

liability for publicizing a patent in the marketplace unless the plaintiff can show that the 

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patentholder acted in bad faith.”). Wintrode’s claims do not seek to impose liability on 

GunVault for improperly publicizing patents that GunVault owns, but for publicizing 

rights in a patent it does not own. Doc. 1-1, ¶¶ 90-94. These state claims are not 

preempted by federal law. See S3 Graphics Co., Ltd. v. ATI Techs. ULC, C.A. No. 11-

1298-LPS, 2014 WL 573358, at *2 (D. Del. Feb. 11, 2014) (finding no preemption where 

“Defendants have falsely and in bad faith ‘laid claim to patents they do not own’”). 

Defendants argue that Wintrode’s complaint injects the nunc pro tunc doctrine 

into this case. It does not. The complaint mentions the doctrine only as part of its 

background section, making clear that application of the doctrine is a question reserved 

for decision by the federal district court in California. See Doc. 1-1, ¶¶ 41-42. 

Defendants also argue that “Wintrode’s only explicitly recited item of damage” 

are attorneys’ fees incurred in defending against GunVault’s patent infringement action. 

Doc. 32 at 6. Because the determination of Wintrode’s entitlement to attorneys’ fees 

incurred in defense of GunVault’s patent infringement lawsuit is an issue of patent law, 

see Imagineering, Inc. v. Van Klassens, Inc., 53 F.3d 1260, 1263 (Fed. Cir. 1995), 

Defendants argue that the Grable test is satisfied. Doc. 32 at 6. But Wintrode’s prayer 

for relief does not specifically include a request for the attorneys’ fees incurred to defend 

against GunVault’s patent infringement action, nor do other portions of the complaint 

allege an entitlement to such fees. See Doc. 1-1, at 19, ¶¶ A-J. 

Because the first Grable factor is not satisfied, the Court concludes that federal 

question jurisdiction over Wintrode’s state law claims does not lie. 

2. Improper Removal of Diversity Action. 

Wintrode argues that Defendants cannot remove the case to this Court on diversity 

grounds because Defendants PSTL, Thomas Loeff, and Sharon Loeff are citizens of 

Arizona, the state in which Wintrode commenced this action. Doc. 1-1, ¶¶ 7-8; Doc. 23 

at 11. The Court agrees. See 28 U.S.C. § 1441(b)(2). 

C. Conclusion. 

Because the Court concludes above that it lacks federal question and diversity 

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jurisdiction, it will grant Wintrode’s motion to remand and deny the remaining motions 

as moot. 

IT IS ORDERED: 

1. Defendants’ motion to dismiss (Doc. 11) is denied as moot. 

2. Defendant PSTL, LLC’s motion to join (Doc. 22) is granted. 

3. Plaintiff’s motion to remand (Doc. 23) is granted. 

4. Defendants’ motion to transfer (Doc. 24) is denied as moot. 

5. Plaintiff’s motion to stay briefing on and consideration of Defendants’ 

motions (Doc. 25) is granted in part and denied in part. 

6. The Rule 16 Case Management Conference scheduled for August 26, 2014 

at 4:00 p.m. is vacated.

7. The Clerk shall remand this case to Maricopa County Superior Court. 

Dated this 25th day of August, 2014. 

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