Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_16-cv-00148/USCOURTS-caed-2_16-cv-00148-2/pdf.json

Parties Involved:
Advanced Steel Recovery, LLC
Counter Defendant
Allstate Paper & Metal Recycling Co., Inc.
Defendant
J.D.M.L., Inc.
Defendant
Jewell Attachments, LLC
Counter Claimant
Standard Industries
Defendant
X-Body Equipment, Inc.
Counter Claimant

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UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

ADVANCED STEEL RECOVERY, LLC, 

Plaintiff, 

v. 

X-BODY EQUIPMENT, INC., JEWELL 

ATTACHMENTS, LLC, J.D.M.L., INC., 

dba STANDARD INDUSTRIES, and 

ALLSTATE PAPER & METAL 

RECYCLING CO., INC., 

Defendants. 

No. 2:16-cv-00148-KJM-EFB 

ORDER 

The matter is before the court on a motion to dismiss and for sanctions brought by 

defendants X-Body Equipment (X-Body) and Jewell Attachments, LLC (Jewell). Mot., ECF 

No. 13. Plaintiff Advanced Steel Recovery, LLC (Advanced Steel) opposes, Opp’n, ECF No. 28, 

and defendants have replied. Reply, ECF No. 36-1. As explained below, the court GRANTS 

defendants’ motion to dismiss with leave to amend and DENIES the motion for sanctions. 

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I. BACKGROUND 

A. Factual Allegations 

Plaintiff owns United States Patent 9,056,731 (the ‘731 Patent) by virtue of an 

assignment, which is the patent at issue here. Compl. ¶ 14, ECF No. 1. The ‘731 Patent, titled 

“Container Packer System and Method,” was issued on June 16, 2015. Id. ¶ 15. It is a 

continuation-in-part (CIP) application of United States Patent 8,061,950 (the ‘950 Patent), which 

itself was a CIP application of United States Patent 7,744,330 (the ‘330 Patent). The ‘330 Patent 

and the ‘950 Patent previously were litigated in another case in this district that was later 

appealed to the Federal Circuit (Prior Litigation). See Case No. 12-1004-GEB-DAD; Advanced 

Steel Recovery, LLC v. X-Body Equip., Inc., 808 F.3d 1313 (Fed. Cir. 2015). On appeal, the 

Federal Circuit affirmed the district court’s decision that the Acculoader device, the same device 

at issue here, did not infringe the asserted claims of the ‘950 Patent literally or under the doctrine 

of equivalents.1

 See generally id. 

The ‘731 Patent describes a system and method for packing overseas containers 

with materials. Compl. ¶ 16. The system described includes a transfer base and a container 

packer. Id. The transfer base contains control systems, among other things, to operate the system 

and receive the container. Id. Defendants make, use, offer to sell, and/or sell a product known as 

the Acculoader that infringes at least one claim of the ‘731 Patent. Id. Specifically, defendant 

Jewell manufactures the Acculoader and sells it to defendant X-Body. Id. ¶ 18. X-Body then 

resells the Acculoader to users, including defendants Standard Industries and Allstate Paper & 

Metal Recycling Co., Inc., who have purchased or otherwise make arrangements to use the 

Acculoader for loading various materials into transport containers. Id. Plaintiff provided a 

written notice to defendants of the ‘731 Patent on July 16, 2015. Id. ¶ 17. 

 1

 “To establish literal infringement, every limitation set forth in a claim must be found in 

an accused product, exactly.” Southwall Techs., Inc. v. Cardinal IG Co., 54 F.3d 1570, 1575 

(Fed. Cir. 1995). To establish infringement under the doctrine of equivalents, a “patentee must 

. . . provide particularized testimony and linking argument as to the insubstantiality of the 

differences between the claimed invention and the accused device or process, or with respect to 

the function, way, result test when such evidence is presented . . . .” AquaTex Indus., Inc. v. 

Techniche Sols., 479 F.3d 1320, 1328 (Fed. Cir. 2007) (citation omitted). 

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Plaintiff has not licensed or authorized defendants, or its dealers, customers, or 

affiliates, to sell or use a system within the scope of the claims in the ‘731 Patent. Id. ¶ 20. 

Defendants have known about the ‘731 Patent since July 16, 2015 and the Prior Litigation, in 

which the complaint was filed by plaintiff on April 16, 2012, but have not altered their conduct 

with respect to the Acculoader. Id. ¶ 22; Compl., Advanced Steel Recovery, LLC v. X-Body 

Equipment, Inc., No. 12-1004 (E.D. Cal. Apr. 16, 2012), ECF No. 1. 

B. Procedural History 

On January 25, 2016, plaintiff filed the complaint in this action for monetary 

damages, alleging defendants infringed the ‘731 Patent within the meaning of 35 U.S.C § 284, 

from at least July 16, 2015, when defendants were notified of the existence of the ‘731 Patent, if 

not as early as June 16, 2015, the issue date of the ‘731 Patent. Compl. ¶ 23. Plaintiff also seeks 

a permanent injunction to prevent defendants’ further violation of the ‘731 Patent, and attorneys’ 

fees and costs. Id. On March 22, 2016, defendants filed the pending motion, supported by 

declarations and exhibits. 

II. RULE 12(b)(6) MOTION TO DISMISS OR RULE 56 SUMMARY JUDGMENT 

 MOTION 

A. Parties’ Arguments 

The threshold issue here is whether defendants can move to dismiss on the basis 

that defendants’ alleged violation of the patent predated the patent’s priority date. Plaintiff argues 

defendant’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should be denied, 

because defendants’ argument is a factual issue that cannot be resolved at the motion to dismiss 

stage. Opp’n at 6. Plaintiff further argues the Rule 12(b)(6) motion to dismiss should not be 

converted to a Rule 56 motion for summary judgment, despite defendant’s submission of 

materials outside the complaint, because claim construction and expert discovery are required to 

resolve the issue of priority date, and even if not, a substantial continuance should be provided for 

plaintiff to respond to the motion if so converted. Opp’n at 9–10. Defendant agrees the motion 

need not be converted. Reply at 8. Defendant argues plaintiff’s claims are not plausible based on 

the complaint, its attachments, and matters properly subject of judicial notice. Id. Finally, both 

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plaintiff and defendants also address the determination of a priority claim, which the court will 

not address at this point for reasons explained below. 

B. Legal Standards in Patent Cases 

A complaint need contain only a “short and plain statement of the claim showing 

that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), not “detailed factual allegations,” 

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). But this rule demands more than 

unadorned accusations; “sufficient factual matter” must make the claim at least plausible. 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). A party may thus move to dismiss for “failure to 

state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). The motion may be 

granted only if the complaint lacks a “cognizable legal theory” or if its factual allegations do not 

support a cognizable legal theory. Hartmann v. Cal. Dep’t of Corr. & Rehab., 707 F.3d 1114, 

1122 (9th Cir. 2013). In making this context-specific evaluation, this court “must presume all 

factual allegations of the complaint to be true and draw all reasonable inferences in favor of the 

nonmoving party.” Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). This rule 

does not apply to “‘a legal conclusion couched as a factual allegation,’” Papasan v. Allain, 

478 U.S. 265, 286 (1986) quoted in Twombly, 550 U.S. at 555, nor to “allegations that contradict 

matters properly subject to judicial notice” or to material attached to or incorporated by reference 

into the complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988–89 (9th Cir. 2001). 

In deciding a motion to dismiss, “courts generally consider only the allegations 

contained in the complaint, exhibits attached to the complaint and matters of public record” when 

reviewing a motion to dismiss. Outdoor Media Group, Inc. v. City of Beaumont, 506 F.3d 895, 

899–900 (9th Cir. 2007) (citing Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007)). Rule 

12(d) addresses the use of materials which are outside the pleadings in motions to dismiss under 

Rule 12(b)(6). Fed. R. Civ. P. 12(d); see also Olsen v. Idaho State Bd. of Medicine, 363 F.3d 

916, 922 (9th Cir. 2004). When such materials are presented, the motion is treated as one for 

summary judgment. Olsen, 363 F.3d at 922. However, certain additional materials may be 

considered without converting the motion to dismiss into a motion for summary judgment. While 

a court is generally limited to the four corners of the complaint, the court may consider exhibits 

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attached to the complaint, see Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 

1542, 1555 n.19 (9th Cir. 1989), and documents incorporated by reference into the complaint. 

See Van Buskirk v. Cable News Network, Inc., 284 F.3d 977, 980 (9th Cir. 2002). Documents 

upon whose contents the complaint necessarily relies—even if the complaint does not explicitly 

allege their contents—and whose authenticity and relevance are uncontested, are considered 

incorporated by reference. See Coto Settlement v. Eisenberg, 593 F.3d 1031, 1038 (9th Cir. 

2010); Knievel v. ESPN, 393 F.3d 1068, 1076–77 (9th Cir. 2005). The court may, in addition, 

take into account material that is properly the subject of judicial notice. Lee v. City of Los 

Angeles, 250 F.3d 668, 688–89 (9th Cir. 2001). Judicial notice may be taken of a fact not subject 

to reasonable dispute because it either is generally known within the trial court's territorial 

jurisdiction, or can be readily determined from sources whose accuracy cannot reasonably be 

questioned. Fed. R. Evid. 201(b). 

With respect to a Rule 12(b)(6) motion to dismiss patent claims, determination of a 

priority claim raises a question of law based on undisputed facts. Amkor Tech v. Int’l Trade 

Comm’n, 692 F.3d 1250, 1254 (Fed. Cir. 2012); Bradford Co. v. Conteyor North America, Inc., 

603 F.3d 1262 (Fed. Cir. 2010). Accordingly, the issue raised by defendants’ motion––whether 

plaintiff’s claim is barred because sales occurred and publications describing the defendants’ 

Acculoader product were distributed more than a year before the ‘731 patent application filed on 

November 22, 2011––could in some cases be decided on a motion to dismiss depending on the 

allegations in plaintiff’s complaint and matters properly susceptible of judicial notice. 

Here, however, defendants have presented matters outside the pleadings. 

Although as noted, a court may consider matters by way of judicial notice without converting a 

motion to dismiss into a motion for summary judgment, United States v. Ritchie, 342 F.3d 903, 

907 (9th Cir. 2003), defendants have instead presented the declaration of Robert Harkins, counsel 

for defendants X-Body and Jewell, in an attempt to clarify and supplement the judicially 

noticeable factual record on the motion to dismiss. A court, in its discretion, may consider 

matters outside the pleadings, but if it does so, the motion must be converted to one for summary 

judgment under Federal Rule of Civil Procedure 56, and all parties must be given a reasonable 

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opportunity to respond to the extra-record material. Fed. R. Civ. P. 12(d); see also Ritchie, 342 

F.3d at 907. If the court does not convert the motion to dismiss into a motion for summary 

judgment, the court declines to consider matters outside the pleadings that are not judicially 

noticeable. See Wiles v. Scott, No. 12-5722, 2012 WL 7619807, at *3 (W.D. Wash. Dec. 19, 

2012), report and recommendation adopted, No. 12-5722, 2013 WL 750777 (W.D. Wash. Feb. 

27, 2013). 

C. Discussion 

Given the early stage of this case, the lack of discovery, and the sparse record 

before the court, the court declines to convert defendants’ Rule 12(b)(6) motion to dismiss into a 

Rule 56 motion for summary judgment. The court does not consider the content of the Harkins 

declaration, or the declaration of William Jon Maul submitted in support of the motion for 

sanctions. The five exhibits attached to the Maul declaration, consisting of photographs of the 

Acculoader and an email, also are not considered as they are not subject to judicial notice under 

Federal Rule of Evidence 201. Regarding the Harkins declaration’s attachments, Exhibit 1, is a 

copy of the Federal Circuit opinion on a related case; Exhibit 2 is a copy of the Federal Circuit 

mandate from the related case; Exhibit 3 is a copy of the ‘950 patent; and Exhibit 4 is a copy of 

the file history for the ‘731 patent. These exhibits are matters of public record and are susceptible 

of judicial notice under Rule 201. Lee, 250 F.3d at 690 (a court may take judicial notice of the 

existence of another court’s opinion); Coinstar, Inc. v. Coinbank Automated Sys., Inc., 998 F. 

Supp. 1109, 1114 (N.D. Cal.1998) (granting defendant’s request for judicial notice of two patents 

and documents from the file history of one of the patents). Plaintiff’s request for judicial notice 

of the ‘330 and ‘950 patents also is granted. See ECF No. 28-1. 

III. ANALYSIS: DISMISSAL 

Defendants argue that plaintiff’s claim is barred because sales of and publications 

describing the defendants’ Acculoader occurred more than a year before plaintiff’s ‘731 Patent 

application was filed. This argument raises two questions: (1) when did defendants allegedly start 

to infringe the ‘731 patent, and (2) whether plaintiffs are alleging a priority date earlier than the 

filing date of the ‘731 patent. 

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Plaintiff alleges defendants make, use, offer to sell, and/or sell the Acculoader 

product and that it infringes at least one claim of the ‘731 Patent. Compl. ¶ 16. The complaint 

generally alleges “subsequently to the issuance of the ‘731 Patent, [d]efendants have infringed the 

‘731 Patent by making, using, importing, offering to sell . . . the Acculoader . . . .” Id. ¶ 26. The 

complaint alleges no facts as to when the infringement began. Quantum Loyalty Sys., Inc. v. TPG 

Rewards, Inc., No. 09-022, 2009 WL 5184350, at *8 (D. Del. Dec. 23, 2009), report and 

recommendation adopted as modified, No. 09-22, 2010 WL 1337621 (D. Del. Mar. 31, 2010) 

(denying defendant’s motion to dismiss plaintiff’s claim of patent infringement for not alleging 

any facts as to when infringement began or whether infringement has continued during litigation 

without prejudice to renewal following the completion of discrete discovery on issue of product 

identification). Plaintiff attaches to the complaint a user manual for the Acculoader. See Compl., 

Ex. 2. Though stamped with the date July 28, 2010, there is no explanation in the user manual or 

otherwise in the complaint to clarify what the date signifies. Plaintiff alleges that “subsequent to 

the issuance of the ‘731 Patent” defendants infringed the patent, id. ¶ 26, but the issuance date of 

the ‘731 Patent was June 16, 2015, id. ¶ 15. It is not clear from the face of the complaint whether 

plaintiff’s position is that the ‘731 patent is entitled to a date earlier than that patent’s date of 

filing. See PowerOasis, Inc. v. T-Mobile USA, Inc., 522 F.3d 1299, 1305–06 (Fed. Cir. 2008) 

(plaintiff carries burden to show it is entitled to claim priority based on an earlier filing date). In 

their briefs, the parties dispute whether the claims asserted are entitled to the filing date of the 

application for the ‘330 Patent, which was June 13, 2008. See Opp’n at 3; Mot. at 5. 

The court does not reach the issue of priority date of the patent claim at issue, 

because plaintiff has not alleged when exactly defendants began to infringe the ‘731 patent. The 

court also finds the motion for sanctions to be premature. 

Federal Rule of Civil Procedure 15(a)(2) provides, “[t]he court should freely give 

[leave to amend its pleading] when justice so requires,” and the Ninth Circuit has “stressed Rule 

15’s policy of favoring amendments.” Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 

1160 (9th Cir. 1989). Defendants’ motion to dismiss is GRANTED but with leave to amend in 

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light of plaintiff’s arguments in its briefing, which suggest amendment may be possible, 

consonant with Federal Rule of Civil Procedure 11. 

IV. PRETRIAL SCHEDULING 

Discovery is opened for the limited purpose of discovering information related to 

priority of claim, for a ninety (90) day period from the filed date of this order. The parties are 

ORDERED to file a stipulation defining the scope of this discovery within twenty-one (21) days 

of the date of this order. Defendants may renew their motion to dismiss within thirty (30) days 

after the close of the limited discovery period. The court will schedule the balance of the case 

after the resolution of any renewed converted motion. 

V. CONCLUSION 

Defendants’ motion to dismiss is GRANTED with leave to amend and defendants’ 

motion for sanctions is DENIED. Plaintiff is ORDERED to file a first amended complaint within 

fourteen (14) days of the date of this order. The parties are ORDERED to file a stipulation as to 

the scope of the limited discovery allowed above within twenty-one (21) days of the date of this 

order. Defendants may renew their motion to dismiss within thirty (30) days after the close of the 

limited discovery period. 

IT IS SO ORDERED. 

DATED: August 8, 2016. 

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