IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

RFR INDUSTRIES, INC. §

§

Plaintiff, §

§

vs. § CAUSE NO. 3:04-CV-2300-K

§

§

CENTURY STEPS, INC., §

d/b/a CENTURY PRECAST §

§

Third-Party Defendant §

MEMORANDUM OPINION and ORDER

Came on for Consideration, RFR Industries, Inc.’s (“RFR”) Motion to Dismiss

without prejudice and Century Steps, Inc.’s (“Century”) Motion for Judgment on the

Pleadings. The Court deems that Century’s answer was filed when served on RFR by fax,

therefore RFR cannot dismiss this case without prejudice absent order from the Court.

See Fed. R. Civ. P. 41(a). Therefore, RFR’s Motion to Dismiss is DENIED. Because

RFR exhausted its patent rights in the filler when it sold the filler to Century, Century’s

Motion for Judgment on the Pleadings is GRANTED.

I. Legal Standard

The court may dismiss a complaint by rendering a "judgment on the pleadings."

Fed. R. Civ. P. 12(c). The standard for deciding motions under Rule 12(c) is the same

as the standard for deciding motions under Rule 12(b)(6). Great Plains Trust Co. v.

 

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Morgan Stanley Dean Witter, 313 F.3d 305, at 313 n.8 (citing 5A Wright & Miller,

Federal Practice and Procedure 1368 at 59) ("A number of courts have held that the

standard to be applied in a Rule 12(c) motion is identical to that used in a Rule 12(b)(6)

motion."). A motion under Rule 12(c) should be granted only if it appears beyond doubt

that the plaintiff could prove no set of facts in support of its claims that would entitle

her to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Leffall v. Dallas Indep. Sch.

Dist., 28 F.3d 521, 524 (5th Cir. 1994); see also Kaiser Aluminum & Chem. Sales, Inc. v.

Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982). In determining whether

dismissal should be granted, the court must accept all well-pleaded facts as true and view

them in the light most favorable to the plaintiff. See Capital Parks, Inc. v. S.E. Adver. and

Sales Sys., Inc., 30 F.3d 627, 629 (5th Cir. 1994); Norman v. Apache Corp., 19 F.3d 1017,

1021 (5th Cir. 1994); Chrissy F. by Medley v. Mississippi Dep’t of Pub. Welfare, 925 F.2d

844, 846 (5th Cir. 1991). However, the plaintiff "must plead specific facts, not mere

conclusory allegations." Guidry v. Bank of LaPlace, 954 F.2d 278, 281 (5th Cir. 1992)

(quoting Elliott v. Foufas, 867 F.2d 877, 881 (5th Cir. 1989)). 

RFR objects to the consideration of the parties’ 2000 Settlement Agreement(RFR

filed a patent infringement suit against Century in 1998 and the parties settled the case

in 2000 pursuant to the “Settlement Agreement”) because the Settlement Agreement

was not attached to the Complaint and Federal Rule of Civil Procedure 12(c) states that

 

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if, “on a motion for judgment on the pleadings, matters outside the pleadings are

presented to and not excluded by the Court, the motion shall be treated as one for

summary judgment.” RFR asks the Court to convert Century’s Motion for Judgment on

the Pleadings to a Motion for summary judgment for improperly referring to matters

outside of the pleadings. The Court will not convert Century’s motion to one for

summary judgment because RFR refers to the Settlement Agreementin its complaint and

the Settlement Agreement is central to RFR’s claim because the Agreement requires

Century to purchase flangeway filler from RFR. See Collins v. Morgan Witter Dean Stanley,

224 F.3d 496, 498-99 (5th Cir. 2000) (noting approval of the practice in various circuits

whereby documents that a defendant attaches to a motion to dismiss are considered part

of the pleadings if they are referred to in the plaintiff's complaint and are central to its

claim).

II. Analysis

The unrestricted sale of a patented product exhausts the patentee’s patent rights

in that product. Jazz Photo Corp. v. Int’l Trade Comm’n, 264 F.3d 1094, 1105 (Fed. Cir.

2001); Intel Corp. v. ULSI Sys. Tech. Inc., 995 F.2d 1566, 1568 (Fed. Cir. 1993) (“the

patent owner’s rights with respect to the product end with its sale, and a purchaser of

such a product may use or resell the product free of the patent.”).

The parties’ settlement agreement required Century to purchase flangeway filler

 

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from RFR. The restrictions on Century’s further use and sale of the filler related to 1)

the price at which Century could resell the filler without paying a royalty to RFR, 2) sales

of filler to Union Pacific Railroad or its suppliers, and 3) sales to persons other than end

users or end users’ contractors. See Settlement Agreement at Section 7.2. Century did

not violate any of these conditions and there were not any other restrictions on Century.

Therefore, RFR’s patent rights in the flangeway filler were exhausted upon the sale.

RFR argues that Century’s patent exhaustion defense does not apply in this case

because it requires payment or compensation to the patentee and Century did not pay

RFR for the flangeway filler in question. A “sale” of a patented product exhausts a

patentee’s rights in that product, not payment. A sale occurred in this case when RFR

offered the flangeway filler for sale, Century accepted the filler and RFR received its right

to the purchase price for the filler. The fact that Century has not yet paid is irrelevant.

RFR further argues that patent exhaustion does not apply to method patents.

However, because RFR sold the filler to Century without any restrictions that apply in

this case, there is an implied license that Century’s customers have every right to use the

filler for its intended purpose. See U. S. v. Univis Lens Co., 316 U.S. 241, 249-51 (1942).

The terms of the sale and of the settlement agreement indicate that the parties

understood that Century would resell the filler to customers who would use - i.e., install -

the filler. This implied license to use the filler means that Century’s customers were free

 

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to install the filler without interference by RFR. Thus, RFR’s sales to Century exhausted

RFR’s right in RFR’s method and apparatus patents, and there can be no patent

infringement liability for the use of the filler RFR sold to Century.

IV. Conclusion 

Therefore, because RFR exhausted its patent rights in the filler when it sold the

filler to Century, Century’s Motion to Dismiss is GRANTED and RFR’s claim is

dismissed with prejudice. 

SO ORDERED.

Signed August 9th, 2005.

/s/ 

ED KINKEADE

UNITED STATES DISTRICT JUDGE

 

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