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Escort Inc. and Beltronics Usa, Inc v. Hoyt A. Fleming

May 23, 2012

ESCORT INC. AND BELTRONICS USA, INC.,
PLAINTIFFS,
v.
HOYT A. FLEMING, ET AL., DEFENDANT.



The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it a motion to dismiss filed by defendants Hoyt A. Fleming and the lawfirm of Park, Vaughan, Fleming & Dowler LLP. The motion is fully briefed and at issue. For the reasons explained below, the Court will grant the motion.

BACKGROUND

Plaintiffs Escort and Beltronics make radar detectors. Three years ago, in another case, they were sued for patent infringement by Hoyt Fleming. See Fleming v. Escort, CV-09-105-BLW ("Fleming I"). In that case, set for trial in a few weeks, Fleming is represented by attorney Michael Dowler, a partner in the firm of Park Vaughn. After Fleming received a summary judgment decision in Fleming I that Escort infringed one of his patents, he had his attorney Dowler send a letter to retailers of Escort's products, putting them on notice that their sales were infringing and demanding that they cease selling those products. By statute, notice to infringers is an important factor in determining the patent holder's damages for infringement. See 35 U.S.C. § 287.

Escort responded to the letter by filing this lawsuit. Escort alleges that the letter to one of those retailers -- Fulfillment Services -- falsely stated that Fulfillment was liable to Fleming for patent infringement. Escort has sued Fleming and his counsel's law firm, Park Vaughn. Escort's complaint asserts five state law causes of action: (1) trade libel and disparagement, (2) business defamation, (3) unfair competition, (4) tortious interference with contract and prospective business advantage, and (5) conspiracy. The complaint also asserts, in the first and third cause of action, that Fulfillment Letter constitute a violation of the federal Lanham Act, 15 U.S.C. § 1051 et seq.

The letter at the heart of this case was sent on February 6, 2012, and signed by attorney Dowler. It was sent to, among others, Fulfillment Services (the "Fulfillment Letter"), a distributor of Escort's radar detectors.*fn1 In the letter, attorney Dowler demanded that Fulfillment "immediately cease and desist from selling" each of the radar detectors at issue in Fleming I. See Exhibit D (Dkt. No. 3-4) at p. 2.*fn2 The letter stated that

Anyone who makes, uses, sells, offers to sell, or imports the infringing . . . radar detectors is liable in damages to Mr. Fleming (35 U.S.C. § 271.) The fact that Escort sold them to Fulfillment Services is not a defense. Fulfillment Services is selling the infringing products and Fulfillment Services is, therefore, liable as an infringer.

Id. at pp. 2-3. The letter continued,

Rest assured that Mr. Fleming has no intent or desire to make a double recovery on the infringing products, i.e., he is not seeking to recover infringement damages from both Escort and Fulfillment Services. Nevertheless, Escort is a small, private company that was purchased in a bankruptcy estate auction in 2005, and to the extent Escort is unable to pay the full damage award after trial and/or Fulfillment Services does not immediately cease and desist from selling the infringement products, Mr. Fleming will have a claim against Fulfillment Services.

Id. (footnote omitted). The letter describes the Court's summary judgment order in Fleming I as a "judgment that [Escort's radar detectors] infringe claims 18, 45, 47, and 48 in U.S. Patent No. RE39,038." Id. at 2. A copy of the redacted summary judgment order was attached to the letter. Id.

About a week after he sent the letter, Fleming filed an infringement action against Fulfillment Services, other retailers, and Escort, alleging that they infringed on his patents through "making, using, offering to sell, or selling . . . intelligent radar detectors." See Fleming v. Escort CV-12-66-BLW ("Fleming II").

To summarize, there are three related cases here: (1) Fleming I, where the Court held that Escort infringed Fleming's patent; (2) Escort v. Fleming, the present case where Escort sues over Fleming's cease-and-desist letter; and (3) Fleming II, where Fleming has sued the retailers (and Escort) for selling infringing devices.

Turning now to the present case, the Court will consider Fleming's motion to dismiss.

LEGAL STANDARD

Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief," in order to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests," Bell Atlantic Corp. v. Twombly, 550 U.S. 554 (2007). While a complaint attacked by a Rule 12(b)(6) motion to dismiss "does not need detailed factual allegations," it must set forth "more than ...


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