United States District Court, D. Maryland, Southern Division
J. HAZEL United States District Judge
Paul Andrew Leitner-Wise brings this case against Defendants
LWRC International. LLC ("LWRCI”) and Sig Sauer.
Inc. ("Sig Sauer") alleging patent infringement.
breach of contract and unjust enrichment in relation to his
2004 invention of a "Self-Cleaning Gas Operating System
for a Firearm." ECF No. 1. Pending be lore the Court are
Defendant Sig Sauefs Motion to Dismiss. ECF No. 14. and
Defendant LWRCIs Motion to Dismiss, or in the Alternative,
for Summary Judgment. ECF No. 1 5. These issues have been
fully briefed and a hearing is unnecessary. Loc. R. 105.6 (D.
Md. 201 6). For the reasons stated below, the Court will
grant Defendant Sig Sauer. Ine.'s Motion to Dismiss in
full and Defendant LWRCIs Motion to Dismiss as it relates to
the patent infringement claim. Furthermore, the Court will
convert LWRCIs Motion to Dismiss into a Motion for Summary
Judgment with respect to the breach of contract and
unjust enrichment claims, and will grant LWRCIs Motion for
Summary Judgment as to those claims.
2004. Plaintiff created a "Self-Cleaning Gas Operating
System for a Firearm, " a self-regulating short-stroke
piston operating system for AR-15 type self-loading rifles,
and was subsequently awarded a patent for his invention by
the U.S. Patent Office ("the '581 patent"). ECF
No. 1 ¶ 19; ECF No. 1 -1. Plaintiff founded a company
named Leitner-Wise Rifle Company, Inc. ("LWRC").
which he then sold in 2005. ECF No. 1 ¶¶21-22. On
April 11. 2005. Plaintiff was retained by LWRC as an
executive and entered into an employment agreement defining
the terms of their relationship. ECF No. 1 at ¶ 22;
see also ECF No. 1-2. The employment agreement
contained a provision acknowledging that Plaintiff had
developed certain Intellectual Property prior to the
execution of this Agreement which Employer desires to
exercise ownership rights....Employer will separately psgy a
royalty of one half of one percent (.05%) on the net sale
price of each product containing a previously patented or
patentable or otherwise protected device developed by the
Executive....Payment of royalties under this section shall
not be withheld or terminated regardless of any Termination
of the Executive for any reason.
ECF No. 1 ¶ 23: see also ECF No. 1-2 at
Plaintiff left his employment with LWRC on October 31, 2006.
and on the same date, assigned the pending "581 patent
to his former employer. ECF No. 1 ¶ 24: see
also ECF No. 1-3. The Assignment stated that
[i]n consideration of the sum of One Dollar ($1.00) or
equivalent and other good and valuable consideration paid
to...Paul Leitner-Wise, the undersigned, hereby sell(s) and
assign(s) to Leitner-Wise Rifle Company. Inc..their entire
right, title and interest...in the invention known as
"Self Cleaning Gas Operating System for a Firearm."
ECF No. 1-3.
with his departure. Plaintiff executed additional contracts
with LWRC. On October 31. 2006. Plaintiff signed a
document entitled "'Termination of Employment"
which included a provision releasing LWRC "from any and
all claims....including, but not limited to. all claims
arising out of [Plaintiffs] employment, all claims arising
out of the Employment Agreement.... [and] all breach of
contract and other common law claims." ECF No. 15-6 at
1-2. An additional contract entitled "Intellectual
Property Assignment Agreement By And Between Paul
Leitner-Wise and Leitner-Wise Rifle Co. Inc."
(hereinafter. "Intellectual Property Agreement")
included a provision stating that "[Leitner-Wise] hereby
transfers and assigns to [LWRC] all of [Leitner-Wise's]
right, title and interest to any and all Intellectual
Property ownership interest [Leitner-Wise] may have
throughout the world in and to the Assigned Intellectual
Properties." ECF No. 15-8 at 2. "Assigned
Intellectual Properties" is separately defined in the
contract to include the '581 patent. See ECF No.
15-8 at 1.7. Furthermore, a section in the same contract
entitled "Payment and Communication." stated that
"the consideration for the assignment and other rights
granted to [LWRC] under this Agreement consists of good and
valuable consideration, the sufficiency of which is hereby
acknowledged by [Leitner-Wise] pursuant to a separate
Equities Purchase Agreement, and the consummation of the
transactions contemplated thereby, there being no further
consideration or royalty payable in respect
thereof." ECF No. 15-8 at 3 (emphasis
added). This contract was also signed by Plaintiff
on October 31. 2006. the same day that the "581 patent
was assigned to LWRC. ECF No. 15-8 at 6; see also
ECF No. 1-3.
April !8. 2008. LWRC assigned the '581 patent to
Defendant LWRC1. ECF No. 1 ¶ 29; ECF No.
Plaintiff claims that this assignment was made without due
consideration of the royalties entitled to him pursuant to
his employment agreement with LWRC, which he claims survived
his termination from LWRC. Id. ¶¶[ 34-35.
Plaintiff states that neither LWRCI nor Sig Sauer ever paid
him for the value received from their ongoing use of the
intellectual property contained within the '581 patent,
hi ¶ 48.
initiated this case on June 29. 2016. asserting claims of
patent infringement and unjust enrichment against both LWRCI
and Sig Sauer. as well as a claim of breach of contract
against LWRCI alone. ECF No. 1. On September 6. 2016. Sig
Sauer Hied a Motion to Dismiss. arguing that the case should
be dismissed pursuant to either Rule 12(b)(1) for lack of
standing, because Plaintiff had relinquished his rights to
the '581 patent, or pursuant to 12(b)(6) for failure to
state a claim. ECF No. 14. The same day. LWRCI tiled a Motion
to Dismiss, or in the Alternative, for Summary Judgment,
echoing Sig Sauer"s arguments that the case could be
dismissed either for lack of standing or for failure to state
a claim. ECF No. 15. Both Defendants also requested that the
Court award them attorneys' fees and costs associated
with drafting their respective motions. ECF No. 15-1 at
17-20: ECF No. 14-1 at 21-22.
September 22. 2016. Plaintiff filed a Consolidated Opposition
to Defendants" Motions to Dismiss, arguing that
Plaintiff's right to receive royalties provided him with
standing to assert a patent infringement claim. ECF No. 1 8.
Plaintiff also argues that converting LWRCI's Motion into
a Motion for Summary Judgment is inappropriate because the
documents on which LWRCI relies are not authenticated. ECF
No. 18 at 5. On October 1 ]. 2016. Defendants filed their
Replies in support of their respective Motions. ECF Nos. 19
(Sig Saner) & 20 (LWRCI).
STANDARDS OF REVIEW
Motion to Dismiss Pursuant to Rule 12(b)(1)
generally analyze issues of standing pursuant to Rule
12(b)(1)." Borlo v. Navy Fed (redti Union, 458
BR. 228. 231 (D. Md. 2011). which governs motions to dismiss
for lack of subject matter jurisdiction. Fed. R. Civ. Pro.
12(b)(1). ""It is well established that before a
federal court can decide the merits of a claim, the claim
must invoke the jurisdiction of the court." Miller
v. Brown, 462 F.3d 312. 316 (4th Cir. 2006) (citation
omitted). Once a challenge is made to subject matter
jurisdiction, the plaintiff bears the burden of proving that
the Court has subject matter jurisdiction. See Evans v.
B.F. Perkins Co.. a Div. oj Standex lnt'l Corp.. 166
F.3d 642. 647 (4th Cir. 1999) (citation omitted): see
also Ferdinand-Davenport v. Children's Guild. 742
F.Supp.2d 772. 777 (I). Md. 2010). The court should grant a
Rule 1 2(b)(1) motion "only if the material
jurisdictional facts are not in dispute and the moving party
is entitled to prevail as a matter of law."
Evans. 166 F.3d at 647.
Motion to Dismiss Pursuant to Rule 12(b)(6)
survive a motion to dismiss invoking 12(b)(6). "a
complaint must contain sufficient factual matter, accepted as
true, to "state a claim to relief that is plausible on
its face."' Ashcrofi v. Iqbal. 556 U.S.
662. 678 (2009) (citing Bell Atlantic Corp. v.
Twombly. 550 U.S. 544. 570 (2007)). "A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged."
Iqbal 556 U.S. at 678. "Threadbare recitals of
the elements of a cause of action, supported by mere
conclusory statements, do not suffice." Id.
(citing Twombly, 550 U.S. at 555) ("a
plaintiffs obligation to provide the 'grounds' of his
'entitlement] to relief requires more than labels and
conclusions, and a formulaic recitation of a cause of
action's elements will not do.").
Civ, P. L2(b)(6)'s purpose "is to test the
sufficiency of a complaint and not to resolve contests
surrounding the facts, the merits of a claim, or the
applicability of defenses." Presley v. City of
Charlottesville, 464 F.3d 480.483 (4th Cir. 2006)
(citation and internal quotation marks omitted). When
deciding a motion to dismiss under Rule 12(b)(6). a court
"must accept as true all of the factual allegations
contained in the complaint." and must "draw all
reasonable inferences [from those facts] in favor of the
plaintiff." E.l. du Font de Nemours & Co. v.
Kolon Indus., Inc.. 637 F.3d 435. 440 (4th Cir. 2011)
(citations and internal quotation marks omitted). The Court
need not. however, accept unsupported legal allegations,
see Reverie v. Charles County Coinin'rs. 882
F.2d 870. 873 (4th Cir. 1989). legal conclusions couched as
factual allegations. Fupasan v. Allain, 478 U.S.
265, 286 (1986). or conclusory factual allegations devoid of
any reference to actual events. United Black Firefighters
of Norfolk v. Hirst, 604 F.2d 844. 847 (4th Cir. 1979).
Converting Motion to Dismiss to Motion for Summary
motion is styled as a Motion to Dismiss or. in the
Alternative, for Summary Judgment under Fed.R.Civ.P. 56. If
the Court considers materials outside the pleadings, as the
Court does here, the Court must treat a motion to dismiss as
one for summary judgment. Fed.R.Civ.P. 12(d). When the Court
treats a motion to dismiss as a motion for summary judgment,
"fa]ll parties must be given a reasonable opportunity to
present all the material that is pertinent to the
motion." Id. When the moving party styles its
motion as a "Motion to Dismiss or. in the Alternative,
for Summary Judgment." as is the case here, and attaches
additional materials to its motion, the nonmoving party is.
of course, aware that materials outside the
pleadings are before the Court, and the Court can treat the
motion as one for summary judgment. See LaughVm v.
Metropolitan Wash. Airports Aiuh., L49 F.3d 253. 260-61
(4th Cir. 1998). Further, the Court is not prohibited from
granting a motion for summary judgment before the