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Arrow Communication Laboratories, Inc. v. John Mezzalingua Associates

November 28, 2006

ARROW COMMUNICATION LABORATORIES, INC., AND TRESNESS IRREVOCABLE PATENT TRUST, PLAINTIFFS,
v.
JOHN MEZZALINGUA ASSOCIATES, INC., DEFENDANT.
JOHN MEZZALINGUA ASSOCIATES, INC., COUNTERCLAIM PLAINTIFF,
v.
ARROW COMMUNICATION LABORATORIES, INC., AND TRESNESS IRREVOCABLE PATENT TRUST, COUNTERCLAIM DEFENDANTS.



The opinion of the court was delivered by: Hon. Norman A. Mordue, Chief U.S. District Judge

MEMORANDUM-DECISION AND ORDER

BACKGROUND

Presently before the Court are two motions, pursuant to Fed. R. Civ. P. 12(b)(6), by John Mezzalingua Associates, Inc., doing business as PPC ("PPC"). PPC seeks dismissal of certain claims asserted by Arrow Communication Laboratories, Inc. ("Arcom") and Tresness Irrevocable Patent Trust ("Tresness") (collectively, the "Arcom parties") relative to two patents in dispute in these consolidated actions*fn1 : U.S. Patent No. 5,745,838 ("838 patent") and U.S. Patent No. 6,737,935 ("935 patent").

In addressing the dismissal motions under Fed. R. Civ. P. 12(b)(6), the Court accepts as true the factual allegations of the pertinent pleadings and draws all inferences in favor of the Arcom parties. See Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993). Dismissal is proper only if it appears beyond doubt that the Arcom parties can prove no set of facts which would entitle them to relief. See Valmonte v. Bane, 18 F.3d 992, 998 (2d Cir. 1994).

Ordinarily, dismissal is without prejudice; however, upon a determination that amendment would be futile, the Court in its discretion may dismiss with prejudice. See generally Foman v. Davis, 371 U.S. 178, 182 (1962).

DISCUSSION

First Motion: Arcom Parties' State Law Claims Regarding 838 Patent Arcom's amended complaint and Tresness' amended counterclaim (05-CV-1456, Dkt. Nos. 46, 47)*fn2 assert that Arcom is the owner of the 838 patent, entitled "Return Path Filter," and that PPC is infringing said patent by manufacturing, selling, and importing electronic filters covered by one or more of the claims of the 838 patent and by actively inducing others to infringe the patent. In addition to claims based on federal patent law, the Arcom parties assert state law claims sounding in breach of contract, fraud, and unjust enrichment in relation to the 838 patent. In the first of the two motions currently before the Court (05-CV-1456, Dkt. Nos. 54, 66)*fn3 , PPC seeks dismissal of the three state law claims. The Arcom parties oppose the motion (05-CV-1456, Dkt. No. 73) and PPC replies (05-CV-1456, Dkt. No. 80).

Breach of Contract

The first state law claim in issue sounds in breach of contract. Arcom claims that in 1998 Tresness notified PPC that PPC's step attenuators infringed the 838 patent, and that Tresness and PPC entered into a Settlement Agreement dated February 12, 2001, in which PPC agreed:

For the remaining term of the '838 Patent, PPC and its subsidiaries and divisions, their respective successors and assigns, shall not manufacture, use, offer to sell, advertise for sale, or sell, in the United States, its territories and possessions, and shall not import into the United States, its territories and possessions, TSA Step Attenuators or any other filter circuit that falls within the protection of the '838 Patent.

Arcom claims that it is the assignee of Tresness' interest in the Settlement Agreement. Arcom further claims that, since entering into the Settlement Agreement, PPC has manufactured, sold, and offered to sell Step Attenuator filter circuits that fall within the protection of the 838 patent, thereby breaching the Settlement Agreement.

It does not appear beyond doubt that the Arcom parties can prove no set of facts which would entitle them to relief based on the Settlement Agreement. Dismissal of this claim is denied. Fraud Arcom's second state law cause of action sounds in fraud. Arcom avers as follows:

In connection with entering into the Settlement Agreement, Defendant [PPC] or its predecessor represented to Counterclaimant [Tresness] that it would not manufacture, use, offer to sell, advertise for sale, or sell any filter circuit that falls within the protection of the '838 Patent.

Upon information and belief, Defendant's (or its predecessor's) dealings under the Settlement Agreement ... were in bad faith and with concealment of the fact that Defendant (or its predecessor) planned to and did, resume manufacturing and selling ...


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