The Tire Hanger Corporation v. Shinn FU Company of America, Inc et al

NOTICE OF MOTION AND MOTION to Dismiss Defendants' Counter Claims

C.D. Cal.March 22, 2017

NOTICE OF MOTION AND MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JOHN D. VAN LOBEN SELS (SBN: 201354) jvanlobensels@fishiplaw.com JENNIFER J. SHIH (SBN: 276225) jshih@fishiplaw.com Fish & Tsang LLP 333 Twin Dolphin Drive, Suite 220 Redwood City, CA 94065 Telephone: (650) 517-9800 Facsimile: (650) 517-9898 Attorneys for Plaintiff, THE TIRE HANGER CORPORATION UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA THE TIRE HANGER CORPORATION, a California corporation; Plaintiff, v. SHINN FU COMPANY OF AMERICA, INC. and SHINN FU CORPORATION. Defendants. Case No. 5:16-02668 JAK (JPRx) Honorable John A. Kronstadt PLAINTIFF’S MOTION TO DISMISS DEFENDANTS’ COUNTER CLAIMS Date: April 24, 2017 Time: 8:30 a.m. Courtroom: 10B Complaint Filed: December 29, 2016 Trial Date: Not yet assigned Case 5:16-cv-02668-JAK-JPR Document 33 Filed 03/22/17 Page 1 of 2 Page ID #:484 NOTICE OF MOTION AND MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 NOTICE OF MOTION AND MOTION TO DISMISS PLEASE TAKE NOTICE that on April 24, 2017, or as soon thereafter as the matter may be heard before the Honorable John A. Kronstadt in Courtroom 10B of the United States District Court for the Central District of California, located at 350 W. First Street, Courtroom 10B, Los Angeles, CA 90012, Plaintiff and Counter Defendant, The Tire Hanger Corporation (“Plaintiff” or “Tire Hanger”) hereby moves to dismiss Defendants’ and Counterclaimants’, Shinn Fu Company of America, Inc. and Shinn Fu Corporation (“Counterclaimants” or “Shinn Fu”) counterclaim for breach of contract for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). This Motion is made following the conference of counsel pursuant to Local Rule 7- 3, which took place by phone on March 14, 2017. Counsel were unable to resolve the issues which are raised in this motion. For the reasons set forth in the attached Memorandum in Support of its Motion, Tire Hanger respectfully requests the Court grant the Motion. Respectfully submitted, FISH & TSANG LLP Dated: March 22, 2017 By: /s/John D. van Loben Sels John D. van Loben Sels, Esq. Attorneys for Plaintiff and Counter Defendant, THE TIRE HANGER CORPORATION Case 5:16-cv-02668-JAK-JPR Document 33 Filed 03/22/17 Page 2 of 2 Page ID #:485 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JOHN D. VAN LOBEN SELS (SBN: 201354) jvanlobensels@fishiplaw.com JENNIFER J. SHIH (SBN: 276225) jshih@fishiplaw.com Fish & Tsang LLP 333 Twin Dolphin Drive, Suite 220 Redwood City, CA 94065 Telephone: (650) 517-9800 Facsimile: (650) 517-9898 Attorneys for Plaintiff, THE TIRE HANGER CORPORATION UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA THE TIRE HANGER CORPORATION, a California corporation; Plaintiff, v. SHINN FU COMPANY OF AMERICA, INC. and SHINN FU CORPORATION. Defendants. Case No. 5:16-02668 JAK (JPRx) Honorable John A. Kronstadt PLAINTIFF’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS DEFENDANTS’ COUNTER CLAIMS Date: April 24, 2017 Time: 8:30 a.m. Courtroom: 10B Complaint Filed: December 29, 2016 Trial Date: Not yet assigned Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 1 of 13 Page ID #:486 ii TABLE OF CONTENTS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS I. INTRODUCTION ....................................................................................... 1 II. FACTUAL AND PROCEDURAL BACKGROUND .................................. 2 III. LEGAL STANDARD FOR A MOTION TO DISMISS .............................. 3 IV. ARGUMENT............................................................................................... 4 V. CONCLUSION ........................................................................................... 8 Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 2 of 13 Page ID #:487 iii TABLE OF AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES CASES Ashcroft v. Iqbal, 556 U.S. 662 (2009) .................................................................................................. 3, 6 Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104 (1991) ..................................................................................................... 4 Balsam v. Tucows Inc., 627 F.3d 1158 (9th Cir. 2010) ...................................................................................... 5 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ...................................................................................................3,4 Branch v. Tunnell, 14 F.3d 449 (9th Cir. 1994) .......................................................................................... 4 Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002) ...................................................................................... 4 Harris v. Cty. of Orange, 682 F.3d 1126 (9th Cir. 2012) ...................................................................................... 4 Kaiser Eng'rs, Inc. v. Grinnell Fire Prot. Sys. Co., 173 Cal. App. 3d 1050 (1985) ..................................................................................... 6 Karo v. San Diego Symphony Orchestra Ass'n, 762 F.2d 819 (9th Cir.1985) ......................................................................................... 5 Lee v. City of Los Angeles, 250 F.3d 668 (9th Cir. 2012) ........................................................................................ 4 Mack v. S. Bay Beer Distribs., 798 F.2d 1279 (9th Cir. 1986) ...................................................................................... 4 Northern Ind. Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449 (7th Cir. 1999) ........................................................................................ 6 Prouty v. Gores Tech. Gr., 121 Cal. App. 4th 1225 (2004). .................................................................................... 6 Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 3 of 13 Page ID #:488 iv TABLE OF AUTHORITIES 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Spinks v. Equity Residential Briarwood Apartments, 171 Cal. App. 4th 1004 (2009) ..................................................................................... 5 Strauss v. Summerhays, 157 Cal. App. 3d 806 (1984) ........................................................................................ 5 STATUTES Cal. Civ. Code § 1559. ..................................................................................................... 5 FED. R. CIV. PROC. 12(b)(6) ............................................................................................. 3 FED. R. Evid. 201 ............................................................................................................. 4 Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 4 of 13 Page ID #:489 1 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES Plaintiff and Counter Defendant, Tire Hanger, by and through its attorneys, Fish & Tsang LLP, submits the following memorandum in support of its Motion To Dismiss, Or In The Alternative For Partial Judgment on the Pleadings (the “Motion”) as to Defendants’ and Counterclaimants’ Shinn Fu’s claim for breach of contract. I. INTRODUCTION Defendants and Counterclaimants Shinn Fu Company of America and Shin Fu Corporation (“Shinn Fu”) filed a counterclaim against Plaintiff and Counter Defendant Tire Hanger alleging that by bringing Tire Hanger’s patent infringement claim against Shinn Fu in this case, Tire Hanger breached the Settlement Agreement Tire Hanger entered with unrelated companies, Vehicle Services Group, LLC dba Rotary Lift (“Rotary Lift”) and others on September 2, 2004 (“Settlement Agreement”). However, Shinn Fu admits it was not a party to the Settlement Agreement. Instead, Shinn Fu claims it is entitled to enforce the release provisions of the Settlement Agreement as a third party beneficiary. Under this theory, Shinn Fu claims that Tire Hanger’s patent infringement action against Shinn Fu related to Tire Hanger’s ‘610 Patent amounts to a breach of the Settlement Agreement. However, for several reasons, Shinn Fu has not alleged sufficient facts to maintain this claim against Tire Hanger, so the Court must dismiss its breach of Settlement Agreement claim. Indeed, it appears that Shinn Fu will be unable to amend in good faith its counterclaim to cure these deficiencies. First, the only way Shinn Fu could have standing as a Third Party beneficiary under the Settlement Agreement is if Shinn Fu alleged that it supplied “Licensed Products” to Rotary Lift. In the Settlement Agreement, “Licensed Products” are defined as those covered by or practicing the claims of the ‘610 Patent. Unless Shinn Fu admits that its Wheel Wing product (or other products sold to Rotary Lift) are covered by or practice the claims of the ‘610 Patent, then Shinn Fu has no standing under the Settlement Agreement. Second, if the Court finds that Shinn Fu is a third party beneficiary of the Settlement Agreement, Shinn Fu’s claim must still be dismissed because neither Shinn Fu Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 5 of 13 Page ID #:490 2 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 nor Rotary Lift performed the Rotary Lift obligations under the Settlement Agreement. Namely, neither Rotary Lift nor Shinn Fu paid Tire Hanger the royalties which are due for the Shinn Fu Wheel Wing sales. That is, Shinn Fu’s counterclaim does not allege it (or Rotary Lift) performed all obligations under the Settlement Agreement, and the complaint does not allege there was no prior material breach by Rotary Lift (or Shinn Fu). Third, Shinn Fu does not allege that its Wheel Wing product is the only Shinn Fu product alleged to infringe the ‘610 Patent, or even that all Wheel Wing sales in the United States were made to Rotary Lift. As a result, the Shinn Fu counterclaim must be dismissed. Moreover, because no good faith amendment to Shinn Fu’s counterclaim is possible under the facts and circumstances of this case, Tire Hanger asks that the Court dismiss Shinn Fu’s breach of Settlement Agreement counterclaim with prejudice. II. FACTUAL AND PROCEDURAL BACKGROUND Tire Hanger is the owner of all rights and title to United States Patent Number 6,604,610 (“the ‘610 Patent”), which pertains generally to methods and apparatus for supporting vehicle wheels that have been temporarily removed from a vehicle disposed on a lift or hoist, i.e. a tire hanger. Shinn Fu designs, manufactures, assembles and/or imports products that constitute a material part of and practice the invention claimed in the ‘610 Patent. These products include, but are not limited to Rotary Lift’s Wheel Wing, part FA5974, and the OMEGA WHEEL ARMTM, Model 92100, sold through Shinn Fu’s website at http://www.shinnfuamerica.com/ProductDetails/Omega/100LBWheelArm/92100/1772 (“Accused Products”). The Accused Products are sold at O’Reilly Auto Parts, Walmart.com, Amazon.com, and eBay.com. Tire Hanger alleges that Shinn Fu’s conduct constitutes induced and contributory infringement of the ‘610 patent. Dkt. 17. Shinn Fu filed counterclaims, alleging breach of a Settlement Agreement to which it is not a party, and seeking declaratory judgments of non-infringement and invalidity. Dkt. 26. Shinn Fu’s breach of Settlement Agreement counterclaim is based on the Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 6 of 13 Page ID #:491 3 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 September 2, 2004 Settlement Agreement between Tire Hanger, Rotary Lift, and other defendants (not Shinn Fu), Case No. 2:03-cv-06776-PA-EX. Specifically, Shinn Fu alleges that, as Rotary Lift’s manufacturer, it is entitled to enforce a release provision in the Settlement Agreement as a third party beneficiary. Dkt. 26 at ¶¶11-30. Shinn Fu alleges that it is an intended third party beneficiary of the Tire Hanger/Rotary Lift Settlement Agreement. Dkt. 26 at ¶¶ 25-26. However, Shinn Fu by its counterclaim does not allege that its Wheel Wing product (or any other Shinn Fu product) practices the inventions claimed in the ‘610 Patent. That is, Shinn Fu does not allege that the Wheel Wing is a “Licensed Product” as that term is defined in the Settlement Agreement. Similarly, Shinn Fu does not allege that it or Rotary Lift performed all material obligations under the Settlement Agreement. That is, Shinn Fu does not allege that it or Rotary Lift paid the required royalties to Tire Hanger for all the sales of the Wheel Wing products to Rotary Lift, and Shinn Fu does not allege that it or Rotary Lift committed no prior material breach of the Settlement Agreement. In addition, Shinn Fu does not allege that all of its Wheel Wing products sold in the United States are sold to Rotary Lift, or even that its Wheel Wing products are the only Shinn Fu products which practice the claims of the ‘610 Patent. III. LEGAL STANDARD FOR A MOTION TO DISMISS A claim may be dismissed if it does not state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6) “To survive a motion to dismiss, a complaint must contain a sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (internal quotation marks omitted). Claims are plausible when the allegations include facts that allow the Court to draw a reasonable inference that the alleged misconduct occurred. Id. In considering a motion to dismiss, the “recitals of the elements of [an] action” should be separated from the factual allegations. Id. Next, the factual allegations should be assumed to be true, and the legal Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 7 of 13 Page ID #:492 4 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 conclusions should be ignored. Id. The factual allegations should then be reviewed to “determine whether they plausibly give rise to an entitlement to relief.” Id. In deciding a motion to dismiss, a court may take judicial notice of matters of public record. This includes entries in the dockets in related proceedings. See Fed. R. Evid. 201; Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2012); Harris v. Cty. of Orange, 682 F.3d 1126, 1131- 32 (9th Cir. 2012); Mack v. S. Bay Beer Distribs., 798 F.2d 1279, 1282 (9th Cir. 1986) (abrogated on other grounds by Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104 (1991)). The Court may also consider documents “whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading.” Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994) (overruled on other grounds by Galbraith v. Cnty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002)). IV. ARGUMENT Shinn Fu’s breach of contract claim fails because it has not established (and cannot establish) that it is a third party beneficiary of the Settlement Agreement. First, Shinn Fu does not allege – as it must – that the Wheel Wing products fall under the “Licensed Products” definition of the Settlement Agreement. Paragraph 1(c) of the Settlement Agreement, attached hereto as Exhibit A, provides: [P]roducts covered by, or whose use is covered by, one or more valid, subsisting and enforceable claim of one or more of the Patents in Suit (herein the “Licensed Products”), .... Licensed Products are further defined to include any device for hanging tires which is attached to a hoist that is covered by, or whose use is covered by, one or more valid, subsisting and enforceable claim of one or more of the Patents in Suit.1 That is, Shinn Fu does not allege that its Wheel Wing products practice the claims or are covered by the claims of the ‘610 Patent. If the products accused in this case are 1 The “Patents in Suit” are defined in the Settlement Agreement as including the ‘610 Patent. See Ex. A at p. 1. Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 8 of 13 Page ID #:493 5 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 not “Licensed Products” as that term is defined in the Settlement Agreement, then Shinn Fu cannot claim the status of third part beneficiary. Second, Shinn Fu does not allege that it or Rotary Lift complied with the terms of the Settlement Agreement such that Tire Hanger’s claim in this case amounts to a breach of the Settlement Agreement. Dkt. 26 at ¶¶ 13-30. In particular, Shinn Fu does not allege that it or Rotary Lift paid all the royalties the Settlement Agreement requires for the sale of “Licensed Products”, including the Shinn Fu Wheel Wing products. Id. That is, Shinn Fu does not allege that it or Rotary Lift committed no prior material breach of the Settlement Agreement (failure to pay royalites for the sale of “Licensed Products”). Shinn Fu does not allege that it paid or Rotary Lift paid the required royalties for those other products, whether sold to Rotary Lift or not. Id. Third, Shinn Fu does not claim that all of its Wheel Wing products sold in the United States are sold to Rotary Lift. Dkt. 26 at ¶¶ 13-30. Obviously, Shinn Fu Wheel Wing sales made to other parties in the United States are not affected by the Settlement Agreement. In addition, Shinn Fu does not allege that only its Wheel Wing products practice the claims of the ‘610 Patents. Id. In other words, Shinn Fu has not adequately alleged three essential conditions precedent to it gaining the status of an intended third party beneficiary to the Tire Hanger/Rotary Lift Settlement Agreement. The issue is whether “the parties intended to benefit the third party and the terms of the contract make that intent evident.” Balsam v. Tucows Inc., 627 F.3d 1158, 1161 (9th Cir. 2010). A “contract, made expressly for the benefit of a third party, may be enforced by him at any time before the parties thereto rescind it.” Cal. Civ. Code § 1559. “A third party qualifies as a beneficiary under a contract if the parties intended to benefit the third party and the terms of the contract make that intent evident.” Karo v. San Diego Symphony Orchestra Ass'n, 762 F.2d 819, 821–22 (9th Cir.1985) (citing Strauss v. Summerhays, 157 Cal. App. 3d 806, 816 (1984)). A party who is not expressly named or identified in a contract must demonstrate “that [it] is a member of a class of persons for whose benefit it was made.” Spinks v. Equity Residential Briarwood Apartments, 171 Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 9 of 13 Page ID #:494 6 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Cal. App. 4th 1004, 1023 (2009) (internal quotation marks and citations omitted) (citing Kaiser Eng'rs, Inc. v. Grinnell Fire Prot. Sys. Co., 173 Cal. App. 3d 1050, 1055 (1985)). “Whether the third party is an intended beneficiary… involves construction of the intention of the parties, gathered from reading the contract as a whole in light of the circumstances under which it was entered.” Prouty v. Gores Tech. Gr., 121 Cal. App. 4th 1225, 1233. Shinn Fu fails to allege that the parties to the Settlement Agreement intended to benefit Shinn Fu. Dkt. 26 at ¶¶ 13-30. To support the inference that Shinn Fu was an intended beneficiary, Defendants only allege that as manufacturers for Rotary Lift, they are “Related Persons” as defined by paragraph 1(a) the Settlement Agreement, and as such are entitled to enforce the release from liability for infringement of the ‘610 patent. Dkt. 26 at ¶¶ 13-30. This is not sufficient. Shinn Fu’s allegation that “Shinn Fu is an intended third-party beneficiary” (Dkt. 26 ¶26) is a legal conclusion that should be ignored by the Court. Ashcroft v. Iqbal, 556 U.S. at 678-79. Additionally, Shinn Fu has not alleged that it was a manufacturer of any Licensed Products when the Settlement Agreement was executed, so Tire Hanger could not have intended for Shinn Fu to specifically benefit from the Release recited in paragraph 1(a) of the Settlement Agreement. Moreover, Shinn Fu has not alleged that the Wheel Wing products it manufactured and sold to Rotary Lift are Licensed Products as that term is defined in the Settlement Agreement. Id. Shinn Fu’s counterclaim pleads no other vehicle by which it could be transformed into an intended third party beneficiary of the Tire Hanger/Rotary Lift Settlement Agreement. In view of these facts, as a matter of law, Shinn Fu is not an intended third party beneficiary of the Settlement Agreement and has no right to enforce the Release provisions of the Settlement Agreement. “It is a well-settled rule that when written instrument contradicts allegations in the complaint to which it is attached, the exhibit trumps the allegations.” Northern Ind. Gun & Outdoor Shows, Inc. v. City of South Bend, 163 F.3d 449, 454 (7th Cir. 1999) (citations omitted). Here, the Settlement Agreement is clear that (1) Rotary Lift must satisfy Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 10 of 13 Page ID #:495 7 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 certain conditions for the releases to remain in effect, and (2) any future infringing activity is excluded from the releases. First, assuming arguendo that Shinn Fu met the definition of a Related Person entitled to “Release” as defined in paragraph 1(a) of the Settlement Agreement, under paragraph 1(b), Tire Hanger promised not to sue Rotary Lift’s Related Persons “so long as the royalties due and owing to [Tire Hanger] under the provisions of this [Settlement] Agreement based upon Licensed Products purchased from or supplied by Rotary Lift” are paid to Tire Hanger. Rotary Lift’s failure to pay royalties to Tire Hanger (itself or on behalf of Shinn Fu) for the sale of Shinn Fu’s Wheel Wing products to Rotary Lift is the subject of Case No. 5:15-cv-02347-JGB-SP (complaint filed November 13, 2015). Tire Hanger’s claims against Rotary Lift fall under paragraph 1(e) of the Settlement Agreement, which provides: Nothing in Section l(b) or Section 4 shall be interpreted or construed to limit [Tire Hanger’s] right to sue Rotary Lift and/or ES for causes of action arising out of this [Settlement] Agreement for sales of Licensed Products in violation of the terms of the grant of license of Section 1(c). Such rights are specifically reserved herein. Because Rotary Lift failed to pay royalties owing to Tire Hanger (and Shinn Fu certainly did not pay those royalties), the Covenant Not To Sue provided in paragraph 1(b) of the Settlement Agreement is no longer in effect, and Tire Hanger’s suit against Shinn Fu would not be precluded. As such, Tire Hanger is entitled to sue Rotary Lift and any of its Related Persons. Shinn Fu does not allege that Rotary Lift paid royalties per the terms of Settlement Agreement paragraph 2(b) or that Rotary Lift did so on Shinn Fu’s behalf for the Wheel Wing products sold to Rotary Lift. Dkt. 26 at ¶¶ 13-30. Second, paragraph 12 of the Settlement Agreement states: Each Party agrees that the releases given in this Agreement are specific releases, that nothing in this Agreement constitutes a general release of unknown future claims, and that they will not raise as a defense or otherwise assert in any proceeding that a general release of an unknown future claim has been made by this [Settlement] Agreement. Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 11 of 13 Page ID #:496 8 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS COUNTERCLAIMS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Tire Hanger’s claims against Shinn Fu for its infringing activity are of the “future” variety, expressly contemplated by the parties to the Settlement Agreement. Therefore, the Settlement Agreement does not bar Tire Hanger’s claims against Shinn Fu in this case. In sum, Shinn Fu has not alleged sufficient facts to maintain its breach of Settlement Agreement claim, and this claim must be dismissed. First, Shinn Fu has not admitted that its Wheel Wing product (or other products sold to Rotary Lift) are covered by or practice the claims of the ‘610 Patent. Second, neither Shinn Fu nor Rotary Lift paid Tire Hanger the royalties, which are due for Shinn Fu’s Wheel Wing sales, and Shinn Fu makes no contrary allegations. Third, Shinn Fu does not allege that its Wheel Wing product is the only Shinn Fu product alleged to infringe the ‘610 Patent, nor does Shinn Fu allege that all Wheel Wing sales in the United State were made to Rotary Lift. In view of these irreparable deficiencies, the Court must dismiss Shinn Fu’s breach of Settlement Agreement counterclaim with prejudice. V. CONCLUSION Shinn Fu failed to allege facts showing that it may enforce the Settlement Agreement as a third party beneficiary. As a result, Shinn Fu’s counterclaim for breach of Settlement Agreement fails to state a claim upon which relief can be granted. Moreover, Shinn Fu cannot make the required amendments sufficient to state a claim because neither Rotary Lift nor Shinn Fu paid Tire Hanger a royalty for even one sale of the Shinn Fu Wheel Wing product. Therefore, Tire Hanger respectfully requests that this Court grant its motion to dismiss Shinn Fu’s breach of Settlement Agreement counterclaim with prejudice. Respectfully submitted, FISH & TSANG LLP Dated: March 22, 2017 By: /s/John D. van Loben Sels John D. van Loben Sels, Esq. Attorneys for Plaintiff and Counter Defendant, THE TIRE HANGER CORPORATION Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 12 of 13 Page ID #:497 CERTIFICATE OF SERVICE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the above and foregoing document was served on all counsel of record via the Court’s CM/ECF system on March 22, 2017. Respectfully submitted, By: /s/ John D. van Loben Sels John D. van Loben Sels Counsel for The Tire Hanger Corporation Case 5:16-cv-02668-JAK-JPR Document 33-1 Filed 03/22/17 Page 13 of 13 Page ID #:498 EXHIBIT A EXHIBIT A Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 1 of 29 Page ID #:499 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 2 of 29 Page ID #:500 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 3 of 29 Page ID #:501 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 4 of 29 Page ID #:502 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 5 of 29 Page ID #:503 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 6 of 29 Page ID #:504 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 7 of 29 Page ID #:505 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 8 of 29 Page ID #:506 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 9 of 29 Page ID #:507 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 10 of 29 Page ID #:508 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 11 of 29 Page ID #:509 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 12 of 29 Page ID #:510 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 13 of 29 Page ID #:511 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 14 of 29 Page ID #:512 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 15 of 29 Page ID #:513 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 16 of 29 Page ID #:514 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 17 of 29 Page ID #:515 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 18 of 29 Page ID #:516 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 19 of 29 Page ID #:517 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 20 of 29 Page ID #:518 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 21 of 29 Page ID #:519 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 22 of 29 Page ID #:520 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 23 of 29 Page ID #:521 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 24 of 29 Page ID #:522 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 25 of 29 Page ID #:523 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 26 of 29 Page ID #:524 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 27 of 29 Page ID #:525 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 28 of 29 Page ID #:526 Case 5:16-cv-02668-JAK-JPR Document 33-2 Filed 03/22/17 Page 29 of 29 Page ID #:527 [PROPOSED] ORDER GRANTING MOTION TO DISMISS COUNTERCLAIM 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JOHN D. VAN LOBEN SELS (SBN: 201354) jvanlobensels@fishiplaw.com JENNIFER J. SHIH (SBN: 276225) jshih@fishiplaw.com Fish & Tsang LLP 333 Twin Dolphin Drive, Suite 220 Redwood City, CA 94065 Telephone: (650) 517-9800 Facsimile: (650) 517-9898 Attorneys for Plaintiff, THE TIRE HANGER CORPORATION UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA THE TIRE HANGER CORPORATION, a California corporation; Plaintiff, v. SHINN FU COMPANY OF AMERICA, INC. and SHINN FU CORPORATION. Defendants. Case No. 5:16-02668 JAK (JPRx) Honorable John A. Kronstadt [PROPOSED] ORDER GRANTING PLAINTIFF’S MOTION TO DISMISS DEFENDANTS’ COUNTER CLAIM Date: April 24, 2017 Time: 8:30 a.m. Courtroom: 10B Complaint Filed: December 29, 2016 Trial Date: Not yet assigned Case 5:16-cv-02668-JAK-JPR Document 33-3 Filed 03/22/17 Page 1 of 2 Page ID #:528 [PROPOSED] ORDER GRANTING MOTION TO DISMISS COUNTERCLAIM 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 [PROPOSED] ORDER GRANTING MOTION AND MOTION TO DISMISS On April 24, 2017, Plaintiff and Counter Defendant Tire Hanger Corporation’s (“Tire Hanger’s”) Motion to Dismiss Defendants’ and Counter Claimants’ Shinn Fu Company of America, Inc. and Shinn Fu Corporation (“Shinn Fu’s”) counterclaim for breach of Settlement Agreement under Fed. R. Civ. P. 12(b)(6) came on for hearing on April 24, 2017 at 8:30 a.m. in Courtroom 10B of the above-entitled court. The Honorable John A. Kronstadt presided. John D. van Loben Sels, Esq. of Fish & Tsang LLP appeared on behalf of Tire Hanger, and Travis W. McCallon, Esq. of Lathrop & Gage LLP appeared on behalf of Shinn Fu. After consideration of all papers filed in connection with the Motion, the files and records in this action and hearing oral argument hereon: IT IS HEREBY ORDERED that the Motion is granted and that: 1. Shinn Fu’s Counterclaims fail to adequately plead standing as a third party beneficiary of the Settlement Agreement; 2. Shinn Fu’s Counterclaims fail to adequately plead breach of the Settlement Agreement; and 3. The first counterclaim is dismissed with prejudice for failure to state a claim upon which relief can be granted pursuant to Fed. R. Civ. P. 12(b)(6). IT IS SO ORDERED. Dated: Honorable John A. Kronstadt United States District Court Judge Case 5:16-cv-02668-JAK-JPR Document 33-3 Filed 03/22/17 Page 2 of 2 Page ID #:529