DEAN D. PREGERSON, District Judge.
Presently before the court is Defendant and Counterclaimant ClarkWestern Dietrich Building Systems LLC ("ClarkWestern)'s Motion to Dismiss Plaintiff's Third Claim for Negligent Interference with Prospective Economic Advantage (Dkt. 113). Also before the court is Plaintiff California Expanded Metal Products Company ("CEMCO")'s Motion to Dismiss ClarkWestern's Counterclaim (Dkt. 117). Having considered the submissions of the parties and heard oral argument, the court grants both motions and adopts the following order.
Plaintiff California Expanded Metal Products Co. ("CEMCO") is a California corporation. (Third Amended Complaint ("TAC") ¶ 1.) Defendant James A. Klein ("Klein") was, at one time, a CEMCO employee. (TAC ¶ 8.) CEMCO alleges it entered into a contract ("the Agreement") with Klein, under which he promised CEMCO exclusive negotiation rights for an exclusive license to any construction-related technology that Klein might invent. (TAC ¶ 9.) Under the Agreement, in the event CEMCO and Klein were unable to agree on license terms, CEMCO would enjoy a right of first refusal on any licensing agreement that Klein reached with a third party. (
Klein later patented a new construction technology, but did not grant an exclusive license to CEMCO. (TAC ¶ 10.) Instead, Klein licensed his new "Blazeframe" technology to CEMCO's biggest competitor, Defendant ClarkWestern. (
On October 31, 2012, Klein filed a patent infringement action against CEMCO in the Western District of Washington.
After conferring with the parties, this court directed CEMCO to file a Third Amended Complaint. The TAC alleges the same six causes of action originally alleged, as well as nine additional causes of action for declaratory relief regarding the validity and enforceability of the various BlazeFrame patents. Clarkwestern again filed a counterclaim against CEMCO, alleging a single claim for Tortious Interference with Prospective Economic Advantage. (Dkt. 115.)
ClarkWestern now moves to dismiss CEMCO's third cause of action for negligent interference with prospective economic advantage. CEMCO moves to dismiss ClarkWestern's counterclaim.
A complaint will survive a motion to dismiss when it contains "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face."
CEMCO's Third Cause of Action for Negligent Interference with Prospective Economic Advantage alleges that ClarkWestern knew or should have known about the relationship between Klein and CEMCO, and failed to act with reasonable care by "unfairly using its multibillion dollar market power to dictate the terms of the license that was offered by Klein to CEMCO, by interfering with CEMCO's ability to obtain a fair license in an arms [sic] length negotiation with only Klein on an exclusive basis, and by requiring that Klein sue CEMCO for patent infringement. . . ." (TAC ¶¶ 30-31.) ClarkWestern argues that it, as a competitor, owed no duty of care to CEMCO. (ClarkWestern Motion at 5-6.)
"The threshold element of a cause of action for negligence is the existence of a duty to use due care toward an interest of another that enjoys legal protection against unintentional invasion."
CEMCO's argument that ClarkWestern owed CEMCO a duty of care relies almost entirely upon the California Supreme Court's decision in
ClarkWestern, in turn, points to
A court of this district addressed the potential incongruity between
Here, as in
ClarkWestern's Counterclaim alleges a single cause of action for Tortious Interference with Prospective Economic Advantage. (Counterclaim ¶¶ 11, 13.) The thrust of ClarkWestern's counterclaim is that CEMCO intentionally interfered with license discussions between Klein and ClarkWestern by "maintaining uncertainty" regarding CEMCO's own claims regarding Klein's patent. (Counterclaim ¶ 11.) Specifically, CEMCO allegedly misrepresented that its exclusive licensing Agreement with Klein applied to the BlazeFrame invention, disputed Klein's ownership of the patented technology, misrepresented its willingness to settle the ownership dispute, and amended its own patent applications to avoid resolution of ownership issues. Because of these intentional acts, ClarkWestern alleges that its license agreement with Klein was delayed by two years, during which time CEMCO sold its "FAS Track" version of Klein's product royalty-free.
An intentional interference claim requires (1) an economic relationship between plaintiff and a third party with the probability of future economic benefit to the plaintiff, (2) defendant's knowledge of that relationship, (3) defendant's intentional, independently wrongful act to disrupt the relationship, (4) actual disruption, and (5) economic harm to the plaintiff.
CEMCO argues that ClarkWestern's counterclaim fails because (1) the Counterclaim does not allege a sufficient economic relationship between ClarkWestern and Klein and (2) CEMCO's alleged acts were not unlawful. (CEMCO Motion at 1-2.)
Intentional interference claims protect "the expectation that the [economic] relationship eventually will yield the desired benefit, not necessarily the more speculative expectation that a potentially beneficial relationship will arise."
Here, ClarkWestern's Counterclaim alleges that it began an economic relationship with Klein's company, BlazeFrame Industries Ltd., in 2010 "as a result of BlazeFrame's claims to ownership of the BlazeFrame Technology and [ClarkWestern's] interest in obtaining a license. . . ." (Counterclaim ¶ 8.) The Counterclaim also alleges that BlazeFrame and ClarkWestern "began discussing a possible license" in January 2010 and "engaged in on-going discussions with BlazeFrame for the next two-plus years regarding a potential license. . . ." (
The Counterclaim does not adequately allege when the purported economic relationship between Clarkwestern and BlazeFrame began. "To show an economic relationship, the cases generally agree that it must be reasonably probable the prospective economic advantage would have been realized but for defendant's interference."
Though ClarkWestern argues that the eventual execution of a licensing agreement in 2012 is sufficient to demonstrate the existence of an economic relationship, that licensing agreement was not consummated until over two and a half years after the relationship is alleged to have begun, and roughly two and a half years after CEMCO's written communications to ClarkWestern. It is unclear from the Counterclaim, as currently pled, when in that span a reasonable expectation that the licensing talks would bear fruit arose. Accordingly, ClarkWestern's Counterclaim is DISMISSED, with leave to amend.
For the reasons stated above, the Motions to Dismiss are GRANTED. CEMCO's Third Cause of Action is dismissed with prejudice. ClarkWestern's Counterclaim is dismissed with leave to amend. Any amended counterclaim shall be filed within fourteen days of the date of this Order.