Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 1 of 11 PageID #: 1 IN THE UNITED STATED DISTRICT COURT FOR THE WESTERN DISTRICT OF KENTUCKY LOUISVILLE DIVISION BRANDON BEAVERS an individual; BEAVERS HOOF CARE SERVICES, LLC a Kentucky Limited Liability Company EXTREME CHUTE COMPANY, LLC a Kentucky Limited Liability Company Plaintiffs, Civil Action No.: 3:14-CV-539-TBR v. JURY DEMANDED RILEY BUILT, INC. a Texas Corporation & WILLIAM S. RILEY an individual Defendants. COMPLAINT FOR DECLARATORY RELIEF FOR PATENT NON-INFRINGMENT AND DEFAMATION Plaintiffs Brandon Beavers, Beavers Hoof Care Services, LLC, and Extreme Chute Company, LLC, file this complaint for declaratory judgment relief of patent non-infringement and defamation against Defendants Riley Built, Inc., and William S. Riley, and allege as follows: THE PARTIES 1. Plaintiff Brandon Beavers ( Beavers ) is an individual residing at 1415 Toad Mattingly Road, Lebanon, KY 40033. 2. Plaintiff Beavers Hoof Care Services, LLC ( Beavers Hoof Care ) is a limited - 1 -
Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 2 of 11 PageID #: 2 liability company organized under the laws of the Commonwealth of Kentucky, with its principle place of business at 1415 Toad Mattingly Road, Lebanon, KY 40033. 3. Plaintiff Extreme Chute Company, LLC, ( Extreme Chute ) is a limited liability company organized under the laws of the Commonwealth of Kentucky, with its principle place of business at 1415 Toad Mattingly Road, Lebanon, KY 40033. 4. Upon information and belief, Defendant Riley Built Inc., or alternatively Riley- Built, Inc. ( Riley Built ), is a Texas Corporation with its corporate headquarters at 7802 Genoa Avenue, Lubbock, TX 79424, and its principal place of business at 16611 FM 179, Wolfforth, TX, 79382. 5. William S. Riley ( Riley ) is an individual and, upon information and belief, is one of the owners and corporate officers of Riley Built. Riley is the inventor and presumptive owner of U.S. Patent No. 5,669,332. Upon information and belief, William S. Riley is a resident of Sulphur Springs, Texas. JURISDICTION AND VENUE 6. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. 1331, 1332, 1338, 2201 and 2202. 7. Venue properly exists in this judicial district pursuant to 28 U.S.C. 1391. 8. This Court has personal jurisdiction over the defendants pursuant to Ky. Rev. Stat. Ann. 454.210 because, on information and belief, Riley Built transacts business in Kentucky and solicits business in this judicial district. Defendants Riley and Riley Built own a United States Patent, and Defendants Riley and Riley Built have alleged that Plaintiffs Beavers, Beavers Hoof Care and Extreme Chute have conducted activities within this judicial district that constitute patent infringement. Additionally, Defendants Riley and Riley Built have hired an investigator to investigate the operations of Plaintiffs Beavers, Beavers Hoof Care, and Extreme - 2 -
Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 3 of 11 PageID #: 3 Chute within this judicial district, and this investigator has placed threatening phone calls and threatened physical violence against the owners and employees of Extreme Chutes, such acts presumably to occur within this judicial district. 9. This Court has jurisdiction over the lawsuit under 28 U.S.C. 1332(a)(1) because plaintiffs and defendants are citizens of different U.S. states and the amount in controversy exceeds $75,000 excluding interest and costs. 10. This Court has supplemental jurisdiction over the state claim of defamation under 28 U.S.C. 1367 because plaintiffs claims are so related to the claims within the Court s original jurisdiction that they form part of the same case or controversy under Article 3 of the U.S. Constitution. Specifically, defendant s claims of patent infringement, as described in detail below, are arguably defamatory under Kentucky law and also give rise to the legitimate fear of a suit for patent infringement, thus warranting the request for declaratory relief. FACTUAL ALLEGATIONS 11. Plaintiffs bring this suit for a declaratory judgment under Federal Rule of Civil Procedure 57 and 28 U.S.C. 2201 and 2202. This action also arises under the Patent Laws of the United States, 35 USC 1 et seq. 12. Plaintiff Brandon Beavers ( Beavers ) is the President and Owner of Plaintiff Beavers Hoof Care Services ( Beavers Hoof Care ) and Plaintiff Extreme Chute Company ( Extreme Chute ). Beavers is a cattle hoof trimmer, and operates his hoof trimming business under the name of Beavers Hoof Care Services. Beavers Hoof Care Services has a web site and a Facebook page to advertise and promote its business. Beavers has invented a new hoof trimming chute, and has applied for a provisional patent application for his new hoof trimming chute (the New Chute. ) Beavers incorporated Plaintiff Extreme Chute for the purpose of manufacturing, marketing, selling, and servicing the new hoof trimming chute. Beavers is in the process of - 3 -
Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 4 of 11 PageID #: 4 preparing a utility patent application for the New Chute. A copy of the Provisional Application for the New Chute is attached at Exhibit 1. 13. Plaintiff Extreme Chute manufactures, promotes, markets, offers for sale and sells cattle hoof trimming chutes. The hooves of cattle grow continuously and must be trimmed periodically to maintain the health of the animal. A cattle hoof trimming chute allows a hoof trimmer to immobilize the animal to facilitate the trimming of the hooves. 14. John Cordrey ( Cordrey ) is the Sales and marketing Manager for Plaintiff Extreme Chute. Cordrey is also the owner of Mid State Hoof Trimming, a company located in Bancroft, Wisconsin, which is in the business of trimming cattle hooves. Mid State Hoof Trimming has a Facebook page to advertise Cordrey s hoof trimming services, and is also used by Cordrey to advertise chutes sold by Plaintiff Extreme Chute. 15. Defendant Riley is the inventor and owner of United States Patent, No. 5,669,332. (the 332 patent.) The 332 patent is entitled Portable Chute for Immobilizing an Animal, and describes a chute for immobilizing cattle for the purposes of trimming their hooves. The 332 patent was issued on September 23, 1997, and is based on an application filed on February 20, 1996. This filed application is a continuation in part application, and claims priority on an application filed on January 3, 1995. A copy of the 332 patent is attached as Exhibit 2. 16. The 332 patent describes a cattle hoof trimming chute with a rear entrance gate, a front exit gate, and two side walls for restraining an animal within the cage. The 332 patent has 16 claims, two independent claims (claims 1 and 15) and fourteen dependant claims. The independent claims are typically the broadest claims, meaning they cover the broadest embodiment of the invention. Both claim 1 and claim 15 are drawn to a chute for immobilizing an animal having a cage with a front gate with means for opening, closing and latching the front - 4 -
Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 5 of 11 PageID #: 5 gate, a rear gate, with means for opening, closing, and latching the rear gate, means for rotating the chute, and means for operating the opening and closing features of the two gates and the rotational feature of the cage. Both of the broadest claims define the front gate as having a surface which tapers inwardly. Essentially this inwardly tapered surface will force the animal in the chute to move its head toward the opening in the front gate. This feature is described in detail in the written specifications in Column 2, lines 37 to 43, and column 5, lines 37 to 43. Both of the broadest claims further state that the means for operating the movable features of the chute are operable from the rear of the chute. The broadest claims also include a pivotably mounted stanchion for restraining the head of the cattle. 17. Upon information and belief, Defendant Riley Built was formed to manufacture, market, sell and service the hoof trimming chutes disclosed in the 332 patent. Upon information and belief, Defendant Riley has assigned his patent rights to Defendant Riley Built. Upon information and belief Defendant Riley Built has been selling these chutes from the Lubbock Texas location since at least 1999. 18. Upon information and belief, Defendants Riley and Riley Built became aware of Brandon Beavers and Plaintiff Extreme Chute in early 2014, when Beavers was discussing his design for a new chute with Cordrey and a number of other hoof trimmers, and posting information about the new chutes on the Beavers Hoof Care Facebook page. 19. On February 25, 2014, Defendant Riley, through his attorney H. Grady Terrill, of Craig, Terrill, Hale & Grantham, LLP, sent Beavers of Beavers Hoof Care and Cordrey of Mid State Hoof Trimming a cease and desist letter. (The Feb 25 cease and desist letter. ) A copy of the letter is attached as Exhibit 3. The Feb 25 cease and desist letter asserts that the chutes under development are so similar that they appear to violate each and every claim under the Riley - 5 -
Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 6 of 11 PageID #: 6 patent. The Feb 25 cease and desist letter demanded that Beavers provide Mr. Terrill all information related to chutes currently under development, change his website, cease manufacture of the current design of the chute, destroy any similar chutes, and provide evidence that the chutes have been destroyed. The Feb 25 cease and desist letter demanded that Beavers and Cordrey comply within 10 days or we will file suite in Federal Court. 20. Upon information and belief, immediately after Mr. Terrill sent the cease and desist letter to Beavers and Cordrey, Defendant Riley posted the letter to his own Facebook Page, and posted copies of the letter to the Facebook pages of both Mid State Hoof Trimming and Beavers Hoof Care. Defendant Riley also posted a second letter, and open letter to hoof trimmers dated February 28, 2014, stating the Beavers and Cordrey were infringing his patent. Copies of both Facebook postings are attached as Exhibit 4, and a copy of the open letter is attached at Exhibit 5. 21. On March 5, 2014, Beavers, by and through the undersigned attorney, sent a reply letter to Mr. Terrill responding to the allegations in the Feb. 25 cease and desist letter. (The reply letter. ) A copy of the reply letter is attached as Exhibit 6.The reply letter points out that the broadest claims of the 332 patent require that the front gate must have a tapered portion to direct the cow s head through the front gate. The reply letter included pictures showing that the allegedly infringing Beavers chute has a straight or flat front gate, does not include the tapered front gate, and therefore does not infringe the 332 patent. 22. Mr. Terrill acknowledged receipt of the reply letter by e-mail, but never replied in substance. E-mail attached as Exhibit 7. 23. On February 25 a man telephoned Cordrey and said that he was following him, and would bankrupt him for infringing Riley s patent. Upon information and belief this man - 6 -
Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 7 of 11 PageID #: 7 was an investigator hired by Defendants Riley and Riley Built. The Feb 25 cease and desist letter specifically noted that Riley had hired an investor to investigate the matter, and it is believed that the man who telephoned Cordrey was the investigator hired by Riley. This supposition is supported by the fact that at least one of the calls to Cordrey came from a phone with an 806 area code, which includes Lubbock Texas. The same man called Cordrey on February 28 and March 6. The same man called Beavers and threatened to bankrupt him and to stomp a mud hole in your ass. A number of these calls were in the form of voice mail messages, and the messages have been preserved. 24. One March 7, the undersigned attorney sent an e-mail to Mr. Terrill informing him of these actions and asking him to tell his client to stop. Mr. Terrill responded that he would check into the matter, but never responded further. E-mail exchange attached as Exhibit 8. 25. Upon information and belief, on or around May 24, 2014, Riley created a fake Facebook page under the name of John Courdrey, and posted comments on both the Mid State Hoof Trimming and Extreme Chute Company Facebook pages. Copies of the comments posted to Mid State Hoof Trimming are attached as Exhibit 9. The comments are written as if they were written by Cordrey. One of the comments states that if it wasn t for Bill s expertise, we wouldn t have anything to steal! Another says We have to have lawyers involved because we are violating a patented product and will probably lose our case. In the meantime I m going to remain a cocky little thief rubbing it in Riley s face!! 26. On May 30, an unidentified man began calling Cordrey and informing him that he and Mr. Riley would see Beavers and Cordrey in jail, bankrupt, and that they would hurt Beavers and Cordrey s family. 27. On July 4, a Mark Larson visited the fabrication shop where Extreme Chute is - 7 -
Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 8 of 11 PageID #: 8 manufacturing the New Chute. Upon information and belief Mark Larson is the sales manager and part owner of Riley Built. Mark Larson told the employees of the fabrication shop that the New Chute is infringing the 332 patent. He told the employees that they should stop building the New Chute or they would be sued. He also said that Beavers and Cordrey were thieves and infringers. 28. Riley Built sells a number of products related to hoof trimming. One of the products sold by Riley Built is a biodegradable leg wrap, called a Q. Pad, that is used to cover medication that is placed on an animal s leg during the hoof trimming process. Riley Built marks the Q. Pad as Pat. Pending. Upon information and belief, neither Riley nor Riley Built have filed a patent on this product, and therefore do not have a patent pending. A photograph of the Q. Pad is attached as Exhibit 10. 29. In light of Defendant Riley and Riley Built s specific assertions of infringement in the cease and desist letter, refusal to respond to the good faith reply letter, telephone calls from Riley s agent, and posts to Facebook by Defendant Riley that Extreme Chute and its employees and owner are infringing the 332 patent, an actual and substantial controversy now exists between Plaintiff Extreme Chute and Defendants Riley and Riley Built with respect to the 332 patent. COUNT I DECLARATORY JUDGMENT OF NON-INFRINGEMENT OF THE 332 PATENT 30. Plaintiffs Beavers, Beavers Hoof Care and Extreme Chute incorporate by reference paragraphs 1 29 above as if fully set forth herein. 31. This is a declaratory judgment action under the Patent Laws of the United States, 35 USC 1 et seq., and the Declaratory Judgment Act, 28 U.S.C. 2201 and 2202. As an - 8 -
Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 9 of 11 PageID #: 9 actual justiciable controversy exists by way of the credible threat of immediate litigation and demand to cease and desist the production of the Chute, as well as repeated accusations of infringement, Extreme Chute seeks relief from this Court. 32. The New Chute hoof trimming chute contains significant differences from the hoof trimming chute disclosed in the 332 patent. Specifically, the Extreme Chute does not include a tapered front gate, or its equivalents, as required by independent claims 1 and 15. The New Chute also does not position its controlling means at the rear of the chute as required by independent claims 1 and 15. The New Chute also does not have a pivotably mounted stanchion, or its equivalents, for restraining the head of the animal in the chute. Other differences between the New Chute and the 332 patent will be shown in detail at trial. 33. Because of the differences between the New Chute and the 332 patent, plaintiffs Beavers, Beavers Hoof Care and Extreme Chute have not directly infringed, induced the infringement of, nor has been a contributory infringer, of any of the claims of the 332 patent. COUNT II NON INFRINGMENT DUE TO PATENT MISUSE AND INEQUITABLE CONDUCT 34. Plaintiffs Beavers, Beavers Hoof Care and Extreme Chute incorporates by reference paragraphs 1 33 above as if fully set forth herein. 35. The 332 patent is not enforceable because of the patent misuse and inequitable conduct of the Defendants Riley and Riley Built. 36. A patent will be deemed unenforceable if the patent owner engages in conduct that seeks to extend scope of the patent, or to use the patent for unfair commercial advantage. See, e.g. Princo Corp. v. International Trade Com'n, 616 F.3d 1318 (Fed. Cir. 2010). Defendants threats in telephone calls, Facebook postings, meritless cease and desist letters, and improper marking of related hoof trimming products, constitute patent misuse and inequitable - 9 -
Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 10 of 11 PageID #: 10 conduct and render the 332 patent unenforceable. COUNT III DEFAMATION 37. Extreme Chute incorporates by reference paragraphs 1 36 above as if fully set forth herein. 38. The elements of defamation in Kentucky are (1) defamatory language, (2) about the plaintiff, (3) which is published, and (4) which causes injury to reputation. Stringer v. Wal- Mart Stores, Inc., 151 S.W.3d 781, 795-96. (Ky. 2004). Language is defamatory for purposes of the first element of this test "if it tends to (1) bring a person into public hatred, contempt or ridicule; (2) cause him to be shunned or avoided; or (3) injure him in his business or occupation." McCall v. Courier-Journal & Louisville Times Co., 623 S.W.2d 882, 884 (Ky.1981). There are two classes of defamatory statements in Kentucky, per quod and per se. If the statement is defamatory per se, damages are presumed. Statements classified as defamatory per se include those which attribute to someone a criminal offense, or conduct which is incompatible with his business, trade, profession, or office. Gilliam v. Pikeville United Methodist Hosp. of Kentucky, Inc., 215 S.W.3d 56, 61 (Ky. App. 2006). 39. Defendant Riley and his agents accused Beavers and employees of Extreme Chute of patent infringement and theft, as noted above in paragraphs 18, 19, 22, 24, 25, 26 and 27. These statements were published on the Riley Built Facebook page, the Mid State Hoof Trimming Facebook page, and the Extreme Chute Company Facebook page. These statements have been disseminated by Defendant Riley s agents in person, and broadcast over the internet. These statements accuse plaintiffs of theft and other conduct incompatible with his business and are, therefore defamatory per se. - 10 -
Case 3:14-cv-00539-TBR Document 1 Filed 07/28/14 Page 11 of 11 PageID #: 11 PRAYER FOR RELIEF WHEREFORE, PLAINTIFFS pray for relief and judgment as follows: (a) the Court enter a declaratory judgment that Plaintiffs Beavers, Beavers Hoof Care, and Extreme Chute Company have not infringe the 332 Patent; (b) the Court enjoin Defendant Riley and Defendant Riley Built and all of its officers, agents, employees, representatives and counsel, and all persons in active concert or participation with any of them, directly or indirectly, from charging infringement or instituting any action for infringement of U.S. Patent No. 5,669,332 against Plaintiffs Beavers, Beavers Hoof Care and Extreme Chute Company or any of its employees, customers or contractors; (c) the Court declare this an exceptional case, pursuant to 35 U.S.C. 285. Plaintiffs therefore specifically requests that the Court increase its damage award by a factor of three and award Plaintiffs their reasonable attorney s fees, expenses and costs in this action; (d) the Court find that Defendants statements defamed Plaintiffs, and award Plaintiffs damages as measured by lost sales, damage to business reputation, and other damages in an amount to be determined at trial; and (e) the Court award Plaintiffs such other and further relief as it may find appropriate. Date: July 28, 2014 Respectfully submitted, By: s/ Michael Coblenz Michael Coblenz, Esq. MICHAEL COBLENZ ATTORNEY AT LAW 230 Lexington Green, Suite 116 Lexington, KY 40503 Telephone (859) 321-6206 Facsimile (859) 422-5082 E-mail mcoblenz@windstream.net ATTORNEY FOR PLAINTIFFS BEAVERS, BEVERS HOOF CARE AND EXTREME CHUTE - 11 -