Case 1:18-cv-06652-JGK Document 44 Filed 10/31/18 Page 1 of 26

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF NEW YORK

CLINTON EASTWOOD and HOWARD

BERNSTEIN, as TRUSTEES of the 1988 ECF CASE
CLINTON EASTWOOD TRUST,
and DOES 1 through XXXX, inclusive,

Plaintiffs, Case No.: 1:18-cv-06652-JGK

v.

MOLECULAR DEFENSES CORPORATION,

a Nevada corporation, MOLECULAR
DEFENSES CORPORATION, a New York
corporation, MOLECULAR DEFENSE
HOLDINGS, LLC, MOLECULAR DEFENSES
GROUP, INC., THYOGEN GROUP
CORPORATION, and KEVIN DAVIS,

Defendants.

DEFENDANTS’ MEMORANDUM OF LAW IN SUPPORT OF MOTION TO DISMISS

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TABLE OF CONTENTS
I. INTRODUCTION ............................................................................................................................. 1
II. BACKGROUND .............................................................................................................................. 2
III. LEGAL STANDARDS................................................................................................................... 5
A. Article III Standing ....................................................................................................... 5
B. Dismissal Under Federal Rule Civil of Procedure 12(b)(1) ......................................... 6
C. No Discretionary Supplemental Jurisdiction Over State Law Claims .......................... 6
D. Dismissal Under Federal Rule of Civil Procedure 12(b)(6) ......................................... 7
IV. ARGUMENT .................................................................................................................................. 7
A. THE COMPLAINT SHOULD BE DISMISSED IN ITS ENTIRETY
FOR LACK OF JURISDICTION UNDER RULE 12(b)(1) ........................................ 7

1. Plaintiffs Lack Constitutional Standing to Assert Counts 1, 3, and 4

Under the Patent Laws for Correction of Inventorship ............................................ 8

a. Plaintiffs Fail to Allege Injury, Causation, or Redressability ......................... 9

b. Plaintiffs’ Purported Standing Under the Patent Laws is Improperly

Conditional on State-Law Causes of Action ................................................. 12

2. Plaintiffs Lack Constitutional Standing to Assert Count 2 for Priority .................. 13

3. The Court Lacks Jurisdiction to Review Inventorship of a Non-Issued

International Patent Application in Count 4 ........................................................... 14

4. State Law Counts 5-8 Must be Dismissed for Lack of Supplemental

Jurisdiction ............................................................................................................. 15

B. IN THE ALTERNATIVE, ALL CLAIMS SHOULD BE DISMISSED

UNDER RULE 12(b)(6) FOR FAILURE TO STATE A CLAIM ON
WHICH RELIEF CAN BE GRANTED ..................................................................... 16

1. Plaintiffs Fail to Address the Invention in Their Allegations of Inventorship ....... 16

2. Plaintiffs’ Conversion, Unjust Enrichment, and Constructive Trust Claims

Fail to Allege Required Elements .......................................................................... 18
V. CONCLUSION .............................................................................................................................. 20

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TABLE OF AUTHORITIES
Page(s)
CASES
Ashcroft v. Iqbal,
556 U.S. 662 (2009) .............................................................................................................7, 16, 18
Bell Atl. Corp. v. Twombly,
550 U.S. 544 (2007) .......................................................................................................................16
Chou v. Univ. of Chi.,
254 F.3d 1347 (Fed. Cir. 2001)..............................................................................................5, 9, 11
Coda Dev. v. The Goodyear Tire & Rubber Co.,
No. 15-cv-1572,
2016 WL 5463058 (N.D. Ohio Sep. 29, 2016) ..............................................................................17
DaimlerChrysler Corp. v. Cuno,
547 U.S. 332 (2006) .........................................................................................................................6
E.E.O.C. v. Port Authority of N.Y. & N.J.,
768 F.3d 247 (2d Cir. 2014)...........................................................................................................16
Eli Lilly & Co. v. Aradigm Corp.,
376 F.3d 1352 (Fed. Cir. 2004)......................................................................................................16
Ethicon, Inc. v. U.S. Surgical Corp.,
135 F.3d 1456 (Fed. Cir. 1998)......................................................................................................17
Ferring B.V. v. Allergan, Inc.,
316 F. Supp. 3d 623 (S.D.N.Y. 2018)..............................................................................................9
First Data Corp. v. Inselberg,
870 F.3d 1367 (Fed. Cir. 2017)......................................................................................................13
Gaia Techs., Inc. v. Reconversion Techs., Inc.,
93 F.3d 774,
as amended, 104 F.3d 1296 (Fed. Cir. 1996).................................................................................16
Harris v. Mills,
572 F.3d 66 (2d Cir. 2009)...............................................................................................................6
HIF Bio, Inc. v. Yung Shin Pharm. Indus. Co.,
600 F.3d 1347 (Fed. Cir. 2010)................................................................................................14, 15
Huster v. J2 Cloud Servs., Inc.,
682 F. App’x 910 (Fed. Cir. 2017) ..................................................................................................5
Jim Arnold Corp. v. Hydrotech Systems, Inc.,
109 F.3d 1567 (Fed. Cir. 1997)................................................................................................12, 13

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Kamden-Ouaffo v. Pepsico, Inc.,

657 F. App’x 949 (Fed. Cir. 2016),
cert. denied, 137 S. Ct. 1096 (2017) ........................................................................................14, 19
Kirschner v. Bennett,
648 F. Supp. 2d 525 (S.D.N.Y. 2009)............................................................................................19

Larson v. Correct Craft, Inc.,

569 F.3d 1319 (Fed. Cir. 2009).............................................................................................. passim
Luckett v. Delpark, Inc.,
270 U.S. 496 (1926) .......................................................................................................................13
Lujan v. Defenders of Wildlife,
504 U.S. 555 (1992) .........................................................................................................................5

Nowak v. Ironworkers Local 6 Pension Fund,

81 F.3d 1182 (2d Cir. 1996).....................................................................................................16, 17
Opternative, Inc. v. Jand, Inc.,
No. 17-6936 (JFK),
2018 WL 3747171 (S.D.N.Y. Aug. 7, 2018) .................................................................................17
Prima Tek II, L.L.C. v. A-Roo Co.,
222 F.3d 1372 (Fed. Cir. 2000)........................................................................................................5

Rite-Hite Corp. v. Kelley Co.,

56 F.3d 1538 (Fed. Cir. 1995)..........................................................................................................5
Rocky Mountain Helium, LLC v. United States,
841 F.3d 1320 (Fed. Cir. 2016)........................................................................................................6
Salmon Spawning & Recovery Alliance v. U.S. Customs & Border,
550 F.3d 1121 (Fed. Cir. 2008)......................................................................................................16
Shukh v. Seagate Tech., LLC,
803 F.3d 659 (Fed. Cir. 2015),
cert. denied, 136 S. Ct. 2512 (2016) ................................................................................................9
Smith v. McCullough,
270 U.S. 456 (1926) .........................................................................................................................6
Spokeo, Inc. v. Robins,
136 S. Ct. 1540 (2016) .................................................................................................................5, 9

Steel Co. v. Citizens for a Better Env’t,

523 U.S. 83 (1998) ...........................................................................................................................6
Textile Prods., Inc. v. Mead Corp.,
134 F.3d 1481 (Fed. Cir. 1998)......................................................................................................16

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Thompson v. County of Franklin,

15 F.3d 245 (2d Cir. 1994).............................................................................................................10
Vermont Agency of Natural Res. v. United States ex rel. Stevens,
529 U.S. 765 (2000) .........................................................................................................................5
Warth v. Seldin,
422 U.S. 490 (1975) .........................................................................................................................8
WiAV Sols. LLC v. Motorola, Inc.,
631 F.3d 1257 (Fed. Cir. 2010)........................................................................................................5
STATUTES
28 U.S.C. § 1331 ..............................................................................................................................7, 15

28 U.S.C. § 1338(a) .........................................................................................................................7, 15

28 U.S.C. § 1367 ..............................................................................................................................8, 15
35 U.S.C. § 112(b) ...............................................................................................................................17
RULES
Fed. R. Civ. P. 12(b)(1)......................................................................................................................2, 6

Fed. R. Civ. P. 12(b)(6)................................................................................................................2, 7, 16

MISCELLANEOUS
13A Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure §§ 3531, 3531.4 (3d ed. 2008 & Supp. 2016) .............................6

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Defendants Molecular Defenses Corporation, a Nevada corporation, Molecular Defenses

Corporation, a New York corporation, Molecular Defense Holdings LLC, Molecular Defenses

Group, Inc., ThyoGen Group Corporation, and Kevin Davis (collectively “Molecular Defenses” or

“Defendants”), through their undersigned counsel, hereby submit this Memorandum in Support of

their Motion to Dismiss. Plaintiffs’ Complaint should be dismissed for lack of standing under

Federal Rule of Civil Procedure 12(b)(1) and, alternatively, failure to state a claim under Federal

Rule of Civil Procedure 12(b)(6).

I. INTRODUCTION

Plaintiffs’ Complaint attempts to invoke this Court’s jurisdiction by framing their dispute as

one over “inventorship” under the patent laws. But even taking as true the baseless allegations that

“Dr. Demopoulos solely contributed to the claimed invention,” and “Kevin Davis is not an inventor

of the inventions claimed,” Plaintiffs lack any standing and/or cognizable right in U.S. Patent No.

9,901,611 (“the ’611 Patent”) 1 or International Patent Application No. PCT/US/2016/038381

(“the ’381 International Application”). Complaint, ¶¶ 158, 168, 172. Nowhere in Plaintiffs’

Complaint is there any factual basis to conclude that Plaintiffs have standing to change the

inventorship of the ’611 Patent or the ’381 International Application. Plaintiffs do not represent the

estate of the late Dr. Harry B. Demopoulos and have alleged no facts that the ’611 Patent or ’381

International Application were assigned to them or were under an obligation of assignment to them.

Instead, Plaintiffs seek to bootstrap their state law causes of action—concerning nearly a

dozen additional intellectual property rights and undefined “tangible and intangible property” of still

1
The Complaint refers to the ’611 Patent as the “U.S. Derivative Patent.” Complaint (ECF No.

1), ¶ 131.

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two other entities—into federal court by manufacturing an “inventorship” dispute that in turn is

premised on its state-law allegations that the ’611 Patent and ’381 International Application “were

wrongfully and/or invalidly assigned” because assignments to which they were not parties are “null

and void.” But the case law is clear that Plaintiffs’ circular reasoning cannot vest this Court with

jurisdiction.

Plaintiffs do not have any rights in the ’611 Patent or ’381 International Application, whether

or not misjoinder of inventorship occurred. Plaintiffs have not alleged that they have anything

cognizable to be gained from removing Kevin Davis as an inventor. Thus, Plaintiffs lack standing to

bring their claims of correction of inventorship in Counts 1, 3, and 4, and they must be dismissed

under Rule 12(b)(1). Similarly, having no rights in the ’611 Patent or the ’381 International

Application, Plaintiffs have no standing with respect to Count 2’s request for a declaration of priority,

which, in any event, is not a live case or controversy. Because Plaintiffs lack standing for the patent-

related counts, there is no supplemental jurisdiction over the state law counts. Accordingly, the

Court should dismiss this case.

Further, the counts relying on inventorship were insufficiently pled and should be dismissed

under Rule 12(b)(6). The inventorship allegations do not specify why Kevin Davis is not a proper

inventor, and fail to even address the relevant invention, i.e., the patent claims. Indeed, the limited

facts alleged by Plaintiffs actually support Kevin Davis’s inventorship. Thus, the Complaint can

also be dismissed for failure to state a claim upon which relief can be granted. Either way, this case

should end now.

II. BACKGROUND

Plaintiffs’ Complaint grossly mischaracterized the events surrounding Kevin Davis’s

contribution to the patents, and the corporate reorganization that was specifically directed by Dr.

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Demopoulos before his tragic illness and death. While on a motion to dismiss the allegations in the

Complaint are assumed to be true, the Complaint includes such misleading assertions that

Defendants feel compelled to provide some additional background to the Court. This background

information is presented only to provide context to the dispute between the parties, and does not

affect the legal analysis for the motion to dismiss, which is based solely on Plaintiffs’ Complaint.

During his lifetime, Dr. Demopoulos owned and maintained more than twenty businesses for

the production and sale of high-quality supplements, such as glutathione. By 2014, some of these

entities were essentially non-functional or had been dissolved, while others were actively involved in

ongoing research or involved at various points in time in manufacturing and sale of compounds.

Dr. Demopoulos hired Kevin Davis in 2014 as President of ThyoGen Group Corporation to

bring order to this chaos. To that end, Dr. Demopoulos and Mr. Davis determined that the interests

of the shareholders would best be served by the consolidation of the work of the various entities into

one entity. Thus, the corporate restructuring for the five legacy companies, the Glutathione

Corporation, Cell. Redox Corporation, International, Molecular Defenses, Ltd., Global Cell

Signaling, Ltd., and Redox and Signaling-Pharmaceutical Holdings Corporation, was planned and

carried out under Dr. Demopoulos’s direct vision and wishes.

Soon after Mr. Davis was hired, he began to have scientific discussions with Dr. Demopoulos

and Nobel Laureate Dr. Luc Montagnier. Mr. Davis had detailed discussions with Dr. Demopoulos

and Dr. Montagnier about therapeutic direction, future business plans, manufacturing issues, supply

chain, customer support, and methods of action and disease targets. Mr. Davis also had numerous

scientific discussions with Dr. Montagnier regarding disease indications and their associated co-

factors and potential causes, particularly at the molecular level. Mr. Davis developed a sophisticated

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understanding of the biochemistry and the science related to glutathione and numerous diseases in

which oxidative stress is a co-factor.

As part of the corporate restructuring, Mr. Davis and Dr. Demopoulos sought out the advice

of legal counsel and other professional advisors while creating the roll-up transaction restructuring

plan and implementing multiple revisions throughout the end of 2015 and early 2016. All of these

decisions, plans, and revisions were carried out well before undertaking the partial restructuring in

early March of 2016. In fact, Dr. Demopoulos and Mr. Davis shared this two-step roll-up

transaction restructuring business plan with Plaintiffs Mr. Eastwood and Mr. Bernstein as early as

the summer of 2015. By December 2015, Dr. Demopoulos and Mr. Davis had agreed upon the final

restructuring plan. Tragically, Dr. Demopoulos suffered a stroke shortly thereafter.

Plaintiffs’ Complaint lists six patents relating to glutathione that Plaintiffs call the “U.S. APC

Patents.” Complaint, ¶ 54. All of these patents have expired, and none of these patents are at issue

in this litigation. Only one of these six patents, U.S. Patent No. 6,204,248, was actually assigned to

Antioxidant Pharmaceuticals Corporation (“APC”) in 2016. Five of these six patents were in fact

assigned to Dr. Demopoulos from their issuance until February 14, 2017. On this date, as part of the

roll-up transaction restructuring plan, the other five patents were assigned from Dr. Demopoulos to

APC. Subsequently, all six of the glutathione patents were assigned from APC to Molecular

Defense Holdings, LLC on the very same day, February 14, 2017, consistent with the roll-up

transaction restructuring plan outlined by Dr. Demopoulos. Neither the ’611 Patent nor ’381

International Application were ever assigned to APC.

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The ’611 Patent was based on a provisional patent application, No. 62/182,229 (“the ’229

Application”), that was filed on June 19, 2015. Ex. 2 1 at (60). After Dr. Demopoulos suffered his

stroke, Mr. Davis, working with intellectual property counsel, made substantial changes to the ’229

Application, which resulted in the filing of non-provisional Patent Application No. 15/187,270

(“the ’270 Application”), which was filed on June 20, 2016. The ’270 Application includes

additional material related to use of the glutathione complex for treatment of the Zika virus,

compositions of glutathione formulations, and optimization of the manufacturing environment for

pharmaceutical glutathione formulations. This material was not included in the ’229 Application. It

was Mr. Davis’s research and inventive efforts that led to the inclusion of this additional material.

III. LEGAL STANDARDS

A. Article III Standing

To have Article III standing, the “plaintiff must have (1) suffered an injury in fact, (2) that is

fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a

favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (citing Lujan v.

Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)); Chou v. Univ. of Chi., 254 F.3d 1347, 1357

(Fed. Cir. 2001). “The benefit of the suit to the plaintiff must relate to the alleged injury.” Huster v.

J2 Cloud Servs., Inc., 682 F. App’x 910, 914 (Fed. Cir. 2017) (citing Vermont Agency of Natural Res.

v. United States ex rel. Stevens, 529 U.S. 765, 772-73 (2000)). Federal Circuit law applies to the

issue of standing under the patent laws. See WiAV Sols. LLC v. Motorola, Inc., 631 F.3d 1257, 1263

(Fed. Cir. 2010); Rite-Hite Corp. v. Kelley Co., 56 F.3d 1538, 1551 (Fed. Cir. 1995); Prima Tek II,

L.L.C. v. A-Roo Co., 222 F.3d 1372, 1376-77 (Fed. Cir. 2000). In conducting the standing analysis,

2
“Ex.” refers to documents attached to the Declaration of Joshua Mack, filed herewith.

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the court “assumes the merits of a litigant’s claim and determines whether even though the claim

may be correct the litigant advancing it is not properly situated to be entitled to its judicial

determination.” Rocky Mountain Helium, LLC v. United States, 841 F.3d 1320, 1325 (Fed. Cir.

2016) (internal quotation marks omitted); see 13A Charles Alan Wright & Arthur R. Miller, Federal

Practice and Procedure §§ 3531, 3531.4 (3d ed. 2008 & Supp. 2016).

B. Dismissal Under Federal Rule Civil of Procedure 12(b)(1)

A defendant may move to dismiss an action based on lack of federal subject matter

jurisdiction. Fed. R. Civ. P. 12(b)(1). In deciding a Rule 12(b)(1) motion, the court takes the factual

allegations in the complaint as true and draws all reasonable inferences in the plaintiff’s favor.

Harris v. Mills, 572 F.3d 66, 71 (2d Cir. 2009). Although a court must accept as true all of the

allegations contained in a complaint, that tenet is inapplicable to legal conclusions and threadbare

recitals of the elements of a cause of action supported by mere conclusory statements. Id. at 72.

Furthermore, federal courts are presumed to lack jurisdiction unless the contrary appears

affirmatively from the record. DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 (2006). The party

seeking to invoke the court’s jurisdiction bears the burden of demonstrating that jurisdiction exists.

Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 103-04 (1998). If the pleading fails to

“affirmatively and distinctly” show the existence of the facts necessary to establish jurisdiction, the

challenged claim must be dismissed. Smith v. McCullough, 270 U.S. 456, 459 (1926).

C. No Discretionary Supplemental Jurisdiction Over State Law Claims

A federal court should decline to exercise supplemental jurisdiction over state-law claims if it

has dismissed all claims purporting to invoke the court’s original jurisdiction. Where the court

dismisses the federal claims for lack of jurisdiction, it has no discretion to retain the supplemental

claims. See Larson v. Correct Craft, Inc., 569 F.3d 1319, 1325-26 (Fed. Cir. 2009) (“[I]f the

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jurisdiction-conferring patent claim is dismissed for lack of standing, the district court cannot

exercise supplemental jurisdiction over surviving state-law claims because there was never an

Article III case or controversy.”).

D. Dismissal Under Federal Rule of Civil Procedure 12(b)(6)

A defendant may move to dismiss an action based on failure to state a claim. Fed. R. Civ. P.

12(b)(6). While “a court must accept a complaint’s allegations as true,” this tenet is applicable only

to facts, not mere conclusions. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). “Threadbare recitals of

elements of a cause of action, supported by…conclusory statements, [no longer] suffice” to

withstand a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Id.

at 678. While “Rule 8 marks a notable and generous departure from the hypertechnical, code-

pleading regime of the prior era, … it does not unlock the doors of discovery for a plaintiff armed

with nothing more than conclusions.” Id. at 678-79. “[W]here the well-pleaded facts do not permit

the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has

not ‘show[n]’—‘that the pleader is entitled to relief.’” Id. at 679 (citation omitted).

IV. ARGUMENT

A. THE COMPLAINT SHOULD BE DISMISSED IN ITS ENTIRETY FOR

LACK OF JURISDICTION UNDER RULE 12(b)(1)

Plaintiffs lack constitutional standing to assert their patent Counts 1-4 for correction of

inventorship and priority because they lack any ownership and/or financial interest in the ’611 Patent

and ’381 International Application that are the subjects of those counts. The alleged improper

inclusion of Kevin Davis as an inventor does not create an injury in fact and his removal does not

redress any injury. Regardless of inventorship, no benefit inures to the Plaintiffs by this suit.

Accordingly, there is no original jurisdiction under 28 U.S.C. §§ 1331 or 1338(a).

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Plaintiffs’ only claims arising “under the patent laws” relating to a U.S. patent concern a

single U.S. patent, the ’611 Patent.3 Although the Complaint discusses at length Plaintiffs’ concerns

with what it defines as the “APC Patents”—none of those patents are the basis of Plaintiffs’ counts

for inventorship. Thus, no allegations concerning them can provide standing as to the single,

separate, and unrelated ’611 patent. Plaintiffs must have an ownership or financial interest in

the ’611 patent, not some other intellectual property rights, but it has not even alleged one. No

Plaintiff is alleged to ever have ownership of the patent. Nor even is non-party APC, through which

Plaintiffs seek to assert rights as shareholders.

And because these patent counts are the only asserted bases for federal jurisdiction, there is

also no supplemental jurisdiction of Plaintiffs’ state law claims in Counts 5-8 under 28 U.S.C. §

1367. Larson, 569 F.3d at 1325-26 (“[I]f the jurisdiction-conferring patent claim is dismissed for

lack of standing, the district court cannot exercise supplemental jurisdiction over surviving state-law

claims because there was never an Article III case or controversy.”).

1. Plaintiffs Lack Constitutional Standing to Assert Counts 1, 3, and 4

Under the Patent Laws for Correction of Inventorship

“Whether the plaintiff has Article III standing ‘is the threshold question in every federal case,

determining the power of the court to entertain the suit.’” Id. at 1325 (quoting Warth v. Seldin, 422

U.S. 490, 498 (1975)). Here, as a threshold matter, Plaintiffs fail to allege the required injury,

causation, and redressability required for constitutional standing for a federal cause of action, much

less one that is not in turn improperly conditional on state law claims.

3
As discussed in § IV.A.3, the allegations as to the international application do not arise under
the patent laws.

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a. Plaintiffs Fail to Allege Injury, Causation, or Redressability

The Federal Circuit has held that “a plaintiff seeking correction of inventorship under § 256

can pursue that claim in federal court only if the requirements for constitutional standing—namely

injury, causation, and redressability—are satisfied.” Larson, 569 F.3d at 1326. Plaintiffs here fail to

allege the required elements for standing where they claim no non-contingent interest in the ’611

Patent and ’381 International Application, much less an interest that has been redressably injured by

Defendants. See Spokeo, 136 S. Ct. at 1547 (“[A]t the pleading stage, the plaintiff must

clearly…allege facts demonstrating each element” required for standing).

A plaintiff challenging inventorship meets its Article III burden only by showing an

“ownership interest” in the patent, a non-conditional “concrete financial interest” in the patent, or a

“concrete and particularized reputational injury” arising from the omission as a named inventor on

the patent. Ferring B.V. v. Allergan, Inc., 316 F. Supp. 3d 623, 630 (S.D.N.Y. 2018) (citing Larson,

569 F.3d at 1326; Chou, 254 F.3d at 1359; and Shukh v. Seagate Tech., LLC, 803 F.3d 659, 663 (Fed.

Cir. 2015), cert. denied, 136 S. Ct. 2512 (2016)).

Here, Plaintiffs do not allege facts showing an ownership interest, concrete financial interest,

or reputational injury. Instead, they simply state in a conclusory manner that “Plaintiffs have a

legally protected interest in the [’611 Patent] and [’381 International Application].” Complaint, ¶¶

155, 162, 167, 171. But they do not allege how or why. Plaintiffs do not allege that they (or even

non-party APC) ever owned the ’611 Patent or ’381 International Application by assignment,

because they did not. Indeed, the facts as pled demonstrate that both Kevin Davis and Dr.

Demopoulos assigned their rights in the patent and application to Molecular Defenses Corporation.

See Complaint, ¶¶ 12, 130, 196. Plaintiffs identify and allege no assignment documents or right of

assignment documents related to the patent or application that confer upon any or all of Plaintiffs

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ownership rights, because none exist. As noted, Plaintiffs’ allegations as to the unrelated “APC

Patents” are irrelevant. Plaintiffs have not pleaded any entitlement to Dr. Demopoulos’s

inventorship stake through assignment and his estate is not represented as Plaintiff. 4

Without an ownership, financial, or reputational interest, Plaintiffs cannot establish the

required injury, causation, and redressability. Even if Plaintiffs made a claim that they derived any

rights from Dr. Demopoulos as inventor, which they do not, Dr. Demopoulos is already a named

inventor and Plaintiffs suffered no injury and gain nothing from having him declared the sole

inventor. Indeed, where Molecular Defenses Corporation received its rights in the patent and

4
The problems with Plaintiffs’ pleadings are compounded by the utter lack of guidance in the

Complaint as to whether Plaintiffs are purporting to bring the suit in their individual capacities

(hence the repeated touting of Mr. Eastwood and definition of only Messrs. Eastwood and Bernstein

as “Plaintiffs” immediately following the caption), as trustees of the single named trust (as might be

implied by the caption), as a direct shareholder suit (in which case Plaintiffs failed to allege distinct,

individual injuries and duties), or as a derivative shareholder suit (given the naming of the Does 1-

XXXX), and, if so, as shareholders of what entity (given the naming and allegations as to a number

of different entities) and on what basis they establish a demand or futility and defeat of the business

judgment rule. At the motion to dismiss stage, “it is the burden of the party who [is seeking standing

to sue to] clearly [] allege facts demonstrating that he is a proper party to invoke judicial resolution

of the dispute.” Thompson v. County of Franklin, 15 F.3d 245, 249 (2d Cir. 1994) (internal

quotations omitted and citations omitted). It is not the Court’s or Defendants’ responsibility to infer

standing argumentatively from the confused averment in the pleadings and the confusion here

further undermines any claim to standing.

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application from both Dr. Demopoulos and Kevin Davis separately, Plaintiffs can claim no injury

from the inclusion of Kevin Davis as inventor. Plaintiffs do not allege that they have a concrete

financial interest at all, much less one that differs whether or not Kevin Davis is named as an

inventor. And no reputational injury arises, or is even alleged, for the alleged misjoinder of Kevin

Davis as an inventor.

Plaintiffs raised in the pre-motion conference and correspondence the Chou case from the

Federal Circuit, which they allege to be applicable here. 254 F.3d. 1357. It is not. In that case, the

Federal Circuit found that the plaintiff had standing to allege correction of inventorship where she

alleged that her name had been improperly omitted from patent applications and if she had been

identified as an inventor, she would be entitled to royalties and licensing revenue. Id. at 1359.

Plaintiffs themselves represent Chou as supporting a case where “but for incorrect inventorship…,

the plaintiff would have had a concrete financial interest in the patent.” ECF No. 40 at 2 (internal

quotations omitted). But that is not the case here. Removing Kevin Davis as an inventor does not

give Plaintiffs ownership or financial rights they never owned. Of course, in Chou, failing to name

the non-joined inventor deprived her of payment she would be due as an inventor. 254 F.3d. at 1359.

Here, Plaintiffs seek to remove a purportedly mis-joined inventor. But including Kevin Davis as an

inventor did not cause Plaintiffs any injury and removing him creates no remedy where Defendants

derived their ownership in the patent not just through Mr. Davis, but also Dr. Demopoulos, who

similarly assigned his right as an inventor to Defendant Molecular Defenses Corporation. In other

words, whether or not Mr. Davis is an inventor, the relative rights of Plaintiffs and Defendants do

not change at all.

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b. Plaintiffs’ Purported Standing Under the Patent Laws is

Improperly Conditional on State-Law Causes of Action

At bottom, though it is unclear, it appears that Plaintiffs argue that they have some “legally

protected interest” in the patent and application based on their Count 5 allegations of Ownership, i.e.,

that “[t]he U.S. Derivative Patent and International Applications were wrongfully and/or invalidly

assigned to MDC-Nevada (or, alternatively, MDC-New York),” and, therefore, “[t]hose assignments

are null and void.” Complaint, ¶¶ 176-177. But again, Plaintiffs do not explain on what theory this

is the case or why they have standing to “void” legal documents to which they were not a party. The

Court might guess that Plaintiffs’ ownership claim—by seeking a judgment that “Plaintiffs and Doe

Plaintiffs, the other shareholders of APC, are the sole owners” of the patent rights (Complaint, ¶

181)—is premised on a theory that Plaintiffs’ purported “legal interest” flows from APC. But

similarly, not a single fact pleads that APC was ever the owner of the ’611 Patent and ’381

International Application—because it was not.

Even if any ownership or financial interest is dependent on Plaintiffs’ other claims that the

patents were wrongfully assigned or the conversion and other state-law counts, then standing also

fails. The Federal Circuit has confirmed that where the only path to financial reward under a § 256

correction of inventorship claim requires first succeeding on state-law claims of rescission of patent

assignment, there can be no standing. Larson, 569 F.3d at 1326-27. In other words, where the

financial interest is contingent on the state law claims, there is no independent standing to correct

inventorship. Id. In Larson, the Court held that plaintiff lacked standing to correct inventorship

because he had no ownership interest in the patents unless he contingently succeeded on his state-

law claims of rescission. Id. Similarly, in Jim Arnold Corp. v. Hydrotech Systems, Inc., the court

found plaintiff lacked standing because “absent judicial intervention to change the situation,” he did

not have an ownership interest in the patents where he had assigned his patent rights, though he

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sought to rescind the assignments through claims brought under state law. 109 F.3d 1567, 1571-72

(Fed. Cir. 1997), see also First Data Corp. v. Inselberg, 870 F.3d 1367, 1372-75 (Fed. Cir. 2017)

(district court properly dismissed complaint premised on patent laws for lack of jurisdiction where

claims were premised on title to the patents that would not occur unless and until the court found

assignment of the patents was invalid under state court claims); Luckett v. Delpark, Inc., 270 U.S.

496 (1926) (ruling plaintiff’s claim to recover royalties, damages for not complying with provision

in license agreement to push sales of a royalty bearing product, and seeking formal reconveyance of

an assigned patent, did not arise under the patent laws, and ruling that because the plaintiff had to

obtain from equity a rescission of the assignment and exclusive license before his claims for patent

infringement could mature, the suit could not arise under the patent laws).

Thus, Federal Circuit precedent compels the conclusion that Plaintiffs have no constitutional

standing to sue for correction of inventorship in federal court where their sole stake in the patents is

in turn contingent on obtaining relief that a federal court has no jurisdiction under § 1338 to provide.

Plaintiffs cannot show an injury in fact because (regardless of inventorship) they have no ownership

rights in the patent. In the cases cited above, as here, unless and until the plaintiffs gained title to the

patents, they had no non-contingent interest in the patents on which to support standing to correct

inventorship.

2. Plaintiffs Lack Constitutional Standing to Assert Count 2 for Priority

Similarly to the inventorship claims, Plaintiffs lack standing to bring Count 2 seeking a

declaration of rights, this time for priority, as to the ’611 Patent and ’381 International Application.

Again, Plaintiffs do not own, and cannot claim to own, the patent or application. Nor do Plaintiffs

otherwise possess a financial interest that is affected, much less harmed, by the patent’s and

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application’s priority claim to the non-provisional application for the same reasons discussed supra §

IV.A.1.

Moreover, Plaintiffs allege “an actual and justiciable controversy” between Plaintiffs and

Defendants as to whether the patent and application “derive from,” i.e., claim priority to, the 2015

provisional application. Complaint, ¶ 164. But there is no case or controversy, as Plaintiffs cannot

and do not allege any contrary position by Defendants on this point. In fact, the ’611 Patent declares

on its face that it “claims benefit of priority under 35 U.S.C. § 119(e) from U.S. Provisional Patent

Application No. 62/182,229.” Ex. 1 at (60), (65). Accordingly, there is no case or controversy or

subject matter jurisdiction.

3. The Court Lacks Jurisdiction to Review Inventorship of a Non-Issued

International Patent Application in Count 4

Through Count 4, Plaintiffs seek an order, pursuant to PCT Rule 92bis (a regulation under

the Patent Cooperation Treaty), directing the Commissioner of Patents to request that the United

Nation’s World Intellectual Property Organization’s (“WIPO”) International Bureau remove Kevin

Davis as an inventor of the ’381 International Application. Complaint, ¶¶ 170-173. But there is no

such private right of action giving a federal district court such jurisdiction over a U.S. patent

application, much less an international application through WIPO’s International Bureau. Indeed,

the sole mention of PCT Rule 92bis in any federal court proceeding that Defendants have been able

to locate is Plaintiffs’ own novel Complaint. The Federal Circuit has already emphasized that there

is no “private right of action to challenge inventorship of a pending patent application.” HIF Bio,

Inc. v. Yung Shin Pharm. Indus. Co., 600 F.3d 1347, 1354 (Fed. Cir. 2010); see also Kamden-Ouaffo

v. Pepsico, Inc., 657 F. App’x 949, 953 n.5, (Fed. Cir. 2016), cert. denied, 137 S. Ct. 1096 (2017)

(“To the extent [plaintiff] seeks correction of inventorship of international patents or patent

applications, the district court lacks jurisdiction to entertain those claims.”).

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Indeed, not even for a U.S. patent application is there a private right of action under 35 U.S.C.

§ 116. In HIF Bio, the Federal Circuit “expressly h[e]ld that § 116 does not provide a private right

of action to challenge inventorship of a pending patent application” where section 116 “authorizes

the Director of the Patent and Trademark Office to take certain actions concerning pending patent

application, but ‘plainly does not create a cause of action in the district courts to modify inventorship

on pending applications.’” 600 F.3d at 1353-54 (citation omitted). In a similar manner, Rule 92bis

authorizes WIPO’s International Bureau to take certain action, but does not create a cause of action

in the U.S. district courts. In any event, even if a claim for correction of inventorship was permitted

as to the PCT application, the time has come and gone for any permissible action under PCT Rule

92bis. Rule 92bis, on its face, indicates that the International Bureau shall not record the requested

change, here to inventorship, if the request is received after the expiration of 30 months from the

priority date, which came and went in December 2017. Thus, Count 4 is also time-barred.

4. State Law Counts 5-8 Must be Dismissed for Lack of Supplemental

Jurisdiction

Plaintiffs’ sole claim to jurisdiction is that the Court has original jurisdiction under 28 U.S.C.

§§ 1331 and 1338(a) as arising under the Patent Laws, and in particular for inventorship and priority.

As noted above, such jurisdiction does not exist for lack of standing and lack of case or controversy.

Plaintiffs’ remaining counts rely only on supplemental jurisdiction under 28 U.S.C. § 1367.

When claims arising under the patent laws are dismissed for lack of standing, the district

court has no discretion to exercise supplemental jurisdiction over related state-law claims and must

dismiss. Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1188 (2d Cir. 1996) (“since a

court must have original jurisdiction in order to exercise supplemental jurisdiction, a dismissal

pursuant to Rule 12(b)(1) precludes a district court from exercising supplemental jurisdiction over

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related state claims.”); see also Larson, 569 at 1325-26 (“[I]f the jurisdiction-conferring patent claim

is dismissed for lack of standing, the district court cannot exercise supplemental jurisdiction over

surviving state-law claims because there was never an Article III case or controversy.”) (citing

Textile Prods., Inc. v. Mead Corp., 134 F.3d 1481, 1486 (Fed. Cir. 1998); Gaia Techs., Inc. v.

Reconversion Techs., Inc., 93 F.3d 774, 781, as amended, 104 F.3d 1296, 1297 (Fed. Cir. 1996));

Salmon Spawning & Recovery Alliance v. U.S. Customs & Border Protection, 550 F.3d 1121, 1133

(Fed.Cir.2008) (noting that “supplemental jurisdiction cannot be exercised when a court does not

have original jurisdiction over at least one claim in the suit”). Here, because Plaintiffs’ patent

allegations fail for lack of standing and case or controversy, Plaintiffs state-law causes of action

must also be dismissed for lack of supplemental jurisdiction.

B. IN THE ALTERNATIVE, ALL CLAIMS SHOULD BE DISMISSED UNDER

RULE 12(b)(6) FOR FAILURE TO STATE A CLAIM ON WHICH RELIEF
CAN BE GRANTED

In the alternative to the foregoing, the Complaint should be dismissed for failure to state a

claim under Rule 12(b)(6). Dismissal is proper when the complaint, viewed in a light most favorable

to the non-movant, lacks a cognizable theory or fails to allege sufficient facts to support a cognizable

legal theory. The Plaintiffs must have alleged sufficient facts to support the viability of their claims

by pleading sufficient nonconclusory factual matter to set forth a claim that is plausible on its face,

meaning specific facts, not just a formulaic recitation of elements. E.E.O.C. v. Port Authority of N.Y.

& N.J., 768 F.3d 247, 253 (2d Cir. 2014) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007) and Iqbal, 556 U.S. at 678). Plaintiffs have failed to do so.

1. Plaintiffs Fail to Address the Invention in Their Allegations of

Inventorship

Inventors named on an issued patent are presumed to be correct. Eli Lilly & Co. v. Aradigm

Corp., 376 F.3d 1352, 1358 (Fed. Cir. 2004). A plaintiff alleging misjoinder of inventors must meet

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the heavy burden of proving its case by clear and convincing evidence. Id. In a patent, it is the

claims of the patent that define the invention. 35 U.S.C. § 112(b). An inventor must conceive

subject matter actually recited in the claims of the patent and not merely described elsewhere in the

patent outside of the claims. Ethicon, Inc. v. U.S. Surgical Corp., 135 F.3d 1456, 1460-61 (Fed. Cir.

1998). Thus, a plaintiff claiming sole inventorship must provide clear and convincing evidence

corroborating conception of each and every claim in the patent at issue and that any contribution by

a misjoined inventor to the conception of each and every claim was insignificant. While at the

pleading stage, Plaintiffs do not yet need to meet this heavy burden, they must at least plead

sufficient allegations to state a plausible claim. See Opternative, Inc. v. Jand, Inc., No. 17-6936

(JFK), 2018 WL 3747171, at *9 (S.D.N.Y. Aug. 7, 2018) (finding failure to state a claim for sole

inventorship where the complaint, beyond conclusory and vague statements, “does not include any

specific allegations that Dr. Lee conceived of the total patented invention and that any contribution

by the named inventors…was insignificant.”); Coda Dev. v. The Goodyear Tire & Rubber Co., No.

15-cv-1572, 2016 WL 5463058, at *6 (N.D. Ohio Sep. 29, 2016) (dismissing correction of

inventorship claims including those where plaintiff sought total substitution of named inventors for

failure to plead sufficient facts).

But nowhere in Plaintiffs’ inventorship allegations do Plaintiffs actually address the

invention, i.e., the patent claims. Plaintiffs do not address any aspect of the patent claims and

tellingly ignore the fact that the claims in the ’611 Patent are different than those in the provisional

application. The removal of Kevin Davis as an inventor requires a showing that he did not

contribute to a single limitation of a single claim in the patent and that Dr. Demopoulos solely

invented the entirety of every claim. Plaintiffs did not even address the patent claims or provide

corroborating information that Dr. Demopoulos is the sole inventor of each and every claim. Indeed,

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Plaintiffs fail to acknowledge that the claims in the ’611 Patent were not the same as those included

in the original provisional application filed by Dr. Demopoulos. The sole factual allegation in the

Complaint that Kevin Davis should be removed is found in paragraph 158, which is mere conclusion.

The facts that portions of the non-provisional are copied from the provisional (as would be expected),

that they relate to “the same or similar technology” plus “additional technical explanations and

examples of glutathione treatment, formulations, and methods” fails to show that Kevin Davis

contributed nothing significant and is not an inventor, or that Dr. Demopoulos conceived of each and

every limitation in each and every claim and is the sole inventor. This threadbare, inapposite

recitation fails to allege facts supporting the elements of a § 256 claim. See Iqbal, 556 U.S. at 678

(holding that “a complaint [will not] suffice if it tenders ‘naked assertion[s]’ devoid of ‘further

factual enhancements.’”) (citation omitted).

In fact, the admission in the Complaint that additional portions of the non-provisional

application “include additional technical explanations and examples of glutathione treatment,

formulations, and methods regarding same” itself supports only the conclusion that Defendant Kevin

Davis contributed to the invention. This is particularly so because the ’611 Patent was allowed to

issue by the U.S. Patent and Trademark Office due in large part to unexpected results concerning

humidity parameters, which were not present in the original claims of the provisional application.

Moreover, the twenty claims in the ’611 Patent are far more detailed than the original sixteen claims

in the provisional application, having undergone significant amendment at the hands of Mr. Davis.

2. Plaintiffs’ Conversion, Unjust Enrichment, and Constructive Trust

Claims Fail to Allege Required Elements

To withstand a motion to dismiss a conversion claim, a plaintiff must allege (1) the property

subject to conversion is a specific identifiable thing; (2) plaintiff had ownership, possession or

control over the property before its conversion; and (3) defendant exercised an unauthorized

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dominion over the thing in question, to the alteration of its condition or to the exclusion of the

plaintiff’s rights. See Kirschner v. Bennett, 648 F. Supp. 2d 525, 540 (S.D.N.Y. 2009).

Here, the detail in the complaint is not sufficient. Plaintiffs’ conversion claim covers a

myriad of unidentified property supposedly converted including “tangible and intangible property of

ThyoGen Pharmaceuticals, Glutathione Corporation, and Redox & Signaling, including without

limitation money funds, company shares, books and records, machinery, equipment, furniture,

and/or fixtures.” Complaint, ¶ 184. This fails to identify a “specific identifiable thing.” Moreover,

Plaintiff does not even feign to allege how or why they exercised ownership, possession, or control

over the same or who, how, and when Defendants exercised unauthorized dominion over the same.

The same supposed undefined property is the subject of Plaintiffs’ Unjust Enrichment count.

In order to adequately plead an unjust enrichment claim, Plaintiffs “must allege that (1) the other

party was enriched, (2) at that party’s expense, and (3) that it is against equity and good conscience

to permit the other party to retain what is sought to be recovered.” Kamdem-Ouaffo, 657 F. App’x at

953. But Plaintiffs’ bare-bones allegations fail to identify the precise property that allegedly

enriched Defendants, much less how they did so at Defendants’ expense. And because “a claim of

constructive trust under New York law requires [p]laintiffs to show unjust enrichment,” Plaintiffs’

constructive trust claims should also be dismissed. Id. (alteration in original, internal citation

omitted) (dismissing for failure to state a claim plaintiff’s claims for unjust enrichment and

constructive trust under New York law where plaintiff argued defendant had been unjustly enriched

by claiming and patenting its inventions for its “own benefit.”). As to the claims over the

intellectual property rights, Plaintiffs lack standing to assert the same and have similarly failed to

allege their own possession over the same.

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V. CONCLUSION

For the foregoing reasons, Defendants respectfully request the Court to grant their motion to

dismiss.

Dated: October 31, 2018 Respectfully submitted,

WILSON SONSINI GOODRICH & ROSATI

Professional Corporation

s/ Joshua Mack
Sheryl Shapiro Bassin
1301 Avenue of the Americas, 40th Floor
New York, New York 10019
Telephone: (212) 999-5800
Facsimile: (212) 999-5899
Email: sbassin@wsgr.com

Joshua Mack (admitted pro hac vice)

12235 El Camino Real
San Diego, California 92130
Telephone: (858) 350-2300
Facsimile: (858) 350-2399
Email: jmack@wsgr.com

Counsel for Defendants

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CERTIFICATE OF COMPLIANCE

This brief complies with the type-volume limitation set forth in Rule 2(D) of Judge Koeltl’s

Individual Rules of Practice. The brief contains 6,069 words, excluding the parts of the brief

exempted by Rule 2(D).

Dated: October 31, 2018 s/ Joshua Mack

Joshua Mack

Counsel for Defendants