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Cloanto Corp. v. Hyperion Entertainment CVBA

United States District Court, W.D. Washington, Seattle

May 16, 2019

CLOANTO CORPORATION, et al., Plaintiffs,
v.
HYPERION ENTERTAINMENT CVBA, Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS IN PART

          RICARDO S. MARTINEZ, CHIEF UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This matter comes before the Court on the Defendant Hyperion Entertainment CVBA (“Hyperion”)'s Motion to Dismiss in Part. Dkt. #52. Specifically, Hyperion moves under Rule 12(b)(1) and (6) for the Court to dismiss: (1) Plaintiffs' First Cause of Action (Breach of Contract) as brought by Cloanto Corporation (“Cloanto”), (2) Plaintiffs' Seventh Cause of Action (Lanham Act §43(a)) as brought by Cloanto, and (3) Plaintiffs' Eighth Cause of Action (Declaration of Trademark Ownership). See Id. at 3. Plaintiffs Cloanto, Amiga, Inc., Itec, LLC, and Amino Development Corporation oppose. Dkt. #54. For the reasons set forth below, the Court GRANTS IN PART AND DENIES IN PART Hyperion's Motion.

         II. BACKGROUND

         As this is a partial motion to dismiss primarily based on standing, the Court will focus only on the relevant factual allegations in the Second Amended Complaint (Dkt. #47), the 2009 Settlement Agreement at issue, attached to the Complaint, and the following procedural history of this case. The Court will not recount here the long history of the various software versions, trademarks, copyrights, and transfers of such between the parties. Suffice it to say that this case deals with copyrights, trademarks, and the right to sell software related to the Amiga operating system.

         In 2009, Amiga, Itec, and Amino (collectively, the “Amiga Parties”) entered into a Settlement Agreement with Hyperion that sits at the center of the claims currently before the Court. Dkt. #1-1. Cloanto was not a party to this contract but was mentioned in an attachment as an existing license holder. See Id. at 19. This Agreement included a “Successor/Acquirer Agreement Form” attached to the Settlement Agreement as “Exhibit 3.” See Id. at 22. In 2011 and 2012, Amiga, Inc. transferred ownership to Cloanto of copyrights to certain software mentioned in the Agreement. Dkt. #47 at 8. On May 10, 2018, well after this dispute began, Cloanto executed Exhibit 3, described further below, and delivered it to Hyperion's counsel on the same day. See Id. at 9. Plaintiffs allege that Hyperion breached the Agreement by infringing on the copyrights and trademarks held by Cloanto.

         This case began as two separate lawsuits. Cloanto first filed against Hyperion on December 14, 2017, in the Northern District of New York. No. 2:18-cv-00535-RSM, Dkt. #1. Hyperion later brought the instant action against Plaintiffs on March 13, 2018. Dkt. #1. On July 30, 2018, these cases were consolidated. No. 2:18-cv-00535-RSM, Dkt. # 40.

         On November 28, 2018, a new entity, C-A Acquisition Corporation, was formed. See Dkt #61-1. C-A and Cloanto are both owned by the same person, Michele “Mike” Console Battilana. Dkt. #57-3 (“Battilana Declaration”), ¶ 2.

         On December 28, 2018, the Court granted leave for the parties to file a Second Amended Complaint to consolidate claims and “reorganize the Parties' positions to reflect Cloanto Corporation, Amiga, Inc., Itec, LLC, and Amino Development Corporation as Plaintiffs, and Hyperion Entertainment CVBA as Defendant.” Dkt. # 46. The Second Amended Complaint was filed on December 29, 2018. Dkt. # 47.

         On January 14, 2019, Hyperion filed the instant Motion to Dismiss in Part Plaintiffs' Second Amended Complaint. Dkt. #52.

         On February 1, 2019, weeks after Hyperion's Motion to Dismiss was filed and a mere three days before Plaintiffs' Response brief was due, C-A Acquisition acquired all remaining intellectual property assets of Plaintiff Amiga, Inc. and then granted Cloanto certain rights. Battilana Declaration, ¶¶ 3-4. Plaintiffs believe that “the rights granted to Cloanto resolve all questions raised by Hyperion in its motion to dismiss in part (Dkt. No. 52) as to Cloanto's standing to bring trademark claims.” Dkt. #57 at 2.

         On March 6, 2019, Plaintiffs filed a Motion seeking to amend the Complaint to add claims based on this transfer of rights and to add C-A Acquisition as a new party. Dkt. #57. On April 8, 2019, the Court denied that Motion finding a lack of diligence on the part of Plaintiffs. Dkt. #65.

         III. DISCUSSION

         A. ...


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