United States District Court, E.D. Virginia, Norfolk Division
OPINION AND ORDER
G. Doumar United States District Judge.
matter comes before the Court on the defendants' partial
motion to dismiss the plaintiffs complaint for failure to
state a claim pursuant to Rule 12(b)(6) of the Federal Rules
of Civil Procedure ("Motion to Dismiss"). ECF No.
19. For the reasons stated herein, the defendants'
partial Motion to Dismiss is GRANTED, IN
PART, and DENIED, IN PART,
consistent with the directives of this Opinion and Order.
December 12, 2018, Trans-Radial Solutions, LLC
("TRS" or "Plaintiff) filed the instant action
against four defendants: Burlington Medical, LLC
("Burlington"), John Williams
("Williams"), Fox-3 Partners LLC ("Fox
Three"), and Phillips Safety Products, Inc.
"Defendants"). See Complaint ("Compl."),
ECF No. 1. The complaint asserts the following thirteen
• Count I: Patent Infringement (against
Burlington and Phillips)
• Count II: Copyright Infringement Reproduction
(against Burlington and Phillips)
• Count III: Copyright Infringement Marketing
and Sale (against Burlington and Phillips)
• Count IV: Unfair Competition, False
Advertising and False Designation of Origin Pursuant to 15
U.S.C. § 1125(a) (against all Defendants)
• Count V: Unfair Competition and Violation of
the Virginia Consumer Protection Act, Va. Code Ann. §
59.1-200(A) (against all Defendants)
• Count VI: Common Law Passing Off (against all
• Count VII: Tortious Interference with
Prospective Contractual Relations (against all Defendants)
• Count VIII: Conversion (against Williams and
• Count IX: Breach of Fiduciary Duty and Duty
of Loyalty (against Williams)
• Count X: Breach of Contract (against Williams
• Count XI: Civil Conspiracy (against all
• Count XII: Misappropriation of Trade Secrets,
18 U.S.C. § 1836 (against Williams, Burlington, and Fox
• Count XIII: Negligence (against Williams and
February 12, 2019, Defendants filed the instant Motion to
Dismiss seeking dismissal of Defendant Williams from all
relevant counts and dismissal of Counts IV-XIII in their
entirety for failure to state a claim. ECF No. 19; see
Memorandum in Support ("Mem."), ECF No. 20. On
March 1, 2019, TRS filed its brief in opposition
("Opp."). ECF No. 27. On March 8, 2019, Defendants
filed their reply. ECF No. 32. On June 27, 2019, the Court
conducted a hearing on Defendants' partial Motion to
Dismiss. Such motion is now before the Court.
12(b)(6) motion to dismiss for failure to state a claim
should be granted if it appears that the plaintiff is not
"entitled to relief under any legal theory which might
plausibly be suggested by the facts alleged."
Harrison v. United States Postal Serv., 840 F.2d
1149, 1152 (4th Cir. 1988) (citation omitted). To survive a
motion to dismiss, the facts alleged in the complaint
"must be enough to raise a right to relief above a
speculative level" and must be sufficient "to state
a claim to relief that is plausible on its face."
Twombly, 550 U.S. at 547.
resolving a Rule 12(b)(6) motion, the court must assume the
truth of all facts alleged in the complaint and construe the
factual allegations in favor of the non-moving party.
Robinson v. Am. Honda Motor Co., 551 F.3d 218, 222
(4th Cir. 2009). However, the court is not bound by the
complaint's legal conclusions. Id. In addition,
the court may consider the complaint's attachments as
well as documents "attached to the motion to dismiss, so
long as they are integral to the complaint and
authentic." Sec'y of State for Defence v.
Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir.
2007). The court may also take judicial notice of items in
the public record, Hall v. Virginia, 385 F.3d 421,
424 n.3 (4th Cir. 2004), including patent, copyright, and
trademark registrations, Zinner v. Olenych, 108
F.Supp.3d 369, 377 n.2 (E.D. Va. 2015).
forth above, when deciding Defendants' motion to dismiss,
the Court must assume the truth of the factual allegations in
the complaint as well as any exhibits attached to the
complaint or to the motion to dismiss that are authentic and
integral to the complaint. A summary of the facts alleged in
or properly incorporated into Plaintiffs complaint follows.
TRS is a South Carolina limited liability company with its
principal place of business in Roebuck, South Carolina.
Compl. ¶ 7. TRS researches, develops, manufactures,
markets, and sells radiation shielding products. Id.
¶ 17. Since 2014, dozens of healthcare providers have
used TRS's Rad-Guard™ brand Radiation Shields and
other TRS products to decrease radiation exposure to medical
Burlington is a Virginia limited liability company with its
principal place of business in Newport News, Virginia.
Id. ¶ 8. Burlington makes, sells, or offers to
sell radiation shields for use by medical professionals.
Id. ¶ 25. Defendant Williams is the CEO and
owner of Burlington and resides in Virginia. Id.
¶ 9. Defendant Fox Three is a Virginia investment
company that acquired Burlington in or about May 2015.
Id. ¶¶ 10, 35. Prior to such acquisition,
Burlington operated as Burlington Medical Supplies, Inc.,
which, according to TRS, was "the same enterprise
operating out of the same location using essentially the same
name, the same CEO, and the same website [www.burmed.com] to
market and distribute the same products and services."
Id. ¶ 38. Defendant Phillips is a New Jersey
corporation that manufactures radiation protection products
for itself and the other defendants. Id. ¶ 11.
Relevant Intellectual Property
October 24, 2017, the United States Patent and Trademark
Office ("USPTO") issued Patent No. 9, 795, 346,
entitled "Radiation Shield Assembly," relating to a
radiation shield affixed to a medical device hangar
(hereinafter, "the '364 Patent"). Id.
¶ 20; Id. at Ex. A. TRS is the owner and
assignee of all rights, title and interest in the '346
Patent. Id. ¶ 21.
September 11, 2016, the United States Copyright Office issued
Registration No. VAu 1-260-031 registering original works of
authorship entitled "TRS Web Images" (hereinafter,
"the '031 Registration"). Id. ¶
23. The TRS Web Images are assigned to and beneficially owned
by TRS and are used to depict TRS's Rad-Guard™
Radiation Barrier. Id. ¶¶ 23-24.
2014 Distribution Agreement
October 15, 2014, TRS and Burlington's precursor entity,
Burlington Medical Supplies Inc., entered into a
"Non-Exclusive Distributorship Agreement" by which
Burlington Medical Supplies Inc. agreed to distribute certain
TRS products, including Rad-Guard™ shields and
Cardio-TRAP systems, at agreed-upon prices (hereinafter
"Distribution Agreement"). See Redacted
Distribution Agreement, Exhibit 1 to Def. Mem., ECF No. 20-1.
The contract term was one year, commencing on October 15,
2014, and would "automatically continue unless
terminated by either party with at least 30 Days prior
written notice." Id. ¶ 14.
connection with such agreement, on or about December 29,
2014, TRS provided twenty-four (24) miniature Cardio-TRAP
systems called "Mini-TRAPs" to Burlington to be
used for Burlington sales demonstrations. Id. ¶
30. In addition, in or around January 2015, TRS provided four
(4) Rad-Guard™ Radiation Shields to Burlington for
demonstration purposes. Id. ¶ 31. In early
2015, TRS also provided training for Burlington salespeople
and supplied copyrighted photographs of TRS products to
Burlington for use in its sales brochures. Id.
around May 2015, Fox Three acquired Burlington Medical
Supplies, Inc., changed its name to Burlington Medical, LLC,
and maintained Williams' leadership role as CEO of the
newly-acquired company. Id. ¶ 38. Shortly after
the acquisition, TRS's Chief Financial Officer, Robert
Shealy, met with Williams to confirm that the business
relationship between TRS and Burlington would continue.
Id. ¶ 40. During such meeting, Williams
expressly confirmed to Mr. Shealy that it would. Id.
From that time through the first quarter of 2018, Burlington
continued to distribute TRS products. Id. ¶ 41.
Indeed, during and after the acquisition, "Burlington
was still serving as a sales representative and distributor
for TRS's products" and "Williams worked with
TRS and its employees to sell TRS products to
customers." Id. ¶ 39. As a result, between
2015 and 2018, "Williams had access to TRS customer
contracts, testing results, and technical information
relating to the TRS products with the express understanding
that all such information belonged to TRS." Id.
Alleged Infringement and Other Alleged
complaint alleges that Fox Three and Williams formed
Burlington, in part, to manufacture, market, and sell
products to compete with TRS's products, including
Burlington's IV Mounted Barrier. Id. ¶ 43.
Specifically, TRS alleges that "Defendants copied
TRS's patented technology and copyrighted materials and
have incorporated TRS's intellectual property into their
'IV Mounted Barriers'" in order to "compete
with TRS's Rad-Guard™ brand Radiation Shields"
and "capture the radiation shield market."
Id. ¶ 42-43.
complaint further alleges that, in 2016, TRS discovered that
Burlington was producing, marketing and selling a copy of
TRS's Rad-Guard™ Radiation Shield, which Burlington
advertised as its own product called the "IV Mounted
Barrier." Id. ¶ 44. Burlington's
website depicted the IV Mounted Barrier using photographs
that were "willfully copied from TRS's registered
photographs" and then intentionally doctored by
photo-editing. Id. ¶ 45. Specifically, TRS
alleges that Burlington doctored such photographs to remove
the TRS Rad-Guard™ mark and replace it with the
Burlington mark. Id. ¶ 46. TRS claims that,
through this alleged infringement, "Burlington has
deceived TRS's customers and potential customers,
defeated the designation of origin purpose of TRS's marks
and trade dress, thwarted the further development of goodwill
in TRS marks, and usurped a stream of advertising rightfully
belonging to TRS." Id. ¶46.
September 20, 2016, TRS, by counsel, sent a letter to
Williams objecting to Burlington's infringing activity
related to the IV Mounted Barrier. Id. ¶ 47. In
response, Williams agreed to cease marketing the IV Mounted
Barrier, and Burlington continued to distribute other TRS
products. Id. Nonetheless, TRS claims that Williams
and Burlington continued to use TRS's trade secrets and
continued to market and sell the IV Mounted Barrier for at
least two more years and made sales of such product to actual
and potential TRS customers, including McLaren Bay Region
Hospital in 2017. Id. ¶49.
April 13, 2017, Mr. Shealy of TRS sent a letter to Williams
stating the following:
The contract between our companies provides in Section 14
(Page 4) that either party may terminate the contract with at
least 30 days notice. We hereby give notice to that effect.
Please arrange to return all demonstration units of the
Rad-Guard and Cardio-TRAP which we loaned to Burlington early
in our business relationship.
We appreciated your company's professional attitude
toward ordering and payment of invoices. Although we must
seek other distributors to increase our market presence, your
company has been a pleasure to work with.
See April 13, 2017 Letter, Exhibit 2 to Def Mem.,
ECF No. 20-2.
about August 2018, TRS allegedly sent a letter to Fox Three
requesting a meeting to address the alleged infringing
activity of Williams and Burlington. Id. ¶ 50.
TRS claims that Fox Three then ceased communications with TRS
"except for the completion of a few outstanding purchase
orders." Id. ¶ 51.
complaint further alleges that Burlington, Williams and Fox
Three hired and directed Phillips, a manufacturer of
occupational safety products, to build or cause to be built
Burlington's IV Mounted Barriers. Id. ¶ 59.
In addition, Phillips allegedly "makes its own
unauthorized copies that infringe both the '346 Patent
and the '031 Registration, which Phillips markets and
sells as 'IV Mounted Barrier'." Id.
¶ 60. TRS claims that Phillips' depictions of this
product on its website and in its sales brochures are
"willfully copied from TRS's registered
photographs." Id. ¶¶ 62-63.
complaint further alleges that TRS has asked Burlington to
return the twenty-four (24) Mini-TRAPs and four (4)
Rad-Guard™ Radiation Shields that TRS provided to
Burlington for demonstration purposes in late 2014 and early
2015, respectively, but "Burlington continues to
unlawfully possess them." Id. ¶¶ 30,
31. TRS claims that the Mini-TRAPs are collectively valued at
approximately $6, 000.00 and the Rad-Guard™ Radiation
Shields are collectively valued at approximately $4, 000.00.
Id. ¶¶ 30, 31.
MOTION TO DISMISS ALL COUNTS AGAINST DEFENDANT
first part of Defendants' Motion to Dismiss seeks
dismissal of Counts IV-XIII as to Defendant Williams on the
grounds that he is not properly named as a defendant in those
counts. The crux of Defendant's argument is that TRS
improperly seeks to hold Williams, the CEO of Burlington,
personally liable for the actions of Burlington without
stating facts sufficient to pierce the corporate veil. For
example, the complaint alleges that "the evidence will
show that . . . Burlington is merely the alter ego of
Williams." Compl. ¶ 28. But, according to Williams,
the complaint fails to allege any facts showing a unity of
interest, a disregard of corporate formalities, comingling of
assets, or use of the corporate form to commit a crime,
fraud, or other injustice. ECF No. 20 at 6. Therefore,
Williams argues that the conclusory allegation that he is the
"alter ego" of Burlington is insufficient to
establish his liability for the actions of Burlington.
Id. at 7.
TRS need not "pierce the corporate veil" to sue
Williams if TRS alleges sufficient facts to show that
Williams, as officer or director of Burlington, took
intentionally tortious actions on behalf of the corporation.
Airlines Reporting Corp. v. Pishvaian, 155 F.Supp.2d
659, 666 (E.D. Va. 2001) (citing Sit-Set. A.G. v.
Universal Jet Exch., Inc., 747 F.2d 921, 929 (4th Cir.
1984) ("Corporate officers may of course be liable
jointly and severally with their corporation for obligations
arising out of tortious conduct of the officers that subject
the corporation to liability.")). For example, a
corporate officer is not liable for the corporation's
contractual obligations, but such officer may be jointly and
severally liable for fraud if "the corporate office
directly engaged in the transaction .. . [for] which
liability was found." Sit-Set 747 F.2d at
the complaint does not seek to hold Williams liable merely
because he is the alleged CEO of Burlington. Rather, the
complaint alleges that Williams personally directed and/or
engaged in nearly all of the tortious conduct alleged. For
example, the complaint alleges that:
• Williams, along with Fox Three and Phillips, directed
Burlington to "make, sell, or offer to sell radiation
shields that are covered by one or more of the claims of the
'346 Patent;" Compl. ¶ 25, and directed
Burlington to "hire Phillips to produce the
[infringing] IV Mounted Barrier," Id. ¶
• "Williams worked with TRS and its employees to
sell TRS products to customers," Id. ¶ 39;
• "Fox Three and Williams formed Burlington in part
to manufacture, market, and sell competing products to
compete with TRS," Id. ¶ 43;
• Williams sold "the IV Mounted Barriers to compete
with TRS's Rad-Guard™ brand Radiation
Shields," id. ¶ 43;
• "Williams and Burlington used TRS's trade
secrets and continued to market and sell the infringing
product [the IV Mounted Barrier] for at least two more
years," id. ¶ 49;
• "Burlington, Williams, and Fox Three copied or
caused to be copied the TRS Web Images under the '031
Registration belonging to TRS and/or created or caused to be
created a ...