Microsoft Complaint Against Hagen and BC Tech Gear Survives Motion to Dismiss

Microsoft filed a complaint against Jason W. Hagen, doing business as BC Tech Gear, also known as BCMT, Inc. and Doubletimeit, and other defendants in the Eastern District of California on December 1, 2009.  The case was transferred to the Western District of Washington on August 31, 2010.  The First Amended Complaint was filed on February 16, 2010.

The First Amended Complaint  (pdf) claims copyright infringement; federal trademark infringement; false designation of origin, false description and false representation; common law unfair competition; imposition of constructive trust; and requests an accounting.  Microsoft alleges that Defendants advertise, market and distribute computer software, including purported Microsoft software.  Defendants allegedly do business in Fresno, California and Ridgefield, Washington.

Microsoft alleges that the Defendants distributed counterfeit Windows XP Pro software components numerous times between March and June 2007.  Microsoft sent Defendants a letter in August 2007 notifying Defendants of their infringing activity and asking them to stop.  Defendants distributed the counterfeit products several more times between February 2008 and June 2009.  Microsoft sent a second letter in June 2009, informing Defendants that they may have distributed illegal and/or unlicensed software.  Defendants distributed the counterfeit software to an investigator in October 2009.  Defendants allegedly advertised, marketed and/or distributed reproductions, copies or colorable imitations of Microsoft’s copyrighted materials, trademarks, logos and service mark.

Defendant Jason W. Hagen, appearing pro se, filed a motion to dismiss on June 29, 2010 and an amended motion to dismiss on January 30, 2011.  In his amended motion to dismiss, Hagen argued insufficiency of service of process under Federal Rule of Civil Procedure 12(b)(4) in that he did not receive an Amended Summons naming him as a defendant, the lack of a plain statement showing why Plaintiff is entitled to relief under Rule 8(a)(2) and failure to state a claim upon which relief can be granted under Rule 12(b)(6), as the wrong party was named.  Hagen claimed that there was no evidence connecting him with the activity complained of.  Specifically, Hagen argued that Microsoft was unable to connect his name to the eBay user name “bctechgear,” under which Microsoft alleged some of the infringing sales occurred from Fresno, California.  Hagen argued that the complaint did not meet the standard of Bell Atlantic v. Twombly.

The Court’s Ruling (pdf)

The court stated

A complaint may be dismissed under Rule 12(b)(6) of the Federal Rules of Civil Procedure if it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle him to relief.

The court cited Bell Atlantic v. Twombly in declaring “[a] court may dismiss a claim under Rule 12(b)(6) if the plaintiff’s factual allegations are not sufficient ‘to state a claim to relief that is plausible on its face.’”  The court quoted Ashcroft v. Iqbal:  “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”  The court ruled that Microsoft sufficiently put Hagen on notice of its copyright and trademark infringement claims pursuant to Rule 8. 

Hagen argued that he is the wrong party and that some other person misappropriated his name.  The court noted that a Rule 12(b)(6) review is generally limited to a review of the complaint, but that the court may take judicial notice of public records outside of the pleadings.  Microsoft submitted Washington Department of Licensing and Washington State Department of Revenue records showing Hagen doing business as BC Tech Gear.  The court concluded

Whether or not someone stole Defendant’s identity when opening and operating BC Tech Gear is inappropriate for a Rule 12(b)(6) motion to dismiss.  These issues are appropriately left to discovery and further motions.

The court indicated that the same is true regarding insufficient service.  The docket reflects that the summons and complaint were personally served on Hagen and any factual dispute regarding proper service is the subject of further discovery.

Hagen filed a Motion for Reconsideration of Order Denying Motion to Dismiss First Amended Complaint on March 30, 2011.  He argued that the complaint did not meet the Rule 12(b)(6) standard and that some finer points had been overlooked; that there was new evidence that the complaint failed to state a claim under Rule 12(b)(6); and that the complaint did not allege fraud with particularity, as required by Rule 9(b).  The court denied the motion (pdf) on April 4, 2011, citing Western District of Washington Local Civil Rule 7(h)(1) (page 11):

Motions for reconsideration are disfavored.  The court will ordinarily denied [sic] such motions in the absence of a showing of manifest error in the prior ruling or a showing of new facts or legal authority which could not have been brought to its attention earlier with reasonable diligence.

The court found that there was no error in its prior ruling or new facts or legal authority to indicate error in the prior ruling.

The case number is Western District of Washington at Tacoma, No. C10-5621 RJB.

4 thoughts on “Microsoft Complaint Against Hagen and BC Tech Gear Survives Motion to Dismiss”

  1. In reviewing this case, it seems the real defendant is missing.
    Microsoft and U.S. Customs have an enormously long reach when they want to employ it.
    In this case, Customs intercepted some allegedly counterfeit software manufactured and shipped from China.
    It would seem that both Microsoft and Customs have the wherewithall to locate the manufacturer and shipping source but for some reason have neglected to do so.
    If I were Microsoft I would want to locate the factory and hammer the officers who were stealing my property. But, of course, the factory is said to be in China.
    People like Dr. Hagen become easy surrogate targets.
    On its face, the case stinks to high heaven.

  2. California IP attorney and avid fan of “David and Goliath” episodes/cases and this is a good one. The complaint started in USDC CAED and then transferred to WAWD. Hagen’s motion to dismiss was shaky and off target with 12(b)(6), I thought. It applies and is part of the same family relative to Bell v. Twobly &tc. but not as well as simply 9(b). He had the right idea but didn’t execute terribly well. Even so, his motion for re was aptly pleaded and very solid. Judge Bryan’s order on both motions showed heavy bias favoring MS under the circumstances. The motion for re probably came as an embarrassment. Orders were wrong, Hagen right. Hence Bryan’s “wave off” 7(h)(1) denial. Not often do you see a pro se litigant take Perkins Coie and a Fed judge to school, but in my humble opinion, that’s what happened.

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