Service of Process and Theft of Ideas

Tracy Nixon v. General Motors (Fed. Cir. 2020).

Nixon sued GM in E.D. Texas, acting pro-se.  The complaint makes the following allegation:

The defendant infringed on the Plaintiffs Design for the Chevrolet Corvette that consisted of the rear trunk LTD Wing, Aerodynamic Full Body Combo Kit, and Hood DAM sold on the 2014-2019 Corvette C7 and Z06 Corvette before the Plaintiff could patent the invention for sale to the public.

Pro Se Complaint.

GM did not make an entry of appearance into the lawsuit and Nixon asked for default judgment. However, Judge Gilstrap refused to enter default judgment — holding that GM had not been properly served with the summons and complaint as required by FRCP 4.

The rule includes several mechanisms for service process, including  “following state law for serving a summons …”   Nixon thought service was proper — Nixon sent the Summons & Complaint to the Texas Secretary of State who forwarded the Summons and Complaint to General Motors HQ via Certified Mail. (See image below). Texas law allows for service-via-SOS in special circumstances, such as where a company is supposed to have a registered agent, but does not have one (or that one isn’t accepting service). See Texas Business Organizations Code § 5.251. (Failure to Designate Registered Agent). A non-Texas company only needs a registered agent in Texas if it “Transact Business” within the state. .

Texas does not make its list of registered agents freely available online, but I just paid for a search and found that General Motors does have a a registered agent in Texas, and that is who should have received service of process.

The District Court denied default judgment, and Nixon immediately appealed to the 5th Circuit who denied appellate jurisdiction for lack of final judgment:

Nixon also appealed directly to the Federal Circuit in parallel who has issued a notice-to-show-cause on whether this is a patent case.  If you remember, Nixon does not have a patent but has sued for theft of the idea.  The court writes:

It appears that this case is not within this court’s limited subject matter jurisdiction. Although this court does have jurisdiction “of an appeal from a final decision . . . in any civil action arising under . . . any Act of Congress related to patents,” it does not appear that Mr. Nixon’s complaint raises a non-frivolous claim arising under the patent laws. See Gayler v. Wilder, 51 U.S. 477, 493 (1850) (explaining that “no suit can be maintained by the inventor against any one for using it before the patent is issued”).

Nor does it appear that transfer to the appropriate federal court of appeals, in this case, the United States Court of Appeals for the Fifth Circuit, would be in the interest of justice. It appears that Mr. Nixon’s request for permission to appeal was initially filed at that court, which issued an order on November 4, 2020 denying his request because “[t]he district court’s order denying the motion for default judgment is not a final order . . . [and] the order has not been certified for immediate appeal under 28 U.S.C. § 1292(b) by the district court.” Nixon v. Gen. Motors Corp., No. 20-90032 (5th Cir. Nov. 4, 2020).

NixonGMOrder.

In the end, Nixon may be left with properly serving GM to get his case moving forward.

21 thoughts on “Service of Process and Theft of Ideas

  1. 9

    OT but relevant since such a large percentage of new patent suits are now on a single new judge’s docket in Waco TX (W.D. TX). Here are a few personal observations of a November 18 one hour video Q&A by a Baker Botts Firm attorney with this Judge – Alan Albright. The Q&A focused on Judge Albright’s busy patent litigation docket and his practice on the bench. Topics partially covered were: Claim construction, Section 101 motions, IPRs, Jury Trials and Verdict Forms. [Any misunderstandings here are mine.]
    Although he has only conducted one trial so far, he has completed 30 Markman hearings* [only one of which he found that significant] and numerous discovery dispute resolutions which he has very promptly decided by phone. [Both with the help of 4 clerks and a magistrate with 2 clerks, with plans for another magistrate.] Any 101 motions should normally be filed early, and he does not favor them. He does not like IPRs [and sets very early trial dates and denies stays, as we know]** unless one was on before he gets another suit on that same patent, But he might take IPR deadline dates in consideration in some cases.
    General attorney tips: don’t be casual or chatty on the phone, act like you are in court. Don’t discuss the whole case and get to the point – your specific request – in less than 4-5 minutes. Conduct a timed practice run first. If the problem can be resolved by a deadline extension don’t be afraid to ask for it.
    For Markman claim interpretations he prefers intrinsic evidence, not a lot of discovery, and finds inventor depositions rarely ever relevant. Nor does he seem to like claim ambiguity or indefiniteness arguments. But he admits that functional claiming in software related patents is now an area of concern requiring more study.
    Also, if your expert’s testimony as to what is the “plain and ordinary” meaning of a claim term is inconsistent with your infringement assertions, you have a problem. But he is not opposed to a later supplemental mini-Markman later in the case if justified. He prefers simple jury verdict questions unless there are plural accused products and/or they are agreed on by both parties.
    *[PFM: Great – early Markman hearings can be very desirable for early and lower cost suit resolutions on non-infringement in some cases,]
    **[PFM: This may come to head soon in appeals or mandamus petitions re IPR Congressional intent and unrealistic trial dates. His venue transfer refusal grounds have already been dealt with.]

    1. 9.1

      Thanks Paul

  2. 8

    Usually I just use the free site to search for Registered Agents in Texas. In this case however, the GM Corporation did not appear to be available though different entities such as General Motors LLC was. Strange! (Usually it isn’t a problem) link to mycpa.cpa.state.tx.us

  3. 7

    GM is likely a Delaware corporation, so you could find its registered agent in Delaware for free at the Delaware SOS website.

    A simple and cheap way to effect service I have done many times is (a) look up the registered agent, Delaware especially, since the agents there tend to be one of a few companies; (b) call the registered agent company and ask if they will accept service by overnight courtier, which they always say yes to; (c) send it by Fedex, which usually costs around $15.

    I then do a declaration of counsel reciting the above. No fuss, no muss, cheap, has worked every time for me.

  4. 6

    There was no need to pay for a search for the registered agent, Dennis — it’s identified in Section III B of the complaint.

    Why the Texas SOS didn’t serve the agent is another matter. Curious they could find that GM’s Ren Cen address was its “Global Headquarters,” a term not used in the complaint, but missed the address of the registered agent.

  5. 5

    Funny note: The address that the plaintiff lists in the complaint is a strip mall barber shop.

  6. 4

    On this same subject of inadequate complaints and proceeding pro se, those readers here who have regularly indicated that anything new or different must be unconstitutional should really step in to help Rudy Giuliani in his emergency takeover of Trump PA vote challenge suits, because all reputable law firms have been bailing out, and I do not think he has any civil case experience either? The only requirement would be paying your own FRCP Rule 11 and other sanctions.
    [Sorry, I could not resist a bit of legal humor during this sad moment in our legal history.]

    1. 4.1

      Rudy has — sadly — gone so far off the rails these past few years that the rails can no longer be seen even with a telescope.

      Anymore hand waving . . . and his arms are sure to fall off.

    2. 4.2

      I’d hardly call a firm “reputable” who would take a client, file a case, and then bail when it gets too politically heated. It’s not like the firms didn’t know in advance what the politics would be. They had a choice to simply not take the case. No, the embarrassment in this case belongs to the firms who don’t know how to be advocates – even of a cause with which they may vehemently personally disagree.

      1. 4.2.1

        The indicated reasons for those firms dropping out of these vote challenge suits is lack of any credible evidence or valid legal argument and/or irrelevance, as has already been decided in several cases, and/or Rudi making himself lead counsel. But you have a point in that they should have looked into that before agreeing to file complaints in such baseless cases.

        1. 4.2.1.1

          Latest: “Of the 21 lawsuits that the Trump campaign and other Republican and GOP-aligned groups have filed since Election Day, they have won zero.” One that made it to to PA Sup. Ct. got no support for plaintiffs from any judge of any political party.

          1. 4.2.1.1.1

            [When are we going to start seeing more attorney sanctions?]

  7. 3

    Dennis writes:

    >Texas does not make its list of registered agents freely available online, but I
    >just paid for a search and found that General Motors does have a a registered
    >agent in Texas, and that is who should have received service of process…
    >>
    >In the end, Nixon may be left with properly serving GM to get his case
    >moving forward.

    You may think you’ve done a favor to the plaintiff by paying for a search simply to let Nixon know how to serve GM in Texas to get his lawsuit back-on-track. Perhaps you were hoping Nixon would see this post (maybe through a Google search), and learn how to properly serve GM in Texas. You’re a nice guy, Dennis, but I think in this case, you may have done a disservice to Nixon if your article results in him getting his case moving forward again.

    As acknowledged in the Texas complaint, Nixon filed this lawsuit against GM in the U.S. District Court for the Eastern District of Michigan in 2018 (Case No. 2:18-cv-12118-DML-DRG), based on substantially the same allegation that GM misappropriated certain aspects of the Corvette design that Nixon claims to have created. The Michigan district court dismissed that lawsuit in 2019, on the merits WITH prejudice, for failure to state a plausible claim. The Sixth Circuit dismissed Nixon’s appeal as untimely, so the Michigan judgment is now final and entitled to res judicata effect.

    I honestly hope Nixon doesn’t take your advice and simply walks away. Because if Nixon refiles and properly serves GM in Texas, then GM will have to respond. The likely end result may be that the case gets transferred back to Michigan (since it’s so closely related to the earlier case) and assigned to the same judge who dismissed the case the first time. That judge may be inclined to hit Nixon with attorneys’ fees and costs, as judges in that district (as many others) take a pretty dim view of duplicative lawsuits and judge shopping.

    1. 3.1

      Thanks for noting that. But could not the the E.D. Texas judge apply res judicata as an additional grounds for case dismissal rather than a case transfer to the Michigan D.C. court that threw him out initially?

      1. 3.1.1

        That’s unlikely. GM would probably want the res judicata issue decided by the Michigan judge. GM can accomplish this by simply (after proper service) moving to transfer to Michigan. They’d delay any dispositive motion on res judicata until after the transfer order, in order to ensure that the issue is decided by the Michigan judge.

        The E.D. Texas judge is not likely to take up and decide the res judicata issue on his own, without a motion from GM. District judges almost never apply res judicata sua sponte (and res judicata is a defense that can be waived).

        1. 3.1.1.1

          Thanks, and I also assume that the odds of getting Rule 11 sanctions would be greater in the Michigan D.C.. But besides that being harder to get against a pro bono plaintiff, it is also likely to be a situation of “you can’t squeeze blood from a turnip” i.e., actually collecting on any sanctions.

          1. 3.1.1.1.1

            Paul, your assumption is probably correct. But it also makes sense for GM to move to transfer to Michigan for other reasons. The judge in Michigan would likely be in a better position than Judge Gilstrap to assess whether the new complaint is barred by res judicata, as the Michigan judge wrote the dismissal order and entered the judgment in the first case. If GM is forced to respond to the Texas complaint and moves to transfer, I’d expect this to be one of their primary arguments.

  8. 2

    If valid service on the registered state agent is effected, the complaint should be promptly dismissed for failure to recite essential elements of any valid legal claim anyway. It does not even assert a confidential disclosure to GM of non-public information. But of course pro se plaintiffs who are not attorneys can get vastly different treatments. [Or even in some cases a court order for a psychiatric examination.]

  9. 1

    OT but of interest to the many IPR parties in “Arthrex purgatory” waiting for the Supremes to decide it. The latest IPWatchdog of 11/17/20 has an interesting detailed review of possibly Arthrex related potential Sup. Ct. decisions from certs on other, non-patent, “appointments” cases. The article notes some distinctions, and I noted some others. In particular that APJs are not ALJs, and that they are now directly appointed by the Sec. of Commerce, a direct presidential appointee, not inferior officers. Nor are all Social Security ALJ appeal hearings ex parte, as asserted in that article. E.g., where two wives are litigating over which [or both] would get social security from their dead husband’s account. I was a pro bono counsel in one such disputed case many years ago.

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