## Facts

- ABS Global, Inc. (ABS) and Inguran, LLC (Inguran) were competitors in the livestock-breeding business involving “sexed” bovine semen.
- The parties entered a contract that included a noncompetition clause restricting ABS from marketing certain products and contemplated substantial liquidated damages for breach (ABS asserted the exposure exceeded $1.5 million).
- ABS developed new technology related to producing sexed bovine semen and wanted to market it, but feared Inguran would sue for breach of the contract; ABS also pointed to Inguran’s history of litigation.
- ABS filed suit seeking declaratory relief that marketing the technology would not violate the contract and that the contract (or restrictive provisions) was invalid or unenforceable.
- The dispute also implicated rights in patents related to sexed-semen processing. ABS sought relief that could affect patent licensing, including requests that could compel licensing on specified terms.
- Inguran answered and pursued counterclaims, and it sought to bring ABS’s parent company, Genus plc (Genus), into the case.
- XY, LLC (XY), an Inguran affiliate that held patents implicated by the requested relief, moved to intervene to protect its patent and licensing interests.
- Multiple motions were presented in the same posture: XY’s motion to intervene; Inguran’s motion to join Genus; Genus’s motion to dismiss a third-party complaint/claims against it; and ABS’s motion to dismiss parts of Inguran’s counterclaims.

## Issues

1. Whether XY, as the patent owner whose licensing interests could be affected by the requested relief, was entitled to intervene under Federal Rule of Civil Procedure 24(a)(2) (or, alternatively, permitted to intervene under Rule 24(b).
2. Whether Genus plc should be joined in the action, and if so, whether it belonged in the case as a counterclaim defendant rather than as a third-party defendant.
3. Whether Counts I and II of Inguran’s counterclaims stated plausible claims under Rule 12(b)(6), and whether Inguran should be given leave to amend any insufficiently pleaded counterclaim allegations.

## Decision

- The court **granted** XY’s motion to intervene.
- The court **granted** Inguran’s motion to join Genus and directed that Genus be reflected in the caption as a **counterclaim defendant**, not as a third-party defendant.
- The court **granted** Genus’s motion to dismiss the third-party complaint as improperly framed in light of the joinder/realignment (with Genus proceeding instead as a counterclaim defendant).
- The court **granted in part and denied in part** ABS’s motion to dismiss Counts I and II of Inguran’s counterclaims, and it allowed Inguran to seek leave to amend by a set deadline.

## Legal Principles

- Intervention as of right under **Rule 24(a)(2)** requires: (1) timely motion; (2) a cognizable interest in the property or transaction at issue; (3) a risk that disposition may, as a practical matter, impair protection of that interest; and (4) inadequate representation by existing parties.
- A patent owner whose patent rights and licensing terms may be directly affected by injunctive or declaratory relief has a sufficient interest to support intervention where the litigation could alter those rights or the owner’s control over licensing.
- Even where a related entity is already a party, intervention may be warranted if the existing party may not fully represent the intervenor’s distinct ownership and licensing interests.
- **Permissive intervention** under Rule 24(b) may be allowed when the intervenor’s claims or defenses share common questions of law or fact with the main action and intervention will not cause undue delay or prejudice.
- Party joinder and alignment should reflect the real pleading posture: when claims against an additional entity are asserted as part of counterclaims, the entity should be joined and captioned as a **counterclaim defendant** rather than treated as a third-party defendant under Rule 14.
- On a **Rule 12(b)(6)** motion, the court tests whether pleaded facts state a plausible claim for relief; partial dismissal is appropriate where only some theories or allegations fail that standard, and leave to amend may be allowed where amendment could cure pleading defects.

## Conclusion

In this early-stage order, the court reorganized the case to match the interests at stake: it permitted the patent-owning affiliate (XY) to intervene to protect its patent and licensing interests, joined ABS’s parent (Genus) as a counterclaim defendant rather than leaving it miscast as a third-party defendant, and trimmed Inguran’s counterclaims only to the extent they were inadequately pleaded—allowing the remainder to proceed and giving Inguran an opportunity to amend.


ABS Global, Inc. v. Inguran, LLC, No. 14-cv-503-wmc, 2015 WL 1486638 (2015)