SUE L. ROBINSON, District Judge.
On October 31, 2008, plaintiff Belden Technologies, Inc. ("Belden" or "plaintiff") filed the present action against LS Corp., LS Cable Ltd. ("LS Korea"), LS Cable America, Inc. ("LS America"), Superior Essex Inc. and Superior Essex Communications LP for infringement of United States Patent Nos. 7,339,116 B2 ("the '116 patent"); 7,135,641 B2 ("the '641 patent"); 6,596,944 B1 ("the '944 patent"); and 6,074,503 ("the '503 patent") (collectively, the "patents-in-suit"). (D.I. 1) Plaintiff amended its complaint on December 5, 2008, alleging infringement of the same patents but dropping Superior Essex Inc. and Superior Essex Communications LP from the suit.
On June 17, 2009, the court denied defendants' motion to dismiss without prejudice and allowed plaintiff time for jurisdictional discovery. (D.I. 27)
After the conclusion of briefing on the renewed motion, and after the period for jurisdictional discovery had ended, defendants turned over three new documents regarding their product warranties. (D.I. 79 at 1) In its memorandum order dated July 14, 2010, the court granted plaintiff's subsequent motion for leave to file a surreply in order "to address how the warranties would support proper jurisdiction of defendants in Delaware." (D.I. 78 at 2) The court heard oral argument on August 4, 2010. (Id.) The court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 and 1338(a).
Belden is a Delaware corporation with its principal place of business in St. Louis, Missouri; it owns the '116, '641, '944, and '503 patents,
LS Korea is a Korean manufacturer of, inter alia, the category 6 communications cables accused of patent infringement in this action. LS Korea makes certain direct sales to customers in the United States (Honeywell Security, Pan duit Corp. and Wavenet Inc.), but not within the State of Delaware. LS Korea has one independent sales representative (KC Systems) that has sold LS Korea's products only to customers outside of Delaware. There is no indication that LS Korea engages
LS America is a New Jersey corporation with an office in Englewood Cliffs, New Jersey. LS America purchases the majority of its products from LS Korea. LS America imports cables directly from LS Korea's manufacturing facilities in South Korea and Vietnam, and takes title to the products at the time of their shipment. LS America receives the products in ports in Los Angeles, California; Long Beach, California; Houston, Texas; New York, New York; Charlestown, South Carolina; Savannah, Georgia; and Seattle, Washington. Products are stored in third-party warehouses at the following locations: Brea, California; Irwindale, California; Jackson, New Jersey; Houston, Texas; Piedmont, South Carolina; Englewood, Colorado; and Savannah, Georgia.
LS America sells its cable products directly to customers or through non-exclusive, independent sales representatives to regional distributors. There is no evidence that LS America has made any direct sales to Delaware citizens. LS America's only east coast sales representative is Viking Electronics ("Viking"), a New Jersey corporation that owns and operates the Jackson, New Jersey warehouse where LS America stores product.
There are two agreements with Viking of record. The "Sales Representative Agreement" (hereinafter, the "Viking sales agreement") designates Viking as "an authorized non-exclusive independent representative to solicit, promote and sell [LS America's] products as set forth in Schedule 1, Section A ... to the customers set forth in Schedule 1, Section B ... within the geographical area set forth in Schedule 1, Section C ("the Territory")." (D.I. 61, ex. 27) The customers are defined as "distributors and premises & LAN markets and applications" with certain exclusions unrelated to geographic area. (Id. at Schedule 1, p. LSCA5877) The "Territory" is defined as:
(Id.) As the foregoing indicates, Delaware is not within Viking's "authorized" Territory, nor is there any specific exclusion regarding sales to Delaware. The Viking sales agreement also provides that LS America will pay Viking commission on orders "that have been shipped, invoiced and for which payment has been received." (Id. at LSCA5873) The agreement specifically contemplates LS America's right to solicit sales outside of the defined Territory, but does not similarly specify that Viking has such rights, stating only that LS America may elect to pay commissions on sales billed outside of the Territory (for sales made in the Territory). (Id. at LSCA5874)
LS America also entered into a "Stocking Warehouse Agreement" with Viking whereby Viking was designated as "the East Coast Stocking Warehouse for [LS America's] inventory/products." (Id., ex. 30) Under the "Order Terms" provision,
Four invoices of record account for sales of the accused category 6 data cables to Delaware customers. Each invoice contains a "LS Cable America, Inc." header and New Jersey address. A first invoice (dated May 4, 2006) reflects a "bill to" addressee of Archtech Electronics Corporation in Dayton, New Jersey and a "ship to" addressee of D & M Electronics in Wilmington, Delaware. (D.I. 61, ex. 37) A second invoice reflecting the same purchaser and "ship to" address is dated May 10, 2006. (Id., ex. 38) A third invoice (dated August 11, 2006) reflects a "bill to" addressee of Lynx Communications in Jackson, New Jersey and "ship to" addressee of a residential home office in Dagsboro, Delaware. (Id., ex. 36) The fourth invoice (dated December 1, 2008) provides a "bill to" addressee of Graybar in Saint Louis, Missouri and a "ship to" addressee of Advanced Networking in Wilmington, Delaware. (Id., ex. 39) This 2008 invoice is the only category 6 cable invoice made to a customer outside of Viking's specified sales territory and shipped to a Delaware end-user. The total sales volume of these four transactions was $1,760.
Plaintiff alleges that, when LS America sells data cables to United States customers, a warranty is provided by LS Korea. (D.I. 60 at 15) In support, plaintiff relies on two warranties produced by defendants, entitled "Basic Product Warranty for Copper Data Cable" and "Extended Product Warranty for Copper Data Cable" and dated November 1, 2007 and June 1, 2008, respectively. (D.I. 72, ex. 1 & 2) Each is an unexecuted letter warranty addressed generally "[t]o whom it may concern," with no mention of a specific company. Both documents contain a "LS Cable America, Inc." header with New Jersey address.
(Id.) In each case there is a blank signature line above the caption "LS Cable Ltd. Quality Assurance Team." (Id.)
Plaintiff has provided an email correspondence between a salesman at DCO Distribution, Inc., another of LS America's distributors, and a Viking employee requesting a 25 year warranty from LS Korea for a potential customer. A reply is given that Viking "ha[s] the same type of warranty;" cc'd on the email were employees of LS America and "LS Cable," according to their email addresses. LS America responded and attached a "LS Cable America Extended Warranty" document. (D.I. 72, ex. 3) Although defendants
In sum, neither LS America nor LS Korea has any physical presence in Delaware. Defendants, in their declarations, have maintained that they never had any offices, employees, agents or bank accounts in Delaware. (D.I. 50 at 4-5) Nor is there any evidence that defendants ever maintained any inventory, owned any property, executed any contract, performed any service or litigated any legal action in Delaware. (Id.) Plaintiff does not dispute these facts. Plaintiff nonetheless asserts that the court has jurisdiction over defendants based on: (1) defendants' overall business plan to market and sell their products throughout the entire United States; (2) four instances of defendants' cable products penetrating the Delaware market; (3) warranties that defendants allegedly offered to all end-users, including the four located in Delaware; and (4) LS Korea's purchases of raw materials from companies located in Delaware. (D.I. 60)
To establish personal jurisdiction, a plaintiff must show, by a preponderance of the evidence, that (a) "there is a statutory basis for jurisdiction under the forum state's long arm statute" and (b) "the exercise of jurisdiction comports with the defendant's right to due process." Boston Scientific Corp. v. Wall Cardiovascular Tech., 647 F.Supp.2d 358, 364 (D.Del.2009) (citations omitted). Pursuant to the relevant portions of Delaware's long-arm statute, 10 Del. C. § 3104(c)(1)-(4), a court may exercise personal jurisdiction over a defendant when the defendant or its agent:
10 Del. C. § 3104(c)(1)-(4) (emphasis added). With the exception of (c)(4), the long-arm statute requires a showing of specific jurisdiction. See Shoemaker v. McConnell, 556 F.Supp.2d 351, 354-55 (D.Del. 2008). Subsection (c)(4), on the other hand, requires a showing of general jurisdiction, that is, a showing that defendant or its agent, through more than minimum contacts, is "generally present" in the forum state. See G & G LLC v. White, 535 F.Supp.2d 452, 461 (D.Del.2008).
If defendant is found to be within the reach of the long arm statute, the court then must analyze whether the exercise of personal jurisdiction comports with due process. Shoemaker v. McConnell, 556 F.Supp.2d 351, 354 (D.Del.2008). The exercise of personal jurisdiction comports with due process where "the defendant's conduct is such that it should `reasonably anticipate being haled into court there.'" L'Athene, Inc. v. EarthSpring LLC, 570 F.Supp.2d 588, 591 (D.Del.2008) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). Personal jurisdiction may be either specific or general. For the court to exercise specific personal jurisdiction consistent with due process, plaintiff's
The first issue before the court on defendants' motion is whether personal jurisdiction exists over LS America and/or LS Korea under Delaware's concept of "dual jurisdiction." The dual jurisdiction concept arises from at least partial satisfaction of subsections (1) and (4) of the Delaware long-arm statute. See Power Integrations, Inc. v. BCD Semiconductor Corp., 547 F.Supp.2d 365, 371 (D.Del.2008). The approach was adopted by Delaware courts as a mechanism by which to apply the long-arm statute to "stream of commerce" situations, or situations where a non-resident places its product in the market place and may, under certain circumstances, be found to have sufficient contacts with Delaware (or with any state in the stream of commerce.) See id. at 371.
Boone, 724 A.2d at 1158 (emphasis added). Thus, the dual jurisdiction analysis requires a showing of both: (1) an intent to serve the Delaware market; and (2) that this intent results in the introduction of the product into the market and that plaintiff's cause of action arises from injuries
Plaintiff asserts that LS America's failure to "carve out" Delaware in the Viking sales contract, and the warranties provided to Delaware customers, evidence LS America's intent to serve the Delaware market. "Under Boone, the touchstone of dual jurisdiction analysis is intent and purpose to serve the Delaware market." Power Integrations, 547 F.Supp.2d at 372 (citing Boone, 724 A.2d at 1158). "[A] non-resident firm's intent to serve the United States market is sufficient to establish an intent to serve the Delaware market, unless there is evidence that the firm intended to exclude from its marketing and distribution efforts some portion of the country that includes Delaware." Id. at 373 (collecting authority). Here, LS America assigned east coast sales rights to Viking; Delaware was not specifically included, yet Viking made at least four sales to Delaware customers. There is no indication that LS Korea or LS America thereafter directed Viking to cease sales to Delaware customers, or to direct distributors such as Graybar to do the same. Delaware was not specifically excluded from Viking's sales "Territory." That LS America did not specifically target Delaware is of no moment under these circumstances. Under Boone, LS America, through its distribution agreement with Viking, "has engaged in the additional conduct necessary under the stream of commerce theory so as to establish minimum contacts with Delaware." Boone, 724 A.2d at 1161. The court, therefore, finds that jurisdiction over LS America is appropriate under §§ 3104(c)(1) and (c)(4).
Even assuming that LS Korea had the requisite "intent to serve" the Delaware market,
In Asahi Metal Industry Co., Ltd. v. Superior Court of California, Solano
The threshold inquiry presented by the parties is whether the tests for dual jurisdiction and due process compliance are equivalent. The court concludes that both analyses look to the non-resident defendant's "intent or purpose" to serve the Delaware market. See Power Integrations, 547 F.Supp.2d at 375. Nevertheless, the court declines to forego a due process analysis on the basis of its finding under the Delaware long-arm statute.
There is no doubt in this case that LS America placed the accused category 6 cables into the stream of commerce; it is the second prong of Justice O'Connor's test at issue in this case, i.e., whether LS America completed an act "purposefully directed toward the forum State." As described by Justice O'Connor,
Asahi, 480 U.S. at 112, 107 S.Ct. 1026. In sum, that LS America placed product in the general United States market may suffice to demonstrate an "intent to serve" Delaware under Delaware's dual jurisdiction theory, but placing the accused category 6 cables into the United States market does not also constitute the "additional conduct" required to pass muster under due process.
Defendants argue that LS Korea manufactured category 6 cables with specifications meeting national (TIA/EIA
LS America did provide warranties on the Delaware sales and, therefore, did make certain direct contact with this forum. As indicated previously, although the documents of record are unsigned, there appears to be no dispute that the warranties of record are legitimate and were issued to Delaware customers.
Ultimately, it is plaintiffs' burden to demonstrate, by a preponderance of the evidence, that jurisdiction over LS America comports with the due process clause, i.e., that LS America had an intent or purpose to serve the Delaware market. The facts at bar are at best evenly weighed; the court concludes that plaintiffs have not met their burden of persuasion. Based on the foregoing, the court declines to exercise jurisdiction over LS America.
Plaintiff also argues that jurisdiction over LS Korea is appropriate under a general jurisdiction approach. See 10 Del. C. § 3104(c)(4) (general jurisdiction is proper if LS Korea "regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in this State."). First and foremost, plaintiff points to LS Korea's warranties that followed the sales of product into Delaware. Plaintiff primarily relies on the Delaware Supreme Court's decision in LaNuova D & B S.p.A. v. Bowe Co., 513 A.2d 764 (Del. 1986), in this regard. In LaNuova, the Court affirmed the exercise of jurisdiction over an Italian manufacturer who had, through its New Jersey distributor, provided warranties on its roofing products which had been previously signed in blank by the President of LaNuova. Id. at 767. LaNuova secured its warranty program with liability insurance. One such warranty followed a sale of roofing material that, after passing through another distributor and a general contractor, was ultimately installed in Delaware and was alleged to be the cause of a subsequent fire on the premises. Id. The Court held that LaNuova's warranty program created a jurisdictional
The court finds the action at bar distinguishable from LaNuova. The action at bar is not for a consumer-based (product liability) claim. This action does not stem from (or relate to) LS Korea's warranties on category 6 cable. Therefore, the warranties do not create an expectation that LS Korea will be haled into court in Delaware to defend a patent infringement action against a competitor.
Moreover, while LS Korea enjoys some measure of consumer goodwill based on its warranties, there is no indication that LS Korea was aware that LS America provided its warranties to Delaware consumers. The warranties do not appear to be insured. Compare LaNuova, 513 A.2d at 770 ("The
Defendants argue in the alternative that plaintiff's first amended complaint should be dismissed under Rule 12(b)(3) for improper venue. The purpose of venue, in most instances, "is to protect the defendant against the risk that a plaintiff will select an unfair or inconvenient place of trial." Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 294 (3d Cir.1994).
For the purposes of venue, a defendant "that is a corporation ... reside[s] in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." 28 U.S.C. § 1391(c). The court has found that plaintiff has not met its burden to demonstrate that the court has personal jurisdiction over defendants at bar.
Title 28 of the United States Code § 1400(b) provides that a "civil action for patent infringement may be brought in the judicial district where the defendant resides,
Plaintiff has not proposed transfer to another district as an alternative to dismissal. "A court may sua sponte cure jurisdictional and venue defects by transferring a suit under the federal transfer statutes, 28 U.S.C. §§ 1406(a) and 1631, when it is in the interests of justice." See Forest Labs., 2009 WL 605745 at *12, n. 9 (citing Trujillo v. Williams, 465 F.3d 1210, 1222 (10th Cir.2006) and Island Insteel Sys., Inc. v. Waters, 296 F.3d 200, 218 n. 9 (3d Cir.2002)). Upon consideration of these interests,
Plaintiff is a Delaware corporation, but principally operates in Missouri and, therefore, litigation in either Delaware or New Jersey will occur outside of its home turf. There is no bona fide relationship between Delaware and defendants at bar. By contrast, LS America is a New Jersey corporation with its headquarters in New Jersey. The only sales of accused infringing category 6 cable occurred through Viking, a New Jersey distributor, which operates a warehouse in Jackson, New Jersey where it stores LS America's products. There is no question that there exists personal jurisdiction over LS America in New Jersey. New Jersey has an interest in overseeing litigation concerning one of its citizens who imports purportedly infringing product into its territory; Delaware has no competing interest in this case.
Plaintiff asserts, and defendants do not specifically refute, that LS Korea sells data cables directly to several United States customers outside of Delaware, such as Honeywell Security, Pan duit Corporation, and Wavenet, Inc. (D.I. 60 at 9-10) Plaintiff does not argue that any of these companies reside in New Jersey or that any such sales occurred in New Jersey. Under New Jersey law, however, jurisdiction over LS Korea would be conferred by service of LS America if LS America is deemed to be an "alter ego or agent" of LS Korea, after considering: (1) whether LS America is doing business in the forum that would otherwise be performed by the parent; (2) whether there is common ownership between the companies; (3) financial dependency on LS Korea by LS America; and (4) whether LS Korea exerts control over LS America's marketing and operating policies and the like. See Dewey v. Volkswagen AG, 558 F.Supp.2d 505, 513 (D.N.J.2008) (citations omitted). Plaintiff makes several of these arguments in connection with the motion
Although plaintiff's forum choice is afforded deference in a transfer analysis, there appears no particular justification for plaintiff's selected forum in this case. At oral argument, counsel indicated that the District of Delaware is a good jurisdiction for both parties because it is "commercially savvy" and "handles a lot of patent cases." (D.I. 82 at 45) Further, counsel asserted that it is "just across the river from New Jersey" and litigation here is not especially burdensome in that regard. Id. However, absent personal jurisdiction over defendants, the court finds that the interests of justice are satisfied by the transfer of the instant case to New Jersey.
For the aforementioned reasons, defendants' renewed motion to dismiss for lack of personal jurisdiction and, alternatively, for improper venue (D.I. 49) is granted, however, the court transfers the case at bar to the United States District Court for the District of New Jersey. An appropriate order shall issue.
At Wilmington this 30th day of September, 2010, consistent with the memorandum opinion issued this same date;
IT IS ORDERED that defendants' renewed motion to dismiss (D.I. 49) is granted, to the extent that the present action shall be transferred to the United States District Court for the District of New Jersey.
Defendants state that LS Corp. has never been served. (D.I. 82 at 3) There has never been a formal motion to dismiss LS Corp. on this ground.
Power Integrations, 547 F.Supp.2d at 371 (internal citations omitted).
Additionally, plaintiff's cause of action — patent infringement — arises from injuries caused by defendants' category 6 cable. See Power Integrations, 547 F.Supp.2d at 373; see also Forest Labs. Inc. v. Cobalt Labs. Inc., Civ. No. 08-21, 2009 WL 605745, *10 (D.Del. Mar. 9, 2009) (dual jurisdiction applies to patent infringement actions).