Summary
noting that a defendant's percentage of sales in forum state can be a relevant consideration in a general jurisdiction analysis
Summary of this case from Coremetrics, Inc. v. Atomic Park.com, LLCOpinion
Civ. No. 04-0009 (JNE/JGL).
February 9, 2005
Philip Caspers, Esq., and Samuel Hamer, Esq., Carlson Caspers Vandenburgh Lindquist, P.C., appeared for Plaintiffs 3M Innovative Properties and 3M Precision Optics, Inc.
David Axelrod, Esq., Schawbe, Williamson Wyatt, P.C. and Frederick W. Morris, Esq., Leonard Street and Deinard, P.A., appeared for Defendant InFocus Corporation.
ORDER
3M Innovative Properties Co. (3MIPC) and 3M Precision Optics, Inc. (3MPO) (collectively, Plaintiffs) brought this action against InFocus Corp. (InFocus) in the United States District Court for the District of Minnesota, alleging patent infringement under 35 U.S.C. §§ 271, 281-85. Plaintiffs claim that InFocus infringed its patent by making and selling a light engine (IROC) used in RCA Scenium DLP projection televisions. The case is before the Court on InFocus's motion to dismiss for lack of personal jurisdiction and, in the alternative, to transfer venue. For the reasons set forth below, the Court denies InFocus's motions.
I. BACKGROUND
3MIPC is incorporated in Delaware and has its office at the 3M Center in St. Paul. It holds title to patents and licenses those patents to 3M companies. 3MIPC owns U.S. Patent No. 5,552,922 ('922 patent), the disputed patent in this case. 3MPO is incorporated in and has its principal place of business in Ohio. It is in the business of designing, manufacturing, and selling optics products, including projection lens systems for televisions. 3MPO holds an exclusive license to manufacture products under the '922 patent.
InFocus is incorporated in and has its principal place of business in Wilsonville, Oregon. InFocus designs, makes or has made, and sells digital projection products and related services worldwide.
InFocus custom makes and sells the IROC to one customer, Thomson RCA, for delivery in the state of Texas. The televisions containing the IROC are eventually sold in Minnesota through retailers such as Best Buy and Circuit City. In addition, InFocus has contacts with the State of Minnesota unrelated to the IROC. Last year, InFocus sent representatives to Minnesota approximately twenty-one times to visit two resellers and various national office supply and electronic retail accounts. Moreover, InFocus generated more than $3.8 million in revenue from sales to Minnesota residents, $75,000 of which is attributable to sales made through InFocus's fully interactive website. Finally, InFocus contracts with Minnesota companies to provide repair and warranty services for InFocus products.
II. DISCUSSION
A. Personal Jurisdiction
When making a determination of whether the Court has personal jurisdiction over a defendant, the Court must determine whether jurisdiction lies under both the Minnesota long-arm statute and the Due Process Clause of the Federal Constitution. See Viam Corp. v. Iowa Export-Imp. Trading Co., 84 F.3d 424, 427 (Fed. Cir. 1996). Minnesota courts have consistently held that the Minnesota long-arm statute "reaches as many extraterritorial defendants as the Due Process Clause will allow." Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed. Cir. 1998); see also Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 411 (Minn. 1992). The Court therefore need only consider whether the requirements of due process are satisfied to resolve InFocus's jurisdictional challenge. See Red Wing Shoe, 148 F.3d at 1358.
The parties agree that, because this is a patent infringement case, the Court is guided by the law of the Federal Circuit rather than the law of the Eighth Circuit when making its personal jurisdiction determination. See Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995).
To satisfy the requirements of the Due Process Clause, a court may only exercise personal jurisdiction over an out-of-state defendant where that defendant has certain purposeful minimum contacts with the forum state "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 318 (1945). See also Viam Corp., 84 F.3d at 428. "In short, the Due Process Clause requires a court to determine whether a defendant `should reasonably anticipate being haled into court there.'" LSI Indus., Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). See also Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1565 (Fed. Cir. 1994) (holding that the purposeful minimum contacts requirement helps ensure that non-residents have fair warning that a particular activity may subject them to litigation within the forum).
1. Minimum Contacts
Under the minimum contacts analysis, a defendant may be subject to either specific or general jurisdiction. See LSI Indus., 232 F.3d at 1375. General jurisdiction arises when a defendant maintains "continuous or systematic" contacts with the forum state even when the cause of action has no relation to those contacts. Id. A defendant may be subject to specific jurisdiction if the plaintiff's claims arise out of or relate to the defendant's contacts with the forum state, even if those contacts are isolated and sporadic. Id.
The Court first turns to Plaintiffs' argument that the Court may properly assert general jurisdiction over InFocus. In order for assertion of general jurisdiction to comport with due process, the defendant's activities within the forum must be both continuous and systematic. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16 (1984). That is, the defendant's contacts with the forum must be more than "random," "fortuitous," or "attenuated." See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). The Court may only exercise general jurisdiction over an out-of-state defendant if "the continuous corporate operations within [the] state [are] thought so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities." Int'l Shoe, 326 U.S. at 318.
The factors courts consider when assessing a defendant's contacts within the forum state include, but are not limited to: (1) whether the corporation solicits business in the state through a local office or agents; (2) whether the corporation sends agents into the state on a regular basis to solicit business; (3) the extent to which the corporation holds itself out as doing business in the forum state, through advertisements, listings or bank accounts; and (4) the volume of business conducted in the state by the corporation. See Trierweiler v. Croxton Trench Holding Corp., 90 F.3d 1523, 1533 (10th Cir. 1996) (cited with approval in Delta Sys., Inc. v. Indak Mfg. Corp., No. 00-1225, 2001 WL 103518, at *3 (Fed. Cir. Feb. 2, 2001)).
Plaintiffs argue that InFocus is subject to general personal jurisdiction in Minnesota because InFocus has established distribution channels in Minnesota; generated $3.8 million in revenue from regular sales of its products in Minnesota last year and almost $20 million over the last five years; maintains an active website that generated $75,000 in sales from Minnesota residents last year; and contracts with Minnesota companies to provide repair and warranty services for Minnesota residents. In addition, InFocus's employees made approximately twenty-one visits to Minnesota last year.
InFocus, on the other hand, maintains that these contacts are insufficient to subject it to general personal jurisdiction. InFocus notes that it does not own, lease or rent any real property in Minnesota; is neither incorporated, nor registered to do business, in Minnesota; does not have a registered agent in Minnesota; does not have a bank account in Minnesota; does not employ any employee or agent who resides in Minnesota; does not target advertising at Minnesota residents; and does not maintain an office, have a telephone listing, or otherwise hold itself out as being present in any way in Minnesota. InFocus contends that its Minnesota sales last year represent only .64% of its total sales and that its web sales to Minnesota residents represent only.01% of its total sales. InFocus also asserts that at least some of its revenue from Minnesota sales was made through sales by national retailers over whom InFocus had no control and that the visits of its employees are insufficient to establish general jurisdiction in Minnesota. Moreover, InFocus argues that its outsourcing of repair work to Minnesota companies rather than providing those services itself cuts against a finding of general jurisdiction.
At the heart of the parties' jurisdiction dispute is the importance of InFocus's $3.8 million in revenue generated from sales in Minnesota. Plaintiffs maintain that this significant amount of revenue, and the number of contacts with the forum state that it implies, is entitled to great weight in the Court's personal jurisdiction analysis. InFocus, on the other hand, argues that these sales are insignificant for personal jurisdiction purposes because they amount to less than 1% of its total sales.
The defendant's percentage of sales in the forum state can be a relevant consideration in a general jurisdiction analysis. See Stairmaster Sports/Med. Prods., Inc. v. Pac. Fitness Corp., 916 F. Supp. 1049 (W.D. Wash. 1996), aff'd 78 F.3d 602 (Fed. Cir. 1996) (dismissing the case for lack of personal jurisdiction where the products the defendant shipped to the forum state were not the claimed invention and constituted only 3% of its total sales); Hockerson-Halberstadt v. Propet USA, Inc., Nos. 02-1259, 02-1304, 02-1341, 2003 WL 1795641 (Fed. Cir. Apr. 1, 2003) (holding that the defendant's web sales of $32,252.32, which amounted to only .0008% of the defendant's total sales, were insufficient to warrant assertion of general personal jurisdiction). The Supreme Court has, however, rejected any rigid mechanical test for determining personal jurisdiction. Burger King, 471 U.S. at 478. Instead, the proper inquiry is whether the defendant's contacts with the forum state are continuous and systematic. See Helicopteros, 466 U.S. at 415-16. Accordingly, the fact that the defendant's revenues from sales in the forum state amount to only a small percentage of that defendant's total sales does not render the actual dollar amount of the sales insignificant for personal jurisdiction purposes. See Lakin v. Prudential Sec., Inc., 348 F.3d 704, 709 (8th Cir. 2003). In fact, the Federal Circuit has indicated that where the defendant makes regular sales in the forum that result in millions of dollars of revenue, those sales are entitled to significant weight in a general jurisdiction analysis. See, e.g., Delta Sys., 2001 WL 103518, at *3; LSI Indus., 232 F.3d at 1375. Those sales alone "might be sufficient to satisfy the requirements for the exercise of general jurisdiction." Delta Sys., 2001 WL 103518, at *3.
In addition to Infocus's millions of dollars of revenue through regular sales in Minnesota, InFocus representatives make frequent trips — almost one visit every other week — to Minnesota, where InFocus products are sold through national office supply chains, eight local dealers, and multiple resellers with whom InFocus has "partner" arrangements. Moreover, contrary to InFocus's contention, the fact that InFocus contracts with third parties to serve as authorized service centers supports a finding of general jurisdiction. InFocus's relationship with these parties contributes to its presence in Minnesota by producing and supporting a customer base in the State that might result in or enhance future sales. Cf. Genetic Implant Sys., Inc. v. Core-Vent Corp., 123 F.3d 1455, 1458 (Fed. Cir. 1997) (holding that the defendant contributed to its presence in the forum state where defendant engaged in a program to develop a market in Washington). These authorized service centers, together with InFocus's interactive website, serve as established channels for providing regular advice in Minnesota. Cf. Viam Corp., 84 F.3d at 429 (holding that defendant was subject to jurisdiction of forum where defendant knowingly and intentionally exploited the forum's market, in part, by establishing channels for providing regular advice in the forum).
Viewing all of InFocus's relevant contacts as a whole, see Aeration Solutions, Inc. v. Dickman, Civ. No. 03-1284, 2004 WL 74621, at *2 (Fed. Cir. Jan. 15, 2004), and keeping in mind Plaintiffs' minimal burden at this stage of the litigation, see Elec. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed. Cir. 2003), the Court finds that it may properly assert general personal jurisdiction over InFocus. InFocus's contacts with Minnesota are far from "random," "fortuitous," or "attenuated;" its contacts with Minnesota are sufficiently continuous and systematic that it should anticipate being haled to Minnesota on causes of action unrelated to its contacts with the State.
Because the Court did not hold an evidentiary hearing, Plaintiffs need only prove a prima facie case of jurisdiction and the Court accepts Plaintiffs' uncontroverted allegations as true. See, e.g., Elec. for Imaging, 340 F.3d at 1349. Accordingly, any factual disputes contained in the affidavits must be resolved in Plaintiffs' favor. Id.
2. Reasonableness
Minimum contacts are a necessary but not sufficient condition to finding personal jurisdiction. Viam Corp., 84 F.3d at 429. In addition, the Court must examine the reasonableness of the exercise of jurisdiction. See id.; see also Metro. Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 572 (2d Cir. 1996) ("[T]he reasonableness inquiry is applicable to all questions of personal jurisdiction, general or specific."). "The test of unreasonableness is a multi-factored balancing test that weighs any burdens on the defendant against various countervailing considerations, including the plaintiff's interest in a convenient forum and the forum state's interest in resolving controversies flowing from in-state events." Viam Corp., 84 F.3d at 429 (citing Burger King, 471 U.S. at 477). The Court must balance: (1) the burden on the defendant; (2) the interests of the forum state; (3) the plaintiff's interest in obtaining relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the interest of the states in furthering their social policies. Viam Corp., 84 F.3d at 429.
After a finding of minimum contacts, courts rarely conclude that an assertion of personal jurisdiction would be unreasonable unless the plaintiff's interests and the state's interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum. See Beverly Hills Fan Co., 21 F.3d at 1568; Schwanger v. Munchkin, Inc., No. 99-1049, 1999 WL 820449, at *6 (Fed. Cir. Oct. 7, 1999). InFocus has not persuaded the Court that this is one of those rare situations. First, while it may be more convenient for InFocus to litigate this case in Oregon, "progress in communication and transportation has made the defense of a lawsuit in a foreign tribunal less burdensome." Schwanger, 1999 WL 820449, at *6 (quoting World-Wide Volkswagen, 44 U.S. at 294). In addition, the Court concludes that Minnesota is not an inconvenient forum for InFocus in light of InFocus's contacts with the State. Cf. 3D Sys., Inc. v. Aarotech Labs, Inc., 160 F.3d 1373, 1380 (Fed. Cir. 1998); DB Indus., Inc. v. BO Mfg, Inc., No. 03-5277, 2004 WL 1765337, at *3 (D. Minn. Aug. 4, 2004) (applying Federal Circuit law and holding that several factors weighed in favor of finding personal jurisdiction where defendant marketed, sold and shipped its products to Minnesota regularly). Finally, "Minnesota's interest in discouraging injuries that occur within the state is well established." DB Indus., 2004 WL 1765337, at *3; cf. Schwanger, 1999 WL 820449, at *6. Accordingly, the Court concludes that it would be reasonable to assert personal jurisdiction over InFocus.
Because the Court concludes that it has general jurisdiction over InFocus, the Court does not reach the issue of specific jurisdiction.
B. Transfer of Venue
In the alternative to its motion to dismiss for lack of personal jurisdiction, InFocus seeks to transfer this action to the United States District Court for the District of Oregon. Motions to transfer venue are governed by 42 U.S.C. § 1404(a), which provides: "For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 42 U.S.C. § 1404(a) (2000). Because InFocus is the party seeking transfer, it bears the burden of establishing that transfer is warranted, see Terra Int'l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 691 (8th Cir. 1997), and its motion should be denied unless the balance of factors strongly favors it, see Graff v. Qwest Communications Corp., 33 F. Supp. 2d 1117, 1121 (D. Minn. 1999). The decision of whether to transfer an action lies within the discretion of the district court. Everett v. St. Ansgar Hosp., 974 F.2d 77, 79 (8th Cir. 1992).
When deciding whether to grant a motion to transfer venue, the Court applies the law of the regional circuit to which appeal from this Court would normally lie. Storage Tech. Corp. v. Cisco Sys., Inc., 329 F.3d 823, 835 (Fed. Cir. 2003).
The threshold question of whether venue would be proper in the District of Oregon is not disputed in this case. The Court, therefore, turns to whether a transfer is proper for the convenience of the parties, the convenience of the witnesses, and the interest of justice.
1. Convenience of the parties
In looking to the convenience of the parties, transfer should not be granted if the effect is simply to shift the inconvenience to the party resisting transfer. See Nelson v. Soo Line R.R. Co., 58 F. Supp. 2d 1023, 1027 (D. Minn. 1999). InFocus insists that it would be convenient for both parties to litigate this case in the District of Oregon, in part, because 3MPO has facilities approximately 10 miles from where InFocus is headquartered. Plaintiffs argue, however, that 3MPO's Oregon facility does not make Oregon a convenient forum for this litigation. No likely witnesses are employees of the 3MPO Oregon facility, no relevant documents are housed in that facility, and the Oregon facility had no involvement in the conception and development of the '922 patent. Plaintiffs maintain, moreover, that Minnesota is a more convenient forum. 3MIPC, Plaintiffs' lawyers, and Plaintiffs' major decision-makers are located here. In addition, all of Plaintiffs' files and documents known to be relevant to this case are located in Minnesota or will be relocated here.
Given that one of the Plaintiffs is domiciled in Minnesota, the Court concludes that the effect of transfer would simply be to shift the inconvenience to Plaintiffs. Accordingly, InFocus has failed to demonstrate that this factor weighs in its favor.
2. Convenience of the witnesses
The convenience of the witnesses is an important factor in the transfer analysis. Graff, 33 F. Supp. 2d at 1121; Nelson v. Master Lease Corp., 759 F. Supp. 1397, 1402 (D. Minn. 1991). Considerations relevant to this factor include the number of essential nonparty witnesses, their location, and the preference for live testimony. Graff, 33 F. Supp. 2d at 1121; Master Lease, 759 F. Supp. at 1402. This factor is not a contest between the parties as to which one presents a longer list of witnesses located in the potential districts. Graff, 33 F. Supp. 2d at 1121-22; Master Lease, 759 F. Supp. at 1402. The party seeking the transfer must clearly specify the essential witnesses to be called and must make a general statement of what their testimony will cover. Graff, 33 F. Supp. 2d at 1122; Master Lease, 759 F. Supp. at 1402. The court must examine the materiality and importance of the anticipated witnesses' testimony and determine whether the forum is convenient for them. Graff, 33 F. Supp. 2d at 1122.
The parties agree that the likely material witnesses in this case hail from Oregon, Ohio, New York, Texas, and California. InFocus argues that if this case is tried in Minnesota, it might not be able to obtain the cooperation of material witnesses such as former employees in Oregon and third-party witnesses located in California. Plaintiffs represent that if the case is tried in Oregon, they may not be able to obtain the cooperation of material third-party witnesses located outside of Oregon.
Notwithstanding the fact that some of the likely witnesses are from Oregon, some material nonparty witnesses for both parties will not be subject to the court's subpoena power wherever this case is litigated. Moreover, Minnesota appears to be a central location for the various nonparty witnesses who are likely to be called to testify in this matter, and several of the Ohio witnesses have business reasons unrelated to this action to travel to Minnesota. InFocus, therefore, has failed to demonstrate that that transfer of this action would serve the convenience of the witnesses. 3. Interest of Justice
The last prong of the transfer analysis addresses whether the interest of justice favors transfer. Soo Line R.R., 58 F. Supp. 2d at 1027. InFocus contends that it is in the interest of justice to transfer this case to the District of Oregon for four reasons. First, InFocus argues that Plaintiffs are better able financially to bear the expense of litigating this case in a foreign forum. InFocus asserts that Plaintiffs are subsidiaries of a company that recorded $15 billion in sales in the 1990's; InFocus, on the other hand, recorded sales of only $600 million during the same time period. Second, InFocus insists that all of the conduct relevant to this suit occurred in Oregon. Third, InFocus argues that there are obstacles to it receiving a fair trial in Minnesota because if the trial were to occur in Minnesota, InFocus might not be able to obtain the cooperation of material witnesses. Finally, InFocus claims that Plaintiffs would be unable to enforce a judgment in Minnesota because InFocus has no assets, operations, or presence in Minnesota.
The Court finds that InFocus has failed to meet its burden of demonstrating that the interest of justice warrants transfer of this case to District of Oregon. First, InFocus is a national publicly-traded company with more than sufficient resources to litigate this case in Minnesota. Moreover, even assuming that all of InFocus's relevant conduct occurred in Oregon, Minnesota's interest in discouraging injuries that occur within the state is well established. Furthermore, as discussed above, no matter where this case is litigated, material witnesses will be beyond the court's subpoena power. Finally, even assuming Plaintiffs would be unable to enforce a judgment against InFocus in Minnesota, this fact alone does not persuade the Court that the interest of justice requires transfer.
In sum, considering all of the factors relevant to a transfer of venue analysis, the Court denies InFocus's motion to transfer.
III. CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT IS ORDERED THAT:
1. InFocus's Motion to Dismiss for Lack of Personal Jurisdiction [Docket No. 11] is DENIED.
2. InFocus's Motion to Transfer Pursuant to 28 U.S.C. § 1404(a) [Docket No. 14] is DENIED.