Opinion
Case No. 6:20-cv-2233-RBD-EJK
2021-02-24
HEALTHE, INC., Plaintiff, v. HIGH ENERGY OZONE LLC; S. Edward Neister; and Pathogen Path Consulting LLC, Defendants.
Adam M. Kaufmann, Pro Hac Vice, Barnes & Thornburg LLP, Eric Hayes, Pro Hac Vice, Garret A. Leach, Pro Hac Vice, Greg Matthew Polins, Pro Hac Vice, Kirkland & Ellis LLP, Chicago, IL, Monica Marie McNulty Kovecses, David Storrs Wood, Akerman LLP, Orlando, FL, for Plaintiff. Abby L. Parsons, Pro Hac Vice, King & Spalding LLP, Houston, TX, Alex Louis Braunstein, Fox Rothschild LLP, West Palm Beach, FL, Brent P. Ray, Pro Hac Vice, King & Spalding LLP, Chicago, IL, Dara Kurlancheek, Pro Hac Vice, King & Spalding LLP, Washington, DC, Julia Mae Kolibachuk, Pro Hac Vice, Lida Ramsey, Pro Hac Vice, King & Spalding LLP, New York, NY, for Defendants High Energy Ozone LLC, S. Edward Neister.
Adam M. Kaufmann, Pro Hac Vice, Barnes & Thornburg LLP, Eric Hayes, Pro Hac Vice, Garret A. Leach, Pro Hac Vice, Greg Matthew Polins, Pro Hac Vice, Kirkland & Ellis LLP, Chicago, IL, Monica Marie McNulty Kovecses, David Storrs Wood, Akerman LLP, Orlando, FL, for Plaintiff.
Abby L. Parsons, Pro Hac Vice, King & Spalding LLP, Houston, TX, Alex Louis Braunstein, Fox Rothschild LLP, West Palm Beach, FL, Brent P. Ray, Pro Hac Vice, King & Spalding LLP, Chicago, IL, Dara Kurlancheek, Pro Hac Vice, King & Spalding LLP, Washington, DC, Julia Mae Kolibachuk, Pro Hac Vice, Lida Ramsey, Pro Hac Vice, King & Spalding LLP, New York, NY, for Defendants High Energy Ozone LLC, S. Edward Neister.
ORDER
ROY B. DALTON JR., United States District Judge Defendants move to dismiss Plaintiff's Complaint (Doc. 1) for lack of personal jurisdiction. (Doc. 28 ("Motion ").) Plaintiff responded. (Doc. 32.) On review, the Motion is denied.
I. BACKGROUND
As alleged in the Complaint: Plaintiff, based out of Florida, develops and deploys high-tech sanitization solutions, including UV light products that inactivate bacteria, viruses, and other pathogens. (Doc. 1, ¶¶ 2, 14–15.) These products include Healthe Entry, Healthe Space, and Healthe Air ("Healthe UV Products "). (Id. ¶ 16.) Defendant High Energy Ozone LLC ("HEO ") is Healthe's competitor; Defendant Edward Neister ("Neister ") is President of HEO. (Id. ¶¶ 19, 123.) In June 2020, HEO sent Plaintiff a cease-and-desist letter, claiming the Healthe UV Products infringed on patents held by Neister and licensed to HEO. (Id. ¶ 18.) Neister and Neister's other company, Defendant Pathogen Path Consulting, LLC ("PPC "), owned the disputed patents. (Id. ¶ 13.) But Defendants did not stop with letters to Plaintiff.
Instead, on November 19, 2020, Neister, on behalf of himself, PPC, and HEO, sent a different letter to one of Plaintiff's customers in the Middle District of Florida. (Id. ¶ 19.) The letter told the customer the Healthe UV Product was infringing on Neister's patent—and that "[p]atents can be asserted against users of infringing products." (Id. ) The letter also demanded the customer inform Neister of how the customer "plan[ned] to proceed with [the customer's] purchased [Healthe UV Product]" within twenty days. (Id. )
The customer informed Plaintiff and Plaintiff immediately sent a letter to HEO's counsel, informing them the allegations were baseless and damaging—and demanding HEO cease sending these letters. (Id. ¶¶ 19, 20.) HEO did not listen. (See id. ¶ 21.) Instead, the next day, HEO sent at least one other letter to a different customer of Plaintiff's, stating "[w]e understand that you have recently purchased [a Health UV Product] and are using it in public," asserting the Healthe UV Products infringed, and the purchasers of infringing products could be liable. (Id. ) Again HEO demanded the second customer respond within twenty days about their intentions for the purchase of the Healthe UV Products. (Id. )
The Complaint doesn't allege where this second customer was located. (See Doc. 1, ¶ 21.)
So Plaintiff sued, seeking a declaratory judgment of non-infringement for its products against all Defendants and asserting two claims for unfair competition under the Florida Deceptive and Unfair Trade Practices Act ("FDUTPA ") and Florida common law against Neister and HEO. (See Doc. 1.) Defendants, who are from New Hampshire, now move to dismiss for lack of personal jurisdiction or to transfer venue. (Doc. 28.) Briefing complete (Doc. 32), the matter is ripe.
II. ANALYSIS
First a look at personal jurisdiction before turning to venue.
A. Personal Jurisdiction
"Determining whether jurisdiction exists over an out-of-state defendant involves two inquiries: whether a forum state's long-arm statute permits service of process and whether assertion of personal jurisdiction violates due process." Xilinx, Inc. v. Papst Licensing GmbH & Co. KG , 848 F.3d 1346, 1353 (Fed. Cir. 2017) (cleaned up). In declaratory judgment actions involving patent infringement, Federal Circuit law is generally used for this analysis as the jurisdictional issue is "intimately involved with the substance of the patent laws"—but the Court applies Florida law in interpreting Florida's long-arm statute. See Xilinx , 848 F.3d at 1352 ; Instabook Corp. v. Instantpublisher.com , 469 F. Supp. 2d 1120, 1122 (M.D. Fla. 2006).
Defendants move to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). (See Doc. 28.) Under Rule 12(b)(2), Plaintiff need make only a prima facie showing Defendants are subject to personal jurisdiction. See Xilinx , 848 F.3d at 1352. Courts may consider affidavits and other written materials in making this determination, but they must "accept the uncontroverted allegations in the plaintiff's complaint as true and resolve any factual conflicts in the affidavits in the plaintiff's favor." Id. (citation and internal quotation marks omitted). Here, Defendants submit an affidavit by Neister swearing to Defendants’ lack of contacts with Florida—but Defendants, mostly, do not contradict the factual allegations in Plaintiff's Complaint. (See Doc. 1; cf. Doc. 28-1.) Given these allegations, Plaintiff has established the Court has personal jurisdiction over Defendants. (See Doc. 1.)
1. Florida's Long-Arm Statute
It is undisputed Defendants are not subject to general personal jurisdiction in Florida. (See Doc. 28, pp. 13–14; Doc. 32 (arguing only specific jurisdiction).) So the only question is whether Defendants are subject to specific personal jurisdiction in Florida.
Florida's long-arm statute permits the exercise of specific jurisdiction over persons who have "commit[ted] a tortious act within the state." Fla. Stat. § 48.193(1)(a)(2). Plaintiff alleges HEO and Neister committed tortious acts within Florida when they sent Plaintiff and Plaintiff's Florida customer letters falsely claiming the Healthe UV Products infringed and demanding more information. (See Doc. 1, ¶¶ 114–28.) Defendants argue sending cease-and-desist letters "cannot be categorized as tortious acts" because "[t]he Federal Circuit has held that letters from a patentee informing an accused infringer's customers of the alleged infringement constitutes protected conduct under federal patent law." (Doc. 28, p. 12 (quoting Paws Aboard, LLC v. DiDonato , No. 8:11-cv-1978-T-33EAJ, 2012 WL 1252763, at *4 (M.D. Fla. Apr. 13, 2012) )). Defendants are only half right.
Defendants’ reliance on Paws Aboard for their Florida long-arm statute argument is misplaced because Paws Aboard expressly did not decide whether the conduct could be considered a "tortious act," relying only on due process considerations. See 2012 WL 1252763, at *4 ; (cf. Doc. 28, p. 12).
"[F]ederal patent law pre-empts state-law tort liability for a patentholder's good faith conduct in communications asserting infringement of its patent and warning about potential litigation." Globetrotter Software, Inc. v. Elan Comput. Grp. , 362 F.3d 1367, 1374 (Fed. Cir. 2004) (emphasis added) (citation omitted). But state tort claims still exist "to the extent that those claims are based on a showing of ‘bad faith’ action in asserting infringement." Id. According to Plaintiff's uncontroverted allegations, HEO and Neister acted in bad faith in sending the letters because a review of the publicly available information shows there was no infringement and the threats of liability made to customers were "objectively baseless"; Neister's pending patent application "has no allowed claims, is currently under a final rejection by the United States Patent and Trademark Office, and has not issued as a patent." (Doc. 1, ¶¶ 116–17, 124–25.) As Plaintiff alleged bad faith (uncontradicted by Defendants) and that Neister and HEO committed a tortious act in Florida, they are subject to Florida's long-arm statute. See Globetrotter , 362 F.3d at 1374 ; see also Weiner v. Podesto , No. 19-60859-CIV-COHN/SELTZER, 2019 WL 7708494, at *5 (S.D. Fla. Aug. 2, 2019).
For similar reasons, Plaintiff has established the Court has jurisdiction over PPC. While Plaintiff does not assert unfair competition claims against PPC, Plaintiff does allege PPC claims ownership in some of the patents and that it directed the sending of the letters. (See Doc. 1, ¶ 13.) So, Plaintiff claims, PPC also committed tortious acts in Florida. (See id. ) As Defendants do not, at this stage, present evidence contesting these allegations, Plaintiff has shown PPC is subject to personal jurisdiction under Florida's long-arm statute. See Weiner , 2019 WL 7708494, at *5.
Neister avers he owns the patents in question but, unlike his allegation he is the "sole inventor" he does not claim he is the sole owner, nor does he disavow PPC's ownership of the patents. (Doc. 28-1, ¶ 1.)And Neister admits he is the President and representative of PPC and PPC has zero employees—supporting the inference in Plaintiff's favor. (Id. ¶¶ 1, 17.)
2. Due Process
Defendants also contend that subjecting them to personal jurisdiction in Florida would violate due process. Not so.
Due process requires sufficient " ‘minimum contacts’ such that maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ " Breckenridge Pharm., Inc. v. Metabolite Lab'ys, Inc. , 444 F.3d 1356, 1361 (Fed. Cir. 2006) (quoting Burger King Corp. v. Rudzewicz , 471 U.S. 462, 476–78, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ). The Federal Circuit uses a three-pronged test for minimum contacts, asking whether: "(1) the defendant purposefully directed its activities at residents of the forum, (2) the claim arises out of or relates to those activities, and (3) assertion of personal jurisdiction is reasonable and fair." Id. at 1363.
Defendants argue sending "cease-and-desist letters to a resident, on its own, does not establish minimum contacts" and "Federal Circuit precedent is clear that personal jurisdiction based on such contacts is not ‘reasonable and fair.’ " (Doc. 28, pp. 15–16.) Again, Defendants are close, but their arguments miss the mark.
"[T]he sending of an infringement letter, without more , is insufficient to satisfy the requirements of due process when exercising jurisdiction over an out-of-state patentee." Campbell Pet Co. v. Miale , 542 F.3d 879, 885 (Fed. Cir. 2008) (emphasis added) (citation and internal quotation marks omitted); see also Avocent Huntsville Corp. v. Aten Int'l Co. , 552 F.3d 1324, 1334 (Fed. Cir. 2008). But there is no general rule that a "letter charging infringement can never provide specific jurisdiction." Jack Henry & Assocs., Inc. v. Plano Encryption Techs. LLC , 910 F.3d 1199, 1203 (Fed. Cir. 2018) (clarifying the decision in Avocent ). For example, attempts at "extra-judicial patent enforcement," targeted at a plaintiff's business activities, "go beyond simply informing the accused infringer of the patentee's allegations of infringement" and can give rise to personal jurisdiction. Campbell , 542 F.3d at 886.
Here, had Defendants simply sent a letter asserting a good-faith claim of infringement to Plaintiff, those contacts would not give rise to personal jurisdiction. See id. at 885. But according to Plaintiff's uncontroverted allegations, Defendants sent a threatening letter in bad faith to one of Plaintiff's customers in Florida that not only baselessly asserted patent infringement but also demanded the customer respond to the letter "in regards to your intentions within twenty (20) days" about the customer's planned purchases of Healthe UV Products. (Doc. 1, ¶¶ 19, 116.) This demand goes beyond informing others of potential patent infringement and is instead an alleged bad-faith attempt at "extra-judicial patent enforcement"—interfering with Plaintiff's customers and trying to collect information about a competitor's business. See Campbell , 542 F.3d at 886 ; see also Breckenridge , 444 F.3d at 1366–67 ; Globetrotter , 362 F.3d at 1374. As Plaintiff successfully alleged Defendants targeted Plaintiff and customers in Florida with tortious letters and that Defendants tried to extra-judicially enforce their patents in Florida with those letters, Plaintiff has shown a prima facie case for personal jurisdiction. See Campbell , 542 F.3d at 888. So Defendants’ motion to dismiss for lack of personal jurisdiction is denied.
B. Venue
Finally, Defendants move in the alternative to transfer venue for forum non conveniens. (Doc. 28, pp. 17–20.) As the Complaint seeks a declaration of non-infringement—and does not assert patent infringement—venue is governed by the general, not patent-specific, venue statute. See Fine Agrochemicals Ltd. v. Stoller Enters. Inc. , No. 7:19-CV-28 (HL), 2020 WL 1000551, at *3 (M.D. Ga. Mar. 2, 2020) ; U.S. Aluminum Corp. v. Kawneer Co. , 694 F.2d 193, 195 (9th Cir. 1982) ; see also 28 U.S.C. § 1391(b) ; cf. 28 U.S.C. § 1400. Defendants do not argue venue is improper in the Middle District of Florida, rather, that the case should be transferred "for the convenience of the parties and witnesses, in the interest of justice" under 28 U.S.C. § 1404(a). (See Doc. 28, pp. 17–20.)
Motions to transfer under § 1404(a) require a two-step inquiry. First, the Court must determine whether the case could have been brought in the transferee forum. See 28 U.S.C. § 1404(a) ; see also SEC v. BIH Corp. , No. 2:10-cv-577-FtM-29DNF, 2011 WL 3862530, at *2 (M.D. Fla. Aug. 31, 2011). Plaintiffs do not dispute this case could have been brought in New Hampshire, Defendants’ preferred venue. (See Doc. 32, pp. 21–26.)
So the Court proceeds to the next step: whether "convenience and the interest of justice" require transfer. BIH , 2011 WL 3862530, at *2. "[T]here is ordinarily a strong presumption in favor of the plaintiff's choice of forum." Piper Aircraft Co. v. Reyno , 454 U.S. 235, 255, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). This choice "should not be disturbed unless it is clearly outweighed by other considerations." Robinson v. Giarmarco & Bill, P.C. , 74 F.3d 253, 260 (11th Cir. 1996) (citation and internal quotation marks omitted). Defendants must show that transfer is warranted. In re Ricoh Corp. , 870 F.2d 570, 573 (11th Cir. 1989). In making this determination, courts consider:
(1) [T]he convenience of the witnesses; (2) the location of relevant documents and the relative ease of access to sources of proof; (3) the convenience of the parties; (4) the locus of operative facts; (5) the availability of process to compel the attendance of unwilling witnesses; (6) the relative means of the parties; (7) a forum's familiarity with the governing law; (8) the weight accorded a plaintiff's choice of forum; and (9) trial efficiency and the interests of justice, based on the totality of the circumstances.
Manuel v. Convergys Corp. , 430 F.3d 1132, 1135 n.1 (11th Cir. 2005).
On review of these factors, Defendants have not met their burden to show transfer is warranted. Several factors are a wash: for instance, Defendants’ documents and witnesses are in New Hampshire and Plaintiff's (including Plaintiff's Florida customer) are in Florida. (See Doc. 1, ¶ 19; Doc. 28-1, ¶¶ 1, 3–4, 19–20; cf. Doc. 32-1, ¶¶ 7–14.) But the locus of operative facts weighs in Plaintiff's favor as Plaintiff alleges Defendants violated Florida law by sending tortious letters to it and its customer in Florida. (See Doc. 1.) Plus, this Court is far more familiar with FDUTPA and Florida common law than a court sitting in New Hampshire, so this weighs in Plaintiff's favor. Finally, Defendants have shown they likely do have fewer means than Plaintiff (Doc. 28-1, ¶ 17); but this single consideration is not enough to overcome the weighty presumption in favor of Plaintiff's choice of forum and the other factors that weigh against transfer. See Robinson , 74 F.3d at 260. So the Court will not transfer this case.
III. CONCLUSION
It is ORDERED AND ADJUDGED that Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction, or, in the Alternative, to Transfer Venue (Doc. 28) is DENIED .
DONE AND ORDERED in Chambers in Orlando, Florida, on February 24, 2021.