Opinion
No. 4:04-CV-247-A.
August 24, 2004
MEMORANDUM OPINION and ORDER
Came on for consideration the motion of plaintiff, Vishay Dale Electronics, Inc., to enjoin and the motion of defendants KOA Corporation and KOA Speer Electronics, Inc. (collectively "KOA") to dismiss the claims against KOA Corporation and to transfer the remaining claims to the Western District of Pennsylvania. The court, having considered the motions, the responses, the record, and applicable authorities, finds that plaintiff's motion should be granted as set forth herein and that KOA's motion should be denied.
I. Procedural History
On April 1, 2004, plaintiff filed its complaint in this action alleging that defendants, KOA and TTI, Inc., had been, and were, infringing one or more claims of United States Patent No. 5,287,083 (the "'083 patent"), United States Patent No. 6,401,329 (the "'329 patent"), United States Patent No. 6,441,718 (the "'718 patent"), and United States Patent No. 6,510,605 (the "'605 patent"). On April 29, 2004, KOA filed in the United States District Court for the Western District of Pennsylvania a complaint for declaratory relief (the "Pennsylvania action") seeking a judgment of invalidity, noninfringement, and unenforceability of the '083 patent, the '718 patent, the '329 patent, the '605 patent, and United States Patent No. 5,604,477 (the "`477 patent"). KOA additionally asserted a claim for patent misuse, alleging that plaintiff had attempted to illegally obtain damages and royalties from KOA by improperly seeking to extend the geographical and temporal scope of the patents in issue. On May 24, 2004, KOA amended its complaint in the Pennsylvania action to add a request for declaratory judgment of noninfringement and unenforceability of United States Patent No. 6,675,529 (the "`529 patent").
On May 6, 2004, plaintiff filed its amended complaint in this action, omitting the claims as to the '329 and '605 patents, continuing to urge patent infringement as to the '083 and '718 patents only.
II. Grounds of the Motions
In support of its motion to enjoin, plaintiff urges that, because its suit was first filed in this court, this court has primary jurisdiction and may enjoin pursuit of the Pennsylvania action.
In support of their motion, the KOA defendants urge that the court lacks personal jurisdiction over KOA Corporation and that plaintiff's claims against it should be dismissed. They further urge that the remaining claims should be transferred to the Western District of Pennsylvania to be considered along with the Pennsylvania action.
III. The Motion to Enjoin
Federal courts have long recognized the principle of comity that requires them to exercise care to avoid interference with each other's affairs. West Gulf Maritime Ass'n v. ILA Deep Sea Local 24, 751 F.2d 721, 728 (5th Cir. 1971). The concern is to avoid the waste of duplication, to avoid rulings that may trench upon the authority of sister courts, and to avoid piecemeal resolution of issues that call for a uniform result. Id. at 729. "The Fifth Circuit adheres to the general rule that the court in which an action is first filed is the appropriate court to determine whether subsequently filed cases involving substantially similar issues should proceed." Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 950 (5th Cir. 1997). Without doubt, this case is the first-filed case. The court is not persuaded that plaintiff's failure to immediately serve defendants changes anything, especially since plaintiff notified defendants that the suit had been filed.
KOA urges that the first-to-file rule should not be applied since KOA Corporation is not subject to personal jurisdiction in Texas. For the reasons discussed infra, the argument lacks merit. KOA further urges that the first-to-file rule should not apply, because this is a customer action. The customer action doctrine, however, does not apply since plaintiff has also sued KOA and not merely its customer in this action. See Katz v. Lear Siegler, Inc., 909 F.2d 1459, 1464 (Fed. Cir. 1990); In re Laughlin Prods., Inc., 265 F. Supp. 2d 525, 537 (E.D. Pa. 2003).
Also, KOA urges that the actions are not substantially similar, because the Pennsylvania action involves other patents that are not at issue here. The court is satisfied that the actions overlap on the substantive issues and that they would be properly consolidated in the same forum. There is no reason that KOA's claims in the Pennsylvania action could not be brought as counterclaims in this action. Nevertheless, the court has determined that it will stay the Pennsylvania action only as to those claims pertaining to the '083 and '718 patents. There is no reason why KOA should not be able to pursue claims that would not be compulsory counterclaims here in its chosen forum.
IV. Personal Jurisdiction
When considering a motion to dismiss for lack of personal jurisdiction in a patent infringement case, the court applies the law of the Federal Circuit. 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1378 (Fed. Cir. 1998); Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1564-65 (Fed. Cir. 1994); Nutrition Physiology Corp. v. Enviros, Ltd., 87 F. Supp. 2d 648, 650 (N.D. Tex. 2000). The burden is on the plaintiff to make a prima facie case for the exercise of jurisdiction over the nonresident defendant. Electronics for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed. Cir. 2003); Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d 1343, 1347 (Fed. Cir. 2002). The court accepts the uncontroverted allegations in the plaintiff's complaint as true and resolves any factual conflicts in the parties' affidavits in plaintiff's favor. Electronics for Imaging, Inc., 340 F.3d at 1349;Deprenyl, 297 F.3d at 1347.Personal jurisdiction over a nonresident may be exercised if (1) the nonresident defendant is amenable to service of process under the law of the forum state, and (2) the exercise of jurisdiction under state law comports with the due process clause of the Fifth Amendment. Electronics for Imaging, Inc., 340 F.3d at 1349. Since the Texas long-arm statute has been interpreted as extending to the limits of due process, the only inquiry is whether the exercise of jurisdiction over the nonresident defendant would be constitutionally permissible.See HollyAnne Corp. v. TFT, Inc., 199 F.3d 1304, 1307 (Fed. Cir. 1999); Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 427 (Fed. Cir. 1996).
See, e.g., Guardian Royal Exchange Assurance Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991);Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990);Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 200 (Tex. 1985).
For due process to be satisfied, (1) the nonresident defendant must have "minimum contacts" with the forum state resulting from an affirmative act on the defendant's part, and (2) the contacts must be such that the exercise of jurisdiction over the person of the defendant does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
The minimum contacts prong of the due process requirement can be satisfied by a finding of either "specific" or "general" jurisdiction over the nonresident defendant. Bullion v. Gillespie, 895 F.2d 213, 216 (5th Cir. 1990); Nutrition Physiology, 87 F. Supp. 2d at 652. For specific jurisdiction to exist, the foreign defendant must purposefully do some act or consummate some transaction in the forum state and the cause of action must arise from or be connected with such act or transaction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985); Akro Corp. v. Luker, 45 F.3d 1541, 1545-46 (Fed. Cir. 1995). Even if the controversy does not arise out of or relate to the nonresident defendant's purposeful contacts with the forum, general jurisdiction may be exercised when the nonresident defendant's contacts with the forum are sufficiently continuous and systematic as to support the reasonable exercise of jurisdiction. See, e.g., Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984); Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 779 (1984); Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952). When general jurisdiction is asserted, the minimum contacts analysis is more demanding and requires a showing of substantial activities within the forum state. Jones, 954 F.2d at 1068.
The court is concerned only with specific jurisdiction in the instant case, as the claims asserted by plaintiff arise out of or are related to alleged contacts by defendants with Texas. Plaintiff alleges that KOA Corporation, through its distribution network, sells and offers to sell in Texas products that infringe its patents. No more is usually required to establish specific jurisdiction in a patent infringement case arising out of a stream of commerce theory than that the product was sold in the forum. Beverly Hills Fan Co., 21 F.3d at 1565. See American Philips Corp. v. Am. Vending Sales, Inc., 35 F.3d 1576, 1578-79 (Fed. Cir. 1994) (patent infringement occurs where allegedly infringing sales are made). Here, plaintiff has made a prima facie showing that KOA has an "established distribution channel" in Texas. Beverly Hills, 21 F.3d at 1565-66. Thus, the specific jurisdiction requirement is satisfied.
KOA admits that TTI, Inc., is one of many customers that distributes products for KOA Speer Electronics, Inc. ("KOA Speer"). KOA's Br. at 6. KOA Speer is KOA Corporation's sole sales representative of the products of KOA Corporation in the United States. Pl.'s App. at 36.
The second prong of the due process analysis is whether exercise of jurisdiction over the nonresident defendant would comport with traditional notions of fair play and substantial justice. International Shoe, 326 U.S. at 316. In determining whether the exercise of jurisdiction would be reasonable such that it does not offend traditional notions of fair play and substantial justice, the Supreme Court has instructed that courts look to the following factors: (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) shared interest of the several states in furthering fundamental substantive social policies. Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113 (1987) (citingWorld-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)). And, the burden is on KOA to present a "compelling case" that the exercise of jurisdiction over KOA Corporation would be unreasonable. Electronics for Imaging, Inc., 340 F.3d at 1352 (quoting Burger King, 471 U.S. at 477)). Applying these factors, the court concludes that exercise of jurisdiction over KOA Corporation would be constitutionally permissible.
V. Motion to Transfer
Under 28 U.S.C. § 1404(a), the court may transfer a civil action to another district or division where the action might have been brought "[f]or the convenience of parties and witnesses, in the interest of justice." The party making the motion bears the burden of proof. Time, Inc. v. Manning, 366 F.2d 690, 698 (5th Cir. 1966). Among the factors to be considered are the convenience of the parties and witnesses, the availability of process to compel the presence of unwilling witnesses, the cost of obtaining the presence of witnesses, the relative ease of access to sources of proof, calendar congestion, where the events in issue took place, and the interests of justice in general. Burlington N. Santa Fe Ry. Co. v. Hertzog Servs., Inc., 990 F. Supp. 503, 504 (N.D. Tex. 1998). Having considered these factors, the court is not persuaded that the proposed transfer would be to a more convenient forum, as opposed to a forum likely to prove equally convenient or inconvenient to the parties. See VanDusen v. Barrack, 376 U.S. 612, 645-46 (1964).
VI. Order
For the reasons discussed herein,
The court ORDERS that:
(1) plaintiff's motion to enjoin be, and is hereby, granted in part, and KOA be, and is hereby, enjoined from prosecuting its claims and urging its contentions as to the '083 and '718 patents in the Pennsylvania action except to seek a dismissal of those claims or transfer of those claims to this court, if it so desires;
(2) KOA's motion to dismiss the claims against KOA Corporation be, and is hereby, denied; and
(3) KOA's motion to transfer be, and is hereby, denied.