United States District Court, D. Minnesota
Gerald E. Helget, Michael M. Sawers, and Kristine M. Boylan, Esqs., Briggs & Morgan, PA, 80 South 8th Street, Suite 2200, Minneapolis, Minnesota 55402, for Plaintiff.
Lisa Anne Smith, Peter B. Goldman, and Shijie Feng, Esqs., DeConcini McDonald Yetwin & Lacy, P.C., 2525 East Broadway Boulevard, Suite 200, Tucson, Arizona 85716, for Defendants.
Johnathan R. Maddox, Henson & Efron, PA, 220 South 6th Street, Suite 1800, Minneapolis, Minnesota 55402, for Defendants.
REPORT AND RECOMMENDATION
STEVEN E. RAU, Magistrate Judge.
The above-captioned case comes before the undersigned on Defendants William A. Ebert and Sunwest Supply, Inc.'s (collectively "Defendants") Motion to Dismiss for Lack of Personal Jurisdiction and Subject Matter Jurisdiction and Motion in the Alternative to Transfer Venue ("Motion to Dismiss") [Doc. No. 15]. This matter was referred to the undersigned by the Honorable Michael J. Davis pursuant to 28 U.S.C. § 636(b)(1)(B) for a report and recommendation. (Order of Referral) [Doc. No. 23]. For the reasons stated below, the Court recommends granting the Motion to Dismiss.
On May 13, 2014, Plaintiff Clim-A-Tech Industries, Inc. ("Clim-A-Tech") filed its complaint against Defendants. (Declaratory J. Compl.) [Doc. No. 1]. Clim-A-Tech filed an amended complaint on August 27, 2014. (Am. Declaratory J. Compl., "Am. Compl.") [Doc. No. 8].
Clim-A-Tech is "a Minnesota corporation with a principal place of business" in Hopkins, Minnesota. (Id. ¶ 1). It is "a... worldwide supplier of plastic profile extrusions and die-cut flexible components to small and large window [and] door companies, appliance manufacturers, [the] recreational industry, technology sector, refining/mining industry, retail and other industrial/commercial markets." (Id. ¶ 7). Defendant William A. Ebert ("Ebert") is "a resident of the State of Arizona and is the named inventor and owner of U.S. Patent No. 6, 746, 581" (the "581 Patent"). (Id. ¶ 2). Sunwest Supply, Inc. ("Sunwest"), is "an Arizona corporation with a principal place of business" in Tucson, Arizona. (Id. ¶ 3). Ebert is an officer, director, and registered agent for Sunwest. (Id. ).
Clim-A-Tech alleges that "Defendants, their employees, agents, and associates have- starting several years ago-leveled verbal accusations of patent infringement in the industry, to Clim-A-Tech's current and potential customers." (Id. ¶ 10). Clim-A-Tech asserts that its dispute with Defendants "came to a head when, on April 30, 2014, a cease and desist letter was sent on behalf of Sunwest'" to Clim-A-Tech's Chief Operating Officer in Hopkins, Minnesota, "formally alleging infringement of [the '581 Patent] by Clim-A-Tech's manufacture and sale of its U shaped cathode protector." (Id. ¶ 11). The letter "demands that Clim-A-Tech cease and desist from all infringing activity relative to the [']581 Patent, and further states that a patent license will not be offered." (Id. ¶ 12). The "April 30, 2014 cease and desist demand, and position that no patent license will be offered" were reiterated in a July 18, 2014 letter. (Id. ¶ 13). Clim-A-Tech further alleges that "[i]n an effort to inject delay and to further harm and prejudice Clim-A-Tech, a patent prosecution attorney on August 26, 2014[, ] filed a Supplemental Information Disclosure Statement with the United States Patent and Trademark Office" ("PTO") regarding the '581 Patent. See ( id. ¶ 14).
Based on these allegations, Clim-A-Tech seeks declaratory judgment that "commercial manufacture, use, sale, and offer to sell the U shaped cathode protector will not infringe the '581 Patent, " the '581 Patent is invalid, and the '581 Patent is unenforceable on a number of grounds. (Id. ¶¶ 18-40, 50-67). Clim-A-Tech also alleges that Sunwest has tortiously interfered with its existing business contracts and prospective business relationships. (Id. ¶¶ 41-49). Clim-A-Tech seeks damages, attorney fees and costs, an "injunction enjoining Defendants and their agents, employees, officers, servants, representatives, successors and assigns, and others in active concert [or] privity with them from tortious interference with Clim-A-Tech's existing or prospective business relations, " including "enforcing the '581 Patent against any of Clim-A-Tech's current or future customers." (Id. ¶ D).
In response to the Amended Complaint, Defendants filed their Motion to Dismiss. Defendants contend that, pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(1), this action should be dismissed for lack of personal and subject matter jurisdiction. (Mot. to Dismiss at 1). Specifically, Defendants contend that this Court lacks general and specific personal jurisdiction over both Ebert and Sunwest. (Mem. of Law in Supp. of Mot. to Dismiss, "Mem. in Supp.") [Doc. No. 17 at 3-12]. Defendants also assert that because Ebert is the patent owner and the Court lacks personal jurisdiction over Ebert, the Court is without subject matter jurisdiction. (Id. at 12-13). In the alternative, Defendants argue that even if the Court determines it has jurisdiction to hear this action, the Court should transfer the case to the District of Arizona pursuant to 28 U.S.C. § 1404(a). (Mot. to Dismiss at 2); (Mem. in Supp. at 14-18).
Clim-A-Tech responded to the Motion to Dismiss, contending that the Court should stay this action "pending the outcome of Defendants['] Post-Grant proceeding at the [PTO]." (Pl.'s Combined Resp. to Defs.' Mot. to Dismiss and Mot. to Stay, or in the Alternative for Leave to Conduct Limited Disc., "Resp.") [Doc. No. 25 at 1, 3-4]. Clim-A-Tech requests, in the alternative, "leave to conduct limited discovery on proper-party and jurisdictional issues." (Id. at 1, 4-7). As another alternative, Clim-A-Tech contends that "the issues between Plaintiff and Defendants may be effectively and completely resolved in a court-facilitated setting, making this case ripe for a settlement conference." (Id. at 7).
On November 3, 2014, the Court heard oral argument on the Motion to Dismiss and on Clim-A-Tech's alternative requests as set forth in its Response. (Minute Entry Dated Nov. 3, 2014) [Doc. No. 27]. The Court took these matters under advisement, and the issues raised by the parties are ripe for consideration. See ( id. ).
II. LEGAL STANDARD
Under Federal Rule of Civil Procedure 12(b) "a party may assert... by motion" the defense that the court lacks personal jurisdiction. Fed.R.Civ.P. 12(b)(2). In opposing a motion to dismiss for lack of personal jurisdiction, a plaintiff bears the burden of making a prima facie showing of personal jurisdiction over the defendant. Digi-Tel Holdings, Inc. v. Proteq Telecomms., Ltd., 89 F.3d 519, 522 (8th Cir. 1996); see also Electronics for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed. Cir. 2003) ("[W]here the district court's disposition as to the personal jurisdictional question is based on affidavits and other written materials in the absence of an evidentiary hearing, a plaintiff need only... make a prima facie showing that defendants are subject to personal jurisdiction."). "Although [t]he evidentiary showing required at the prima facie stage is minimal, the showing must be tested, not by the pleadings alone, but by the affidavits and exhibits supporting or opposing the motion." K-V Pharm. Co. v. J. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th Cir. 2011) (alteration in original) (citations and internal quotation marks omitted); see Electronics, 340 F.3d at 1349. In determining whether the plaintiff has made its prima facie showing, the court views the evidence in the light most favorable to the plaintiff and resolves all factual conflicts in the plaintiff's favor. Digi-Tel, 89 F.3d at 522; Electronics, 340 F.3d at 1349 ("In the procedural posture of a motion to dismiss, a district court 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.").
A. Personal Jurisdiction
1. Legal Standard
The "law of the Federal Circuit, rather than that of the regional circuits, " applies to the determination of "personal jurisdiction in a patent infringement case." Red Wing Shoe Co, Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed. Cir. 1998). "This choice of governing law applies as well to personal jurisdiction in declaratory judgment actions that involve patentees as defendants." Id. Further, when an action involves "non-patent claims that go hand-in-hand' with the patent infringement claims, Federal Circuit law also applies to the non-patent claims." WhatRU Holding, LLC v. Bouncing Angels, Inc., Civil No. 13-2745 (JNE/TNL), 2014 WL 641517, at *2 (D. Minn. Feb. 19, 2014) (quoting Amana Refrigeration, Inc. v. Quadlux, Inc., 172 F.3d 852, 856-57 (Fed. Cir. 1999)). Where the parties "do not dispute the jurisdictional facts, the question of personal jurisdiction... resolves itself into one of law." Red Wing Shoe, 148 F.3d at 1358.
A federal district court's personal jurisdiction "over a non-consenting defendant outside the boundaries of the forum is a two-step inquiry." Id. The court must first determine "whether a provision makes the defendant amenable to process, which usually depends on whether the defendant could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district is located.'" Id. (quoting Fed.R.Civ.P. 4(k)(1)(A)). Second, the court must "ensure that maintenance of the suit does not offend traditional notions of fair play ...