Athletic Training Innovations, LLC v. eTagz, Inc.
Athletic Training Innovations, LLC v. eTagz, Inc.
Opinion of the Court
ORDER AND REASONS
Before the Court is Defendant eTagz’s (“Defendant”) Motion to Dismiss,
I. Background
A. Factual Background
Plaintiff is a Louisiana limited liability company that sells athletic equipment and specially designed training shoes “almost exclusively on the internet and by phone.”
Defendant, a Utah corporation with its principal place of business in Provo, Utah, owns U.S. patents nos. 6,298,332, 7,503,502, and 7,703,686 (“the patents”). These patents concern the use of a hangtag having a computer-readable medium that is attached to a product by a vendor and removed therefrom by purchaser.
However, on September 7, 2012, Plaintiff received a letter from Defendant, alleging that it believed Plaintiffs products infringed the patents, and that it might take legal action.
In Plaintiff’s First Supplemental and Amending Complaint,
After this letter, Plaintiff alleges that a representative and/or employee of Defendant “initiated at least three telephone calls to Plaintiffs employees located in the State of Louisiana in a further attempt to coerce a quick settlement based upon a frivolous claim of patent infringement.”
In addition to these factual allegations, Plaintiff adds two new causes of action. Styled as its seventh cause of action, Plaintiff seeks to hold Defendant liable in tort under Louisiana Civil Code article 2315.
B. Procedural Background
Plaintiff filed the initial complaint in this matter on October 18, 2012, invoking this Court’s federal question and diver
On February 4, 2013, Defendant filed a motion to reconsider the denial of its motion to dismiss.
11. Parties’Arguments
In support of the pending motion, Defendant argues that this Court does not have personal jurisdiction over it, and notes that the law of the United States Court of Appeals for the Federal Circuit governs this matter as it pertains to patent law.
Defendant argues that in a declaratory judgment action for non-infringement and/or patent invalidity, the relevant inquiry regarding specific jurisdiction is “ ‘to what extent has the defendant patentee ‘purposefully directed [such enforcement activities] to residents of the forum,’ and the extent to which the declaratory judgment claim ‘arises out of or relates to those activities.’ ”
However, Defendant argues that this activity is insufficient as a matter of law to establish personal jurisdiction, because under Federal Circuit precedent “ ‘[standards of fairness demand that [the patentee] be insulated from personal jurisdiction in a distant forum when its only contacts with that forum were efforts to give proper notice of its patent rights.’ ”
In the alternative, Defendant claims that Plaintiff has failed to state a claim upon which relief can be granted.
Concerning the seventh cause of action styled as “Tort Liability Under Article 2315,” for alleged harassment, Defendant construes the claim as one for intentional misrepresentation, arguing that a cause of
With regard to Plaintiffs eighth cause of action for “extortion,” Defendant notes that Louisiana Revised Statute § 14:66 is a criminal cause of action, not a civil cause of action. Likewise, 18 U.S.C. § 1951 is a criminal statute that does not provide a private cause of action.
Defendant also seeks the dismissal of Plaintiffs six original causes of action raised in the first complaint. Regarding Plaintiffs claim for a declaratory judgment of non-infringement, Defendant argues that Plaintiffs claim “does not distinguish between direct or indirect infringement, and thus does not provide a short and plain statement showing entitlement to relief.”
Turning next to Plaintiffs Sherman Antitrust Act claims, Defendant argues that the complaint generally refers to the act without specifying which section or sections Defendant has allegedly violated.
In opposition, Plaintiff avers that this Court has specific jurisdiction over Defendant.
Without citing authority, Plaintiff argues that “jurisdiction should be applied to protect a Louisiana business from a non-resident company voluntarily entering Louisiana commerce to deceptively attempt to coerce a settlement by knowingly articulating false statements as to the scope and attributes of its patent.”
Plaintiff also contends that this Court may also have general jurisdiction over Defendant, because it may have “continuous and systematic contacts” with Louisiana.
Plaintiff also refutes Defendant’s contention that it has failed to state a claim. Concerning its seventh cause of action, Plaintiff notes that it alleged in the original and supplemental complaint that “threatening [Plaintiff] with frivolous and baseless allegations of patent infringement knowing that its patents do not have the broad scope that Defendant purports subjects Defendant to tort liability under La. Civ.Code Article 2315” and “Defendant has purposely misrepresented the claim scope of its patents to purposely harm [Plaintiff’s] marketing and sales efforts in Louisiana and elsewhere, which subjects Defendant to tort liability under La. Civ.Code Article 2315.”
Plaintiff also challenges Defendant’s assertion that its pleadings are deficient be
Concerning its antitrust claims, Plaintiff argues that the United States Supreme Court has specifically held that the Noerr-Pennington doctrine will not apply to immunize a defendant when “the enforcement of a patent procured by fraud on the patent office could form the basis for a lawsuit under the Sherman [Antitrust] Act provided the other elements of monopolization under Section 2 are established.”
Lastly, Plaintiff argues that Defendant has not addressed or challenged its LUT-PA claims in the pending motion to dismiss.
In reply, Defendant argues that in discussing personal jurisdiction, Plaintiff has failed to address the binding Federal Circuit precedent cited by Defendant, but instead relies on Fifth Circuit precedent which is not controlling in this dispute.
Defendant reiterates many of its arguments urging dismissal pursuant to Fule 12(b)(6).
Concerning Plaintiffs eighth cause of action for “extortion,” Defendant notes that Plaintiff did not dispute that the statutes it cited do not provide a cause of action; however, Defendant expresses confusion as to whether Plaintiff “maintains this claim as a separate cause of action,” or incorporates it into its Article 2315 claim for general tort liability.
Moreover, Defendant argues that Plaintiff is incorrect to state that Defendant has not challenged its LUTPA claims, because Defendant expressly stated its position that these claims were barred by the Noerr-Pennington doctrine.
III. Law and Analysis
A. Applicable Standard: Prima Facie Showing of Personal Jurisdiction
As Defendant has correctly acknowledged, because this case involves patent law, Federal Circuit precedent controls the analysis of personal jurisdiction.
Before discovery, a plaintiff need only make a prima facie showing that the defendant is subject to personal jurisdiction.
B. Personal Jurisdiction Inquiry
Determining whether jurisdiction exists over an out-of state defendant involves two inquiries: (1) whether a forum state’s long arm statute permits service of process and (2) whether the assertion of personal jurisdiction violates due process.
1. General Jurisdiction
General jurisdiction requires that a defendant have “continuous and systematic” contacts with the forum state, and confers personal jurisdiction, even when the cause of action has no relationship to those contacts.
The Court notes that here, Plaintiff has not affirmatively alleged that this Court has general jurisdiction over Defendant, but rather stated that it is not sure because it has not received discovery responses from Defendant on this issue.
However, in a June 6, 2013 status conference, Plaintiff argued that Defendant had refused to respond to several discovery requests that could have a bearing on the issue of general jurisdiction.
The district court, however, has broad discretion in all discovery matters. The*613 decision not to permit depositions on a motion to dismiss for lack of personal jurisdiction is specifically one for the trial court’s discretion, and “[s]uch discretion will not be disturbed ordinarily unless there are unusual circumstances showing a clear abuse.”95
It is normally only when “the jurisdictional question intertwines "with the merits of the case [that] some discovery on the merits may be necessary, and general discovery may be permitted.”
2. Specific Jurisdiction
Even when a defendant is not subject to general personal jurisdiction in a forum state, a district court may nonetheless exercise specific personal jurisdiction over the defendant if the defendant satisfies a three-prong test:
(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. With respect to the last prong, the burden of proof is on the defendant, which must “present a compelling case that the presence of some other considerations would render jurisdiction unreasonable” under the five-factor test articulated by the Supreme Court in Burger King97
“The first two factors correspond with the ‘minimum contacts’ prong of the International Shoe analysis, and the third factor corresponds with the ‘fair play and substantial justice’ prong of the analysis.”
In the specific context of an action for a declaratory judgment of non-infringement, the Federal Circuit has expressly defined the relevant inquiry:
[I]n the context of an action for declaratory judgment of non-infringement, invalidity, and/or unenforceability, the patentee is the defendant, and the claim asserted by the plaintiff relates to the wrongful restraint [by the patentee] on the free exploitation of non-infringing goods ... [such as] the threat of an infringement suit. Thus, the nature of the claim in a declaratory judgment action is to clear the air of infringement charges. Such a claim neither directly arises out of nor relates to the making, using, offering to sell, selling, or importing of arguably infringing products in the forum, but instead arises out of or relates to the activities of the defendant patentee in enforcing the patent or patents in suit. The relevant inquiry for specific personal jurisdiction purposes then becomes to what extent has the defendant patentee “purposefully directed [such enforcement activities] at residents of the forum,” and the extent to which the declaratory judgment claim “arises out of or relates to those activities.” This inquiry necessarily places greater focus in a declaratory judgment action on the differences, if any, in the*614 meaning of the “arises out of’ and “relates to” inquiries for personal jurisdiction."99
The Federal Circuit has further acknowledged that in declaratory judgment for non-infringement actions, the alleged injury arises out of the threat of infringement as communicated in an infringement letter:
While such letters themselves might be expected to support an assertion of specific jurisdiction over the patentee because “the letters are ‘purposefully directed’ at the forum and the declaratory judgment action ‘arises out of the letters,” Silent Drive [Inc. v. Strong Industries, Inc.], 326 F.3d [1194] at 1202 [ (Fed.Cir. 2003) ], we have held that, based on “policy considerations unique to the patent context,” id. at 1206, “letters threatening suit for patent infringement sent to the alleged infringer by themselves ‘do not suffice to create personal jurisdiction,’ ” id. at 1202 (quoting Red Wing Shoe, 148 F.3d at 1359-60] (emphasis added). This is “because to exercise jurisdiction in such a situation would not ‘comport with fair play and substantial justice.’ ” Id. (quoting Red Wing Shoe, 148 F.3d at 1359-60). “Principles of fair play and substantial justice afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum. A patentee should not subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement. Grounding personal jurisdiction on such contacts alone would not comport with principles of fairness.” Red Wing Shoe, 148 F.3d at 1360-61; see also Silent Drive, 326 F.3d at 1206. Thus, “[fjor the exercise of personal jurisdiction to comport with fair play and substantial justice, there must be ‘other activities’ directed at the forum and related to the cause of action besides the letters threatening an infringement suit.” Silent Drive, 326 F.3d at 1202 (emphasis added); see also Calder [v. Jones], 465 U.S. [783], at 788, 104 S.Ct. 1482[, 79 L.Ed.2d 804 (1984) ] (noting that “[i]n judging minimum contacts, a court properly focuses on ‘the relationship among the defendant, the forum, and the litigation.’ ” (emphases added)(quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977))).100
These “other activities” necessary to impose specific personal jurisdiction “relate to the enforcement or the defense of the validity of the relevant patents.”
Here, Plaintiff contends that this Court has specific personal jurisdiction over Defendant based on the cease-and-letter and the three phone calls and one email sent to Plaintiffs employees in Louisiana.
The Federal Circuit has made clear that for specific personal jurisdiction to exist, there must be “other activities”, such as “initiating judicial or extra-judicial patent enforcement within the forum, or entering into an exclusive license agreement or other undertaking which imposes enforcement obligations with a party residing or regularly doing business in the forum.”
IV. Conclusion
For the reasons described above, this Court does not have general or specific personal jurisdiction over Defendant, and therefore must dismiss this matter. This finding obviates the need to address Defendant’s arguments for dismissal pursuant to Rule 12(b)(6). Accordingly,
IT IS HEREBY ORDERED that Defendant’s Motion to Dismiss
. Rec. Doc. 19.
. Rec. Doc. 1 at ¶¶ 6-7.
. Id. at ¶¶ 8-9.
. Id. at ¶ 10.
. Id. at ¶ 11 (emphasis in original).
. Id. at II13.
. Id. at ¶¶ 15-16.
. Id. at ¶ 17.
. Id. at ¶¶ 19-20.
. Id. at ¶¶ 22-47.
. Rec. Doc. 12.
. Id. at ¶ 2.
. Id. atf3.
. Id.
. Id. at ¶¶ 5-6.
. Id. at ¶ 7.
. Id. at ¶ 8.
. Id. at ¶ 9.
. Id. at ¶¶ 10-11.
. Id. at ¶¶ 24-28.
. Id. at ¶¶ 29-30.
. Rec. Doc. 1 at ¶ 4. The Court notes that while Plaintiff has invoked this Court's diversity jurisdiction, it has not properly alleged its own citizenship. Plaintiff claims it "is a Louisiana Limited Liability company authorized to do business in the State of Louisiana with its principal place of business in Kenner, Louisiana.” Id. at ¶ 1. However, the citizenship of a limited liability company is determined by the citizenship of each of its constituent members. See Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1078 (5th Cir. 2008). However, because Plaintiff has also invoked federal question jurisdiction, this deficiency is inconsequential at this time, as the Court has an alternatively sufficient ground for subject matter jurisdiction.
. Rec. Doc. 9.
. Rec. Doc. 12.
. Rec. Doc. 13.
. Rec. Doc. 15.
. Rec. Doc. 16.
. Rec. Doc. 19.
. Rec. Doc. 21.
. Rec. Doc. 28.
. Rec. Doc. 41.
. Rec. Doc. 19-1 at pp. 4-5 (citing Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324, 1328 (Fed.Cir. 2008)).
. Id. at p. 5 (citing Avocent, 552 F.3d at 1328-29).
. Id.
. Id. (quoting Avocent, 552 F.3d at 1332) (citations omitted) (alterations in Defendant's memorandum).
. Id. at p. 8 (citing Declaration of Isaac Jacobson, Rec. Doc. 9-2 at ¶ 9).
. Id.
. Id. (quoting Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed.Cir. 1998)).
. Id. at p. 9 (citing Avocent, 552 F.3d at 1333).
. Id. at p. 10.
. Id. atpp. 11-12.
. Id. atp. 12, n. 1.
. Id. (citing Kadlec Med. Ctr. v. Lakeview Anesthesia Assoc., 527 F.3d 412, 418 (5th Cir. 2008)).
. Id.
. Id. at p. 13 (citing Wisdom v. First Midwest Bank, 167 F.3d 402, 408 (8th Cir. 1999)).
. Id.
. Id. atp. 14.
. Id.
. Id. at p. 15 (citing Bryant v. Military Dept. of Miss., 597 F.3d 678, 690 (5th Cir. 2010)).
. Id. (citing Video Int’l Prod., Inc. v. Warner-Amex Cable Comm’ns, Inc., 858 F.2d 1075, 1084 (5th Cir. 1988)).
. Id. atp. 16.
. Id. (citing B. Braun Med., Inc. v. Abbott Labs., 124 F.3d 1419, 1427 (Fed.Cir. 1997)).
. Rec. Doc. 21 atp. 8.
. Id.
. Id. at pp. 8-9.
. Id. at p. 9 (citing Brown v. Flowers Indus., Inc., 688 F.2d 328, 332-33 (5th Cir. 1982)).
. Id. atp. 10.
. Id. at p. 11 (citing Guidry v. U.S. Tobacco Co., 188 F.3d 619, 628 (5th Cir. 1999)).
. Id. at p. 12 (citing Dickson Marine, Inc. v. Panalpina, Inc., 179 F.3d 331, 339 (5th Cir. 1999)).
. Id.
. Id. at p. 14 (emphasis in original).
. Id.
. Id. (citing Louisiana v. Guidry, 489 F.3d 692 (5th Cir. 2007)).
. Id. at pp. 14-15.
. Id. at p. 15.
. Id. at p. 16 (citing Walker Process Equip., Inc. v. Food Machinery & Chem. Corp., 382 U.S. 172, 174, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965)).
. Id. (citing Prof'l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60-61, 113 S.Ct. 1920, 123 L.Ed.2d 611 (1993)).
. Id.
. See id. at pp. 17-18.
. Rec. Doc. 28 at p. 2.
. Id.
. Id. at pp. 3-4.
. Id. at p. 4.
. Id. at pp. 4-5.
. Id. at p. 6 (Hydril Co. LP v. Grant Prideco LP, 474 F.3d 1344, 1349 (Fed.Cir. 2007)).
. Id. (citing Medimmune, Inc. v. Genentech., Inc., 427 F.3d 958, 967 (Fed.Cir. 2005)).
. Id. at pp. 6-7.
. Id. at p. 7
. Id.
. See Avocent, 552 F.3d at 1328.
. Id. (quoting Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1362 (Fed.Cir. 2006)) (emphasis added).
. Id. at 1328-29.
. Id. at 1329.
. Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed.Cir. 2003).
. Autogenomics, Inc. v. Oxford Gene Tech., 566 F.3d 1012, 1016 (Fed.Cir. 2009).
. Id. at 1017.
. Sinclair v. StudioCanal, S.A., 709 F.Supp.2d 496, 506 (E.D.La. 2010) (emphasis in original) (citing Luv N' Care, Ltd. v. InstaMix, Inc., 438 F.3d 465, 469 (5th Cir. 2006)).
. Autogenomics, 566 F.3d at 1017.
. Campbell Pet Co. v. Miale, 542 F.3d 879, 884 (Fed.Cir. 2008).
. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Campbell, 542 F.3d at 884.
. See Rec. Doc. 21 at pp. 12-13.
. Rec. Doc. 9-2.
. Rec. Doc. 40 (minute entry).
. Autogenomics, 566 F.3d at 1023.
. Wyatt v. Kaplan, 686 F.2d 276, 284 (5th Cir. 1982) (internal citations omitted) (quoting Associated Metals & Minerals Corp. v. S.S. Geert Howaldt, 348 F.2d 457, 459 (5th Cir. 1965)).
. Id.
. Autogenomics, 566 F.3d at 1018-19 (quoting Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1363 (Fed.Cir. 2006) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985))).
. Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed.Cir. 2001).
. Avocent, 552 F.3d at 1332-33 (internal quotations and citations omitted).
. Id. at 1333-34 (emphasis added).
. Id. at 1334 (emphasis in original).
. Id. (emphasis in original)
. See Rec. Doc. 21 atp. 8.
. Autogenomics, 566 F.3d at 1019.
. See Rec. Doc. 21 at p. 9 (citing Brown, 688 F.2d at 332-33).
. Avocent, 552 F.3d at 1333 (internal quotation marks omitted).
. Id. at 1334.
. See Rec. Doc. Nos. 1, 12.
. See Avocent, 552 F.3d at 1328 (explaining that Federal Circuit precedent will control the analysis of personal jurisdiction for patent claims and all other claims at issue "where the question of infringement is a critical factor in determining liability under the non-patent claims.”).
. Rec. Doc. 19.
. See Avocent, 552 F.3d at 1328 (“The district court granted Aten International's motion to dismiss the entire action without prejudice for lack of personal jurisdiction.”)
Reference
- Full Case Name
- ATHLETIC TRAINING INNOVATIONS, LLC v. eTAGZ, INC.
- Cited By
- 8 cases
- Status
- Published