Adhesive Tech. v. Western Trimming CV-94-415-B 06/08/95

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Adhesive Technologies, Inc.

v. Civil No. 94-415-B

Western Trimming Corp.

O R D E R

Plaintiff, Adhesive Technologies, Inc. ("AdTech"), filed

suit against the defendant. Western Trimming Corporation,

("Westrim"), in this court alleging infringement of its patent in

violation of

et seg. (West 1984 & Supp. 1995).

Westrim seeks dismissal of the complaint on grounds that this

court lacks personal jurisdiction and improper venue. In the

alternative, it seeks to have the case transferred to the United

States District Court for the Central District of California.

AdTech filed an objection to the defendant's motion. For the

following reasons, I deny defendant's motion to dismiss or in the

alternative to transfer the case. I. BACKGROUND1

AdTech is a New Hampshire corporation and maintains its

principal place of business in this state. Its business relates

to the development, manufacture, and sale of products in the

metal hot adhesive industry, including glue guns and glue sticks.

Most of AdTech's manufacturing takes place in New Hampshire at

its own facility and its other produces are manufactured in

Taiwan. Its products are shipped around the world to

distributors and most of its sales are made outside this state.

Westrim is a California corporation and has its principal

place of business in that state. It engages in business similar

to that of AdTech, including the marketing of glue guns. Westrim

A plaintiff facing a motion to dismiss for lack of personal jurisdiction has the burden of demonstrating "the existence of 'every fact reguired to satisfy both the forum's long-arm statute and the [D]ue [P]rocess [C]lause of the Constitution.'" United Elec. Radio & Mach. Workers v. 163 Pleasant St. Corp.,

(1st Cir. 1993) (guoting Bolt v. Gar-Tec Products, Inc.,

(1st Cir. 1992) (internal guotations and citations omitted)). This prima facie showing must be supported by specific facts in the record and therefore may not rest merely on what is contained in the pleadings.

"However, in determining whether the prima facie demonstration has been made, the district court is not acting as a factfinder; rather, it accepts properly supported proffers of evidence by a plaintiff as true and makes its ruling as a matter of law."

I employ this standard in reciting the relevant factual background.

2 has no sales representatives or business agents in New Hampshire.

Nor has any other department of Westrim ever been located in this

state. It has never had a license to do business here. Nor have

its employees visited New Hampshire for any business related

reason. Less than one percent of Westrim's total sales for 1992

and 1993 were in New Hampshire.

Westrim employs a sales representative to cover all of New

England, including New Hampshire. Westrim asserts that it never

directly sold its Model 260D glue gun in New Hampshire, although

it acknowledges that it markets that glue gun to the House of

Fabrics, a nationwide distributor. House of Fabrics has an

established distribution network and ships items across the

country, including New Hampshire, from its warehouse in South

Carolina.

AdTech alleges in its complaint that Westrim infringed its

patent for a glue gun invented by Peter S. Melendy, President of

AdTech, and Richard A. Belanger, both residents of New Hampshire

and both listed on the patent. Melendy purchased the allegedly

infringing glue gun from a House of Fabrics outlet in Manchester,

New Hampshire. Further, although Westrim disputes the point,

AdTech alleges in the complaint and its supporting memorandum

that Westrim distributed the infringing glue gun.

3 II. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

Westrim asserts that its contacts with this forum are

insubstantial and well below the minimum requirements authorized

by New Hampshire's long arm statute and the United States

Constitution. AdTech contends that Westrim is subject to

personal jurisdiction in this district because it was foreseeable

that its product would be sold in New Hampshire through its

distributors. Thus, AdTech contends, the defendant purposefully

availed itself of the privilege of conducting activities in New

Hampshire.

A. New Hampshire's Long Arm Statute

Because Westrim is a foreign corporation,2 the applicable

long arm statute is N.H. Rev. Stat. Ann. 293-A:15.10 (Supp.

1994) .3 McClary, 856 F. Supp. at 55. That statute provides in

2 A "foreign corporation" is defined as "a corporation for profit incorporated under a law other than the law of this state."

-A:1.40(10) (Supp. 1994). Because Westrim is incorporated under the laws of California it falls within this definition.

3 Defendants cite

(1983 & Supp. 1994) as the controlling long-arm statute in this case. This court, however, has noted in prior decisions that § 510:4 does not apply to corporations. McClary v. Erie Engine & Mfg. C o .,

(D.N.H. 1994) (citing Deeper v. Deeper,

(1974)). The court noted two reasons: (1) the use of the term "person" in the statute; and (2) the

4 pertinent part:

(b) A foreign corporation may be served by registered or certified mail, return receipt reguested, addressed to the secretary of the foreign corporation at its principal office shown in its application for a certificate of authority or in its most recent annual report if the foreign corporation: (1) has no registered agent or its registered agent cannot with reasonable diligence be served. ... (d) This section does not prescribe the only means, or necessarily the reguired means, of serving a foreign corporation.

N.H. Rev. Stat. Ann. 293-A:15.10.

This statute has been interpreted "to authorize jurisdiction

over foreign corporations to the full extent allowed by federal

law." McClary,

(two step personal

jurisdiction inguiry collapses into one inguiry). Therefore, the

sole guestion I must address is whether the constitutional

reguirements of due process have been met. See Mitrano v.

Eastern Trans-Waste, Inc., No. 94-171-JD, slip op. at 5-6 (D.N.H.

Oct. 25, 1994); McClary,

.

existence of other statutes deemed to be the "corporate parallel" of § 510:4. Id. Therefore, the proper statute governing corporations is § 293-A:15.10.

5 B. Constitutional Analysis: Due Process4

Under International Shoe Company v. Washington,

due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he must have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.

(1945) (internal quotations and citations

omitted). The court's exercise of personal jurisdiction is

proper if "the defendant's conduct and connection with the forum

[s]tate are such that [it] should reasonably anticipate being

haled into court there." World-Wide Volkswagen Corp. v. Woodson,

(1980); accord Hanson v. Denckla,

(1958) (focus is on concept of purposeful availment not

random, isolated, or fortuitous contacts) .

4 Although subject matter jurisdiction arises because of the existence of a federal question, the same principles governing the exercise of personal jurisdiction which control in a diversity action are controlling here. See United Elec. Radio & Mach. Workers v. 163 Pleasant St. Corp.,

, 1085-86 (1st Cir. 1992) (noting that Fifth not Fourteenth Amendment governs limits of court's personal jurisdiction in federal question cases), appeal after remand,

(1st Cir. 1993); accord Horne v. Adolph Coors Co.,

(3d Cir. 1982) (in patent case only constitutional limit on exercise of personal jurisdiction is fairness to defendant required by Fifth Amendment due process).

6 Two types of personal jurisdiction exist: general and

specific. United Elec. Workers, 960 F.2d at 1088. "General

jurisdiction exists when the litigation is not directly founded

on the defendant's forum-based contacts, but the defendant has

nevertheless engaged in continuous and systematic activity,

unrelated to the suit, in the forum state." Id. (citing

Helicopteros Nacionales de Columbia, S.A. v. Hall,

, 414 n.9 (1984)). When a forum state cannot assert

general jurisdiction over a defendant, however, it may still

exercise specific jurisdiction where the cause of action arises

out of, or relates to, the defendant's contacts with the forum

state. Ticketmaster-New York, Inc. v. Alioto,

, 204

n.3 (1st Cir. 1994); United Elec. Workers, 960 F.2d at 1088-89.

AdTech does not allege that the court has general jurisdiction

over Westrim. Therefore, my inguiry focuses on whether this

court may exercise specific jurisdiction.

The First Circuit has formulated a tripartite test for the

ascertainment of specific jurisdiction. United Elec. Workers,

960 F.2d at 1088-89. First, the claim underlying the litigation

must "directly arise out of, or relate to, the defendant's forum-

state activities." Id. at 1089. Second, the plaintiff must show

that the defendant's in-state contacts represent purposeful

7 availment of the privilege of conducting activities in the forum

state invoking the benefits and protection of the state's laws

and making the defendant's involuntary presence before the state

courts foreseeable. Id.; Ticketmaster,

. Finally,

the exercise of jurisdiction, in light of certain Gestalt

factors, must be reasonable. United Elec. Workers, 960 F.2d at

1089.5

1. Relatedness

Relatedness "focuses on the nexus between the defendant's

contacts and the plaintiff's cause of action." Ticketmaster,

. This focus establishes causation as the underlying

theme of the due process reguirement.

Westrim placed its

Model 2 60D glue gun into the stream of commerce and knew that

5 The Supreme Court in Burger King Corp. v. Rudzewicz,

(1985), limned five factors relevant to determining whether jurisdiction over the defendant is consistent with the concepts of fair play and substantial justice. The First Circuit deemed those factors the "Gestalt" factors and they are: (1) the defendant's burden of appearing; (2) the forum state's interest in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the judicial system's interest in obtaining the most effective resolution of the controversy; and (5) the common interests of all sovereigns in promoting substantive social policies. United Elec. Workers, 960 F.2d at 1088 (citing Burger King,

) ) . infringement of a valid patent would cause injury to the owner of

that patent in whatever state they resided. See Horne,

. AdTech produced sufficient evidence to demonstrate that

many of Westrim's products are sold in New Hampshire and at least

one Model 260D glue gun was sold in New Hampshire. Therefore,

Westrim's connections to New Hampshire are "related to" AdTech's

cause of action.

2. Purposeful Availment

The two cornerstones to the purposeful availment inguiry are

foreseeability and voluntariness. Ticketmaster,

(jurisdiction must be based on act of defendant not

unilateral act of third party) (citing Burger King,

). Denial of direct shipment or sale of the accused product

is insufficient to defeat personal jurisdiction where the

defendants ship indirectly through established distributors known

to sell goods throughout the country. Beverly Hills Fan Co. v.

Roval Sovereign Corp.,

(Fed. Cir.), cert.

dismissed, 115 S. C t . 18 (1994); cf. Stabilisierungsfonds Fur

Wein v. Kaiser Stuhl Wine Distrib.,

(D.C. Cir.

1981) (due process does not prohibit exercise of personal

jurisdiction in trademark infringement action where nonresident

defendant ships goods to intermediary with expectation that goods will then be distributed to region including the forum state).

In its complaint, AdTech alleges that Westrim distributes

glue guns in this district through a distributor, the House of

Fabrics. In its objection to Westrim's motion to dismiss, AdTech

also demonstrates the nature of the House of Fabrics distribution

system which involves nationwide disbursement of products sold to

it by manufacturers. Westrim's motion and supporting declaration

do not directly contravene these assertions; rather Westrim

merely contends that it did not directly sell or distribute its

glue gun in New Hampshire. Moreover, AdTech notes that because

the products at issue are shipped across the country, those

products must conform to the local laws of the states where they

are ultimately sold. Therefore, it is reasonable to conclude

that a manufacturer such as Westrim is aware of the reguirements

of local laws of the states to which its products are ultimately

shipped and ensures that its products comply with those laws.

Finally, Westrim employs a sales representative that is

responsible for sales to New Hampshire, among other states in the

New England area. Thus, AdTech has made a sufficient prima facie

showing that the purchase of a Westrim Model 260D glue gun in New

Hampshire was not merely fortuitous, but resulted from the

intentional act of placing it in an established distribution

10 chain. See Beverly Hills Fan,

; Honeywell, Inc.

v. Metz Apparatewerke,

(7th Cir. 1975) (based

on economic and commercial realities defendant cannot defeat

jurisdiction by claiming ignorance as to ultimate destination of

products).

3. The Gestalt Factors

If exercise of personal jurisdiction over Westrim would be

inconsistent with fair play and substantial justice despite the

existence of the reguisite minimum contacts with New Hampshire,

this court cannot exercise personal jurisdiction over Westrim.

See Ticketmaster,

(surveying circuits and

noting cases reaching such result are rare) (citing Burger King,

); Beverly Hills Fan,

(noting

only case where this arises is where plaintiff's and state's

interests in adjudication are very attenuated and are clearly

outweighed by burden on defendant); accord Asahi Metal Indus. Co.

v. Superior C t . of Cal.,

(1987)

(jurisdiction unreasonable even though minimum contacts arguably

fulfilled). Therefore, "dismissal may be appropriate on grounds

of reasonableness even if considerations of relatedness or

purposefulness, taken in isolation, could support the exercise of

jurisdiction." Ticketmaster,

(citations omitted).

11 For the following reasons, I conclude that the plaintiff's prima

facie showing of minimum contacts comports with traditional

notions of fair play and is therefore reasonable.

a. Burden of Appearing

The burden on the defendant to appear in a forum a great

distance from its principal place of business is "entitled to

substantial weight in calibrating the jurisdictional scales."

(burden on California defendant to defend in Massachusetts

substantial). But see Beverly Hills Fan,

(noting

that progress in communication and transportation mitigates this

burden). Thus, the burden placed on Westrim to travel from

California to defend this action in New Hampshire weighs in favor

of concluding that the exercise of personal jurisdiction over

them would be unreasonable. Based on my assessment of the other

factors, however, this factor alone, although entitled to

significant weight, is insufficient to trump the finding of

relatedness and purposeful availment. See Ticketmaster,

(whether reasonableness trumps minimum contacts is sliding

scale) .

b. Forum State's Interests

"The forum state has a demonstrable interest in exercising

jurisdiction over one who causes tortious injury within its

12 borders."

at 211 (citing Keeton v. Hustler Magazine, Inc.,

(1984)). Where the infringing act is the sale

of a patented item, the situs of the injury is the state where

the infringing item is sold. North Am. Philips Corp. v. American

Vending Sales,

(Fed. Cir. 1994) (infringement

occurs where offending act is committed); Horne,

.

Not only was the infringing gun sold in New Hampshire, but the

owners of the patent in this case are residents of New Hampshire.

Thus, this state has a strong interest in exercising jurisdiction

over the defendant because the offending act and the injury

occurred in this state. Horne,

(notions of fair

play not offended where patent owner is resident of forum state).

c. The Plaintiff's Interest in Convenient and Effective Relief

AdTech is a New Hampshire corporation and the owners of the

alleged patent are also residents of this state. AdTech's

records, necessary to demonstrate the extent of their injury

caused by the alleged infringement, are located in this state.

In light of the deference that must be accorded the plaintiff's

choice of forum and the actual convenience for the plaintiffs in

this case, this factor counsels in favor of reasonableness in

exercising jurisdiction over Westrim. Ticketmaster,

211 (citing Piper Aircraft Co. v. Revno,

(1981) ) .

d. Other Factors

The remaining Gestalt factors, the effective administration

of justice and pertinent policy arguments, do not appear to weigh

strongly in either direction. Thus, I conclude that the

defendant's showing of unreasonableness is not sufficient to

trump AdTech's solid showing of relatedness and purposeful

availment. See Ticketmaster,

(unreasonableness

showing sufficient to trump relatedness and purposefulness where

those connections were tenuous at best). Thus, I conclude that

the constitutional reguirements of due process have been met and

jurisdiction over Westrim is proper.

III. MOTION TO DISMISS FOR IMPROPER VENUE

Westrim also argues that this case should be dismissed or

transferred because of improper venue pursuant to 28 U.S.C.A.

1406(a) (West 1993).6 See Fed. R. Civ. P. 12(b)(3). Patent

Section 1406(a) states in pertinent part: "The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought."

14 actions may be brought in any district where the defendant

resides.

(b) (West 1993)7 The general venue

statute for district courts defines a corporation's residence as

any judicial district where the corporation may be subject to

personal jurisdiction.

(c) (West 1993).8

Thus, a corporate defendant may be properly sued for patent

infringement in any district where it is subject to personal

jurisdiction. VE Holding Corp. v. Johnson Gas Appliance Co., 917

F .2d 1574, 1580, 1583 (Fed. Cir. 1990) (§ 1391(c) and § 1400(b)

should be read together) , cert. denied,

(1991) . For

the foregoing reasons, therefore, defendant's motion to dismiss

or transfer for improper venue is also denied. See Fed. R. Civ.

P. 12 (b) (3) .

7 Section 1400(b) states in pertinent part: "Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business." Id.

8 Section 1391(c) states in pertinent part: "For purposes of venue under this chapter [Chapter 87], a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced." Id.

15 IV. MOTION TO TRANSFER

Westrim also requests that this case be transferred to the

United States District Court for the Central District of

California pursuant to

(a) (West 1993).9 In

support of its motion to transfer Westrim states that it resides

in the Central District of California and the case could have

been brought in that forum. Westrim's business records are

located there and many relevant witnesses who are Westrim

employees reside in California. Further, Westrim argues that the

only significant third party involved is the House of Fabrics

whose corporate headquarters are located in Los Angeles County.

Finally, Westrim asserts that AdTech's business records are of

negligible significance in the decision to transfer because they

are only tangentially related, if at all, to their claim. AdTech

objects to Westrim's request for transfer primarily because any

transfer will only shift the inconvenience from the defendant to

the plaintiff which is insufficient to justify transfer under §

1404(a) .

9 Section 1404(a) states in pertinent part: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division were it might have been brought." Id.

16 "The convenience of the parties and the witnesses and the

availability of documents needed for evidence are factors a

district court must consider in resolving whether to grant a

motion to transfer venue under section 1 4 0 4 ( a ) Crosfield

Hastech, Inc. v. Harris Corp.,

(D.N.H.

1987). The defendant's burden is substantial and absent a strong

showing in favor of the defendant, the plaintiff's forum choice

should be preserved.

(citing Gulf Oil Corp. v. Gilbert,

(1947)). Moreover, "[t]ransfer is inappropriate if

the effect is merely to shift inconvenience from the defendant to

the plaintiff."

Westrim's argument for transfer demonstrates the

inconvenience it would face in having to defend in New Hampshire.

Even if this showing were specific enough to demonstrate that

there is great inconvenience in proceeding in this district, see

(need for unnamed witnesses and unspecified documents

insufficient to meet burden), these same inconveniences will be

experienced by AdTech were the case to be transferred to

California. Further, New Hampshire has a significant interest in

providing a forum to remedy injuries occurring within its

borders. Therefore, I conclude that Westrim has failed to

demonstrate that the balance of conveniences weighs heavily in

17 their favor and that the interests of justice would be better

served by adjudicating the controversy in California instead of

New Hampshire. Thus, I deny defendant's motion to transfer. See

(a) .

V. CONCLUSION

For the foregoing reasons I deny defendant's motion to

dismiss and in the alternative to transfer this case (document

n o . 9) .

SO ORDERED.

Paul Barbadoro United States District Judge

June 8, 1995

cc: Daniel G. Smith, Esg. Conrad J. Clark, Esg. John E. Kelly, Esg. Brian C. Goudas, Esg.

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