Narco Avionics, Inc. v. Sportsman's Market, Inc.

• Decision Date: 23 June 1992
• Docket Number: Civ. A. No. 90-8056.
• Citation: 792 F. Supp. 398
• Parties: NARCO AVIONICS, INC. v. SPORTSMAN'S MARKET, INC. Win Industries, Ltd., and Jal Data Communications and Systems Co., Ltd.
• Court: U.S. District Court — Eastern District of Pennsylvania

792 F. Supp. 398

NARCO AVIONICS, INC. v. SPORTSMAN'S MARKET, INC. Win Industries, Ltd., and Jal Data Communications and Systems Co., Ltd.

Civ. A. No. 90-8056.

United States District Court, E.D. Pennsylvania.

June 23, 1992.

Richard F. McMenamin, Victoria E. Silbey, Morgan, Lewis & Bockius, Philadelphia, Pa., John J. Simkanich, Newtown, Pa., for Narco Avionics, Inc. and Narco Avionics, Inc. pro se, John F. Smith, President.

William J. Lehane, Drinker, Biddle & Reath, Philadelphia, Pa., for Sportsman's Market, Inc.

John J. O'Donnell, Eckert, Seamans, Cherin & Mellott, Philadelphia, Pa., for Win Industries, Ltd.

Steven J. Rocci, Woodcock, Washburn, Kurtz, Mackiewicz & Norris, Philadelphia, Pa., for Jal Data Communications & Systems Co., Ltd.

MEMORANDUM

WALDMAN, District Judge.

I. BACKGROUND

Plaintiff Narco Avionics, Inc. ("Narco") brings this patent infringement action to enforce a patent issued on a portable navigational communications transceiver. The patent, No. 4,843,399, was issued on June 27, 1989. Presently before the court are the motions of WIN and JAL to dismiss for lack of personal jurisdiction. The parties have conducted pertinent discovery regarding the issue of jurisdiction and have had an opportunity for oral argument thereon.

II. FACTS

Defendant Sportsman's Market, Inc. ("Sporty's"), is an Ohio corporation with its principal place of business in Batavia, Ohio. Sporty's sells a transceiver which is alleged to infringe upon Narco's patent. The product is marketed by Sporty's throughout the United States and abroad under the name "Sporty's A300," with Sporty's label prominently visible on the front of the product. See Shevers Decl., Exh. A; Shevers Dep. of 3/21/91 at 31.

Defendants Win Industries, Ltd. ("WIN") and JAL Data Communications Systems Co., Ltd. ("JAL") are Japanese businesses with principal offices in or near Tokyo. Neither has any office, employee or agent in Pennsylvania; advertises, conducts or is licensed to conduct any business in the Commonwealth; or, has any property or account here. See Yamane Aff., ¶ 37; Ichimura Aff., ¶ 10; JAL Supp.Resp. to First Set of Interrog., Nos. 1-2 and 10; WIN Resp. to First Set of Interrog., Nos. 1-2 and 10.

Since September of 1988, JAL has manufactured transceivers in Japan without any identifying markings and has sold them to WIN in Japan. See JAL Resp. to First Set of Interrog. No's. 16, 80, 114; Yamane Aff., ¶ 9. JAL has no relationship with WIN other than that of supplier. JAL Resp. to First Set of Interrog. No. 80; JAL Resp. to Second Set of Interrog., No. 60. It has no knowledge of or control over the subsequent distribution of the transceivers, and has never had any direct contact with Sporty's. See JAL Resp. to First Set of Interrog., No. 88; JAL Resp. to Second Set of Interrog. No. 63.¹ JAL does not know how many transceivers WIN resold to Sporty's or the identity of any American purchasers of the A300. JAL Resp. to First Set of Interrog., No's 65, 73-74.

WIN had no involvement with the design or manufacture of the transceiver. See Ichimura Aff., 2, 6. Since the latter part of 1988, WIN has sold transceivers it buys from JAL to Sporty's which it resells to consumers. See Shevers Decl., ¶ 19; Sporty's Answ., ¶ 51; Shevers Dep. of 3/21/91 at 134-35. At Sporty's request, WIN helped to obtain an FCC license for the transceivers which are otherwise delivered to Sporty's without identification. Ichimura Aff., ¶ 6-7. WIN sells to Sporty's f.o.b. Saitama, Japan. Sporty's is responsible for shipping the product to its place of business in Ohio. Id., ¶ 8. WIN has no control over and no knowledge of where, how or to whom Sporty's distributes the product once it takes possession. Id., ¶ 9; Shevers Dep. of 2/29/92 at 32. WIN does not provide a guarantee to the ultimate purchaser and does not supply Sporty's with an instruction manual or warranty card for the product. Ichimura Aff., ¶ 11.²

Sporty's labels the transceivers it receives as the "Sporty's A300". ("Sporty's" is a registered trademark of Sportsman's Market.) See Shevers Dep. of 3/21/91 at 39. Neither JAL nor WIN exercise any control over Sporty's distribution. See Shevers Dep. of 2/29/92 at 117. Sporty's has sold approximately 15,000 A300s, a "very small percentage" of them to Pennsylvania residents. See Shevers Dep. of 3/21/91 at 115, 119. Sporty's produces its own instruction manual for purchasers of the A300. See Shevers Dep. of 2/29/92 at 94.

Sporty's provides a three year warranty on the product to purchasers. Id. at 54-55; Shevers Decl., Exh. A. Sporty's customers return A300s for repair directly to Sporty's. See Shevers Dep. of 2/29/92 at 54. Typically, Sporty's fixes the product on site in Ohio and returns it. Id. Sporty's has returned a small number of defective transceivers for repair to WIN. Id. at 82. There is no evidence that any A300 from a Pennsylvania customer has ever been returned to WIN. Id. at 81-82. WIN has returned a total of 418 transceivers for repair to JAL, none of which had a Sporty's label, FCC number or indeed any identification markings whatsoever. See Yamane Aff., ¶ 11; JAL's Supp.Resp. and Supp.Resp. to Pl's. First Set of Interrog., No. 69. JAL has no knowledge how or from whom WIN received these transceivers. JAL Supp.Resp. to First Set. of Interrog., No. 69.

By September of 1989, JAL had become aware of Narco's patent. See Tanaka Decl., ¶ 17. In October of 1989, JAL rejected an offer by Narco to distribute the JAL transceiver after JAL concluded that it could design around or otherwise defeat the Narco patent. See Tanaka Decl., ¶ 24. The JAL representative who allegedly made the statements in September and October of 1989 relied on by plaintiff regarding these matters vigorously denies having done so. See Hayashi Supp. Decl., ¶ 4, 6-8. In resolving defendants' motions to dismiss, the court will credit plaintiff's version of the Tanaka-Hayashi conversations.

III. DISCUSSION

Plaintiff argues that the court may assert personal jurisdiction over the foreign defendants under an aggregate national contacts test, stream of commerce theory or effects test.³

A. Aggregate National Contacts

In a patent infringement case, a due process jurisdictional inquiry implicates the fifth amendment. See Max Daetwyler Corp. v. Meyer, 762 F.2d 290, 293 (3d Cir.), cert. denied, 474 U.S. 980, 106 S.Ct. 383, 88 L.Ed.2d 336 (1985); DeJames v. Magnificence Carriers, Inc., 654 F.2d 280 (3d Cir.), cert. denied, 454 U.S. 1085, 102 S.Ct. 642, 70 L.Ed.2d 620 (1981). General principles of "minimum contacts" analysis and "fair play" deriving from diversity cases, however, remain applicable. DeJames, 654 F.2d at 283; Fraley v. Chesapeake & Ohio Railway, 397 F.2d 1, 4 (3d Cir.1968).

Some courts have suggested that a defendant's aggregate national contacts are relevant under a fifth amendment analysis in a federal question case.⁴See Go-Video, Inc. v. Akai Electric Company, Inc., 885 F.2d 1406, 1414 (9th Cir.1989); Securities Investor Protection Corp. v. Vigman, 764 F.2d 1309 (9th Cir.1985); Johnson Creative Arts v. Wool Masters, 743 F.2d 947, 950 (1st Cir.1984); Amtrol, Inc. v. Vent-Rite Valve Corp., 646 F.Supp. 1168, 1171-72 (D.Mass.1986).⁵

In any event, the authority of a district court to exercise jurisdiction is limited by a defendant's amenability to suit under the Federal Rules of Civil Procedure. As this almost invariably turns on the applicable state long-arm statute, the restrictions imposed upon the states by the fourteenth amendment thereby effectively constrain a federal court even in a nondiversity case. See DeJames, 654 F.2d at 284. Even courts appearing to favor an aggregate contacts test recognize this principle and require specific authorization from Congress before they would allow an assertion of jurisdiction premised upon national contacts. See, e.g., Go-Video Inc., 885 F.2d at 1413 (national contacts relevant where statute authorizes world-wide service of process); Johnson Creative Arts, 743 F.2d at 950 (aggregate national contacts relevant if Congress specifically provides for nationwide service of process).

Where Congress has not enacted a nationwide service provision, a federal court must rely upon the long-arm statute of the state in which it sits to determine whether jurisdiction may be constitutionally exercised over a defendant. See Omni Capital International v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 105, 108 S.Ct. 404, 410, 98 L.Ed.2d 415 (1987). Congress has not enacted any service provision applicable to patent infringement actions and this court is thus limited by the constraints imposed by Pennsylvania's long-arm statute.⁶ See Max Daetwyler, 762 F.2d at 297 ("In the absence of any provision in the patent laws authorizing nationwide service of process, the district court's power to exercise jurisdiction is limited by Fed. R.Civ.P. 4(e) and the Pennsylvania long-arm statute, whose incorporation by reference, Rule 4(e) requires.").

That a defendant may be served under the Hague Convention does not alter this result. The Convention is not a "wholly federal means" of service. See DeJames, 654 F.2d at 290. "The treaty merely provides a method for effecting service to be used by a litigant with the requisite authority to serve process." Id. "The authority to effect service is found in the state long-arm rule." Id.

Accordingly, the court must undertake a traditional fourteenth amendment jurisdictional analysis under Pennsylvania's long-arm statute in this case.

B. Standard of Law

In deciding a motion to dismiss for lack of personal jurisdiction, the allegations of the complaint are taken as true. After a defendant has raised a jurisdictional defense, however, the plaintiff bears the burden of proving, by affidavits or other competent evidence, sufficient contacts with the forum state to establish personal jurisdiction. See North Penn Gas Co. v. Corning Natural Gas Corp., 897 F.2d 687, 689 (3d Cir.), cert. denied, ___ U.S. ___, 111 S.Ct. 133, 112...