EJ McGOWAN & ASSOCIATES v. Biotechnologies, Inc.

• Decision Date: 16 March 1990
• Docket Number: No. 89 C 3946.,89 C 3946.
• Citation: 736 F. Supp. 808
• Court: U.S. District Court — Northern District of Illinois
• Parties: E.J. McGOWAN & ASSOCIATES, INC., Plaintiff, v. BIOTECHNOLOGIES, INC., and John D. Perry, individually, Defendants.

736 F. Supp. 808

E.J. McGOWAN & ASSOCIATES, INC., Plaintiff, v. BIOTECHNOLOGIES, INC., and John D. Perry, individually, Defendants.

No. 89 C 3946.

United States District Court, N.D. Illinois, E.D.

March 16, 1990.

George E. Bullwinkel and Jamie S. Freveletti, Burditt, Bowles & Radzius, Chicago, Ill., for plaintiff.

Terrence W. McMillin and Richard M. LaBarge, Marshall, O'Toole, Gerstein, Murray & Bicknell, Chicago, Ill., for defendants.

ORDER

NORGLE, District Judge.

Before the court is the motion of defendants, John D. Perry and Biotechnologies, Inc. ("Biotech") to dismiss the complaint of plaintiff E.J. McGowan & Associates, Inc. ("McGowan"). For the following reasons, the court grants the motion.

Biotech is a Maine corporation with its principle place of business in Bryn Mawr, Pennsylvania. Dr. John D. Perry is a Pennsylvania resident and the President of, and partial stockholder in, Biotech. Mr. Perry owns the patent to the "Vaginal Myograph" pubococcygeus contraction monitor system, an electrical sensing device aiding in the treatment of incontinence.

McGowan is an Illinois corporation with its principle place of business in Elmhurst, Illinois. McGowan also manufactures and sells electrical sensing devices used in the treatment of incontinence. In particular, McGowan manufactures the Advanced Perineometer Model 127-002. McGowan received a letter from counsel for Biotech, dated October 13, 1988, warning that the Advanced Perineometer might infringe Dr. Perry's patent. Counsel for McGowan responded by forwarding examples of the Advanced Perineometer to Biotech's counsel. In a letter dated March 13, 1989, Biotech's counsel stated that it had determined that the Advanced Perineometer did infringe Dr. Perry's patent, and threatened possible litigation. McGowan then filed the instant suit, seeking a declaratory judgment that McGowan was not infringing Dr. Perry's patent.

DISCUSSION

Defendants have moved to dismiss plaintiff's complaint on the basis that this court lacks personal jurisdiction over both Dr. Perry and Biotech.

The burden to establish jurisdiction is on the party asserting it. Saylor v. Dyniewski, 836 F.2d 341, 342 (7th Cir. 1988); Integrated Business Information Service v. Dun & Bradstreet, 714 F.Supp. 296 (N.D.Ill.1989); Gordon v. Tow, 148 Ill. App.3d 275, 279-80, 101 Ill.Dec. 394, 397, 498 N.E.2d 718, 721 (1st Dist.1986). A federal district court in Illinois has personal jurisdiction over a party only if an Illinois state court could have such jurisdiction. John Walker & Sons v. DeMert & Dougherty, Inc., 821 F.2d 399, 401 (7th Cir.1987); Dun & Bradstreet, 714 F.Supp. at 299. In Illinois, a court may acquire personal jurisdiction over a non-resident defendant by showing the defendant was either "doing business" within the state or is subject to jurisdiction under the Illinois long arm statute¹. Asset Allocation & Mgt. Co. v. Western Employers Insurance Co., 892 F.2d 566, 570 (7th Cir.1989); Heil, 863 F.2d at 548. By "doing business" within the state, a corporation is deemed to have consented to jurisdiction. R.W. Sawant & Co. v. Allied Programs Corp., 111 Ill.2d 304, 312-13, 95 Ill.Dec. 496, 501, 489 N.E.2d 1360, 1365 (1986); Cook, 87 Ill.2d at 199, 57 Ill.Dec. at 734, 429 N.E.2d at 851. Although there is no all-inclusive test for "doing business" in this state, the Illinois Supreme Court has held that "the term means that the corporation is conducting business in Illinois of such a character and extent as to warrant the inference that the corporation has subjected itself to the jurisdiction and laws of the district in which it is served and in which it is bound to appear when a proper agent has been served with process". Cook, 87 Ill.2d at 201, 57 Ill.Dec. at 735, 429 N.E.2d at 852. This conduct must not be occasional or casual but must be substantial and show a fair measure of permanence and continuity. Asset Allocation, 892 F.2d at 570; Cook, 87 Ill.2d at 202-03, 57 Ill.Dec. at 736, 429 N.E.2d at 853.

Plaintiff bases its entire jurisdictional argument on the assertion that Biotech was "doing business" in the Northern District, ignoring the Illinois long arm statute². Plaintiff's Response, p. 6. However, neither Dr. Perry nor Biotech maintain an office, a mailing address or a telephone number in Illinois. Dr. Perry, as an individual, has only been in Illinois three times, twice on vacation and once in attendance at a convention. Biotech has engaged in business in Illinois on only five occasions, three days in attendance at a convention and two days in negotiations with Hollister, Inc., an Illinois corporation. These facts do not show the "fair measure of permanence and continuity" necessary for jurisdiction under this doctrine³. Cook, 87 Ill.2d at 202-03, 57 Ill.Dec. at 736, 429 N.E.2d at 853; Sawant, 111 Ill.2d at 313, 95 Ill.Dec. at 501, 489 N.E.2d at 1365. Therefore, plaintiff has failed to demonstrate that defendants have consented to jurisdiction in this court under the "doing business" standard.

Although not raised by the plaintiff, jurisdiction could also be based on the Illinois long arm statute⁴. Formerly, the reach of the Illinois long arm statute was considered to be coterminous with the "minimum contacts" test of the due process clause. However, the Illinois Supreme Court, in Cook Associates, Inc. v. Lexington United Corp., 87 Ill.2d 190, 57 Ill.Dec. 730, 429 N.E.2d 847 (1981) rejected this notion⁵. See also, J. Walker, 821 F.2d at 402; Dun & Bradstreet, 714 F.Supp. at 299; Gordon, 148 Ill.App.3d at 279, 101 Ill.Dec. at 397, 498 N.E.2d at 721. Therefore, in determining whether an Illinois court could properly exercise jurisdiction, a federal court should ask three questions: (1) whether the defendant engaged in one of the jurisdictional acts enumerated by the statute; (2) whether the cause of action is one "arising from" the jurisdictional act; and (3) whether the exercise of long arm jurisdiction is consistent with due process as defined by prevailing constitutional standards. J. Walker, 821 F.2d at 402; Jacobs/Kahan & Co. v. Marsh, 740 F.2d 587, 590 (7th Cir.1984).

The first inquiry this court makes is whether Dr. Perry and Biotech engaged in one of the jurisdictional acts enumerated in the statute. The only possible jurisdictional act in this case is the transaction of business within the state. Dr. Perry's total personal contacts with Illinois encompass three days, two spent on vacation here and one in attending a convention. Nowhere does plaintiff allege the transaction of business by Dr. Perry as an individual within the state. Plaintiff does point to jurisdictional acts within this state by Dr. Perry as President of Biotech. However, jurisdictional acts as an officer of a corporation do not subject the individual to personal jurisdiction. Marine Midland Bank N.A. v. Miller, 664 F.2d 899, 902 (2d Cir.1981); State Security Insurance Co. v. Frank B. Hall & Co., Inc., 530 F.Supp. 94, 97-98 (N.D.Ill.1981). Plaintiff has therefore failed to show that Dr. Perry engaged in any act submitting himself to the jurisdiction of this state.

Turning to the actions of Biotech, the court likewise finds jurisdiction lacking. The only basis upon which Biotech can be found to have transacted business in Illinois is through either the two day negotiation with Hollister, Inc. or the sending of infringement letters into the state⁶. A jurisdictional act can be based upon a single transaction within the state as long as the cause of action is related to, ie. "arises from", the business which is done. J. Walker, 821 F.2d at 402. A cause of action arises from a transaction if it "lies in the wake" of the transaction. Heil, 863 F.2d at 549; Saylor, 836 F.2d at 343; J. Walker, 821 F.2d at 403. In the present case, McGowan's cause of action for declaratory judgment is not related to the negotiations between Hollister, Inc. and Biotech, and this act is therefore insufficient to confer jurisdiction under the Illinois long arm statute.

The last issue before the court is whether infringement letters sent by Biotech to McGowan in Illinois are sufficient to confer jurisdiction. Biotech, through their counsel, sent letters warning of possible infringement and litigation on October 13, 1988 and March 13, 1989. This district has held that the sending of infringement letters into the jurisdiction is sufficient to be the "transaction of business" in the state. Classic Golf Co. v. Karsten Manufacturing Co., 231 U.S.P.Q. 884, 885, 1986 WL 8953 (N.D.Ill.1986) (citing Nova Biomedical Corp. v. Moller, 629 F.2d 190, 193, 207 U.S.P.Q. 713, 715-16, n. 3 (1st Cir.1980); Wesley-Jessen, Inc v. Volk, 200 U.S.P.Q. 795, 796 (N.D.Ill.1976); Chromium Industries, Inc. v. Mirror Polishing & Plating Co., Inc., 193 U.S.P.Q. 158, 161 (N.D.Ill.1976) (citing B & J Manufacturing Co. v. Solar Industries, 483 F.2d 594, 598, 179 U.S.P.Q. 137, 140 (8th Cir.1973)). Plaintiff therefore satisfies the first element of the test. Moreover, McGowan's cause of action for declaratory judgment arises from the jurisdictional act of sending infringement letters into Illinois, Nova Biomedical, 629 F.2d at 195-96, n. 9, 207 U.S.P.Q. at 718, n. 9, satisfying the second element.

Having found that Biotech's mailing of infringement letters satisfies the requirements necessary under Illinois law, the court looks to see whether exercise of jurisdiction is consistent with due process as defined by prevailing constitutional standards. The application of the due process clause to the assertion of jurisdiction rests upon "traditional notions of fair play and substantial justice." International Shoe Co. v. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) "The `constitutional touchstone' in the due process analysis is `whether the defendant purposefully established minimum contacts' in the forum state." FMC Corp. v. Varonos, 892 F.2d 1308, 1313 (7th Cir.1990) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, ...