Agio Int'l Co. v. Zhejiang Longda Force Co.
| Decision Date | 21 March 2019 |
| Docket Number | CIVIL CASE NO. 1:15-cv-00192-MR |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | AGIO INTERNATIONAL COMPANY, LTD., Plaintiff, v. ZHEJIANG LONGDA FORCE CO., LTD. and JMH TRADING INTERNATIONAL MANAGEMENT, LLC, d/b/a WORLD SOURCE, Defendants. |
THIS MATTER is before the Court on the Plaintiff's Motion for Default Judgment [Doc. 49].
On September 1, 2015, the Plaintiff Agio International Company, Ltd. ("Agio") filed its original complaint against the Defendant JMH Trading International Management LLC d/b/a World Source ("JMH"),1 asserting a claim of infringement of U.S. Patent No. 6,585,323 ("the '323 Patent"). [Doc.1]. On December 29, 2015, Agio filed an Amended Complaint, adding Zhejiang Longda Force Co. Ltd. ("Longda"), a Chinese company, as a defendant and amending its patent infringement claim to include U.S. Patent 6,293,624 ("the '624 Patent"). [Doc. 5].
Longda refused to waive service of process under Federal Rule of Civil Procedure 4(d). Accordingly, Agio initiated formal service of process of the Summons and the Amended Complaint pursuant to the Hague Convention, to which the People's Republic of China is a signatory. [See Doc. 26-1]. Despite Agio's extensive and repeated efforts to effectuate service, Longda failed to file a responsive pleading or otherwise participate in the above-captioned action.
On February 15, 2017, Agio moved for the entry of default against Longda for failure to answer or otherwise plead in response to Agio's Amended Complaint. [Doc. 26]. On February 16, 2017, pursuant to Federal Rule of Civil Procedure 55(a), the Clerk entered default against Longda. [Doc. 27].
The claim having been resolved against all other parties, Agio now moves pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure for default judgment against Longda, seeking the following relief: (1) a finding that Longda is liable for patent infringement; (2) an award of compensatorydamages based on Agio's lost profits; (3) an award of treble damages based on Longda's egregious and willful infringement; (4) an award of attorney fees on the grounds that this case is "exceptional"; and (5) an award of costs, prejudgment interest, and post-judgment interest.
Rule 55 of the Federal Rules of Civil Procedure provides for the entry of a default when "a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend." Fed. R. Civ. P. 55(a). Once a defendant has been defaulted, the plaintiff may then seek a default judgment. If the plaintiff's claim is for a sum certain or can be made certain by computation, the Clerk of Court may enter the default judgment. Fed. R. Civ. P. 55(b)(1). In all other cases, the plaintiff must apply to the Court for a default judgment. Fed. R. Civ. P. 55(b)(2).
"The defendant, by his default, admits the plaintiff's well-pleaded allegations of fact...." Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (quoting Nishimatsu Constr. Co., Ltd. v. Houston Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). A defendant, however, "is not held . . . to admit conclusions of law." Ryan, 253 F.3d at 780 (quoting Nishimatsu, 515 F.2d at 1206). The Court therefore must determine whetherthe facts as alleged state a claim for relief. GlobalSantaFe Corp. v. Globalsantafe.com, 250 F. Supp. 2d 610, 612 n.3 (E.D. Va. 2003).
The well-pleaded factual allegations of Agio's Amended Complaint having been deemed admitted by virtue of Longda's default, the following is a summary of the relevant facts.
Agio is an industry-leading designer, manufacturer, and distributor of outdoor furniture items, including chairs, tables, and other usable products. [Doc. 5 at ¶ 2]. Agio is the assignee of the '624 Patent and the '323 Patent (collectively, "the patents-in-suit" or "Agio's patents"). [Id. at ¶ 3]. Agio owns all rights, title, and interest in and to the patents-in-suit, including the right to sue for infringement. [Id. at ¶¶ 21-22].
Longda is also a manufacturer and distributor of outdoor garden furniture, considerable amounts of which are exported to the United States, including to North Carolina. [Doc. 5 at ¶¶ 4-5, 7-8]. For more than fifteen years, Longda has manufactured and distributed sling chairs that infringe Agio's patents. Since May of 2003, Longda has had actual notice of Agio's '624 Patent and has known its sling chairs infringed the '624 Patent but has continued to sell and distribute its infringing sling chairs despite this knowledge. [Id. at ¶¶ 31-33].
In 2002, Agio filed a complaint in the United States District Court for the Northern District of Illinois for infringement of the '624 Patent. See Agio Int'l Co. v. Hansen Int'l Inc., No. 1:02-cv-06242 (N.D. Ill. Aug. 30, 2002). On April 22, 2003, the Northern District of Illinois issued a Permanent Injunction Order (hereinafter, "the Hansen Permanent Injunction"), enjoining the defendants in that action "from manufacturing, using, selling, offering for sale, promoting, distributing, displaying in any medium or otherwise disposing of" any sling chair "with the same accused structure" that infringes Agio's patent. [Doc. 5-3 at 5]. The Hansen Permanent Injunction also enjoined "those persons in active concert or participation with [the defendants] who receive actual notice of the Permanent Injunction Order...." [Doc. 5 at ¶ 31; Doc. 5-3 at 5].
While not a named defendant in the Hansen litigation, Longda supplied the infringing furniture at issue in Hansen. [Doc. 5 at ¶ 32]. Agio provided notice of the Hansen Permanent Injunction to Longda in May 2003. [Id.]. Longda nevertheless began selling and supplying infringing chairs to JMH at its facility in Candler, North Carolina. [Id. at ¶ 33; Declaration of John Mark Hudson ("JMH Aff."), Doc. 50-1 at ¶ 3]. Specifically, between 2011 and 2014, Longda profited by selling to JMH 22,478 infringing chairs, as well as 1,626tables, which tables were sold together with the chairs in question as functional units. [See JMH Aff., Doc. 50-1 at ¶¶ 5, 6].
Since Agio initiated the above-captioned action, Longda has repeatedly refused to participate in this litigation despite Agio's repeated efforts to put them on notice of the action and prompt Longda to participate. [See Declaration of Craig L. Mytelka ("Mytelka Decl."), Doc. 51-1]. In February 2016, working with a law firm in China, counsel for Agio provided Longda with translated copies of the Summons, Amended Complaint, and Exhibits, as well as a Waiver of Service Form. [Id. at ¶ 6]. Longda responded that it was not willing to sign the waiver but wished to nonetheless receive any documents related to the case. [Id. at ¶ 7]. Agio made every effort to obtain service under the Hague Convention, and the Chinese law firm later sent a letter warning Longda that Agio would soon commence default proceedings. [Id. at ¶ 10]. Longda's refusal to participate in this litigation continues to the present date.
III. DISCUSSION
District courts have "original jurisdiction of any civil action arising under any Act of Congress relating to patents...." 28 U.S.C. § 1338(a); see also 28 U.S.C. § 1331. Accordingly, the Court has subject matter jurisdiction overthe above-captioned civil action as it was brought by Agio against Longda for patent infringement pursuant to the Patent Act, 35 U.S.C. §§ 1 et seq. [Doc. 5 at ¶¶ 15-16].
The Court also has specific personal jurisdiction over Longda as required to render a valid default judgment. Federal Circuit law governs the exercise of personal jurisdiction in patent infringement cases. See Rates Tech., Inc. v. Nortel Networks Corp., 399 F.3d 1302, 1307 (Fed. Cir. 2005). Under Federal Circuit law, whether specific jurisdiction exists requires the Court to determine whether "(1) the defendant purposefully directed its activities to the forum State; (2) the claims arise out of or relate to those activities (collectively, the minimum contacts prong); and (3) the assertion of jurisdiction is reasonable and fair." NexLearn, LLC v. Allen Interactions, Inc., 859 F.3d 1371, 1376 (Fed. Cir. 2017). Agio's Amended Complaint contains jurisdictional facts sufficient to support the exercise of personal jurisdiction by setting forth that: (1) Longda has done business within North Carolina [Doc. 5 at ¶ 8] and (2) Longda committed infringement in North Carolina, including within this district, by supplying infringing chairs to JMH [Doc. 5 at ¶¶ 12, 14, 17]. Given such contact with the forum, Longda should have reasonably anticipated being haled into court here.
Agio has complied with its obligations to effectuate service of process through its efforts to serve Longda in China pursuant to Fed. R. Civ. P. 4(f) and the Hague Convention. [Doc. 26-1; see also Mytelka Decl., Doc. 51-1]. Finally, venue is proper under 28 U.S.C. § 1391(b)-(c) and 28 U.S.C. § 1400(b).
Under the Patent Act, "whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent." 35 U.S.C. § 271(a). Direct infringement "require[s] not more than the unauthorized use of a patented invention." Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 761 n.2 (2011) (citations omitted). Indirect infringement occurs when an infringer induces another party to commit direct infringement. 35 U.S.C. § 271(b). Indirect infringement requires that the infringer know that "the induced acts constitute patent infringement." Global-Tech, 563 U.S. at 766. The facts alleged must support the inference that "the accused infringer specifically intended another party to infringe the patent and knew that the other party's acts constituted infringement." Lifetime Indus., Inc. v....
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