Arlington Indus., Inc. v. Elec. Custom Distribs., Inc.

• Decision Date: 15 September 2011
• Docket Number: Civil Action No. 3:10–CV–842.
• Citation: 817 F.Supp.2d 473
• Parties: ARLINGTON INDUSTRIES, INC., Plaintiff, v. ELECTRONIC CUSTOM DISTRIBUTORS, INC., Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

817 F.Supp.2d 473

ARLINGTON INDUSTRIES, INC., Plaintiff,

v.ELECTRONIC CUSTOM DISTRIBUTORS, INC., Defendant.

Civil Action No. 3:10–CV–842.

United States District Court, M.D. Pennsylvania.

Sept. 15, 2011.

Robert J. Tribeck, Amanda J. Lavis, Rhoads & Sinon LLP, Harrisburg, PA, for Plaintiff.

R. Edward Perkins, Sheehy Ware & Pappas, PC, Thomas L. Warden, Conley Rose, PC, Houston, TX, Robert N. Gawlas, Jr., Rosenn, Jenkins & Greenwald, LLP, Wilkes Barre, PA, for Defendant.

MEMORANDUM

A. RICHARD CAPUTO, District Judge.

Defendant Electronic Custom Distributors moves to dismiss the present action for lack of personal jurisdiction. (Doc. 8). Because the Court lacks personal jurisdiction over the Defendant, the Motion will be granted.

I. Background

Arlington Industries, Inc. (Arlington), brought this action against Electronic Custom Distributors, Inc. (ECD). Arlington seeks a declaratory judgment of non-infringement and invalidity of one of ECD's patents.

Arlington is in the business of distributing electrical fittings, connectors, and related materials, while ECD distributes audio, video, and telecommunication products to dealers. Arlington is the record owner of Patent Number 7,563,979, which relates to a protective cable chute for routing low-voltage cables through walls. Arlington manufactures products that are covered by the claims of the cable chute patent.

At issue in this case is ECD's Patent Number 7,654,405 ('405 Patent), relating to a method and system of a detachable nose faceplate. When an installer embeds electrical wires in a wall, the detachable nose faceplate can cover the unsightly hole while allowing a wire to be threaded through the wall. The application leading to the faceplate patent was filed on October 17, 2006. Around March 2, 2007, the patent was assigned to ECD.

While the patent application was still pending, ECD amended it three times. The second amendment was filed on April 8, 2008 and added five new claims. On February 26, 2009, ECD filed a third amendment to the application, adding nine new claims. Arlington alleges that ECD made these amendments in order to expand the coverage of its patent so it would encompass some of Arlington's products.

On September 23, 2009, an ex-parte request for a reexamination was filed for Arlington's cable chute patent pursuant to 35 U.S.C. § 302. The request cited to prior art, including the ECD faceplate application, as bearing on the patentability of the cable chute patent. Although the party requesting the reexamination is kept confidential, ECD has admitted in jurisdictional discovery that it requested the reexamination.

Anticipating that ECD would file suit for infringing on the faceplate patent, Arlington brought this action, seeking a declaration that it is not infringing on the faceplate patent and that the claims of the faceplate patent are invalid.

ECD moved to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). (Doc. 8). Arlington opposed the Motion, moving in the alternative for jurisdictional discovery. The parties were allowed forty-five days to conduct discovery on the issue of personal jurisdiction pertaining to the time period beginning January 1, 2003, to the date the complaint was filed, and were given the opportunity to submit supplemental briefing. The Motion to Dismiss has now been fully briefed and is ripe for review.¹

II. Discussion

A. Legal Standard

The law of the Federal Circuit, rather than the regional circuit, controls the determination of personal jurisdiction “over out-of-state patentees as declaratory judgment defendants.” Hildebrand v. Steck Mfg. Co., Inc., 279 F.3d 1351, 1354 (Fed.Cir.2002) (citing Red Wing Shoe Co. v. Hockerson–Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed.Cir.1998)). When personal jurisdiction is challenged, the plaintiff carries the burden of showing that jurisdiction exists. Iowa State Univ. Research Found., Inc. v. Greater Continents Inc., 81 Fed.Appx. 344, 349 (Fed.Cir.2003) (citing Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir.1996)).

District courts are permitted to exercise personal jurisdiction over a nonresident to the extent allowed under the laws of the state where the district court sits. Fed.R.Civ.P. 4(e). Two inquiries are required in determining whether jurisdiction exists over an out-of-state defendant: whether a forum state's long-arm statute permits service of process and whether assertion of personal jurisdiction violates due process.” Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1017 (Fed.Cir.2009) (quoting Genetic Implant Sys. v. Core–Vent Corp., 123 F.3d 1455 (Fed.Cir.1997)). Here, as Pennsylvania's long-arm statute extends to the limits of due process, 42 Pa.C.S. § 5322(b), the two tests collapse solely into a due process inquiry.

Such due process requires that an out-of-state defendant “have certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). See Goodyear Dunlop Tires Operations v. Brown, –––U.S. ––––, 131 S.Ct. 2846, 2853, 180 L.Ed.2d 796 (U.S.2011) (affirming that “[t]he canonical opinion in this area remains International Shoe ”). Due process also requires some voluntary action by the defendant; this action serves as “fair warning that a particular activity may subject [it] to the jurisdiction of a foreign sovereign.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (citations omitted).

Having the requisite minimum contacts with the forum state may subject the defendant to either general jurisdiction or specific jurisdiction. General jurisdiction allows a court to “hear any and all claims against [a party] when their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.” Goodyear, 131 S.Ct. at 2851 (citing International Shoe, 326 U.S. at 317, 66 S.Ct. 154). The hallmark of general jurisdiction are “continuous and systematic” contacts with the forum state, even where the cause of action is unrelated to those contacts. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414–16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984).

Conversely, specific jurisdiction “arises out of” or “relates to” the cause of action when the contacts are “isolated or specific.” Burger King, 471 U.S. at 472–73, 105 S.Ct. 2174. It depends not on an entity's overall vulnerability to suit in a form, but “on an ‘affiliatio[n] between the forum and the underlying controversy,’ principally, [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation.” Goodyear, 131 S.Ct. at 2851 (citing von Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L.Rev. 1121, 1136 (1966)).

Federal Rule of Civil Procedure 12(b)(2) provides for dismissal of an action where the district court lacks personal jurisdiction over the defendant. Once challenged, the plaintiff bears the burden of establishing personal jurisdiction. Iowa State Univ. Research Found., Inc. v. Greater Continents, Inc., 81 Fed.Appx. 344 (Fed.Cir.2003). Where, as here, there has been no evidentiary hearing, “a plaintiff need only to make a prima facie showing that defendants are subject to personal jurisdiction.” Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed.Cir.2003).

B. General Jurisdiction

“When the cause of action does not arise out of or relate to the foreign corporation's activities in the forum State, due process is not offended by a State's subjecting the corporation to its in personam jurisdiction when there are sufficient contacts between the State and the foreign corporation.” Helicopteros Nacionales de Colom. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Unfortunately, “[n]either the United States Supreme Court nor [the Federal Circuit] has outlined a specific test to follow when analyzing whether a defendant's activities within a [forum] are ‘continuous and systematic.’ ” LSI Indus. Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 (Fed.Cir.2000).

Instead, in analyzing the Defendant's contacts with the forum, a district court will look to the aggregate effect of those contacts as a whole. Aeration Solutions, Inc. v. Dickman, 85 Fed.Appx. 772, 774 (Fed.Cir.2004). Taken together, the court will consider “whether the company's contacts are substantial for the forum.” Lakin v. Prudential Sec., 348 F.3d 704, 709 (8th Cir.2003); Provident Nat'l Bank v. California Federal Sav. & Loan Asso., 819 F.2d 434, 437–38 (3d Cir.1987).

Helicopteros Nacionales de Colom. v. Hall considered whether a Texas state court could exercise jurisdiction over a Colombian corporation (“Helicol”) for the crash of one of its helicopters in Peru. 466 U.S. 408, 409, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). The combined contacts with the Texas forum included “sending its chief executive officer to Houston for a contract-negotiation session; accepting into its New York bank account checks drawn on a Houston bank; purchasing helicopters, equipment, and training services from [a Texas corporation] for substantial sums; and sending personnel to ... Fort Worth for training.” Id. at 416, 104 S.Ct. 1868. These contacts were not trivial; the helicopters purchased in Texas constituted 80% of Helicol's fleet and constituted more than four million dollars of commerce over seven years preceding the accident. Id. at 411, 104 S.Ct. 1868. Still, the Court held that these contacts did not “constitute the kind of continuous and systematic general business contacts” necessary for general jurisdiction. Id. at 412, 104 S.Ct. 1868. In finding as much, the Court promulgated a long list of...