Central Tools, Inc. v. Mitutoyo Corp.

• Citation: 381 F.Supp.2d 71
• Decision Date: 11 August 2005
• Docket Number: No. C.A.04-68S.,C.A.04-68S.
• Parties: CENTRAL TOOLS, INC., Plaintiff, v. MITUTOYO CORPORATION, Mitutoyo American Corporation, and C.E. Johansson AB, Defendants.
• Court: U.S. District Court — District of Rhode Island

381 F.Supp.2d 71

CENTRAL TOOLS, INC., Plaintiff, v. MITUTOYO CORPORATION, Mitutoyo American Corporation, and C.E. Johansson AB, Defendants.

No. C.A.04-68S.

United States District Court, D. Rhode Island.

August 11, 2005.

Matthew F. Medeiros, Little, Medeiros, Kinder, Bulman & Whitney, Providence, RI, Robert B. Golden, Lackenback Siegel, LLP, Scarsdale, NY, for Plaintiff.

Darle M. Short, Cliff & Berridge, PLC, Alexandria, VA, Thomas C. Plunkett, Providence, RI, for Defendants.

DECISION AND ORDER

SMITH, United States District Judge.

I. Introduction

Central Tools, Inc. ("Central"), a Rhode Island corporation, brought this action seeking a declaratory judgment for, among other things, noninfringement and invalidity of patent, U.S. Patent No. 4,743,902 (the "902 Patent"),¹ against: C.E. Johansson AB ("CEJ"), the owner of the 902 Patent; Mitutoyo Corporation ("Mitutoyo"), a Japanese corporation and the exclusive licensee of that portion of the 902 Patent covering length measuring devices;² and Mitutoyo American Corporation (" MAC"), a subsidiary of Mitutoyo serving as Mitutoyo's American distributor (collectively, "Defendants"). Defendants have moved to dismiss this action for lack of personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure. For the reasons set forth below, the Defendants' motion is granted.

II. Background

The Court takes Plaintiff's well-pleaded allegations as true for purposes of this motion. See Electronics for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed.Cir.2003) ("In the procedural posture of a motion to dismiss, a district court must accept the uncontroverted allegations in the plaintiff's complaint as true and resolve any factual conflicts in the affidavits in the plaintiff's favor."). Furthermore, the Court "may consider public records without transforming the motion into one for summary judgment." Greene v. Rhode Island, 289 F.Supp.2d 5, 8 (D.R.I.2003). And finally, when "a complaint's factual allegations are expressly linked to — and admittedly dependent upon — a document (the authenticity of which is not challenged), that document effectively merges into the pleadings and [this Court] can review it in deciding a motion to dismiss." Beddall v. State Street Bank and Trust Co., 137 F.3d 12, 17 (1st Cir.1998).

Central sells measuring devices such as the length measurement device which is covered by the 902 patent. Since 1995, Central has been in direct communication with Mitutoyo regarding a disagreement about the 902 Patent. Mitutoyo initiated the correspondence by sending a letter to Central accusing Central of infringing on Mitutoyo's exclusive right to control the sale of the length measuring devices covered by the 902 Patent by selling similar devices made in China. The parties engaged in correspondence on the matter throughout 1995. (Compl. at ¶¶ 17-23.)

On September 15, 1995, Mitutoyo wrote to Central with an offer: If Central stopped selling the length measuring devices made in China, Mitutoyo would not hold Central liable for past infringements. (Letter of 9/15/1995 from Mitutoyo to Central.) Central responded to this proposal on September 27, 1995. Without admitting liability or the validity of the patent, Central agreed not to sell or place future orders for the allegedly infringing goods. (Letter of 9/27/1995 from Central to Mitutoyo.) The parties then entered into an agreement (the "Agreement") whereby Central would cease marketing the allegedly infringing goods and Mitutoyo would not pursue any claims regarding past sales.

Following the Agreement, Central found itself at an economic disadvantage because other competitors continued to sell the allegedly infringing goods. Central concluded from this that either there was no infringement or that Mitutoyo was selectively enforcing the patent, rendering it unenforceable. As a result, Central terminated the Agreement. (Letter of 11/7/1995 from Central to Mitutoyo.) In response, Mitutoyo wrote to Central objecting to the termination of the Agreement. (Letter of 12/8/1995 from Mitutoyo to Central.) The two companies exchanged correspondence for seven years with no resolution, ultimately leading to the filing of this action.

III. Discussion

Claims concerning personal jurisdiction over a party in a declaratory judgment action involving patent invalidity are governed by Federal Circuit law. Electronics for Imaging, 340 F.3d at 1348. Federal Circuit law also governs personal jurisdiction issues involved in state law claims that go "hand-in-hand" with patent infringement claims, such as Central's claim here regarding the validity/breach of the Agreement.³ 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1377 (Fed.Cir.1998) (concluding that state law libel and unfair competition claims should be analyzed under Federal Circuit law "because the resolution of the patent infringement issue will be a significant factor in determining whether or not 3D libeled the defendants"). Finally, procedural issues that may be critical to analysis of the Motion to Dismiss (such as whether CEJ is an indispensable party under Rule 19 of the Federal Rules of Civil Procedure) are resolved under this Court's regional circuit law. Bayer AG v. Housey Pharms., Inc., 340 F.3d 1367, 1371 (Fed.Cir.2003) ("We review the grant of a motion to dismiss under Rule 12(b)(6) by applying the procedural law of the regional circuit."); Dainippon Screen Mfg. Co., Ltd. v. CFMT, Inc., 142 F.3d 1266, 1269 (Fed.Cir.1998) ("[w]hether a party is indispensable under Rule 19(b) is a matter of regional circuit law").

In this case, Defendants argue, among other things, that CEJ, as the owner of the patent,⁴ is an indispensable party not subject to personal jurisdiction, and thus this action cannot proceed here. Central, meanwhile, argues CEJ is not beyond the jurisdictional reach of this Court, and even if it is, it is not an indispensable party.

A. Is CEJ Subject to the Personal Jurisdiction of this Court?

"Determining whether personal jurisdiction exists over an out-of-state defendant involves two inquiries: whether a forum state's long-arm statute permits service of process and whether assertion of personal jurisdiction would violate due process." Id. at 1270. Where, as here, the state's long arm statute is co-extensive with the limits of due process, see KVH Indus., Inc. v. Moore, 789 F.Supp. 69, 70 (D.R.I.1992), "the two inquiries collapse into a single inquiry: whether jurisdiction comports with due process," Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed.Cir.2001). Thus, the ultimate inquiry turns on whether there are sufficient contacts between the defendant and the State of Rhode Island. Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 427 (Fed.Cir.1996).

Personal jurisdiction over a defendant may be based on either specific or general jurisdiction. Specific jurisdiction refers "to a situation in which the cause of action arises directly from the defendant's contacts with the forum State." Id. General jurisdiction, of course, looks more broadly "to the situation in which the defendant's contacts [with the forum state] have no necessary relationship to the cause of action." Id.

As noted above, Central argues that CEJ is either not an indispensable party to this action, in which case the Court's lack of personal jurisdiction over CEJ is no bar to this action proceeding, or is an indispensable party and thereby becomes subject to the Court's jurisdiction via Mitutoyo's agency. As to the latter argument Central cites Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) wherein the Supreme Court stated that in analyzing issues of personal jurisdiction, "when commercial activities are `carried on in behalf of' an out-of-state party those activities may sometimes be ascribed to the party." 471 U.S. at 480 n. 22, 105 S.Ct. 2174. Central argues that if CEJ is indeed an indispensable party to an action involving the 902 Patent because it retained substantial rights in that patent, then all of Mitutoyo's threats of litigation in defense of the 902 Patent must have been made by Mitutoyo on behalf of CEJ because Mitutoyo lacks the power to bring such an infringement action on its own. (See Pl.'s Obj. at 19 (citing Abbott Labs. v. Diamedix Corp., 47 F.3d 1128, 1132 (Fed.Cir.1995) (holding that where patent owner licensor retained substantial rights under license agreement, licensee did "not have an independent right to sue for infringement")).) But see Intellectual Prop. Dev., Inc. v. TCI Cablevision of Cal., Inc., 248 F.3d 1333, 1346-47 (Fed.Cir.2001) (noting that "the Supreme Court has stated that a patent owner that grants `the exclusive right to make, use, or vend [a patented invention], which does not constitute a statutory assignment ... must allow the use of his name as plaintiff in any action brought by the licensee ... to obtain damages for the injury to his exclusive right'") (quoting Indep. Wireless Tel. Co. v. Radio Corp. of Am., 269 U.S. 459, 469, 46 S.Ct. 166, 70 L.Ed. 357 (1926)) (emphasis in original). In support of its argument that CEJ is subject to the personal jurisdiction of this Court by way of some type of Burger King agency theory, which is Central's only argument for finding personal jurisdiction over CEJ, Central relies on Akro Corp. v. Luker, 45 F.3d 1541 (Fed.Cir.1995).

For purposes of analyzing Plaintiff's argument, the Court will assume it has personal jurisdiction over Mitutoyo (which it must in order to conclude Mitutoyo subjected CEJ to the jurisdiction of this Court via its actions as CEJ's "agent") as a consequence of Mitutoyo's enforcement activities in defense of its exclusive license. See id. (concluding combination of letters directed at alleged infringer and license agreement with in-state company subjected out-of-state patent owner to personal jurisdiction). Central relies on Akro to press the point that "[t]o reject the argument that there is...