Cryomedics, Inc. v. Spembly, Limited

• Decision Date: 11 June 1975
• Docket Number: Civ. No. B-74-453.
• Court: U.S. District Court — District of Connecticut
• Parties: CRYOMEDICS, INC. v. SPEMBLY, LIMITED, et al.

397 F. Supp. 287

CRYOMEDICS, INC. v. SPEMBLY, LIMITED, et al.

Civ. No. B-74-453.

United States District Court, D. Connecticut.

June 11, 1975.

Barry Kramer, Stamford, Conn., Robert S. Cooper, Bridgeport, Conn., for plaintiff.

Roger B. McCormick, Hartford, Conn., for defendants.

RULING ON DEFENDANTS' MOTION TO DISMISS

NEWMAN, District Judge.

This motion to dismiss presents in an unusual procedural posture an important question of the reach of this Court's in personam jurisdiction. Plaintiff Cryomedics, Inc. ("Cyromedics") is a Connecticut corporation engaged in the manufacture and sale of cryosurgical instruments that are sold to hospitals and surgeons. Defendants Spembly, Limited and Spembly Technical Products, Limited (referred to jointly as "Spembly") are incorporated under the laws of Great Britain and have their principal place of business in England. Spembly is also engaged in the manufacture and sale of cryosurgical instruments. This action arises under the patent laws of the United States, 35 U.S.C. §§ 271, 281. In the first three counts of its complaint, Cryomedics charges that Spembly has infringed, actively induced the infringement, and contributed to the infringement of its United States patent 3,696,813 ("the '813 patent"), in violation of 35 U.S.C. § 271. Count IV seeks a declaration that Spembly's United States patent 3,502,081 ("the '081 patent") in invalid and not infringed by Cryomedics.¹ 28 U.S.C. § 2201. Spembly has moved to dismiss all four counts on the ground that it is not subject to the in personam jurisdiction of this Court, Fed.R.Civ.P. 12(b)(2). Spembly has also moved to dismiss Count IV on the ground that there is no justiciable controversy between it and Cryomedics with respect to the '081 patent, and that this Court therefore lacks jurisdiction over the subject matter, Fed.R.Civ.P. 12(b)(1).

With respect to in personam jurisdiction, Spembly does not now contest Cryomedics' claim that the Connecticut corporate long-arm statute, Conn.Gen. Stat. § 33-411(c), provides a basis for service of process on it. See Fed.R.Civ. P. 4(e), 4(i)(1)(D).² Section 33-411(c) has been construed "to extend Connecticut's jurisdictional reach to the constitutional limits," Electric Regulator Corp. v. Sterling Extruder Corp., 280 F. Supp. 550, 556 (D.Conn.1968), and Spembly's sole remaining challenge to this Court's exercise of personal jurisdiction over it is the claim that the application of the statute to it is unconstitutional.

The argument as advanced by Spembly is based on two propositions: first, that International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), requires that as a predicate to this Court's jurisdiction Spembly have certain "minimum contacts" with the State of Connecticut,³ and second, that its contacts with the State are insufficient to satisfy International Shoe's due process standards.⁴ To establish the second proposition Spembly relies almost exclusively on the District Court decision in Honeywell, Inc. v. Metz Apparatewerke, 353 F.Supp. 492 (N.D.Ill.1972). Honeywell has been reversed, however, 509 F.2d 1137 (7th Cir. 1975), and although it still provides a useful basis for comparison, it is no longer controlling.

Cryomedics resists the claim of insufficient contacts on two fronts. It contends, first, that it has alleged sufficient contacts with Connecticut to meet the constitutional requirements, see note 3, supra, and, second, that Spembly's status as an alien permits this Court to consider the aggregate of Spembly's contacts with the United States as a whole. See Honeywell v. Metz, supra, 509 F.2d at 1143 n. 2.

Taking as true the allegations of the complaint as supplemented by affidavit and particularized in Cryomedics' memorandum, Spembly has the following contacts with Connecticut.⁵ Storz Instrument Co., described as a "sub or dealer under" Keeler, Inc., one of Spembly's two primary distributors in the United States, has at least one salesman who solicits in Connecticut. Storz has offered infringing and other Spembly equipment for sale in Connecticut. Keeler itself has made at least one sale in Connecticut of Spembly equipment, although the complaint does not allege the sale was of equipment that infringes the '813 patent. Elmed, Inc., Spembly's other primary American distributor, also has representatives who solicit and who have sold at least one item of infringing Spembly equipment in Connecticut. Cryomedics also alleges that Spembly has caused Elmed and Keeler to sue Cryomedics in Connecticut, that a director of Spembly met once in Connecticut with Cryomedics' president, and that Spembly has a Connecticut licensee that apparently is independent of Spembly and does not manufacture or deal in Spembly equipment. Spembly, of course, describes these contacts in more limited terms and disputes the significance of those that it admits. Other than the charges of voluntary involvement in litigation in Connecticut, and the related allegation that Spembly has agreed to indemnify its distributors for losses incurred in defending and prosecuting the patent actions, Cryomedics has offered no evidence of the relationship between Spembly and its distributors.

In Honeywell v. Metz, supra, the Court observed that there is no easy formula for determining whether contacts are sufficient to comply with due process, and that a court must determine on a case-by-case basis whether a non-resident defendant "can be said to have invoked, by act or conduct, the benefits and protection of the laws of the forum." 509 F.2d at 1144. See International Shoe v. Washington, supra; Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). Metz was found to have availed itself of the protection of Illinois law by injecting its products into the stream of commerce "under such circumstances that it should reasonably have anticipated that injury through infringement" would occur in Illinois, 509 F.2d at 1144. Metz's involvement with Illinois, for purposes of this test, was substantially greater than Spembly's involvement with Connecticut; one of Metz's principal American distributors was incorporated in Illinois and assigned a limited territory in which it was Metz's exclusive distributor, and at least one Chicago firm purchased continuously from that distributor and regularly sold infringing equipment at retail. Id. at 1139. The Court of Appeals also found that the distribution of its products in Illinois generated revenue for Metz, and, relying on the "economic realities" of Metz's relations with its distributors, found sufficient contacts to sustain jurisdiction over Metz.

The relative sparseness of the allegations about Spembly's relationship with its American distributors,⁶ and about their relationship with Connecticut, is a matter of some consequence if jurisdiction over Spembly is to be tested by its contacts with Connecticut; this Circuit requires, in a suit to recover for injury caused within a state by conduct occurring without the state, more of a showing of foreseeability for jurisdictional purposes than the "rather low floor of foreseeability necessary to support a finding of tort liability." Leasco Data Processing Corp. v. Maxwell, 468 F.2d 1326, 1341 (2d Cir. 1972).

The person sought to be charged must know, or have good reason to know, that his conduct will have effects in the state seeking to assert jurisdiction over him. Ibid.

Absent such a showing of foreseeability, contact with Connecticut is merely fortuitous and not an intentional invocation of the state's protection, and is an insufficient basis for jurisdiction. Compare id. at 1341-42 n. 11. This more stringent standard may well have been met in Honeywell, although the Court of Appeals apparently applied the less rigorous standard. Metz's relationship with its distributor was a close one, and Metz appears to have known that it was incorporated in Illinois and that a Chicago dealer was retailing its products.

In the present case, it is a close question whether Spembly had "good reason" to know its products would be sold in Connecticut, or whether it was more like the alien defendant in Marston v. Grant, 351 F.Supp. 1122 (E. D.Va.1972), which sold to distributors knowing its products would be marketed abroad, including the United States, but with no particular reason to know where in the United States such sales would be solicited and consummated. Compare Rheem Mfg. Co. v. Johnson Heater Corp., 370 F.Supp. 806 (D.Minn.1974), with SCM Corp. v. Brother International Corp., 316 F.Supp. 1328 (S.D.N.Y.1970). Probably the better course would be to deny the motion, especially in light of Spembly's alleged voluntary involvement in litigation in this District, and allow Cryomedics to attempt to prove the jurisdictional facts, including the nature of Spembly's activities in the litigation, either at trial or through more pre-trial discovery. Cf. Leasco Data Processing Corp. v. Maxwell, supra, 468 F.2d at 1342-44. With respect to the first three counts of the complaint, however, it is not necessary to decide whether Spembly's contracts with Connecticut are alone sufficient to satisfy the demands of the Constitution. When a federal court is asked to exercise personal jurisdiction over an alien defendant sued on a claim arising out of federal law, jurisdiction may appropriately be determined on the basis of the alien's aggregated contacts with the United States as a whole, regardless of whether the contacts with the state in which the district court sits would be sufficient if considered alone. See von Mehren and Trautmen, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv.L.Rev. 1121, 1123-25 n. 6 (1966). If the defendant's contacts with the United States are sufficient to satisfy the fairness standard of the Fifth Amendment, see note 3, supra, then the only limitation on place of trial would be the doctrine of forum non conveniens. Cf. Holt v. Klosters Rederi A/S, 355 F.Supp. 354 (W...