Edizone, LLC v. Asia Focus Int'l Grp., Inc.

• Decision Date: 21 July 2016
• Docket Number: Case No. 2:15-cv-00614-JNP-PMW
• Citation: 196 F.Supp.3d 1222
• Parties: EDIZONE, LLC, a Delaware limited liability company, Plaintiff, v. ASIA FOCUS INTERNATIONAL GROUP, INC. d/b/a Tallmenshoes.com, a California corporation, and Does 1 – 50, Defendants.
• Court: U.S. District Court — District of Utah

196 F.Supp.3d 1222

EDIZONE, LLC, a Delaware limited liability company, Plaintiff,

v.ASIA FOCUS INTERNATIONAL GROUP, INC. d/b/a Tallmenshoes.com, a California corporation, and Does 1 – 50, Defendants.

Case No. 2:15-cv-00614-JNP-PMW

United States District Court, D. Utah.

Signed July 21, 2016

Casey K. McGarvey, Edizone LLC, Alpine, UT, for Plaintiff.

Leontyne Fan, Songfong Tommy Wang, Yang & Wang PC, Los Angeles, CA, Chad E. Nydegger, David P. Johnson, Workman Nydegger, Salt Lake City, UT, for Defendants.

MEMORANDUM DECISION AND ORDER DENYING DEFENDANT ASIA FOCUS INTERNATIONAL GROUP, INC.'s MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION OR IN THE ALTERNATIVE TRANSFER VENUE

Jill N. Parrish, United States District Court Judge

INTRODUCTION

Edizone, LLC ("Edizone") brings this action against Defendant Asia Focus International Group, Inc. ("AFIG"), claiming that AFIG has infringed on Edizone's patent. AFIG moves to dismiss on the basis that the court lacks personal jurisdiction over it. Alternatively, AFIG moves to transfer the case to California. The court held a hearing on AFIG's motion on May 6, 2016.

Edizone has met its burden of showing that AFIG has sufficient contacts with Utah to allow the court to exercise personal jurisdiction over its patent claims. Likewise, AFIG has failed to satisfy the high burden for transferring the case to California on convenience grounds. Accordingly, the court DENIES AFIG's motion. (Docket 10).

FACTUAL BACKGROUND

Edizone is a Delaware limited liability company with its principal place of business in Alpine, Utah. Edizone works to develop new inventions and to patent and then license these inventions to others.

AFIG is a company that operates the website "www.Tallmenshoes.com," a wholly owned subsidiary of AFIG, from which it sells footwear and related products. AFIG sells its products online to customers throughout the world, including in the State of Utah. The dispute in this case arises from the online sales of honeycomb gel insoles that allegedly infringe on a patent developed by Edizone. Both parties agree that AFIG sold thirty-seven units of the allegedly infringing product to Utah residents. These sales all occurred between August 2012 and December 2015 through the website www.Tallmenshoes.com. Edizone asserts that the allegedly infringing honeycomb gel products were offered for sale on this website, which provided descriptions, prices, and a means to actually order the product directly from the website.

In support of its motion to dismiss for lack of personal jurisdiction, AFIG offers an affidavit by its vice president detailing its lack of contacts with Utah. AFIG is a California corporation. Its principal place of business is located in South El Monte, California. AFIG does not maintain a regular or established place of business in Utah. AFIG has no employees or bank accounts in Utah and ships all of the products it sells out of its warehouse in California. Edizone offers no evidence to contradict these assertions.

DISCUSSION

I. The Court May Exercise Personal Jurisdiction Over AFIG for Edizone's Patent Infringement Claims.

Whether a court may exercise personal jurisdiction over a defendant depends on the defendant's contacts with the forum state. Those contacts may give rise to either general or specific personal jurisdiction. A party is subject to general personal jurisdiction only when its "affiliations with the [forum] State are so ‘continuous and systematic’ as to render them essentially at home in the forum State." Daimler AG v. Bauman , –––U.S. ––––, 134 S.Ct. 746, 755, 187 L.Ed.2d 624 (2014) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011) ). In this case, the parties agree that AFIG's limited contacts with Utah are insufficient to give rise to general personal jurisdiction. Accordingly, the court's analysis is confined to specific personal jurisdiction.

Specific personal jurisdiction exists only when the plaintiff's claims arise out of the defendant's contacts with the forum. To determine whether the court has personal jurisdiction over AFIG, the court must first determine whether to apply Tenth Circuit or Federal Circuit law. Both circuits agree that where, as in Utah, "the state long arm statute supports personal jurisdiction to the full extent constitutionally permitted, due process principles govern the inquiry." Shrader v. Biddinger , 633 F.3d 1235, 1239 (10th Cir.2011) ; 3D Sys., Inc. v. Aarotech Labs., Inc. , 160 F.3d 1373, 1377 (Fed.Cir.1998) (explaining that the Federal Circuit defers "to the interpretation of a state's long-arm statute given by that state's highest court"); Starways, Inc. v. Curry , 980 P.2d 204, 206 (Utah 1999) (explaining that the Utah long-arm statute extends to the fullest extent permitted by due process). Because Edizone raises only patent-related claims, Federal Circuit law governs the due process analysis for personal jurisdiction. 3D Sys. , 160 F.3d at 1377 (explaining that for patent-related claims "when analyzing personal jurisdiction for purposes of compliance with federal due process, Federal Circuit law, rather than regional circuit law, applies").

Under Federal Circuit law, the plaintiff bears the initial burden of establishing personal jurisdiction. SeeElecs. for Imaging, Inc. v. Coyle , 340 F.3d 1344, 1350 (Fed.Cir.2003). But where a motion to dismiss is made with no request for an evidentiary hearing, the plaintiff need only make a prima facie showing of personal jurisdiction to defeat the motion. Id. at 1349. The plaintiff may carry this burden by demonstrating, via affidavit or other evidence, facts that, if true, would support jurisdiction over the defendant. Id. Any factual disputes must be resolved in the plaintiff's favor. Graphic Controls Corp. v. Utah Med. Prods., Inc. , 149 F.3d 1382, 1383 n. 1 (Fed.Cir.1998).

Under Federal Circuit law, when specific personal jurisdiction has been contested, the inquiry is "whether: (1) the defendant purposefully directed its activities at residents of the forum, (2) the claim arises out of or relates to those activities, and (3) assertion of personal jurisdiction is reasonable and fair." Avocent Huntsville Corp. v. Aten Int'l Co. , 552 F.3d 1324, 1332 (Fed.Cir.2008) (quoting Breckenridge Pharm., Inc. v. Metabolite Labs., Inc. , 444 F.3d 1356, 1363 (Fed.Cir.2006) ). Edizone argues that the court has specific personal jurisdiction over AFIG for its patent-related claims because AFIG sold thirty-seven units of the allegedly infringing product to customers in Utah through an interactive website maintained by AFIG. With these facts in mind, the court addresses each of the three factors identified by the Federal Circuit.

A. AFIG purposefully directed its activities at Utah residents.

First, the court must determine whether AFIG's website and the 37 sales into Utah amount to purposeful availment of the Utah forum. "By its very nature, the internet allows individuals and businesses to create a presence that is visible throughout the United States and the world. Even so, ‘one cannot purposefully avail oneself of some forum someplace.’ " Kindig It Design, Inc. v. Creative Controls, Inc. , Case No. 2:14–cv–00867–JNP–BCW, 157 F.Supp.3d 1167, 1175-76, 2016 WL 247574, at *6 (D.Utah Jan. 20, 2016) (quoting Revell v. Lidov , 317 F.3d 467, 475 (5th Cir.2002) ). In Kindig It Design, Inc. v. Creative Controls, Inc. , Case No. 2:14–cv–00867–JNP–BCW, 157 F.Supp.3d 1167, 2016 WL 247574 (D.Utah Jan. 20, 2016), this court held that maintaining a website capable of accepting orders from the forum state was insufficient by itself to establish purposeful availment where there was no evidence that forum residents had accessed the website or made any online purchases destined for the forum state. See id. at 1177-78, at *8. Because Kindig It Design did not involve a single sale in the forum state, it did not require an analysis of whether there is any threshold on the number of sales required to satisfy the purposeful availment prong of the test for specific personal jurisdiction. See id.

AFIG acknowledges that it sold thirty-seven units of the allegedly infringing product into Utah. But it argues that these sales amount to only de minimis contacts with the forum state and therefore do not support a finding of purposeful availment. AFIG asserts that there is no evidence that it targeted the Utah market. AFIG contends that Utah consumers had to go searching for its website and thus reached out to it, rather than the other way around. Finally, AFIG argues that a ruling adopting de minimis online sales as the linchpin for personal jurisdiction would eviscerate the traditional geographic limitations on a state's ability to exercise jurisdiction over foreign defendants. See Kindig It Design , 157 F.Supp.3d at 1174-75, 2016 WL 247574, at *5.

The court disagrees. AFIG's contacts with the Utah forum are significant enough to show purposeful availment. Both parties agree that thirty-seven units of the allegedly infringing product were sold into Utah. These Utah residents accessed AFIG's website from Utah and interacted with it by providing Utah billing and shipping addresses with their orders, which were then accepted and processed by AFIG. Reaching out from California, AFIG filled these orders and shipped the allegedly infringing product to the Utah customers' addresses from its warehouse in California. As a result of AFIG's actions, ongoing relationships were formed with Utah forum residents regarding the allegedly infringing products. Customers were provided with AFIG contact information and AFIG stored its customers' information. These sales occurred for at least three and a half years. Thus, it may reasonably be inferred that, because AFIG was directly processing orders from and shipping orders to Utah for such an extended period of time, AFIG was aware of its continued availment "of the privilege of conducting business" in Utah. See Burger King Corp....