Elcomsoft, Ltd. v. Passcovery Co.

• Decision Date: 31 July 2013
• Docket Number: Civil Action No. 2:13cv18.
• Citation: 958 F.Supp.2d 616
• Parties: ELCOMSOFT, LTD., Plaintiff, v. PASSCOVERY CO. LTD., et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

958 F.Supp.2d 616

ELCOMSOFT, LTD., Plaintiff,

v.PASSCOVERY CO. LTD., et al., Defendants.

Civil Action No. 2:13cv18.

United States District Court,

E.D. Virginia,

Norfolk Division.

July 31, 2013.

Filipp Iosifovich Kofman, Kevin Richard Garden, International Legal Counsels PC, Alexandria, VA, for Plaintiff.

Duncan Glover Byers, Jeffrey Dennis Wilson, Byers Law Group, Norfolk, VA, Peter Andrew Koziol, Assouline & Berlowe PA, Boca Raton, FL, for Defendants.

ORDER

ARENDA L. WRIGHT ALLEN, District Judge.

On January 9, 2013, Plaintiff ElcomSoft, Ltd. (“ElcomSoft”) brought this suit against Defendants Passcovery Co., Ltd. (“Passcovery”), Accentsoft, Denis Gladysh,¹ and Ivan Golubev, alleging that Defendants had infringed its patents in violation of federal law. ElcomSoft also asserts claims of unjust enrichment and breach of contract under common law doctrines.

On May 10, 2013, Defendants filed a Motion to Dismiss. ECF No. 21. Defendants seek dismissal on the bases of personal jurisdiction, venue, forum non conveniens,and failure to state a claim upon which relief could be granted.

Defendants' first three objections stem from the uncontested fact that all parties to this suit are citizens of the Russian Federation (“Russia”). Defendants argue that their ties to the United States and to this district are insufficient to establish proper personal jurisdiction and venue in this Court. Alternatively, Defendants argue that Russia would be a more convenient forum for this litigation.

For the following reasons, the Motion to Dismiss is GRANTED IN PART on the basis of forum non conveniens, and the case is DISMISSED WITHOUT PREJUDICE.

I. OVERVIEW

Although Defendants have raised jurisdictional questions, the Court addresses their claim of forum non conveniens first.

“A district court ... may dispose of an action by a forum non conveniens dismissal, bypassing questions of ... personal jurisdiction, when considerations of convenience, fairness, and judicial economy so warrant.” Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 432, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007).

ElcomSoft argues that Passcovery has waived its objection to personal jurisdiction and that all Defendants have sufficient ties to this District. Even assuming that ElcomSoft's waiver argument is correct, jurisdictional discovery would be required in order to determine whether this Court possesses personal jurisdiction over Mr. Gladysh and Mr. Golubev. Therefore, “considerations of convenience, fairness, and judicial economy” warrant resolving Defendants' forum non conveniens claim before addressing their other arguments for dismissal. See id. at 435, 127 S.Ct. 1184 (affirming a district court's decision to dismiss a case on the basis of forum non conveniens prior to determining personal jurisdiction because the latter question would have required jurisdictional discovery).

II. FORUM NON CONVENIENS

A. Factual Background

ElcomSoft and Passcovery are companies organized under the laws of Russia, and their business involves the sale of digital password recovery products. Compl. paras. 3–4, 13, 21, ECF No. 1; Gladysh Decl. paras. 7, 13–16, ECF No. 22–1. Accentsoft is a brand name used by Passcovery. Compl. para. 5, ECF No. 1; Gladysh Decl. para. 8, ECF No. 22–1. Mr. Gladysh and Mr. Golubev are residents and citizens of Russia. Compl. paras. 6–7, ECF No. 1; Gladysh Decl. para. 4, ECF No. 22–1; Golubev Decl. para. 3, ECF No. 22–2.

ElcomSoft alleges that it owns patents on several password recovery methods. Compl. para. 15, ECF No. 1. It alleges that Mr. Golubev was hired as a software developer on June 1, 2003, and that his employment contract contained non-disclosure and confidentiality provisions. Id. at para. 18. But see Golubev Decl. para. 11, ECF No. 22–2 (alleging that Mr. Golubev never signed the contract attached to the Complaint). According to the Complaint, Mr. Golubev and Mr. Gladysh founded Passcovery while Mr. Golubev was working for Elcomsoft. Compl. para. 20, ECF No. 1. But cf. Gladysh Decl. para. 50, ECF No. 22–1 (alleging that Mr. Golubev is not currently a Passcovery employee).

The Complaint alleges that Mr. Golubev resigned from ElcomSoft on December 31, 2009, and that thereafter Passcovery released several products that allegedly infringe ElcomSoft's patents. Compl. paras. 22, 24, ECF No. 1. ElcomSoft asserts that these products are based on confidential information that Mr. Golubev disclosed improperlyto Passcovery. Id. at para. 32. Contra Gladysh Decl. paras. 47–49, ECF No. 22–1; Golubev Decl. para. 10, ECF No. 22–2.

B. Legal Framework

A party seeking to dismiss a case for forum non conveniens must show that “the alternative forum is: 1) available; 2) adequate; and 3) more convenient in light of the public and private interests involved.” Jiali Tang v. Synutra Int'l, Inc., 656 F.3d 242, 248 (4th Cir.2011). In analyzing such a claim, the Court must consider every material factor and hold defendants to their burden of persuasion on all elements of the analysis. Galustian v. Peter, 591 F.3d 724, 731 (4th Cir.2010).

C. Analysis1. Availability

A foreign forum is “available” “when the defendant is ‘amenable to process' in the other jurisdiction.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 n. 2, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981) (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 506–07, 67 S.Ct. 839, 91 L.Ed. 1055 (1947)). Each defendant is either a Russian company or a resident of Russia. Compl. paras. 4–7, ECF No. 1; Gladysh Decl. paras. 4, 7–8, ECF No. 22–1; Golubev Decl. para. 3, ECF No. 22–2. Additionally, Defendants have presented affidavits indicating that they are all amenable to service of process in Russia. Gladysh Decl. para. 70, ECF No. 22–1; Golubev Decl. para. 23, ECF No. 22–2. Therefore, Russia is available as a potential forum.

2. Adequacy

“A foreign forum is adequate when (1) all parties can come within that forum's jurisdiction, and (2) the parties will not be deprived of all remedies or treated unfairly, even though they may not enjoy the same benefits as they might receive in an American court.” Jiali Tang, 656 F.3d at 248 (quoting Fid. Bank PLC v. N. Fox Shipping N.V., 242 Fed.Appx. 84, 90 (4th Cir.2007) (unpublished)) (internal quotation marks omitted).

All parties to this suit are either Russian companies or residents of Russia. Compl. paras. 3–7, ECF No. 1; Gladysh Decl. paras. 4, 7–8, ECF No. 22–1; Golubev Decl. para. 3, ECF No. 22–2. ElcomSoft does not contest that all parties can come within Russia's jurisdiction. Therefore, the first prong of the test for adequacy is met.

When a foreign forum has jurisdiction, it is inadequate only “[i]n rare circumstances ... where the remedy offered by the other forum is clearly unsatisfactory.” Piper Aircraft, 454 U.S. at 254 n. 22, 102 S.Ct. 252. ElcomSoft argues that the remedies offered by Russian law are unsatisfactory. Defendants have presented affidavits indicating that “Russian law provides for protection against breach of Russian employment agreements, misappropriation of trade secrets, copyright, patent infringement and fraud.” Gladysh Decl. para. 63, ECF No. 22–1; Golubev Decl. para. 22, ECF No. 22–2. ElcomSoft argues that these affidavits are insufficient and that expert testimony is required. Resp. Mot. Dismiss 18 n. 2, ECF No. 26.

This is incorrect. “In determining questions of foreign law,” courts have “broad discretion” to consult “a wide variety of sources.” United States v. Mitchell, 985 F.2d 1275, 1280 (4th Cir.1993) (collecting cases and examples); accordFed.R.Civ.P. 44.1 (“In determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence.”). Although affidavits by non-lawyer parties who are residents and citizens of the jurisdiction in question are not the strongest evidence of foreign law, they can still suffice where, as here, there is no opposing evidence. See Banque Paribas v. Hamilton Indus. Int'l, Inc., 767 F.2d 380, 384–85 (7th Cir.1985) (holding that a district judge “was not entitled to reject” an affidavit by a corporate officer “when no contrary evidence had been introduced, or independent research into [foreign] law conducted by him”).

ElcomSoft also asserts that Russia provides insufficient redress because its “unjust enrichment and breach of confidentiality claims” may not be cognizable there. However, Russian law would likely apply to these claims even if they are litigated here. See Po Water & Sewer v. Indian Acres Club, 255 Va. 108, 495 S.E.2d 478, 482 (1998) (holding that an unjust enrichment claim is an equitable claim that a contract should be implied by law); Woodson v. Celina Mut. Ins. Co., 211 Va. 423, 177 S.E.2d 610, 613 (1970) (holding that questions regarding the validity and interpretation of a contract are governed by the law of the place where the contract was made); Arkla Lumber & Mfg. Co. v. W.Va. Timber Co., 146 Va. 641, 132 S.E. 840, 842 (1926) (holding that questions regarding the performance of a contract are governed by the law of the place where the contract was to be performed).

Moreover, the possibility that Russian law might differ significantly from the law applied by this Court is no basis for finding Russia to be an inadequate alternative forum. As the Supreme Court has noted, “if conclusive or substantial weight were given to the possibility of a change in law, the forum non conveniens doctrine would become virtually useless” because the forum selected by a plaintiff will generally be one in which the law is more advantageous than that of any alternative forums. Piper Aircraft, 454 U.S. at 250, 102 S.Ct. 252.

Differences in the law can render a proposed forum inadequate only “if the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all.” Id. at 254;see also Compania Naviera Joanna SA v. Koninklijke Boskalis...