Fallon Lumin. Products v. Multi Media Electronics, C.A.6:04-2049-20.

• Court: United States District Courts. 4th Circuit. United States District Court of South Carolina
• Writing for the Court: Herlong
• Citation: 343 F.Supp.2d 502
• Parties: FALLON LUMINOUS PRODUCTS CORP., Plaintiff, v. MULTI MEDIA ELECTRONICS, INC., Defendant.
• Docket Number: No. C.A.6:04-2049-20.,C.A.6:04-2049-20.
• Decision Date: 04 November 2004

343 F.Supp.2d 502 FALLON LUMINOUS PRODUCTS CORP., Plaintiff,
v.
MULTI MEDIA ELECTRONICS, INC., Defendant. No. C.A.6:04-2049-20. United States District Court, D. South Carolina, Greenville Division. November 4, 2004.

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John B Hardaway, III, Stephen J Shaw, Nexsen Pruet Jacobs and Pollard, Greenville, SC, for Plaintiff.

Donald A Harper, Harper Law Firm, Greenville, SC, R Patrick Smith, Harrison White Smith Hayes and Coggins, Spartanburg, SC, for Defendant.

ORDER

HERLONG, District Judge.

This matter is before the court on Multi Media Electronics, Inc.'s ("MME") motion to dismiss for lack of personal jurisdiction and improper venue pursuant to Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure. For the reasons set forth below, the court denies MME's motion to dismiss for lack of personal jurisdiction and improper venue.

I. STATEMENT OF THE FACTS

Fallon Luminous Products Corp. ("Fallon") is a South Carolina corporation that

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"manufactures and sells illuminated and neon signs." (Compl. ¶¶ 1, 5.) MME is a Delaware corporation headquartered in Farmingdale, New York that "markets and sells a variety of novelty goods and lighting products." (Def.'s Mem. Supp. Mot. Dismiss at 1 (Decl. of Bernhardt ¶ 2).) Fallon alleges that MME has infringed its patent for a luminous electric sign ("neon sign"), U.S. Patent No. 5,533,286 ("286 patent"), by selling identical or substantially similar neon signs to Wal-Mart Stores, Inc. ("Wal-Mart") for distribution throughout the nation. (Compl.¶ 8.) Fallon purchased one of MME's allegedly infringing neon signs at a Wal-Mart store in Spartanburg, South Carolina. (Pl.'s Mem. Opp'n Mot. Dismiss (Aff. of Devin Hinson ¶¶ 2, 3, 4).) MME's trademark is located on five sides of the box containing the neon sign, and MME's company information and website address is next to the UPC code. (Id. (Aff. of Devin Hinson ¶¶ 5, 6).)

MME alleges that Fallon's complaint contains no allegations to support a finding of personal jurisdiction over MME in South Carolina. (Def.'s Mem. Supp. Mot. Dismiss at 2.) MME asserts that it does not own real property or have a place of business in South Carolina. (Id. (Decl. of Bernhardt ¶¶ 4, 5).) Further, MME does not pay South Carolina taxes and does not maintain a bank account in South Carolina. (Id. (Decl. of Bernhardt ¶¶ 6, 7).) MME does not have a registered agent for service of process in South Carolina. (Id. (Decl. of Bernhardt ¶ 8).) In addition, MME has not sold or delivered any allegedly infringing neon signs into South Carolina. (Def.'s Mem. Supp. Mot. Dismiss at 6 (Decl. of Bernhardt ¶¶ 24, 26).) According to MME, it sells the allegedly infringing neon signs to Wal-Mart, and Wal-Mart decides which stores will offer the allegedly infringing neon signs for sale. (Id. (Decl. of Bernhardt ¶¶ 19, 20, 21).) The neon signs are manufactured in China and shipped to the United States. (Id. (Decl. of Bernhardt ¶ 25).) MME asserts that Wal-Mart's sale of neon signs in South Carolina is insufficient to establish a basis for personal jurisdiction over MME.

II. DISCUSSION OF THE LAW

A. Personal Jurisdiction

"When a court's personal jurisdiction over a defendant is contested, the burden is on the plaintiff to establish the existence of a ground for exercising such jurisdiction." ESAB Group, Inc. v. Centricut, LLC, 34 F.Supp.2d 323, 328 (D.S.C.1999). The plaintiff need only make a prima facie showing of jurisdiction where the court is addressing the jurisdictional question on the basis of a written motion of the parties. Id. Because this is a patent infringement case, Federal Circuit law, rather than Fourth Circuit law, controls the analysis of jurisdiction. Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed.Cir.1995). In determining whether personal jurisdiction exists over a defendant, the court must apply a two-step analysis. See Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed.Cir.1998). First, the court must determine whether the forum state's long-arm statute provides a basis for asserting jurisdiction over the defendant. Second, the court must determine if the assertion of such jurisdiction comports with due process. See id.

1. Long-Arm Statute

When a suit arises out of a defendant's activities within the forum state, a court may exercise specific jurisdiction.¹

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See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 & 473 n. 15, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). The Federal Circuit defers to the forum state's highest court in interpreting the long-arm statute. See HollyAnne Corp. v. TFT, Inc., 199 F.3d 1304, 1307 (Fed.Cir.1999). South Carolina asserts specific jurisdiction over defendants pursuant to its long-arm statute. See Sheppard v. Jacksonville Marine Supply, Inc., 877 F.Supp. 260, 264 (D.S.C.1995). The South Carolina Supreme Court has interpreted South Carolina's long-arm statute to extend to the constitutional limits imposed by the due process clause. See id. at 265. Therefore, it follows that the two-step analysis collapses into due process. See id. Under this analysis, the plaintiff must show that the defendant had sufficient "minimum contacts" with South Carolina and that the exercise of jurisdiction would not offend "traditional notions of fair play and substantial justice." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (internal quotation omitted).

2. Due Process

The due process analysis consists of two branches: the "minimum contacts" branch and the "fair play and substantial justice branch." Id.

a. Minimum Contacts

In a patent infringement case, the Federal Circuit has established a three-prong test for determining whether minimum contacts exist: "(1) whether the defendant purposefully directed its activities at the residents of the forum; (2) whether the claim arises out of or is related to those activities, and (3) whether assertion of personal jurisdiction is reasonable and fair." HollyAnne Corp., 199 F.3d at 1307-08.

The first prong of the minimum contacts test is whether MME purposefully directed its activities at South Carolina. MME argues that it simply placed the neon signs into the stream of commerce and did not purposefully direct them at South Carolina. (Def.'s Mem. Supp. Mot. Dismiss at 6.) The court disagrees.

If the sale of a product of a manufacturer or a distributor... is not simply an isolated occurrence, but arises from the efforts of the [defendant] to serve, directly or indirectly, the market for its product ..., it is not unreasonable to subject it to suit.... [T]he forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a...