NCS Multistage v. TCO AS

• Decision Date: 28 May 2021
• Docket Number: 6:20-CV-00622-ADA
• Parties: NCS MULTISTAGE, Plaintiff, v. TCO AS, Defendant.
• Court: U.S. District Court — Western District of Texas

NCS MULTISTAGE, Plaintiff, v. TCO AS, Defendant.

6:20-CV-00622-ADA

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS WACO DIVISION

May 28, 2021

ORDER DENYING DEFENDANT TCO AS'S MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(b)(2), (3), (6), AND FOR FORUM NON-CONVENIENS

Before the Court is Defendant TCO AS's Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(2), (3), and (6) which was filed on February 9^th, 2021. ECF. No. 57. Plaintiff NCS Multistage filed its response on March 5^th, 2021. ECF. No. 62. Defendant TCO AS then replied on Marth 12^th, 2021. ECF. No. 64. Also before the court is TCO AS's motion to transfer case for Forum Non-Conveniens, which was filed on April 30, 2021. ECF No. 71. Plaintiff NCS Multistage filed its Response on May 19, 2021. ECF No. 74. Defendant TCO AS filed its Reply on May 24, 2021. After considering all related pleadings and the relevant law, the Court is of the opinion that both TCO AS's Motion for Dismissal and Forum Non-Conveniens should be DENIED.

I. Factual Background

This is a patent dispute over the Patent No. 10,465,445 and TCO AS's alleged use of it in their TDP-PO Floating Device. ECF No. 1 at 1. TCO AS is incorporated and has headquarters in Bergen, Norway. ECF No. 42 at 1. The TDP-PO devices are marketed and sold in the United States and are handled by TCO Products, a subsidiary of TCO AS, whose headquarters are in Houston. ECF No. 71 at 1. NCS Multistage contends that TCO AS is a global company with a substantial presence in the Western District of Texas and, accordingly has filed the instant patent infringement suit. ECF No. 74 at 10. Further, NCS alleges that many TCO AS employees, customers, executives, and inventors are located outside the Southern District of Texas and in fact reside in the Western District of Texas, Eastern District of Texas, Europe, and Canada. Id at 5-7. TCO AS has filed a motion to dismiss and, in the alternative, a motion seeking transfer to the Southern District of Texas.

II. Standard of Review

A. Motion to Dismiss for Lack of Personal Jurisdiction

Pursuant to Federal Rule of Civil Procedure 12(b)(2), the Court may dismiss an action when it lacks personal jurisdiction over the defendant. For patent cases, Federal Circuit law governs personal jurisdiction. Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1016 (Fed. Cir. 2009). When there has not been any jurisdictional discovery or an evidentiary hearing regarding jurisdiction, the "plaintiff usually bears only a prima facie burden." Celgard, LLC v. SK Innovation Co., Ltd., 792 F.3d 1373, 1378 (Fed. Cir. 2015).

Personal jurisdiction is proper where the state long-arm statute permits service of process on the defendant and the requirements of due process are satisfied. Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1361 (Fed. Cir. 2006). Because the Texas long-arm statute has been interpreted as extending to the limit of due process, these two inquiries are the same for district courts in Texas. Religious Tech. Ctr. v. Liebreich, 339 F.3d 369, 373 (5th Cir. 2003). The Supreme Court has articulated a two-pronged test to determine whether the requirements of due process are satisfied: 1) the nonresident must have "minimum contacts" with the forum state, and 2) subjecting the nonresident to jurisdiction must be consistent with "traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945); Breckenridge, 444 F.3d at 1361.

"The Federal Circuit applies a three-prong test to determine if specific jurisdiction exists:(1) whether the defendant purposefully directed activities at residents of the forum; (2) whether the claim arises out of or relates to those activities; and (3) whether assertion of personal jurisdiction is reasonable and fair." Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1231 (Fed. Cir. 2010). The plaintiff has the burden to show minimum contacts exist under the first two prongs, but the defendant has the burden of proving the exercise of jurisdiction would be unreasonable under the third. Elecs. For Imaging Inc. v. Coyle, 340 F.3d 1344, 1350 (Fed. Cir. 2003). The Federal Circuit has counseled, however, that the exercise of jurisdiction is unreasonable only in "the rare situation in which the plaintiff's interest and the state's interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum." Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1568 (Fed. Cir. 1994) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985).

The test of reasonableness and fairness is "a multi-factored balancing test that weighs any burdens on the defendant against various countervailing considerations, including the plaintiff's interest in a convenient forum and the forum state's interest in resolving controversies flowing from in-state events." Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 429 (Fed. Cir. 1996) (citing Burger King, 471 U.S. at 477). This test requires balancing the following factors: " (1) the burden on the defendant; (2) the interests of the forum state; (3) the plaintiff's interest in obtaining relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the interest of the states in furthering their social policies." Viam Corp., 84 F.3d at 429.

The Federal Circuit has also applied the "stream of commerce" theory born in World-Wide Volkswagen Corp. v. Woodson and reaffirmed in Asahi Metal Indus. Co. v. Superior Court. See Beverly Hills Fan, 21 F.3d at 1566. In Asahi, two four-justice pluralities offered slightlydifferent versions of this theory as a means of establishing the existence of minimum contacts. Id. Justice Brennan, supported by three other justices, argued jurisdiction could be validly exercised over a defendant who placed goods into the stream of commerce so long as the defendant could foresee the goods might end up in the forum state. Id.

The Federal Circuit has repeatedly refused to endorse either articulation of the stream of commerce theory. See, e.g., Beverly Hills Fan, 21 F.3d at 1566 ("We need not join this debate here, since we find that, under either version of the stream of commerce theory, plaintiff made the required jurisdictional showing."); see also AFTG-TG, LLC v. Nuvoton Tech. Corp., 689 F.3d 1358, 1364 (Fed. Cir. 2012) ("Thus, Beverly Hills Fan counsels that we refrain from taking a position on the proper articulation of the stream-of-commerce theory where the facts of a particular case mandate exercising or declining to exercise personal jurisdiction under any articulation of that theory."). Instead, the Federal Circuit's approach is to determine whether the plaintiff can establish minimum contacts—or has failed to establish minimum contacts—under both theories, making the choice between theories unnecessary. AFTG-TG, 689 F.3d at 1364.

B. Motion to Dismiss for Improper Venue

"Any civil action for patent infringement may be brought in any judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business." 28 U.S.C. § 1400(b). However, when a foreign corporation is sued for patent infringement, 28 U.S.C. § 1391 applies and not 28 U.S.C. § 1400. In re HTC, 889 F.3d 1349, 1357 (Fed. Cir. 2018). Section 1391(c) in Title 28 of the US Code U.S.C. § 1391(c) states that "a defendant not resident in the United States may be sued in any judicial district[.]..."

A party may move to dismiss a claim for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3). Once a defendant challenges venue, "the plaintiffs have the burden to prove that the chosen venue is proper." Zurich Am. Ins. Co. v. Tejas Concrete & Materials Inc.,982 F. Supp. 2d 714, 719 (W.D. Tex. 2013). On a Rule 12(b)(3) motion to dismiss for improper venue, the court must view all the facts in a light most favorable to the plaintiff. Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 237-38 (5th Cir. 2009). "Thus, a plaintiff may show that venue is proper by 'setting forth facts that taken as true would establish venue.'" Zurich Am. Ins. Co., 982 F. Supp. 2d at 719; see also Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994).

C. Motion to Dismiss for Failure to State a Claim

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss an action for failure to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). In the Fifth Circuit, motions to dismiss under Rule 12(b)(6) are "viewed with disfavor and are rarely granted." Lormand v. US Unwired, Inc., 565 F.3d 228, 232 (5th Cir. 2009) (quoting Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 570 (5th Cir. 2005). A claim cannot be dismissed under Rule 12(b)(6) unless the plaintiff "would not be entitled to relief under any set of facts or any possible theory that [it] could prove consistent with the allegations in the complaint." Muhammad v. Dallas Cnty. Cmly. Supervision & Corrs. Dep't, 479 F.3d 377, 380 (5th Cir. 2007) (citing Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999)). In other words, it must appear beyond doubt that the plaintiff can prove no set of facts in support of their claim entitling them to relief. Griffith v. Kroger Co., No. 9:05-CV-76-TH, ...