Power Intergrations, Inc. v. Bcd Semiconductor

• Decision Date: 11 April 2008
• Docket Number: Civ. No. 07-633-JJF-LPS.
• Parties: POWER INTEGRATIONS, INC., Plaintiff, v. BCD SEMICONDUCTOR CORPORATION and Shanghai SIM-BCD Semiconductor Manufacturing Co., Ltd., Defendants.
• Court: U.S. District Court — District of Delaware

547 F.Supp.2d 365

POWER INTEGRATIONS, INC., Plaintiff, v. BCD SEMICONDUCTOR CORPORATION and Shanghai SIM-BCD Semiconductor Manufacturing Co., Ltd., Defendants.

Civ. No. 07-633-JJF-LPS.

United States District Court, D. Delaware.

April 11, 2008.

William J. Marsden, Jr., Kyle Wagner Compton, Fish & Richardson P.C., Wilmington, DE; Frank E. Scherkenbach, Fish & Richardson P.C., Boston, MA; Howard G. Pollack, Michael R. Headley, Fish & Richardson P.C., Redwood City, CA, for Plaintiff.

Steven Balick, John G. Day, Tiffany Geyer Lydon, Ashby & Geddes, Wilmington, DE; E. Robert Yoches, Joyce Craig, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Washington DC; Robert L. Burns, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Reston, VA; Eric R. Puknys, Finnegan, Henderson, Farabow, Garrett & Dunner, L.L.P., Palo Alto, CA, for Defendant.

MEMORANDUM OPINION

STARK, United States Magistrate Judge:

Plaintiff Power Integrations, Inc. ("PI") is a Delaware corporation and maker of power supply chips incorporated into electronic devices such as cellular telephone chargers. PI owns several patents on its power supply chips, including U.S. Patent Nos. 6,249,876; 6,107,851; and 5,313,381. Defendant BCD California and Defendant SIM-BCD (collectively, "BCD" or "Defendants") are based in California and China, respectively. Defendants also manufacture power supply chips, including the AP3700, AP3700A, AP3700E, and AP3710 (the "accused products" or "accused chips"). PI claims that Defendants' chips infringe one or more of PI's patents.

In June 2007, PI filed suit for patent infringement against BCD in the Northern District of California. On October 15, 2007, PI dismissed its California suit and, on the same day, filed its action in this Court. On January 18, 2008, Defendants filed suit in the Northern District of California against PI, seeking a declaratory judgment of noninfringement.

Presently before me is Defendants' motion to dismiss PI's action due to a purported lack of personal jurisdiction. Defendants contend that they do not have sufficient contacts with Delaware to allow this Court to exercise jurisdiction over them. After reviewing the parties' briefs, as well as supplemental briefs I ordered, I find that the record is insufficiently developed to permit me to determine whether jurisdiction lies in this Court. Because PI has articulated theories which, if supported by evidence, would establish jurisdiction, I will order limited jurisdictional discovery.

JURISDICTIONAL BACKGROUND

SIM-BCD is a Chinese company that has no physical presence in the United States. Its affiliate, BCD, maintains a two-person office in California. Neither of the Defendants have any offices, employees, or property in Delaware. Neither of them hold bank accounts in Delaware nor are registered to do business here. Nor is there any evidence in the record before me that either of the Defendants has ever directly transacted business or sold products in Delaware. To the contrary, Defendants have put before me declarations attesting that they "have not shipped or sold, directly or through a distributor or licensee, any BCD product into Delaware; have not given warranties to any Delaware customers; have not visited Delaware to meet with buyers of the accused products; have not solicited sales of the accused products from buyers in Delaware; and have had no continuing involvement in the manufacture, distribution, regulation, or use of any products shipped into Delaware." (D.I. 58 at 4 n. 3 (citing Wang and Chan declarations))

Much of this PI concedes. PI asserts, nonetheless, that this Court has jurisdiction over Defendants under a "stream of commerce" theory. This argument is predicated on the undisputed fact that the Defendants' accused chips are readily available for sale in Delaware by virtue of their presence as components in cell phone chargers sold here by Samsung. In this way. according to PI, Defendants have an established distribution channel into Delaware for the accused chips. From this, PI insists, I should conclude that Defendants intend to serve the U.S. market, including Delaware, giving this Court jurisdiction.

PI has made a number of specific factual allegations, most of which are uncontested. These allegations, and Defendants' responses to them, are summarized below.

• It is undisputed that, prior and subsequent to the filing of the complaint, Defendants' accused chips were and remain in Delaware as components in Samsung chargers. PI estimates that tens of thousands of Samsung chargers containing BCD's accused chips have been shipped into Delaware through established sales channels and that approximately 17,000 of these chargers were sold in the State in the third quarter of 2007 alone. Defendants do not, dispute these estimates. They emphasize, however, that no BCD chips have been offered for sale or sold in Delaware as chips; the chips are here solely as components in Samsung products, products Defendants had nothing to do with marketing or distributing. Defendants further observe that they sell the accused chips for less than $.06 each, so even accepting PI's sales estimates the revenue generated for Defendants from Samsung chargers sold in Delaware in one quarter was only about $1,000. This amounts to less than .0033% of SIM-BCD's revenues. (D.I. 43 at 5)

• BCD has "established distribution channels" in the U.S., but has not used them to ship the accused products. While attempting to raise $75 million for a proposed initial public offering (IPO) early in 2008, BCD told potential investors that it had a sales office and "established distribution channels" in the United States.¹ BCD has an agreement with Future Electronics, a Canadian company, to distribute its products throughout North America, including the United States and Delaware. Defendants explain, however, that they do not use any channels to distribute the accused products in the U.S. Moreover, "Future Electronics did not supply Samsung any accused product.... [T]o Defendants' knowledge, Future Electronics has not sold, offered for sale, or shipped any BCD product into Delaware, and neither has BCD...." (D.I. 58 at 6)

• BCD has "close relationships" with end users of its products who regularly conduct business in the U.S., including in Delaware. BCD's F-I Registration Statement, filed in connection with the planned IPO, states that BCD "maintains close, direct relationships with key market-leading end users of our products," including Samsung. A video of BCD's road show presentation for the IPO also apparently features BCD touting its sales to Samsung.² Similarly, BCD's "Company Profile" notes that BCD has been "closely engaging with end-user applications" and "engaging custom ICs [Integrated Circuits] business with market leading companies." While Defendants do not (and cannot) deny these statements, they point out that none of their customers that happen to be Delaware corporations use the accused chips.

• BCD's website is accessible throughout the U.S., including in Delaware. Defendants assert, however, that one cannot purchase the accused chips on BCD's website. Nor does the record contain any evidence of how much, if at all, the site has been accessed by computers located in Delaware.

• BCD attempted to raise large amounts of capital throughout the U.S. in connection with its planned IPO. However, these financing efforts began in January 2008, months after PI filed its complaint in this action.

Vigorously disputed by the parties is whether Defendants knew and intended that their accused chips would end up in Delaware. PI insists that Defendants' accused chips "predictably and intentionally ... make their way to Delaware as a result of [BCD's] overall business plan." (D.I. 53 at 9) To PI, there "is no question" that BCD knew and intended that the accused chips would be sold in Delaware. Id. In addition to the evidence cited above PI explains that BCD dispatched an attorney to Delaware to watch an earlier patent infringement trial (D.Del. C.A. No. 04-1371-JJF) in which PI was involved against Fairchild Semiconductor; Fairchild was Samsung's principal supplier of power supply chips until a Delaware jury found Fairchild was infringing PI's patents.

Defendants reply that BCD sells the accused chips to three Korean distributors, who in turn sell them to five Korean manufacturers, who then make chargers for Samsung phones. BCD acknowledges it believed that the Korean manufacturers sold the chargers containing BCD chips to Samsung in Korea, but BCD disclaims any knowledge as to how these chargers ended up in the U.S. The record contains sworn declarations of BCD officers to the effect that, prior to the filing of this lawsuit, BCD did not know the accused chips were incorporated into any products sold in Delaware. PI responds that "BCD's purported ignorance is simply not credible." (D.I. 53 at 6)

LEGAL STANDARDS FOR CHALENGES TO PERSONAL JURISDICTION

Determining the existence of personal jurisdiction requires a two-part analysis. First, the Court must consider whether a defendant's actions come within any of the provisions of Delaware's longarm statute. See Intel v. Broadcom, 167 F.Supp.2d 692, 700 (D.Del.2001). Next, the Court must determine whether exercising jurisdiction over the defendant in this stale comports with the Due Process Clause of the Constitution. See id. Due Process is satisfied if the Court finds the existence of "minimum contacts" between the non-resident defendant and the forum state, "such that the maintenance of the suit does not offend traditional notions of

fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks omitted).

With respect to the first-step statutory inquiry, the Court applies the law of the state in which the district court is located. See Intel. 167 F.Supp.2d at 700. For the second-step Due Process analysis, ...