Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., Civil No. 4-96-838.

• Decision Date: 06 June 1997
• Docket Number: Civil No. 4-96-838.
• Citation: 966 F.Supp. 833
• Parties: RED WING SHOE COMPANY, INC., Plaintiff, v. HOCKERSON-HALBERSTADT, INC., Defendant.
• Court: U.S. District Court — District of Minnesota

966 F.Supp. 833

RED WING SHOE COMPANY, INC., Plaintiff, v. HOCKERSON-HALBERSTADT, INC., Defendant.

Civil No. 4-96-838.

United States District Court, D. Minnesota, Fourth Division.

June 6, 1997.

Jeff Howard Eckland, William L. Roberts, Faegre & Benson, Minneapolis, MN, for plaintiff.

James Thomas Nikolai, Haugen & Nikolai, Minneapolis, MN, James E. Uschold, Uschold Law Office, New Orleans, LA, for defendant.

ORDER

DOTY, District Judge.

This matter is before the court on defendant's motion to dismiss or, in the alternative, to transfer venue, and on plaintiff's motion for preliminary injunction. Based on a review of the file, record and proceedings herein, the court grants defendant's motion to dismiss for lack of personal jurisdiction, and denies plaintiffs motion as moot.

BACKGROUND

Plaintiff Red Wing Shoe Company, Inc. ("Red Wing") is a Minnesota corporation with its principal place of business in Red Wing, Minnesota. Red Wing manufactures and sells Vasque Outdoor Footwear, a line of hiking boots. Defendant Hockerson-Halberstadt, Inc. ("HHI") is a Louisiana corporation with its principal place of business in Albuquerque, New Mexico. HHI has a registered office in New Orleans, Louisiana.

The patent at issue in this litigation is United States Patent Number 4,322,895 and Reexamination Certificate Number 4,322,895 ("the '895 patent"). The patent was issued in 1982, and the certificate was issued in 1995. Stan Hockerson ("Hockerson") was named as the inventor. The '896 patent is for a "stabilized athletic shoe," described in the patent abstract as "an athletic shoe having an upper with a counter forming a heel cup carried above a sole having an outsole, mid-sole and heel wedge. A support band is formed integral about the upper rim of the mid-sole and is secured about the sidewalls of the heel cup for supporting and stabilizing the heel cup relative to the sole when the shoe contacts the running surface."

HHI is a corporation formed by Hockerson and John Halberstadt ("Halberstadt"), the named inventor of United States Patent Number 4,259,792 (which is not at issue in this case). In 1991, Hockerson and Halberstadt assigned their respective interests in the patents to the corporation, which was formed to assert rights under the patent. Hockerson and Halberstadt are the officers and sole shareholders of HHI. HHI's business activities consist of "negotiating licenses under the patents and if necessary, to initiate litigation against infringers." Declaration of Hockerson at ¶ 2. HHI has negotiated licensing/settlement agreements which permit approximately thirty companies to manufacture, use, and sell footwear products incorporating the invention of the '896 patent.

On October 25, 1995, counsel for HHI sent a letter to Vasque Outdoor Footwear in Red Wing, Minnesota, stating:

We are contacting you to advise you that your company is manufacturing, using, and/or selling products which infringe the Hockerson patent. The following are examples of models where we believe this is the case: World Walkers — Fleetwood I & II, — Traveler I & II, Pathfinder, Escape, Clarion — Low, — GTX 7650, 7665, 7652, 7647, 7651, 7657, — Impact 7686, 7690, 7682, 7698, 7696, 7684, 7683, 7685, 7699, 7697, 7695. HHI realizes you may not have been aware of the Hockerson patent and/or the completion of the reexamination. Therefore with regard to infringing products, we would like to present a proposal to handle the situation in a fair, equitable manner, as amicably as is possible under the circumstances. Accordingly, a non-exclusive license is offered which will permit manufacture, sale, and use of footwear incorporating the patented invention. Of course, in the alternative, you may elect to cease further manufacture, use and/or sale of infringing products.

To date, settlements/licenses have been negotiated with numerous companies. Other negotiations are ongoing.

The license being offered will cover past and future manufacture, sale and use. Please be assured that the consideration will be realistic, fair and reasonable, with the overall amount being negotiable, based on the extent of allegedly infringing activities and other factors. (In this regard it would be helpful and greatly appreciated if you could send a copy of your latest catalog to this office at your earliest convenience.) The license may be on a fully paid royalty free basis or, if you prefer, on a running royalty basis with the per unit royalty credited against a non-refundable advance royalty payment.

Affidavit of David Holland, Exhibit A. In subsequent correspondence, HHI's counsel asserted the belief that additional products appeared to have an infringing construction.

By letter dated March 18, 1996, Red Wing's counsel responded to HHI's assertions of infringement regarding the products in dispute and concluded:

It is our position that none of the Vasque Products mentioned in your letters of October 25, 1995 and December 27, 1995 infringe any of the claims of the '895 patent either by literal infringement or under the Doctrine of Equivalents. We trust that your careful consideration of the enclosed product samples, cross section drawings and claim charts will bring you to the same conclusion.

Affidavit of Melissa Winn, Exhibit C. Subsequent correspondence occurred whereby HHI again asserted infringement of the '895 patent and Red Wing advised that it had no interest in negotiating a license or ceasing the manufacture and sale of the accused hiking boots.

On August 23, 1996, Red Wing filed this civil action seeking a declaratory judgment of non-infringement, invalidity and unenforceability of the '895 patent. On August 29, 1996, HHI filed a civil action against Red Wing in the United States District Court for the Eastern District of Louisiana, seeking a finding of infringement of the '895 patent and requesting injunctive and monetary relief.

HHI moves to dismiss this action for lack of personal jurisdiction, lack of subject matter jurisdiction, or improper venue, or in the alternative, HHI moves for transfer of venue to the United States District Court for the Eastern District of Louisiana. Also before the court, Red Wing moves for a preliminary injunction prohibiting HHI from proceeding in any manner with the civil action entitled Hockerson-Halberstadt, Inc. v. Red Wing Shoe Company, Inc., Civil Action No. 96-2844, the Louisiana litigation.

DISCUSSION

HHI moves for dismissal of Red Wing's claims for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Plaintiff carries the burden of establishing a prima facie showing that the court has personal jurisdiction over the defendants. Digi-Tel Holdings, Inc. v. Proteq Telecommunications, Ltd., 89 F.3d 519, 522 (8th Cir.1996). When considering a Rule 12(b)(2) motion, the court must view the evidence in favor of the plaintiff and resolve all factual conflicts in the plaintiff's favor. Id.; Watlow Elec. Mfg. Co. v. Patch Rubber Co., 838 F.2d 999, 1000 (8th Cir.1988).

A federal court may assume jurisdiction over nonresident defendants only to the extent permitted by the long-arm statute of the forum state and by constitutional due process. Wessels, Arnold & & Henderson v. National Medical Waste, 65 F.3d 1427, 1431 (8th Cir.1995); Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 427 (Fed. Cir.1996) (recognizing that the court applies the same standard for personal jurisdiction issues in federal patent actions as it does in diversity actions, except that the patent actions are analyzed under the Fifth Amendment, as opposed to the Fourteenth Amendment); Dakota Industries, Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1389 n. 2 (8th Cir.1991) (applying standard of International Shoe and its progeny to question of personal jurisdiction in a federal question case); Zumbro, Inc. v. California Natural Products, 861 F.Supp. 773, 777 n. 8 (D.Minn. 1994) (stating that because the patent claims involved federally-created rights, the court would examine due process in light of the Fifth Amendment, as opposed to the Fourteenth Amendment). Minnesota state courts have held that the Minnesota Legislature intended the state's long-arm statute to have the maximum extraterritorial effect allowed under the Constitution; thus, the court must consider whether the assertion of jurisdiction over HHI is consistent with due process. Minnesota Mining & Manufacturing v. Nippon Carbide Industries, 63 F.3d 694, 697 (8th Cir.1995) (citing Domtar, Inc., v. Niagara Fire Insurance Co., 518 N.W.2d 58, 60-61 (Minn.App.1994), aff'd, 533 N.W.2d 25 (Minn.), cert. denied, ___ U.S. ___, 116 S.Ct. 583, 133 L.Ed.2d 504 (1995)), cert. denied, ___ U.S. ___, 116 S.Ct. 1288, 134 L.Ed.2d 232 (1996).

Due process is satisfied when non-resident defendants have "minimum contacts" with 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. State of Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). The requisite minimum contracts must be based on acts of the defendant. Asahi Metal Industry Co., Ltd. v. Superior Court of California, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). Whether the minimum contacts are sufficient to satisfy due process depends upon whether the defendant has "`purposefully avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protection of its laws.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958)). "Purposeful availment" means deliberately engaging in significant activities within a state or creating "continuing obligations" between the litigant and residents of the forum. Burger King, 471 U.S. at 475-76, 105 S.Ct. at 2183-84. A defendant must have "fair warning that...