Regenlab U.S. LLC v. Estar Techs. Ltd., 16-cv-08771 (ALC)

• Decision Date: 15 August 2018
• Docket Number: 16-cv-08771 (ALC)
• Citation: 335 F.Supp.3d 526
• Parties: REGENLAB USA LLC, Plaintiff, v. ESTAR TECHNOLOGIES LTD., Eclipse Aesthetics LLC, and Healeon Medical, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

335 F.Supp.3d 526

REGENLAB USA LLC, Plaintiff,

v.ESTAR TECHNOLOGIES LTD., Eclipse Aesthetics LLC, and Healeon Medical, Inc., Defendants.

16-cv-08771 (ALC)

United States District Court, S.D. New York.

Signed August 15, 2018

Benjamin N. Luehrs, Christopher J. Stankus, Michael J. Kosma, Michael Andrew Lavine, Robert D. Keeler, Walter B. Welsh, Stephen F. W. Ball, Jr., Whitmyer IP Group LLC, Stamford, CT, for Plaintiff.

Daniel J. Melman, Guy Yonay, Michal Pearl, Miriam Kurien Tyrell, Pearl Cohen Zedek Latzer Baratz LLP, Zachary Adam Kerner, Holwell Shuster & Goldberg LLP, New York, NY, Vincent J. Allen, James Andrew Reed, Theodore G. Baroody, Carstens & Cahoon, LLP, Paul Jon Putnam, Law Office of PJ Putnam, P.C., Dallas, TX, for Defendants.

OPINION AND ORDER

ANDREW L. CARTER, JR., United States District Judge

Plaintiff RegenLab USA, LLC ("RegenLab") brings this action alleging patent infringement arising from the unauthorized use of its patented technology. Before this Court are Defendant Estar Technologies Ltd. ("Estar")'s motion to dismiss for lack of personal jurisdiction and Defendant Eclipse MedCorp, LLC ("Eclipse")¹ and Healeon Medical, Inc. ("Healeon")'s motions to dismiss for improper venue. For the following reasons, the Court reserves decision on Estar's motion to dismiss pending a determination under the federal long arm statute; Eclipse's motion to dismiss for improper venue is DENIED; and Healeon's motion to dismiss for improper venue is GRANTED.

BACKGROUND

I. Factual Background

The Court only recites those facts necessary to resolving the instant motions. RegenLab, the United States affiliate of a Swiss manufacturer of medical and pharmaceutical products, brought suit for infringement of its "'957 patent" against Estar, an Israeli company and manufacturer of products that allegedly infringe the '957 patent, namely Mycells, Tropocells, "Eclipse PRP" and "Healeon PRP" ("the accused products");² Eclipse, a Texas entity that distributes the accused products in the United States; and Healeon, a California entity affiliated with Eclipse. ECF No. 1 ("Compl.").

Pursuant to an exclusive distribution agreement, Eclipse serves as Estar's sole distributor of the accused products in the United States. See Declaration of Daniel J. Melman in Support of Estar's Motion to Dismiss ("Melman Jdx. Decl") Ex. B ("Distribution Agreement"). Estar imports the accused products to Eclipse's warehouse in Texas. Eclipse then distributes such products across the country, including in New York. See Compl. ¶ 44; Declaration of Stephen F.W. Ball, Jr. ("Ball Venue Decl") Ex. A, Declaration of Paul O'Brien ("O'Brien Decl"). Eclipse has sold the accused products in New York and made profits. Id. ¶ 4. Healeon also distributes Estar and/or Eclipse's products. Compl. ¶ 12.

II. Procedural Background

RegenLab filed the complaint commencing this action on November 11, 2016. ECF No. 1. On March 16, 2017, Estar moved to dismiss for lack of personal jurisdiction. ECF Nos. 42-44 ("Estar Initial Mem"). That day, Eclipse and Healeon moved to dismiss for improper venue or, alternatively, to transfer this case to the Northern District of Texas. ECF Nos. 49 ("Eclipse Initial Mem"); 50 ("Healeon Initial Mem").

Plaintiff subsequently sought jurisdictional and venue discovery. On August 17, 2017, this Court denied without prejudice the pending motions to dismiss and granted jurisdictional and venue discovery. ECF No. 102. The Court, however, limited discovery on personal jurisdiction to the questions of whether (1) Estar derived "substantial revenue from goods used or consumed" in New York under C.P.L.R. § 302(a)(3)(i) and (2) Estar expects or reasonably should expect that its sales would have consequences in New York under C.P.L.R. § 302(a)(3)(ii). Id. at 9-12.³

Following the completion of jurisdictional and venue discovery, Estar, Eclipse, and Healeon renewed their respective motions to dismiss. ECF Nos. 115 ("Healeon Mem"); 116 ("Estar Mem"); 117 ("Eclipse Mem"). Defendants filed their motions entirely under seal, without seeking leave from the Court. Plaintiff filed its opposition motions under seal on January 8, 2018. ECF Nos. 122 ("Pl Jdx. Mem"); 123 ("Pl Venue Mem"). Defendants filed their reply briefs under seal on January 19, 2018. ECF Nos. 125 ("Estar Reply"); 126 ("Eclipse Reply"). Healeon did not submit a reply brief. Defendants subsequently filed redacted versions of their memoranda of law in support of their motions to dismiss and reply briefs on ECF. ECF Nos. 134, 138, 145, 147, 148. Accordingly, the Court considers the motions fully submitted.

On February 23, 2018, Plaintiff filed a motion to unseal Defendants' memoranda of law in support of Defendants' motions to dismiss (ECF Nos. 134, 138 and 148); Plaintiff's memoranda of law in opposition to Defendants' motions to dismiss (ECF Nos. 120-21); and Defendants' reply memoranda of law (ECF Nos. 145, 147). ECF No. 151. Defendants responded in opposition on March 2, 2018. ECF No. 154. On April 5, 2018, the Court granted Plaintiff's motion to unseal and ordered Defendants to produce narrowly-tailored redactions. ECF No. 155. Defendants submitted revised redactions on April 18, 2018.

DISCUSSION

I. Personal Jurisdiction⁴

A. Legal Standard

In patent law cases such as this, "the existence of personal jurisdiction is, under Federal Circuit law, determined in accordance with the law of the Court of Appeals for the Federal Circuit." JetBlue Airways Corp. v. Helferich Patent Licensing, LLC , 960 F.Supp.2d 383, 390 (E.D.N.Y. 2013) (citing Hildebrand v. Steck Mfg. Co., Inc. , 279 F.3d 1351, 1354 (Fed. Cir. 2002) ). The Federal Circuit's test for personal jurisdiction "mirrors that of the one employed by the Court of Appeals for the Second Circuit." Id. First, "we first apply the forum state's long-arm statute." Eades v. Kennedy, PC Law Offices , 799 F.3d 161, 168 (2d Cir. 2015) (internal quotation marks and citation omitted).⁵ Second, "[i]f the long-arm statute permits personal jurisdiction, we analyze whether personal jurisdiction comports with due process protections established under the Constitution." Id. (citation omitted).

The plaintiff bears the burden of showing that jurisdiction is proper. However, the nature of that burden shifts depending on the procedural posture of the litigation. "When the district court's determination of personal jurisdiction is based on affidavits and other written materials, and no jurisdictional hearing is conducted, the plaintiff usually bears only a prima facie burden." Celgard, LLC v. SK Innovation Co., Ltd. , 792 F.3d 1373, 1378 (Fed. Cir. 2015) (citation omitted). In contrast a "preponderance of the evidence" standard applies "where the parties conduct jurisdictional discovery but no jurisdictional hearing was necessary because the parties indicated to the district court that the jurisdictional facts were not in dispute." Id. (citing Pieczenik v. Dyax Corp. , 265 F.3d 1329, 1334 (Fed. Cir. 2001) ). In cases such as this, where "jurisdictional discovery was conducted and the district court did not conduct a jurisdictional hearing" but jurisdictional facts remain in dispute, "the exception in Pieczenik does not apply." Id. Thus, Plaintiff need only "make a prima facie showing of jurisdiction." Id. "[W]here the plaintiff's factual allegations are not directly controverted, [they] are taken as true for purposes of determining jurisdiction." Nuance Comms., Inc. v. Abbyy Software House , 626 F.3d 1222, 1231 (Fed. Cir. 2010) (citation and internal quotation marks omitted).

B. Analysis

i. New York Long-Arm Statute

While Federal Circuit caselaw governs the federal due process analysis, "in interpreting the meaning of state long-arm statutes, [the Federal Circuit] elect[ed] to defer to the interpretations of the relevant state and federal courts, including their determinations regarding whether or not such statutes are intended to reach to the limit of federal due process." Graphic Controls Corp. v. Utah Med. Prods., Inc. , 149 F.3d 1382, 1386 (Fed. Cir. 1998) (collecting cases).

"In New York, the question of long-arm personal jurisdiction over an out-of-state defendant is governed by NY. C.P.L.R. § 302." Penguin Group (USA) Inc. v. Am. Buddha , 609 F.3d 30, 35 (2d Cir. 2010). Plaintiff asserts jurisdiction under C.P.L.R. § 302(a)(3), which provides for jurisdiction over a non-domiciliary who, in relevant part, "commits a tortious act without the state causing injury to person or property within the state" if the individual either "(i) derives substantial revenue from goods used or consumed ... in the state" or "(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce." In this analysis, "each element is essential, and if plaintiffs fail to proffer sufficient evidence for any element, it is dispositive of the issue of personal jurisdiction under this provision." Overseas Media, Inc. v. Skvortsov , 407 F.Supp.2d 563, 575 (S.D.N.Y. 2006) (citation and internal quotation marks omitted).

1. C.P.L.R. § 302(a)(3) : Commission of a Tort Outside New York Causing Injury Inside New York

As a threshold matter, Plaintiff must allege that (1) Defendant committed a tortious act outside of New York which (2) caused an injury that occurred within New York.

Plaintiff alleges that Estar committed a tortious act outside of New York by importing products that infringe on its patent into Texas, in violation of 35 U.S.C. § 271(c). Plaintiff further alleges that Estar directly infringes and induces others to infringe on those patent rights. See Compl ¶¶ 83-96. Assuming, without deciding, that Estar's products infringe Plaintiff's patent, then Estar's importation of the accused products constitutes a tortious act in Texas. See Stephan v. Babysport, LLC , 499 F.Supp.2d 279, 288 (E.D.N.Y. 2007) ; Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez , 305 F.3d 120, 125 (2d Cir. 2002) (at this stage "plaintiff need...