Sarvint Techs., Inc. v. Omsignal, Inc.

• Decision Date: 02 June 2015
• Docket Number: CIVIL ACTION FILE NUMBER 1:15-cv-00070-TCB
• Citation: 161 F.Supp.3d 1250
• Parties: Sarvint Technologies, Inc., Plaintiff, v. Omsignal, Inc., Defendant.
• Court: U.S. District Court — Northern District of Georgia

161 F.Supp.3d 1250

Sarvint Technologies, Inc., Plaintiff,

v.Omsignal, Inc., Defendant.

CIVIL ACTION FILE NUMBER 1:15-cv-00070-TCB

United States District Court, N.D. Georgia, Atlanta Division.

Signed June 2, 2015

Henry Artoush Ohanian, Schoenthaler Law Group, Austin, TX, Peter F. Schoenthaler, Peter F. Schoenthaler, P.C., Bryan L. Baysinger, Schoenthaler Law Group, Atlanta, GA, Dan Robert Gresham, Eric Gregory Maurer, Norman Andrew Crain, Thomas Horstemeyer, LLP, Atlanta, GA, for Plaintiff.

Christopher C. Campbell, Kevin Lake, Stephen C. Crenshaw, Cooley, LLP, Reston, VA, Robert Andrew King, Hunton & Williams LLP, Atlanta, GA, for Defendant.

ORDER

Timothy C. Batten, Sr., United States District Judge

This patent infringement case comes before the Court on Defendant OMsignal, Inc.'s motion under Federal Rule of Civil Procedure 12(b)(2) and (3) to dismiss the amended complaint or, in the alternative, to transfer venue to the Southern District of New York [21]. As set forth below, the Court concludes that OMsignal is subject to personal jurisdiction in this Court and that transfer is inappropriate. OMsignal's motion will therefore be denied.

I. Background

A. Overview

Plaintiff Sarvint Technologies, Inc. is the exclusive licensee of U.S. Patent No. 6,970,731 (the “ '731 patent”), which is entitled “Fabric-Based Sensor for Monitoring Vital Signs.” Two of Sarvint's cofounders—Dr. Sundaresan Jayaraman, its chief scientist, and Sungmee Park, its chief technical officer—developed the technology behind the '731 patent at the Georgia Institute of Technology, where Jayaraman is a professor and Park is a research associate.¹ Georgia Tech describes the technology as a “wearable motherboard” or a “smart shirt.” The shirt is designed to monitor an individual's vital signs unobtrusively and without the use of external wiring or adhesive electrode patches.

OMsignal develops technology to promote personal health and wellness, including wearable textiles that are designed to track biometric data of the individuals wearing them. OMsignal's biosensing products include a line of fitness wear known as “OM Signal Fitness Shirts,” which the company began selling in May 2014. Sarvint alleges that OMsignal's fitness shirts infringe the '731 patent, and it filed this action against OMsignal to enjoin the alleged infringement and recover monetary damages.² OMsignal has moved to dismiss the case, or alternatively to transfer it to the Southern District of New York, on the grounds of lack of personal jurisdiction and improper venue.

B. The Parties' Respective Contacts with Atlanta

Sarvint's principal place of business is in Atlanta, Georgia, and the company maintains an accounting and administrative office in Cumming, Georgia. [23-5] at 5. All of its officers and shareholders reside in Atlanta. Id. at 5–7. GTRC, which owns the '731 patent and granted Sarvint its license, is also located in Atlanta. Sarvint avers in its pleading that OMsignal is subject to suit in this judicial district because it regularly conducts or solicits business in Georgia, derives substantial revenue from goods provided to individuals in Georgia, and advertises, offers to sell, sells, and ships allegedly infringing products to Georgia.

It is undisputed that OMsignal was founded in and continues to be based and operated out of Montreal, Canada, and that OMsignal does not have any brick-and-mortar place of business in Georgia. OMsignal does, however, operate a classic e-commerce website, www.omsignal.com, through which it appears that any customer, regardless of his or her location, may purchase its products. Sarvint alleges that Georgia residents have in fact purchased infringing products through OMsignal's website and that OMsignal has shipped its products to and derived more than $1,000 in revenue from Georgia residents.

OMsignal concedes that it has sold allegedly infringing products to Georgia residents, that it has derived roughly $1,000 from those sales, and that it maintains a website through which Georgia residents may purchase its products. But it argues that its contacts with the state are not sufficient to establish personal jurisdiction. The company has no offices or places of business in Georgia, no employees, officers or directors here, has never traveled to Georgia, has no bank accounts, business records, real property, or registration here, and has never manufactured, serviced or maintained product inventory in Georgia. According to OMsignal, beyond “de minimus sales to an extremely small number of customers, OMsignal has no connection to the State of Georgia or the Northern District.” [21-1] at 5. It therefore moves to dismiss for lack of personal jurisdiction.

II. Discussion

A. Legal Standard on a Motion to Dismiss

When a court's power to exercise personal jurisdiction over a nonresident defendant is challenged by a motion under Rule 12(b)(2), the plaintiff “bears the initial burden of alleging in the complaint sufficient facts to make out a prima facie case of jurisdiction.” Diamond Crystal Brands, Inc. v. Food Movers Int'l, Inc. , 593 F.3d 1249, 1257 (11th Cir.2010). In determining whether the plaintiff has proven a prima facie case of personal jurisdiction, the court must draw all reasonable inferences arising from the proof, and resolve all factual disputes, in the plaintiff's favor. Trintec Indus., Inc. v. Pedre Promotional Prods., Inc. , 395 F.3d 1275, 1283 (Fed.Cir.2005) ; Madara v. Hall , 916 F.2d 1510 (11th Cir.1990).

B. Personal Jurisdiction

Personal jurisdiction over a non-resident defendant is permissible only where the forum state's long-arm statute permits jurisdiction without violating federal due process as set forth in International Shoe Co. v. Washington , 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). See LSI Indus. Inc. v. Hubbell Lighting, Inc. , 232 F.3d 1369, 1371 (Fed.Cir.2000) ; Radio Sys. Corp. v. Accession, Inc. , 638 F.3d 785, 788–89 (Fed.Cir.2011).³ Thus, subjecting a party to the jurisdiction of this Court requires the Court to conduct a two-part inquiry to determine (1) whether jurisdiction exists under Georgia's long-arm statute, and (2) whether exercising such jurisdiction is consistent with federal due process. Sculptchair, Inc. v. Century Arts, Ltd. , 94 F.3d 623, 626 (11th Cir.1996). And while courts previously held that Georgia's long-arm statute is co-terminus with the extent of jurisdiction permitted by the due process clause of the Fourteenth Amendment, the Eleventh Circuit has recently made clear that courts must “apply the specific limitations and requirements of O.C.G.A. § 9–10–91 literally and must engage in a statutory examination, that is independent of, and distinct from, the constitutional [due process] analysis to ensure that both, separate prongs of the jurisdictional inquiry are satisfied.” Diamond Crystal Brands , 593 F.3d at 1263 (interpreting Innovative Clinical & Consulting Servs., LLC v. First Nat'l Bank of Ames, Iowa , 279 Ga. 672, 620 S.E.2d 352 (2005) ). As such, the Court engages in two separate inquiries below.

1. Georgia's Long-Arm Statute

Georgia's long-arm statute permits the exercise of personal jurisdiction over a non-resident defendant where the cause of action asserted “arises out of” the defendant's “transact[ion of] any business within [Georgia].” O.C.G.A. § 9–10–91(1) ; Innovative Clinical , 620 S.E.2d at 354.⁴ The Georgia Supreme Court has construed this broad language literally. Diamond Crystal , 593 F.3d at 1264. Thus, the language of subsection (1) of the statute “grants Georgia courts the unlimited authority to exercise personal jurisdiction over any nonresident who transacts any business in this State.” Diamond Crystal , 593 F.3d at 1261 (quoting Innovative Clinical , 620 S.E.2d at 355 ).

“Interpreted literally, ‘transacts any business' requires that the nonresident defendant has purposefully done some act or consummated some transaction in Georgia.” Id. at 1264 (citing Aero Toy Store, LLC v. Grieves , 279 Ga.App. 515, 631 S.E.2d 734, 737 (2006) ). However, “a defendant need not physically enter the state ... [and] a nonresident's mail, telephone calls, and other ‘intangible’ acts, though occurring while the defendant is physically outside of Georgia, must be considered.” Id. The question is whether, upon analysis of all the defendant's tangible and intangible conduct, “it can fairly be said that the nonresident [defendant] has transacted any business within Georgia.” Id.

Here, OMsignal effectively concedes that it “transact[ed] any business within [Georgia]” within the literal meaning of O.C.G.A. § 9–10–91(1). By its own admission, it has sold at least seven allegedly infringing products to Georgia consumers, has derived over $1,000 in revenue from those transactions, and operates a website that allows residents and consumers in Georgia to place orders and purchase allegedly infringing products. Upon these facts, O.C.G.A. § 9–10–91(1) plainly authorizes the exercise of specific personal jurisdiction over OMsignal for the causes of action asserted against it by Sarvint. See Thomas v. Strange Eng'g, Inc. , No. CV 111–074, 2012 WL 993244 at *5 (S.D.Ga.2012) (applying literal interpretation of the long-arm statute and holding that “any business” was transacted when defendant shipped one product to Georgia and derived revenue from the sale of that product).

2. Federal Due Process

Having determined that Georgia's long-arm statute is satisfied, the Court next considers whether the exercise of personal jurisdiction comports with constitutional due process. Federal due process demands that an out-of-state defendant have “minimum contacts” with the forum state such that exercising jurisdiction does not offend “traditional notions of fair play and substantial justice.” Int'l Shoe , 326 U.S. at 316, 66 S.Ct. 154. In evaluating whether the exercise of specific personal jurisdiction in a given case satisfies this requirement, the Federal Circuit employs a three-prong test that looks to “(1) whether ...