Tower Mfg. Corp. v. Shanghai Ele Mfg. Corp.

• Decision Date: 05 February 2008
• Docket Number: C.A. No. 06-170S.
• Citation: 533 F.Supp.2d 255
• Parties: TOWER MANUFACTURING CORPORATION v. SHANGHAI ELE MANUFACTURING CORPORATION.
• Court: U.S. District Court — District of Rhode Island

533 F.Supp.2d 255

TOWER MANUFACTURING CORPORATION v. SHANGHAI ELE MANUFACTURING CORPORATION.

C.A. No. 06-170S.

United States District Court, D. Rhode Island.

February 5, 2008.

COPYRIGHT MATERIAL OMITTED

John J, Cotter, Larissa S. Bifano, Kirkpatrick & Lockhart Preston Gates Ellis LLP, Boston, MA, Bruce W. Gladstone Cameron & Mittleman, Providence, RI, for Tower Manufacturing Corporation.

Tony D. Chen, Bingham McCutchen LLP, Santa Monica, CA, Victor H. Polk, Jr., Bingham McCutchen, LLP, Boston, MA, Jeffrey S. Brenner, Nixon Peabody LLP, Providence, RI, Lawrence T. Stanley, Marshall B. Grossman, William J. O'Brien, Alschuler Grossman LLP, for Shanghai Ele Manufacturing Corporation.

ORDER

WILLIAM E. SMITH, District Judge.

The Report and Recommendation of United States Magistrate Judge. David L. Martin filed on January 15, 2008, in the above-captioned matter is accepted pursuant to Title 28 United States Code § 636(b)(1). No objection having been filed, Defendant's Motion to Dismiss for Lack of Personal Jurisdiction is DENIED.

REPORT AND RECOMMENDATION (REDACTED)¹

DAVID L. MARTIN, United States Magistrate Judge.

Before the Court is Defendant Shanghai ELE Manufacturing Corporation's Motion to Dismiss for Lack of Personal Jurisdiction (Document ("Doc.") # 13) ("Motion to Dismiss" or "Motion"). The Motion has been referred to me for preliminary review, findings, and recommended disposition pursuant to 28 U.S.C. § 636(3)(1)(H). A hearing was conducted on November 21, 2007. For the reasons stated herein, I recommend that the Motion be denied.

Introduction

This is an action for patent infringement. See Complaint (Doc. # 1) ¶ 3. Plaintiff Tower Manufacturing Corporation ("Plaintiff' or "Tower"), a Rhode Island corporation, alleges that Defendant Shanghai ELE Manufacturing Corporation ("Defendant" or "ELE"), a Chinese corporation, is infringing a patent to which Tower holds the rights, Letters Patent No. 6,738,241 B1 ("the '241 Patent"). See id. ¶¶ 1-3, 9, 11. Specifically, Tower complains that ELE is infringing by making and selling leakage current detection interrupters ("LCDIs")² which are covered by the claims of the '241 Patent. Id. ¶ 11.

Facts

Tower has places of business in Providence, Rhode Island, and Shenzhen, China, and manufactures wiring devices and electromechanical products, including LCDI products. See Declaration of Tony D. Chen in Support of Shanghai ELE Manufacturing Corporation's Motion to Dismiss for Lack of Personal Jurisdiction ("Chen Decl."), Exhibit ("Ex.") A (Printout of pages from Tower's website) at 1-2. ELE has its headquarters in Shanghai, China, with manufacturing facilities in Jiangsu and. Zhejiang Provinces, China. See Declaration of "Long Zhang ("Zhang Decl.") ¶ 2. ELE manufactures household electrical products, two of which, LCDIs and Ground Fault Circuit Interruption ("GFCI") devices, are imported and/or sold in the United States. See id. ¶¶ 2, 10. Tower's claim of infringement is directed only at the LCDIs manufactured by ELE. See Complaint ¶ 11.

Most of, the LCDIs made by ELE are sold to air conditioner manufacturers located in China.³ See Zhang Decl. ¶ 15. The manufacturers assemble their air conditioner products with LCDIs as a component part. See Zhang Decl. ¶ 15. The air conditioners are then exported to and sold in the United States. See id. A lesser number of LCDIs are sold directly to manufacturers located in the United States. See Declaration of Kenneth X. Xie ("Xie Decl.") ¶¶ 16-19. The approximate value of an LCDI is about $4.00. See Zhang Decl. ¶ 16.

In response to an interrogatory, ELE identified twelve manufacturers who it had reason to believe purchased LCDIs for air conditioners which would ultimately be offered for sale in the United States. See Xie Decl., Exhibit ("Ex.".) M (Defendant Shanghai ELE Manufacturing Corporation's Second Supplemental Response to Plaintiff Tower's First Set of Interrogatories Relating to Jurisdictional Issues) at 2-4, Records obtained by Tower indicate that between January 2005 and June 2007 ELE sold at least [REDACTED] LCDIs to these manufacturers and that it received at least [REDACTED] from these sales. See Plaintiff Tower's Memorandum in Support of Objection to Defendant's Motion to Dismiss for Lack of Personal Jurisdiction ("Tower Mem.") at 8-9 (citing Xie Decl. Exs.). Almost all of the sales occurred after December 1, 2005. See Xie Decl., Exs. N-EE.

Eight of the manufacturers are located in China. See Xie Decl., Ex. M at 2-4. They include: Haier (Dalian) Electrical Appliance Co., Ltd. ("Haier"); Daewoo Air Conditioner (Tianjin) Co., Ltd. ("Daewoo"); Fedders (Shanghai) Co., Ltd. ("Fedders Shanghai"); Fedders Xinle Co., Ltd. ("Fedders Xinle"); Guangdong Midea Refrigerate Equipment Co., Ltd. ("Midea"); and LG Electronics Tianjin Appliances Co., Ltd. ("LG"). See Xie Decl. ¶¶ 20-29, 32-33. The sales of LCDIs to these manufacturers occurred in China. See Zhang Decl. ¶ 15.

Three of the manufacturers are located in the United States: Friedrich Air Conditioning Co. ("Friedrich") of San Antonio, Texas; CareCo Fedders Effingham ("CareCo Fedders") of Effingham, Illinois; and Fedders Islandaire, Inc. ("Fedders Islandaire"), of East Setauket, New York.⁴ See Xie Decl. ¶¶ 16-19. ELE sold LCDIs directly to these three U.S. manufacturers. See Xie Decl., Exs. N-Q. The, number of LCDIs sold to these U.S. manufacturers is [REDACTED], and the total amount ELE realized from these sales is [REDACTED]. See Xie Decl. ¶¶ 16-19 (citing id., Exs. N-Q). Breaking these figures down by company, between July 24, 2006, and March 19, 2007, ELE sold [REDACTED] LCDIs to Friedrich at a total price of [REDACTED]. See Xie Decl. ¶ 17. These sales are reflected in sixteen invoices which ELE, sent to Friedrich during this eight month period. See Xie Decl., Ex. N. ELE's sales to CareCo Fedders and Fedders Islandaire are much smaller. On June 9, 2006, ELE sold [REDACTED] "Line Cord LCDI[s]" to Fedders Islandaire for [REDACTED], see id., Ex. Q (Purchase Order Acknowledgement), and on January 30, 2007, it sold [REDACTED] LCDI power cords to CareCo Fedders for [REDACTED], see id., Ex. P (Invoice).

Among the retailers in the United States selling air conditioners containing LCDIs manufactured by ELE: are Wal-Mart Stores, Inc. ("Wal-Mart"); Home Depot U.S.A. ("Home Depot"); Lowe's Home Centers, Inc. ("Lowe's"); and Benny's Inc. ("Benny's").⁵ See Xie Decl. ¶ 13-14; id., Ex. K at 1 (List of Benny's stores); id., Ex. L (Documents produced by Wal-Mart Stores, Inc.); Declaration of James E. Fajkowski ("Fajkowski Decl.") ¶¶ 3-4; Declaration of Kenneth L. Laliberte ("Laliberte Decl.") ¶¶ 2-8. In 2006, Wal-Mart sold [REDACTED] Haier Model No. HWF05XC6 air conditioners in the United States which were likely equipped with LCDIs manufactured by ELE. See Xie Decl., Ex. L.⁶ Of these [REDACTED] air conditioners, [REDACTED] were sold in Wal-Mart stores in Rhode Island.⁷ See Letter from Cotter to Martin, M.J., of 11/29/07, Ex. L at 1. In 2006, Benny's stores in Rhode Island sold [REDACTED] air conditioners which were likely made by Haier and equipped with ELE LCDIs.⁸ See id., Ex. K at 2-3. Lowe's stores in Rhode Island sold Frigidaire air conditioners in 2006 equipped with LCDIs made by ELE.⁹ See Laliberte Decl. ¶¶ 2-8. Tower was also able to determine that the Home Depot store in Salem, Massachusetts, sold a 10,000 BTU Everstar air conditioner on July 3, 2006, which was equipped with an LCDI made by. ELE. See Fajkowski Decl. ¶¶ 2-4.

ELE maintains a website. See Xie Decl. ¶ 8. On a web page entitled "About ELE," there are links to several air conditioner manufacturers, including Haier, Daewoo, Fedders Corporation, Midea, Trane, Samsung, and General Electric. Id., Ex. F. There is also a link to "The Home Depot." Id. The names and logos of these air conditioner manufacturers and Home Depot are prominently displayed on the page. See id.

On a web page entitled "Mission," ELE states that it has a "customer support center in America, providing global service," Xie Decl., Ex. II, at 1. Notwithstanding this statement, ELE denies that it has a customer support center in the United States.¹⁰ See Xie Decl., Ex. G (Defendant Shanghai ELE Manufacturing Corporation's Answers and Objections to Plaintiff Tower Manufacturing Corporation's Written Deposition Questions) at 11 (Answer to Question No. 57). ELE's vice-president of sales, Barkley Bao, responded to an interrogatory inquiring about what customer support ELE has provided to United States customers by stating that ELE "does not have a formal customer support department. Shanghai ELE's sales department will handle post-sales issues if a customer calls, including issues with shipment or payment. Technical questions are sometimes forwarded to engineers." Id. at 5 (Answer to Question No. 19). Bao was repeatedly asked if ELE has provided customer support to United States customers, and he repeatedly responded that he was not aware of ELE providing customer support regarding "LCDIs to any United States customers."¹¹ Id. at 5-6.

There are references on the "Mission" web page to ELE "relying on UL standard of America," id., Ex. II at 1, to ELE's products "all under UL label," id., at 2, and to ELE's "100% test in UL standard," id. In addition, the following statements appear on the same web page (and are reproduced without correction):

We broke through the technical, blockade of America and developed GFCI in 2003.

In 2004, we successfully developed Linkage Circuit Detect Interrupter (LCDI), the series become one of the first company coming into the market.

In 2006, we broke through the technical blockade of America again and developed GFCI of 2006 version.

Acquired many invention patent of America.

Xie Decl., Ex. II at 2.

ELE uses customer feedback forms to obtain information from its customers regarding the quality of its products. Bao stated that "[a]fter a duly diligent review of our customer support feedback files, I have not...