Velcro Group Corp. v. Billarant

• Decision Date: 12 April 1988
• Docket Number: No. C-87-468-L.,C-87-468-L.
• Citation: 692 F. Supp. 1443
• Court: U.S. District Court — District of New Hampshire
• Parties: VELCRO GROUP CORPORATION v. Patrick BILLARANT, et al.

692 F. Supp. 1443

VELCRO GROUP CORPORATION v. Patrick BILLARANT, et al.

No. C-87-468-L.

United States District Court, D. New Hampshire.

April 12, 1988.

Hayes, Soloway, Hennessey & Hage by Norman P. Soloway, Manchester, N.H., William O. Hennessey, Concord, N.H., for plaintiffs.

Sulloway, Hollis & Soden by John Burwell Garvey, Concord, N.H., Fish and Richardson by Gregory A. Madera, Boston, Mass., J. Peter Fasse, Robert E. Hillman, Boston, Mass. for defendants.

ORDER ON MOTION TO DISMISS

LOUGHLIN, District Judge.

This is a Federal question and diversity action for declaratory judgment of patent invalidity and non-infringement of United States Letters Patent No. 4,693,921 ("the '921 patent"), unfair competition, and antitrust violations brought by VELCRO, a corporation having its principal place of business in Manchester, New Hampshire, against defendants, APLIX, INC., a Delaware corporation having its principal place of business in North Carolina, Patrick Billarant, a General Manager of APLIX, S.A. and President of its United States subsidiary, APLIX, INC., and Bruno Queval, an employee of APLIX, INC. Both Billarant and Queval are citizens of France and residents of North Carolina.

Defendants bring a Motion to Dismiss, pursuant to Fed.R.Civ.P. 12(b). Defendants make the following asseverations: (1) Defendants are not subject to the in personam jurisdiction of this court; (2) Venue is improper as to the defendants; (3) Service of process on defendants is insufficient; and, (4) an appropriate forum with proper jurisdiction and venue exists and, thus, this court may properly dismiss or stay in favor of an alternative forum. Finally, defendants allege that only Aplix, Inc. and not Aplix, S.A., the patentee, manufactures and sells products covered by the patent in the United States. This court's jurisdiction arises under the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, 28 U.S.C. § 1332, and the laws of the United States concerning actions related to patents, 28 U.S.C. § 1338 and 35 U.S.C. § 293.

Both Aplix, S.A. and Aplix, Inc. are manufacturers of hook-and-loop fasteners covered by the '921 patent. Defendants Billarant and Queval are named as co-inventors on the '921 patent. The patent is for a fastening tape that is attached to a molded item such as a seat cushion in which gripping hooks are turned outward to hold a seat cover containing a complementary fastening device. Products covered by the '921 patent are sold by Aplix, Inc. to the automotive industry in Detroit either by Aplix, Inc. sales employees or its exclusive licensee under the '921 patent, R.A. Caralou, Inc. of Southfield, Michigan. VELCRO manufactures and sells similar fastening tapes to the auto industry in Detroit.

On April 12, 1984, VELCRO received a letter from defendant Billarant, the purpose of which was to inform VELCRO of the '921 patent and Aplix, Inc.'s intention to protect it. On September 22, 1984, VELCRO received a second letter from Billarant in which he stated: "In view of the products which you are now manufacturing and the relation to the '921 patent, I am writing to inform you of this patent and of our intention to protect the invention covered for it." It is alleged that customers of VELCRO were informed by Aplix, Inc. and/or its agents of VELCRO's possible infringement upon the '921 patent. It is further alleged that in early October, 1987 an agent of Ford Motor Co. notified a VELCRO employee of Aplix, Inc.'s intention to enforce the '921 patent. Thereafter, on December 4, 1987, in a response to the allegations of infringement of the '921 patent, VELCRO filed its complaint in this court.

In its complaint, VELCRO claims that a substantial and continuing controversy exists between VELCRO and defendants as to the validity and scope of the '921 patent, as to whether the fastening tapes sold by VELCRO infringe any valid claim of the '921 patent, and as to the right of defendants to threaten VELCRO and customers of VELCRO with infringement of the '921 patent. Therefore, VELCRO seeks declaratory judgment as to the patent invalidity and infringement. Furthermore, VELCRO claims that the acts of defendants constitute violations of the United States Antitrust laws, 15 U.S.C. § 2, and the New Hampshire unfair competition statute, N.H.Rev.Stat.Ann. (R.S.A.) §§ 358-A:2 & 10. Wherefore, VELCRO seeks actual damages.

On December 28, 1987, three weeks after commencement of this case, one of the defendants, Aplix, S.A. brought suit in the United States District Court for the District of Delaware against VELCRO with a single count alleging infringement of the '921 patent. None of the other defendants named in this present suit—Aplix, Inc., Billarant and Queval—are named plaintiffs in the Delaware suit. VELCRO has moved for a change of venue or to stay or dismiss the later filed Delaware suit.

"The general rule in New Hampshire is that on a motion to dismiss, the plaintiff's pleadings and all reasonable inferences therefrom are to be taken as true and considered most favorably to the plaintiffs." Kibby v. Anthony Indus., Inc., 123 N.H. 272, 274, 459 A.2d 292 (1983) (citing Jarvis v. Prudential Ins. Co., 122 N.H. 648, 651, 448 A.2d 407 (1982)). However, since defendants have denied jurisdiction, plaintiffs have the burden of proving that jurisdiction exists in this court. Ealing Corp. v. Harrods, Ltd., 790 F.2d 978, 979 (1st Cir.1986).

I. PERSONAL JURISDICTION

In determining whether or not to exercise in personam jurisdiction over a non-resident defendant,

a court must typically engage in a two-part inquiry. It must first determine whether the State's long-arm statute authorizes such jurisdiction. Weld Power Industries v. C.S.I. Technologies, 124 N.H. 121, 123, 467 A.2d 568, 570 (1983); Tavoularis v. Womer, 123 N.H. 423, 462 A.2d 110, 112 (1983); Cove-Craft Industries v. B.L. Armstrong Co. Ltd., 120 N.H. 195, 198, 412 A.2d 1028, 1030 (1980). If the long-arm statute would establish jurisdiction over the defendant, the court must further ask whether the defendant has "minimum contacts" with the state sufficient to insure that suit against him there 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, 158, 90 L.Ed. 95 (1945) (citation omitted); see Hall v. Koch, 119 N.H. 639, 644, 406 A.2d 962, 965 (1979). The plaintiff bears the burden of demonstrating facts sufficient to establish personal jurisdiction over the defendant. Weld Power Industries, supra 124 N.H. at 123, 467 A.2d at 469; Kibby v. Anthony Industries, Inc., 123 N.H. 272, 274, 459 A.2d 292, 293-94 (1983). In determining whether this burden has been met, the court will take facts that the plaintiff has properly pleaded as true and will construe reasonable inferences therefrom in the manner most favorable to the plaintiff. Weld, supra; Lawton v. Great Southwest Fire Ins. Co., 118 N.H. 607, 610 392 A.2d 576, 578 (1978); Bell v. Pike, 53 N.H. 473, 475 (1873).

Phelps v. Kingston, 130 N.H. 166, 536 A.2d 740 (1987).

Defendants Aplix, Inc., and Aplix, S.A.

R.S.A. § 510:4, I, the New Hampshire long-arm statute, provides:

Any person who is not an inhabitant of this state and who, in person or through an agent transacts any business within this state, commits a tortious act within this state, or has the ownership, use, or possession of any real or personal property situated in this state submits himself, or his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from or growing out of the acts enumerated above.

Jurisdiction vests if any of the three acts enumerated within the statute are present. See, e.g., Kinchla v. Baumner, 114 N.H. 818, 330 A.2d 112 (1974).

VELCRO contends that both Aplix, Inc. and Aplix, S.A., in attempting to enforce the '921 patent have committed tortious acts which have damaged the business and property of VELCRO in New Hampshire. Such tortious acts include, but are not limited to, the fraudulent concealment by Aplix, S.A., alone or in concert with Aplix, Inc., of the correct inventorship of the alleged invention of the '921 patent and the alleged threatening enforcement of the '921 patent against VELCRO's customers. VELCRO claims that Aplix, S.A. and Aplix, Inc. were attempting to accelerate the prosecution of the U.S. patent application with the specific intention of securing patent protection against VELCRO.

Furthermore, VELCRO and Aplix, Inc. are direct competitors in supplying fasteners to the auto industry. Aplix, Inc.'s fasteners, covered under the '921 patent, are incorporated in cars and trucks sold and used in New Hampshire. Aplix, S.A. is the nominal owner of the '921 patent. Therefore, VELCRO claims that both Aplix, Inc., and Aplix, S.A. have transacted business in New Hampshire.

Defendants, however, contend that the tort alleged occurred outside New Hampshire. Defendants claim that Aplix, S.A., owner of the patent in issue, retained patent counsel in Charlotte, North Carolina to prosecute on its behalf an application for a United States patent based on a previously filed patent application in France. Information was supplied to the patent attorney in North Carolina by officials of Aplix, S.A. and defendant Billarant. This information formed the basis for a patent application filed in the United States Patent and Trademark office in Washington, D.C.

Furthermore, defendants contend that the only products covered by the '921 patent are sold exclusively to the automobile industry in Detroit, Michigan, and no sales of such items have taken place in New Hampshire either by sales employees of Aplix, Inc. or R.H. Caralou, Inc., its exclusive licensee under the '921 patent. Defendants claim that the only sales by Aplix, Inc. in New Hampshire are of products not covered by the '921 patent and consist of two-tenths of one percent of total interstate sales of Aplix, Inc.

Finally, defenda...