Woodway United States, Inc. v. Samsara Fitness, LLC, Case No. 15-cv-956-pp
| Decision Date | 14 June 2016 |
| Docket Number | Case No. 15-cv-956-pp |
| Parties | WOODWAY USA, INC., Plaintiff, v. SAMSARA FITNESS, LLC, and CHAPCO, INC., Defendants. |
| Court | U.S. District Court — Eastern District of Wisconsin |
DECISION AND ORDER GRANTING DEFENDANTS' MOTION TO DISMISS OR TRANSFER VENUE OR, IN THE ALTERNATIVE, TO STAY (DKT. NO. 11) AND DISMISSING THIS ACTION FOR LACK OF PERSONAL JURISDICTION
On August 11, 2015, plaintiff Woodway USA, Inc., filed a complaint under 35 U.S.C. §§271-299, naming Samsara Fitness, LLC, and Chapco, Inc., as defendants. Dkt. No. 1. The complaint asserts that the defendants are infringing on two of Woodway's patents for motorless, manually-operated treadmills. Id. ¶¶7-24. A declaratory judgment action involving the same parties and patents currently is pending in the District of Connecticut. In this court, the defendants have filed a motion to dismiss or transfer venue or, in the alternative, to stay. Dkt. No. 11. The court grants the defendants' motion based on lack of personal jurisdiction over defendant Chapco, Inc.
Woodway USA, Inc., is a Wisconsin company, with its principal place of business in Waukesha, Wisconsin. Dkt. No. 1, ¶1. Woodway is the assignee and owner of two patents - U.S. Patent Nos. 8,986,169 and 9,039,580 - both entitled "Manual Treadmills and Methods of Operating the Same." Id. ¶¶8-10, 17-19. The '169 patent was issued on March 24, 2015 and the '580 patent was issued on May 26, 2015. Id. ¶¶9, 18. Woodway has manufactured and sold its motorless CURVE treadmill, which embodies the inventions of the '169 and '580 patents, since 2009. Dkt. No. 18 at 3.
Samsara Fitness, LLC, is a Connecticut limited liability company, with its principal place of business in Chester, Connecticut. Dkt. No. 1, ¶2. Samsara sells and offers for sale human-powered treadmills under the name TrueForm Runner. Dkt. No. 12 at 2. Chapco, Inc. is a Connecticut corporation, with its principal place of business in Chester, Connecticut. Dkt. No. 1, ¶3. Chapco specializes in product engineering and development, contract manufacturing, metal fabrication, and assembly in a variety of industries. Dkt. No. 12 at 2.
Woodway alleges that the defendants are manufacturing, selling, offering for sale, and/or using certain manual treadmills - including, but not limited to, the TrueForm Runner - without authorization and in violation of Woodway's patent rights under 35 U.S.C. §271(a). Dkt No. 1, ¶¶11, 20. Woodway further alleges that the defendants are actively inducing the direct infringement of its patents, without authorization and in violation of 35 U.S.C. §271(b), by aiding, abetting, and encouraging its customers' use of the TrueForm Runner with knowledge of the infringement and with the intent to cause such infringement. Id. ¶¶12, 21.
Woodway filed this patent infringement lawsuit on August 11, 2015, but it did not immediately serve either defendant with the complaint. Woodway indicates that it withheld service in order to engage in good faith business discussions with the defendants. Dkt. No. 18 at 4-5. During that time, Woodway sent letters to the defendants' customers and dealers, informing them of the asserted patents and Woodway's intellectual property rights in them. Dkt. No. 16, ¶10. Approximately seventy targets received these letters, which included customers located throughout the United States. Id.
The defendants contend that Woodway did not attempt to engage in any good faith negotiations with them in October 2015 or thereafter. Dkt. No. 12-2, ¶17. The defendants also maintain that Woodway used the unserved complaint to threaten and harass Samsara's customers. Dkt. No. 12 at 4; Dkt. No. 12-3. Upon learning of Woodway's "anti-competitive efforts," Samsara and Chapco filed suit against Woodway in the District of Connecticut on November 16, 2015 - approximately three months after Woodway filed suit in this court. Dkt. No. 12 at 4. The Connecticut complaint sought declarations of non-infringement and invalidity with respect to the same two patents at issue here. Dkt. No. 12 at 4; Dkt. No. 12-1. Samsara and Chapco served Woodway with the Connecticut complaint on November 17, 2015 - almost immediately. Dkt. No. 12 at 4. The following day, Woodway served Samsara and Chapco with the Wisconsin complaint. Id.; Dkt. Nos. 9-10.
Both cases are active, although at this point, the Connecticut case is more active than the Wisconsin one. On December 8, 2015, Woodway filed a motion in the District of Connecticut to dismiss or stay the Connecticut action, arguing the "first-to-file rule." Dkt. 12 at 4. That motion is fully briefed and pending resolution in the Connecticut court. Indeed, on February 19, 2016, the magistrate judge in Connecticut held a case management/scheduling conference, and on February 22, 2016, entered a scheduling order, requiring the parties in the Connecticut litigation to begin exchanging discovery. Dkt. No. 22-1. The Connecticut magistrate judge even scheduled a status conference for March 10, 2016, at which time it hoped to hear of this court's progress on the current motion to dismiss. Id. at 2.
Samsara and Chapco filed their motion to dismiss in this court on December 9. 2015. Dkt. Nos. 11-12. On January 4, 2016, Woodway filed a brief in opposition to Samsara and Chapco's motion. Dkt. No. 18. Samsara and Chapco filed a reply brief on January 15, 2016. Dkt. No. 20. On February 22, 2016 - the same day, as it turns out, that the Connecticut magistrate judge issued the scheduling order - this court heard oral argument on the defendants' motion. See Dkt. No. 21. At the hearing the parties informed the court that the magistrate judge in Connecticut had entered a scheduling order, and reported that the statement of infringement in that case was due April 18, 2016. Id. at 2.
This court - I, Judge Pepper, to be specific - did not issue a ruling prior to those dates, and as a result has caused delay and uncertainty in thelitigation in the District of Connecticut. The court expresses its regret to the parties in both cases, and to the judges in Connecticut, for its delay in this case.
The defendants' motion asks for several different forms of relief. First, the defendants seek dismissal of the entire action pursuant to Fed. R. Civ. P. 12(b)(2) and 12(b)(3), arguing that the court lacks personal jurisdiction over Chapco and that venue in the Eastern District of Wisconsin is improper. In lieu of dismissal, the defendants request that the court transfer venue to the District of Connecticut - the proper venue, according to the defendants -pursuant to 28 U.S.C. §1406(a). Alternatively, the defendants argue that the court should transfer venue to Connecticut pursuant to 28 U.S.C. §1404(a). Finally, if the court does not grant any of those forms of relief, the defendants ask that the court stay the proceedings in this case pending the outcome of the Connecticut litigation. The plaintiff responds that the first-to-file rule controls and, therefore, that this court should give priority to the Wisconsin litigation. The court will begin by addressing the parties' jurisdictional arguments.
The defendants have moved for dismissal pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction over Chapco, Inc. Dkt. No. 11 at 1. Although "'[a] complaint need not include facts alleging personal jurisdiction[,]' . . . once the defendant moves to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(2) . . ., the plaintiff bears the burden of demonstrating the existence of jurisdiction." Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003)(quoting Steel Warehouse of Wis., Inc. v. Leach, 154 F.3d 712, 715 (7th Cir. 1998)).
"[W]hen the district court rules on a defendant's motion to dismiss based on the submission of written materials, without the benefit of an evidentiary hearing, . . . the plaintiff 'need only make out a prima facie case of personal jurisdiction.'" Purdue Research, 338 F.3d at 782 (quoting Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002)). That is, "once the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction." Purdue Research, 338 F.3d at 783. "[U]nder the prima facie standard, the plaintiff is entitled to have any conflicts in the affidavits (or supporting materials) resolved in its favor." Id.
Federal Circuit law governs personal jurisdiction issues in patent infringement cases. See Hildebrand v. Steck Mfg. Co., 279 F.3d 1351, 1354(Fed. Cir. 2002). According to Federal Circuit case law, a district court properly may exercise personal jurisdiction over an out-of-state defendant only if (1) jurisdiction exists under the forum state's long-arm statute, and (2) exercising jurisdiction over the out-of-state defendant would be consistent with the limitations of the Due Process Clause. Trintec Indus., Inc. v. Pedre Promotional Prods., Inc., 395 F.3d 1275, 1279 (Fed. Cir. 2005). Because "Wisconsin's long-arm statute is to be liberally construed in favor of exercising jurisdiction to the fullest extent allowed under the due process clause," Shared Med. Equip. Grp., LLC v. Simi Valley Hosp. & Healthcare Servs., 3 F....
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