Laseraim Tools, Inc. v. Sda Mfg., LLC

Page 1027

624 F.Supp.2d 1027

LASERAIM TOOLS, INC., Plaintiff v. SDA MANUFACTURING, LLC and Merle Skip Adrian, Defendants.

Case No. 4:08CV00329 BSM.

United States District Court, E.D. Arkansas, Western Division.

December 22, 2008.

Gary N. Speed, Speed Law Firm, Little Rock, AR, for Plaintiff.

Dennis B. Haase, Law Offices of Dennis B. Haase, Hot Springs, AR, for Defendants.

ORDER

BRIAN S. MILLER, District Judge.

Pending before the court are the defendants' motion to dismiss, or in the alternative for change of venue [Doc. # 8] and plaintiff's response [Doc. # 11].

I. BACKGROUND

Plaintiff Laseraim Tools, Inc. (Laseraim) is an Arkansas corporation with its principal place of business in Little Rock, Arkansas. Laseraim manufactures and sells the Laseraim LTTS Drill/Chuck Alignment Tool (Drill/Chuck). The Drill/Chuck was invented in 1996 by Acie G. Johnson. It is manufactured exclusively in the State of Arkansas and sold worldwide.

Defendant Merle Skip Adrian is a resident of Sanger, Fresno County, California. He has lived in California for over forty years and has never resided or conducted business in the State of Arkansas. In the fall of 2000, after attending a basic machining class at Reedley College in Reedley, California, he realized the need for a better way of finding edges and centers on material. This led to him inventing the "Work Piece Center And Edge Finder Having Visual Light Indicator." He first manufactured his invention in July/August 2004. In September 2004, he filed a provisional patent application for the invention with the United States Patent and Trademark Office.

In October 2004, Mr. Adrian sold 130 units at a trade show in California. In January 2005, he established a website http://www.lasercenteredgefinder.com. The following month, he purchased advertising in two publications, The Machinist's Workshop and The Home Shop Machinist, published by Village Press Publishers of Traverse City, Michigan. Mr. Adrian made his first internet sale on February 21, 2005. Several months later, he purchased advertising in a third Village Press Publishers publication, Live Stream. In June 2005, he made inquiries into purchasing advertising from Australian Model Engineering Magazine. This past February, he purchased three months of advertising in Modern Machine Shop, a publication by Gardner Publications of Cincinnati, Ohio.

On July 19, 2005, Mr. Adrian filed a utility patent application for his invention. He was awarded United States Patent Number 7,140,118 ('118 Patent) for his invention.

Mr. Adrian formed defendant SDA Manufacturing LLC (SDA) in January 2007. SDA is a California Limited Liability Company with its principal place of business in Sanger, Fresno County, California. SDA has a post office box in Piedra, Fresno County, California. Mr. Adrian is SDA's managing member and all members reside in California.

To date, SDA has made a total of eighteen sales in the State of Arkansas. Five of the eighteen sales were telephone orders. The remaining thirteen sales were internet sales. SDA has made internet sales in all fifty states, the District of Columbia, and thirty-six countries. The sales in Arkansas have generated $1,555.55. SDA has sold 8,500 total units. The Arkansas sales comprise only 0.2% of SDA's total sales.

SDA has never operated any type of business in Arkansas. It has never expressly targeted its advertising at individuals residing in Arkansas or entities located in Arkansas. Neither SDA nor Mr. Adrian maintain a continuing business relationship with SDA's Arkansas customers.

On April 1, 2008, defendants, through their attorney, sent plaintiff a letter (infringement letter) alerting it to a potential patent infringement concerning the Drill/Chuck. In the infringement letter, defendants inform plaintiff that it appears that the Drill/Chuck infringes the '118 Patent. Defendants go on to state:

Although we are unable to say for sure at this time, it appears that this product may be the same laser guide tool which was previously being sold by Scientific Models, Inc., through its Mirco-Mark® product line. After receiving notification and a copy of the patent from my office, Scientific Models ceased selling that product.

* * *

To avoid future issues with regard to patent infringement, Laseraim should review the enclosed copy of the '118 Patent and, if the Drill/Chuck Alignment Tool does fall within the scope of the claims, immediately cease advertising and selling the product. As Laseraim would anticipate, Mr. Adrian and SDA Manufacturing take their intellectual property rights very seriously and intend on aggressively enforcing these rights, if necessary. Hopefully, however, this warning letter is sufficient to encourage your company to resolve any potential dispute before it becomes a much more significant issue.

* * *

To avoid any future legal issues, please contact this office as soon as possible and indicate what steps your company will be doing to alleviate any infringement of the '118 Patent. If we do not receive any response from your company by April 14, 2008, we will assume that your company does not desire to resolve this dispute amicably and will act accordingly.

On April 9, 2008, plaintiff filed a declaratory relief action before this court concerning the validity and enforceability of the '118 patent. Plaintiff also asserted a claim of tortious interference with contract. Plaintiff alleged that this court has personal jurisdiction under Ark.Code Ann. § 16-4-101 et seq., in that the defendants had advertised and offered for sale in this judicial district and had intentionally targeted tortious conduct at the State of Arkansas. Plaintiff also alleged that venue was proper by virtue of 28 U.S.C. § 1391(b), because a substantial portion of the events or omissions giving rise to the claims occurred in this district.

Defendants now move to dismiss plaintiff's complaint, pursuant to Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure, for lack of personal jurisdiction and for improper venue. In the alternative, defendants move to have this case transferred to the United States District Court for the Eastern District of California, Fresno Division, pursuant to 28 U.S.C. § 1404(a).

II. DISCUSSION

A. Personal Jurisdiction:

To defeat a motion to dismiss for lack of personal jurisdiction, the non-moving party need only make a prima facie showing of jurisdiction. Romak USA, Inc. v. Rich, 384 F.3d 979, *983 (8th Cir.2004); Epps v. Stewart Info. Servs. Corp., 327 F.3d 642, *647 (8th Cir.2003). This prima facie showing can be made by the use of affidavits, exhibits, or other evidence. Romak, 384 F.3d at 983. Although the evidence is viewed in a light most favorable to the party seeking to establish the court's in personam jurisdiction and factual conflicts are resolved in that party's favor, the party seeking to establish in personam jurisdiction carries the burden of proof, and the burden does not shift to the party challenging the court's jurisdiction. Id.; Epps, 327 F.3d at 647.

The issue of personal jurisdiction in a declaratory action for patent invalidity and non-infringement is intimately related to patent law; therefore, questions concerning personal jurisdiction are governed by Federal Circuit law. Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, *1201 (Fed.Cir.2003); Midwest Indus. Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, *1359 (Fed.Cir.1999); see Pennington Seed, Inc. v. Produce Exch. No. 299, 457 F.3d 1334, *1339 (Fed.Cir.2006); Overstock.com, Inc. v. Furnace Brook, LLC, 420 F.Supp.2d 1217, *1219 (D.Utah 2005). In their brief, defendants do not cite or address any relevant Federal Circuit precedent, instead they rely on Eighth Circuit precedent. The court will apply Federal Circuit law. A district court may properly exercise personal jurisdiction over a non-consenting party outside the forum state if a two-step inquiry is satisfied. Hildebrand v. Steck Mfg. Co., Inc., 279 F.3d 1351, *1354 (Fed.Cir.2002); Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, *1358 (Fed.Cir.1998). First, jurisdiction must exist under the forum state's long arm statute. Medical Solutions, Inc. v. C Change Surgical LLC, 541 F.3d 1136, *1139 (Fed.Cir.2008); see Inamed Corp. v. Kuzmak, 249 F.3d 1356, *1359 (Fed.Cir.2001). Second, the assertion of personal jurisdiction must be consistent with the limitations of the due process clause. Medical Solutions, 541 F.3d at *1139; Inamed, 249 F.3d at *1359. The law of the forum governs the first inquiry; Federal law controls the second. Medical Solutions, 541 F.3d at *1139. Sometimes these two inquiries coalesce into one because the reach of the forum state's long-arm statute is the same as the limits of the due process clause, so that the state limitation collapses into the due process requirement. Trintec Indus., Inc. v. Pedre Promotional Prods., Inc., 395 F.3d 1275, *1279 (Fed.Cir.2005). The Arkansas long-arm statute confers jurisdiction to the fullest constitutional extent, thus limiting the court's inquiry to whether an exercise of personal jurisdiction comports with due process. Miller v. Nippon Carbon Co., Ltd., 528 F.3d 1087, *1090 (8th Cir.2008); Steinbuch v. Cutler, 518 F.3d 580, *585 (8th Cir.2008); Ferrell v. West Bend Mut. Ins. Co., 393 F.3d 786, *790 (8th Cir.2005).

In the seminal case on personal jurisdiction, International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), the Supreme Court held that "due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Inamed, 249 F.3d at *1360 (quoting International Shoe, 326 U.S. at 316, 66 S.Ct. 154). Minimum contacts require the undertaking of some act by the defendant by which...