Venmill Indus., Inc. v. ELM, Inc.

100 F.Supp.3d 59

VENMILL INDUSTRIES, INC., Plaintiff

v.ELM, INC., Defendant.

Civil Action No. 14–40064–TSH.

United States District Court, D. Massachusetts.

Signed April 22, 2015.

Norman P. Soloway, Stephen B. Mosier, Hayes Soloway P.C., Tucson, AZ, Todd A. Sullivan, Daniel H. Landau, Hayes Soloway, P.C., Manchester, NH, for Plaintiff.

Howard J. Susser, Zachary R. Gates, Burns & Levinson, Boston, MA, William S. Frommer, Frommer, Lawrence & Haug LLP, New York, NY, for Defendant.

ORDER ON DEFENDANT'S MOTION TO DISMISS FIRST AMENDED COMPLAINT (Docket No. 20) AND PLAINTIFF'S MOTIONS FOR DIRECTED SERVICE OF PROCESS (Docket No. 23) AND JURISDICTIONAL DISCOVERY (Docket No. 27)

HILLMAN, District Judge.

This is a declaratory judgment action in which Plaintiff Venmill Industries, Inc. seeks a declaration that it does not infringe on any valid claim of U.S. Patent No. 8,342,905. Defendant ELM, Inc., the owner of the patent, has moved to dismiss the First Amended Complaint for lack of personal jurisdiction and insufficient service of process. (Docket No. 20). Plaintiff has filed cross-motions for an order directing service of process by alternative means, (Docket No. 23), and for jurisdictional discovery. (Docket No. 27). For the reasons set forth below, Defendant's motion to dismiss is granted. Plaintiff's motions for directed service of process and jurisdictional discovery are denied.

Background

Plaintiff Venmill Industries, Inc. (“Plaintiff” or “Venmill”) is a Massachusetts corporation with a principal place of business at 670 Douglas Street in Uxbridge, Massachusetts. The company develops and manufactures disk repair and maintenance products, including a disk-cleaning product called the “VMI Hybrid.” Defendant ELM, Inc. (“Defendant” or “ELM”) is also engaged in the business of manufacturing disk restoration products. ELM is a privately held company incorporated under the laws of Japan, with a principal place of business in Japan.

ELM is the owner of U.S. Patent No. 8,342,905 (“the '905 Patent”). The ' 905 Patent, entitled “Optical Disk Restoration Method and Apparatus,” purports to cover a process by which optical disks, such as DVDs, can be restored. On April 17, 2014, counsel for ELM sent a cease-and-desist letter to Venmill, asserting that Venmill's VMI Hybrid product infringes one or more claims of the '905 Patent. The letter demanded that Venmill immediately stop making, selling, and/or offering for sale the product within the United States. Venmill asserts that the VMI Hybrid product does not infringe on any valid and enforceable claim of the '905 Patent. Venmill filed this declaratory judgment action on May 14, 2014, seeking a declaration of non-infringement.

Discussion

Federal Circuit law governs the jurisdictional issues in this case, because “personal jurisdiction in a declaratory action for non-infringement is ‘intimately related to patent law[.]’ ” Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1361 (Fed.Cir.2006) (quoting Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1201 (Fed.Cir.2003) ). Venmill need only make a prima facie showing that ELM is subject to personal jurisdiction, because the parties have not yet conducted discovery. See Avocent Huntsville Corp. v. Aten Int'l Co., 552 F.3d 1324, 1328–29 (Fed.Cir.2008). The pleadings and affidavits are to be construed in the light most favorable to Venmill; the Court “must accept the uncontroverted allegations in the plaintiff's complaint as true and resolve any factual conflicts in the affidavits in the plaintiff's favor.” Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed.Cir.2003) (emphasis in original). However, a plaintiff is only entitled to those inferences that can be reasonably drawn from the allegations. Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1018 (Fed.Cir.2009).

Jurisdictional Facts

Venmill asserts that this Court may exercise jurisdiction over ELM because ELM has purposefully directed certain activities in the United States. The First Amended Complaint contends that ELM has subjected itself to the jurisdiction of this Court under Fed.R.Civ.P. 4(k)(2) by obtaining a United States patent and enforcing its patent rights in the United States. As grounds therefore, Paragraphs 16(a) through (g) allege the following jurisdictional facts:

(a) ELM had granted a license and/or exclusive license to an entity formed under U.S. law and known as “Elm USA, Inc.” to distribute, in and throughout the United States, product ostensibly incorporating ELM's patented technology under the '905 Patent, pursuant to which license agreement ELM conferred upon Elm USA, Inc. the right and/or duty to enforce, or to assist ELM in enforcing, the '905 Patent in and throughout the United States, including in this judicial district;

(b) Elm USA, Inc. was, as of the date of commencement of this action, the sole and/or exclusive licensee of ELM in the United States, with the right and/or duty to enforce ELM's '905 Patent in and throughout the United States, including in this judicial district;

(c) ELM had, as of the date of commencement of this action, contracted for services to be performed in the United States relating to or in connection with ELM's enforcement of the '905 Patent in the United States;

(d) ELM had, as of the date of commencement of this action, initiated international and/or interstate communications with persons in the United States, and/or had sent ELM employees from Japan to the United States, in connection with or relating to ELM's enforcement of the '905 Patent in the United States;

(e) ELM had, as of the date of commencement of this action, wire transferred and/or directed through the U.S. mails money (or other things of value) into the United States in connection with or related to ELM's enforcement of the ' 905 Patent in the United States;

(f) ELM had, as of the date of commencement of this action, purchased goods or services in the United States in furtherance of ELM's enforcement of its ' 905 Patent in the United States; and(g) ELM had, as of the date of commencement of this action, caused one or more cease-and-desist communications to be directed to one or more persons in, or operating in, the United States, in furtherance of ELM's enforcement of the '905 Patent in the United States.

Pl.'s First Am. Compl. ¶ 16(a)-(g). Filed with the First Amended Complaint are the '905 Patent (Docket No. 15, Ex. A), the patent assignment establishing ownership of the '905 Patent by ELM (Docket No. 15, Ex. B), and the cease-and-desist letter sent to Venmill by ELM's U.S. counsel (Docket No. 15, Ex. C).

In moving to dismiss for lack of personal jurisdiction, ELM has filed the declaration of Takakazu Miyahara, the company's President and CEO. See Miyahara Dec., Docket No. 21–1. The declaration concedes that ELM owns the '905 Patent, and that ELM's U.S. counsel sent a cease-and-desist letter to Venmill. See Miyahara Dec. ¶ 7, 10(g), 11. However, it disputes all other jurisdictional facts that Venmill has alleged. The declaration states that ELM has no branch, bank accounts, tax filing obligations, employees, manufacturing or development operations, or exclusive distributor in the United States. Miyahara Dec. ¶ 2–3, 5, 7. The declaration further asserts that ELM does not market or sell products, have a registered agent for service of process, or own real estate in Massachusetts Id. at ¶ 3, 4, 7. The declaration specifically refutes the allegations that, at the time this action was filed, ELM had granted an exclusive distribution or enforcement license in the United States related to the '905 Patent, purchased or contracted for services in the United States in connection with its '905 Patent enforcement activity, communicated with persons in the United States in connection with enforcement activity, and wire transferred or directed money into the United States related to enforcement activity.¹ Id. at ¶ 10(a)-(f).

In response to the Miyahara Declaration, Venmill offers no support for its assertion of ELM's connections to Massachusetts and the United States in paragraphs 16(a) through (f) of the First Amended Complaint. The Court will not credit such allegations in the face of the specific denials in ELM's sworn declaration. See Autogenomics, 566 F.3d at 1014–16 (making findings of jurisdictional fact based on Defendant's uncontested declaration that it lacked contacts in California). The only evidence offered by Venmill in support of jurisdiction establishes facts that ELM does not contest: ELM owns the '905 Patent and has sent a cease-and-desist letter.

Personal Jurisdiction

The Court begins with Rule 4 of the Federal Rules of Civil Procedure.² See Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip. Medico, 563 F.3d 1285, 1293 (Fed.Cir.2009) (“Rule 4 is the starting point for any personal jurisdictional analysis in federal court.”). At issue is whether jurisdiction over ELM may be exercised under Rule 4(k)(1)(A) or Rule 4(k)(2).³

Jurisdiction under Rule 4(k)(1)(A)

Rule 4(k)(1)(A) provides that service of process establishes personal jurisdiction over a defendant “who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located.” Fed.R.Civ.P. 4(k)(1)(A). Analysis of personal jurisdiction under this rule involves a familiar two step inquiry. First, the Court must “decide whether the forum state's long-arm statute permits service of process” on the defendant. Touchcom, Inc. v. Bereskin & Parr, 574 F.3d 1403, 1411 (Fed.Cir.2009). Second, the Court must “determine whether the assertion of personal jurisdiction with that long-arm statute would violate the U.S. Constitution's guarantee of due process.” Id. In this case, the Court “may sidestep the statutory inquiry and proceed directly to the constitutional analysis, however, because the Supreme Judicial Court of Massachusetts has interpreted the state's long-arm statute ‘as an assertion of jurisdiction over the person to the limits...