Wing Shing Products (Bvi) v. Simatelex Manufactory

479 F.Supp.2d 388

WING SHING PRODUCTS (BVI), LTD., Plaintiff, v. SIMATELEX MANUFACTORY CO., LTD., Defendant.

No. 01 Civ. 1044(RJH).

United States District Court, S.D. New York.

March 29, 2007.

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William Irvin Dunnegan, Perkins & Dunnegan, New York City, for Plaintiff.

Orrin Kaley Ames, III, William Bradley Smith, Hand Arendall, L.L.C., Mobile, AL, for Defendant.

MEMORANDUM OPINION AND ORDER

HOLWELL, District Judge.

Plaintiff Wing Shing Products (BVI), Ltd. ("Wing Shing") brings this action against Hong Kong based defendant Simatelex Manufactory Co., Ltd. ("Simatelex") to enforce its rights in United States Design Patent No. 348,585 (the "Design Patent"), asserting claims of direct patent infringement in violation of 35 U.S.C. § 271(a) and active inducement of patent infringement in violation of 35 U.S.C. § 271(b). Now pending before the Court are defendant's motion to dismiss for lack of personal jurisdiction, or in the alternative, for summary judgment on liability [71] and plaintiffs motion for summary judgment on liability [filed under seal, December 20, 2005]. Defendant's motion to dismiss for lack of personal jurisdiction and motion for summary judgment are DENIED. Plaintiffs cross-motion for summary judgment on liability is GRANTED in part.

BACKGROUND

Wing Shing is a corporation organized and existing under the laws of the British Virgin Islands with a place of business in Hong Kong. (Compl.¶ 4.) Wing Shing owns the Design Patent for a coffeemaker. Beginning around 1992, Wing Shing manufactured and sold coffeemakers made with the patented design to Sunbeam Products, Inc. ("Sunbeam") ¶ a Delaware corporation with its principal place of business in Palm Beach County, Florida¹ ¶ or to its predecessor, Mr. Coffee, Inc. Simatelex ¶ a Hong Kong corporation with its principal place of business in Hong Kong (Compl.¶ 5) ¶ also manufactured AD Series coffeemakers for Sunbeam and its predecessor.

I. Procedural History

This action against Simatelex has a lengthy procedural history that relates, in part, to litigation between Wing Shing and Sunbeam. Sunbeam filed a petition for bankruptcy in the Southern District of New York on February 4, 2001. The complaint in this action was filed days later, on February 9, 2001, after which it is undisputed that Simatelex was aware of the existence of the Design Patent. On February 23, 2001, Sunbeam commenced an adversary proceeding against Wing Shing in bankruptcy court seeking a declaratory judgment that Sunbeam owned the Design Patent, or had a permanent license for it (the "Sunbeam Action"). By order dated February 26, 2001, Wing Shing was enjoined by the bankruptcy court from prosecuting this action against Simatelex pending its resolution of the Sunbeam Action. In the Sunbeam Action, the bankruptcy court found that the Design Patent was valid, that Sunbeam had no rights in the Design Patent, and that Sunbeam infringed the Design Patent. As a result, the bankruptcy court permanently enjoined Sunbeam from infringing the Patent and awarded damages to Wing Shing. In re AI Realty Marketing of N.Y., Inc., 293 B.R. 586 (Bankr.S.D.N.Y.2003). Both parties then appealed that decision to this Court.

By Memorandum Opinion and Order dated June 29, 2004, this Court upheld the, bulk of the bankruptcy court's finding, including, inter alia, the findings that (1) Sunbeam was not a joint inventor of the Design Patent, (2) Sunbeam did not have joint ownership rights in the Design Patent, (3) Sunbeam did not have a permanent exclusive license to the Design Patent; (4) Wing Shing is not equitably estopped from enforcing the Design Patent as against Sunbeam, and (5) the Design Patent is otherwise enforceable. Sunbeam Prods., Inc. v. Wing Shing Prods. (BVI) Ltd., 311 B.R. 378, 388-99 (S.D.N.Y.2004). Both parties thereafter appealed to the Federal Circuit. By order dated June 29, 2004, this Court lifted the stay in this action, and upon the completion of discovery the parties filed cross-motions for summary judgment substantially similar to the ones now pending before the Court. However, upon concurrent motion by defendant for a stay of the proceedings pending the outcome of the Sunbeam Action appeal to the Federal Circuit, the Court entered a further stay and dismissed the pending summary judgment motions without prejudice to renew following the resolution of the appeal. See Wing Shing Prods. (BVI), Inc. v. Simatelex Manufactory Co., Ltd., 01 Civ. 1044(RJH), 2005 WL 912184 (S.D.N.Y. April 19, 2005).

By decision dated August 24, 2005, the Federal Circuit affirmed this Court's decision in the Sunbeam Action, 150 Fed.Appx. 703 (Fed.Cir.2005), and the stay in this action was lifted shortly thereafter, on September 13, 2005, at which time a briefing schedule for the pending motions was set. Sunbeam's petition to the United States Supreme Court for a writ of certiorari was denied on January 9, 2006, Sunbeam Prods., Inc. v. Wing Shing Prods. (BVI) Ltd., ____ U.S. ____, 126 S.Ct. 1085, 163 L.Ed.2d 863 (2006), bringing the Sunbeam Action to an end and resolving conclusively the issue of Sunbeam's infringement of Wing Shing's Design Patent.

II. Factual Background

Unless otherwise indicated, the following background facts are undisputed. John C.K. Sham (president of Wing Shing) is the inventor of the Design Patent, which covers a design for a line of automatic drip coffeemakers marketed as the "AD Series." (United States Patent No. Des. 348,585, Dunnegan Decl. Ex. A.) Sham assigned the Design Patent to Wing Shing, and Wing Shing now owns it. (Assignment of Invention, Dec. 15, 1998, Dunnegan Decl. Ex. B; Responses of Simatelex Manufactory Co., Ltd. to Wing Shing's First Set of Requests for Admissions, Oct. 19, 2004 ("Simatelex Admissions"), Dunnegan Decl. Ex. C.) Simatelex and Sunbeam entered into a contract on February 19, 2000 (the "Supply Agreement"), whereby Simatelex agreed to supply Sunbeam with AD Series coffeemakers. (Supply Agreement, Feb. 21, 2000, Dunnegan Decl. `Ex. F.) Simatelex, manufactured various models of the AD Series coffeemakers for Sunbeam. (Simatelex Admissions; see also Dunnegan Decl. Ex. D.)² The coffeemakers were made according to product specifications provided to Simatelex by Sunbeam. (See Supply Agreement Part I, ¶¶ 1, 9, Part II, ¶¶ 2a, 10a.) The parties no longer dispute that the design of the coffeemakers manufactured by Simatelex for Sunbeam is covered by the Design Patent.

The parties also do not dispute that the negotiations preceding the entry into the Agreement, and the actual physical execution of the Agreement, all occurred in Hong Kong. (Tr. 22:22-23:12, Oct. 27, 2006; Pl.'s Supp. Mem. 12.) According to the Supply Agreement's "Governing Law" provision, the Agreement was deemed to be made in Florida, and the contracting parties agreed their rights and liabilities under the Agreement would be determined under Delaware law. (Supply Agreement Part II, ¶ 31.) The Supply Agreement also provides that the "FCA point (Incoterms 1990)³ to which Supplier shall deliver Units ... shall be at Hong Kong." (Id. Part I, ¶ 7.) With respect to "Shipment, Delivery, and Title," the Supply Agreement provides that the "Units are to be delivered FCA to [Hong Kong]." (Id. Part II, ¶ 7(a)) Finally, the Agreement includes the following integration clause: "This Agreement, which includes the terms and conditions, sets forth the entire understanding between the parties with respect to the subject matter herein, and supersedes and replaces the terms of any and all prior discussions, agreements, or understanding between the parties. This Agreement may not be modified or amended except by a written agreement signed by the parties." (Id. Part II, ¶ 30.)

Simatelex manufactured the coffeemakers in China. (Def.'s Suppl. Rule 56.1 Statement ¶ 5.) After the coffeemakers had been manufactured, the coffeemakers were transferred (either by Simatelex or a carrier selected by Sunbeam) to the port in Hong Kong or the port in Yantian, China, as designated by Sunbeam,⁴ and ultimately transported by ship to the United States. (Def.'s Suppl. Rule 56.1 Statement ¶ 6; Chan Man Fai Decl. 2, Dec. 8, 2005 ("Chan Decl."), Def.'s Ex. 11.) Simatelex prepared three sets of original bills of lading and an invoice, which were forwarded by Simatelex's bank in Hong Kong in the form of a "Bill Presentation Schedule" to Bank One, designated by Sunbeam to serve as the collecting bank. (Janice Fay Gavin Dep., Oct. 24, 2005 ("Gavin Dep.") 22:17-23:06, Dunnegan Decl. Ex. U; see also Chan Decl. 3.) Although the parties dispute precisely when,⁵ at some point Simatelex's invoices began to include the following language: "Title of the goods shall not pass until unconditional payment of the goods." (Dunnegan Decl. Ex. H; Pang Suppl. & Am. Decl. 3-4.) Simatelex added this language to its invoices unilaterally, and Sunbeam never expressly agreed to the additional terms contained in the invoices. (Pang Suppl. & Am. Decl. 4.) After Sunbeam's treasury department had wired payment for a given invoice, Bank One would release to Sunbeam the applicable original bill of lading. (Gavin Dep. 23:14-28:20; 19:18-20:08.) Once Sunbeam had the original bill of lading, it would be forwarded to Sunbeam's customs broker, who prepared customs entry papers, paid ocean freight, and arranged for release of the merchandise. (Gavin Dep. 21:21-22:16.) Sunbeam paid Simatelex — i.e., wired funds to Bank One to effectuate release of the original bill of lading — for some of the coffeemakers after the coffeemakers had either arrived in a U.S. port or had been placed on U.S. soil and/or rail for transport to their ultimate destinations. (See Pl.'s Nov. 7, 2005 56.1 Statement ¶¶ 8-16; Def.'s Response to Pl.'s Nov. 7, 2005 56.1 Statement ¶ 8.) Bank One would then remit payment to Simatelex's Hong Kong bank's corresponding United States bank, per instructions in the Bill...