United States District Court, D. Nevada
June 16, 2014
BRAVO COMPANY USA, INC., Plaintiff,
BADGER ORDNANCE LLC et al., Defendants.
ROBERT C. JONES, District Judge.
This case arises out of the alleged infringement of to of Defendants patents related to an ambidextrous charging-handle for an M-16-type assault rifle. Pending before the Court are Defendants' Motion to Dismiss (ECF No. 12) for lack of personal jurisdiction and Plaintiff's Motions for Leave to Conduct Jurisdictional Discovery and Extend Time to Respond (ECF Nos. 16, 17). For the reasons given herein, the Court denies the motion to dismiss, without prejudice, grants the motion for discovery in part, and denies the motion for an extension of time as moot.
I. FACTS AND PROCEDURAL HISTORY
Plaintiff Bravo Company USA, Inc. ("Bravo Co.") manufactures an ambidextrous charging handle for M-16-type assault rifles called the "5.56mm/.223 Mod. A44 Black Ambidextrous Charging Handle GFH 556 MOD A44" (the "Accused Product") under a license from non-party Abrams Airborne, Inc. d.b.a. Vltor Weapon Systems ("Vltor"). (Compl. ¶¶ 2-3, Mar. 14, 2014, ECF No. 1). Vltor holds U.S. Patent No. 8, 336, 436 for an "Ambidextrous Cam Style Charging Handle, " pursuant to which Bravo Co. manufactures and sells the Accused Product under license. ( Id. ¶ 3). The 436 Patent is not directly at issue in the present case.
At issue are two patents owned by Defendant Badger Ordnance LLC ("Badger"), U.S. Patents No. 7, 900, 546 and 7, 240, 600 (collectively, the "Patents"). ( See id. ¶ 8). The 546 Patent issued from a continuation of the application from which the 600 Patent issued. ( Id. ¶ 5). Defendant Martin J. Bordson is the sole inventor of the Patents, and he owns and controls Badger. ( Id. ¶¶ 5, 9). Badger has accused Bravo Co. of infringement of the Patents via the manufacture and sale of the Accused Product, inter alia, in Nevada, and has threatened legal action. ( Id. ¶¶ 12-17). Bravo Co. has therefore filed the present suit for declarations of noninfringement and invalidity. Badger has moved to dismiss for lack of personal jurisdiction. Bravo Co. has asked the Court for sixty days to conduct jurisdictional discovery and for twenty-one days thereafter to oppose the motion to dismiss.
II. LEGAL STANDARDS
A defendant may move to dismiss for lack of personal jurisdiction. See Fed.R.Civ.P. 12(b)(2). Jurisdiction exists if: (1) provided for by law; and (2) the exercise of jurisdiction comports with due process. See Greenspun v. Del E. Webb Corp., 634 F.2d 1204, 1207 (9th Cir. 1980). When no federal statute governs personal jurisdiction, a federal court applies the law of the forum state. See Boschetto v. Hansing, 539 F.3d 1011, 1015 (9th Cir. 2008). Where a forum state's long-arm statute provides its courts jurisdiction to the fullest extent of the Due Process Clause of the Fourteenth Amendment, such as Nevada's does, see Arbella Mut. Ins. Co. v. Eighth Judicial Dist. Court, 134 P.3d 710, 712 (Nev. 2006) (citing Nev. Rev. Stat. § 14.065), a court need only apply federal due process standards, see Boschetto, 539 F.3d at 1015.
There are two categories of personal jurisdiction: general jurisdiction and specific jurisdiction. Traditionally, general jurisdiction exists over a defendant who has "substantial" or "continuous and systematic" contacts with the forum state such that the assertion of personal jurisdiction over her is constitutionally fair even where the claims are unrelated to those contacts. See Tuazon v. R.J. Reynolds Tobacco Co., 433 F.3d 1163, 1171 (9th Cir. 2006) (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984)). A state court has general jurisdiction over the state's own residents, for example.
The Supreme Court recently clarified that general personal jurisdiction exists only where a company is at "home" in the forum state. See Daimler AG v. Bauman, 134 S.Ct. 746, 760-62 (2014). The Court noted that "continuous and systematic" contacts alone are not enough in-andof-themselves to create general jurisdiction. See id. The quoted phrase was in fact first used in the context of specific jurisdiction as conjunctive with the "arises-out-of" requirement. See id. at 761 (citing Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 317 (1945)). "Accordingly, the inquiry under Goodyear is not whether a foreign corporation's in-forum contacts can be said to be in some sense continuous and systematic, ' it is whether that corporation's affiliations with the State are so "continuous and systematic" as to render [it] essentially at home in the forum State.'" Id. (quoting Goodyear Dunlop Tires Operations S.A. v. Brown, 131 S.Ct. 2846, 2851 (2011)) (alteration in original). So the company must be at "home" in the forum state for there to be general jurisdiction. Where this is not the case, a plaintiff must rely on specific jurisdiction, i.e., the action must have arisen out of contacts with the forum state.
Even where there is no general jurisdiction over a defendant, specific jurisdiction exists when there are sufficient minimal contacts with the forum state such that the assertion of personal jurisdiction "does not offend traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. State of Wash., Office of Unemployment Comp. & Placement, 326 U.S. 310, 316 (1945) (quoting Milliken, 311 U.S. at 463). The standard has been restated using different verbiage. See Hanson v. Denckla, 357 U.S. 235, 253 (1958) ("[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." (citing Int'l Shoe Co., 326 U.S. at 319)); World-wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) ("[T]he foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." (citing Kulko v. Superior Court of Cal., 436 U.S. 84, 97-98 (1978))). From these cases and others, the Ninth Circuit has developed a three-part test for specific jurisdiction:
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e. it must be reasonable.
Boschetto, 539 F.3d at 1016 (quoting Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004)).
The plaintiff bears the burden on the first two prongs. If the plaintiff establishes both prongs one and two, the defendant must come forward with a "compelling case" that the exercise of jurisdiction would not be reasonable. But if the plaintiff fails at the first step, the jurisdictional inquiry ends and the case must be dismissed.
Id. (citations omitted). The "purposeful direction" option of the first prong uses the " Calder effects" test, under which "the defendant allegedly must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state." Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th Cir. 2010) (quoting Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1206 (9th Cir.2006) (en banc)). The third prong is a seven-factor balancing test, under which a court considers:
(1) the extent of the defendant's purposeful interjection into the forum state's affairs; (2) the burden on the defendant of defending in the forum; (3) the extent of conflict with the sovereignty of the defendants' state; (4) the forum state's interest in adjudicating the dispute; (5) the most efficient judicial resolution of the controversy; (6) the importance of the forum to the plaintiff's interest in convenient and effective relief; and (7) the existence of an alternative forum.
Menken v. Emm, 503 F.3d 1050, 1060 (9th Cir. 2007) (quoting CE Distrib., LLC v. New Sensor Corp., 380 F.3d 107, 1112 (9th Cir. 2004)).
There is no general personal jurisdiction over Badger in Nevada. Bravo Co. alleges that Badger is a Missouri limited liability company with its principle place of business (and presumably its headquarters) in Kansas City, Missouri and does not allege that any of Badger's members are Nevada citizens or that its headquarters is in Nevada. ( See Compl. ¶ 7). Bordson's citizenship is not alleged, but he is alleges to own and control Badger, so he presumably resides in Missouri or Kansas. ( See generally id. ). There is therefore no basis to find that Badger is "at home" in Nevada. See Daimler AG v. Bauman, 134 S.Ct. 746, 760-62 (2014). Plaintiff ignores Daimler AG and argues under the previous "systematic contacts" test.
There may still be specific personal jurisdiction over Badger in Nevada if this action arises out of minimal contacts of Badger with the State. In declaratory judgment actions for noninfringement and/or invalidity, courts typically find no specific personal jurisdiction over patentee defendants where the defendant's only contact with the forum is the sending of a ceaseand-desist letter. See 8 Donald S. Chisum, Chisum on Patents § 21.02[a][ii], at 21-239 & n.67 (Matthew Bender & Co. 2013) (collecting cases). On the other hand, courts tend to find specific personal jurisdiction where such defendants have additional contacts with the forum, such as the regular shipment of goods covered by the patent into the forum. See id. at 21-239 to 21-243 & n.68 (collecting cases).
The Federal Circuit appears to have most recently ruled in a patentee-defendant personal jurisdiction case in 2011. See Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785, (Fed. Cir. 2011). The court began by noting that "ordinary cease-and-desist notices sent by a patentee to an alleged infringing party in a different state are not sufficient to subject the patentee to specific jurisdiction in that state, " id. at 789 (citing Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998)), but that "certain other patent enforcement actions, taken in conjunction with the issuance of cease-and-desist letters, are sufficient to support specific jurisdiction over a patentee in a foreign forum, " id. (citing Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1019 (Fed. Cir. 2009) (collecting cases)). For the purposes of a personal jurisdiction analysis, a declaratory judgment action for non-infringement "arises out of" the activities of the patentee in enforcing the patent(s) at issue, and the relevant inquiry is therefore "to what extent... the defendant patentee purposefully directed such enforcement activities at residents of the forum and the extent to which the declaratory judgment claim arises out of or relates to those activities." Id. (quoting Avocent Huntsville Corp. v. Aten Intern. Co., Ltd., 552 F.3d 1324, 1332 (Fed. Cir. 2008)). "Thus, only those activities of the patentee that relate to the enforcement or defense of the patent can give rise to specific personal jurisdiction for such an action." Id. (citing Avocent Huntsville Corp., 552 F.3d at 1336; Autogenomics, 566 F.3d at 1020).
Defendants are correct that the single cease-and-desist letter sent by Defendants from Nevada to Plaintiff's Wisconsin headquarters on January 10, 2013 (the "Letter") is insufficient to establish specific personal jurisdiction in Nevada. See id. at 789. Defendants are also correct that their contacts with Nevada alleged in paragraphs 12, 13, 14, and 16 of the Complaint are irrelevant to the personal jurisdiction question in the present non-infringement action, because those allegations have to do with Defendants' business activities in the state unrelated to the enforcement of the Patents. See id.
In response, Plaintiff argues that in addition to the Letter, Badger retained Nevada-based counsel as its agent for enforcement of the Patents and that Bordson twice attempted to contact Plaintiff about a license agreement. The Court finds these contacts to be insufficient, and at least two of the three do not represent contacts with Nevada at all. Bordson attests that he attempted to call Plaintiff at its 1-800-number to discuss a potential license agreement and that he later sent an email to Plaintiff for the same purpose. ( See Bordson Decl. ¶¶ 7-8, Apr. 23, 2014, ECF No. 12-1). The phone call went unanswered, and a response to the email directed Bordson to another company. ( See id. ). More importantly, the communications were not directed to Nevada, but to Wisconsin. Next, Bennet K. Langlotz attests that he has lived in Texas since November 2013, that he used a P.O. box in Genoa, Nevada for his patent practice until 2009, but since then he has used a District of Columbia P.O. box. ( See Langlotz Decl. ¶¶ 1-6, Apr. 23, 2014, ECF No. 12-2). Langlotz prosecuted the Patents at issue before the U.S. Patent and Trademark Office beginning in 2004. ( Id. ¶ 7). On January 10, 2013, while still living in Nevada, he sent a cease-and-desist letter to Plaintiff's headquarters in Hartland, Wisconsin. ( Id. ¶ 9-10). The Letter is attached. it is a cease-and-desist letter with an offer to negotiate a license. On February 27, 2014, Langlotz sent a similar letter from his new residence in Texas to Plaintiff in Wisconsin indicating Plaintiff's need to acquire a license. ( Id. ¶ 11). No license negotiations occurred in Nevada or elsewhere. ( See id. ¶¶ 12-13). Langlotz cannot recall any other communications sent to Plaintiff before it filed the present lawsuit. ( See id. ¶ 13). Neither letter supports personal jurisdiction in Nevada, because neither was sent to Nevada. The first letter was sent from Nevada, but it is a cease-anddesist letter including an offer to negotiate a license. An offer to negotiate a license to avoid litigation is common fare for such letters and does not support personal jurisdiction even if directed to the forum state, which is not the case here. And a letter sent from a patentee's agent from a given forum is simply not directed to that forum.
The Court will permit limited jurisdictional discovery. Plaintiff may have thirty (30) days to send interrogatories to Bordson concerning the limited questions of whether and in what ways Bordson or his agents have negotiated or entered into licenses to the Patents in Nevada or sued others in Nevada regarding the Patents, may request the production of related documents, and may depose Bordson for no more than four (4) hours as to those topics at a place convenient to Bordson.
The Court will not permit Plaintiff to conduct discovery for the purpose of obtaining information concerning the ownership rights of the Patents. Plaintiff implies that some other party may in fact own the Patents-it simply is not certain. But no potential non-infringement action could yet be ripe as to a putative defendant Plaintiff does not even know of, because any person who has contacted Plaintiff to allege infringement (the requirement for ripeness in such an action) would already be known to Plaintiff. Defendants note that Bordson owns the Patents. That is why there is no record of assignment. Badger is a fictitious name for Bordson's sole proprietorship. It is not in fact a limited liability company, and the Missouri Secretary of State's website identifies Bordson as the sole owner of Badger.
IT IS HEREBY ORDERED that the Motion to Dismiss (ECF No. 12) is DENIED, without prejudice.
IT IS FURTHER ORDERED that the Motion for Leave to Conduct Jurisdictional Discovery (ECF No. 16) is GRANTED IN PART. Plaintiff may conduct jurisdictional discovery as delineated, supra, for thirty (30) days from the date this Order is entered into the electronic docket.
IT IS FURTHER ORDERED that the Motion for Extend Time to Respond (ECF No. 17) is DENIED as moot. Defendants may renew their motion after the close of jurisdictional discovery, and Plaintiff may respond in the regular course.
IT IS SO ORDERED.