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Freedom Innovations, LLC v. Chas. A. Blatchford & Sons, Ltd.

United States District Court, D. Nevada

October 15, 2014

FREEDOM INNOVATIONS, LLC, a Delaware limited liability company, Plaintiff,
v.
CHAS. A. BLATCHFORD & SONS, LTD., an English entity, and BLATCHFORD PRODUCTS, LTD., an English entity, Defendants.

ORDER

ROBERT C. JONES, District Judge.

This case arises out of Plaintiff's use of technology that Defendants allege violates their patent. Plaintiff brought this action seeking a declaratory judgment of non-infringement. Currently pending before the Court is Defendants' Motion to Dismiss (ECF No. 14) and Plaintiff's Motion to Enjoin Prosecution (ECF No. 20) of a later filed case by Defendants in another jurisdiction. For the reasons contained herein, Defendants' motion is GRANTED and Plaintiff's motion is DENIED as moot.

I. BACKGROUND

Plaintiff is a limited liability company organized under the laws of Delaware with its principal place of business in Irvine, California. (Carkhuff Decl. ¶ 2, ECF No. 21). Its business deals with designing and producing lower limb prosthetics. ( Id. ¶ 3). Plaintiff's manufacturing is done in Utah. ( Id. ¶ 4). Plaintiff holds a number of patents and owns over twenty product brands related to prosthetic foot/ankle systems, including the KINTERRA® brand. ( Id. ¶ 3).

Defendants Chas. A. Blatchford & Sons, Ltd. and Blatchford Products, Ltd. are both entities organized under the laws of the United Kingdom with their principal places of business located in Basingstoke, Hampshire, United Kingdom. (Blatchford Decl. ¶ 1, ECF No. 15). Defendants have no facilities in Nevada nor are they registered to do business within the state. ( Id. ¶ 4). Neither Defendant sells or distributes products directly to unrelated third parties within the United States. ( Id. ). Defendant Blatchford Products, Ltd. holds United States Patent No. 8, 574, 312 ("the 312 patent"), which covers the design for a certain prosthetic foot/ankle assembly. ( Id. ¶ 3). This patent is exclusively licensed to Blatchford, Inc., a wholly-owned subsidiary of Defendant Chas. A. Blatchford & Sons in the United States. ( Id. ¶ 6). Blatchford, Inc. is a Delaware corporation with its headquarters and facilities in Miamisburg, Ohio. ( Id. ¶ 5). Blatchford, Inc. is not a defendant in this case.

The 312 patent issued on November 5, 2013, after which Defendants contacted Plaintiff stating their belief that the KINTERRA® system utilized features of the 312 patent. ( Id. ¶ 7). The parties conferred on the matter by letter and telephone until they agreed to a face-to-face meeting to discuss a potential license agreement on February 5, 2014, when both parties would have representatives attending the Hanger Education Fair and National Meeting ("Hanger Fair"), a tradeshow for the medical device industry, in Las Vegas, Nevada. ( Id. ¶¶ 8-9; Carkhuff Decl. ¶ 7). Blatchford, Inc. also attended the Hanger Fair and made presentations to the participants. ( Id. ¶ 12). While in Las Vegas, the parties were unable to reach a mutually acceptable licensing arrangement. (Carkhuff Decl. ¶12). The parties met two more times in New York to negotiate a potential licensing agreement. ( Id. ¶ 13). When the parties failed to reach an amicable solution, Plaintiff filed this declaratory judgment action in the District of Nevada and Defendants filed a patent infringement suit in the Southern District of Ohio. Defendants seek dismissal of Plaintiff's case under Rule 12(b)(2) for lack of personal jurisdiction. Plaintiff opposes that motion and requests that this Court enjoin the prosecution of the Ohio infringement suit on the grounds that it was filed after this case.

II. DISCUSSION

When evaluating personal jurisdiction in an action seeking declaratory judgment of patent non-infringement, the court applies the Federal Circuit's case law rather than the case law of the regional circuit. Avocent Huntsville Corp. v. Aten Int'l Co., 552 F.3d 1324, 1329 (Fed. Cir. 2008). As a procedural matter, when ruling on a motion to dismiss, the district 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). Accordingly, if there are discrepancies in the facts relating to personal jurisdiction, the Court must resolve them in Plaintiff's favor.

The "constitutional touchstone" for personal jurisdiction is "whether the defendant purposefully established minimum contacts' in the forum State." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Personal jurisdiction may be either general or specific. General personal jurisdiction requires "the defendant have continuous and systematic' contacts with the forum state and confers personal jurisdiction even when the cause of action has no relationship with those contacts." Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1200 (Fed. Cir. 2003) (quoting Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984)).

Here, Defendants clearly are not subject to general personal jurisdiction in Nevada. Nothing in the record indicates that either Defendant conducts business anywhere in the United States. The fact that the Defendants are not licensed to do business in Nevada is also indicative of the lack of general personal jurisdiction. See Helicopteros, 466 U.S. at 416 (rejecting plaintiff's assertion of personal jurisdiction where the defendant was not licensed to do business in the forum state and did not have a place of business there). Blatchford, Inc.'s status as Defendants' subsidiary can also not generate general personal jurisdiction over Defendants in this case because Blatchford, Inc.'s alleged activities in Nevada are not "so continuous and systematic as to render [Defendants] essentially at home in the [] state." Daimler AG v. Bauman, 134 S.Ct. 746, 761-62 (2014) (citation omitted) (holding that an out-of-state defendant was not subject to general personal jurisdiction when its subsidiary was neither incorporated in the forum nor had its principal place of business there). Therefore, if Defendants are subject to personal jurisdiction in this forum, it must be based on specific jurisdiction.

A district court may exercise specific jurisdiction over a defendant "if the cause of action arises out of' or relates to' the defendant's in-state activity." Burger King, 471 U.S. at 472-73. "Determining whether personal jurisdiction exists over an out-of-state defendant involves two inquiries: whether a forum state's long-arm statute permits service of process, and whether the assertion of personal jurisdiction would violate due process." Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1359 (Fed. Cir. 2001). Nevada's long-arm statute, NRS 14.065, reaches "the outer limits of federal constitutional due process." Certain-Teed Prods. Corp. v. Second Judicial Dist. Court, 479 P.2d 781, 784 (Nev. 1971). Accordingly, in this case the specific jurisdiction analysis is compressed into a single inquiry of whether it comports with due process. Patent Rights Prot. Grp., LLC v. Video Gaming Techs., Inc., 603 F.3d 1364, 1370 (Fed. Cir. 2010).

To determine whether exercising personal jurisdiction over a particular defendant would violate due process, the court applies a three-prong test that asks whether: "(1) the defendant purposefully directed its activities at residents of the forum, (2) the claim arises out of or relates to those activities, and (3) assertion of personal jurisdiction is reasonable and fair." Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1018 (Fed. Cir. 2009) (quoting Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1363 (Fed. Cir. 2006)). "The first two factors correspond with the minimum contacts' prong of the International Shoe analysis, and the third factor corresponds with the fair play and substantial justice' prong of the analysis." Id. at 1019 (citations omitted).

A. Purposeful Direction and Relation

Under the first two prongs of the analysis, "[t]he relevant activities are those the defendant purposefully directs... at the forum which relate in some material way to the enforcement or the defense of the patent.'" Id. at 1020 (quoting Avocent, 552 F.3d at 1336). Indeed, a declaratory judgment action "neither directly arises out of nor relates to the making, using, offering to sell, selling, or importing of arguably infringing products in the forum, but instead arises out of or relates to the activities of the defendant patentee in enforcing the patent or patents in suit." Avocent, 552 F.3d at 1332. Thus, "the mere sale of defendant's products- whether covered by the patents in suit or not-is not sufficient to establish specific personal jurisdiction in a declaratory judgment suit." Id. at 1338. Likewise, "cease-and-desist" communications alone are generally insufficient to create specific personal jurisdiction even when directed at a forum, regardless of whether they are transmitted by letter, e-mail, or in-person negotiations. Autogenomics, Inc., 566 F.3d at 1019 (looking for contacts beyond face-to-face licensing negotiations held in the forum to establish personal jurisdiction). The "policy considerations unique to the patent context" require that a patentee be afforded "sufficient latitude to ...


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