Opinion
6:21-cv-01022-ADA
03-22-2023
SINOX COMPANY LTD., Plaintiff, v. YIFENG MANUFACTURING CO. LTD., SHENZHEN YUANDAOYUAN INDUSTRIAL CO. LTD., Defendants. SHENZHEN YUANDAOYUAN INDUSTRIAL CO. LTD., Counterclaim-Plaintiff, v. SINOX COMPANY LTD., Counterclaim-Defendant.
PUBLIC VERSION
SEALED MEMORANDUM OPINION & ORDER DENYING YIFENG MANUFACTURING CO. LTD.'S MOTION TO DISMISS
ALAN D. ALBRIGHT UNITED STATES DISTRICT JUDGE
Came on for consideration this date is Defendant YiFeng Manufacturing Co. Ltd.'s Motion to Dismiss, filed August 17, 2022. ECF No. 33 (the “Motion”). Plaintiff Sinox Company Ltd. filed an opposition on December 7, 2022, ECF No. 56, to which YiFeng replied on December 14, 2022, ECF No. 61. After careful consideration of the Motion, the Parties' briefs, and the applicable law, the Court DENIES YiFeng's Motion.
I. BACKGROUND
Sinox is a Taiwanese corporation with its principal place of business in Taiwan. ECF No. 1 ¶ 2. According to Sinox, it is a “world-leading developer and provider of high-quality security locks.” Id. ¶ 26. Sinox designs, engineers, and builds security locks, ranging from residential and commercial door locks, bicycle locks, electronic security systems, travel luggage locks, and more. Id.
YiFeng is a Chinese corporation with its principal place of business in Dongguan City, China. Id. ¶ 3. According to YiFeng, it is “the largest manufacturer of TSA-recognized combination locks in China.” ECF No. 34. YiFeng sells its products, including travel luggage locks, to luggage factories located in Asia and Europe, which then sell the finished luggage products to various brands. Id.
On June 8, 2021, Sinox sent YiFeng notice of the patent-in-suit regarding United States Patent No. RE45,429, a luggage lock patent. ECF. No. 1 ¶ 58. Sinox asked YiFeng to immediately cease and desist from any further infringement. Id. However, on October 1, 2021, Sinox filed its Complaint for Patent Infringement against YiFeng after it, as Sinox alleges, failed to correct and alter its infringing conduct. Id. ¶ 59. The Complaint alleges that the infringing products are incorporated into various consumer goods and explicitly identified nine zipper locks: TSA 15023, TSA 16003, TSA 15102, TSA 372, TSA 371, TSA 21138, TSA 12069, TSA 12033, and TSA 601 (“Accused Products”). Id. ¶ 55.
Sinox effectuated alternative service on YiFeng on June 27, 2022. ECF No. 31. YiFeng filed its Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(2) on August 17, 2022, its agreed-upon extension deadline. ECF. No 34. Sinox filed its Opposition to YiFeng's Motion to Dismiss on December 7, 2022. ECF No. 56. YiFeng filed its Reply in Support of its Motion to Dismiss on December 14, 2022. ECF No. 61. The parties filed a Joint Motion to Stay on January 11, 2023, pending YiFeng's Motion to Dismiss. ECF No. 62. The Court granted the Joint Motion to Stay on January 12, 2023. No other action has followed.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(2) requires a court to dismiss a claim if the court does not have personal jurisdiction over the defendant. The plaintiff has the burden of establishing jurisdiction. Patterson v. Aker Sols. Inc., 826 F.3d 231, 233 (5th Cir. 2016). When a court assesses a non-resident defendant's challenge to personal jurisdiction without holding an evidentiary hearing, the plaintiff bears the burden of presenting “sufficient facts” for a prima facie case of personal jurisdiction. Thiam v. T-Mobile USA, Inc., No. 4:19-CV-00633, 2021 WL 1550814, at *1 (E.D. Tex. Apr. 20, 2021); Celgard, LLC v. SK Innovation Co., Ltd., 792 F.3d 1373, 1378 (Fed. Cir. 2015). The court accepts as true allegations in the plaintiff's complaint, except when they are contradicted by the defendant's affidavits. Thiam, 2021 WL 1550814, at *1. However, “genuine, material conflicts” between the facts in the parties' affidavits and other evidence are construed in the plaintiff's favor. Id.
In matters unique to patent law, Federal Circuit law-rather than the law of the regional circuit-applies. See In re Cray, 871 F.3d 1355, 1360 (Fed. Cir. 2017) (citing Midwest Indus., Inc. v. Karavan Trailers, Inc., 175 F.3d 1356, 1359 (Fed. Cir. 1999)). Whether this Court has personal jurisdiction is just such an issue, so Federal Circuit law governs the substantive questions of law. Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1016 (Fed. Cir. 2009).
Rule 4 is the “starting point” for any personal jurisdiction analysis in federal court. 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(k)(1)(A) provides that “serving a summons or filing a waiver of service 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). Conversely, Rule 4(k)(2) establishes that a court has personal jurisdiction over a defendant in a federal claim outside of state-court jurisdiction if “(A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws.” Fed.R.Civ.P. 4(k)(2).
A court may exercise jurisdiction under Rule 4(k)(2) when three requirements are met: (1) the claim arises under federal law; (2) the defendant is not subject to the personal jurisdiction of any state court of general jurisdiction; and (3) the federal court's exercise of personal jurisdiction must comport with due process. Synthes, 563 F.3d at 1290. Essentially, Rule 4(k)(2) serves as a federal long-arm statute, allowing a district court to exercise personal jurisdiction over a foreign defendant whose contacts with the United States, rather than the forum state, satisfy due process. Id. at 1296.
III. ANALYSIS
Under Rule 4(k)(2), YiFeng is subject to the personal jurisdiction of this court because: (1) Sinox's patent infringement case arises under federal law; (2) YiFeng is not subject to the personal jurisdiction of any state court of general jurisdiction; and (3) the Court's exercise of personal jurisdiction comports with due process because YiFeng is subject to the Court's specific personal jurisdiction.
A. Sinox's Patent Infringement Claims Arise Under Federal Law.
The first prong of Rule 4(k)(2) requires a showing that the claim against the defendant arises under federal law. Synthes, 563 F.3d at 1290. It is undisputed that federal patent law governs Sinox's patent infringement allegations. 28 U.S.C. §1338; Synthes, 563 F.3d at 1296 (“The claim of patent infringement presents a federal question”). Therefore, the first prong of Rule 4(k)(2) is satisfied.
B. YiFeng Contends it is Not Subject to Personal Jurisdiction in Any United States Forum.
The second prong of Rule 4(k)(2) requires that the defendant is not subject to the personal jurisdiction of any state court of general jurisdiction. Synthes, 563 F.3d at 1290. If the defendant “contends that he cannot be sued in the forum state and refuses to identify any other where suit is possible, then the federal court is entitled to use Rule 4(k)(2).” Merial, Ltd. v. Cipla, Ltd., 681 F.3d 1283, 1294 (Fed. Cir. 2012). Thus, a defendant who wants to preclude the use of Rule 4(k)(2) has only to name some other state in which the suit could proceed. Id.
Here, YiFeng contends that it cannot be sued in Texas. ECF No. 34 at 6. However, YiFeng has not named any other state in which the suit could proceed. See generally id. Thus, the second prong of Rule 4(k)(2) is satisfied.
C. The Court's Exercise of Personal Jurisdiction Comports with Due Process.
The third prong of Rule 4(k)(2) requires that the federal court's exercise of personal jurisdiction comports with due process. Synthes, 563 F.3d at 1290. This analysis “contemplates a defendant's contacts with the entire United States, as opposed to the state in which the district court sits.” Id. at 1295. Thus, Rule 4(k)(2) serves as a federal long-arm statute. Id. at 1296.
This prong requires two inquires: (1) whether a defendant has established “certain minimum contacts” with the forum, and (2) whether the exercise of jurisdiction comports with “traditional notions of fair play and substantial justice.” Id. (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). It 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[], thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253 (1958). This “purposeful availment requirement ensures that a defendant will not be hauled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). Minimum contacts are satisfied by contacts creating either general or specific jurisdiction. Thiam, 2021 WL 1550814, at *2 (citing Wilson v. Belin, 20 F.3d 644, 647 (5th Cir. 1994)).
A corporation is only subject to general jurisdiction when its contacts with the state are so “continuous and systematic” they render it “essentially at home” in the forum state. Daimler AG v. Bauman, 571 U.S. 117, 138-39 (2014). Ordinarily, a corporation is only subject to general jurisdiction where it is incorporated or has its principal place of business. Daimler AG, 571 U.S. at 137, 139 n.19. Here, neither Sinox nor YiFeng claims that YiFeng is subject to general jurisdiction.
As for specific jurisdiction, The Federal Circuit applies a three-prong test to determine whether it exists: “(1) whether the defendant purposefully directed activities at residents of the forum; (2) whether the claim arises out of or relates to those activities; and (3) whether the assertion of personal jurisdiction is reasonable and fair.” Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1231 (Fed. Cir. 2010). Even if the contacts are isolated and sporadic, courts may assert specific jurisdiction as long as the cause of action arises out of or relates to those contacts. Synthes, 563 F.3d at 1297. The plaintiff has the burden to show minimum contacts exist under the first two prongs, but the defendant has the burden of proving the exercise of jurisdiction would be unreasonable under the third. Elecs. For Imaging Inc. v. Coyle, 340 F.3d 1344, 1350 (Fed. Cir. 2003).
1. YiFeng Purposefully Directs its Activities at the United States.
Under the first prong for specific jurisdiction, the court must determine whether the defendant “purposefully directed its activities at parties in the United States,” constituting intentional availment of a particular market. Synthes, 563 F.3d at 1297. Sinox has satisfied its burden on this factor in showing that YiFeng attended multiple tradeshows with the Accused Products displayed.
Sinox also argues that YiFeng purposefully directs its activities at the United States because (1) YiFeng has a license with Travel Sentry to use Travel Sentry's trademark on its locks or (2) it has satisfied the stream of commerce test. See ECF No. 56 at 7-11. Because the Court finds that Sinox has established that YiFeng purposefully directed its activities at the United States by attending multiple tradeshows in the United States, the Court need not address Sinox's alternative arguments.
Cases support courts asserting personal jurisdiction over a defendant who has relatively minuscule but still directed activities directed towards a forum. See, e.g., Moore v. Harney Hardware, Inc., No. H-05-4054, 2006 WL 1342820, at *2-3 (S.D. Tex. May 15, 2006); Caddy Prods., Inc. v. Greystone Int'l, Inc., No. 05-301 JRTFLN, 2005 WL 3216689, at *2 (D. Minn. Nov. 29, 2005); Osteotech, Inc. v. GenSci Regeneration Scis., Inc., 6 F.Supp.2d 349, 354 (D.N.J. 1998); Aero Indus., Inc. v. DeMonte Fabricating, Ltd., 396 F.Supp.2d 961, 966- 69 (S.D. Ind. 2005); Crystal Semiconductor Corp. v. OPTI Inc., No. A 97-CA-026 SS, 1997 WL 798357, at *3-5 (W.D. Tex. July 14, 1997). A court can properly assert personal jurisdiction even if the contacts are isolated and sporadic. Synthes, 563 F.3d at 1297.
YiFeng attending multiple tradeshows where it displayed the Accused Product(s) evidences that YiFeng purposefully directed its activities at residents of the United States. YiFeng argues that because it did not sell the Accused Products at the tradeshows or in the United States in general, it has not purposefully directed its activities at residents of the United States. ECF No. 34. However, multiple cases stand for the proposition that a defendant can purposefully direct its activities at residents of the forum without effectuating a sale in the forum. See, e.g., 3D Sys. Inc. v. Aarotech Laboratories, Inc., 160 F.3d 1373, 1379 (Fed. Cir. 1998) (“Commercial activities directed to residents of a forum state may be sufficient even if they are unsuccessful”); Monolithic Power Sys., Inc. v. Meraki Integrated Circuit (Shenzhen) Tech., Ltd., No. 6:20-CV-008876-ADA, 2021 WL 3931910, *3 (W.D. Tex. 2021) (“Sending a sample of the accused product into the forum for the purpose of eliciting business contacts is directed conduct sufficient to support personal jurisdiction in this forum”); Synthes, 563 F.3d at 1285 (concluding that the defendant purposefully directed its activities at parties in the United States due to its tradeshow attendance in the United States).
Synthes, a patent infringement case involving a bone plating system, is particularly applicable to the facts before the Court today. Synthes, 563 F.3d at 1285. In Synthes, plaintiff Synthes alleged that defendant GMReis infringed its patent. Id. GMReis filed a motion to dismiss for lack of personal jurisdiction on the grounds that it neither sold nor made an offer to sell the accused product in the United States. Id. However, the court ultimately denied GMReis's motion to dismiss and held that GMReis purposefully directed its activities to parties in the United States because of its activities at United States tradeshows. Id. at 1297-98. The deliberate contacts of GMReis included traveling to the United States to attend the tradeshows, displaying the accused product at the tradeshows, and doing so as part of its international sales effort. Id. The court concluded that even though GMReis might not have directed its sales activities to residents of the United States, as it explicitly told attendees at the tradeshow that the accused product was not for sale or use in the United States, its other deliberate contacts were sufficient. Id.
Here, YiFeng traveled to the United States to attend multiple tradeshows, just like GMReis. See ECF No. 57-3 (“YiFeng Supp. Interrogatory Response No. 2”). YiFeng displayed the Accused Product(s) to United States residents, just like GMReis. Id. YiFeng traveled to and displayed its products in United States tradeshows to gauge market interest, just like GMReis. See ECF No. 572 (“Pendy Wu Dep.”) 40:18-22. Unlike GMReis, YiFeng did not expressly tell attendees at the tradeshow that the Accused Products were not for sale or use in the United States. Thus, YiFeng had sufficient deliberate contacts under the Synthes holding such that it purposefully directed its actions at the United States.
YiFeng attempts to argue that because its primary targets were non-United States residents, it did not direct its actions to the United States. ECF No. 61 (the fact that the tradeshows “happened to be hosed in the U.S. is beside the point.. .because no U.S. customers have any interest in these zipper locks”). GMReis made a similar argument as it displayed material at the tradeshow explicitly stating that the accused product was not for sale or use in the United States. Synthes, 563 F.3d at 1298. The court determined, however, that this disclaimer was not sufficient. Id. YiFeng had no such disclaimer at its tradeshows. Despite whatever its intent might be, YiFeng still attended a United States tradeshow that United States residents attended with the Accused Product(s). Thus, it purposefully directed its actions at the United States.
YiFeng also attempts to argue that the holding in Indag GmbH & Co. v. IMA S.P.A. is a more applicable precedent to the facts before the Court today. ECF No. 61; 150 F.Supp.3d 946 (N.D. Ill. 2015). In Indag GmbH, a patent infringement case, the court held that the plaintiff failed to satisfy the first prong of the specific jurisdiction test-that the defendant had purposefully directed its actions at the forum. 150 F.Supp.3d at 963-65. The court stated that “a single attendant at a tradeshow is not, alone, sufficient to support a prima facie case of personal jurisdiction.” Id. at 965. Thus, the defendant's single attendance at one tradeshow did not establish specific personal jurisdiction. Id. Unlike Indag GmbH, YiFeng did not attend a single tradeshow. It attended at least six. See YiFeng Supp. Interrogatory Response No. 2; ECF No. 57-4. Thus, this case is distinguishable from Indag GmbH, and its holding is not applicable here. YiFeng's attendance at multiple United States tradeshows supports the conclusion that it purposefully directed its activities at United States residents. Therefore, Sinox met its burden on the first prong of specific jurisdiction.
2. Sinox's Claim Arises Out of or Relates to YiFeng's Activities in the United States.
Under the second prong for specific jurisdiction, the court must determine whether the plaintiff's claim arises out of or relates to the defendant's activities in the United States. Synthes, 563 F.3d at 1297. Here, Sinox's patent infringement claim arises out of YiFeng's activities in the United States.
In Synthes, the court also found that Synthes' claim arose out of GMReis' activities in the United States. 563 F.3d at 1298. Even though the court determined that GMReis' sales efforts were not purposefully directed at United States residents, the court determined that its other actions were sufficient to support its conclusion that Synthes' claim for patent infringement arose out of GMReis' actions in the United States. Id. The court further emphasized that “the sole question before [the court was] whether exercising jurisdiction over GMReis comports with due process,” and thus expressed “no view as to whether Synthes [] made a prima facie showing of [patent infringement].” Id. at 1298-99.
Like Synthes, YiFeng purposefully traveled to the United States with the Accused Products and displayed the Accused Products at the tradeshows, attended by some United States residents, for around six years for the purpose of gauging market interest in its products. See YiFeng Supp. Interrogatory Response No. 2; Pendy Wu Dep. 40:18-22. Under Synthes, these actions are enough to support the conclusion that Sinox's claim arises out of YiFeng's activities in the United States. Thus, Sinox met its burden on the second prong of specific jurisdiction.
3. Personal Jurisdiction over YiFeng is Reasonable and Fair.
Under the third prong for specific jurisdiction, the court must determine whether assertion of personal jurisdiction is reasonable and fair. Synthes, 563 F.3d at 1297. The Federal Circuit has counseled that the exercise of jurisdiction is unreasonable only in “the rare situation in which the plaintiff's interest and the state's interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum.” Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1568 (Fed. Cir. 1994) (citing Burger King Corp., 471 U.S. at 477).
The test of reasonableness and fairness is “a multi-factored balancing test that weighs any burdens on the defendant against various countervailing considerations, including the plaintiff's interest in a convenient forum and the forum state's interest in resolving controversies flowing from in-state events.” Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 429 (Fed. Cir. 1996) (citing Burger King, 471 U.S. at 477). This test requires balancing the following factors: “(1) the burden on the defendant; (2) the interests of the forum state; (3) the plaintiff's interest in obtaining relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the interest of the states in furthering their social policies.” Id.
As to the first reasonableness factor, the burden on YiFeng is reasonable. YiFeng argues that defending in this forum places a significant burden on it because it “is incorporated in China and sells the accused products to factories and manufacturers in China and other non-U.S. countries.” ECF No. 34. However, “progress in communications and transportation has made the defense of a lawsuit in a foreign tribunal less burdensome.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 294 (1980) (quoting Hanson, 357 U.S. at 251). Further, courts often consider the fact that the defendant has traveled to the United States in the past to evaluate whether such travel is an unreasonable burden. See Synthes, 563 F.3d at 1299. Here, YiFeng has frequently traveled to the United States to attend tradeshows, demonstrating that travel is not unduly burdensome.
As to the second and third reasonableness factors, the United States has an interest in adjudicating this dispute, as it involves a United States patent, and Sinox has an interest in obtaining effective and convenient relief. See id. at 1300.
As to the fourth reasonableness factor, even if it applies when the United States is the forum, here the forum is the United States, so no other U.S. forum is available to Sinox for its patent infringement claim. See id. Put another way, there is “no United States forum with which to compare the efficiency of a resolution.” See id. This factor therefore weighs in Sinox's favor.
As to the fifth reasonableness factor, there are no competing social policies. First, there is no other United States forum with which there may be a clash of social policies. Id. Second, there is no reason to believe that the federal government's interest in its foreign relations policies with China will be hindered by allowing the Court to exercise personal jurisdiction over YiFeng. Id. Thus, this factor weighs in Sinox's favor.
In sum, the Court holds that it has personal jurisdiction over YiFeng for Sinox's claims, and exercising that jurisdiction is reasonable under Rule 4(k)(2). The Court DENIES YiFeng's Motion as to its 12(b)(2) grounds.
IV. CONCLUSION
For the foregoing reasons, it is ORDERED that YiFeng's Motion is DENIED. The Clerk of Court is hereby directed to lift the stay of this case that was entered on January 12, 2023. The parties are hereby ORDERED to file an amended scheduling order within seven days.