Opinion
CIVIL ACTION NO. 03-1481
October 9, 2003
MEMORANDUM AND ORDER
Presently before the Court is Defendant Jan Akerberg's Motion to Dismiss Plaintiff's Amended Complaint (Docket No. 5).
I. BACKGROUND
Plaintiff Streamlight, Inc. ("Streamlight") brings suit against Defendants ATD Tools, Inc. ("ATD"), Jan Akerberg ("Akerberg"), and Liberty Bell Equipment Corp. d/b/a Medco Tool ("Medco"), alleging patent infringement under 35 U.S.C. § 271. Specifically, Streamlight alleges infringement of U.S. Patent No. 6, 402, 340 entitled "Stylus Flashlight and Method for Making Same," U.S. Design Patent Nos. 430, 321 entitled "Flashlight" and 452, 024 entitled "Flashlight."
ATD is a corporation located in Missouri. See Pl.'s Am. Compl. ¶ 4. Jan Akerberg is the President of ATD and has been its President for the past five years. See Def.'s Mot. to Dismiss Ex. 2 ¶ 11 (Decl. of Jan Akerberg). Mr. Akerberg argues that the suit against him must be dismissed on three grounds. First, pursuant to Fed.R.Civ.P. 12(b)(2), Mr. Akerberg argues that the suit must be dismissed for lack of personal jurisdiction. Second, Mr. Akerberg argues that the action must be dismissed under Fed.R.Civ.P. 12(b)(3) because venue does not lie in the Eastern District of Pennsylvania. Finally, Mr. Akerberg argues that, under Fed.R.Civ.P. 12(b)(6), Streamlight fails to state a claim upon which relief can be granted.
II. 12(b)(2) MOTION FOR LACK OF JURISDICTION OVER THE PERSON
A. Legal Standard
Under Fed.R.Civ.P. 12(h)(1), the defendant bears the burden of raising lack of personal jurisdiction as it is a waivable defense. See National Paintball Supply, Inc. v. Cossio, 996 F. Supp. 459, 460 (E.D. Pa. 1998). Once the defense has been raised, the burden then shifts to the plaintiff to prove that jurisdiction exists. When determining whether personal jurisdiction exists, the court must construe all facts in a light most favorable to the plaintiff. See Pinker v. Roche Holdings, LTD., 292 F.3d 361, 368 (3d Cir. 2002). A plaintiff, however, may not rest solely on the pleadings to satisfy its burden. See Carteret Savings Bank, F.A. v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992). Rather, a plaintiff must sustain its prima facie burden with sworn affidavits or other evidence that demonstrate, with reasonable particularity, a sufficient nexus between the defendant and the forum state to support jurisdiction. See id.; see also Brooks v. Bacardi Rum Corp., 943 F. Supp. 559, 562 (E.D. Pa. 1996); North Penn Gas Co. v. Corning Natural Gas Corp., 897 F.2d 687, 689 (E.D. Pa. 1990).
Personal jurisdiction consists of two components, one constitutional and the other statutory. First, the plaintiff must demonstrate that jurisdiction is proper pursuant to the law of the forum state and second, the plaintiff must show that jurisdiction comports with Due Process under the United States Constitution. Erinc v. Karavil, No. 00-5729, 2001 WL 1143314, at *4 (E.D. Pa. Sept. 27, 2001). The Supreme Court has long recognized that the due process clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72, 105 So. Ct. 2174, 85 L.Ed.2d 528 (1985); International Shoe Co. v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Indeed, Due Process requires that the defendant have "minimum contacts" within the forum state such that the exercise of jurisdiction comports with "traditional notions of fair play and substantial justice." Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001) (quoting International Shoe, 326 U.S. at 316). Thus, to satisfy the dictates of the due process clause, the defendant must have purposefully directed his conduct toward the forum state or must have purposefully availed himself of the protection of the laws of the forum state. See Burger King, 471 U.S. at 472; IMO Industries v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1998).
Where subject matter jurisdiction is based on a claim arising under patent law, the law of the Court of Appeals of the Federal Circuit controls the determination of whether the district court may exercise personal jurisdiction over any individual. See Hildebrand v. SteckMfcr. Co., 279 F.3d 1351, 1354 (Fed. Cir. 2002); 3D Systems, Inc. v. Aarotech Laboratories, Inc., 160 F.3d 1373, 1377 (Fed. Cir. 1998). However, the Federal Circuit defers to the state's long arm statute in considering personal jurisdiction. See HollyAnne Corp. v. TFT, Inc., 199 F.3d 1304, 1307 (Fed. Cir. 1999); 3D Systems, 160 F.3d at 1377.
Under Fed.R.Civ.P. 4(e), a district court may assert personal jurisdiction over non-resident defendants to the extent permissible under the law of the state where the district court sits. Pursuant to Pennsylvania's long-arm statute, 42 Pa. Cons. Stat. Ann. § 5322(b), the courts are permitted to exercise personal jurisdiction over non-resident defendants to the constitutional limits of the due process clause of the Fourteenth Amendment. See Mellon Bank (East) PSFS v. DiVeronica Bros., Inc., 983 F.2d 551, 554 (3d Cir. 1993); National Paintball Supply, Inc. v. Cossio, 996 F. Supp. 459, 461 (E.D. Pa. 1998).
As this is a patent action, the due process clause of the Fifth Amendment rather than the Fourteenth Amendment governs. However, "due process under either amendment limits the long-arm statutes in the same manner." Modern Mailers, Inc. v. Johnson Quin, Inc., 844 F. Supp. 1048, 1051 (E.D.Pa. 1994); see also Max Daetwyler Corp. v. Meyer, 762 F.2d 290, 293 (3d Cir. 1985) (noting that due process inquiry in patent cases proceeds under the fifth amendment).
The exercise of jurisdiction can satisfy Due Process on one of two distinct theories, a defendant's general or claim-specific contacts with the forum. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414 n. 8-9, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). A defendant is subject to general jurisdiction when it has continuous and systematic contacts with the forum state and exists even if the plaintiff's cause of action arises from the defendant's non-forum related activities. See Helicopteros, 466 U.S. at 414-16 (1984); Vetrotex Certainteed Corp. v. Consolidated Fiber Glass Products Co., 75 F.3d 147, 151 n. 3 (3d Cir. 1996). Specific jurisdiction, in turn, is established when a non-resident defendant has "purposefully directed" his activities at a resident of the forum and the injury arises from or is related to those activities.General Electric Company v. Deutz Ag, 270 F.3d 144, 151 (3d Cir. 2001). Questions of specific jurisdiction are properly tied to the particular claims asserted and thus specific jurisdiction frequently depends on physical contacts with the forum. See id. Thus, where the plaintiff has shown that the defendant has the requisite minimum contacts with the forum state and that the exercise of personal jurisdiction would comport with traditional notions of fair play and substantial justice, the constitutional due process standards underlying specific jurisdiction are satisfied. See, e.g., Lautman v. The Loewen Group, Inc., No. 99-75, 2000 WL 772818 (E.D. Pa. June 15, 2000).
Plaintiff does not allege any facts that would establish "systematic and continuous" contacts between Mr. Akerberg and Pennsylvania sufficient for this court to exercise general personal jurisdiction over Mr. Akerberg. Accordingly, the Court's analysis will focus solely on the exercise of specific personal jurisdiction over Mr. Akerberg.
Defendant Akerberg argues that his contacts with Pennsylvania are solely in his corporate capacity, and hence there is no basis upon which he can be subjected to jurisdiction as an individual. Specifically, Mr. Akerberg asserts that he has had no contacts with Pennsylvania apart from traveling to Pennsylvania once a year for the last five years for a one-day trip. See Def.'s Ex. 2 ¶ 14 (Akerberg Decl.). Mr. Akerberg asserts that the purpose of the trips is to make sales presentations regarding new products to Medco, one of ten distributors that own ATD.See id. ¶¶ 12, 14. Mr. Akerberg further asserts that he has not made any sales presentations regarding the ATD Flashlight nor has he traveled to Pennsylvania to engage in activities related to the ATD Flashlight.See id. ¶¶ 14-15. As President of ATD, Mr. Akerberg states that he is not responsible for selecting which products ATD will import or distribute. See id. ¶ 12. Mr. Akerberg also states that he does not manage the day-to-day operations of ATD. See id. ¶ 16.
In response, Streamlight alleges that Mr. Akerberg, as President of ATD, plays a major role within ATD and particularly, in manufacturing and selling the ATD Flashlight in Pennsylvania. See Pl.'s Resp. to Def.'s Mot. to Dismiss at 1-2. Streamlight alleges that Mr. Akerberg contacted an as-yet-unidentified Taiwanese manufacturer to manufacture the ATD Flashlight for sale in the United States. See id. at 2. Streamlight further alleges that ATD sells the flashlight in Pennsylvania through Medco and that Mr. Akerberg has "actively and knowingly" directed, controlled, or participated in these sales. See id.
As an initial matter, the Court notes that Mr. Akerberg has no contacts with Pennsylvania outside of his corporate capacity. Mr. Akerberg has never lived in Pennsylvania, has never traveled to Pennsylvania except for business trips, and does not own any property nor maintains a bank account or telephone listing in the Pennsylvania. See Def.'s Ex. 2 ¶¶ 1-4, 6. Thus, whether Mr. Akerberg has sufficient contacts with this state to justify the assertion of jurisdiction over him rests on his contacts with the state in his role as President of ATD.
In general, individuals performing acts in a state in their corporate capacity are not subject to the personal jurisdiction of the courts of that state for those acts. See Worldcom Tech., Inc. v. Intelnet Int'l, Inc., No. 00-2284, 2002 WL 1971256, at *4 (E.D. Pa. Aug. 22, 2002); D S Screen Fund II v. Ferrari, 174 F. Supp.2d 343, 347 (E.D. Pa. 2001). This principle is commonly referred to as the "fiduciary shield" or "corporate shield" doctrine. See D S Screen, 174 F. Supp.2d at 347. While the Third Circuit has not decided this issue, this District has recognized an exception to the doctrine so that personal liability may attach when the corporate officer engages in tortious conduct in his corporate capacity in the forum state. See Worldcom, 2002 WL 1971256, at *4; D S Screen, 174 F. Supp.2d at 347. Courts that recognize this exception apply three factors to determine if the officer's corporate contacts should be considered for personal jurisdiction over the officer: (1) the officer's role in the corporate structure; (2) the quality of the officer's contacts; and (3) the nature and extent of the officer's role in the alleged tortious conduct. See Worldcom, 2002 WL 1971256, at *4; D S Screen, 174 F. Supp.2d at 347, United Products Corp. v. Admiral Tool Mfg. Co., 122 F. Supp.2d 560, 562 (E.D. Pa. 2000); Lautman v. the Loewen Group, Inc., No. 99-75, 2000 WL 772818, at *5 (E.D. Pa. Jan. 15, 2000).
1. Mr. Akerberg's Role in Corporate Structure
As President of ATD, Mr. Akerberg represents that he does not oversee the company's day-to-day operations. Although he is a high-ranking official, his responsibilities within ATD are unclear to the Court and Streamlight has not presented any evidence to contradict Mr. Akerberg's assertions. Thus, the Court finds that Mr. Akerberg's role in the corporate structure, as it stands now, is insufficient to weigh in favor of exercising personal jurisdiction over him.
2. Mr. Akerberg's Corporate Contacts in Pennsylvania
Over the last five years, Mr. Akerberg has traveled to Pennsylvania every year for a one-day trip to make sales presentations to Medco. However, Mr. Akerberg has not given sales presentations regarding the ATD Flashlight nor engaged in other activities related to the ATD Flashlight in Pennsylvania. Plaintiff Streamlight does not present any evidence to contradict these facts. Thus, these contact are insufficient to weigh in favor of the exercise of personal jurisdiction by this Court.
3. Mr. Akerberg's Role in the Tortious Conduct
Mr. Akerberg asserts that he is not responsible for selecting which products ATD will import or distribute. Rather, new products are selected by a majority vote of the ten distributor-owners of ATD. See Pl.'s Ex. 2 ¶ 13. Mr. Akerberg also asserts that he has not engaged in any activity related to the ATD Flashlight in Pennsylvania. Streamlight does not present any evidence to contradict these facts. However, Streamlight alleges that Mr. Akerberg has contacted a Taiwanese firm to manufacture the ATD Flashlight for sale in the United States. Further, Streamlight alleges that Mr. Akerberg had an active role in the sale of the ATD Flashlight. Viewing the facts in the light most favorable to Streamlight, the Court finds that the alleged tortious actions did not occur in Pennsylvania. As a result, these contacts are also insufficient to weigh in favor of exercising jurisdiction over Mr. Akerberg.
Accordingly, the Court concludes that the jurisdictional facts, as they stand now, do not support the exercise of personal jurisdiction over Mr. Akerberg.
C. Jurisdictional Discovery
In the alternative, Streamlight contends that, with appropriate discovery, it can establish personal jurisdiction over Mr. Akerberg.
A court has discretion to allow discovery when considering a motion to dismiss for lack of personal jurisdiction. See Massachusetts School of Law at Andover, Inc. v. American Bar Assoc., 107 F.3d 1026, 1042 (3d Cir. 1997); Renner v. Lanard Toys Ltd., 33 F.3d 277, 283 (3d Cir. 1994);Royal Gist-Broades N.V. v. Sierra Products, Ltd., No. 97-1147, 1997 WL 792905, at *7 (E.D. Pa. Dec. 12, 1997); Lee v. Westin Hotel Co., No. 97-3266, 1997 WL 727499, at *2 (E.D. Pa. Nov. 14, 1997). The scope of this discovery is within the court's discretion. See Molnlycke Health Care AB v. Dumex Med. Surgical Prods., Ltd., 64 F. Supp.2d 448, 454 (E.D. Pa. 1999). Jurisdictional discovery is allowed unless the plaintiff's claim is "clearly frivolous." See Massachusetts School of Law, 107 F.3d at 1042. Further, jurisdictional discovery generally relates to corporate defendants and the question of whether they are "doing business" in the state. See id. If the defendant is an individual, the presumption in favor of discovery is reduced. See id. (citing Shaw v. Boyd, 659 F. Supp. 89, 91 n. 1 (E.D. Pa. 1987).
"Parties are entitled to a fair opportunity to engage in jurisdictional discovery to obtain facts necessary for thorough consideration of the [jurisdictional] issue." Southern Ocean Seafood Co. v. Holt Cargo Systems, Inc., No. 96-5217, 1997 WL 539763, at *8 (E.D. Pa. Aug. 11, 1997) (citing Federal Ins. Co. v. Richard I. Rubin Co., Inc., 12 F.3d 1270, 1285 n. 11 (3d Cir. 1993). A court can deny jurisdictional discovery where the party that bears the burden of establishing jurisdiction fails to establish a "threshold prima facie showing" of personal jurisdiction. See Southern Ocean Seafood Co., 1997 WL 539763, at *8. On the other hand, if a plaintiff presents factual allegations that suggest "with reasonable particularity" the possible existence of the requisite "contacts between [the party] and the forum state," the plaintiff's right to conduct jurisdictional discovery should be sustained. See Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 456 (3d Cir. 2003); Mellon Bank PSFS v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992).
Here, Streamlight has presented allegations that, if true, may provide the requisite contacts between Mr. Akerberg and Pennsylvania. Streamlight alleged that Mr. Akerberg was actively involved in directing, controlling, ratifying, and participating in the sale of the ATD Flashlight in Pennsylvania. See Pl.'s Am. Compl. ¶¶ 20-21, 23. Streamlight also alleges that Mr. Akerberg contacted a Taiwanese manufacturer to make the product for sale in the United States. Given these allegations, Streamlight requests additional discovery into Mr. Akerberg's role in contacting the Taiwanese manufacturer, and in evaluating and recommending the ATD Flashlight to be included in ATD's product line. Streamlight's request for additional jurisdictional discovery is specific and non-frivolous. Jurisdictional discovery will be permitted only as to these two matters. Defendant Akerberg's Motion to Dismiss based on lack of personal jurisdiction is denied without prejudice to renew at the close of discovery on October 31, 2003. Within thirty days following the discovery deadline, Streamlight and Mr. Akerberg will be permitted to file additional affidavits and briefs on the issue of personal jurisdiction.
Pursuant to the joint proposed discovery plan of June 16, 2003 (Docket No. 11), Plaintiff and Defendants agreed that fact discovery will end on October 31, 2003.
II. 12(b)(3) MOTION FOR IMPROPER VENUE
A. Legal Standard
Federal Rule of Civil Procedure 12(b)(3) permits a court to dismiss a suit for improper venue. Any civil action where jurisdiction is not based solely on diversity of citizenship may be brought in the district in which a substantial part of the acts or omissions giving rise to the claim occurred. 28 U.S.C. § 1391(b)(2). Further, the patent infringement statute allows for a suit to be brought in any jurisdiction "where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business." 28 U.S.C. § 1400(b). The burden of proving improper venue lies with the moving party. Myers v. Amer. Dental Assoc., 695 F.2d 716, 724-25 (3d Cir. 1992). If a district court finds that the case lays venue in the wrong district or division, then the court may dismiss the action or, if the interests of justice require it, transfer the case to any division or district where it could have been brought. 28 U.S.C. § 1406(a).
B. Analysis
Defendant Jan Akerberg argues that venue is improper under § 1400(b) because (1) he resides in Missouri and (2) he does not have a regular and established place of business in the Eastern District of Pennsylvania. Plaintiff Streamlight counters that venue is proper in this District because, under § 1391(b)(2), sales of the alleged infringing products take place here. Streamlight also contends that since venue is proper for ATD, it is also proper for Mr. Akerberg if he is an alter ego of ATD. In the alternative, Streamlight requests that limited jurisdictional discovery be allowed as to venue.
Since the Court will permit limited discovery on matters relevant to personal jurisdiction, it is appropriate to permit the parties that same opportunity with respect to venue. See Lee, 1997 WL 727499, at *2. Accordingly, Akerberg's Motion to Dismiss based on improper venue is denied without prejudice to renew at the close of discovery on October 31, 2003. Within thirty days following the discovery deadline, the parties will be permitted to file additional affidavits and briefs on the issue of venue.
III. 12(b)(6) MOTION FOR FAILURE TO STATE A CLAIM
A. Legal Standard
Federal Rule of Civil Procedure 12(b)(6) provides that a court may dismiss a complaint "for failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). When considering a motion to dismiss a complaint for failure to state a claim under Rule 12(b)(6), the Court must accept as true all facts alleged in the complaint and any reasonable inferences that can be drawn therefrom. Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir. 1990) (citing Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988)); see also H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50 (1989). A court may only dismiss a complaint where plaintiff can prove no set of facts, consistent with his allegations, which justifies relief. See ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994); Cricrhton v. Schuylkill County, 882 F. Supp. 411, 414 (E.D. Pa. 1995).
The court is not required to credit a plaintiff's "bald assertions" or "legal conclusions" when deciding a motion to dismiss. See id. The Federal Rules merely require "a short and plain statement of the claim showing that the pleader is entitled to relief," enough to "give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Fed.R.Civ.P. 8(a)(2).
B. Analysis
Defendant Akerberg argues that Plaintiff s complaint fails to state a claim upon which relief can be granted under 35 U.S.C. § 271(b). See Def.'s Mot. to Dismiss at 10. Specifically, Mr. Akerberg asserts that Streamlight's "conclusory allegations" are insufficient to state a claim of patent infringement. See id. Plaintiff's complaint alleges that Mr. Akerberg, as the President of ATD, actively and knowingly controlled or participated in acts of patent infringement. Specifically, Mr. Akerberg is alleged to be a "moving forcing" behind the manufacture and sale of the ATD Flashlight in this District, in violation of Patent No. 6, 402, 304 and Design Patent Nos. 430, 312 and 452, 024. See Pl.'s Am. Compl. ¶¶ 5, 19, 20.
Section 271(b) states, "[W]hoever actively induces infringement of a patent shall be liable as an infringer." 35 U.S.C. § 271 (b).
Accepting as true all allegations in the Amended Complaint and all the inferences that can be drawn therefrom, the Court finds that Streamlight has barely met its burden to make out a claim for patent infringement. Accordingly, the Court denies Mr. Akerberg's Motion to Dismiss for Failure to State a Claim.
III. CONCLUSION
Based on the foregoing reasons, Defendant Akerberg's motion to dismiss for lack of personal jurisdiction under Rule 12(b)(2) and motion to dismiss for improper venue under Rule 12(b)(3) is denied without prejudice to renew at the close of discovery. Defendant Akerberg's motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) is denied.
An appropriate Order follows.
ORDER
AND NOW, this 9th day of October, 2003, upon consideration of Defendant Jan Akerberg's Motion to Dismiss Plaintiff's Amended Complaint (Docket No. 5) and Plaintiff's Response thereto (Docket No. 8), and for the reasons stated in the accompanying Memorandum, IT IS HEREBY ORDERED that:(1) Defendant's Motion to Dismiss for Lack of Personal Jurisdiction pursuant to Fed.R.Civ.P. Rule 12(b)(2) is DENIED WITHOUT PREJUDICE to renew at the close of discovery on matters relevant to personal jurisdiction and venue.
(2) Defendant's Motion to Dismiss for Improper Venue pursuant to Fed.R.Civ.P. Rule 12(b)(3) is DENIED WITHOUT PREJUDICE to renew at the close of discovery on matters relevant to personal jurisdiction and venue.
(3) Discovery is permitted as to Defendant's role in contacting the Taiwanese manufacturer and Defendant's role in evaluating and recommending the ATD Flashlight be included in ATD's product line. Within thirty days following the discovery deadline of October 31, 2003, either party may file additional affidavits and briefs on the issue of personal jurisdiction and venue.
(4) Defendant's Motion to Dismiss for Failure to State a Claim pursuant to Fed.R.Civ.P. Rule 12(b)(6) is DENIED.