Summary
applying New York Long Arm Statute and federal circuit law to due process analysis in case alleging patent infringement
Summary of this case from Nanovibronix, Inc. v. WeissOpinion
No. 03 Civ. 7831 (BSJ).
July 13, 2004
Opinion
Plaintiff, Avecmedia brought this diversity action against defendants, Emily Gottschalk; The Garr Group, LLC; TGG Packaging Solutions, LLC; Packaging Solutions, LLC; and Acquire, Corp. for patent infringement and tortious interference with contract. Defendants The Garr Group, TGG Packaging Solutions, Packaging Solutions, and Emily Gottschalk ("The TGG Defendants") filed a crossclaim against Acquire for defense costs and fees and indemnification based on an Indemnification and Hold Harmless Agreement between the TGG Defendants and Acquire. Defendant Acquire has moved pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure to dismiss the complaint and the first amended crossclaim for lack of personal jurisdiction.
The Plaintiff bears the burden of establishing that the Court has personal jurisdiction over the Defendant. Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999). In the absence of an evidentiary hearing and prior to discovery, the Plaintiff need only establish a prima facie showing of personal jurisdiction. CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 364 (2d Cir. 1986). The following facts are drawn from the complaint, affidavits, and documents submitted by the parties, and have been construed in the light most favorable to the Plaintiff, and all doubts have been resolved in its favor. CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986).
FACTS
Avecmedia is a Connecticut corporation headquartered in Norwalk, Connecticut. Avecmedia is the owner of several patented packaging systems which enable CDs, CD-ROMs, DVDs and other game discs to be packaged easily on high-volume consumer products, such as drink lids, candy boxes, and mailing devices. (Compl. ¶ 11). TGG is a multimedia (CD/DVD) promotion company located in Voorhees, New Jersey. Acquire, an advertising agency, is a California corporation with its principal place of business and sole office located in California. (McInnis Decl. ¶ 2).
On November 11, 2001, Avecmedia personnel, Defendant Gottschalk and other personnel and/or agents of Defendants Garr Group, TGG, and Packaging Solutions had a meeting in New York City, the purpose of which was to explore a possible business relationship between the companies. (Compl. ¶ 15). Following the meeting, Gottschalk executed on behalf of the Garr Group a Confidentiality/Non-Circumvention Agreement with Avecmedia "whereby the parties agreed that they would engage in discussions regarding Avecmedia's proprietary products and/or product ideas." Each party agreed "not to use, sell, exploit, copy or further develop or disclose to anyone else the other's Confidential Information or to make such Confidential Information public or common knowledge." (Compl. ¶ 16). Avecmedia claims that the TGG Defendants misappropriated Avecmedia's confidential information and used it to manufacture, distribute and sell their own line of products using Avecmedia's technology. Specifically, they claim the products TGG sold to Acquire as part of an advertising campaign are a misappropriation of Avecmedia's patented technology.
In May 2003, Acquire designed an advertising campaign on behalf of Electronic Arts, Disney, MGM, Virgin Records, Zingy, and Capitol Records. The purpose of the campaign, titled "Fun in the Sun" ("FITS"), was to publicize various recordings by providing free samples of client's work to the movie-going public on a CD-ROM ("FITS CD") that was placed inside a see-through drink cup lid ("FITS lids"). The FITS lids were to be distributed to the public by a movie theater operator. Acquire's tasks included creating the master CD-ROM, obtaining the necessary copyright and trademark rights for the CD-ROM content, contracting a lid vendor, and arranging with a theater chain to distribute the drink lids. (McInnis Decl. ¶ 13). Acquire avers that the lids were never meant to be sold either to the theater chain or the end users; they were to be given to the theaters for further free distribution to theater customers. (McInnis Decl. ¶ 13).
In furtherance of the FITS advertising campaign, Acquire entered into an agreement with Defendants TGG, a lid vendor. TGG was to replicate the FITS CD-ROM, package the CD-ROMs into TGG's CD lid, and ship the lid/CD-ROM combination to movie theaters. (McInnis Decl. ¶ 14). The only sale of the allegedly infringing lids took place between TGG and Acquire. Emily Gottschalk negotiated the agreement on behalf of TGG. The negotiations were conducted via telephone between TGG in New Jersey and Acquire in California. (McInnis Decl. ¶ 16). As part of the overall agreement, the parties entered into a written confidentiality agreement and an Indemnification and Hold Harmless Agreement requiring Acquire to indemnify The Garr Group. Acquire alleges that it relied on statements by TGG in "concluding that TGG, as the developer and seller of the lids, had the patent rights that it needed to carry out its obligations under the contract concerning the FITS campaign." (McInnis Decl. ¶ 15).
The FITS CD lids were to be distributed by Cinemark USA, Inc., the operator of a movie theater chain. Cinemark's home office is in Plano, Texas but Cinemark is registered to do business in New York, and operates two movie theaters in New York. (Warshavasky Decl. Ex. J). The theater agreed to distribute the FITS CD-ROM's free to consumers with the purchase of a 44 oz. fountain drink. On or about July 7, 2003 Cinemark began distribution of the FITS lids to its theaters, but Acquire claims that no lids were shipped to New York. (McInnis Decl. ¶ 18). On or about July 11, 2003, the Convex Group, who is not a party to this action, sent a cease and desist letter to Cinemark claiming that TGG's lids infringed four of its US patents and demanded that Cinemark immediately cease and desist the distribution of TGG's promotional lids. Cinemark immediately refused to distribute the TGG lids; distribution was stopped before a single lid was given to a theater patron. (McInnis Decl. ¶ 21).
The patents that were the subject of the Convex Group's cease and desist letter are not the patents that are the source of this suit.
Acquire's Contacts with New York
Acquire does not have any offices, employees, or agents within the State of New York; it does not have a telephone number, assets, bank accounts, or real property within the State of New York; nor does it have subsidiaries within the State of New York. (McInnis Decl. ¶¶ 7-9). Acquire is not licensed to do business within the State of New York nor does it direct advertisements or solicitations within the State of New York. (McInnis Decl. ¶¶ 6, 10). Acquire has sent employees to New York only twice during its six year existence. In March 2002, Ronald McInnis, the President of Acquire, and Tom Taylor were in New York for two days meeting with potential sponsors of a CD-ROM advertising campaign that did not involve the use of a soft drink lid. On June 18, 2003, Ronald McInnis and Rebecca Japsen traveled to New York for three days on behalf of Acquire and had courtesy meetings with the companies that had already agreed to sponsor the FITS advertising campaign. They also met with William Plumb and Alexandra Gordon of Avecmedia to discuss the possibility of doing business. At the meeting, the parties discussed "the possibility of Avecmedia supplying the AvecPAK CD Drink Lid to Acquire for a promotion that Acquire was planning for later that summer in which they were to distribute lids of fountain beverage cups at motion picture theaters." (Gordon Decl. ¶ 3). Following the June meeting Rebecca Japsen continued to be in telephone and email contract with Avecmedia concerning the advertising campaign. There is a disagreement between Avecmedia and Acquire as to whether the advertising campaign discussed on June 20, 2003 was part of the FITS advertising campaign, which is the source of this lawsuit. Avecmedia avers that the meeting concerned the FITS campaign. Acquire's President, Ronald McInnis, counters that the June meeting and subsequent communications with Avecmedia were in connection with a future advertising campaign — a promotion contemplated to take place in August/September 2003 entitled "Back to School." (McInnis Reply Decl. ¶ 2). McInnis claims that, by the time of the meeting with Avecmedia on June 20, 2003, Acquire had already reached an agreement with TGG to provide the soda lids for the FITS promotion. (McInnis Reply Decl. ¶ 2). McInnis presented an invoice Acquire received from Defendant TGG for the FITS soft drink lids as evidence that the FITS campaign was completed by June 20, 2003. The invoice, dated June 2, 2003, calls for partial availability of the lids by June 18, 2003, before the meeting with Avecmedia took place; the invoice also references payments made on May 29, 2003 and June 3, 2003. Furthermore, McInnis states in his declaration that distribution of the FITS lids began on July 7, 2003 and was halted due to the cease and desist letter that Cinemark received from the Convex Group on June 11, 2003. (McInnis Decl. ¶¶ 17-19, Ex. C). All of these events took place prior to the June 20 meeting in New York. In addition, electronic mail communication between Acquire and Avecmedia also states that the time frame for the promotion was the end of August or the beginning of September 2003.
Throughout the telephone and email communication between Acquire and Avecmedia, Avecmedia alleges that its employees, Alexandra Gordon and William Plumb, were working from their home offices in New York state. McInnis and Japsen assert that they did not know Avecmedia's employees were working from their home offices in New York and that they believed the employees were in Connecticut, as Avecmedia is a Connecticut corporation and is headquartered in Connecticut.
DISCUSSION
Personal jurisdiction over a defendant in a diversity action is determined by reference to the law of the state where the court sits. Savin v. Ranier, 898 F.2d 304, 306 (2d Cir. 1990). Personal jurisdictional analysis involves a two-part inquiry. First, a court must determine whether jurisdiction is proper under the forum state's law — in this case New York's long-arm statue, CPLR § 302(a). Second, if the forum state's law supports jurisdiction, then a court must determine whether jurisdiction comports with constitutional due process requirements and does not violate traditional notions of "fair play and substantial justice." Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999).
In the present case, personal jurisdiction cannot be obtained under New York's general jurisdiction statute. N.Y. CPLR § 301 (McKinney 1972). Under the general jurisdiction statute a non-domiciliary is subject to personal jurisdiction in New York with respect to any cause of action if she is "engaged in such a continuous and systematic course of 'doing business' here as to warrant a finding of [her] presence in this jurisdiction."Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 762 (1983) (quoting Simonson v. International Bank, 14 N.Y.2d 281, 285, (1964)). The non-domiciliary must be "doing business" in New York "not occasionally or casually, but with a fair measure of permanence and continuity." Id. Acquire's contacts with New York are insufficient to satisfy this 'doing business' test.
The present case involves a claim of patent infringement, thus the Federal Circuit has appellate jurisdiction, see 28 U.S.C. § 1295(1), including issues relating to personal jurisdiction. Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed. Cir. 1998). In determining whether jurisdiction comports with federal constitutional due process requirements, the Federal Circuit applies the law of the Federal Circuit. Graphic Controls Corp. v. Utah Med. Prods., Inc., 149 F.3d 1382, 1385-1386 (Fed. Cir. 1998); see Akro Corp. v. Luker, 45 F.3d 1541, 1543-44 (Fed. Cir. 1995). However, "when interpreting the meaning of a state's long-arm statute, the [Federal Circuit] elect[s] to defer to the interpretation of the relevant state and federal courts." Id.; see Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed. Cir. 1998).
Avecmedia asserts that personal jurisdiction over Acquire is proper pursuant to CPLR sections 302(a)(1) and 302(a)(3). The TGG defendants argue for personal jurisdiction only under 302(a)(1). A plaintiff must secure personal jurisdiction over a defendant with respect to each claim [he or she] asserts." First Capital Asset Mgmt., Inc. v. Brickellbush, Inc., 218 F. Supp.2d 369, 397 (S.D.N.Y. 2002). As stated above, Avecmedia's claims against Acquire are for patent infringement and tortious interference with contract and TGG's crossclaim is a claim for indemnification based on an Indemnification and Hold Harmless Agreement.
I. CPLR § 302(a)(1) — Transaction of Business or Contract to Supply Goods/Services in New York.
CPLR § 302(a)(1) provides for jurisdiction over a non-domiciliary "who in person or through an agent . . . [1] transacts any business within the state or [2] contracts anywhere to supply goods and services within the state." Although either of these two clauses can form the basis for the exercise of personal jurisdiction, Avecmedia and the TGG defendants only argue for jurisdiction under the first clause.
The parties do not argue for personal jurisdiction pursuant to the second clause of § 302(a)(1); therefore the Court does not address its application.
For personal jurisdiction to be sustained under the first clause of § 302(a)(1), two requirements must be met: first, the defendant must engage in a "transaction of business" and, second, the claim against the non-domiciliary must arise out of that business activity. CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986); Agency Rent a Car Sys., Inc. v. Grand Rent a Car Corp., 98 F.3d 25, 29 (2d Cir. 1996). Section 302(a)(1) is a "single act statute" and "proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities [in New York] were purposeful and there is a substantial relationship between the transaction and the claim asserted." Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460, 467 (1988). The Second Circuit has noted that "a nondomiciliary transacts business under CPLR 302(a)(1) when he purposefully avails [himself] of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws." CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). The following factors are considered in determining whether a nondomiciliary has transacted business: 1) whether the defendant has an on-going contractual relationship with a New York corporation; 2) whether the defendant negotiated or executed a contract in New York, and whether the defendant visited New York after executing the contract with the parties; 3) what the choice of law is in any such contract; and 4) whether the contract requires franchisees to send notices and payments into the forum state or subjects them to supervision by the corporation in the forum state. Agency Rent a Car Sys., Inc. v. Grand Rent a Car Corp., 98 F.3d 25, 29 (2d Cir. 1996). While each of these factors is important, none is dispositive. Id. To determine whether a party has "transacted business" in New York a court must consider "the totality of circumstances when determining the existence of purposeful activity." SAS Group, Inc. v. Worldwide Inventions, Inc., 245 F. Supp.2d 543, 548 (S.D.N.Y. 2003). A defendant may not be subject to jurisdiction based on "random," "fortuitous," or "attenuated contacts." Id.; Burger King v. Rudzewicz, 471 U.S. 462, 475 (1985). The contacts must provide a fair warning to defendant of the possibility of being haled into court in the forum state. Spencer Trask Ventures, Inc. v. Archos S.A., 2002 WL 417192, at *3, 2002 U.S. Dist. Lexis 4396, at *11 (S.D.N.Y. Mar. 18, 2003); Kreutter, 527 N.Y.S.2d at 198.
In addition to the "transacts business" requirement, the cause of action must also "arise from" the defendant's contacts with the forum state. For a cause of action to be deemed to "arise from" a defendant's New York activities, the activities have to be "substantially proximate to the allegedly unlawful acts."Xedit Corp. v. Harvel Ind. Corp., 456 F. Supp. 725, 729 (S.D.N.Y. 1978). There must be an articulable nexus between the business transacted and the cause of action sued upon; in other words, the foreign defendant's transaction of business in New York must "bear a substantial relationship to the transaction out of which the instant cause of action arises." McGowan v. Smith, 52 N.Y.2d 268, 272 (1981).
Plaintiff Avecmedia alleges that its meeting with Acquire held in New York on June 20, 2003 satisfies the "transacts business" requirement of § 302(a)(1). The purpose of the meeting "was to explore a possible business relationship under which Defendant Acquire would utilize Avecmedia's patented packaging systems." (Compl. ¶ 20). At the meeting the parties discussed "the possibility of Avecmedia supplying the AvecPAK CD Drink Lid to Acquire for a promotion that Acquire was planning for later that summer in which they were to distribute lids of fountain beverage cups at motion picture theaters." (Gordon Decl. ¶ 3). "Any contract negotiations which indicate a purposeful invocation of the laws of New York State are transactions of business for the purposes of New York's long arm statute," and a single transaction of business in New York may be sufficient. SAS Group, Inc. v. Worldwide Inventions, Inc., 245 F. Supp.2d 543, 548-49 (S.D.N.Y. 2003) citing Premier Lending Servs., Inc. v. J.L.J. Assocs., 924 F. Supp. 13, 15-16 (S.D.N.Y. 1996). Acquire's meeting with Avecmedia clearly falls short of "indicating a purposeful invocation of the laws of New York." Acquire met with Avecmedia, a Connecticut company, in New York City as a matter of convenience. The purpose of the meeting was to explore a possible business relationship; the meeting did not involve specific contract negotiations nor did the parties execute an agreement. Although "a long line of cases has established that § 302(a)(1) permits the assertion of jurisdiction over a defendant who has engaged in meetings or precontractual negotiations in New York, so long as those negotiations significantly advance or are essential to the formation of an agreement," Goldstein v. CTT Mobile Mgmt. Serv., Inc., 1985 WL 321, at *4, 1985 U.S. Dist. LEXIS 22289, at *11 (S.D.N.Y. Feb. 26, 1985), in the present case the meeting between the parties did not involve precontractual negotiations and an agreement was not formed subsequent to the meeting; therefore personal jurisdiction cannot be based on this isolated meeting in New York.
Moreover, even if the single business meeting held in New York satisfied the "transacts business" requirement of 302(a)(1), it does not satisfy the "arise from" requirement of 302(a)(1). Avecmedia alleges that the subject of the meeting was the FITS advertising campaign and, as such, the present dispute arises out of Acquire's business transaction in New York. However, as stated above, the parties contest the subject of the meeting. Even if this court were to assume that the FITS campaign was discussed at the meeting, the present action does not "arise from" this single contact with New York. The crux of this dispute is the sale of infringing products from TGG to Acquire and the circumvention of the confidentiality agreement between TGG and Avecmedia. The meeting held in New York between Avecmedia and Acquire is unrelated to these claims.
Avecmedia also asserts that at the New York meeting Avecmedia informed Acquire's president McInnis, that McInnis's prototype CD-pak was an infringement of Avecmedia's patent; however, merely telling someone in a jurisdiction that they have a product that could potentially be an infringement of a patent is not enough to confer personal jurisdiction over the defendant. In addition, plaintiff does not offer any legal authority to suggest otherwise.
Avecmedia also asserts that the telephone and electronic mail communication between Acquire and Avecmedia can serve as the basis for personal jurisdiction over Acquire because Avecmedia's employees were working out of their home offices in New York state. However, Acquire clearly did not know that Avecmedia's personnel were working from New York, and Avecmedia did not inform Acquire that its employees were working from New York home offices. Avecmedia is a Connecticut corporation and is headquartered in Connecticut; therefore, Acquire reasonably believed that it was communicating with personnel also located in Connecticut. (McInnis Repl. Decl ¶ 6). The business cards of the two Avecmedia employees, Gordon and Plumb, indicated that their addresses were in Norwalk, Connecticut. Since the location of Avecmedia's personnel was unknown to Acquire, it did not provide Acquire with a fair warning of being haled into court in New York. See Spencer Trask Ventures, Inc. v. Archos, S.A., 2002 WL 417192, at *3, 2002 U.S. Dist. LEXIS 4396, at *11 (S.D.N.Y. Mar. 18, 2003) (the requisite minimum contacts must provide a fair warning to the defendant of a possibility of being subject to the courts of the forum state). In addition, telephone calls and mailings can serve as the basis for personal jurisdiction only if the defendants "conducted these activities in such a manner as to 'project' themselves into New York in order to 'purposely avail' themselves of the benefits of doing business in New York." Nat'l Tel. Directory Consultants, Inc. v. Bellsouth Adver. Publ'g Corp., 25 F. Supp.2d 192, 196 (S.D.N.Y. 1998) (citing Jaisan, Inc. v. Sullivan, 1997 WL 86402, at *3, 1997 U.S. Dist. LEXIS 21907, at *5 (S.D.N.Y. Feb. 28, 1997). As stated above, Acquire was not aware that it was communicating with Avecmedia personnel working from their home offices in New York; therefore, Acquire cannot be said to have been "projecting" itself into New York commerce. Furthermore, just as the claims in this lawsuit do not arise out of the meeting between Acquire and Avecmedia in New York, they also do not arise out of Acquire and Avecmedia's telephone and email communications.
The TGG Defendants argue for personal jurisdiction based on Acquire's business dealings with the record companies whose content was to appear on the FITS CDs. TGG argues that this satisfies the "transacts business" requirement of 302(a)(1). As part of the FITS advertising campaign, Acquire entered into business relationships with Electronic Arts, Disney, MGM, Virgin Records, Zingy and Capitol Records, which are registered to do business in New York. (Warshavsky Decl. Exs. A-G, J). McInnis also had courtesy meetings with these companies in New York in June 2003, after they had contracted to sponsor the FITS advertising campaign. (McInnis Decl. ¶ 12). Furthermore, the TGG Defendants claim that the licensing division of Virgin Records is located within New York; therefore, "at least some of the licensing issue must have occurred in New York, or, at least with a New York company." (TGG Opp. at 5). Even assuming Acquire's business relationship with New York based companies satisfies the "transacts business requirement" of 302(a)(1), these contacts fail to satisfy the "arise from" requirement.
The New York Court of Appeals has clearly stated that there must be an articulable nexus between the business transacted and the cause of action sued upon. McGowan v. Smith, 52 N.Y.2d 268, 272 (1981). In McGowan, Mogi Trading Co., a Japanese exporter, shipped a fondue pot to New York where it subsequently injured an infant. The court held that visits by Mogi's representatives to New York "for the purpose of doing general marketing and research and ascertaining what type of products might be salable in New York" were "purposeful" but they did not "bear a substantial relationship to the transaction out of which the instant cause of action arose." Id. at 272. While these visits did establish Mogi's physical presence within the State, "physical presence alone cannot talismanically transform any and all business dealings into business transactions under CPLR 302(a)(1). Id. at 272 (quoting Presidential Realty Corp. v. Michael Square West, 44 N.Y.2d 672, 673 (1978)).
Here, the dispute at issue involves allegations of patent infringement of Avecmedia's soft-drink lid packaging and tortious interference with a Confidentiality and Non-Circumvention Agreement. Although, Acquire's business relationship with the New York based record companies was related to obtaining the licensing for the music and movies to be placed on the infringing products, the present suit does not arise out of these contacts. Avecmedia's suit would still exist even if blank CDs had been inserted into the drink lids and sold. Acquire's alleged "transaction of business" with New York based companies falls short of a "substantial relationship" as required by 302(a)(1).
II. CPLR § 302(a)(3) — Tort Outside New York/Injury Inside New York
Avecmedia also argues for personal jurisdiction pursuant to CPLR 302(a)(3), which provides in relevant part:
(a) [A] Court may exercise personal jurisdiction over a non-domiciliary, or his executor, or administrator, who in person or through an agent (3) commits a tortious act without the state causing injury to the person or property within the state, . . . if he (I) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce . . .
CPLR § 302(a)(3) (McKinney 2001).
To establish jurisdiction under CPLR 302(a)(3), the plaintiff must make a prima facie showing of the following: 1) that defendants committed a tortious act outside the state; 2) that the cause of action arises from that act; 3) that the act caused injury to a person or property within the State; 4) that defendants expected or should reasonably have expected the act to have consequences in the State; 5) that defendants derived substantial revenue from interstate or international commerce.See LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 214 (2000). In "determining whether the injury in New York is sufficient to warrant § 302(a)(3) jurisdiction [courts] must generally apply a situs-of-injury test, which asks them to locate the 'original event' which caused the injury." Bank Brussels Lambert v. Fiddler Gonzalez Rodriguez, 171 F.3d 779, 791 (2d Cir. 1999). "The 'original event' is, however, generally distinguished not only from the initial tort but from the final economic injury and the felt consequences of the tort." Id. It is of "paramount importance that the exercise of personal jurisdiction must be based on a direct injury within the state and a close expectation of consequences within the state stemming from the tortious act."Id. (internal quotations and citations omitted).
The original events underlying Avecmedia's claim of tortious interference are the Non-Circumvention Agreement, the negotiation of any agreement between TGG and Acquire, and the alleged inducement by defendants TGG, Packaging Solutions, and Acquire to induce breach of the Non-Circumvention Agreement. See Complaint, ¶¶ 32-35, 37-41. Plaintiff cannot establish that any of these events took place in New York. The agreement between Acquire and TGG was negotiated and entered into through communications via telephone with Acquire in California and with TGG in New Jersey. (McInnis Decl. ¶ 16). There is no allegation that any inducement by Acquire for TGG to breach the Non-Circumvention Agreement occurred in New York. Therefore, personal jurisdiction is not proper under 302(a)(3).
Avecmedia's second claim is for patent infringement. In a patent case, the Federal Circuit has held that the situs of the injury is the place where the infringing products are sold.Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1571 (1994); see also Safe-Strap Co. v. RDN Int'l., 2002 WL 14360, *1, 2001 U.S. Dist. LEXIS 21907, at *5 (S.D.N.Y. Jan. 4, 2002). To meet its burden as to the situs of injury, Plaintiff must prove that the infringing products were sold in New York.Westvaco Corp. v. Viva Magnetics, Ltd., 2003 WL 21136729 at *2, 2003 U.S. Dist. LEXIS 8051 (S.D.N.Y. May 15, 2003). In the present case, the FITS lids were sold by the TGG defendants, located in New Jersey, to Acquire, located in California. Plaintiff argues that even though the FITS lids were not sold in New York, Acquire had given the lids to Cinemark theaters who would in turn distribute the lids to customers; Cinemark had two theaters in New York, therefore the lids were going to be distributed to customers in New York. However, because the FITS lids were never distributed to customers, no lids were ever distributed or sold in New York. Even though lids were given to Cinemark, as the Westvaco Court explained, distribution of an infringing product to intermediaries is not enough to meet the injury requirement of 302(a)(3). Here Cinemark is an intermediary, thus personal jurisdiction is not proper under 302(a)(3).