Opinion
Case No. 2:04 CV 240 PGC
June 2, 2004
ORDER DENYING MOTION TO DISMISS AND DENYING MOTION FOR PRELIMINARY INJUNCTION
Plaintiffs Kyle Bateman and Action Target ("Action Target") filed a motion for a preliminary injunction on their underlying patent claims. Defendant Blackwater Target Systems, LLC, ("Blackwater") responded with a motion to dismiss this matter for lack of personal jurisdiction. The court heard argument on June 1, 2004, and after reviewing the pleading the court DENIES the motion to dismiss and DENIES the motion for a preliminary injunction.
I. Motion to Dismiss
Action Target alleges personal jurisdiction over Blackwater and bears the burden of alleging facts to support a prima facie case for personal jurisdiction. In reviewing facts at this early stage, the court must view the facts in the light most favorable to the plaintiff. The facts in this case support the exercise of personal jurisdiction over Blackwater.
Arguably the facts alleged by Action Target could support the exercise of general jurisdiction over Blackwater. Blackwater has sold a different product to Hill Air Force Base in Utah for over $1800. Moreover, in Fall 2003, an "eager" sales person from Blackwater spoke with Mr. Stillwell of Rangemasters of Utah about its "Bear" product line. Mr. Stillwell received a bid on a some of the "Bear" products totaling several thousand dollars from Blackwater. Mr. Still well's handwritten notes indicate that during his discussions with Blackwater about the "Bear" products patent issues arose. Mr. Stillwell's notes also indicate that Blackwater Action Target would not be "happy campers" on the infringement issues. Though it appears the discussion centered around the "Bear" product line, at some point thereafter the shoot houses at issue here became the focus of their discussion. This repeated contact with Utah demonstrates that Blackwater was actively selling and marketing its products in the state of Utah and arguably could support a finding of general jurisdiction over Blackwater based on their repeated contacts with Utah.
However, a finding of specific jurisdiction is better supported. In March 2004, shortly after an industry convention in Las Vegas, Mr. Stillwell began actively looking into purchasing one of Blackwater's allegedly infringing shoot houses. Blackwater sent Mr. Stillwell a bid for over $100,000 and a schematic drawing of the dimensions of a proposed shoot house. The bid also included costs such as delivery and installation fees. At this time, Blackwater was aware of the potential infringement with the Action Target shoot house and went ahead with the proposed bid.
Whether using Federal Circuit law (as Action alleges) or Tenth Circuit law, the basic inquiry is whether exercise of jurisdiction comports with due process concerns. The court agrees with Action Target that Federal Circuit precedent controls. Under the Federal Circuit precedent the basic inquiry is (1) whether the defendant purposefully directed its activities at the residents of the forum; (2) whether the claim arises out or relates to those activities; and (3) whether the assertion of personal jurisdiction would be reasonable and fair.
See 3D Systems, Inc., v. Aarotech Laboratories, 160 F.3d 1373, 1379 (F.3d. Cir. 1998).
Finding jurisdiction on the facts of this case is supported by the Federal Circuit's holding in 3D Systems. In that case, the Federal Circuit concluded that a defendant who sent promotional letters and price quotations to residents of the forum state purposefully directed its activities at residents of the forum state and that a price sheet was a sufficient "offer to sell" (under the patent infringement statute, 18 U.S.C. § 271(a)) such that the plaintiff's claim arose out of the defendant's action, thus establishing the second prong necessary for personal jurisdiction. If 3D Systems is good law, personal jurisdiction appears proper here.
3D Systems, has, however, been questioned. As explained in Moldflow Corporation v. Simecon, Inc., the Federal Circuit revisited the "offer to sell" issue in Rotec Industries v. Mitsubishi Corp., in light of the Supreme Court's decision in Pfaff v. Wells Electronics, Inc. Pfaff was decided two days before 3D Systems and not analyzed in 3D Systems. In Rotec, the Federal Circuit concluded that, in the wake of Pfaff, the "offers to sell" language of § 271 must be interpreted in light of ordinary principles of contract law. This holding is in tension with the 3D conclusion.
296 F. Supp.2d 34 (D.Mass, 2003).
215 F.3d 1246, 1251 (Fed. Cir. 2000).
515 U.S. 55 (1999).
See Moldflow, 296 F. Supp. at 43.
Under the latter-decided Rotec opinion, the question becomes what are ordinary principles of contract law. Such principles require that all terms of any contract are contained in the offer to sell. As to the bid on the shoot house, it is a close question on whether or not it is an offer to sell. Time of delivery and terms of payment are arguably missing, and these are ingredients to a contract. On the other hand, there is arguably sufficient definiteness to create a contract, as the bid includes distinct quantity terms, in the wake of specific negotiations, as well as a blue print for construction, and delivery and installation pricing. The shoot house bid is significantly more detailed than a mere price sheet and appears to be an offer to sell.
Id. at 44.
The court must satisfy itself that it has jurisdiction before proceeding. However, the problems with relying on 3D Systems have not been raised, at this juncture, by Blackwater. Moreover, the court believes there may be problems with the Mold/low analysis, which focuses on the second prong of the Federal Circuit's test — whether a claim arises out or relates to the allegedly infringing activities. Case law not discussed by Mold/low holds that "relates to" is a very broad phrase. Accordingly, at this juncture in light of the evidence and arguments before it, the court will find that it has specific personal jurisdiction over Blackwater. This conclusion is also supported by this court's holding in Systems Software v. New Customware.
248 F. Supp.2d 93.
Blackwater raises the issue that the timing of Mr. Stillwell's request for pricing of the allegedly infringing shoot house (two days before this suit was filed) creates an appearance of Action Target "manufacturing" jurisdiction in Utah. At oral argument, Action Target presented a declaration in which Mr. Stillwell indicated that it was, in fact, Blackwater's sales representative who first proposed Rangemasters consider one of its shoot houses. At this point, viewing the facts in the light most favorable to the plaintiff, the court has no evidence before it (other than fortuitous timing) demonstrating manufactured jurisdiction. However, out of an abundance of caution, the court will allow Blackwater to conduct discovery on this jurisdiction issue, beginning immediately. Should Blackwater find evidence of manufactured jurisdiction or evidence for this court to follow the Moldflow analysis, it is of course free to ask the court to reconsider its decision.
II. Motion for Preliminary Injunction
The court DENIES the motion for a preliminary injunction for the reasons stated at the hearing.
III. Scheduling
The court directs the parties to comply with the following scheduling guidelines when conducting their scheduling conference:
Fact Discovery January 15, 2005
Expert Discovery February 15, 2005
Dispositive Motions March 15, 2005
4 — Day Jury Trial September 7, 2005
SO ORDERED.