Opinion
Civil Action No. 03-CV-033.
April 23, 2004
MEMORANDUM AND ORDER
In this patent infringement action, Angelo Fan Brace ("Angelo"), a Delaware corporation with its principal place of business in Philadelphia, Pennsylvania, accuses Allied Moulded Products ("Allied") of infringing Angelo's patent covering two ceiling fan boxes. Arguing lack of personal jurisdiction and improper venue, Allied, an Ohio corporation, has moved to dismiss Angelo's complaint or to transfer this matter to the United States District Court for the Northern District of Ohio.
When a defendant moves to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2), the plaintiff bears the burden of establishing jurisdiction. Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002). In resolving the motion, the Court must accept as true all allegations in the complaint and "construe disputed facts in favor of the plaintiff." Id. at 368.
Personal Jurisdiction
Jurisdiction over a nonresident defendant in a patent infringement case implicates the same due process considerations present in diversity cases. Max Daetwyler Corp. v. Meyer, 762 F.2d 290, 293 (3d Cir. 1985). A federal court in Pennsylvania can exercise personal jurisdiction over a nonresident defendant to the extent permissible under Pennsylvania's long arm statute, 42 PA. CONS. STAT. ANN. §§ 5301, 5322. FED. R. CIV. P. 4(k)(1)(A). Long arm jurisdiction still must meet the constitutional requirements of the due process clause of the Fourteenth Amendment. Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1221 (3d Cir. 1992). In sum, the test is whether the exercise of personal jurisdiction is constitutional.Once a defendant raises lack of jurisdiction, the plaintiff must demonstrate facts establishing a basis for jurisdiction. N. Penn Gas v. Corning Natural Gas Corp., 897 F.2d 687, 689 (3d Cir. 1990). Consequently, the plaintiff must prove "with reasonable particularity" that sufficient contacts exist between the defendant and the forum state to justify the exercise of jurisdiction. Provident Nat'l Bank v. Cal. Federal Sav. Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987).
Personal jurisdiction over nonresident defendants can be general or specific. Farino, 960 F.2d at 1221. Angelo does not assert general jurisdiction. It does argue that Allied is subject to specific jurisdiction in this district.
Specific jurisdiction arises when the cause of action is related to or arises out of the defendant's contacts with the forum. Pennzoil Prods. Co. v. Colelli Assocs., Inc., 149 F.3d 197, 201 (3d Cir. 1998). A finding of specific jurisdiction requires a determination that a defendant, by the nature of its conduct in the forum, could have reasonably anticipated being sued there; and, if so, whether the exercise of personal jurisdiction is consistent with "fair play and substantial justice." Id.
Though patent infringement actions are statutorily created, tort principles are applied in determining a jurisdictional base. See, e.g., N. Am. Phillips Corp., 35 F.3d at 1578-79 (citing Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1570-71 (Fed. Cir. 1994)). The Pennsylvania long arm statute permits the exercise of jurisdiction over an individual or corporation that causes tortious injury in the state. 42 PA. CONS. STAT. ANN. § 5322(a)(3). Because a state has an interest in preventing the importation of infringing products, patent infringement occurs in the state where infringing sales are made. N. Am. Phillips Corp., 35 F.3d at 1578-79. When it sells its products in a state, the alleged infringer has fair warning that it can be sued there. Id. Thus, if a plaintiff establishes that a defendant sold the accused product in the forum state, personal jurisdiction is proper there because the sale of an infringing article to a buyer in that state is deemed tortious conduct within the meaning of the long arm statute. Id.
A nonresident defendant may be amenable to specific jurisdiction in Pennsylvania if it transacts business in Pennsylvania by performing a single act in the Commonwealth from which it recognizes a pecuniary benefit, ships merchandise into the Commonwealth, contracts with residents of the Commonwealth or causes harm or tortious injury to residents of the Commonwealth. 42 PA. CONS. STAT. ANN. § 5322(a).
Allied argues that it does not own real estate nor have an office, a telephone number, mail address, bank account or agent for service of process in the Eastern District of Pennsylvania. It also claims that it derives minimal monetary benefit from Pennsylvania residents. Mot. to Dismiss at 3-4. Yet, it only presents its sales activity in a part of the state. See, e.g., Pennzoil Prods., 149 F.3d at 200-01, 203 (stating that proper inquiry is defendant's contacts with the entire forum state).
Although the volume of sales in the eastern part of the state is not great, it is not because Allied did not attempt to sell more of its boxes in Pennsylvania. Allied's products are sold "through a network of sales agents to electrical distributors nationwide." Allied's Pennsylvania sales are a direct result of its relationship with Quad-Tech, its sales representative located in this district. Purchase orders for Allied's electrical boxes in Eastern Pennsylvania must be placed through Quad-Tech, which establishes new customer accounts that are forwarded to Allied. (Supp'l Westmeyer Aff. ¶¶ 5-6). Thus, Quad-Tech is the conduit through which Allied's boxes flow into the Eastern District of Pennsylvania. (Supp'l Westmeyer Aff. ¶ 10).
http://www.alliedmoulded.com/companyprofile.cfm.
http://www.alliedmoulded.com/outlet_national.cfm? product=outletboxesstate=pa.
There is more than a mere possibility that Allied's products will enter Pennsylvania. Allied has taken and continues to take steps to introduce its products in Pennsylvania. These are not incidental transactions. They are part of a purposeful plan to sell products here with a sales agent whose goal is to increase Pennsylvania sales. These efforts demonstrate a deliberate decision to market Allied's products in Pennsylvania.
Allied concedes that it shipped the alleged infringing products to this jurisdiction. However, it contends that because the products were shipped "freight on board," the transaction was actually conducted in Ohio and not in Pennsylvania. This distinction is immaterial as long as the alleged infringer voluntarily placed the infringing articles into the stream of commerce. N. Am. Phillips Corp., 35 F.3d at 1580-81. Allied placed the accused boxes in the market flow and knew they were destined for Pennsylvania where they would be installed and used. Therefore, because Allied purposefully sold the accused products to residents of this jurisdiction, the exercise of personal jurisdiction over Allied, grounded on the Pennsylvania long-arm statute, comports with due process requirements.
Venue
A patent infringement action may be brought against a corporate defendant in any judicial district where the defendant resides. 28 U.S.C. § 1400(b). A corporation is deemed to reside in any judicial district in which it is subject to personal jurisdiction. 28 U.S.C. § 1391(c)); VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1580 n. 17 (Fed. Cir. 1990). As discussed earlier, Allied is subject to personal jurisdiction in this district. Therefore, contrary to Allied's argument, venue in the Eastern District of Pennsylvania is proper.
Venue Transfer
Allied contends that even if it is subject to personal jurisdiction and venue is proper in the Eastern District of Pennsylvania, this case should be transferred to the United States District Court for the Northern District of Ohio pursuant to either 28 U.S.C. § 1404(a) or § 1406(a). Transfer or dismissal under § 1406(a) can only be granted where the original venue is improper. Jumara v. State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir. 1995). Because venue is proper in this district, § 1406(a) does not apply. Therefore, we shall examine the relevant factors under § 1404(a) to determine whether transfer is appropriate.
A defendant moving for transfer of venue bears the burden of demonstrating that (1) the case could have been brought initially in the proposed transferee forum; (2) the proposed transfer will be more convenient for the parties and witnesses; and, (3) the proposed transfer will be in the interest of justice. 28 U.S.C. § 1404(a); Jumara, 55 F.3d at 879; Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970). Once the defendant establishes that the action could have been brought in the proposed district, the court must weigh several private and public interest factors to determine whether the balance of conveniences tips in favor of transfer. Jumara, 55 F.3d at 879-80.
Among the factors considered when determining whether transfer is more convenient for the parties and in the interest of justice are: (1) the plaintiff's choice of forum; (2) the defendant's preferred forum; (3) the place where the claim arose; (4) the relative ease of access to the sources of proof; (5) the convenience of the parties as demonstrated by relative financial status and physical location; (6) the availability of compulsory process for the attendance of witnesses; (7) the convenience of the witnesses; (8) the practical problems that make trial of a case expensive and inefficient; and, (9) "public interest" factors, such as congestion of court dockets and the relationship of the jury and the community to the underlying district. Jumara, 55 F.3d at 879-80.
The district court has broad discretion in deciding a motion for transfer of venue. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988). Despite this wide latitude, a transfer motion should not be granted without a careful weighing of factors favoring and disfavoring transfer. See Shutte, 431 F.2d at 24-25. Indeed, we begin our analysis by favoring the plaintiff's forum selection because the defendant bears the burden of demonstrating that the balancing of conveniences and the interest of justice clearly favor transfer. Jumara, 55 F.3d at 879-80.
The plaintiff's choice of venue is usually given paramount consideration. Shutte, 431 F.2d at 25. Angelo, a Delaware corporation with its principal place of business in this district, chose to bring the action here. Allied argues that the infringement claims arose in Ohio and that forcing Allied to litigate this matter in the Eastern District of Pennsylvania would cause it undue hardship because many witnesses and exhibits are located in Ohio.
A plaintiff's choice of forum is given less deference only when the plaintiff does not reside in the chosen forum and none of the operative facts occurred there. 15 CHARLES ALAN WRIGHT ET AL., FED. PRAC. PROC. JURIS. 2D § 3848 (2d ed. 1986). Angelo, as a resident of this forum, is entitled to litigate this dispute in the Eastern District of Pennsylvania. Litigating in the Northern District of Ohio would frustrate Angelo's choice of forum and subject it to the same hardships claimed by Allied. Allied's concerns that witnesses will be inconvenienced by having to travel from Ohio and the cost of transporting evidence from Ohio to Pennsylvania is not persuasive. Travel and transport from Ohio to the Eastern District of Pennsylvania is relatively easy. Although Allied may have developed and manufactured the allegedly infringing fan boxes in Ohio, infringing activity also took place in Pennsylvania. Therefore, Allied's convenience factors do not outweigh those of Angelo nor do they overcome Angelo's choice of forum.
Conclusion
Allied is subject to specific jurisdiction here, venue is proper in this district and Allied has not demonstrated that transfer of venue is appropriate. Accordingly, Allied's motion to dismiss will be denied.