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finding that because the plaintiff had plausibly alleged literal infringement, a general allegation of infringement under the doctrine of equivalents was sufficient
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Case No. 2:21-cv-08972-AB-SP
2022-09-19
CAO LIGHTING, INC., Plaintiff, v. SIGNIFY N.V. (f/k/a Philips Lighting N.V.), and Signify North America Corporation (f/k/a Philips Lighting North America Corporation), Defendant.
Seth A. Gold, Roya Rahmanpour, Barnes and Thornburg LLP, Los Angeles, CA, Adam M. Kaufmann, Pro Hac Vice, Baenes and Thornburg LLP, Chicago, IL, Heather B. Repicky, Pro Hac Vice, Ronald E. Cahill, Pro Hac Vice, Barnes and Thornburg LLP, Boston, MA, Jeffrey M. Barron, Pro Hac Vice, Todd G. Vare, Pro Hac Vice, Barnes and Thornburg LLP, Indianapolis, IN, Jeffrey C. Morgan, Pro Hac Vice, Barnes and Thornburg LLP, Atlanta, GA, for Plaintiff. Jason M. Dorsky, Pro Hac Vice, Venable LLP, Washington, DC, John D. Carlin, Pro Hac Vice, Sean M. McCarthy, Pro Hac Vice, Venable LLP, New York, NY, Sarah S. Brooks, Venable LLP, Los Angeles, CA, for Defendant Signify North America Corporation.
Seth A. Gold, Roya Rahmanpour, Barnes and Thornburg LLP, Los Angeles, CA, Adam M. Kaufmann, Pro Hac Vice, Baenes and Thornburg LLP, Chicago, IL, Heather B. Repicky, Pro Hac Vice, Ronald E. Cahill, Pro Hac Vice, Barnes and Thornburg LLP, Boston, MA, Jeffrey M. Barron, Pro Hac Vice, Todd G. Vare, Pro Hac Vice, Barnes and Thornburg LLP, Indianapolis, IN, Jeffrey C. Morgan, Pro Hac Vice, Barnes and Thornburg LLP, Atlanta, GA, for Plaintiff. Jason M. Dorsky, Pro Hac Vice, Venable LLP, Washington, DC, John D. Carlin, Pro Hac Vice, Sean M. McCarthy, Pro Hac Vice, Venable LLP, New York, NY, Sarah S. Brooks, Venable LLP, Los Angeles, CA, for Defendant Signify North America Corporation. ORDER GRANTING DEFENDANT SIGNIFY N.V.'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION (Dkt. No. 48) ANDRÉ BIROTTE JR., UNITED STATES DISTRICT COURT JUDGE
Before the Court is Defendant Signify N.V.'s ("Defendant") Renewed Motion to Dismiss for Lack of Personal Jurisdiction ("Motion," Dkt. No. 48). Plaintiff CAO Lighting, Inc. ("Plaintiff") filed an Opposition (Dkt. No. 51), and Defendant filed a Reply (Dkt. No. 52). For the following reasons, the Court GRANTS the Motion.
I. BACKGROUND
Plaintiff alleges that Defendant infringes U.S. Patent 6,465,961 ("the '961 Patent") through its own actions and through actions of its wholly-owned subsidiary Defendant Signify North America Corp. ("Signify NoAC"). See First Amended Complaint ("FAC," Dkt. No. 44) ¶¶ 5, 11, 45. Defendant "utilizes its subsidiaries and intermediaries, such as . . . Signify North America Corporation . . . to design, develop, import, distribute, and service infringing lighting products." FAC ¶ 24.
Defendant is a company organized under the laws of the Netherlands, with its principal place of business in the Netherlands. FAC ¶ 3. Defendant owns subsidiaries located around the world, including wholly-owned Signify NoAC and other subsidiaries in the United States. FAC ¶ 5. Signify NoAC is a Delaware corporation with its principal place of business in New Jersey. FAC ¶ 4. Signify NoAC operates a place of business in this District, located in Ontario, California. FAC ¶ 6.
Defendant moves to dismiss for lack of personal jurisdiction, arguing that it does not have sufficient minimum contacts with California to subject it to personal jurisdiction in this state. For example, Defendant asserts that it is a holding company that generates revenues through investing in companies and that it does not direct or control the day-to-day activities of its subsidiaries, nor does it direct or control the product design, development, manufacture, marketing or sales efforts of its subsidiaries. On the other hand, Plaintiff maintains that Defendant exercises control over Signify NoAC as the parent, owner, and controlling entity of numerous subsidiaries, and that Signify NoAC is not a separate or independent entity. Thus, the degree of Defendant's control over its subsidiaries is central to the dispute here.
II. LEGAL STANDARD
A party may move to dismiss an action for lack of personal jurisdiction. Fed. R. Civ. P. 12(b)(2). To decide whether it is appropriate to exercise personal jurisdiction over a defendant, the court may rely on declarations and documentary evidence submitted by the parties, or hold an evidentiary hearing. Data Disc., Inc. v. Sys. Tech. Assoc., Inc., 557 F.2d 1280, 1289 n. 8 (9th Cir. 1977). The plaintiff bears the burden of establishing that the Court has jurisdiction. CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1073 (9th Cir. 2011).
Federal Circuit law governs the substantive aspects of the personal jurisdiction because the issue is intimately involved with the substance of the patent laws. Avocent Huntsville Corp. v. Aten Int'l Co., 552 F.3d 1324, 1328 (Fed. Cir. 2008). Under Federal Circuit law, a plaintiff can meet its burden of proving personal jurisdiction only if: (1) a forum state's long-arm statute permits service of process; and (2) the assertion of personal jurisdiction would not violate due process under Fourteenth Amendment. Id.
The Due Process Clause of the Fourteenth Amendment limits a state's authority to bind a nonresident defendant to a judgment of its courts. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). When a party is not a resident of that state, the exercise of personal jurisdiction must comport with both the state's "long-arm statute" and constitutional principles of due process. Daimler AG v. Bauman, 571 U.S. 117, 125, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). Because the California long-arm statute "allows to exercise personal jurisdiction over defendants to the extent permitted by the Due Process Clause of the United States Constitution," the two-step inquiry collapses into one federal due process analysis. Harris Rutsky & Co. Ins. Servs. v. Bell & Clements Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003).
To comport with due process, the nonresident must have "certain minimum contacts . . . such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.' " International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). In assessing whether the due process requirement for specific personal jurisdiction is met, the Federal Circuit considers: (1) whether the defendant purposefully directed its activities at residents of the forum state; (2) whether the claim arises out of or relates to those activities; and (3) whether the exercise of jurisdiction would be fair and reasonable. Celgard, LLC v. SK Innovation Co., 792 F.3d 1373, 1377 (Fed. Cir. 2015).
The plaintiff bears the burden of affirmatively establishing the first two elements of the due process requirement. Electronics For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1350 (Fed. Cir. 2003). If the plaintiff meets its burden, the burden shifts to the defendant to prove that personal jurisdiction is unreasonable. Celgard, 792 F.3d at 1378.
III. DISCUSSION
In its FAC, Plaintiff advances several theories of personal jurisdiction, but in the Opposition, Plaintiff pursues only on the stream-of-commerce theory and an alternative argument that Signify N.V. has sufficient minimum contacts with the United States as a whole and is therefore subject to personal jurisdiction under Fed. R. Civ. P. 4(k)(2). As it is Plaintiff's burden to establish that the Court may exercise jurisdiction over Defendant, the Court will only address those bases Plaintiff pursues in its Opposition. Lastly, Plaintiff concludes its Opposition by seeking jurisdictional discovery and leave to amend the FAC.
A. Plaintiff Fails to Establish Minimum Contacts Through the Stream of Commerce Theory.
Plaintiff alleges that Defendant has sufficient minimum contacts with California under a stream-of-commerce theory based on its own placement of infringing goods into the stream of commerce and based on Defendant's alleged control over its subsidiaries who place such goods into the stream of commerce. The Court finds that Plaintiff has not shown that Defendant has sufficient contacts with the forum to confer personal jurisdiction.
"The stream of commerce, like other metaphors, has its deficiencies as well as its utility. It refers to the movement of goods from manufacturers through distributors to consumers, yet beyond that descriptive purpose its meaning is far from exact." J. McIntyre Machinery, Ltd. v. Nicastro, 564 U.S. 873, 881, 131 S.Ct. 2780, 2788, 180 L.Ed.2d 765 (2011). Here, Plaintiff's stream-of-commerce theory does not follow this pattern of goods flowing from manufacturer, to distributor, to consumer. Instead, Plaintiff argues that Defendant—the parent company that does not manufacture anything and thus does not itself place any goods in the stream of commerce—controls its subsidiary Signify NoAC—the manufacturer—to such an extent that Defendant "places" goods into the stream of commerce through Signify NoAC. That Defendant does not itself place any goods into the stream of commerce makes Plaintiff's theory appear unorthodox. However, the stream of commerce theory can nevertheless apply to a nonmanufacturing parent company when it significantly contributes to the placement of the product in the stream of commerce. See, e.g., In re DePuy Orthopaedics, Inc., Pinnacle Hip Implant Prod. Liab. Litig., 888 F.3d 753, 779 (5th Cir. 2018) (stating "it cannot be [ ] that nonmanufacturing [parent corporations] categorically lie beyond the stream of commerce no matter the nature of their contributions," and finding personal jurisdiction where parent "significantly contributed to the product's placement into the stream of commerce").
The precise requirements to establish personal jurisdiction under the stream-of-commerce theory remain unsettled. Asahi Metal Industry Co., Ltd. v. Superior Court of California, reflects two competing views of the stream-of-commerce theory. 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). Justice Brennan opined that due process is satisfied when the defendant places a product into the stream of commerce while being aware that the final product is being marketed in the forum state. Id. at 117, 107 S.Ct. 1026. On the other hand, Justice O'Connor advanced a stricter view and opined that the placement of a product into the stream of commerce, without "something more" is not activity that is purposefully directed toward the forum state. Id. at 109-112, 107 S.Ct. 1026. In Nicastro, the Supreme Court was again asked to address whether stream-of-commerce doctrine requires "something more" to establish purposeful direction, but the court did not reach a consensus. Nicastro, 564 U.S. 873, 881, 131 S.Ct. 2780. Therefore, it remains unresolved whether Justice Brennan's view ("stream of commerce" alone) or Justice O'Connor's view ("something more") controls, and the Courts of Appeals have divided on this question. However, this Court need not resolve that issue because Plaintiff cannot satisfy even the more lenient approach espoused by Justice Brennan.
1. Plaintiff Fails To Establish That Defendant Purposefully Directed Its Activities to the Forum Through the Stream of Commerce.
Plaintiff proceeds by making two arguments: (1) Defendant itself placed the infringing products into the stream of commerce with the knowledge that products will be sold or marketed in the forum, and (2) because Defendant is the "parent company" and the "chief operating decision maker," it exercises control over its subsidiaries and through this control the subsidiaries' conduct of placing infringing goods into the stream of commerce should be attributed to Defendant.
On the facts presented here, the Court finds that neither of Plaintiff's two asserted grounds for personal jurisdiction satisfies even the more lenient Asahi stream-of-commerce test for personal jurisdiction.
Plaintiff's first argument that Defendant itself places infringing products in the stream of commerce fails for the reasons stated in Holland Am. Line, Inc. v. Wartsila N. Am., Inc., 485 F.3d 450 (9th Cir. 2007). There, the Ninth Circuit found that because the defendant "has not put any products into the stream of commerce that might have ended up in the forum, whether through a distributorship agreement or otherwise . . . [t]hat alone ends the inquiry." 485 F.3d at 459. Here, Plaintiff only alleges in a conclusory manner devoid of facts that Defendant itself places products in the stream of commerce. See FAC ¶¶ 23, 25. By contrast, Defendant filed a declaration from Michiel H. Thierry ("Thierry Decl.," Dkt. No. 48-1), the Chief Legal Officer of non-party subsidiary Signify Holding B.V., stating that Defendant "does not design, manufacture, import, market, offer for sale or sell, export or import any products or services, in California or anywhere else throughout the world." Thierry Decl. ¶¶ 9-12. Plaintiff does not present any new evidence to rebut Defendant's declaration. Thus, the Court finds that Plaintiff has not shown that Defendant itself places infringing products into the stream of commerce.
Plaintiff's second argument—that Defendant places infringing goods into the stream of commerce through its control of its subsidiaries—ultimately fails because the Plaintiff fails to establish that Defendant controls its subsidiaries. First, Plaintiff argues that because, in its annual report, Defendant represents that it (Signify N.V.) is the "chief operating decision maker," Defendant controls its subsidiaries, including Signify NoAC. Plaintiff therefore argues that Defendant has caused its subsidiaries to place the infringing goods into the stream of commerce. In response, Defendant explains, through the Thierry Declaration, the relationship between Defendant and its subsidiaries, including Signify NoAC. To start, Thierry attests that "Signify N.V. does not direct or control the product design, development, manufacture, marketing or sales efforts of its subsidiaries (including Signify NoAC) with respect to any products, including any products marketed and sold by Signify NoAC within the United States. Signify N.V. does not direct any marketing, sales or other activities towards California or its residents." Thierry Decl. ¶ 10. Furthermore, "Signify N.V. does not have any direction or control over the day-to-day operations of Signify NoAC. Rather, Signify NoAC has complete control over their respective daily operations." Thierry Decl. ¶ 12. Thierry then explains that Defendant's Board of Management ("Board") is the "chief operating decision maker" for the company, meaning that while it "issues general directives concerning governance, policy and risk management, it does not control Signify N.V.'s subsidiaries in carrying out those directives." Thierry Decl. ¶ 22. The Board "does not direct, manage or control the product design, development, manufacture, marketing or sales efforts of its subsidiaries with respect to any products, in the United States or elsewhere." Id. Thierry further points to the company's "Rules of Procedure" that the Board must abide by. See Rules of Procedure ("Rules," Thierry Decl. Ex. C). These Rules set forth the Board's specific responsibilities which include "to set general policy and strategy objectives, ensure compliance with applicable laws and regulation, prepare annual accounts, monitor corporate social issues, and the like." Thierry Decl. ¶ 23 (summarizing Rules § 1.4 (p. 2)). "The Rules do not permit the Board of Management to direct or control the day-to-day activities, including the commercial activities, of any Signify N.V. subsidiary, such as the product design, development, manufacture, marketing or sales efforts of its subsidiaries with respect to any products, in the United States or elsewhere." Thierry Decl. ¶ 23. This evidence tends to establish that Defendant does not "control" the subsidiaries in such a way as to defeat the separation between parent and subsidiary or to substantially contribute to the placement of the accused products into the stream of commerce.
Defendant also shows that Plaintiff's argument that Defendant controls its subsidiaries sufficiently to trigger personal jurisdiction through the stream of commerce theory is based on several misreadings of the Annual Reports. For example, Plaintiff attempts to attribute statements in the Annual Reports concerning the activities of "Signify" to Defendant Signify N.V. alone. But, the Annual Reports expressly state in their Definitions and Abbreviations sections that the term "Signify" is used generally to refer to "Signify . . . and its subsidiaries," i.e., the collective family of related Signify entities, not to Signify N.V. in particular. See Thierry Decl. ¶ 18. When the Annual Reports refer specifically to Signify N.V., they use the terms "Signify N.V." or the "Company" (with an uppercase C). Thierry Decl. ¶ 20. Thierry goes on to explain that several activities that the Annual Report attributes to "Signify" are not the activities of Signify N.V., as Plaintiff suggests, but rather are the activities of the "collective family of related Signify entities." See, e.g., Thierry Decl. ¶¶ 19-21, 24-27. Thus, the Annual Reports, read as a whole, do not support Plaintiff's claims regarding Signify N.V.'s substantial involvement in placing products in the stream of commerce.
Plaintiff points to a similar recent case in the Eastern District of Texas in which Signify N.V. filed a motion to dismiss for lack of personal jurisdiction. Stingray IP Solutions, LLC v. Signify N.V. et al., No. 2:21-cv-00043-JRG, 2021 WL 9095764 (E.D. Tex. Oct. 25, 2021). The court denied the motion to dismiss, finding that Signify uses its multi-level corporate structure to actively participate "with control and management of group activities related to at least importation, distribution and sale of accused products." Id. at *4.
The key difference here is that, as shown above, Defendant clarifies, with the Thierry Declaration, the Annual Reports' use of the term "Signify" which establishes that Defendant does not control the subsidiaries in the way Plaintiff suggests. The Stingray court did not weigh in on this issue. Furthermore, in Stingray, the Court noted that the defendant's declarant did not state that the defendant did not have control over the subsidiary's daily operations or rebut the plaintiff's allegations of operational control. Id. at *4. Here, by contrast, Defendant's evidence, including the Thierry Declaration, demonstrates Defendant's lack of control and rebuts Plaintiff's allegations, so the Court finds that Plaintiff fails to meet its burden of establishing personal jurisdiction.
For the foregoing reasons, Plaintiff has not shown that Defendant placed any infringing products into the stream of commerce, either directly or through sufficient control of its subsidiaries. Plaintiff therefore cannot satisfy even the more permissive version of the stream-of-commerce theory advanced by Justice Brennan.
2. Plaintiff's claims do not arise out of or relate to Defendant's activities in the forum.
Plaintiff's infringement claims rely on either Defendant placing the accused products into the stream of commerce itself, or Defendant controlling Signify NoAC's placement of products into the stream of commerce. As described above, Plaintiff does not establish that Defendant itself places any product in the stream of commerce nor does Plaintiff show that Defendant has control over its subsidiaries. For these reasons, the Court finds that Plaintiff's claims do not arise out of or relate to Defendant's activities in California because there is no product sold there under Def's direction.
B. Defendant is not subject to jurisdiction under Rule 4(k)(2).
In a final effort to prove jurisdiction, Plaintiff invokes Fed. R. Civ. P. 4(k)(2). Under Rule 4(k)(2), a defendant is subject to personal jurisdiction if "(1) the plaintiff's claim arises under federal law, (2) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction, and (3) the exercise of jurisdiction comports with due process." M-I Drilling Fluids UK Ltd. v. Dynamic Air Ltda., 890 F.3d 995, 999 (Fed. Cir. 2018). The due process requirement of Rule 4(k)(2) contemplates a defendant's contacts with the entire United States, as opposed to the state in which the district court sits. Id.
First, Plaintiff's claims for patent infringement arise under federal law so the first element is satisfied. Second, neither party has alleged facts regarding whether Defendant is subject to the general jurisdiction of any state. However, Defendant has stated that it is not subject to the courts of general jurisdiction in any state. Ordinarily, the plaintiff bears the burden of proving personal jurisdiction in every state over the defendant, and if the defendant wants to prevent the use of Rule 4(k)(2), they must name another state in which the suit could proceed. Holland Am. Line, Inc., 485 F.3d at 461. Absent any statement from the defendant that it is subject to the courts of general jurisdiction of another state, the second requirement is met. Therefore, the first two requirements are met.
However, the Court finds that Plaintiff has not proven the third requirement. The due process analysis under Rule 4(k)(2) is nearly identical to the traditional personal jurisdiction analysis with one significant difference: rather than considering the contacts between the defendant and the forum state, the court considers the defendant's contacts with the nation. Id. Similar to its showing for the stream-of-commerce doctrine relative to California, Plaintiff fails to show that Defendant is more than a holding company and controls its subsidiaries, including the companies in the United States. Defendant, through Declarant Thierry, provides evidence that its does not engage in the design, manufacture, importation, marketing, offers for sale or sales of any products or services, either in California or elsewhere in the United States. Thus, Defendant's contacts with the nation are insufficient to establish personal jurisdiction under Rule 4(k)(2).
C. Plaintiff's Request For Jurisdictional Discovery is Denied.
In the Ninth Circuit, "discovery should ordinarily be granted where pertinent facts bearing on the question of jurisdiction are controverted or where a more satisfactory showing of the facts is necessary." Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1235 (Fed. Cir. 2010) (citing Laub v. U.S. Dep't of the Interior, 342 F.3d 1080, 1093 (9th Cir. 2003)). But, a court may deny a request for jurisdictional discovery if the requesting party does not demonstrate facts sufficient to constitute a basis for jurisdiction. Id. Additionally, where a plaintiff's claim appears to be both attenuated and based on allegations in the face of specific denials made by defendant, the Court need not permit any amount of discovery. See Terracom v. Valley Nat'l Bank, 49 F.3d 555, 562 (9th Cir. 1995). That is, if the jurisdictional discovery request amounts only to a "fishing expedition" it need not be granted. Johnson v. Mitchell, No. CIV S-10-1968 GEB GGH PS, 2012 WL 1657643, *7 (E.D. Cal. May 10, 2012).
Plaintiff argues that it is entitled to discovery because Defendant does not provide sufficient evidence to show they are merely a holding company. To explain Defendant's structure, Defendant filed a declaration from Thierry, the Chief Legal Officer for Signify Holding B.V.—a non-party subsidiary. Plaintiff argues that this suggests that the parent company and the subsidiary share a common legal department and are not separate entities, invoking a potential alter ego theory that should trigger discovery. See Opp'n, 20:15-23. Additionally, Plaintiff claims additional discovery is necessary to understand the roles and relationships of Defendant's various subsidiaries as it relates to the manufacturing and transfer of products.
Plaintiff's argument is unpersuasive. First, that Declarant Thierry is employed by the legal department of Defendant's single direct subsidiary and not by Defendant itself is simply not enough to raise a sufficient question regarding alter ego to warrant discovery, especially given Thierry's explanation of his role and the relationship among the entities. See Thierry Decl. ¶¶ 3, 7, 26. Second, substantively, Thierry makes specific denials of claims in the FAC, explains the relationship between Defendant and its subsidiaries, and clarifies how this relationship is reflected in the Annual Reports. In response, Plaintiff continues to rely on the same mischaracterizations of the Annual Reports even after Defendant corrected them. Given Plaintiff's attenuated theory of jurisdiction and Defendant's specific denials and factual rebuttals to Plaintiff's theory, Plaintiff's request for jurisdictional discovery is tantamount to a "fishing expedition."
Because Plaintiff has not demonstrated that additional discovery is necessary, Plaintiff's request for jurisdictional discovery is DENIED.
IV. CONCLUSION
For the foregoing reasons, the Court lacks personal jurisdiction over Defendant Signify N.V. with respect to Plaintiff's claims. Signify N.V. is therefore DISMISSED without prejudice.
IT IS SO ORDERED.