Opinion
Case No. 2:99CV814K
November, 2000
Julie Kathryn Morriss and Randall B. Bateman, MORRISS BATEMAN O'BRYANT COMPAGNI PC, SALT LAKE CITY, UT ENVIROTECH PUMPSYSTEMS, a Delaware Corporation plaintiff.
Harold G. Christensen, Mr., Rodney R Parker, Mr., SNOW CHRISTENSEN MARTINEAU, SALT LAKE CITY, UT; Robert P. Taylor and Edwin H. Wheeler, HOWREY SIMON ARNOLD WHITE, MENLO PARK, CA; Marcus T. Hall, HOWERY SIMON, MENLO PARK, CA; STERLING FLUID SYSTEMS (SCHWEIZ) AG, a foreign company formed under the laws of Switzerland defendant.
Harold G. Christensen, Mr. and Rodney R Parker, Mr. for WILLSER MAINTENANCE B.V., a company organized under the laws of The Netherlands, defendant.
Gordon W Campbell, Mr. and David L. Mortensen, STOEL RIVES LLP, SALT LAKE CITY, UT, for Defendant.
David J. Jordan, Jordon W. Campbell and David L. Mortensen, STOEL RIVES LLP, SALT LAKE CITY, UT, for counter-claimant.
Julie Kathryn Morriss, Randall B. Bateman, MORRISS BATEMAN O'BRYANT COMPAGNI PC, SALT LAKE CITY, UT, ENVIROTECH PUMPSYSTEMS counter-defendant.
MEMORANDUM DECISION AND ORDER
Before the court are Defendant Willser Maintenance B.V.'s ("Willser") Motion to Dismiss for Lack of Personal Jurisdiction and Plaintiff Envirotech Pumpsystem Inc.'s ("Envirotech") Motion for Leave to File Amended Complaint. A hearing on these motions was held on October 24, 2000. At the hearing, Willser was represented by Edwin H. Wheeler. Defendant Thomas Pump Company ("Thomas Pump") was represented by David L. Mortensen. Envirotech was represented by Julie K. Morriss. Before the hearing, the court considered carefully the memoranda and other materials submitted by the parties. Since taking them under advisement, the court has further considered the law and facts relating to these motions. Now being fully advised, the court renders the following Memorandum Decision and Order.
I. BACKGROUND
Envirotech alleges in its original Complaint that Defendants Sterling Fluid Systems (Schweiz) AG ("SFS (Schweiz)") and Willser Maintenance B.V. ("Willser") (previously referred to as the "Sterling Defendants") have infringed Envirotech's patent. The allegedly infringing article is a Combitube pump, which allegedly infringes on a line of rotary pitot pumps sold under the trademark Roto-Jet, which incorporates improvements described and claimed in U.S. Patent No. 4,280,790.
Previously, the Sterling Defendants filed a motion to dismiss based on a lack of personal jurisdiction. Envirotech then sought leave to amend its complaint and requested that the court stay the motion to dismiss and permit Envirotech to conduct further discovery. On April 25, 2000 the court held a hearing on the parties' motions and subsequently issued an Order dated April 28, 2000, dismissing without prejudice SFS (Schweiz) and holding in abeyance both the remainder of the motion to dismiss (regarding Willser) and Envirotech's motion for leave to amend. The court gave Envirotech 120 days to conduct further discovery regarding the personal jurisdiction of various other Sterling Fluid Systems ("SFS") entities, including Willser and the other entities that Envirotech sought to name in its proposed Amended Complaint. The court also directed Envirotech to discuss whether the court has jurisdiction over SFS USA, SFS Europe, and TBG Group, which were entities named in Envirotech's proposed Amended Complaint but which were not discussed in the previous briefs or at the April hearing.
At the hearing, Envirotech agreed that SFS Schweiz should be dismissed, although Envirotech requested that the dismissal be without prejudice, and the Sterling Defendants requested that the dismissal be with prejudice.
After further discovery, Envirotech has now filed a supplemental memorandum in opposition to the motion to dismiss, opposing the dismissal of Willser from this case, and claiming that this court also has jurisdiction over Willser's sister company, Sterling Fluid Systems Ltd. ("SFS Ltd."), which also allegedly manufactured and imported infringing pumps into the United States. At the hearing, upon questioning from the court, Envirotech claimed that it still sought to add the three entities named in its proposed Amended Complaint (i.e., SFS USA, SFS Europe, and TBG Group), even though Envirotech did not provide any analysis regarding these entities in its supplemental brief. Apparently, Envirotech also seeks to add SIHI as a defendant.
A. Facts
Combitube pumps and pump parts have been, and are, manufactured by Willser in The Netherlands and by SFS Ltd. in England. Combitube pumps and pump parts were imported into the United States by Willser, SFS Ltd., SFS USA (located in Indiana), and Sihi Pumps, Inc. (dba SFS USA, hereinafter "SIHI," located in New York). SFS USA and SIHI are both owned by SFS (Americas) Inc., located in Indiana.
Thomas Pump Machinery ("Thomas") is a distributor of Combitube pumps pursuant to a Distribution Agreement (the "Agreement") executed on October 17, 1997 between Thomas and SIHI. Under the Agreement, Thomas is authorized to sell Combitube pumps and pump parts in a "primary area" comprising thirty-five states, including Colorado, Nebraska, North Dakota, South Dakota, and Oklahoma. The Agreement provides that "the Supplier agrees to pay a commission to the Distributor for orders awarded to the Supplier, where the Distributor assisted technically and/or provided a sales opportunity to Supplier outside the Primary Area."
Willser, SFS Ltd., SFS USA, and SIHI have each supplied Combitube pumps to Thomas under the Distribution Agreement. Two Combitube pumps sold by Thomas to customers of Envirotech were shipped to Envirotech's plant in Salt Lake City, Utah, although the customers-not Thomas-shipped them to Envirotech, at Envirotech's request.
It is unclear from the record how Willser, SFS Ltd., and SFS USA supplied Combitube pumps to Thomas when the Distribution Agreement was between Thomas and SIHI, but for purposes of this motion, the court has accepted this fact as true.
In addition, Willser sold and shipped over $47,000 in Combitube pump parts to Envirotech in 1997-98, prior to Envirotech becoming aware that Willser was manufacturing and importing a pump that allegedly infringed Envirotech's patent. Envirotech has not alleged that these pump parts were the infringing parts.
SFS USA manufactures a variety of industrial pumps, and SIHI manufactures a variety of industrial pump products and air injector products, which they have shipped into Utah and sold through several Sterling product resellers located in Utah. SFS Ltd. sells its products in the United States, but it has not sold or shipped product into Utah.
Finally, the Sterling Fluid Systems family of companies maintains a website through which the products of all SFS companies are advertised, including Combitube pumps. Sterling received an inquiry in 1999 from an engineer at Utah State University requesting information and a price quote concerning replacement of a Sterling-made Peerless pump, but there have not been any inquiries regarding the Combitube pump.
II. DISCUSSION A. Legal Standards
Ordinarily, in determining whether personal jurisdiction exists, a plaintiff need only present a prima facie showing, and all factual disputes must be resolved in favor of the plaintiff. Purco Fleet Servs., Inc. v. Towers, 38 F. Supp.2d 1320, 1322 (D.Utah 1999). However, after discovery, a plaintiff's prima facie showing "must include an averment of facts that, if credited by the trier, would suffice to establish jurisdiction over the defendant." Ball v. Metallurgie Hoboken-Overpelt, 902 F.2d 194, 196-97 (2d Cir. 1990); cf. Brownlow v. Aman, 740 F.2d 1476 (10th Cir. 1984) (stating that if a motion to dismiss for lack of personal jurisdiction is decided initially on the pleadings and before discovery, then the plaintiff need only make a prima facie showing of threshold jurisdiction) (emphasis added).
Personal jurisdiction over an out-of-state defendant exists only if the relevant state long-arm statute permits it and the assertion of jurisdiction does not offend the Due Process Clauses of the Fifth and Fourteenth Amendments. See 3D Sys., Inc. v. Aarotech Labs, Inc., 160 F.3d 1373, 1376-77 (Fed. Cir. 1998). In interpreting a long-arm statute, the Federal Circuit Court of Appeals, which is the controlling court in a patent case, id. at 1377, defers to the forum state's highest court. Hollyanne Corp. v. TFT, Inc., 199 F.3d 1304, 1307 (Fed. Cir. 1999). Utah courts interpret Utah's long-arm statute as coextensive with the limits of due process. See Soma Medical Int'l v. Standard Chartered Bank, 196 F.3d 1292, 1297 (10th Cir. 1999) (citing Starways, Inc. v. Curry, 980 P.2d 204, 206 (Utah 1999)). Thus, this court need only determine whether the assertion of personal jurisdiction over Defendants comports with due process under the Constitution of the United States. See Hollyanne Corp., 199 F.3d at 1307; 3D Sys. Inc., 160 F.3d at 1377.
Personal jurisdiction "can be broken down into either `general' or `specific' jurisdiction, and whether a court can assert either type of jurisdiction depends upon the subject matter of the claim asserted and the number and quality of `contacts' the non-resident defendant has made with the forum." Harnischfeger Eng'rs, Inc., v. Uniflo Conveyor, Inc., 883 F. Supp. 608, 611 (D.Utah 1995). General jurisdiction is the assertion of personal jurisdiction over a defendant due to the totality of the defendant's contacts with the forum state, regardless of whether such contacts are related or unrelated to the claim for relief. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15 (1984). Where general jurisdiction exists, the defendant is subject to litigation of all types, without regard to the subject matter. Id. For transactionally unrelated contacts to give rise to general jurisdiction over a defendant, those contacts must be "continuous and systematic," such that the exercise of personal jurisdiction is reasonable under federal due process. Id. at 415-16.
A court may exercise specific jurisdiction if a defendant has purposefully directed its activities at residents of the forum and the litigation results from alleged injuries that arise out of or relate to those activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). The exercise of specific jurisdiction is appropriate only where the defendant has contacts with the forum that are related to or arise out of the cause of action. Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1359 (Fed. Cir. 1998). The Federal Circuit has set forth a three-part test to determine whether a district court may properly exercise specific personal jurisdiction over a defendant in a patent infringement suit: (1) whether the defendant purposefully directed its activities at the residents of the forum; (2) whether the claim arises out of or is related to those activities; and (3) whether the assertion of personal jurisdiction is reasonable. Hollyanne Corp. 199 F.3d at 1307-08.
B. Envirotech's Arguments
Envirotech argues that this court has both general and specific jurisdiction over Willser and SFS Ltd. (collectively "Defendants") because they provided for the importation of infringing goods into the United States with the full knowledge that those infringing goods would be entering the stream of commerce of the United States and could end up in the forum state. By importing the infringing pumps and offering them for sale in the United States, Envirotech claims that the SFS Defendants have perpetrated the tortious act of infringement upon a resident of Utah (Envirotech), thus subjecting themselves to the jurisdiction of this court under Utah's long-arm statute. Envirotech relies on Engineered Sports Products v. Brunswick Corp., 362 F. Supp. 722, 727 (Utah 1973) and Honeywell Inc. v. Apparatewerke, 509 F.2d 1137 (7th Cir. 1975) for the proposition that patent infringement is a tortious act under the Utah long-arm statute.
In addition, Envirotech relies on 35 U.S.C. § 271(a), which provides that "whoever without authority makes, uses, offers to sell or sells any patented invention, within the United States, or imports in to the United States any patented invention during the term of the patent therefor, infringes the patent." Envirotech states that no case concerning personal jurisdiction under this amended section has been decided, but that factually similar cases decided prior to the amendment of section 271(a) have paved the way for establishing the jurisdictional exercise of the courts under this section.
Envirotech claims that Defendants knowingly directed the importation of the pumps to enable their resale by a designated distributor, Thomas Pump, and by their sister companies, SFS USA and SIHI. Envirotech argues that because Thomas, SFS USA, and SIHI were all entitled to sell Combitube pumps in Utah, "it is not unforeseeable that Willser and SFS Ltd. could reasonably anticipate or foresee that some of those pumps could end up in Utah." Indeed, Envirotech claims, Defendants even provide an incentive to Thomas and the suppliers of the Combitube pumps to sell outside the designated "primary area." Envirotech argues that it is irrelevant that no Combitube pumps have ever been sold in Utah. Rather, Envirotech claims, the only material question is whether it was foreseeable that the pumps could end up in Utah. Envirotech contends that this court would not exceed its powers under due process if it asserts personal jurisdiction over corporations that deliver products into the stream of commerce with the expectation that they will be purchased in the forum state.
Envirotech also claims that Defendants could reasonably foresee that the infringing pumps might find their way into Utah by means other than regular distribution channels. Here, established purchasers of Envirotech's patented goods have purchased infringing articles, believing them to be Envirotech's. Subsequently, the confused purchasers seek redress from the manufacturer of the patented goods, including seeking exchange of the infringing goods for the patented goods. Thus, it claims, it is not unreasonable for Defendants to foresee that the imported infringing goods might end up in Utah.
Additionally, Envirotech argues that jurisdiction over Willser is proper because Willser sold Combitube pump parts to Envirotech in Utah, for a price of $47,000. Also, Envirotech claims, the Sterling Fluid Systems family of companies maintains maintain a website through which Combitube pumps are advertised.
Envirotech also contends that because SFS USA and SIHI maintain distribution channels or have established relationships with product resellers in the state of Utah for various products that are manufactured or sold by those companies, it is not unreasonable for Willser and/or SFS Ltd. to anticipate that Combitube pumps or pump parts could end up in Utah as a result of these channels of trade.
Finally, Envirotech argues that because it is unlikely that all of the Defendants and proposed Defendants can be found to have contacts with one single forum, the minimum contacts that Willser and SFS Ltd. have with Utah are sufficient to render personal jurisdiction appropriate here so that judicial resources may be saved.
C. Analysis 1. General Jurisdiction a. Willser and SFS Ltd.
There is no basis for this court to exercise general jurisdiction over Willser or SFS Ltd. Willser is a Dutch corporation with its principal place of business in Breda, The Netherlands. It has no officers, agents, or property in Utah. Similarly, SFS Ltd. is located in England and has never had any contact with Utah. With one exception, neither entity has ever solicited or made sales in Utah. None of their distributors has ever sold products in Utah with their knowledge. Neither is registered to do business in Utah, and neither has an agent for the service of process in Utah. The sole transactions in Utah were Willser's three sales to Envirotech of pump components in 1997 and 1998, totaling about $47,000.
To be subject to general personal jurisdiction, a defendant must have "continuous and systematic" business contacts with the forum such that the exercise of personal jurisdiction is reasonable under federal due process. See Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984). Three isolated sales of non-infringing products over two years, amounting to $47,000, is insufficient to establish general jurisdiction. See, e.g., ESAB Group, Inc. v. Centricut, LLC, 34 F. Supp.2d 323, 329 (D.S.C. 1999) (finding that $145,000 in sales in two years is insufficient to establish general jurisdiction); Harnischfeger Eng'rs, Inc. v. Uniflo Conveyor, Inc., 883 F. Supp. 608, 611-12 (D.Utah 1995) (determining that $39,000 in sales to Utah companies was insufficient to establish general jurisdiction).
The "distribution channels" for Sterling products, consisting of various local and regional independent distributors, do not support the assertion of general jurisdiction over Willser or SFS Ltd. Aside from the $47,000 sale, there is no evidence that either of the Defendants have distributed any products to customers in Utah, through distributors or otherwise. In any event, in the absence of an agency relationship, the acts of a distributor are not ordinarily attributable to a foreign manufacturer for the purposes of establishing general jurisdiction. Kuenzle v. HTM Sportund Freizeitgerate AG, 102 F.3d 453, 459 (10th Cir. 1996).
Finally, the existence of a website that merely provides information without allowing for the transaction of business cannot support a court's exercise of general jurisdiction over a defendant. See 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1380 (Fed. Cir. 1998); Soma Medical Int'l v. Standard Charter Bank, 196 F.3d 1292 (10th Cir. 1999); Patriot Sys., Inc. v. C-Cubed Corp., 21 F. Supp.2d 1318, 1324 (D.Utah 1998). Envirotech contends that an inquiry was made in 1999 from an engineer at Utah State University requesting information and a price quote concerning a pump made by Sterling. However, the ability to make mere inquiries over the Internet, without the ability to transact business, is insufficient for this court to exercise personal jurisdiction over Defendants.
Thus, this court cannot exercise general jurisdiction over Willser or SFS Ltd. Even if Envirotech's burden was merely the pre-discovery burden of establishing a prima facie case, Envirotech has not satisfied even that burden regarding general jurisdiction.
b. SFS USA, SIHI, TBG, and SFS Europe
Before the April 2000 hearing on this matter, Envirotech filed a Motion for Leave to Amend, which sought to add SFS USA, SFS Europe, and TBG Group. In that motion, Envirotech did not attempt to establish that this court had jurisdiction over these entities. At that time, the Sterling Defendants argued that granting leave to amend would be futile because this court could not exercise personal jurisdiction over these entities. Consequently, in the Order of April 28, 2000, this court specifically instructed Envirotech, after conducting discovery pertaining to the personal jurisdiction of all the SFS entities, "to discuss whether the court has jurisdiction over SFS USA, SFS Europe, and TBG Group so that the court can determine whether permitting Plaintiff to amend its Complaint would or would not be futile." Order of April 28, 2000 at 3.
Envirotech, however, has failed to provide sufficient facts to meet its burden after discovery. It failed to even mention SFS Europe and TBG Group. While Envirotech stated in its "fact" section that SFS USA and SIHI (a company that Envirotech now apparently seeks to add as a defendant) both manufacture a variety of industrial pumps, which they have shipped into Utah and sold through several Sterling product resellers located in Utah, Envirotech has failed to provide any specific evidence or analysis concerning whether these contacts with Utah are systematic and continuous. At the October 24, 2000 hearing, Envirotech claimed that SFS USA's and SIHI's contacts with Utah are systematic and continuous, but such a conclusory allegation is insufficient to carry its burden after discovery and a specific instruction from the court to discuss these issues in its supplemental briefing.
Because of this omission-even after a specific instruction from the court to address this very issue-both the court and Willser were uncertain as to whether Envirotech still sought to add these parties as defendants. It was only upon questioning by the court at the October 24, 2000 hearing that Envirotech informed the court that it still sought leave to add SFS USA, SFS Europe, TBG Group, and a newly proposed defendant, SIHI.
Accordingly, the court finds that it cannot exercise general jurisdiction over SFS USA, SIHI, SFS Europe, or TBG Group. Thus, allowing the filing of Envirotech's proposed Amended Complaint would be futile and Envirotech's motion for leave to amend its Complaint is therefore denied.
Envirotech does not appear to contend that the court has specific jurisdiction over these entities. However, even if it did claim that the court had specific jurisdiction over these entities, the court finds that it does not.
2. Specific Jurisdiction
Envirotech's primary argument is that specific personal jurisdiction is proper under Utah's long-arm statute, which provides for jurisdiction where tortious injury is caused within Utah. However, this court has consistently rejected financial injury to a plaintiff resulting from conduct occurring outside of Utah as a basis for exercising specific jurisdiction over a defendant. Patriot Sys. Inc., 21 F. Supp.2d at 1321 (finding no personal jurisdiction over a defendant in a trade secret misappropriation/copyright infringement case where there was no allegation of culpable conduct occurring in Utah, stating, "[t]his court has previously recognized that causing financial injury to a Utah business has been flatly rejected by the Utah courts as a basis for exercising specific personal jurisdiction.") (internal quotations omitted); Harnischfeger, 883 F. Supp. at 613.
In addition, Envirotech is mistaken when it asserts, based on Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558 (Fed. Cir. 1994) , that the situs of injury for patent infringement is the residence of the patentee. Rather, it is abundantly clear that the Beverly Hills Fan court rejected that proposition, holding that the situs of injury for patent infringement is the place where the infringing activity occurs. Beverly Hills Fan Corp., 21 F.3d at 1571; see also North American Philips Corp. v. American Vending Sales, 35 F.3d 1576, 1578-79 (Fed. Cir. 1994).
Similarly, Envirotech's argument that 35 U.S.C. § 271(a) confers jurisdiction is without merit. There is no indication that this amended section was intended to confer personal jurisdiction on a foreign manufacturer in any forum in the United States, as Envirotech argued.
As previously noted, specific personal jurisdiction over patent infringement is appropriate only where: (1) the defendant purposefully directed its activities to the forum state; (2) the claim arises out of or is related to those activities; and (3) the assertion of jurisdiction is reasonable. See Hollyanne Corp. v. TFT, Inc., 199 F.3d 1304,1307-08 (Fed. Cir. 1999); Akro Corp v. Luker, 45 F.3d 1541, 1546-49 (Fed. Cir. 1995). However, Envirotech has not alleged that any Sterling entity purposefully directed any activities related to the allegations of patent infringement at Utah. There is no evidence that Defendants made, used, sold, or offered for sale the accused Combitube product in Utah. Two of Envirotech's out-of-state customers shipped a Combitube pump to Envirotech-at Envirotech's request-for replacement with one of Envirotech's pumps. There is no allegation that either of these pumps was made, used, sold, or offered for sale in Utah. Nor would it matter because none of the Sterling entities is alleged to have played any role in a decision by one of these customers to engage in acts in Utah. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 296-98 (1980) (finding that a seller of chattels not subject to personal jurisdiction based on the mere foreseeability that a chattel may reach the forum; rather, a defendant must purposefully avail itself of the privilege of conducting activities with the forum). In addition, the $47,000 sale by Willser to Envirotech was unrelated to the allegations of infringement, and the Utah distribution channels of SFS USA and SIHI are not related to the allegations of patent infringement.
Envirotech cites various cases for the proposition that sending an accused product into the stream of commerce with the expectation that the product will reach the forum is sufficient to establish specific personal jurisdiction over the defendant. However, as Willser points out, in each of those cases, the accused product was sold or used in the forum, unlike the situation in the instant case. While the United States Supreme Court has recognized that the stream of commerce theory provides a valid basis for finding requisite minimum contacts, see Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987), the Court did not agree on the requirements for application of that theory. Four of the Justices believed that the exercise of personal jurisdiction requires more than the mere act of placing a product in the stream of commerce, id. at 112, but four of the Justices thought additional conduct was needed. Id. at 117 (Brennan, White, Marshall, Blackmun, JJ., concurring in part and concurring in the judgment). In addition, the Federal Circuit has not found it necessary to reach this issue. See Beverly Hills Fan, 21 F.3d at 1566. With no controlling authority on this point, this court finds that merely placing a product in the stream of commerce, without more, is not enough for this court to exercise personal jurisdiction.
The existence of a website is also an insufficient basis for the assertion of specific jurisdiction, despite Envirotech's claim to the contrary. As mentioned above, the website does not allow for the transaction of business, and moreover, there is no evidence that any Utah resident contacted any Sterling entity regarding the Combitube pump. Thus, it simply would not be reasonable for this court to exercise specific jurisdiction over Defendants.
Finally, Envirotech's claim that this court should exercise personal jurisdiction, based on the fact that Envirotech will otherwise be required to litigate this claim in multiple forums, is misplaced. The fact that Envirotech might have to litigate in multiple forums is entirely irrelevant to a determination regarding personal jurisdiction.
III. CONCLUSION
For the foregoing reasons, and good cause appearing, IT IS HEREBY ORDERED that Willser's Motion to Dismiss (docket entry #4) is GRANTED, and Envirotech's Motion for Leave to Amend Complaint (docket entry #18) is DENIED.