Opinion
Case No. 5:00 CV 1511.
November 17, 2000.
MEMORANDUM OF OPINION AND ORDER
Before the Court is Defendants' Motion to Quash Summons and Dismiss for Improper Venue and Lack of Personal Jurisdiction ("Defendants' Motion") ( ECF No. 8). Plaintiff Kent Adhesive Products Co. ("KAPCO") alleges that Defendants Ryco Book Protection Services Limited ("Ryco"), Gerald Ryan and Alan Ryan have infringed two of KAPCO's patents as well as induced others to infringe them. Defendants, all residents of Ireland, ask the Court to dismiss this case for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2). For the following reasons, Defendants' Motion is GRANTED.
I.
Plaintiff KAPCO is an Ohio corporation engaged in the business of designing and selling book covers to libraries across the United States. Defendant Ryco is a foreign corporation with its principal place of business in Bray, County Wicklow, Ireland. Ryco also develops and manufactures products designed to protect books. Defendant Gerald Ryan is the Director of the Board, President, Managing Director and CEO of Ryco, who resides in Dublin, Ireland. Defendant Alan Ryan is a Director and President of Ryco, who resides in Delegany, Ireland.
For jurisdictional purposes, the relevant facts are undisputed.
Ryco sold its book covers, which allegedly infringe two of KAPCO's patents, to a distributor in Illinois and a distributor in Wisconsin. The two sales together totalled less than $4,000. The Illinois distributor, The Library Store, Inc., markets the Ryco product through catalogs mailed to libraries throughout the United States, including the State of Ohio. KAPCO learned about the Ryco product by obtaining a copy of The Library Store's catalog. KAPCO then purchased, "and is aware of at least one other Ohio purchaser" who bought, the Ryco product through the catalog. Other than the two sales by an Illinois catalog distributor to persons within Ohio, the defendants have no connection to the State whatsoever.
KAPCO now asks the Court to exercise personal jurisdiction over the defendants on the basis that Ryco sold its allegedly infringing product to a distributor in Illinois who, in turn, sold the Ryco product to two persons in Ohio through its mail-order catalog.
II.
In determining whether a district court has personal jurisdiction over an out-of-state defendant accused of patent infringement, the court must apply Federal Circuit law. Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed. Cir. 1998); Imperial Products, Inc. v. Endura Products, Inc., 109 F. Supp.2d 809, 810 (S.D. Ohio 2000). Where the plaintiff's factual allegations are undisputed, the Court must accept them as true for purposes of determining jurisdiction. Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995) (citing Beverly Hills Fan Co. v. Royal Soverign Corp., 21 F.3d 1558, 1564 (Fed. Cir.), cert. dismissed, 512 U.S. 1273 (1994)).
Under Federal Circuit law, the determination of personal jurisdiction involves a two-step inquiry. First, the district court must determine whether the defendant is amenable to suit under Ohio's long-arm statute, O.R.C. § 2307.382(A). Red Wine Shoe Co., 148 F.3d at 1358; Imperial Products, 109 F. Supp.2d at 810-11; Glasstech, Inc. v. TGL Tempering Sys., Inc., 50 F. Supp.2d 722, 725 (N.D. Ohio 1999). Second, the court must determine whether exercise of personal jurisdiction over the defendant comports with due process. Id.
The Ohio long-arm statute provides jurisdiction over any person or corporation:
(1) Transacting any business in this state;
(2) Contracting to supply services or goods in this state;
(3) Causing tortious injury by an act or omission in this state;
(4) Causing tortious injury in this state by an act or omission outside this state if he 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 this state;
* * *
(6) Causing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons, when he might reasonably have expected that some person would be injured thereby in this state;
O.R.C. § 2307.382(A). The "tort" of patent infringement arises upon the making, using, or selling of an infringing article; thus, the tort occurs where the tortious act is committed — not where the injury is felt. Glasstech, Inc., 80 F. Supp.2d at 727 (citing North American Philips v. American Vending Sales, 35 F.3d 1576, 1578-579 (Fed. Cir. 1994)) See also Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558 (Fed. Cir. 1994). Moreover, infringement and the inducement of infringement requires the commission of an affirmative act. Beverly Hills Fan, 21 F.3d at 1570 (citing 35 U.S.C. § 271).
Because subject matter jurisdiction over the complaint exists by virtue of a federal question, the Due Process Clause of the Fifth Amendment is implicated. Akro Corp., 45 F.3d at 1544; Imperial Products, 109 F. Supp.2d at 811. Due process analysis under the Fifth Amendment is indistinguishable from due process analysis under the Fourteenth Amendment, as enunciated in International Shoe Co. v. State of Washington, 326 U.S. 310 (1945). Akro Corp., 45 F.3d at 1541 (citingNorth American Philips, 35 F.3d at 1580 and Beverly Hills Fan, 21 F.3d at 1565-69)).
Due process requires that a nonresident defendant have certain minimum contacts with the forum state such that the maintenance of the suit "does not offend traditional notions of fair play and substantial justice."Akro Corp., 45 F.3d at 1545 (citations omitted). A nonresident defendant has minimum contacts with Ohio if it has purposefully directed its activities at residents of Ohio and the litigation results from alleged injuries that arise out of or relate to those activities. Akro Corp., 45 F.3d at 1545 (citations omitted). If the court decides that the nonresident defendant has had minimum contacts with Ohio, the defendant must present a compelling case that the presence of some other consideration would render personal jurisdiction unreasonable. Id. at 1545-46 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985)).
Ohio's long-arm statute does not extend to the limits of due process.See Imperial Products, 109 F. Supp.2d at 811 n. 3. That is, the requirements of the state statute are more rigorous than the due process standards. Id.
III.
KAPCO has failed to establish that the defendants are amenable to suit under Ohio's long-arm statute. KAPCO has not shown, under O.R.C. § 2307.382(A)(1-2), that defendants have transacted any business in this State, or that they have contracted to supply services or goods in this State. See Plaintff's Brief in Opposition etc. (ECF No. 13) at 5 ("While such infringing activity is not directly that of Defendants, Defendants clearly induced that activity by selling to distributors known in the in the industry to solicit sales through mail order catalogues sent to libraries across the country, including those within the State of Ohio . . .") (emphasis added).
KAPCO has also failed to establish, under O.R.C. § 2307.382(A)(3), that the defendants caused tortious injury in Ohio by an "act" in the State. As discussed supra, the "tortious injury" of patent infringement arises upon the making, using, or selling of an infringing article. It occurs where the tortious act is committed, not where the injury is felt. And it requires the commission of an affirmative act. The defendants have committed no affirmative act in Ohio.
In addition, the federal statute prohibiting patent infringement, 35 U.S.C. § 271, provides in pertinent part:
a). . . whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.
KAPCO argues that, under § 271(a), the use of the allegedly infringing product by a third party in Ohio is a tortious act of the defendants. Similarly, the Illinois corporation's offer to sell the allegedly infringing product to a library in Ohio was a tortious act of the defendants. The Court cannot accept such a liberal interpretation of the statute, and KAPCO has provided no case law on point that would permit the Court to reach these conclusions. A plain reading of the statute shows that a person or entity who knowingly uses an infringing product or who knowingly offers an infringing product for sale to third parties may also be liable for patent infringement.
There is no evidence that anyone has used the Ryco product in Ohio, much less the defendants. See Plaintiff's Brief in Opposition at 5 ("Most likely, any infringing products purchased by Ohio residents will be used in Ohio.").
KAPCO also suggests that the Court has jurisdiction over the Irish defendants because they induced the use of the product by a person in Ohio, or because they induced the Illinois corporation to market the product to a third party in Ohio. However, the notes accompanying 35 U.S.C. § 271 explain that § 271(b), the inducement provision, forms a basis for contributory patent infringement by a third party, not the manufacturer.
KAPCO has also failed to show that Ryco or the Ryans are amenable to suit under O.R.C. § 2307.382(A)(4), i.e., causing tortious injury in this state by an act outside the State, because KAPCO has not shown that the defendants solicited business or engaged in any other persistent course of conduct in Ohio, or that they derived substantial revenue from goods sold in Ohio. See The Hoover Co., 904 F. Supp. at 674-75. Nor has KAPCO shown, under § 2307.382(A)(6), that the defendants might reasonably have expected that some person would be injured in Ohio. And again, there is no evidence that the defendants committed the requisite "tortious injury" in Ohio. Glasstech, Inc., 80 F. Supp.2d at 727; North American Philips, 35 F.3d at 1578-579; Beverly Hills Fan, 21 F.3d at 1570.
It appears, then, that the alleged tortious act of the defendants occurred, if at all, either in Ireland, where Ryco affirmatively manufactured the product, or in Illinois or Wisconsin, where Ryco affirmatively sold the product. See The Hoover Co., 904 F. Supp. at 675 (although federal courts have sometimes been more willing to find personal jurisdiction over foreign corporations that attempt to avoid liability in all 50 states by using an independent national distributor, it is unnecessary to find jurisdiction where an alternate forum is available).
For this same reason, KAPCO's Rule 4(k)(2) argument fails. See Plaintiff's Brief in Opposition at 6-8.
KAPCO's contentions that the Court has jurisdiction over the Irish defendants does not pass constitutional muster either. Although Ryco was hopeful that the Illinois company or the Wisconsin company would be able to sell its product in the United States, there is absolutely no evidence that Ryco or the Ryans "purposefully directed their activities at" residents of Ohio. Akro Corp., 45 F.3d at 1545. There is no evidence of continuous and systematic contact between the defendants and anyone in Ohio, let alone any single direct contact with the State. Ryco has no offices or employees in Ohio, and has no contractual agreements with an Ohio entity. It has accepted no orders from, nor made any deliveries to, anyone in Ohio. There is no evidence that the defendants have derived any revenue from the sale of the Ryco product in the State. There is no evidence or allegation that Ryco employees have attended industry trade shows in Ohio, been present in Ohio on Ryco's behalf, or conducted business with anyone in the State on any level (i.e., directly or through the use of telephone calls, letters, email, or facsimile transmissions). There is no allegation or evidence that Ryco has any control whatsoever over the Illinois or Wisconsin distributors.
In short, KAPCO cannot show that the Court has long-arm jurisdiction over the Irish defendants, or that exercising jurisdiction over them would comport with due process.
IV.
For the foregoing reasons, Defendants' Motion to Quash Summons and Dismiss for Improper Venue and Lack of Personal Jurisdiction ( ECF No. 8) is hereby GRANTED. Because dismissal of this case is based on jurisdictional grounds, it is WITHOUT PREJUDICE.
JUDGMENT ENTRY
For the reasons stated in the Memorandum of Opinion and Order filed contemporaneously with this Judgment Entry, and pursuant to Federal Rule of Civil Procedure 58, it is hereby ORDERED, ADJUDGED AND DECREED that the above-captioned case is hereby terminated and dismissed as final.IT IS SO ORDERED.