Arlington Industries, Inc. v. Electronic Custom Distributors, Inc., No. 3:2010cv00842 - Document 43 (M.D. Pa. 2011)

Court Description: MEMORANDUM AND ORDER granting 8 Motion to Dismiss for Lack of Jurisdiction.Signed by Honorable A. Richard Caputo on 9/15/11 (jam, )

Download PDF

Arlington Industries, Inc. v. Electronic Custom Distributors, Inc. Doc. 43 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA ARLINGTON INDUSTRIES, INC., CIVIL ACTION NO. 3:10-CV-842 Plaintiff, v. (JUDGE CAPUTO) ELECTRONIC CUSTOM DISTRIBUTORS, INC., Defendant. MEMORANDUM Defendant Electronic Custom Distributors moves to dismiss the present action for lack of personal jurisdiction. (Doc. 8). Because the Court lacks personal jurisdiction over the Defendant, the Motion will be granted. I. Background Arlington Industries, Inc. (A rlington), brought this acti on against Electronic Custom Distributors, Inc. (ECD). Ar lington seeks a declaratory j udgment of non-infringement and invalidity of one of ECD’s patents. Arlington is in the business of distributing electrical fittings, connectors, and related materials, while ECD distributes audio, video, and telecommunication products to dealers. Arlington is the record owner ofPatent Number 7,563,979, whichrelates to a protective cable chute for routing low-voltage cables through walls. Arlington manufactures products that are covered by the claims of the cable chute patent. At issue in this case is ECD’s Patent Number 7,654,405 (‘405 Patent), relating to a Dockets.Justia.com method and system of a detachable nose faceplat e. When an installe r embeds electrical wires in a wall, the detachable nose faceplate can cover the unsightly hole while allowing a wire to be threaded through the wall. The application leading to the faceplate patent was filed on October 17, 2006. Around March 2, 2007, the patent was assigned to ECD. While the patent applicati on was still pending, ECD amended it three times. The second amendment was filed on April 8, 2008 andadded five new claims. On February 26, 2009, ECD filed a third amendment to the application, adding nine new claims. Arlington alleges that ECD made these amendm ents in order to expand the cove rage of its patent so it would encompass some of Arlington’s products. On September 23, 2009, an ex-parte requ est for a reexamination was filed for Arlington’s cable chute patent pursuant to 35 U.S.C. § 302. The request cited to prior art, including the ECD faceplate application, as bearing on the patentability of the cable chute patent. Although the party requesting the reexam ination is kept confidential, ECD has admitted in jurisdictional discovery that it requested the reexamination. Anticipating that ECD would file suit fo r infringing on the faceplate patent, Arlington brought this action, seeking a declaration that it is not infringing on the faceplate patent and that the claims of the faceplate patent are invalid. ECD moved to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). (Doc. 8). Arlington opposed the Motion, moving in the alternative for jurisdictional discovery. The parties were a llowed forty-five days to conduct discovery on the issue of personal jurisdiction pertaining to the time period beginning January 1, 2003, to the date the complaint was filed, and were gi ven the opportunity to submit supplemental 2 briefing. The Motion to Dismiss has now been fully briefed and is ripe for review. 1 II. Discussion A. Legal Standard The law of the Federal Circuit, rather than the regional circuit, controls the determination of personal jurisdiction “over out-of-state patentees as declaratory judgment defendants.” Hildebrand v. Steck Mfg. Co, Inc., 279 F.3d 1351, 1354 (Fed. Cir. 2002) (citing Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed. Cir. 1998)). When personal jurisdiction is challenged, the pl aintiff carries the bur den of showing that jurisdiction exists. Iowa State Univ. Research Found., Inc. v. Greater Continents Inc., 81 F. App’x 344, 349 (Fed. Cir. 2003) (citingBurlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir. 1996)). District courts are permitted to exercise perso jurisdiction over a nonresident to the nal extent allowed under the laws of the state where the district court sits. Fed. R. Civ. P. 4(e). Two inquiries are required in determining whether jurisdiction exists over an out-of-state defendant: whether a forum state's long-arm stat te permits service of process and whether u assertion of personal jurisdiction violates due process." Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1017 (Fed. Cir. 2009) (quoting Genetic Implant Sys. v. Core-Vent Corp., 123 F.3d 1455 (Fed. Cir. 1997)). Here, as Pennsylvania’s long-arm statute ex tends to the limits of due process, 42 Pa.C.S. § 5322(b), the two tests collapse solely into a due 1 The parties’ supplemental briefs have been filed under seal. (Docs. 28, 31 and 40). As such, some specific statistics have been excluded to avoid disclosure of confidential or privileged information. 3 process inquiry. Such due process requires that an out-o f-state defendant “have certain minimum contacts with [the forum] such that the maint enance of the suit does not offend ‘traditional notions of fair play and substantial justice.’” International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). See Goodyear Dunlop Tires Operations v. Brown, 131 S. Ct. 2846, 2853 (U.S. 2011) (affirming that “[t]he canonical opinion in this area remai s International Shoe”). Due process also requires some n voluntary action by the defendant; this action servesas “fair warning that a particular activity may subject [it] to the jurisdiction of a foreign sovereign.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (citations omitted). Having the requisite minimum contacts with the forum state may subject the defendant to either general jurisdiction or specific jurisd iction. General jurisdiction allows a court to “hear any and all claims against [a party] w hen their affiliations with the State are so ‘continuous and systematic’ as to render them essentially at home in the forum State.” Goodyear, 131 S. Ct. at 285 (citing International Shoe, 326 U.S. at 317). The hallmark of general jurisdiction are “conti nuous and systematic” contacts with the forum state, even where the cause of action is unrelated to those contacts. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414–16 (1984). Conversely, specific jurisdiction “arises out of or “relates to” the cause of action when ” the contacts are “isolated or specific.” Burger King, 471 U.S. at 472–73. It depends not on an entity’s overall vulnerability to suit in a form, “on an ‘affiliatio[n]between the forum and but 4 the underlying controversy,’ principally, [an] activity or an occurrence that takes place in the forum State and is therefore subjec to the State's regulation.” Goodyear, 131 S. Ct. at 2851 t (citing von Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1136 (1966)). Federal Rule of Civil Procedure 12(b)(2) prov ides for dismissal of an action where the district court lacks personal jurisdiction over the defendant. Once challenged, the plaintiff bears the burden of establishing personal jurisdiction. Iowa State Univ. Research Found., Inc. v. Greater Continents, Inc., 81 Fed. Appx. 344 (Fed. Cir. 2003). Where, as here, there has been no evidentiary hearing, “a plaintiff need only to make a prima facie showing that defendants are subject to personal jurisdiction.” Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed. Cir. 2003). B. General Jurisdiction “When the cause of action does not arise out of or relate to the foreign corporation's activities in the forum State, due process is not offended by a State's subjecting the corporation to its in personam jurisdiction when there are sufficient contacts between the State and the foreign corporation.” Helicopteros Nacionales De Colom. v. Hall, 466 U.S. 408, 414 (1984). Unfortunately, “[n] either the United States S upreme Court nor [the Federal Circuit’ has outlined a specific test to follow when analyzing whether a defendant’s activities within a [forum] are ‘continuous and systematic.’” LSI Indus. Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000). Instead, in analyzing the Defendant’s contacts with the forum, a district court will look to the aggregate effect of those contacts as a whole.Aeration Solutions, Inc. v. Dickman, 85 5 Fed. Appx. 772, 774 (Fed. Cir. 2004). Taken together, the court will consider “whether the company's contacts are substantial for the forum.” Lakin v. Prudential Sec., 348 F.3d 704, 709 (8th Cir. 2003); Provident Nat'l Bank v. California Federal Sav. & Loan Asso., 819 F.2d 434, 437-38 (3d Cir. 1987). Helicopteros Nacionales De Colom. v. Hall considered whether a Texas state court could exercise jurisdiction over a Colombian co rporation (“Helicol”) for the crash of one of its helicopters in Peru. 466 U.S. 408, 409 (1984). The combined contacts with the Tex forum as included “sending its chief executive officer to Houston for a contract-negotiation session; accepting into its New York bank account checks drawn on a Houston bank; purchasing helicopters, equipment, and training services from[a Texas corporation] for substantial sums; and sending personnel to . . . Fort Worth for training.” Id. at 416. These contacts were not trivial; the helicopters purchased in Texas constituted 80% of Helicol’s fleet and constituted more than four million dollars of commerce over seven years preceding the accident. Id. at 411. Still, the Court held that these contacts did not “constitute the kind of continuous and systematic general business contacts” nec essary for general jurisdiction. Id. at 412. In finding as much, the Court promulgated a long list of considerationsit found relevant to a lack of jurisdiction: Helicol never has been authorized to dobusiness in Texas and never has had an agent for the service of process within the State. It never has performed helicopter operations in Texas or sold any product that reached Texas, never solicited business in Texas, never signed any contract in Texas, never had any employee based there, and neverrecruited an employee in Texas. In addition, Helicol never has owned r eal or personal property in Texas and never has maintained an office or establishment ther . Helicol has ma e intained no records in Texas and has no shareholders in that State. 6 Id. at 411. Relying on Helicopteros, the Federal Circuit found a lack of general jurisdiction by the State of California in a similar declaratory judgment action asserting patent invalidity and noninfringement against a British defendant. Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1014-18 (Fed. Cir. 2009). That defendant was “not registered to do business in California, nor [did] it have any facilities, assets, employees, or agents there.” Id. at 1014. However, weighing in favor of general juri sdiction, the defendant had: (1) flown company representatives to California to negotiate a potential license agreement with the plaintiff; (2) entered into a “collaborative agreement” to “j ointly develop a Centre of (Microarray) Excellence” with a third-party company with Califor ia offices; (3) “entered into non-exclusive n licenses with ‘about ten’ Californi companies;” (4) participated i three scientific conferences a n in California; (5) electronically published (via website) a scientific publication to which the University of California was a top-ten institutional visitor; and (6) sold twenty of its systems to a California company for at total of $7,600,or 1% of its revenue for that year.Id. at 1015-16. Even with so many forum contacts, the Feder l Circuit held that “nothing here exceeds a the commercial contacts that the Supreme Court held were insufficient in Helicopteros.” Id. at 1018 (noting that “[ l]ike the defendant in Helicopteros, Oxford has no actual physical presence or license to do businessin California”). Instead, itwas a “classic case of sporadic and insubstantial contacts with the forum state, which are not sufficient to establish general jurisdiction over the defendants in the forum.” Id. at 1017 (citing Campbell Pet Co. v. Miale, 542 F.3d 879, 884 (Fed. Cir. 2008)). The instant case concerns Defendant ECD, a Texas corporatio n with its principal 7 place of business in Texas. It has never r egistered to do business in Pennsylvania, never held any license or permit issued by a Pennsyl vanian authority, or paid any Pennsylvania taxes. It has never employed a Pennsylvani a resident or utilized one as an agent or consultant. ECD has never had any facility in Pennsylvania, nor maintained any interest in real estate, personal property, or intangible pr perty in Pennsylvania. It has never attended o any trade shows or marketing functions in Pennsylvania, does not advertise in Pennsylvania, and none of its employees have ev er traveled to Pennsylvania on business. Aside from limited purchases and sales, Defendant has never contracted with a Pennsylvania resident. Instead, Plaintiff alleges ECD’s activity within the forum in the form of sales, purchases, newsletters, and websites combines to form the basis of general personal jurisdiction. For the reasons stated below, the C ourt finds these contacts insufficient to form the basis for general jurisdiction over Defendant ECD. 1. Defendant’s Purchases and Sales in Pennsylvania Defendant’s extremely limited commerce in Pennsylvania is an inadequate foundation for general jurisdiction. It s clear that limited commercial activity shall “not foreclose a finding i that the company has sufficient minimum contacts with the forum.” Intermec, Inc., 2007 U.S. Dist. LEXIS 2851 at Alien Tech. Corp. v. *14-16 (D.N.D. Jan. 4, 2007) (citations omitted). However, this does not mean that neg ligible commercial activity is alone sufficient. “[T]he overall nature of a business's activity is a more reliable indicator of ‘continuous and systematic’ contacts, than focusing on a small percentage of revenue generated from that particular state.” Verona v. United States Bancorp, 2009 U.S. Dist. LEXIS 14863 (E.D. Pa. Feb. 23, 2009). 8 Instead of considering percentages alone, a court should look to whether a company “has substantial and significant ties with the Commonwealth through the sale of its product.” AMP Inc. v. Methode Electronics Inc., 823 F.Supp. 259, 268 (M.D. Pa. 1993). In Alien Tech., the court applied such an analysis to find that 0.0571% of sales revenue was sufficient for general jurisdiction over a foreign corporation registered in the forum, paying taxes in the forum, and conducting business trips within the forum. Alien Tech. Corp. v. Intermec, Inc., 2007 U.S. Dist. LEXIS 2851 at*14-16 (D.N.D. Jan. 4, 2007) (ci ations omitted). Similarly, 3M t Innovative Props. Co. v. InFocus Corp. held that 0.064% of sales in a forum were adequate to exercise general jurisdiction where the defendant had established distribution channels, generated twenty million dollars in sales over thepreceding five years, contracted with forum companies for repair and warranty services, and s employees on twenty-one visits to the ent forum in the preceding year. 2005 U.S. Dist. LEXIS 2381 at *6-7 (D. Minn. Feb. 9, 2005). Conversely, Verona found a lack of general jurisdiction for a company with 2.88% of its revenues in Pennsylvania. 2009 U.S. Dis t. LEXIS 14863, at *9-10 (E.D. Pa. Feb. 23, 2009). That court compiled a non-exhaustive list of factors that contributed to its decision: (1) whether the defendant is incorporated or licensed to do business in Pennsylvania; (2) whether the defendant has ever filed any tax returns in the Commonwealth; (3) whether the defendant files administrative reports with any agency or department of Pennsylvania; (4) whether the defendant regularly purchases products or supplies within Pennsylvania for use in its business outside the state; (5) whether the defendant owns land or property within the state; (6) whether the defendant advertises in Pennsylvania; and (7) whether the defendant maintains an agent in the Commonwealth. Id. at *8. Specifically, that court found the company’s lack of incor poration, property or employees in the state failed to provide a sufficient nexus to the forum. Id. 9 The Federal Circuit, controlling in the instant case, has offered some authority as to the necessary quantum of commerce to establish general jurisdiction. Campbell Pet Co. v. Miale, 542 F.3d 879 (Fed. Cir. 2008). There, a “very small volume of sales”–approximately 2% of defendant’s total sales–was deemed “far s hort of enough to reflectthe substantial and continuous presence in the state necessa ry to support general jurisdiction.” Id. at 884. However, that defendant also had additional cont acts to the forum weighing in favor of general jurisdiction. The defendant had a websit e (available in the forum, but doing no business there), and had attended a trade conventi on in the forum where she took orders and “demonstrated her products and offered them for sale.” Id. at 881-82. Therefore, while small amounts of business do not preclude general jurisdiction, they are also generally are not enough to satisfy it. See e.g. Lakin v. Prudential Sec., 348 F.3d 704, 708 n.7 (8th Cir. 2003) (“Other circuits, wh ile not addressing this issue directly, have considered the percentage of a company's total business as just one of the factors to consider in a general personal jurisdiction analysis--wit varying results.” (emphasis added)). h In the instant case, there is disagreement as to the exact percentage of ECD’s business conducted in Pennsylvania. Suffice to say, it is small. Plaintiff concedes this, but maintains that these transactions are subs tantial as they are frequent and systematic. Specifically, Plaintiff alleges general jurisdicti on exists for ECD as it “regularly engages in business with dealers, vendors, and customers in the Commonwealth of Pennsylvania, and, further, distributes products in this judicial dist rict.” (Doc. 1 at ¶ 6). Plaintiff avers that Defendant is in constant comm unication with all of its vendor s to ensure availability of product on demand, to follow up on product wa 10 rranties, and to perform returns and exchanges. Plaintiff calculates that in c onsidering the sales and purchased in tandem, ECD has had contact with Pennsylvania on almost a daily basis. (Doc. 28 at 6). This, Plaintiff argues, constitutes continuous and systematic for the purposes of general jurisdiction. In the period between January 2003 to April 2010, ECD has sold to forty-six different states, and at least 31 different states in any giv year. (Doc. 28-7 at 4-19, Ex. G.) In that en same period, ECD sold products to twenty-f ur Pennsylvania customers on a weekly basis, o but no more than twelve in any given year. (Doc. 28-3 at 5, Ex. B). Plai tiff alleges a high of n .59% of sales to a low of 0.08%. (Doc. 28 at 11). Defendant responds that “ECD’s few sal es to Pennsylvania were not the result of soliciting specific customers, were items of ordinary inventory and not an important part of ECD’s business, and amount to only 0.167 percent of ECD’s total sales.” (Doc. 19 at 1; Provenzano 3d Decl., Doc. 32 at 3). As for purchases, ECD’s inventor consists of its own produc as well as acquisitions y ts from outside vendors. The purchase order s appear to require communication, i.e. confirmation with the vendor before finalization. (Doc. 28 at 8). ECD has eight vendors located in Pennsylvania, never doing business withmore than five of themin any given year. (Doc. 28 at 4; Doc. 28-3 at 6, Ex. B). In the period of January 2003 to April 2010, this comprised a high of 1.28% of national vendor purc hases to a low of .45%of national vendor purchases (per unit). (Doc. 28 at 4). In fact, the majority of these Pennsylvania pur hases (98%) appear to be from Plaintiff c Arlington. However, they were placed at Arlington’s office in Houston, Texas, shipped from Arlington’s warehouse in Houston, Texas, and pay ment disbursed to Arlington’s office in Atlanta, Georgia. (Provenzano 3d Decl., Doc. 32 at 1). As such, Defendant contends that 11 98% of its Pennsylvania purchases actually have no transactional nexus to Pennsylvania, though it is undisputed that Ar lington is a Pennsylvania corporation and ECD has itself classified Arlington as a Pennsylvania supplier. Still, ECD contests the notion that it could have reasonably anticipated being hauled into court byArlington in Pennsylvania. Similarly, Defendant contends that five more of the ei ht Pennsylvania vendors have no transactional g connection with Pennsylvania due to similar arr ngements. (Claiming that between January a 1, 2009 and August 9, 2010, only .065 percent of all sales were shipped to a Pennsylvania address. (Provenzano 2d Decl., Doc. 19 at 2)). Regardless of how these sales and purchases are tabulated, it is clear that they are not sufficiently substantial or significant to c onfer the basis for general jurisdiction. In the face of such a small proportion, never exceeding two percent, courts require some further nexus with the forum in order to establish generaljurisdiction. Unlike the above cited cases, there is little beyond these regular sales and pur chases that connects Defendant ECD to the forum. Looking to the other factors, it is not ble that ECD is not registered in Pennsylvania, a possesses no property there, has never sent agents there, and do es not pay taxes there. Aside from its website and newsletter, ECD’s totacontact with Pennsylvania is a mere sliver l of its overall commerce. Plaintiff maintains that ECD’s strong dedica tion to customer service enlarges the nature of its contacts with the fo rum. Specifically, Plaintiff c ontends that Defendant maintains ongoing of dealer relationships with the Pennsylvania businesses to which Defendant sold products. (Doc. 16 at 17). The Court reject this argument as it double-counts Defendant’s s contacts with the forum. It may be true that cotact with the forum accompanies each sale or n 12 purchase. However, it would be rather difficultfor Defendant to complete such transactions without some communication, and to argue that the communication itself is a forum contact essentially counts each sale twice for the purposes of substantial contacts. In other words, each communication is directly related to a sale or purchase, adequately tallied above as a proportion of overall commerce. Moreover, in every case where general jurisdiction has been found to be lacking because of insufficient commerce, it could generally be argued that the commerce in those instances also included a requisite communication. In the instant case, the parties present no evidence that Def endant’s limited commerce in Pennsylvania is qualitatively different from that in any other state, and ther efore this Court finds that Defendant’s accompanying contact is adequately represented inthe percentage figures listed above. Finally, Plaintiff urges us to follow the test promulgated inProvident National Bank v. California Federal Savings & Loan Association, 819 F.2d 434 (3d Cir. 1987), asserting that Defendant’s contacts are such that they go tothe core of ECD’s business model. Ultimately, this is unhelpful to Plaintiff’s position. While the Federal Circuit is controlling in the instant patent case, Provident indicated that it was the centrality of the conduct to the defendant’s business was more important than t he magnitude of the conduct itself. Id. at 438. In the Third Circuit, centrality appears to be additional requirement, and is not alone sufficient. Fisher v. Teva PFC SRL, 212 Fed. Appx. 72, 75 (3d Cir.N.J. 2006) (“The contacts mustalso be a central part of the defendant's bus iness.” (emphasis added)). See alsoPhila. Macaroni Co. v. Italpasta Ltd., 2010 U.S. Dist. LEXIS 39030, at * 14-15 (E.D. Pa. Apr. 20, 2010) (explaining that “courts within the Third Circuit have recognized that general jurisdiction is 13 lacking with respect to a defendant who conducts a minimal amount of business in the relevant forum and where such business activity does not qualify as a central part of the non-resident's business”). Moreover, such centra has been interpreted not that the acti n lity o itself is central to the business model, but that the action in the forum must be central to the business model. Molnlycke Health Care AB v. Dumex Med. Surgical Prods. Ltd., 64 F. Supp. 2d 448, 452 (E.D. Pa. 1999). In Molnlyckle, the court found no indication that business conducted in Pennsylvania was central to def ndant’s business where the defendant had no e regular place of business in the state and sold less than one percent ofits products there. Id. In so much a particular business model requires buying and selling, Plaintiff’s centrality argument would confer jurisdiction ov er a retailer for any purchase or sale in a given forum. This cannot be. As the foregoing illustrates, a minuscule proportion of sales, central or not, are not alone sufficient to alone carry general jurisdiction. In ECD’s case, such a small proportion of sales within the form are notsignificant enough to label them central to the business. Therefore, I find that the purchases and sales listed above, although perhaps central to ECD’s business model, do not meet the requisite level for general jurisdiction. 2. Defendant’s Periodic Newsletter ECD’s extremely limited distribution of materials in Pennsylvania similarly does not subject it to general jurisdiction. Defendant maintains a periodic newslette r goes out to over 1,000 customers and potential customers, two of which are located in Pennsylvania (0.02%). (Provenzano Decl. at ¶ 9, Doc. 9 at 2). Analogous to the analysis above, such a small fractionof incidental contact is not enough to support general jurisdiction. See e.g. Blackwell v. Marina Associates, No. 14 No. Civ.A. 05-5418, 2006 WL 573793 at *4 (E.D. Pa.March 9, 2006) (finding “the mere fact that defendant mailed promotional materials to at least two Pennsylvania residents is not sufficient to demonstrate that defendant engaged incontinuous and systematic contacts with Pennsylvania.”). O’Connor v. Sandy Lane Hotel Co., Ltd., No. Civ.A. 04-2436, 2005 WL 994617 at *3 (E.D. Pa April 28, 2005), failed to find continuous and systematic contacts where a defendant periodically mailed newsletters to 865 Pennsyl vania residents. Specifically, as the newsletters were “sent only to a targeted c lientele of individuals who have independently sought out information, this limited interaction with Pennsylvania residents [was] insufficient to establish general jurisdiction.” Id. Similarly, Romeo Entertainment Group, Inc. v. Showing Animals Respect & Kindness, there was no general jurisdic tion where only five of 1,426 addresses were in the forum state, and only 0.087% of the donationsreceived as a result of the mailing came from within the forum. 643 F.Supp. 2d 1109, 1114-15 (D. Neb. 2009). In Romeo, corporate officers had also visited the forum on business further strengthening the argument for general jurisdiction. Id. at 1114. Still, that court rejected the claim that such jurisdiction existed, finding the quantity of these contacts “ minimus, at most.” Id. at 1115. de Like the above instances, Defendants newslette directed at Pennsylvania residents rs are similarly de minimus. The existence of two periodic mailings, without additional evidence of purposeful targeting or a substantial connection to forum transactions, is simply too attenuated in the general jurisdiction calculation. As such, t e Court finds them insufficient to h confer the basis of general jurisdiction. 3. Defendant’s Website 15 ECD’s websites of limited interactivity are not sufficient to confer the basis of general jurisdiction. ECD has two publically accessible websites. Over the past seven years, these two websites made a total of forty-five sales totaling $14,303 to Pennsylvania customers. (Provenzano 3d Decl., Doc. 32 at 3). Of thos e sales, only seven, totaling about $2,056, included a Pennsylvania billing or shipping address. Id. at 5. In support of jurisdiction, Defendant’s webs ite claims that ECD “serv[es] the entire U.S. with over 100 v endors and 4,000 stocked items to se rve the custom installation industry.” (Ex. 10 to Boak Decl.). ECD boasts hat it “sells the finest brands of electronics to t installing dealers all over the country—who then sell the items to e users.” (Ex. 1 to Boak nd Decl.). It also allows users to contact the Defendant, and to place orders that are “ready to ship anywhere in the U.S.” (Ex. 10 to Boak Decl). However, in order to “purchase products . through defendant’s website (or to purchase genera lly from defendant), a user must first apply to become an installing dealer and establish an account with Defendant.” (Doc. No. 16 at 5). In short, internet sales require registration. Zippo Mfg. Co. v. Zippo DOT Com was an early attempt to set a standard for general jurisdiction when considering internet contacts. 952 F. Supp. 1119 (W.D. Pa. 1997). It held general jurisdiction proper for “active websites”—where a “defendant clearly does business over the Internet.” Id. at 1124. However, Zippo Mfg. offers two other possibilities: (1) “passive websites”—inappropriate for general jurisdiction—which do “little more than make information available to those who are interested;” and (2) a middle ground, “where a user can exchange information with the host computer.” Id. Yet, “[i]n the wake of Zippo, courts have been reluctant to find generaljurisdiction based on internet contacts only, even in those 16 cases where the websites are highly interactive.” Nationwide Contr. Audit Serv. v. Nat'l Compliance Mgmt. Servs., 622 F. Supp. 2d 276, 292 (W.D. Pa. 2008). As such, within the middle category, traditional notions of general jurisdiction generally apply. For cases falling in the gray area, “t he exercise of jurisdic tion is determined by examining the level of interactivity and commerc nature of the exchange of information that ial occurs on the Web site.” Id. “As Zippo and the Courts of Appeals decisions indicate, the mere operation of a commercially interactive web site should not subject the operator to jurisdiction anywhere in the world. Rather , there must be evidence that the defendant ‘purposefully availed’ itself of conducting activity in the forum state, by directly targeting its web site to the state, knowingly interacting with residents of the forum state via its web site, or through sufficient other related contacts.” Toys "R" Us, Inc. v. Step Two, S.A., 318 F.3d 446, 454 (3d Cir. 2003). Plaintiff argues that Defendant’s website is a “virtual store,” “an interactive and highly commercial website by which Defendantclearly transacts business.” (Doc. 16 at 14). Thi is s an appeal to place Defendant’s websites in the ac tive category. According to Plaintiff, the fact “[t]hat a customer must first be approved as an installing dealer and complete a “Web Access Form” before ma king online purchases does not undermine the commercial nature of Defendant’s website.” (Doc. 16 at 13). In s upport of this, Plaintiff cites to Obabueki v. Int’l Bus. Machs. Corp., Nos. 99 Civ. 11262 (AGS), 99 Civ. 12486 (AGS), 2001 U.S. Dist. LEXIS 11810 (S.D.N.Y. Aug. 14, 2001). However, that case found the “middle category” applicable to a websit e requiring customers to download and fax applications before accessing website’s services. Id. at *11-12. This is highly analogous to 17 the instant case where users wishing to pur chase from Defendant’s password-protected website must first apply before having the ability to make purchases. In a similar patent infringement suit, it was held that a website “does not, on its own, suffice to establish general jurisdiction. To hol that the possibility ofordering products from d a website establishes general jurisdiction woul d effectively hold that any corporation with such a website is subject to general jurisdictionin every state. The court is not willing to take such a step.” Molnlycke Health Care AB v. Dumex Med. Surgical Prods. Ltd., 64 F. Supp. 2d 448, 451 (E.D. Pa. 1999). In Molnlycke, it was unclear whether Defendant’s website had transacted business within the forum. However,like the instant case,the defendant had two websites, one of which, unlike the instant case, allowed fo r direct orders without prior approval. Id. at 451. The court analogized these sites to “a general advertising campaign: while they are available in ever state, they are not necessarilytargeted towards every state.” y Id. at 452. Finding that there was no evi dence that the defendant had targeted the Pennsylvania forum, nor that Pennsylvania was asubstantial part of defendant’s business (at less than one percent of total sales), there was no general jurisdiction. Id. at 452-54. The Federal Circuit has held that the “ab ility of [forum] residents to access the defendants' websites . . . does not by itself s how any persistent course of conduct by the defendants in the [forum]." Campbell Pet Co. v. Miale, 542 F.3d 879, 884 (Fed. Cir. 2008) (quoting Cybersell, Inc. v. Cybersell, Inc., 130 F.3d 414, 419-20 (9th Cir. 1997)). In Campbell, a nationally accessible website was held insufficient for general jurisdiction as it was “not directed at customers in [in theforum] and does not appear to have generated any sales in [in the forum].” Id. There, a lack of general juri sdiction was found where that 18 defendant had also attended a trade convention in the forum where she took orders and “demonstrated her products and offered them for sale.” Id. at 881-82. The Federal Circuit has not opined whether a “h ighly interactive, transaction-oriented website . . . may support long-arm jurisdiction w herever the site is available to potential customers.” Trintec Indus. v. Pedre Promotional Prods., 395 F.3d 1275, 1281 (Fed. Cir. 2005). However, as established, Defendant’s website is not of that category anyway. Instead, Plaintiff contends that the link to their website “effectively established a continuous presence in Pennsylvania, a virtual gateway through which cust omers pass to enter Arlington’s facility.” (Doc. No. 16). Plaintiff’s argument is ultimately unconvincing. As noted above, there mere availability of Defendant’s websites within the forum is not dispositive of a continuous presence in Pennsylvania. Nor are the websites highly interactive under theZippo test as the registration requirements renders them, at best, mildly intera ctive. Ultimately, there is no purposeful availment to the forum in which to hang general jurisdiction. Despite the fact that Defendant’s website is nationally accessible, t here is no evidence that they have targeted Pennsylvania, nor have they accounted for a significant proportion of sales in Pennsylvania. Rather, as in Molnlycke, these two websites are better analogized to an advertising campaign. Therefore, like the contacts listed above, their contact with the form does not rise to a sufficient level in which it would be proper to exercise general personal jurisdiction. Separately, none of Defendant’s contacts with the forum are significant enough to confer the basis of general jurisdiction. Taken together, the result is still the same.Campbell analogizes extremely well to the instant case. 542 F.3d 879. There, as here, defendant 19 never did more than 2% business in the forum st ate. There, as here, Plaintiff also had a website that was available in the forum. However, unlike here, defendant in Campbell had actually attended a trade show in the forum where it sold product. Yet, this all was still not enough to sustain general jurisdiction. Here, the C ourt arrives at a similar result. Within the forum, Defendant conducts less than two percent ofits commerce, distributes an insignifi ant c numbers of newsletters, and operates two nationallyavailable websites. This falls below the level of contacts found insufficient in Campbell, and it therefore falls below the level of contacts necessary to confer general jurisdic tion. Therefore, I find a lack of general jurisdiction over Defendant ECD in the instant case. B. Specific Jurisdiction Specific jurisdiction exists where (1) “the defendant has purposef ully directed his activities at residents of the forum;” and (2) “the litigation results from alleged injuries that 'arise out of or relate to' those activities.” Avocent Huntsville Corp. v. Aten Int'l Co., 552 F.3d 1324, 1330 (Fed. Cir. 2008) ( quotations and citations omitted). As a final matter, a court shall also determine whether the “assertion of personal jurisdiction is reasonable and fair.” Id. at 1332 (citation omitted). The plaintiff has the burden of making a prima facie showing on the first two elements, and if they ar e met the defendant may still defeat personal jurisdiction by “present[ing] a compelling case that jurisdiction would be constitutionally unreasonable.” Akro Corp. v. Luker, 45 F.3d 1546 (Fed. Cir. 1995). “This ‘purposeful availment’ requirement ensures that a defendant will not be haled intoa jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts, or of the ‘unilateral activity of another party or a third person.’” Burger King, 471 U.S. at 475 (internal citations omitted). 20 “With respect to the last prong, the burden of proof is on the defendant, which must present a compelling case that the presenc e of some other considerati ons would render jurisdiction unreasonable under the five-factor test ar ticulated by the Supreme Court in Burger King.” Avocent, 552 F.3d at 1332. Plaintiff’s sole argument concerning specific jurisdiction rests on Defendant’s alleged patent enforcement activities. However, certain enforcement activities are exempted from the exercise of personal jurisdiction. Based on “policy considerations unique to the patent context,” Silent Drive, Inc. v. Strong Indus., 326 F.3d 1194, 1202 (Fed. Cir. 2003), “letters threatening suit for patent infringement sent to the alleged infr inger by themselves ‘do not suffice to create personal jurisdiction.’” Id. at 1202 (quoting Red Wing Shoe, 148 F.3d at 1359-60). “[W]ithout more, a patentee's act of sending letters to another state claiming infringement and threatening litigation is not sufficient to confer personal jurisdiction in that state.” Campbell Pet Co., 542 F.3d at 885. In this, the Federal Circuit has explained that: Principles of fair play and substantial justce afford a patentee sufficient latitude i to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum. A patentee should not subjec itself to personal jurisdiction in a t forum solely by informing a party who happens to be located there of suspected infringement. Grounding pers onal jurisdiction on such contacts alone would not comport with principles of fairness. Red Wing Shoe, 148 F.3d at 1360-61. Thus, “there must be ‘other activities’ directed at the forum and related to the cause of action besides letters threatening an infringement suit.” the Silent Drive, 326 F.3d at 1202. Examples of these "other ac tivities" include initiating judici al or extrajudicial patent enforcement within the forum, or entering into an exclusiv e license agreement or other 21 undertaking which imposes enforcement obligations with a party residing or regularly doing business in the forum.” Avocent Huntsville Corp. v. Aten Int'l Co., 552 F.3d 1324, 1334 (Fed. Cir. 2008). Yet, even these instances are viewed as the outer limits of specific jurisdiction: “Even a patentee's exclusive licensing and enfor cement activities in the forum raise questions as to the propriety of an assertion of personal jurisdiction over a non-resident defendant.” Id. at 1336. In the instant case, Plaintiff contends thatDefendant is subject to specific jurisdiction as the instant suit allegedly arises out of Defendant’s patent enforcement activities. “Here, Defendant has purposefully directed activity (ext ajudicial patent enforcement and threats of r litigation) at Arlington, a Pennsylvania resident.” (Doc. 28 at 20). In support of this position, Plaintiff cites two supposed instances of extrajudicial enforcement. These instances included Defendant amending its patent application to apparently expand its scope, and a request for an ex-parte re-examination of Arlington’s patent inan attempt to invalidate it. (Doc. 16 at 22). “While Defendant filed its amendments and request for re-exami ation with the [U.S. Patent n and Trade Office] in Alex andria, Virginia, its actions were aimed at, and their effects intended to be felt in, Pennsylvania. Where, as here, acts are both aimed at and intended to cause injury in the forum state, such acts are sufficientto confer specific personal jurisdiction over the defendant.” (Doc. 16 at 22-23). Principles of fair play and substantial justice require that Defendant not be subject to specific jurisdiction due to a pat nt infringement notice. Asnoted above, informing others of e your patent rights does not alone s ubject you to specific jurisdiction within the forum. To hol d otherwise would subject defendants to suit wher 22 ever a plaintiff was located, however attenuated that forum is to the defendant’s activi ties. Furthermore, such patent infringement notices can include threats of lit igation: “As we have noted, the e-mails and letters from [defendant’s] counsel to [plaintiff] are insufficient togive rise to personal jurisdiction in light of the principles of Red Wing Shoe. Warnings and threats of infringement suits are typical in such correspondence, as are offers to license.” Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785, 791 (Fed. Cir. 2011). ECD submits that, prior to the previous lawsuit that Arlington withdrew, “ECD had never communicated with Arlington regarding the ‘405 patent, much less did ECD threaten to file suit against Arlington.” (Provenzano Decl., Doc. 9 at 5). Regardless, as ECD’s alleged assertion of patent infringement did nothing more than put Arli ngton on notice of potential infringement, it is not alone enough to subject it to specific jurisdiction in Pennsylvania. Furthermore, Defendant has not initiated anyother activities against Plaintiff that can be characterized as “other activities” directedat patent enforcement within the forum. Putting aside the matter as to whether actions directed towards an unrelated patent can constitute patent enforcement, the requests for amendments and reexamination were directed at the Patent and Trade Office (PTO) in Alex andria, Virginia—not Pennsylvania. Analogous to the instant case is Radio Systems Corp. v. Accession, Inc., 638 F.3d 785 (Fed. Cir. 2011). There, the Federal Circuit affirmed the District Court’s holding that similar contacts with the PTO were directed at Virginia rather than the forum. Id. at 792. Specifically, the defendant in Radio Systems left a voice message with the PTOexaminer, in Virginia, causing the PTO to withdraw its notice of allowance on the plaintiff’s patent. Id. at 788. In doing so, the court was firm that it had “made clear in Avocent that enforcement activities taking place outside 23 the forum state do not give rise to personal ju risdiction in the forum, and that decision is controlling here.” Id. at 792. Here, Defendant’s activities regarding the PTO similarly took place in Virginia and do not give rise to personal jurisdiction within the forum. Therefore, the Court concludes that specific jurisdiction is inapplicable in the instant case. As such, it is unnecessary to consider whether such jurisdiction would comport with fair play and substantial justice. III. Conclusion For the reasons stated above, the Court will grant Electronic Custom Distributors’ Motion to Dismiss on the present action for lack of personal jurisdiction. (Doc. 8.). An appropriate order follows. September 15, 2011 /s/ A. Richard Caputo Date Richard Caputo United States District Judge A. 24 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA ARLINGTON INDUSTRIES, INC., Plaintiff, v. ELECTRONIC CUSTOM DISTRIBUTORS, INC., CIVIL ACTION NO. 3:10-CV-842 (JUDGE CAPUTO) Defendant. ORDER NOW, this 15th day of September, 2011, IT IS HEREBY ORDERED that Electronic Custom Distributors’ Motion to Dismiss (Doc. 8) is GRANTED. /s/ A. Richard Caputo A. Richard Caputo United States District Judge

Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.