Braley v . Sportec Prod. CV-01-333-JD 07/16/02
UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW HAMPSHIRE
John H. Braley, et a l .
v. No. 0
Opinio n N o . 2002 DNH 133
Sportec Products C o .
O R D E R
The plaintiffs, John and Jennifer Braley, bring this action
against the defendant, Sportec Products Company (“Sportec”),
alleging that Sportec infringed the Braleys’ patented design for
a string of decorative lights depicting a series of NASCAR-type
cars. Sportec denies the Braleys’ allegations. Sportec moves to
dismiss the action, asserting that this court lacks personal
jurisdiction over Sportec, pursuant to Federal Rule of Civil
Procedure 12(b)(2). In the alternative, Sportec moves to
transfer the action to the United States District Court for the
Southern District of Ohio, Eastern Division, pursuant to 28
U.S.C. § 1404(a).
Background1
The plaintiffs, John and Jennifer Braley, are a husband and
wife who live in Andover, New Hampshire with their two young
1
For the purposes of this motion only, the facts are taken
from the plaintiffs’ complaint and the affidavits and supporting
materials submitted by the parties.
children. John Braley is employed as a roofing contractor
servicing New Hampshire, Massachusetts, and Vermont, and Jennifer
Braley works as a clerk in a convenience store located in
Andover, New Hampshire.
In 1998, the Braleys conceived of the idea of a string of
party lights in the shape of NASCAR-type cars, and filed a patent
application for their design. Prior to issuance of their patent,
in October of 2000, the Braleys saw Sportec’s NASCAR-type party
lights offered for sale in a catalogue from Sports Express by
Raceline Direct (“Sports Express”). A friend of the Braleys had
received the catalogue at his home in New Hampshire. Sportec’s
product was also found for sale on the Internet, at the Sports
Express and Motorsports by Mail websites.
The Braleys contacted their counsel. Dawn Perry, an
employee of the law firm, ordered the product from Sports Express
on October 1 7 , 2000.2 The product was delivered within two days
of Perry’s order to the law firm, located in Laconia, New
Hampshire. The Braleys’ counsel wrote to Sportec at that time,
expressing the Braley’s belief that Sportec’s product infringed
their design, and suggesting the possibility of a licensing
agreement. Sportec’s counsel responded that Sportec did not
2
Perry also ordered the product from Motorsports by Mail,
but canceled that order after learning that the product was on
back order.
2
believe that its product infringed the Braleys’ patent, and
therefore a license was not necessary.
On January 2 , 2001, the Braleys obtained United States
Patent N o . D435,921 for their NASCAR-type “string of decorative
lights.” They filed this action in August of 2001, claiming that
Sportec infringed their patent. In the fall of 2001, the Braleys
continued to observe Sportec’s product offered for sale in the
Sports Express and Motorsports by Mail catalogues. Sportec’s
product was observed for sale in the most recent spring 2002
catalogue from Sports Express. Perry also observed the product
for sale on the Internet at www.tcsalescorp.com,
www.partylights.com, www.true-fan.com, and
www.pictureperfectgifts.com, in June of 2002.
In January of 2002, Sportec filed suit against the Braleys
in the United States District Court for the Southern District of
Ohio, Eastern Division, alleging patent infringement and tortious
interference with business relationships, relating to Sportec’s
“Race Car Patio Lights,” United States Patent N o . D445,515. The
Braleys have filed a motion to dismiss for lack of personal
jurisdiction and improper venue, which is pending.
3
Discussion
Sportec moves to dismiss the Braleys’ action on the ground
that this court lacks personal jurisdiction over Sportec. See
Fed. R. Civ. P. 12(b)(2). Alternatively, Sportec moves to
transfer the action to the Southern District of Ohio, Eastern
Division. See 28 U.S.C. § 1404(a). The Braleys object to both
motions.
I. Personal Jurisdiction
Sportec asserts that it is not subject to personal
jurisdiction in New Hampshire because it lacks minimum contacts
with this forum. Sportec argues that it is an Ohio corporation
that has never directed any of its activities toward New
Hampshire. Sportec asserts that it sells its products to
independent companies and does not supervise, control, or have
advance notice of where those companies consequently market
Sportec’s products. The Braleys respond that personal
jurisdiction over Sportec in New Hampshire is proper under the
“stream of commerce theory,” because Sportec’s product is
available for sale in New Hampshire.
In determining whether exercising personal jurisdiction is
proper in the context of a patent infringement suit, the court
applies the law of the Federal Circuit, not the First Circuit.
4
See Midwest Indus. Inc. v. Karavan Trailers, Inc., 175 F.3d 1356,
1359-60 (Fed. Cir. 1999) (en banc); see also R & J Tool, Inc. v .
The Manchester Tool Co., N o . 99-242-M,
2001 WL 1636435, at *2
(D.N.H. Apr. 2 1 , 2001).
In a motion to dismiss for lack of personal jurisdiction,
the plaintiff is required to show that the defendant has
sufficient minimum contacts with the forum state. See Viam Corp.
v . Iowa Export-Import Trading Co., 84 F.3d 424, 429 (Fed. Cir.
1996). Where the parties have not conducted discovery on the
jurisdictional issue and no evidentiary hearing has been held,
the plaintiff need only make a prima facie showing that
jurisdiction is proper. See Graphic Controls Corp. v . Utah Med.
Prods.,
149 F.3d 1382, 1383 n.1 (Fed. Cir. 1998); Digital Control
Inc. v . Boretronics Inc.,
161 F. Supp. 2d 1183, 1185 (W.D. Wash.
2001) (applying Federal Circuit l a w ) . “For purposes of [a]
12(b)(2) motion, the district court's task [is] to construe the
pleadings and affidavits in the light most favorable to [the
plaintiff].” Graphic Controls,
149 F.3d at 1383 n.2; see also
Beverly Hills Fan C o . v . Royal Sovereign Corp.,
21 F.3d 1558,
1563 (Fed. Cir. 1994) (stating that where facts alleged by
plaintiff are uncontroverted, they are taken as true).
The court’s first determination in a jurisdictional analysis
is whether the defendant is amenable to service in the forum,
pursuant to federal statute or the long-arm statute of the forum
5
state. See Omni Capital Int’l Ltd. v . Rudolf Wolff & Co., Ltd.,
484 U.S. 9 7 , 105 (1987); Red Wing Shoe Co., Inc. v . Hockerson-Halberstadt, Inc.,
148 F.3d 1355, 1358 (Fed. Cir. 1998). The
federal patent statute does not provide special provisions for
the service of nonresident defendants residing in the United
States. See generally,
35 U.S.C. § 293; Akro Corp. v . Luker,
45
F.3d 1541, 1543-44 (Fed. Cir. 1995). Therefore, “[p]ersonal
jurisdiction over an out-of-state defendant is appropriate if the
relevant state’s long-arm statute permits the assertion of
jurisdiction without violating federal due process.” 3D Systems,
Inc. v . Aarotech Labs, Inc.,
160 F.3d 1373, 1376-77 (Fed. Cir.
1998); see also Fed. R. Civ. P. 4(e). New Hampshire’s corporate
long-arm statute, Revised Statutes Annotated (“RSA”) 293-
A:15.10(b), has been interpreted to authorize jurisdiction that
is coextensive with the federal due process standard. See
Sawtelle v . Farrell,
70 F.3d 1381, 1388 (1st Cir. 1995).
Therefore, the court’s inquiry is whether exercising jurisdiction
comports with the requirements of federal due process. See Red
Wing Shoe,
148 F.3d at 1358.
In the second step of the analysis, the court determines
whether exercising jurisdiction would comport with the
requirements of due process under the Fifth Amendment.3 See id.;
3
Where a case involves a federal question, the
constitutional limits of federal due process are fixed by the
6
see also U.S. Const. amend. V. “[D]ue process requires only that
in order to subject a defendant to a judgment in personam, . . .
he have certain minimum contacts with [the forum] such that the
maintenance of the suit does not offend traditional notions of
fair play and substantial justice.” Int’l Shoe C o . v .
Washington, 326 U.S. 310, 316 (1945) (citation and internal
quotation marks omitted). 4 Minimum contacts with the forum must
be purposeful, meaning that the defendant “purposefully avails
itself of the privilege of conducting activities within the forum
State, thus invoking the benefits and protections of its laws.”
Hanson v . Denckla,
357 U.S. 235, 253 (1958). The purposeful
contacts requirement is meant to ensure that a nonresident
defendant has “fair warning” that its activities may subject it
to suit in the forum state. See Beverly Hills Fan,
21 F.3d at
1565, citing Burger King Corp. v . Rudzewicz,
471 U.S. 462, 472
(1985). In contrast, personal jurisdiction is not proper where
the defendant’s sole contacts with the forum state resulted from
the “unilateral actions of a third party having no pre-existing
Fifth, as opposed to the Fourteenth, Amendment. See Viam,
84
F.3d at 427.
4
Int’l Shoe was decided under the Fourteenth Amendment in
the context of a diversity case. See 326 U.S. at 316.
Nevertheless, in patent cases the court applies the Fourteenth
Amendment due process test created by Int’l Shoe and its progeny
to determine whether minimum contacts exist. See Viam,
84 F.3d
at 427 & n.2.
7
relationship with the defendant.” Beverly Hills Fan, 21 F.3d at
1565, citing World-Wide Volkswagon Corp. v . Woodson,
444 U.S.
286, 298 (1980).
When the plaintiff has made a prima facie showing that the
defendant has sufficient minimum contacts with the forum state,
the court then determines whether exercising personal
jurisdiction would be reasonable. See Int’l Shoe, 326 U.S. at
320; Viam,
84 F.3d at 429-30. Jurisdiction is improper where its
exercise would “offend traditional notions of fair play and
substantial justice.” Int’l Shoe,
326 U.S. at 316 (quotation
omitted). To defeat otherwise constitutional jurisdiction, the
defendant bears the burden of “marshaling a compelling case
against jurisdiction . . . .” Viam,
84 F.3d at 429.
A. Minimum Contacts
The sufficiency of a defendant’s minimum contacts is
normally determined according to whether the plaintiff is
asserting “general” or “specific” jurisdiction. See Viam, 84
F.3d at 427; Sawtelle,
70 F.3d at 13987 n.3. In this case, the
Braleys do not assert general or specific jurisdiction. They
contend that Sportec is subject to personal jurisdiction under
the “stream of commerce” theory.
Under the “stream of commerce” theory, in a patent case the
court may find that an alleged infringer has sufficient minimum
8
contacts with any state in which its product is sold. See Viam,
84 F.3d at 427-29; Beverly Hills Fan,
21 F.3d at 1566; see also
World-Wide Volkswagon,
444 U.S. at 297. “‘[A] forum State does
not exceed its powers under the Due Process Clause if it asserts
personal jurisdiction over a corporation that delivers its
products into the stream of commerce with the expectation that
they will be purchased by consumers in the forum State.’” Viam,
84 F.3d at 4 2 8 , quoting World-Wide Volkswagon,
444 U.S. at 297-
98. “‘[I]f the sale of a product of a manufacturer or
distributor is not simply an isolated occurrence, but arises from
the efforts of the [defendant] to serve, directly or indirectly,
the market for its product . . . , it is not unreasonable to
subject it to suit.’” Beverly Hills Fan,
21 F.3d at 1565-66,
quoting World-Wide Volkswagon,
444 U.S. at 297.
The presence of an established distribution channel into the
forum state is a significant factor in determining whether the
defendant has established purposeful contacts such that it would
be subject to personal jurisdiction. See Beverly Hills Fan, 21
F.3d at 1565-66 & n.15 (collecting cases). Another factor is
whether the defendant knew the likely destination of its
products.
Id. at 1566.
The Federal Circuit applies the stream of commerce theory in
Beverly Hills Fan and Viam, patent cases on which both parties
9
rely.5 In Beverly Hills Fan, the defendant manufacturer had an
ongoing relationship with its New Jersey distributor, which sold
its fans through a retail company with outlets in Virginia. See
21 F.3d at 1560, 1564-65. The retail outlet regularly had
approximately fifty of the defendant’s fans for sale in its
store.
Id. at 1564. The Federal Circuit found that the
distribution channel was intentionally established, it was
foreseeable that one termination point of the distribution
channel was in Virginia, and that fans would be sold there. See
id. at 1563-64. The Federal Circuit found minimum contacts and
held that the exercise of personal jurisdiction over the
defendant in Virginia was proper. See
id. at 1564-66.
In Viam, the defendant, a foreign company, had a marketing
agreement with its United States distributor that established a
channel, through which the defendant “purposefully directed” its
activities in California. See 84 F.3d at 428-29. The
distributor advertised on the defendant’s behalf in California,
used the defendant’s catalogue for its marketing, and provided
regular advice to consumers.
Id. The Federal Circuit held that
the defendant in Viam had sufficient minimum contacts with the
5
Although the United States Supreme Court acknowledged the
validity of the stream of commerce theory in Asahi Metal Indus.
Co. v . Super. Cout of Calif., the Court was split in its
discussion of the contacts required to establish jurisdiction
under the theory. See 480 U.S. 102, 1 1 2 , 116-21 (1987).
10
California and was subject to personal jurisdiction there. Id.
The Braleys contend that Sportec placed its product into the
stream of commerce, and knew, or should have known, that its
product would likely be sold in New Hampshire, especially since
New Hampshire International Speedway, the site of numerous NASCAR
sanctioned races, is located here.
The Braleys’ complaint and the other materials submitted by
the parties in this case show that Sportec’s NASCAR-type lights
have appeared in three editions of Sports Express’s catalogue
which were distributed to New Hampshire consumers. In addition,
Sportec’s product is available for sale on the Internet through
various websites, which are accessible to New Hampshire
consumers. Perry’s purchase of Sportec’s product via the Sports
Express catalogue demonstrates that the product was offered for
sale in New Hampshire. Taking the facts in the light most
favorable to the Braleys, Sportec sold its product to the
catalogue and internet companies so that its product might be
distributed to the market at large, including New Hampshire.6
In addition, as the Braleys point out, New Hampshire
International Speedway is located here. Presumably, Sportec
produces NASCAR-type party lights to service the market of NASCAR
6
From the materials reviewed by the court it appears that
Sportec does not sell its product directly through a retail
outlet, a catalogue, an internet website, or any other means.
11
fans and spectators. Taking the facts in favor of the Braleys,
Sportec put its product in the stream of commerce with the
expectation that it would be purchased by NASCAR fans, many of
whom could be found in New Hampshire.
The Braleys have made a prima facie showing that Sportec
intentionally established a channel of distribution to sell its
NASCAR-type lights, that foreseeably resulted in sales in New
Hampshire. Therefore, the Braleys have met their burden of
showing that Sportec has sufficient minimum contacts with New
Hampshire under the stream of commerce theory.
B. Reasonableness of Jurisdiction
Once a plaintiff makes a showing of the defendant’s minimum
contacts, the defendant may still defeat jurisdiction by making a
“compelling case” that jurisdiction would be unreasonable. Viam,
84 F.3d at 429. “Defeats of otherwise constitutional personal
jurisdiction ‘are limited to the rare situation in which the
plaintiff’s interest and the state’s interest in ajudicating the
dispute in the forum are so attenuated that they are clearly
outweighed by the burden of subjecting the defendant to
litigation within the forum.’” Akro,
45 F.3d at 1549, quoting
Beverly Hills Fan,
21 F.3d at 1568. Pertinent to intellectual
property cases, “the state has definite and well-defined
12
interests in commerce and scientific development.” Viam, 84 F.3d
at 430.
In light of the Braleys’ showing, the burden shifts to
Sportec to show that exercising jurisdiction would be
unreasonable. Sportec argues that it would be unfairly
inconvenienced by litigation in New Hampshire, however it does
not persuade the court that its inconvenience rises to the level
of unconstitutional jurisdiction. New Hampshire is the home of
the plaintiffs, and the product at issue was sold in New
Hampshire and continues to be offered for sale. New Hampshire
therefore has a definite interest in providing the forum.
Sportec has not shown that this is one of the rare cases in
which otherwise constitutional jurisdiction may not be properly
exercised. Sportec’s motion to dismiss this action for lack of
personal jurisdiction is denied.
II. Transfer of Venue
In the alternative, Sportec moves to transfer the case to
the Southern District of Ohio, Eastern Division. Sportec
contends that the convenience of witnesses and the undue burden
on Sportec favor a transfer.
In determining procedural issues not pertaining to patent
law, regional circuit precedent, rather than Federal Circuit
13
precedent, applies. See Phonometrics, Inc. v . Hospitality
Franchise Sys., Inc., 203 F.3d 790, 793 (Fed. Cir. 2000); Midwest
Indus.,
175 F.3d at 1359. The Federal Circuit has not held that
transfer of venue is a nonsubstantive issue that “pertains to
patent law,” as it has for the issue of personal jurisdiction,
such that Federal Circuit law should control. See e.g.,
HollyAnne Corp. v . TFT, Inc.,
199 F.3d 1304, 1306-07 (Fed. Cir.
1999) (applying Federal Circuit law to jurisdiction discussion
and Sixth Circuit law to venue discussion); Banjo Buddies, Inc.
v . Renosky,
156 F. Supp. 2d 2 2 , 24-25 (D. M e . 2001) (applying
First Circuit law to transfer of venue motion in patent case);
cf. Midwest Indus.,
175 F.3d at 1359-60 (listing certain
nonsubstantive issues held by Federal Circuit to be pertinent to
patent l a w ) . Therefore, the court will determine Sportec’s
motion to transfer venue according to the law of the First
Circuit.
Sportec moves to transfer on the ground of forum non
conveniens, pursuant to 28 U.S.C. § 1404(a). 7 Section 1404(a)
provides: “For the convenience of parties and witnesses, in the
interest of justice, a district court may transfer any civil
action to any other district or division where it might have been
7
Section 1404(a) is a codification of the doctrine of f
non conveniens. See Albion v . YMCA Camp Letts, 171 F.3d 1 , 2
14
brought.” To prevail on a motion to transfer under § 1404(a), a
defendant must show “both that an adequate alternative forum
exists and that considerations of convenience and judicial
efficiency strongly favor litigating the claim in the alternative
forum.”8 Iragorri v . Int’l Elevator, Inc., 203 F.3d 8 , 12 (1st
Cir. 2000).
The court evaluates motions to transfer according to an
“individualized, case-by-case consideration of convenience and
fairness. A motion to transfer under § 1404(a) thus calls on the
district court to weigh in the balance a number of factors.”
Stewart Org., Inc. v . Ricoh Corp., 487 U.S. 2 2 , 29 (1988)
(quotation omitted). Factors of convenience to be considered by
the court include:
(1) the convenience of the parties; (2) the
convenience of the witnesses; (3) the relative ease
of access to sources of proof; (4) the availability
of process; (5) [the] cost of obtaining willing
witnesses; and (6) trying the case most expeditiously
and inexpensively.
F.A.I. Electronics v . Chambers, 944 F. Supp. 7 7 , 80-81 (D. Mass.
1996), citing Gulf Oil Corp. v . Gilbert,
330 U.S. 501, 508
(1947); see also Coady v . Ashcroft & Gerel,
223 F.3d 1 , 11 (1st
Cir. 2000); Iragorri,
203 F.3d at 1 2 .
8
The parties do not dispute that the Braleys’ action might
have been brought in the Southern District of Ohio, Eastern
Division.
15
Factors of public interest are also considered, including
the efficient administration of the judicial system, the
conservation of judicial resources, and the forum state’s
interest in the case. See Gulf Oil, 330 U.S. at 508-09; see also
17 James Wm. Moore et a l . , Moore’s Federal Practice §
111.13[1][o], at 111-89 (3rd ed. 2000).
“‘[U]nless the balance is strongly in favor of the
defendant, the plaintiff’s choice of forum should rarely be
disturbed.’” Mercier v . Sheraton Int’l, Inc., 981 F.2d 1345,
1354 (1st Cir. 1992), quoting Gulf Oil,
330 U.S. at 508.
“Transfer is inappropriate if the effect is merely to shift
inconvenience from one party to another.” Buckley v . McGrawHill, Inc.,
762 F. Supp. 4 3 0 , 439 (D.N.H. 1991). Furthermore,
where an identical action is pending in another federal court,
“the first filed action is generally preferred in a choice-ofvenue decision.” Cianbro Corp. v . Curran-Lavoie, Inc.,
814 F.2d
7 , 11 (1st Cir. 1987); but see Veryfine Prods., Inc. v . Phlo
Corp.,
124 F. Supp. 2d 1 6 , 22-24 (D. Mass. 2000) (transferring
case where first filed action resulted from plaintiff “jumping
the gun” and winning race to courthouse).
Sportec argues that the balancing of conveniences in this
case weighs in favor of a transfer. Sportec asserts that it
would be a hardship for Sportec, a four-person company, to
16
litigate in New Hampshire. It also argues that the witnesses
familiar with the design and manufacture of Sportec’s product are
located in Ohio, and the documentary evidence about its allegedly
infringing product is located in Ohio. In contrast, Sportec
asserts, the Braleys would not be unduly burdened by traveling to
Ohio for litigation, since they have a business relationship with
an Ohio company to market their patent.
The Braleys respond that traveling to Ohio to litigate would
result in an undue hardship on them. They argue that they would
lack sufficient funds to proceed with the case, and they would
incur expense either transporting their two children with them to
Ohio, or making arrangements for care in their absence.
The convenience of the parties does not weigh in Sportec’s
favor. The burden on the Braleys to travel to Ohio would be at
least equal to the burden placed on Sportec to travel to New
Hampshire. The Braleys are residents of New Hampshire and the
alleged marketing and sale of Sportec’s product took place in New
Hampshire. Sportec has not shown a significant difference in the
burden on its witnesses, or the documentation required for its
defense, as opposed to the Braleys’ witnesses and documents.9
9
The court notes that the potential witnesses named by
Sportec are its employees, and therefore may be compelled by
Sportec to testify in New Hampshire. See Galonis v . Nat’l Broad.
Co., 498 F. Supp. 789, 793 (D.N.H. 1980).
17
Furthermore, the Braleys’ action is the first-filed suit in this
dispute by eight months.10 The Braleys’ willingness to travel to
Ohio, if necessary, to litigate a claim against them does not
defeat their choice of forum for their own claim against Sportec.
Sportec has not met its burden of showing that a balancing
of conveniences strongly favors a transfer. In this case, a
transfer would most likely shift the inconvenience to the
Braleys, which is insufficient to justify disturbing the
plaintiffs’ choice of forum. Sportec’s motion to transfer is
denied.
Conclusion
Sportec’s motion to dismiss for lack of personal
jurisdiction (document n o . 11) is denied. Sportec’s motion in
the alternative to transfer venue to the Southern District of
Ohio, Eastern Division (document n o . 1 1 ) , is also denied.
Before expending more of their resources in preparing this
case for trial, the parties should attempt to seek a resolution
of this matter. In furtherance of this, the court suggests that
the parties consider mediation before Attorney David Plante, an
experienced patent attorney, arbitrator, and mediator, who is a
10
The Braleys’ motion to dismiss Sportec’s action for lack
of personal jurisdiction is pending. If granted, the Braleys
will not be traveling to Ohio to defend that claim.
18
member of the mediation panel for this court’s mediation program.
His resume is attached.
SO ORDERED.
Joseph A . DiClerico, Jr.
District Judge
July 1 6 , 2002
cc: Edward D. Philpot Jr., Esquire
Robert J. Rabuck, Esquire
Mark A . Losey, Esquire
19
