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RACE SAFE SYSTEMS, INC. v. INDY RACING LEAGUE

February 18, 2003

RACE SAFE SYSTEMS, INC. Plaintiff,
v.
INDY RACING LEAGUE and DELPHI CORPORATION Defendants.



The opinion of the court was delivered by: MUNSON, Senior District Judge.

MEMORANDUM DECISION AND ORDER

This is a patent infringement lawsuit instituted by plaintiff Race Safe Systems, ("Race Safe") a New York corporation that was dissolved by proclamation on December 27, 2000. The corporate dissolution does not prevent Race Safe from bringing this action. Rule 17(b) of the Federal Rules of Civil Procedure applies to dissolved and active corporations, and it provides that, "[t]he capacity of a corporation to sue or be sued shall be determined

[251 F. Supp.2d 1108]

      by the law under which it was organized." Domino Media, Inc. v. Kranis, 9 F. Supp.2d 374 (S.D.N.Y. 1998), aff'd, 173 F.3d 843 (2d Cir. 1999). States may provide that a dissolved corporation may maintain a suit to collect its assets, and the corporation will then have the capacity to sue in the federal courts even after dissolution. Traverse Bay Area Intermediate School District v. Kitco, Inc., 762 F. Supp. 1298 (W.D.Mich. 1991).

The courts in New York have consistently given effect to the statutory mandate that corporations "may continue to function for the purpose of winding up the affairs of the corporation in the same manner as if the dissolution had not taken place." (NY Business Corp. Law § 1006(a)); Baddeck v. 57 Light Street Corporation, 111 Misc.2d 255, 257, 443 N.Y.S.2d 785, 787 (1981). This statute by its very terms applies regardless of the manner in which the dissolution was achieved and regardless of the nature of the existing corporate liabilities and obligations. Douglas v. Pearlstein, 170 Misc. 561, 563, 10 N.Y.S.2d 479, 481; aff'd 256 A.D.2d 1084 (2nd Dept. 1939). A conveyance of real property 16 years after dissolution has been recognized and upheld. Jennings v. High Farms Corp., 28 A.D.2d 693, 281 N.Y.S.2d 110 (2nd Dept. 1967). Plainly, Race Safe may sue or be sued under the New York General Corporation Law, and its cause of action for injunctive relief and damages arising from the alleged infringement of its patent survived its dissolution. New York corporate statutes indicate that it is the public policy of the state to permit a corporation, even after dissolution, to properly wind up its affairs, and its right to sue for this purpose should not be forfeited by implication. School of Music of Brooklyn Free Music Society, Inc. v. Morit, 145 N.Y.S.2d 265, 646 (Misc. 1955).

  On November 15, 1998, Richard J. and Donald D. Martel were issued a patent on a Pulse Coded Warning System for Racetrack. The patent covers a race condition alerting system used in automobile races and consists of a transmitter actuated by a flagman or other race official and a receiver unit in each race car. During a race, the transmitter sends a pulse encoded signal that operates a green light signal in each racer's receiver. If the race has to be stopped for any reason, a red signal light replaces the green one. If a wreck or other danger occurs on the race course that is not serious enough to stop the race, a yellow light replaces the green one, alerting each driver that a yellow flag or caution event has been called on the race course. This in car alert system supplements a flag and lighting system surrounding the race course which is activated when a caution incident has taken place. When the caution system is operating, the drivers must discontinue competitive racing and reduce speed until the caution period ends and the yellow lights turn green again.

  Richard J. and Donald D. Martell assigned their patent rights to the plaintiff, Race Safe, which markets and sells the coded warning system for racetracks. Defendant Delphi Corporation is a Delaware corporation headquartered in Troy, Michigan. It is an immense multi-national corporation which, according to its media releases, has approximately 192,000 employees and operates 179 wholly owned manufacturing sites, 42 joint ventures, 53 customer centers and sales offices and 32 technical centers in 41 countries. Delphi's Dec. 9, 2002 press release projects 2003 revenue of $28 billion. Its United States operating subsidiary, Delphi Automotive Systems, LLC, designs and manufacturers assorted automotive parts that are marketed throughout the United States. Delphi

[251 F. Supp.2d 1109]

      also operates manufacturing plants located in Lockport and Rochester, NY.

  Defendant Indy Racing League ("IRL") is an Indiana company situated in Indianapolis, Indiana. IRL organizes Indy Racing competitions and annually conducts approximately 15 races with its premier event being the Indianapolis 500. It last conducted a race event in New York state in 1998. In late 1997, IRL requested Delphi to design an in-vehicle system that would directly inform a race car driver if a yellow flag or caution event had occurred on the race course because of an accident or other danger.

  In response to IRL's request, Delphi developed and manufactured a warning system named the Track Condition Radio or TRC, at its Kokomo, Indiana facility. IRL purchased 150 TCSs to be used in the vehicles competing in IRL's yearly car racing series.

  Race Safe alleges that since early in 1998, Delphi has been making, using, selling and/or offering for sale in the United States a line of patent infringing warning systems for racetracks substantially identical in operation, construction and results to that of Race Safe's system; and that Delphi has continued to do so even after Race Safe notified it that it was infringing upon Race Safe's patent. Race Safe further contends that since 1998, defendant IRL has received royalties from national television companies that show the events IRL sponsors and markets to the general public; that during this same period IRL has been making, using, offering for sale and/or requiring its race car owners and other race personnel to use the TCR warning system that infringes on Race Safe' patent, at all IRL races; that IRL advertises and markets itself through the infringing use of Race Safe's warning system on national television; and that the winner of the 2002 winner of the Indianapolis 500 was determined as a result of the use of defendant Delphi's infringing product by the IRL.

  Currently before the court are two motions. The first is brought by defendant IRL which moves to dismiss itself from the case pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, or, in the alternative, to transfer venue to the Southern District of Indiana pursuant to 28 U.S.C. § 1631 and/or 28 U.S.C. § 1404. The second is brought by defendant Delphi and moves to transfer the case to the Southern District of Indiana pursuant to Federal Rule of Civil Procedure 28 U.S.C. § 1404(a). Both Delphi's Kokomo, Indiana facility and IRL's headquarters in Indianapolis, Indiana, are located in the Southern District of Indiana. Plaintiff has entered opposition to the Delphi motion only. The court will first consider ILR's motion to dismiss itself from the case and then the venue transfer motions.

  Local Rule 7.1(b)(3) for the United States District Court Northern District of New York provides that where a properly filed motion is unopposed and the Court determines that the moving party has met its burden demonstrating entitlement to the relief requested therein, failure by the non-moving party to file any of the papers required by this rule shall be ...


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