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METEORO AMUSEMENT CORP. v. SIX FLAGS

May 27, 2003

METEORO AMUSEMENT CORP., PLAINTIFF,
v.
SIX FLAGS, DEFENDANT.



The opinion of the court was delivered by: Neal P. McCURN, Senior District Judge

MEMORANDUM-DECISION AND ORDER

Factual and Procedural Background

Plaintiff, Meteoro Amusement Corp. ("Meteoro"), a New Mexico Corporation with its principal place of business in Lansing, New York, filed this civil action against defendant, Six Flags, Inc. ("SFI"), a Delaware corporation, on July 31, 2002. An amended complaint was filed November 15, 2002. Meteoro claims two counts of patent infringement against SFI pursuant to 35 U.S.C. § 271 et seq. regarding United States Patent Numbers 6,386,115 ("the '115 patent") and 6,477,961("the '961 patent"), seeking declaratory and injunctive relief as well as damages. Count I alleges infringement of the '115 patent for the period of time commencing at publication and concluding at issuance. See Am. Compl. ¶¶ 23-27. Count II alleges continuing infringement of both the '115 and '961 patents commencing at issuance. See id. ¶¶ 28-35.

The following are the facts as set forth in the complaint.

Meteoro is the assignee of the '115 patent, entitled "Modularized Amusement Ride and Training Simulation Device", issued on May 14, 2002. See id. ¶ 5, Ex. A. The Modularized Amusement Ride and Training Simulation Device is defined in the abstract of the '115 patent as "[a]n amusement device comprising a modular pod, in which one or more riders sit and are restrained, and which spins under power about a horizontal axis according to the passenger's active control" and "may be used in conjunction with many different types of amusement devices, including, but not limited to roller coasters". See id. Ex A. Between 1997 and 1998 Meteoro offered to sell SFI, as well as other companies such as Premier Rides and Arrow Dynamics, Inc., the technology embodied in the '115 patent. See id. ¶ 7. In 1998, copies of a video which illustrated this technology were distributed to and presumed viewed by Premier Rides, Arrow Dynamics and SFI, and in 1999 the video was made available for public viewing on Meteoro's website. See id. ¶ 8.

In December 2000, defendant SFI announced the anticipated debut of a roller coaster called "X" at its theme park, Magic Mountain, located in Valencia, California. The roller coaster was being manufactured by Arrow Communications. See id. ¶ 10. Passengers of the X roller coaster are strapped into vehicles that move 360 degrees forward or backward along a central carriage. See id. ¶ 11, Ex. E.

In September 2001, plaintiff Meteoro's CEO notified defendant SFI's CEO that if X was built and used, an infringement of plaintiff's pending patent application, Serial Number 09/814,083 ("the '083 application") would occur upon its maturation into a U.S. Patent, presently, the '115 patent. See id. ¶¶ 12, 26. SFI has never responded to this notification. See id. ¶¶ 13-15, 21.

In November 2001, the United States Patent and Trademark Office published the '083 application. The following month, X was opened to a limited audience at Magic Mountain, and was opened to the general public in January 2002. See id. ¶¶ 16-17. SFI has promoted, and continues to promote X, utilizing, among other things, its website to do so. See id. ¶¶ 18-20.

Plaintiff is also the assignee of the '961 patent, duly and legally issued on November 12, 2002. See id. ¶ 22.

Presently before the court is a motion by defendant to dismiss the entire action for failure to state a claim upon which relief may be granted pursuant to Fed.R.Civ.P. 12(b)(6), for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1), and for improper venue pursuant to Fed.R.Civ.P. 12(b)(3). Alternatively, defendant moves this court to transfer venue pursuant to 28 U.S.C. § 1404(a). Plaintiff opposes this motion. Oral Argument was heard on March 18, 2003 in Syracuse, New York. The court denied the motion to dismiss from the bench as to the 12(b)(1) and 12(b)(6) grounds but reserved judgment regarding the 12(b)(3) ground and the § 1404(a) motion to transfer venue. The court now denies the 12(b)(3) motion to dismiss but exercises its discretion to transfer venue to the Western District of Oklahoma pursuant to 28 U.S.C. § 1404(a).

Analysis

I. Venue — Rule 12(b)(3)

When addressing a 12(b)(3) motion to dismiss, the court must accept as true all of the allegations in plaintiff's complaint and construe all reasonable inferences in plaintiff's favor. See Dolson v. New York Thruway Auth., No. 00-CV-6439, 2001 WL 363032, at *1 (S.D.N.Y. Apr. 11, 2001). However, in defending against such a motion, plaintiff bears the burden of proving that venue is proper. See id. When deciding a motion to dismiss for improper venue, courts may consider materials outside the pleadings. See Brennen v. Phyto-Riker Pharm., Ltd., 01-CV-11815, 2002 WL 1349742, *1 n. 2 (S.D.N.Y. Jun. 20, 2002), (citing New Moon Shipping Co., Ltd. v. Man B & W Diesel AG, 121 F.3d 24, 26 (2d Cir. 1997)). Should the defendant prevail on its motion, the court still retains discretion to decline to dismiss the case in favor of a transfer to any district where the case could initially have been brought. See id. (citing Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir. 1993)).

Here, according to plaintiff, "venue is proper in (the Northern District of New York) pursuant to 28 U.S.C. § 1391(b) and (c) and § 1400(b)." See Am. Compl. ¶ 2. Pursuant to § 1391(b), where, as here, subject matter jurisdiction in a civil action is based on federal question, the case may be

brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought. 28 U.S.C. § 1391(b).
Where, as here, a defendant is a corporation, it
shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside in the district within which it has the most significant contacts. 28 U.S.C. § 1391(c).
Finally, where, as here, the complaint alleges a claim of patent infringement, such an action "may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business." 28 U.S.C. § 1400(b).

As an initial matter, it is important to note that §§ 1391(c) and 1400(b) should be read coextensively instead of the latter being the exclusive authority for determination of venue in patent infringement cases. See VE Holding Corp. v. Johnson Gas Appliance Co., 917 F.2d 1574, 1583 (Fed. Cir. 1990), cert. denied, 499 U.S. 922, 111 S.Ct. 1315 (1991); Rocket Jewelry Box, Inc. v. Noble Gift Packaging, Inc., 869 F. Supp. 152, 155 (S.D.N.Y. 1994). Cf. Aerotel v. Sprint, 100 F. Supp.2d 189, 194 (S.D.N.Y. 2000). Thus, the question the court should answer when addressing a 12(b)(3) motion to dismiss in a patent infringement case with respect to a defendant who is a corporation is "whether the defendant was subject to personal jurisdiction in the district of suit at the time the action was commenced." VE Holding, 917 F.2d at 1584, (citing 28 U.S.C. § 1391(c) and 1400(b)).*fn1 In accordance with § 1391(c), therefore, the Northern District of New York ("Northern District") will be deemed a proper venue if it is determined that SFI is subject to personal jurisdiction there as if it were a separate state. In other words, venue in the Northern District is proper if SFI's contacts with the District render it amenable to suit there. See 28 U.S.C. § 1391(c).

The court may exercise personal jurisdiction over a defendant "who could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district court is located." See Fed.R.Civ.P. 4(k)(1)(A). See also Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 94 (2d Cir. 2000). When determining whether it has personal jurisdiction over a defendant in a patent case, the district court must apply the law of the state in which it sits and must defer to that state's highest court when interpreting said law. See Aerotel v. Sprint, 100 F. Supp.2d 189, 191 (S.D.N.Y. 2000); Rocket Jewelry Box, 869 F. Supp. at 154-155 (S.D.N.Y. 1994); Hollyanne v. TFT, 199 F.3d 1304, 1307 (Fed. Cir. 1999). In New York, a defendant that is a foreign corporation may be subject to the general jurisdiction of its courts pursuant to section 301 of the New York Civil Practice Law and Rules where it is "doing business" in the state. See Wiwa, 226 F.3d at 95, citing N.Y. C.P.L.R. § 301 (McKinney 2003). Alternatively, a defendant who is a foreign corporation may be subject to the specific jurisdiction of New York courts pursuant to its long arm statute, section 302 of the New York Civil Practice Law and Rules. See N.Y. C.P.L.R. § 302 (McKinney 2003). When determining whether it has personal jurisdiction over a foreign defendant, this court must assess whether New York's long arm statute confers jurisdiction in light of the defendant's contacts with the forum state, and if so then whether such exercise of jurisdiction comports with constitutional due process. See LaMarca v. Pak-Mor Mfg. Co., 95 N.Y.2d 210, 214, 713 N.Y.S.2d 304, 307 (Ct.App. 2000). See also Rocket Jewelry Box, 869 F. Supp. at 155-156.

A. General Jurisdiction: C.P.L.R. § 301

Corporate Presence

A corporation is subject to the jurisdiction of New York courts when it is found to be "doing business" in New York in such a continuous and systematic manner that it is deemed present in the state. See Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267 (N.Y. 1917)*fn2; Landoil Resources Corp. v. Alexander & Alexander Serv., 77 N.Y.2d 28, 33, 563 N.Y.S.2d 739, 740 (N.Y. 1990). The test for courts to apply in determining whether a foreign corporation is doing business in New York is "a `simple [and] pragmatic one,' which varies in its application depending on the particular facts of each case." Landoil, 77 N.Y.2d at 33, 563 N.Y.S.2d at 740, (citing Bryant v. Finnish Natl. Airline, 15 N.Y.2d 426, 432, 260 N.Y.S.2d 625 (N.Y. 1965)). Courts have looked for more than mere solicitation to find that jurisdiction exists under section 301, and have found that activities of substance such as having office space, employees, and completing financial transactions in the forum, in addition to solicitation will render a corporate defendant amenable to suit in New York. See Laufer v. Ostrow, 55 N.Y.2d 305, 310, 449 N.Y.S.2d 456, 459 (N.Y. 1982).

In its moving papers, SFI argues that it has not engaged in any "continuous and systematic course of doing business" in the Northern District because "[t]he mere indirect, stock ownership in a corporation that owns and operates one theme park in the District does not constitute the type of systematic, regular conducting of business that would subject [it] to jurisdiction in this District under CPLR § 301".*fn3 See Mem. in Supp. of Def.'s Mot. to Dismiss or Transfer Venue at 15.

Meteoro argues in its opposition papers that SFI's business activities bring it within the purview of section 301 because it solicits business in the Northern District via an interactive website, in addition to its "selling of tickets and accepting of employment applications, financing of operations, and contracting to supply goods and services at its theme park here." See Pl.'s Mem. of Law in Opp'n to Def.'s Mot. to Dismiss or Transfer Venue at 14. In addition to the sixflags.com website, Meteoro cites four UCC financing statements which, they claim, are evidence that SFI guarantees the loans of its New York subsidiary, Great Escape, LLC. See id. at 15; Aff. of George R. McGuire, Jan. 6, 2003 at Ex. E.

At oral argument, counsel for plaintiff admitted that defendant does not have an office or employees in the Northern District, but reiterated plaintiff's argument that defendant SFI's website activity as well as Great Escape's UCC financing statement are evidence that the "solicitation ...


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