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Steuben Foods, Inc v. Shibuya Hoppmann Corp

August 15, 2011

STEUBEN FOODS, INC., PLAINTIFF,
v.
SHIBUYA HOPPMANN CORP., DEFENDANT.



The opinion of the court was delivered by: Honorable Richard J. Arcara United States District Judge

DECISION AND ORDER

I. INTRODUCTION

Pending before the Court are motions by defendant Shibuya Hoppman Corporation to dismiss plaintiff's complaint (Dkt. No. 7) and, in the alternative, to stay this case (Dkt. No. 9) pending re-examination of two of the six patents that plaintiff has identified as relevant to its infringement claims. Defendant believes that outright dismissal is appropriate because it does not have sufficient contacts with New York to create personal jurisdiction, and because plaintiff's allegations of patent infringement are too conclusory to survive scrutiny under Rule 12(b)(6) of the Federal Rules of Civil Procedure ("FRCP"). As an alternative request, defendant asks the Court to stay the case until the United States Patent and Trademark Office ("USPTO") completes its review of two out of the six patents that plaintiff believes have been infringed. Defendant contends that a revocation or significant alteration of these patents would have enough of an impact on the litigation that the Court should wait for guidance from the USPTO.

Plaintiff opposes both motions. According to plaintiff, defendant's own admission of occasional sales in New York, coupled with attendance at an annual trade show in New York and an interactive website that facilitates sales, more than suffices to establish personal jurisdiction. Plaintiff also contends that it has set forth its allegations of patent infringement in sufficient detail to put defendant on notice about the patents and the technology in question. Finally, plaintiff argues against a stay on the grounds that re-examination of two of the patents in question does not affect the other four patents that allegedly have been infringed. At a minimum, according to plaintiff, litigation can proceed with respect to the four patents that have not been challenged.

The Court held oral argument on July 25, 2011. For the reasons below, the Court denies both motions.

II. BACKGROUND

This case concerns plaintiff's allegations that defendant manufactures and sells automated bottling machines that infringe on six of its patents. Among other products or services, both parties manufacture and sell "aseptic filling systems"-that is, automated machines that fill aseptically sterilized bottles at high rates of speed. Plaintiff, a New York corporation based in Elma, New York, owns six patents pertaining to equipment and processes for bottling that allows it to sell machines that process more than 100 bottles per minute. The technical details of these six patents are not relevant to the pending motions, but these patents generally concern issues such as disinfecting bottles with hydrogen peroxide, disinfecting bottles in a way that sharply reduces contamination while bottling at high speed, and filling bottles in a way that preserves the sterility of the food product. The parties never have worked together, though a corporate predecessor of defendant visited plaintiff's Elma facility a few years ago to discuss the possibility of having defendant install machinery at that facility.

A trade show appears to have brought defendant's allegedly infringing conduct to plaintiff's attention. INTERPHEX is an annual trade show "for industry professionals and contract service providers in the fields of pharmaceutical and biopharmaceutical manufacturing." (Dkt. No. 19-4 at 17.) Whether the location of INTERPHEX varies is not clear from the record, but the trade show was held in New York City in 2009, 2010, and 2011. Defendant attended INTERPHEX in 2009, 2010, and 2011. Among other activities in which it may have engaged, defendant displayed its Dual Robotic Aseptic System and its hydrogen peroxide decontamination system at INTERPHEX 2009 and its Compact Filler/Capper machine at INTERPHEX 2010. Plaintiff also attended these INTERPHEX trade shows; Thomas Taggart, a vice president for plaintiff, claims to have observed defendant showcasing machinery incorporating sterilization and filling techniques covered by plaintiff's patents. Defendant announced its attendance at INTERPHEX on both its website and its Facebook page.

In response to the alleged patent infringement that came to its attention, plaintiff filed its complaint on September 29, 2010. In the complaint, plaintiff asserted that defendant does business in New York and has engaged in actual, induced, and contributory infringement. Plaintiff asserted further that it sent defendant written notice on September 25, 2009 about the existence of its patents. Defendant allegedly never acknowledged receipt of that written notice. The complaint contains two causes of action. In the first cause of action, plaintiff accuses defendant of actual, induced, and contributory infringement that continues through the present time. In the second cause of action, plaintiff requests injunctive relief on the grounds that defendant's continued patent infringement is causing irreparable harm that monetary relief cannot address.

Defendant filed the pending motions in lieu of answering the complaint. With respect to the motion to dismiss, defendant advances two bases for dismissal. First, defendant argues a lack of personal jurisdiction or, alternatively, improper venue. Although defendant acknowledged at oral argument that it has sold products from time to time in New York, it denies having any physical presence, employees, mailing addresses, or similar features in New York. Additionally, defendant contends that its attendance at INTERPHEX by itself does not suffice to establish personal jurisdiction because that trade show constitutes an isolated or sporadic event at which it has not completed sales. To the extent that plaintiff bases jurisdiction on the features of defendant's website, defendant argues that its website is not sufficiently "interactive" to constitute either doing business in New York or projecting itself into New York for purposes of due process analysis. Second, defendant argues that the assertion of patent infringement in the complaint does not identify specific machinery or specific features of that machinery that allegedly infringes on plaintiff's patents. Consequently, according to defendant, plaintiff's allegations are so conclusory that the complaint is subject to dismissal under FRCP 12(b)(6).

Along with the motion to dismiss, defendant filed an alternative motion to stay litigation pending the re-examination of two of plaintiff's patents by the USPTO. Of the six patents that plaintiff placed in issue, third parties not affiliated with defendant have requested and received re-examination for two of them under 35 U.S.C. §§ 301--307. On June 29, 2010, non-party Joseph W. Holland requested re-examination of all 20 claims for Patent No. 6,536,188 (the "`188 Patent"). In a decision dated November 5, 2010, the USPTO agreed with Holland and issued a preliminary rejection of those claims; the re-examination process as a whole has not ended. On September 24, 2010, non-party Charles A. Gaglia requested re-examination of all 20 claims for Patent No. 6,945,013 (the "`013 Patent"). That re-examination also is ongoing. Defendant argues that the results of these re-examinations could change the scope and substance of plaintiff's claims and the rights that are potentially at stake. Accordingly, and because this case is in its earliest stages, defendant contends that a stay would provide the benefit of clarifying the issues in the case without imposing any prejudice on plaintiff. Defendant estimates that a stay would not last long because the re-examinations have been proceeding for some time and because it does not intend to challenge plaintiff's other four patents.

Plaintiff opposes both pending motions and urges the Court to allow the case to move forward. According to plaintiff, proper venue in patent infringement cases occurs wherever personal jurisdiction exists, and personal jurisdiction exists here through a combination of factors. Through admitted occasional sales in New York, repeated attendance at New York trade shows, a sales representative assigned to New York, and an interactive website that includes a "shopping cart" feature, defendant supposedly has established sufficient contacts with New York to satisfy both state and federal law. Plaintiff also emphasizes that defendant's sales efforts in New York include the attempted sale to plaintiff a few years ago, even if defendant's corporate predecessor technically handled that negotiation. As for the sufficiency of its claims, plaintiff contends that this is a simple infringement case and that it has adequately alleged that the infringement has occurred and continues to occur. Finally, plaintiff argues against any stay because its claims against defendant do not rest on the outcome of the re-examinations currently under way.

III. DISCUSSION

For the sake of clarity, the Court will address each of defendant's arguments separately below. In reviewing defendant's arguments about personal jurisdiction, the Court will look to precedent from the United States Court of Appeals for the Federal Circuit. The Court will do so because plaintiff brought this case in part under 28 U.S.C. § 1338, which gives district courts original jurisdiction over patent cases, and the Federal Circuit "shall have exclusive jurisdiction of an appeal from a final decision of a district court of the United States . . . if the jurisdiction of that court was based, in whole or in part, on section 1338 of this title . . . ." 28 U.S.C. § 1295(a)(1); see also Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995) ("We apply the law of the Federal Circuit, rather than that of the regional circuit in which the case arose, when we determine whether the district court properly declined to exercise personal jurisdiction over an out-of-state accused infringer.") (citation omitted). In contrast, this Court will apply Second Circuit precedent to ...


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