UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
April 16, 2012
BODUM U.S.A., INC., PLAINTIFF,
HANTOVER, INC., DEFENDANT.
The opinion of the court was delivered by: Shira A. Scheindlin, U.S.D.J.
OPINION AND ORDER
Bodum U.S.A. Inc. ("Bodum") brings this declaratory judgment action seeking determinations of non-infringement and invalidity respecting a patent owned by Hantover Inc. ("Hantover") for a universal knife holder. Hantver now moves to dismiss the Complaint under Rule 12(b)(2) of the Federal Rules of Civil Procedure or, in the alternative, to transfer the case to the United States District Court for the Western District of Missouri. For the following reasons, Hantover's motion to dismiss the Complaint is granted, without prejudice and with leave to replead.
The facts of the case are largely undisputed. Bodum is a Delaware
corporation with offices and its principal place of business in New
York.*fn1 Bodum is part of an international
conglomeration of companies headquartered in Switzerland.*fn2
Bodum creates and distributes kitchen products including a
line of knife block products named "BISTRO Universal Knife
Block."*fn3 Hantover is a Missouri corporation with
its headquarters and operating facilities located in Kansas City,
Missouri.*fn4 Hantover owns U.S. Patent No. 6,082,559
("the '559 patent") which is directed to a universal knife block that
Hantover commercializes under the brand name KAPOOSH.*fn5
On April 18, 2011, counsel for Hantover sent a letter to Bodum's New York office regarding the '559 patent.*fn6 The letter alleged Bodum's "BISTRO Universal Knife Block" infringed the '559 patent, and asked Bodum to cease and desist infringing activities or seek a non-exclusive license under the patent.*fn7 The letter warned that "Bodum's failure to comply with these demands will leave us no option but to advise Hantover to take whatever legal steps are necessary to enforce its valuable patent rights."*fn8
On June 29, 2011, Bodum responded by providing Hantover with copies of
four foreign patents that Bodum believed invalidated Hantover's patent
and that had never been presented to the United States Patent and
Trademark Office.*fn9 On November 2, 2011, Hantover
replied disputing Bodum's assertions of patent invalidity.*fn10
Hantover warned that it was prepared to enforce its patent
rights if Bodum continued to sell the "BISTRO Universal Knife Block"
or failed to seek a license for the '559 patent by December 2,
On November 30, 2011, Bodum filed a complaint in this Court seeking a declaratory judgment of noninfringement and invalidity of Hantover's '559 patent. On January 20, 2012, Hantover filed this motion to dismiss under Rule 12(b)(2) of the Federal Rules of Civil Procedure or, in the alternative, to transfer the case to the Western District of Missouri pursuant to section 1404 of Title 28 of the United States Code.
III. APPLICABLE LAW
A. Rule 12(b)(2) Motion to Dismiss
When the issue of personal jurisdiction "is decided initially on the pleadings and without discovery, the plaintiff need only show a prima facie case."*fn12
Plaintiffs "can make this showing through [their] own affidavits and supporting materials containing an averment of the facts that, if credited . . . would suffice to establish jurisdiction over the defendant."*fn13 Thus, a court may consider materials outside the pleadings,*fn14 but must credit plaintiffs' averments of jurisdictional facts as true.*fn15 "[A]ll allegations are construed in the light most favorable to the plaintiff and doubts are resolved in the plaintiff's favor, notwithstanding a controverting presentation by the moving party."*fn16 Nonetheless, where a defendant "rebuts [plaintiffs'] unsupported allegations with direct highly specific, testimonial evidence regarding a fact essential to jurisdiction -- and plaintiffs do not counter that evidence -- the allegation may be deemed refuted."*fn17 Although in patent cases the court applies the uniform body of Federal Circuit law,*fn18 the court will apply the relevant state long-arm statute when determining whether it has personal jurisdiction over a defendant.*fn19 Accordingly, New York law defines the jurisdictional issue here.
1. General Jurisdiction Under Section 301 of the CPLR
Under section 301 of the New York Civil Practice Law and Rules ("CPLR"), New York subjects a foreign corporation to general jurisdiction if it is "doing business" in the State. Under this test, "a foreign corporation is amenable to suit in New York if it is 'engaged in such a continuous course' of 'doing business' here as to warrant a finding of its 'presence' in this jurisdiction."*fn20
"[T]he term 'doing business' is used in reference to foreign corporations to relate to 'the ordinary business which the corporation was organized to do' . . . . It is not the occasional contact or simple collateral activity which is included."*fn21 "The doing business standard is a stringent one because a corporation which is amenable to the [c]court's general jurisdiction 'may be sued in New York on cause of action wholly unrelated to acts done in New York.'"*fn22
To determine whether a foreign corporation is doing business in New York, courts focus on criteria including: (1) whether the foreign corporation has an office in the state; (2) whether it has any bank accounts or other property in the state; (3) whether it has a phone listing in the state; (4) whether it does any public relations work in the state; and (5) whether it has employees who permanently work in the state.*fn23 No single criterion is determinative.*fn24 The general jurisdiction inquiry thus looks to the totality of the defendant's contacts and "permits a court to exercise its power in a case where the subject matter of the suit is unrelated to those contacts."*fn25
"[M]ere sales of a manufacturer's product in New York, however substantial, have never made the foreign corporation manufacturer amenable to suit in this jurisdiction."*fn26 However, extensive sales can suggest a continuing course of solicitation of business in New York, which is also a relevant factor in the general jurisdiction inquiry. "Solicitation of business alone will not justify a finding of corporate presence in New York with respect to a foreign manufacturer or purveyor of services."*fn27 "[I]f the solicitation is substantial and continuous, and defendant engages in other activities of substance in the state, then personal jurisdiction may properly be found to exist."*fn28 In order to meet the level of substantial and continuous solicitation, "direct sales into the New York market must constitute a significant portion of the defendant's business activities."*fn29 After a court finds solicitation that is substantial and continuous, it "can consider whether there are sufficient additional activities of substance to support the exercise of general jurisdiction."*fn30 "In evaluating the existence of other activities of substance, courts 'tend to focus on physical corporate presence,' . . . . However, a permanent physical presence in the state is not an absolute precondition for 'doing business' in New York."*fn31
2. Specific Jurisdiction Under Section 302(a)(1) of the CPLR
Under section 302(a)(1) of the CPLR a court may exercise specific jurisdiction over a non-domiciliary, provided that two conditions are met: the nondomiciliary defendant transacts business within New York and the claim against the non-domiciliary defendant arises directly out of his activity.*fn32 Section 302(a)(1) "is a single-act statute requiring but one transaction -- albeit a purposeful transaction -- to confer jurisdiction in New York."*fn33
"New York courts define 'transact[ing] business' as purposeful activity -- 'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'"*fn34 There is no definitive test to determine if a defendant has purposefully availed itself of the privilege of conducting activities in New York. Rather, the totality of the defendant's contacts must be reviewed to determine whether jurisdiction is proper.*fn35
3. Due Process
As set forth by the Supreme Court in International Shoe v. Washington, due process requires that a defendant "not present within the territory of the forum" have "certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'"*fn36
This involves an analysis consisting of two components: the minimum contacts test and the reasonableness inquiry.
To establish the minimum contacts necessary to satisfy due process, the plaintiff must show that "his claim arises out of or relates to, the defendant's contacts with the forum . . . [that] the defendant purposefully availed itself of the privilege of doing business in the forum state and that the defendant could foresee being haled into court there."*fn37 If defendant's contacts with the forum state rise to this minimum level, a defendant may defeat jurisdiction only by presenting "a compelling case that the presence of some other considerations would render jurisdiction unreasonable."*fn38 Courts must weigh the following five factors in evaluating the "reasonableness" requirement of due process:
(1) the burden that the exercise of jurisdiction will impose on the defendant; (2) the interests of the forum state in adjudicating the case; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of the controversy; and (5) the shared interest of the states in furthering substantive social policies.*fn39
B. Transfer of Venue
Section 1404(a) provides: "[f]or 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 brought." This statute has superseded the common-law doctrine of forum non conveniens, which is now appropriate only in "'cases where the alternative forum is abroad.'"*fn40
In order to transfer a civil action under Section 1404(a), the moving party must satisfy two requirements. First, the transferee court must be able to exercise jurisdiction over the parties and must be an appropriate venue for the action. Second, the balance of convenience and justice must favor transfer.*fn41
Although the first requirement is straightforward, the second requirement "'is essentially an equitable task' left to the Court's discretion."*fn42
Some of the factors a district court is to consider are, inter alia: (1) the plaintiff's choice of forum, (2) the convenience of the witnesses, (3) the location of relevant documents and relative ease to access to sources of proof, (4) the convenience of the parties, (5) the locus of operative facts, (6) the availability of process to compel the attendance of unwilling witnesses, [and] (7) the relative means of the parties.*fn43
Additional factors a court may consider "include (1) the forum's familiarity with governing law and . . . (2) the interest of justice, based on the totality of the circumstances."*fn44 When conducting this balancing test, the court enjoys "broad discretion" and decides the issue based on "notions of convenience and fairness on a case-by-case basis."*fn45 The movant bears the burden of showing that transfer is warranted.*fn46
Not all of these factors merit equal weight. The convenience of witnesses is the most important factor in deciding whether to transfer an action.*fn47
The location of documents, on the other hand, is "not a compelling consideration when records are easily portable."*fn48 For the purposes of determining the locus of operative facts, a court may make reasonable assumptions regarding the location of events if they are not clearly specified in the complaint.*fn49
A. Personal Jurisdiction
Bodum argues that both general and specific jurisdiction authorize the court's exercise of personal jurisdiction over Hantover. I consider both possible bases in turn, concluding that Bodum has not made out a prima facie case of personal jurisdiction.
1. General Jurisdiction Under Section 301
In its Complaint, Bodum fails to allege facts sufficient to support a finding of general jurisdiction over Hantover. Bodum merely uses conclusory language that tracks the case law, and makes no specific factual allegations. Hantover has none of the usual contacts considered in the general jurisdiction inquiry: it owns no property in New York and has no offices, employees, bank accounts, post office boxes, telephone lines, or mailing addresses within the state.*fn50
Nonetheless Bodum argues that Hantover's New York sales represent a systematic and continuous course of business that gives rise to general jurisdiction. Under the "solicitation-plus" doctrine, direct sales must first rise to the level of "substantial solicitation."*fn51 In the year the suit was filed, less than one percent of Hantover's sales were in New York.*fn52 District courts in this Circuit have repeatedly held that where a foreign corporation derives less than five percent of its revenue from New York, that amount is insubstantial and cannot support a finding of personal jurisdiction over the defendant.*fn53 The Court cannot proceed to the second prong of the "solicitation plus" test, because these direct sales do not constitute a significant portion of Hantover's business activities. The mere fact that Hantover sells its product in New York is not enough to justify an exercise of general jurisdiction, and Bodum makes no other factual allegations or arguments that would support a finding of general jurisdiction.*fn54 Therefore, on the facts currently pled, section 301 does not provide a basis for asserting personal jurisdiction over Hantover.
2. Specific Jurisdiction Under 302(a)(1)
Bodum argues specific jurisdiction also authorizes personal jurisdiction over Hantover. Bodum relies primarily on the two cease and desist letters Hantover's counsel sent to Bodum's New York office in drawing this conclusion. Bodum does not make any other factual allegations regarding specific jurisdiction. However, the Federal Circuit has repeatedly held that "cease-and-desist letters alone do not suffice to justify personal jurisdiction"*fn55 requiring instead that "the defendant [must also] have engaged in 'other activities' that related to the enforcement or the defense of the validity of the relevant patents."*fn56
Bodum fails to specifically allege any of these 'other activities.' Therefore, Bodum has not met its burden of showing a prima facie case of specific jurisdiction under section 302(a)(1).
3. Due Process
I do not reach the due process inquiry because personal jurisdiction is not authorized by statute.
Because dismissal is appropriate in this case, I do not reach the issue of transfer.
C. Leave to Replead
Whether to permit a plaintiff to amend his complaint is a matter committed to a court's "sound discretion."*fn57 Rule 15(a) provides that leave to amend a complaint "shall be freely given when justice so requires."*fn58 "When a motion to dismiss is granted, the usual practice is to grant leave to amend the complaint."*fn59 Leave to replead should be denied, however, where the proposed amendment would be futile.*fn60 Here, Bodum could plead additional facts to make out a prima facie case of jurisdiction. Accordingly, Bodum may have until May 8, 2012 to file an amended complaint.
For the foregoing reasons, defendant's motion is granted. The Clerk of the Court is directed to close this motion [Docket #7].