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Synthes v. G.M. dos Reis Jr. Ind. Com. de Equip. Mexico

March 21, 2008

SYNTHES (U.S.A.), A PENNSYLVANIA PARTNERSHIP, PLAINTIFF,
v.
G.M. DOS REIS JR. IND. COM. DE EQUIP. MEXICO A/K/A GMREIS, A BRAZILIAN CORPORATION, DEFENDANT.



The opinion of the court was delivered by: M. James Lorenz United States District Court Judge

ORDER (1) GRANTING PLAINTIFF'S EX PARTE APPLICATION TO FILE DECLARATION OF I.V. HALL; (2) GRANTING DEFENDANT'S MOTION TO DISMISS; AND (3) DISMISSING ACTION WITHOUT PREJUDICE FOR LACK OF PERSONAL JURISDICTION

In this patent infringement action, Defendant G.M. dos Reis Jr. Ind. Com. de Equip. Mexico a/k/a GMReis ("GMReis"), a Brazilian corporation, brought a motion to dismiss for lack of personal jurisdiction. Plaintiff Synthes (U.S.A.) ("Synthes") opposed the motion.*fn1 After the close of briefing, Synthes filed an ex parte application for leave to file declaration of I.V. Hall in opposition to GMReis motion to dismiss. For good cause having been shown, Synthes' ex parte application is GRANTED. In deciding GMReis' motion to dismiss, the court considered Mr. Hall's declaration, attached as Exhibit A to Synthes' ex parte application. For the reasons which follow, GMReis's motion to dismiss is GRANTED. The case is DISMISSED WITHOUT PREJUDICE for lack of personal jurisdiction.

Synthes is a global medical device company which designs, manufactures and markets skeletal fixation devices. Synthes is the assignee of United States Patent No. 7,127,744 (the "'744 Patent"). GMReis is a Brazilian company headquartered in Brazil. It designs, manufactures and sells orthopedic and neurosurgical medical devices. Synthes alleges GMReis is subject to personal jurisdiction in this court because it imported into the United States and/or offered to sell locking bone plates which infringe the '744 Patent. Specifically, Synthes alleges that GMReis displayed the locking plates at the 2007 American Association of Orthopaedic Surgeons ("AAOS") Annual Meeting in San Diego, California for the purpose of generating interest in infringing products to the commercial detriment of the rightful patentee.

The court granted Synthes' motion to compel jurisdictional discovery. In discovery, Synthes learned that GMReis attended several trade shows in the United States since 2003. It exhibited every year for the last five years at the AAOS annual meeting, and exhibited again at the beginning of March 2008. It exhibited at least once and possibly more often at the North American Spine Society conference, once at the World Spine, and once at the Brazilian North American Spine Meeting in New York. In addition, GMReis CEO Geraldo Marin dos Reis, Jr., made a presentation at the In Spine and Orthopedics conference. GMReis has made one sale of its products in the United States to a veterinary supply company, which did not result in repeat business. GMReis has purchased parts from two suppliers in the past and currently purchases a product from one supplier in the United States. GMReis resells in Brazil one product it purchases in the United States. GMReis has purchased one machine in the United States, which is used in its manufacturing process in Brazil. In addition, GMReis representatives have met and consulted with two companies in the United States to explore potential suppliers and product development. Synthes does not contend that the sale for veterinary application in the United States, any of the parts, products or the machine purchased in the United States or exploratory contacts in the United States involved the alleged infringing product.

GMReis contends it has no offices, employees, distributors or assets in the United States. All of its manufacturing is in Brazil. It sells the products it manufactures and also resells some products purchased elsewhere. The resale part of the business is limited to customers in Brazil. Only one to two percent of GMReis income is derived from sales abroad. The remaining 98 to 99 percent is derived from sales in Brazil. GMReis sales abroad are made in Latin America, Europe and Middle East. GMReis attends trade shows and conferences in those regions. With the exception of a one-time sale to a veterinary supplier, GMReis does not ship to or sell its products in the United States because they are not approved by the Food and Drug Administration ("FDA"). GMReis has not applied for FDA approval. The GMReis booth and its product literature at trade shows in the United States state that the products are not FDA approved and are not for sale in the United States. GMReis exhibits at trade shows in the United States to generate interest in the products among surgeons, medical device distributors and other medical professionals from outside the Untied States, who often attend conferences and trade shows in the United States. No United States residents provided contact information at GMReis' booth at the 2007 AAOS annual meeting to obtain information about its products. Two inquiries from United States after the 2007 AAOS annual meeting came to GMReis website. The inquiries were whether certain products will be available in the United States in the future or will participate in clinical trials for approval in the United States. GMReis responded that its products are not FDA approved, not available in the United States market, and will not be launched in the United States. There were no further communications with these two parties. Synthes does not contend that the products involved were the allegedly infringing products. No product sales were made as a result of GMReis' attendance of the 2007 AAOS annual meeting.

Synthes argues this court has personal jurisdiction based on GMReis' contacts with California, or in the alternative, based on GMReis' contacts with the United States pursuant to Federal Rules of Civil Procedure 4(k)(2).

The regional circuit law typically applies to "procedural matters that are not unique to patent law." Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1564 (Fed. Cir. 1994). However, "where the personal jurisdiction inquiry is intimately involved with the substance of the patent laws," Federal Circuit law applies. Elec. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1348 (Fed. Cir. 2003); see also Beverly Hills Fan, 21 F.3d at 1564. The plaintiff has the burden to show personal jurisdiction.

[W]here the district court's disposition as to the personal jurisdictional question is based on affidavits and other written materials in the absence of an evidentiary hearing, a plaintiff need only to make a prima facie showing that defendants are subject to personal jurisdiction. In the procedural posture of a motion to dismiss, a district court must accept the uncontroverted allegations in the plaintiff's complaint as true and resolve any factual conflicts in the affidavits in the plaintiff's favor. Elec. for Imaging, 340 F.3d at 1349 (internal citations omitted).

"There are two kinds of personal jurisdiction - specific and general. Specific jurisdiction arises out of or relates to the cause of action even if those contacts are isolated and sporadic. General jurisdiction arises when a defendant maintains continuous and systematic contacts with the forum state even when the cause of action has no relation to those contacts." Trintec Indus., Inc. v. Pedre Promotional Prod., Inc., 395 F.3d 1275, 1279 (Fed. Cir. 2005) (internal quotation marks and citations omitted).

Rule 4(k)(2) provides in pertinent part:

Federal Claim Outside State-Court Jurisdiction. For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if:

(A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and

(B) exercising jurisdiction is consistent with the United States Constitution and laws.

The parties cite to no Federal Circuit case law applying Rule 4(k)(2) and the court has not found any. Furthermore, Rule 4(k)(2) does not involve procedural issues unique to patent law and is not intimately involved with the substance of the patent laws. The court ...


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