IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA
July 2, 2009
EXPERT MICROSYSTEMS, PLAINTIFF,
UNIVERSITY OF CHICAGO AND ARCH DEVELOPMENT CORP., DEFENDANTS.
Plaintiff's motion for jurisdictional discovery came on regularly for hearing July 2, 2009. John W. Carpenter appeared for plaintiff. Brian D. Fagel appeared telephonically for defendants. Upon review of the motion and the documents in support and opposition, upon hearing the arguments of plaintiff and counsel and good cause appearing therefor, THE COURT FINDS AS FOLLOWS:
Plaintiff seeks leave of court to conduct jurisdictional discovery. Defendants contend that jurisdictional discovery will be "enormously burdensome" and will be moot if defendants' motion to transfer*fn1 this case under 28 U.S.C. § 1404(a). (Jt. Stmt. at 2.)
Rule 26(d) of the Federal Rules of Civil Procedure provides that parties may be permitted to engage in discovery before the parties have conferred pursuant to Fed. R. Civ. P. 26(f), when authorized by the rules or by court order. Fed. R. Civ. P. 26(d). Rule 26(b)(1) provides that "the [p]arties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense. . . ." Fed. R. Civ. P. 26(b)(1).
Courts are afforded a significant amount of leeway in deciding whether parties may conduct discovery relating to jurisdictional issues while a motion to dismiss is pending. "It is clear that the question of whether to allow discovery is generally within the discretion of the trial judge. However, where pertinent facts bearing on the question of jurisdiction are in dispute, discovery should be allowed." America West Airlines, Inc. v. GPA Group, Ltd., 877 F.2d 793, 801 (9th Cir.1989) (citations omitted). See also Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406 (9th Cir.1977) (finding that "[d]iscovery . . . 'should be granted where pertinent facts bearing on the question of jurisdiction are controverted . . . or where a more satisfactory showing of the facts is necessary.' ") Id. at 430 n. 24 (citing Kilpatrick v. Texas & P. Ry., 72 F.Supp. 635, 638 (S.D.N.Y.1947)); Data Disc, 557 F.2d at 1285 n.1 (same). Nevertheless, it is not an abuse of judicial discretion to deny discovery before dismissing on jurisdictional grounds "when it is clear that further discovery would not demonstrate facts sufficient to constitute a basis for jurisdiction." Wells Fargo, 556 F.2d at 430 n.24.
Orchid Biosciences, Inc., v. St. Louis University, 198 F.R.D. 670, 672-73 (S.D. Cal. 2001).
In the instant action, defendants contend that defendant ARCH does not have sufficient contacts with the forum state for this court to exercise both general and specific personal jurisdiction over defendant. (Jt. Stmt. at 6.)
Federal courts are split on whether plaintiff must establish a prima facie case of personal jurisdiction over defendant before obtaining even limited jurisdictional discovery. Orchid Biosciences, 198 F.R.D. at 672-73 (prima facie showing not required); Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 517 F.3d 235, 242 (5th Cir. 2008) (prima facie showing not required); but see Medical Solutions, Inc. v. C Change Surgical, LLC, 541 F.3d 1136, 1142 (Fed. Cir. 2008) (prima facie showing required before jurisdictional discovery allowed); Ellis v. Fortune Seas, Ltd., 175 F.R.D. 308, 312 (S.D. Ind. 1997) (prima facie showing required).
It appears the Court of Appeals for the Ninth Circuit has not yet addressed this issue. However, where the instant action intimately involves the substance of patent laws, the law of the Court of Appeals for the Federal Circuit should apply in deciding whether the court should exercise personal jurisdiction. See Inamed Corp. v. Kuzmak, 249 F.3d 1356 (Fed. Cir. 2001). Thus, this court will determine whether plaintiff has made a prima facie showing of jurisdiction.
Exclusive license agreements with respect to the patents at issue with residents of the forum, for example, have, at least in some circumstances, been held sufficient to confer personal jurisdiction. Inamed, 249 F.3d at 1361, 58 USPQ2d at 1777; Genetic Implant Sys., 123 F.3d at 1458, 43 USPQ2d at 1789; Akro, 45 F.3d at 1546, 33 USPQ2d at 1509.
Silent Drive, Inc. v. Strong Industries, Inc., et al., 326 F.3d 1194 (Fed. Cir. 2003); Dainippon Screen Mfg. Co., Ltd. v. CFMT, Inc., 142 F.3d 1266, 1271 (Fed. Civ. 1998). Moreover, "a court which has jurisdiction over a corporation has jurisdiction over its alter egos." Minnesota Mining Mfg. Co. v. EcoChem, Inc., 757 F.2d 1256, 1265 (Fed. Cir. 1985).
Here, plaintiff has submitted numerous documents that are publicly available. (See May 19, 2009 Mem. P's & A's at 7-16; May 20, 2009 Carpenter Decl.) Specifically, plaintiff has provided registration statements obtained from the U.S. Securities and Exchange Commission that reflect defendant ARCH holds ownership interest in, and entered into patent licensing for royalty revenue agreements with, numerous California corporations. (May 19, 2009 Mem. P's & A's at 7-13; May 20, 2009 Carpenter Decl., Ex. A.) The registration statement for R2 Technology, Inc. also demonstrates that defendant ARCH executive employees served or serve on R2's Board of Directors. (May 19, 2009 Mem. P's & A's at 7; May 20, 2009 Carpenter Decl., Ex. A.)
Pages from the Advanced Lubrication Technology, Inc. ("ALT") internet website reflect that ALT acquired exclusive rights to certain patents based on discoveries made at Argonne National Laboratory, where the technology had been honored with the prestigious R&D 100 award."
(Carpenter Decl., at 5.) The Evergreen America Corporation ("Evergreen") internet website shows Evergreen is a distributor of ALT products. (Id.) Evergreen further states:
In 1995 Argonne's business development affiliate, ARCH Development Corp., granted exclusive rights to develop, produce and distribute boron products to Advanced Lubrication Technology of Encino, CA.
Plaintiff also contends that defendant ARCH is an alter ego of defendant University of Chicago. Defendant University of Chicago has not challenged personal jurisdiction. Plaintiff has provided copies of pages from the University of Chicago Office of Technology & Intellectual Property ("UChicagoTech") internet website which state UChicagoTech has taken over ARCH. (Carpenter Decl. at 5-6.) One internet page states:
Relationship between UChicagoTech and ARCH Development Corporation ARCH Development Corporation, a wholly owned 501(c)3 affiliate of the University of Chicago handled all of the University's intellectual property matters between 1986 and June 30th, 2001. UChicagoTech, a unit of the Provost's office, was created on July 1st, 2001. The University, acting through UChicagoTech, henceforth carries out all licensing and other actions required for the transfer of technology, either in the name of the University or of ARCH.
(Carpenter Decl. at 6.)
All of the public documents provided by plaintiff make a prima facie showing of personal jurisdiction*fn2 under both theories of exclusive licensing and alter ego. Silent Drive, 326 F.3d 1194; Dainippon Screen, 142 F.3d at 1271; Minnesota Mining, 757 F.2d at 1265.
Plaintiff bears the burden of proving the court's jurisdiction and should be given the opportunity to discover facts supporting the jurisdictional allegations in the complaint. It is an abuse of discretion to dismiss for lack of subject matter jurisdiction without giving plaintiff reasonable opportunity, if requested, to conduct discovery for this purpose. Laub v. United States Dept. of Interior, 342 F.3d 1080, 1093 (9th Cir. 2003)("discovery should be granted when, as here, the jurisdictional facts are contested or more facts are needed.")
Accordingly, plaintiff's motion will be granted. However, discovery will be limited to (1) defendant ARCH's substantial, continuing and systematic contacts with the State of California and (2) the alter ego relationship between defendant University of Chicago and defendant ARCH.
IT IS HEREBY ORDERED that plaintiff's May 19, 2009 motion for jurisdictional discovery is granted, subject to the limitations set forth above.