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SDS Korea Co., Ltd. v. SDS USA

August 4, 2010

SDS KOREA CO., LTD., A SOUTH KOREAN CORPORATION, PLAINTIFF,
v.
SDS USA, INC., A NEW JERSEY CORPORATION; IBEND, LLC., A MONTANA LLC AND SIMON SONG, AN INDIVIDUAL; AND DOES 1-100, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hon. Michael M. Anello United States District Judge

ORDER: GRANTING DEFENDANTS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION AND IMPROPER VENUE [Doc. No. 14] GRANTING IN PART AND DENYING IN PART DEFENDANTS' EX PARTE APPLICATION [Doc. No. 35]

On May 5, 2010, Defendants SDS USA, Inc., iBEND, LLC and Simon Song (collectively "Defendants"), filed a motion to dismiss Plaintiff SDS Korea Co., Ltd.'s first amended complaint ("FAC") for lack of personal jurisdiction, improper venue, and failure to state a claim, or in the alternative for a more definite statement of its claims. [Doc. No. 14.]*fn1 Plaintiff opposed Defendants' motion [Doc. Nos. 19-26], and Defendants submitted a reply, including objections to Plaintiff's evidence [Doc. Nos. 29, 30]. On June 15, the Court took Defendants' motion to dismiss under submission on the papers and without oral argument pursuant to its discretion under Civil Local Rule 7.1(d)(1). [Doc. No. 31.] On June 17, Plaintiff submitted a response to Defendants' objections, as well as objections to Defendants' evidence. [Doc. Nos. 32, 33.] On June 21, Defendants filed an ex parte application requesting the Court strike these "late-filed" documents, or in the alternative, permit Defendants an opportunity to respond. [Doc. No. 35.] Plaintiff opposed Defendants' ex parte request on June 22. [Doc. No. 22.] For the reasons set forth below, the Court GRANTS Defendants' motion to dismiss, and GRANTS IN PART and DENIES IN PART Defendants' ex parte application.

BACKGROUND

Plaintiff is a South Korean "machine tooling" company involved in, among other things, "pioneering technology for bending and cutting" metallic materials. [FAC ¶¶4, 9.] Plaintiff's principal place of business is located in San Diego, California. [Id. at ¶9.] Defendant SDS USA is a New Jersey corporation with its principal place of business in Norwood, New Jersey. [Id. at ¶5; Defs.' Mot. to Dismiss, Doc. No. 14, p.2.] Individual Defendant Simon Song is the president and CEO of SDS USA. [Doc. No. 14, p.1.] Mr. Song is domiciled in New Jersey. [Id. at p.2.] Defendant iBend LLC is a Missouri limited liability company with its principal place of business in Riverside, Missouri. [Id. at p.3; FAC ¶7.]

Plaintiff produces an automated system that processes and bends steel rule, which is sold in the United States under the trademark "EasyBender." [FAC ¶¶10, 15.]*fn2 iBend sells "automatic bending machines for the die making and sign making industries." [Doc. No. 14, p.1.] SDS USA provides "technical support [for] automatic bending machines for the die making and sign making industries." [Id.] Until 2007, SDS USA provided services for Plaintiff's products sold in the United States. [FAC ¶34.] The relationship terminated when SDS USA allegedly breached its contract with Plaintiff by selling its own products that infringed Plaintiff's patents. [Id.] In addition, Plaintiff asserts Defendants are using an infringing domain name-EasyBender.com-to confuse consumers and redirect traffic to iBend's website (www.ibend.net). [Id. at ¶18.] Plaintiff alleges Defendants are wrongfully using its EasyBender mark in various locations on iBend's website, including for example, to provide links to proprietary "EasyBender Online Manual(s)." [Id. at ¶¶19, 22.] Plaintiff asserts Defendants' unauthorized use of its proprietary manuals online constitutes copyright infringement. [Id. at ¶22.]

Accordingly, on January 28, 2010, Plaintiff filed a complaint alleging, inter alia, trademark and copyright infringement claims. [Doc. No. 1.] On March 9, 2010, Plaintiff filed its FAC to add patent infringement claims, alleging ten causes of action for: (1) Trademark Infringement (15 U.S.C. § 1114); (2) Unfair Competition under the Lanham Act (15 U.S.C. §§ 1114, 1125(a)); (3) Injunctive Relief under the Lanham Act (15 U.S.C. § 1116); (4) Copyright Infringement; (5) Unfair Competition and Infringement under California Business and Professions Code § 17790; (6) Negligent Interference with Economic Relations; (7) Infringement of '919 Patent; (8) Infringement of '940 Patent; (9) Infringement of '574 Patent; and (10) Infringement of Patent Application 12/111,857. [Doc. No. 7.]

LEGAL STANDARD

Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a defendant may move to dismiss for lack of personal jurisdiction. The plaintiff then bears the burden of demonstrating that jurisdiction exists. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). The plaintiff "need only demonstrate facts that if true would support jurisdiction over the defendant." Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). Uncontroverted allegations in the complaint must be taken as true. AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996). However, the court may not assume the truth of such allegations if they are contradicted by affidavit. Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1284 (9th Cir. 1977). In a case such as this, where a court considers only affidavits and discovery materials, the plaintiff need only make a prima facie showing of jurisdiction. Id. at 1285. Further, "conflicts between the facts contained in the parties' affidavits must be resolved in [the plaintiff's] favor for purposes of deciding whether a prima facie case for personal jurisdiction exists." Id. (quoting AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996)).

There are two independent limitations on a court's power to exercise personal jurisdiction over a non-resident defendant: the applicable state personal jurisdiction rule and constitutional principles of due process. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). California's jurisdictional statute is coextensive with federal due process requirements; therefore, jurisdictional inquiries under state law and federal due process standards merge into one analysis. Rano v. Sipa Press, Inc., 987 F.2d 580, 587 (9th Cir. 1993); see Cal. Civ. Proc. Code § 410.10. The exercise of jurisdiction over a non-resident defendant violates the protections created by the due process clause unless the defendant has "minimum contacts" with the forum state so that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Personal jurisdiction may be either general or specific.Here, Plaintiff asserts the Court may exercise both general and specific jurisdiction over each Defendant, whereas Defendants contend personal jurisdiction does not exist under either standard. For the reasons set forth below, the Court agrees with Defendants.

DISCUSSION

I. DEFENDANTS' EX PARTE APPLICATION

As a preliminary matter, the Court considers Defendants' ex parte application to strike certain late-filed documents that Plaintiff submitted after Defendants filed extensive objections to Plaintiff's evidence. [Doc. No. 35.]*fn3 On June 17, Plaintiff filed a response to Defendants' objections, as well as objections to Defendants' evidence that was submitted with their moving papers on May 5, 2010. [Doc. Nos. 32, 33.] On June 21, Defendants moved to strike both documents, or in the alternative, allow Defendants time to respond. [Doc. No. 35.] For the reasons set forth below, the Court GRANTS IN PART and DENIES IN PART Defendants' ex parte application.

(A) Plaintiff's Objections to Defendants' Evidence [Doc. No. 32]

Defendants filed their motion to dismiss on May 5, 2010, which was scheduled for hearing on June 21, 2010. [Doc. No. 14.] Pursuant to Civil Local Rule 7.1(e), Plaintiff's opposition, including any objections to Defendants' evidence submitted on May 5, was due no later than June 7. See Civ. L.R. 7.1(e)(2). Thus, Plaintiff's objections filed ten days later on June 17 are untimely. Plaintiff asserts the late-filed objections should not be stricken because "Defendants were the ones who decided to commence filing objections to evidence in a 12(b)(6) motion, where the case has not yet commenced and therefore the evidence on both sides cannot be properly be authenticated through discovery." [Doc. No. 36, p.2.] The Court disagrees. On a motion to dismiss for lack of personal jurisdiction, the Court may consider evidence outside the allegations in the complaint. See, Oakley, Inc. v. Jofa AB, 287 F. Supp. 2d 1111, 1113-14 (C.D. Cal. 2003). If Plaintiff desired to object to evidence Defendants submitted in support of their moving papers, it was required to do so when it filed its opposition, no later than June 7. See, e.g., Hong v. Right Mgmt. Consultants, Inc., 2006 U.S. Dist. LEXIS 15252 *53-54 (N.D. Cal.). Accordingly, Plaintiff's untimely objections to Defendants' evidence [Doc. No. 32] are STRICKEN.

(B) Plaintiff's Response to Defendants' Objections [Doc. No. 33]

Defendants also move to strike Plaintiff's response (filed June 17) to Defendants' objections (filed June 14) on the ground that it is "tantamount to an improper sur-reply." [Doc. No. 35, p.2.] Unlike Plaintiff's untimely objections to Defendants' evidence, however, which could (and should) have been made in connection with its opposition, Plaintiff did not have an opportunity to respond to Defendants' objections filed with their reply brief. Because the Court took Defendants' motion to dismiss under submission on June 15, Plaintiff was prevented from responding to Defendants' objections at the hearing. The Court therefore finds Plaintiff's response, promptly filed within three days of receiving Defendants' objections, reasonable. Accordingly, the Court DENIES Defendants' request to strike Plaintiff's response [Doc. No. 33]. In addition, the Court DENIES Defendants' request to be allowed to file a reply to Plaintiff's responses. The Court has thoroughly reviewed the parties' respective positions regarding the evidence submitted in connection with Defendants' motion to dismiss, and concludes additional briefing is unnecessary.*fn4

II. GENERAL JURISDICTION

Before the Court can exercise general jurisdiction over SDS USA, iBend, and Mr. Song, Plaintiff must allege facts sufficient to demonstrate each Defendant has "continuous and systematic business contacts" with California, such that the exercise of jurisdiction is "reasonable and just." Helicopteros Nacionales v. Hall, 466 U.S. 408, 415 (1984). This so called "minimum contacts" standard for establishing general jurisdiction is high, requiring that the defendant's contacts approximate physical presence in the forum. Bancroft & Masters, Inc. v. Augusta National Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). "This is an exacting standard, as it should be, because a finding of general jurisdiction permits a defendant to be haled into court in the forum state to answer for any of its activities anywhere in the world." Schwarzenegger, 374 F.3d at 801 (citation omitted). In addition, each defendant's contacts with the forum state must be considered individually, unless the plaintiff establishes the defendant's actions are reasonably attributable to the other defendants. See Indiana Plumbing Supply, Inc. v. Standard of Lynn, Inc., 880 F. Supp. 743, 750-51 (C.D. Cal. 1995).

Here, Plaintiff suggests the conduct of SDS USA, iBend, and Mr. Song should be considered collectively to determine if Defendants engaged in sufficient minimum contacts with the forum to establish jurisdiction. [See Pl.'s Opp. to Mot. to Dismiss, Doc. No. 19, p.4.] In support, Plaintiff offers evidence indicating the two companies "share some corporate officers," advertise together, and share an address in Montana. [Id.] However, Plaintiff does not identify any legal theory or authority that would allow the Court to impute the individual Defendant's conduct to one another based on this limited evidence. Thus, the Court declines to impute each Defendant's conduct to the others, and will consider each Defendant's alleged contacts with California separately.

(A) Simon Song

Mr. Song argues this action should be dismissed because he lacks the requisite minimum contacts with California for this Court to exercise personal jurisdiction over him. In support of Defendants' motion to dismiss, Mr. Song provides a declaration stating: (i) he is domiciled in New Jersey; (ii) he does not own any real or personal property in California; (iii) he does not own any vehicles registered in California; (iv) he does not have any bank accounts in California; (v) he does not maintain an office, a mailing address, a telephone or fax number, nor an answering service in California; (vi) he does not own or lease any storage or warehouse space in California; (vii) he has not been physically present in California for any purpose related to Plaintiff's allegations; and (viii) he has not purposefully availed himself of any activities directed toward California. [Doc. No. 14, p.8-9; Declaration of Simon Song ¶¶3-13.] Plaintiff asserts Mr. Song is subject to personal jurisdiction because he has specifically directed advertisements toward California and solicited business from California residents-albeit, on behalf of SDS USA and iBend. [Doc. No. 19, p.1, 3.]

In support, Plaintiff provides a declaration from Tony Lim (President of Plaintiff SDS Korea) stating, he "discovered" that Mr. Song exhibited iBend equipment at the "2009 Sign Expo trade show in Las Vegas, Nevada." [Declaration of Tony Lim ¶¶1, 7.] Although the trade show did not take place in California, Plaintiff asserts Mr. Song's exhibition of iBend products at the Las Vegas show supports a finding of jurisdiction because it is the only one offered in the western United States, and there were over 2,400 southern California residents in attendance. [Doc. No. 19, p.13; Lim Decl. ¶7.] Plaintiff also offers a declaration from Mike Adams (president of Adams Technologies, a distributor for Plaintiff), which states that he witnessed Mr. Song's exhibition at the Las Vegas trade show, and he is aware of several emails and letters from Mr. Song soliciting business from California companies. [Doc. No. 19, p.13; Declaration of Mike Adams. ¶¶6-10, 12.]

(i) Trade Show in Las Vegas, Nevada

First, Plaintiff does not indicate Mr. Song engaged in any contact with the forum in his individual capacity. Mr. Adams testifies he witnessed Mr. Song exhibiting iBend's products at the trade show in Las Vegas, Nevada. [Adams Decl. ΒΆ12.] "[A] person's mere association with a corporation that causes injury in the forum state is not sufficient in itself to permit that forum to assert jurisdiction over the person." Indiana Plumbing Supply, 880 F. Supp. at ...


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