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Sequal Technologies, Inc v. Michael Stern and Digiflo

April 4, 2011

SEQUAL TECHNOLOGIES, INC.,
PLAINTIFF,
v.
MICHAEL STERN AND DIGIFLO, INC.,
DEFENDANTS.



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

ORDER (1) DENYING DEFENDANTS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION, (2) DENYING DEFENDANTS' MOTION TO TRANSFER, AND (3) DENYING DEFENDANTS' MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

[Docket No. 11]

This case comes before the Court on Defendants' motion to dismiss for lack of personal jurisdiction, or in the alternative, motion to transfer venue, or in the alternative, motion to dismiss for failure to state a claim. Plaintiff filed an opposition to the motion. Defendants did not file a reply. For the reasons set out below, the Court denies Defendants' motion to dismiss for lack of personal jurisdiction, denies Defendants' motion to transfer and denies Defendants' motion to dismiss for failure to state a claim.

I.

BACKGROUND Plaintiff SeQual Technologies, Inc. ("SeQual") and Defendants Michael Stern and DigiFLO, Inc. are former business partners in the field of oxygen concentrator technology. In August 2010, Stern and DigiFLO filed a complaint against SeQual in the United States District Court for the Western District of Washington alleging a claim for infringement of United States Patent Number 5,627,323 ("the '323 Patent"). That case is currently pending before that court.

On December 22, 2010, SeQual filed the present complaint against Stern and DigiFLO alleging claims for infringement of United States Patent Number 5,593,478 ("the '478 Patent") and United States Patent Number 5,730,778 ("the '778 Patent"). In response to the present complaint, Stern and DigiFLO filed the present motion.

II.

DISCUSSION Stern and DigiFLO move the Court to dismiss this case for lack of personal jurisdiction. In the alternative, they move the Court to transfer this case to the Western District of Washington. As a final alternative, they move for dismissal of SeQual's complaint for failure to state a claim. SeQual disputes each argument.

A. Personal Jurisdiction

Federal Circuit law applies to the personal jurisdiction inquiry in this case. Nuance Communications, Inc. v. Abbyy Software House, 626 F.3d 1222, 1230 (Fed. Cir. 2010), pet. for cert. filed, No. 10-1019, 79 U.S.L.W. 3480 (Feb. 10, 2011), (citing Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995)). Under that law, "'[p]ersonal jurisdiction over an out-of-state defendant is appropriate if the relevant state's long-arm statute permits the assertion of jurisdiction without violating federal due process.'" Id. (quoting 3D Systems Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1376-77 (Fed. Cir. 1998)). "Because California's long-arm statute is co-extensive with federal due process requirements, the jurisdictional analyses under California law and federal law are the same." Id. (citing Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004)). That analysis asks "'whether the defendant purposefully established 'minimum contacts' in the forum State.'" Id. at 1230-31 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985)).

There are two ways of establishing minimum contacts. The first is through general jurisdiction, "which requires that the defendant have 'continuous and systematic' contacts with the forum state and confers personal jurisdiction even when the cause of action has no relationship with those contacts."

Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1200 (Fed. Cir. 2003) (citations omitted). The second way to find minimum contacts is through specific jurisdiction, which is "based on activities that arise out of or relate to the cause of action, and can exist even if the defendant's contacts are not continuous and systematic." Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1017 (Fed. Cir. 2009) (citing Silent Drive, 326 F.3d at 1200). "The Federal Circuit applies a three prong test to determine if specific jurisdiction exists: (1) whether the defendant purposefully directed activities at residents of the forum; (2) whether the claim arises out of or relates to those activities; and (3) whether assertion of personal jurisdiction is reasonable and fair." Nuance, 626 F.3d at 1231 (citations omitted).

Plaintiff asserts that personal jurisdiction exists under either of these tests. Because the parties have not conducted any jurisdictional discovery, Plaintiff "need only make a prima facie showing of jurisdiction." Id. (citing Trintec Industries, Inc. v. Pedre Promotional Products, Inc., 395 F.3d 1275, 1282 (Fed. Cir. 2005)). If Plaintiff's factual allegations are uncontroverted, the court must accept them as true for purposes of determining jurisdiction. Id. If the facts are disputed, the court must resolve those disputes in Plaintiff's favor. Id.

Looking at specific jurisdiction first, Plaintiff alleges Defendants "offered for sale in this district products containing the technology alleged to be infringing the claims of SeQual's patents." (Compl. ΒΆ 6.) Specifically, Defendant Stern sent an e-mail to Timothy Coonan at SeQual regarding "Flow rate sets concentrator valve timing control - OCSC[.]" (Decl. of Peter Armstrong in Supp. of Opp'n to Mot. to Dismiss, Ex. 5.) In that e-mail, Defendant Stern announces that Defendant DigiFLO is releasing a new version of its concentrator sensor, or OCSC. (Id.) The e-mail includes a link to DigiFLO's website, and pricing for the new product. (Id.) That e-mail satisfies the first prong of the specific jurisdiction test, namely activity purposefully directed at the forum state. See Sitrick v. Freehand Systems, Inc., No. 02 C 1568, 2002 WL 31443128, at *3 (N.D. Ill. Oct. 30, 2002) (finding distribution of sales brochures in the forum state satisfies the first prong for specific jurisdiction); Int'l Truck ...


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