The opinion of the court was delivered by: Cooper, District Judge.
On July 24, 2000, plaintiff LG Electronics, Inc. ("LGE") filed
its Amended Complaint for patent infringement against FIC, FICA,
and Expert. LGE claims that FIC, FICA, and Expert have infringed
the following five patents that LGE owns by making, selling,
offering to sell, using, or importing into the United States
infringing products manufactured by FIC: (1) U.S. Patent No.
4,918,645; (2) U.S. Patent No. 4,939,641; (3) U.S. Patent No.
5,077,733; (4) U.S. Patent No. 5,379,379; and (5) U.S. Patent
No. 5,892,509 (the "Patents"). (Am.Compl. ¶¶ 3-13, 16, 20, 24.)
LGE has not yet identified the specific FIC products that
allegedly infringe the Patents.
LGE is a Korean corporation with its principal place of
business in Seoul, Korea. (Am.Compl. ¶ 1.) FIC is a Taiwanese
corporation with its principal place of business in Taipei,
Taiwan. (Id. ¶ 2.) FIC has no offices outside of Taiwan.
(Decl. of David Wang ("Wang Decl.") ¶ 3.) FICA, a subsidiary of
FIC, is a California corporation with its principal place of
business in Fremont, California. (Id. ¶ 7; Am.Compl. ¶ 3.)
Fremont is located in Silicon Valley, which is within the
jurisdiction of the Northern District of California. Expert, a
reseller of computer goods, is a New Jersey corporation with its
principal place of business in Fairfax, New Jersey. (Am. Compl.
FIC designs and sells computer hardware, such as motherboards,
desktop computers, and notebook computers. (Wang Decl. ¶ 2.) FIC
sells these computer products to distributers throughout the
world. (Decl. of Jeffrey L. Eichen, Esq.) ("Eichen Decl." Ex. A:
pages printed from FIC's web site at http://www.fic.com.tw,
Ex. B: pages printed from FICA's web site at
http://www.fica.com.) FICA specializes in the wholesale
distribution of computer hardware, focusing especially on
motherboards and "barebones" desktop computers, i.e. computers
without preinstalled processors or memory. (See Decl. of
Anderson Lien ("Lien Decl.") ¶¶ 2-3; Eichen Decl. Ex. B.) FICA is
FIC's wholesale distributor in the United States (Eichen Decl.
Exs. A & B) and obtains the bulk of the products it resells from
FIC in Taiwan, where FICA takes possession of the products.
(Lien Decl. ¶ 3.) FICA distributes these products to resellers
throughout the United States. (Eichen Decl. Ex. B.) Three of the
resellers listed on FICA's web site have facilities or offices
located in New Jersey. (Eichen Decl. ¶ 17, Ex. B, Ex. C: pages
from web site of Bell Microproducts, Inc. at
http://www.bellmicro.com, Ex. D: pages printed from web
site of Leadman Electronics USA, Inc. at http://www.leadman.com,
Ex. E: pages printed from web site of Tech Data Corporation at
http://www.techdata.com.) Some retailers with facilities or
offices in New Jersey that are not listed as distributors on
FICA's web site offer FIC products for sale. (Id. ¶¶ 18-21, Ex.
B, Ex. F: pages printed from web site of Micro Warehouse, Inc.
at http://www2.warehouse.com, Ex. G: pages from web site of
PCwonders.com, Inc. at http://www.pcwonders.com, Ex. H: pages
printed from web site of Expert Computer Group Corp. at
http://www.expertgroup.com, Ex. I: price sheets received from
Expert Computer Group Corp.) One of these retailers is Expert.
(Id. ¶ 21, Exs. H, I.) LGE alleges that for at least some of
the FIC motherboards sold, or offered for sale, by Expert,
Expert must attach a power supply, memory chips or cards, disk
drives, processors, input/output devices and other devices
(which are often specified by the end consumer) in order to
transform a bare motherboard into a working computer system.
(Eichen Decl. ¶ 24.)
FICA admits that it has sold only a very small amount of FIC
products to distributors in New Jersey. (Lien Decl. ¶ 7.) FICA
claims, however, that (1) all such sales were FOB Fremont; (2)
there have been no in-person sales to anyone in New Jersey for
more than a year; (3) any sales or shipments into New Jersey
have represented no more than 0.2 of one percent of FICA's total
revenue, as compared with sales in California, which account for
over 47 percent of FICA's sales; (4) FICA has had no sales to
Expert for more than a year, when Expert ceased to be one of
FICA's customers. (Id. ¶¶ 6-7.)
Expert claims that it has never purchased any motherboards or
other computer equipment from FIC or FICA. (Decl. of Fu Jung
Wang ("Expert Decl.") ¶ 8; Suppl. Decl. of Fu Jung Wang ("Expert
Decl. # 2") ¶ 3.) Expert asserts that even though a related
corporate entity, Expert Distributing, Inc. ("EDI"), has
distributed FIC products in the past, it was only a small
distributor of FIC products, it has no existing inventory of FIC
manufactured hardware, and it discontinued purchases from FIC
and FICA approximately one year ago. (Expert Decl. ¶ 10; Expert
Decl. # 2 ¶¶ 4, 6-8.)
FIC and FICA brought a motion to dismiss the claims against
them for lack of personal jurisdiction pursuant to Federal Rule
of Civil Procedure 12(b)(2) or, in the alternative, to transfer
venue to the Northern District of California pursuant to
28 U.S.C. § 1404(a). Expert moves this court to dismiss the claims
against it for failure to state a claim upon which relief can be
granted pursuant to Federal Rule of Civil Procedure 12(b)(6) or,
in the alternative, for summary judgment pursuant to Federal
Rule of Civil Procedure 56.
The Court of Appeals for the Federal Circuit has jurisdiction
over appeals from the district court in patent cases.
21 U.S.C. § 1295(a)(1). Thus, decisions of the Federal Circuit on
substantive questions of patent law are binding precedent on
district courts. Panduit Corp. v. All States Plastic Mfg. Co.,
744 F.2d 1564, 1574-75 (Fed.Cir. 1984). The Federal Circuit
applies Third Circuit precedent to routine procedural matters in
patent infringement cases arising in the district courts within
the Third Circuit. See id. The Federal Circuit has found,
however, that certain aspects of personal jurisdiction are
"intimately related to substantive patent law" and that,
consequently, Federal Circuit law, as opposed to Third Circuit
law, controls these jurisdictional issues. Beverly Hills Fan
Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1564 (Fed.Cir.
The Court will first discuss Expert's motion. Then the Court
will address the motion of FIC and FICA.
I. Expert's Motion to Dismiss/Summary Judgment
"[W]hoever without authority makes, uses, offers to sell, or
sells any patented invention, within the United States or
imports into the United States any patented invention during the
term of the patent therefor, infringes the patent."
35 U.S.C. § 271(a). LGE alleges in its Amended Complaint that Expert "has
infringed and continues to infringe one or more of the Patents
by making, selling, offering to sell, using, or importing into
the United States computer systems embodying the claimed
inventions of the Patents or by contributing thereto or
inducing others to do so." (Am.Compl. ¶ 24.) Accepting all of
the allegations of the Amended Complaint as true, as we must,
the Amended Complaint asserts a valid claim against Expert for
patent infringement. We conclude, therefore, that dismissal of
LGE's claims against Expert is inappropriate. See Robb, 733
F.2d at 290.
II. Motion for Summary Judgment
Federal Rule of Civil Procedure 56(c) provides that summary
judgment is proper "if the pleadings, depositions, answers to
interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a
judgment as a matter of law." Fed.R.Civ.P. 56(c). The party
moving for summary judgment bears the initial burden of showing
that there is no genuine issue of material fact. Celotex Corp.
v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265
(1986). Once the moving party has met its initial burden, the
nonmoving party is required to present evidence that creates a
genuine issue of material fact making it necessary to resolve
the difference at trial. See id. at 324, 106 S.Ct. 2548. In
applying these standards, the court must construe the facts in
the light most favorable to the party against whom judgment is
sought. See Lauwrence v. Nat'l Westminster Bank N.J.,
98 F.3d 61, 65 (3d Cir. 1996). Before entering summary judgment against
a party, the court must afford that party "adequate notice and
time to present to the district court material relevant to [its]
claim in order to demonstrate that there is a genuine issue of
material fact that renders summary disposition . . .
inappropriate." Liberty Lincoln-Mercury v. Ford Motor Co.,
134 F.3d 557, 569 (3d Cir. 1998) (quoting Hilfirty v. Shipman,
91 F.3d 573, 578 (3d Cir. 1996)). The Court is required to provide
an adequate opportunity for discovery of the material facts.
See id.; Kachrnar v. Sun-Gard Data Sys., Inc., 109 F.3d 173,
183 (3d Cir. 1997). The Court finds that plaintiff has not been
given an adequate opportunity to conduct discovery of material
facts relevant to the issue of whether Expert has purchased any
motherboards or other computer products from FIC or FICA. (See
Pl.'s Br. in Opp'n to Mot. to Dismiss by Def. Expert Computer
Group Corp. ("Pl.'s Br. in Opp'n to Expert") at 11-12.) In
addition, the facts submitted by LGE in opposition to Expert's
motion appear to show that Expert has offered FIC products for
sale on its web site. (See Eichen Decl. Exs. H & I.) If LGE is
able to prove that these FIC products infringe the Patents,
LGE's offering of such products for sale might sustain a finding
of patent infringement even if Expert did not in fact sell any
such infringing products. See
35 U.S.C. § 271(a). We conclude, therefore, that LGE should be
given an opportunity for discovery of the material facts before
the Court considers whether summary judgment against it is
III. Motion of FIC and FICA to Transfer Venue*fn2
"For 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." 28 U.S.C. § 1404(a). Although this section authorizes
the transfer only of an entire action and not of individual
claims, the Court is not confined to view the facts as they
existed at the time of the filing of the complaint. See In re
Fine Paper Antitrust Litig., 685 F.2d 810, 819 (3d Cir. 1982);
Wyndham Assocs. v. Bintliff, 398 F.2d 614, 618 (2d Cir. 1968).
Venue defects as to a party whose portion of the action has been
severed or settled does not bar transfer of the remainder of the
action. See In re Fine Paper, 685 F.2d at 819. Thus, when
venue or jurisdiction in a transferee district is not proper for
a defendant who is only indirectly connected to the main claims,
the transferor court may sever the claims as to that defendant
and transfer the remaining claims to the more convenient
district pursuant to 28 U.S.C. § 1404(a). See id.; see also
Sunbelt Corp. v. Noble, Denton & Assocs., 5 F.3d 28, 33-34 (3d
Cir. 1993); Wyndham Assocs., 398 F.2d at 618-19; LG Elects.,
Inc. v. Asustek, 126 F. Supp.2d 414, 421 (E.D.Va. 2000); Corry
v. CFM Majestic Inc., 16 F. Supp.2d 660, 664 (E.D.Va. 1998);
Indianapolis Motor Speedway Corp. v. Polaris Indus., No.
IP99-1190-C-B/S, 2000 WL 777874, *2 (S.D.Ind. June 15, 2000).
The rationale for this procedure is that courts should sever
peripheral claims when the "administration of justice would be
materially advanced." See, e.g., Corry, 16 F. Supp.2d at 665
(quoting Wyndham Assocs., 398 F.2d at 618-19). "Without the
remedy of severance, ...