Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

LG Electronics, Inc. v. First International Computer

April 13, 2001

LG ELECTRONICS INC., PLAINTIFF,
v.
FIRST INTERNATIONAL COMPUTER, INC., FIRST INTERNATIONAL COMPUTER OF AMERICA, INC., AND EXPERT COMPUTER GROUP CORP., DEFENDANTS.



The opinion of the court was delivered by: Cooper, District Judge

FOR PUBLICATION

MEMORANDUM OPINION

This matter comes before the Court upon (1) the motion of defendants First International Computer, Inc. ("FIC") and First International Computer of America, Inc. ("FICA") to dismiss the claims against them for lack of personal jurisdiction or, in the alternative, to transfer venue to the Northern District of California and (2) the motion of Defendant Expert Computer Group Corp. ("Expert") to dismiss plaintiff's claims against it for failure to state a claim upon which relief can be granted or, in the alternative, for summary judgment. *fn1 For the reasons expressed below, the Court will (1) deny without prejudice the motion of FIC and FICA to dismiss the claims against them for lack of personal jurisdiction; (2) sever the claims against FIC and FICA from this action and transfer the severed action to the Northern District of California; (3) deny Expert's motion to dismiss or, in the alternative, for summary judgment; and (4) stay the claims against Expert pending disposition of the transferred action.

BACKGROUND

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. ¶¶ 5-6.)

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 , Ex. B: pages printed from FICA's web site at .) 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 , Ex. D: pages printed from web site of Leadman Electronics USA, Inc. at , Ex. E: pages printed from web site of Tech Data Corporation at .) 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 , Ex. G: pages from web site of PCwonders.com, Inc. at , Ex. H: pages printed from web site of Expert Computer Group Corp. at , 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.

DISCUSSION

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 State 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. 1994).

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

In deciding a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court must "accept as true all the allegations in the complaint and all reasonable inferences that can be drawn therefrom, and view them in the light most favorable to the nonmoving party." Rocks v. Phila., 868 F.2d 644, 645 (3d Cir. 1989). Dismissal is inappropriate unless it clearly appears that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief. Robb v. Phila., 733 F.2d 286, 290 (3d Cir. 1984).

"[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 (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. In applying these standards, the court must construe the facts in the light most favorable to the party against whom judgment is sought. See Lawrence 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.; Kachmar v. SunGard 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 appropriate.

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 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.