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Telebrands Corp. v. Altair Instruments, Inc.

United States District Court, D. New Jersey

August 13, 2019




         Before the Court are defendant's motion to dismiss the complaint or, alternatively, to transfer venue to the Central District of California (ECF No. 19) and plaintiffs motion for leave to file an amended complaint (ECF No. 43). The Honorable Susan D. Wigenton, U.S.D.J., referred the motion to dismiss to the undersigned for a Report and Recommendation; as the motion to amend also raises issues related to personal jurisdiction, the Court will address the motions in tandem. The Court heard oral argument on the motion to dismiss and the motion to amend on May 13, 2019. The parties then asked the Court to stay decision on the motions while they pursued mediation. (ECF No. 55). As their mediation efforts were unsuccessful, the motions are now ripe for disposition. Having considered the parties' arguments and the written submissions at ECF Nos. 19, 25, 26, 28, 29, 30, 34, 35, 43, 45, and 49, and for good cause shown, the Court recommends that the motion to dismiss for lack of personal jurisdiction be GRANTED. The motion to transfer venue and motion to amend are therefore DENIED AS MOOT.[1]

         I. BACKGROUND

         In a complaint dated November 16, 2018, plaintiff Telebrands Corp. seeks a declaratory judgment that its DermaSuction product does not infringe defendant Altair Instruments, Inc.'s U.S. Patent No. 6, 241, 739 (the '"739 Patent") entitled "Microdermabrasion Device and Method of Treating the Skin Surface." (Compl. ¶¶ 1, 10, 11, ECF No. 1). Plaintiff is a New Jersey corporation with its principal place of business in Fairfield, New Jersey. (Id. ¶ 2). Defendant is a California corporation with its principal place of business in Ventura, California. (Id. ¶ 3; Walker Decl. ¶ 2, ECF No. 19-3). Defendant has no offices, real property, or employees in New Jersey, is not licensed to do business in New Jersey, and does not have an agent for service of process in New Jersey. (Walker Decl. ¶¶ 4-5). Defendant has not initiated any lawsuits in New Jersey and has not granted any license authorizing any other entity to enforce the '739 Patent. (Id. ¶¶ 7-8).

         On October 10, 2018, counsel for Altair sent Telebrands a cease and desist letter alleging that the DermaSuction product infringed several claims of the '739 Patent. (Compl. ¶ 14, Ex. 2). The parties then corresponded about the possibility of re-designing the DermaSuction product to avoid potential patent infringement liability. (Oines Decl., Exs. 5-10, ECF No. 19-2). Instead, approximately one month after receiving the cease and desist letter, Telebrands filed the instant declaratory judgment action. On December 17, 2018, Altair filed an essentially identical patent infringement suit against Telebrands in the Central District of California, the court in which it has litigated a number of other actions related to the '739 Patent. (Id. ¶¶ 3, 15, Ex. 11).

         On January 4, 2019, defendant filed the instant motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. (ECF No. 19). Defendant also urges the Court to decline to exercise jurisdiction over the declaratory judgment action because Telebrands allegedly filed it in anticipation of the California patent infringement lawsuit to avoid litigating in a forum where Altair has successfully pursued other accused infringers of the '739 Patent. (Id.). In the alternative, defendant asks the Court to transfer this action to the Central District of California. (Id.). However, on February 27, 2019, while the motion to dismiss was sub judice, the Honorable Manuel L. Real, United States District Judge for the Central District of California, granted Telebrands' motion to transfer the second-filed patent infringement action from California to the District of New Jersey pursuant to the first-to-file rule. (ECF No. 34-1). The transferred patent infringement action, Altair Instruments, Inc. v. Telebrands Corp., No. 19-cv-7452 (SDW), has been stayed pending the outcome of this motion to dismiss.

         Following an unsuccessful settlement conference on March 14, 2019, while the fully briefed motion to dismiss for lack of personal jurisdiction was still pending, plaintiff filed a motion for leave to file an amended complaint. (ECF No. 43). In addition to the declaratory judgment of non-infringement, plaintiff seeks to add claims for Lanham Act false advertising, false patent marking, and unfair competition in violation of New Jersey statute and common law relating to defendant's alleged marking of its DiamondTome Lymphatic Massage Wand product ("Lymphatic Wand") with the '739 patent. (Proposed Am. Compl. ¶¶ 19-24, ECF No. 43-2).

         The Court has attempted to resolve the parties' jurisdictional standoff by way of agreement, so that the DermaSuction patent infringement and declaratory judgment of non-infringement claims, as well as the Lymphatic Wand claims in plaintiffs proposed amended complaint, could proceed in a single action either in this district or in California. The parties could not agree to litigate their disputes efficiently in a negotiated forum, so the Court proceeds to the pending motions.

         II. ANALYSIS

         A. Personal Jurisdiction

         This Court applies the law of the Federal Circuit to determine whether personal jurisdiction over defendant exists in New Jersey. See Breckenridge Pharma., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1361 (Fed Cir. 2006) ("The issue of personal jurisdiction in a declaratory action for non-infringement is 'intimately related to patent law' and thus governed by Federal Circuit law regarding due process.")- Where, as here, the parties have not yet begun discovery, plaintiff must make only a prima facie showing that the court can exercise personal jurisdiction over a defendant. Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1017 (Fed. Cir. 2009). Under a prima facie standard, "the pleadings and affidavits are to be construed in the light most favorable" to plaintiff and any factual disputes are resolved in plaintiffs favor. Id.

         "Determining whether personal jurisdiction exists over an out-of-state defendant involves two inquiries: whether a forum state's long-arm statute permits service of process, and whether the assertion of personal jurisdiction would violate due process." Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1359 (Fed. Cir. 2001). New Jersey's long-arm statute permits the exercise of jurisdiction over non-residents "'to the uttermost limits permitted by the United States Constitution.'" Charles Gendler & Co.. Inc. v. Telecom Equip. Corp., 102 N.J. 460, 469 (1986) (quoting Avdel Corp. v. Mecure, 58 N.J. 264, 268 (1971)). Therefore, the Court's "jurisdictional analysis collapses into a single determination of whether the exercise of personal jurisdiction comports with due process." Avocent Huntsville Corp. v. Aten Int'l Co., Ltd., 552 F.3d 1324, 1329 (Fed. Cir. 2008). Due process, in turn, requires that the defendant have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation omitted).

         The Court can assert either general or specific jurisdiction over a defendant that has minimum contacts with the forum. Avocent, 552 F.3d at 1330. Plaintiff focuses its argument solely on general jurisdiction.[2] "A court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State." Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011). In all but "exceptional case[s]," a corporation is "essentially at home" and thus subject to general jurisdiction in its state of incorporation and its principal place of business. Daimler AG v. Bauman, 571 U.S. 117, 139 n.19 (2014).

         As Altair is a California corporation with its principal place of business in California, plaintiff faces an uphill battle to show that this is the exceptional case where a foreign corporation has such extensive affiliations with New Jersey that this Court can hear any and all claims against it. Defendant has no employees, offices, real property, business license, or agent for service of process in New Jersey. See Senju Pharma. Co., Ltd. v. Metrics, Inc., 96 F.Supp.3d 428, 441 (D.N.J. 2015) (applying Daimler and Federal Circuit law in determining that there was no personal jurisdiction in patent infringement action over foreign defendant that "is not registered to do business in the state and does not have an agent appointed to accept service in the state. There is no allegation that Defendant has any employees, agents, or bank accounts in New Jersey, or that it solicits business or advertises in the state"). Instead, Plaintiff argues that the Court may exercise general jurisdiction based on the fact that defendant sells its products to customers in New Jersey via the internet and a network of 23 New Jersey "distributors." See Compl. ΒΆ 7; Maldonado ...

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