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.

Dennison v. Alien Technology Corp.

December 4, 2008

AVERY DENNISON PLAINTIFF,
v.
ALIEN TECHNOLOGY CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Judge Kathleen O'malley

MEMORANDUM & ORDER

Before the Court is Defendant Alien Technology Corporation's ("Alien") Motion to Dismiss or to Transfer Venue (Doc. 12). In its motion, Alien requests that the Court either (1) dismiss the case for lack of personal jurisdiction, (2) dismiss the case for improper venue, or (3) transfer the case to the United States District Court for the District of North Dakota. The Plaintiff, Avery Dennison Corporation ("Avery"), opposes all aspects of the motion, which is now ripe for adjudication.*fn1 For the reasons fully articulated below, Alien's motion to dismiss or to transfer venue is DENIED.

I. BACKGROUND

This is a patent case involving radio frequency identification or "RFID." As described by Avery, RFID "is an advanced communication technology that uses radio waves to read information stored on microchips for identification purposes." (Doc. 16.) RFID systems are similar to bar coding systems in that they facilitate the identification and tracking of a particular object. There are two components to RFID systems: the RFID reader and the RFID inlay. The reader retrieves information remotely from the inlay. The inlay is a tag attached to, or incorporated in, the object to be tracked. It generally consists of a microchip connected to an antenna. One of the engineering challenges in manufacturing the inlay is finding a way to attach the microchip to the antenna in a quick, effective, and inexpensive manner. This lawsuit focuses on Avery's patented "Strap Attach Method" for connecting the microchip to the antenna. Avery and Alien are both participants in the emerging market for the development and sales of RFID. The parties' had a contractual relationship in 2002 to jointly develop an inexpensive method to use Alien's Fluidic Self Assembly ("FSA") process in connection with Avery's Strap Attach Method for producing RFID inlays. According to Avery, the partnership did not produce the desired results and was terminated in 2006. Avery alleges that, while Alien did not manufacture or market RFID prior to its relationship with Avery, it entered the RFID industry as a result of that relationship. Avery's lawsuit alleges that Alien used Avery's patented methods to do so.

Avery brought this lawsuit against Alien alleging infringement of seven patents, specifically, U.S. Pat. Nos. 6,951,596; 7,292,148; 7,361,251; 7,368,032; 7,307,527; 7,359,823; 7,298,266. The first four patents relate to processes for making RFID; the other three patents relate to methods of reading, testing, and communicating RFID. In sum, Avery alleges that Alien is unlawfully selling RFID that were manufactured using Avery's Strap Attach Method.

II. ANALYSIS

A. ISSUES

Alien's motion raises several issues. First, Alien contends that this Court does not have personal jurisdiction over it. Second, Alien argues that, even if the Court has personal jurisdiction, venue is improper in this district. In the alternative, Alien requests that the Court transfer the case to the United States District Court for the District of North Dakota, asserting that it is a more convenient forum for resolution of the issues presented. The Court will address each of these issues in turn, after first describing the location of the parties' various activities.

B. CONDUCT RELEVANT TO PERSONAL JURISDICTION AND VENUE

Both parties are Delaware corporations. Avery's principal place of business is in Pasadena California, within the Central District of California. Alien's principal place of business is in Morgan Hill, California, within the Northern District of California.

1. Avery

Avery is an international company with offices throughout the United States and the world. Avery has key RFID facilities in Concord, Mentor, Painesville and Strongsville, Ohio, all within the Northern District of Ohio. These Ohio facilities "house Avery's RFID marketing personnel and business development contacts, as well as a substantial portion of Avery's legal team. They are also the repository for much potential documentary evidence related to the development of roll-to-roll technologies." (Doc. 14 at 14.) Avery also has RFID facilities in South Carolina, Georgia, and Irwindale, California. The inventors of the patents at issue reside in South Carolina and Great Britain.

2. Alien

Alien markets RFID tags internationally. Most pertinent to this Order, however, are its connections to Ohio, North Dakota, and California.

Alien's principle place of business is in Morgan Hill, California, and a great deal of its employees and corporate records are located there. Alien also tests RFID tags in Morgan Hill. The inventors that may act as witnesses with respect to Alien's inventorship defense reside in California and Pennsylvania. The marketing of all of Alien's products is supervised by marketing personnel in California who work with its network of distributors.

Alien's manufacturing facilities are in Fargo, North Dakota. Alien purchased the machine which employs the allegedly infringing method from Toray International, Inc., a Japanese company, and that machine is now located at Alien's facility in Fargo. Consequently, the assembly line employees who work with the machine and those employees who ship and bill for the assembled products are also located in North Dakota. The products manufactured in North Dakota are then shipped to distributors located "all over the world" (Tr. at 17) who then sell the RFID product with the oversight of the marketing personnel in California.

Alien is registered to do business in Ohio. It has an RFID educational and resources center -- the "RFID Solutions Center" -- in Miamisburg, Ohio, within the Southern District of Ohio. According to Alien, the RFID Solutions Center is "a resources facility that provides educational classes, professional services, and tagged unit testing in real-world environments." (Doc. 12 at 4.) Alien does not manufacture RFID tags or perform the challenged tests at the RFID Solutions Center. Alien also has development alliances with five Ohio universities, all of which are primarily located within the Southern District of Ohio. Ohio State University ("OSU") is one of the universities with whom Alien has a development alliance. OSU's main campus is located in the Southern District of Ohio, but it has two local branches within the Northern District of Ohio. Additionally, Alien's "most valued" RFID customer is the Kennedy Group, located in Willoughby, Ohio, and its "most valuable" distributor, Bluestar, has an office in Strongsville, Ohio. Both Willoughby and Strongsville, Ohio are within the Northern District of Ohio.

C. PERSONAL JURISDICTION

In a patent case, the Court must apply the law of the Federal Circuit in analyzing personal jurisdiction. See LSI Indus. Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1371 (Fed. Cir. 2000). Under Federal Circuit law, because the parties have not conducted jurisdictional discovery, the plaintiff only bears the burden of establishing a prima facie case of personal jurisdiction (as opposed to meeting a preponderance of the evidence standard). See Trintec Indus. Inc. v. Pedre Promotional Prods., Inc., 395 F.3d 1275, 1282 (Fed. Cir. 2005); see also Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d 1343, 1347 (Fed. Cir. 2002). Further, the Court will construe the pleadings and affidavits in the light most favorable to Avery. Id.

In general, personal jurisdiction involves a two-pronged inquiry: first, whether the defendant is amenable to process in the forum state and, second, whether exercising personal jurisdiction over the defendant comports with the requirements of federal due process. Id. With respect to the first prong, the Federal Circuit "defer[s] to a state's highest court to interpret whether a defendant is amenable to process in the forum state." Id. This requirement may be satisfied by conduct covered by the Ohio long-arm statute, or, if Ohio recognizes the concept, by fulfilling the requirements of "general jurisdiction."*fn2 Id. In this case, Alien contends that prong one can not be satisfied. First, Alien argues that this Court does not have personal jurisdiction over it because Alien is not amenable to service of process under Ohio's long-arm statute. Further, Alien contends that Ohio law -- as it has been interpreted by the Federal Circuit -- simply does not recognize the concept of general jurisdiction.

Avery implicitly concedes, as it must on the facts presented, that the Ohio long-arm statute does not reach Alien. Instead, Avery argues that this Court has personal jurisdiction over Alien based on the existence of general jurisdiction. Avery contends that the Federal Circuit has found that general jurisdiction is a valid basis for the assertion of jurisdiction under Ohio law and that Alien's presence in this district satisfies the requirements for the exercise of such jurisdiction.

Thus, the first question the Court must resolve is whether general jurisdiction is a valid legal basis upon which to premise jurisdiction over an out-of-state defendant sued in this district. As discussed below, the Court finds that the Federal Circuit has concluded that personal jurisdiction may be premised on facts supporting general jurisdiction even where Ohio's long-arm statute would not authorize the assertion of specific jurisdiction against that same defendant.

1. Federal Circuit Court Precedent Holds that Ohio Law Recognizes General Jurisdiction

The parties vigorously debate the Federal Circuit's view of Ohio law -- Avery contends that the Federal Circuit both recognizes and has relied on the concept of general jurisdiction to authorize the assertion of personal jurisdiction over patent defendants, while Alien contends it has disavowed reliance on that legal theory. Alien argues that Hildebrand v. Steck Mfg. Co., 279 F.3d 1351, 1354 (Fed. Cir. 2002), is the most recent authority on point and that it rejects reliance on general jurisdiction for cases filed in an Ohio forum. Avery argues, to the contrary, that Delta Sys. Inc. v. Indak Mfg. Corp., 4 Fed. Appx. 857 (Fed. Cir. 2001) (following LSI, 232 F.3d at 1375), is the most recent authority on point, and clearly interprets Ohio law as permitting the exercise of personal jurisdiction based solely on general jurisdiction. Avery says Hildebrand is distinguishable and does not overrule LSI, either expressly or by implication.

Avery is correct -- LSI and Delta Sys. remain the controlling authority, and their holdings were not altered by Hildebrand. The Federal Circuit in LSI acknowledged that the Ohio long-arm statute does not extend to the limits of due process. The Federal Circuit went on to say, however, that the "Ohio long-arm statute does not limit personal jurisdiction in Ohio to causes of action arising from conduct it covers." LSI, 232 F.3d at 1373. In reaching this conclusion, the Federal Circuit reasoned that the Ohio long-arm statute, enacted in 1965, did not "supplant the viability of Perkins [v. Benquet Consol. Min. Co., 158 Ohio St. 145 (Ohio 1952)]" because Perkins essentially applied general jurisdiction, and Ohio Supreme Court cases post-1965 followed Perkins. In LSI, the Federal Circuit stated: In essence, the Ohio Supreme Court [in Perkins] adopted a federal due process general jurisdiction standard as a hook for prong one of the personal jurisdiction inquiry. That is, when an out-of-state defendant conducts "continuous and systematic" business in Ohio, it is "doing business" in Ohio and is amenable to process there, even if the cause of action did not arise from activity in Ohio.

In 1965, the Ohio legislature enacted the Ohio long-arm statute. 1965 Ohio Laws 2307.382. This statute recognizes that certain causes of action will make a defendant amenable to process in Ohio. This statute, however, fails to supplant the viability of Perkins. The Ohio long-arm statute does not limit personal jurisdiction in Ohio to causes of action arising from conduct it covers. Indeed, the statute provides: "When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him." Ohio Rev.Code Ann. § 2307.382(C) (West 2000). As the term "solely" indicates, Ohio courts can maintain personal jurisdiction over an out-of-state defendant conducting activity not enumerated in the Ohio long-arm statute. Further, in 1976, the Ohio Supreme Court applied the Perkins doctrine without mention of the Ohio long-arm statute in Wainscott v. St. Louis-San Francisco Railway Co., 47 Ohio St.2d 133, 351 N.E.2d 466 (1976).

LSI, 232 F.3d at 1373.

In Delta Sys., Inc., the Federal Circuit relied on LSI in remanding a case to the undersigned after this Court had dismissed it on grounds of a lack of personal jurisdiction under Ohio law. In reaching its conclusion that neither venue nor jurisdiction were proper against Indak, this Court looked only to the provisions of Ohio's long-arm statute and did not find any alternative grounds upon which jurisdiction could be premised. The Federal Circuit disagreed with this Court and held that personal jurisdiction in Ohio is still governed by Perkins and, therefore, may be based on a finding of general jurisdiction even where no provision of the long-arm statute was implicated by a defendant's conduct. Delta Sys., Inc., 4 Fed. Appx. at 860. Judge Timothy Dyk wrote:

While we agree with the district court that there were insufficient contacts between Ohio and the alleged infringement to confer personal jurisdiction over Indak under the Ohio long-arm statute, that statute is not the only source of jurisdiction over an out-of-state defendant under Ohio law. In LSI Industries, Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369 . . . (Fed.Cir.2000), this court addressed the same issue presented in this appeal-namely, whether Ohio courts will entertain suits unrelated to activities within the state so long as the defendant has sufficient contacts with Ohio to satisfy federal due process requirements for general jurisdiction. Relying on the Ohio Supreme Court's decision in Perkins v. Benguet Consolidated Mining Co., 158 Ohio St. 145, 107 N.E.2d 203 (Ohio 1952), and its progeny, we held that "a defendant conducting activity that meets the federal due process threshold for general jurisdiction is necessarily amenable to process under Ohio's 'doing business' standard as described in Perkins," and is therefore subject to the personal jurisdiction of the district court. LSI Indus., 232 F.3d at 1374 . . . .

In short, the district court in this case may properly exercise personal jurisdiction over Indak if that company maintains the "continuous" and "systematic" contacts with Ohio sufficient to satisfy the standard for general jurisdiction set forth by the Supreme Court in Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 445, 447-49 . . . (1952) and Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 . . . (1984).

Id.

Alien argues that Delta Sys. and LSI are no longer controlling authority in light of the Federal Circuit's more recent opinion in Hildebrand, 279 F.3d 1351 (Fed. Cir. 2002). Alien argues that the result in Delta Sys. would have been different if it had been decided after Hildebrand. Although this is a colorable argument, it is not a winner. In Hildebrand, the Federal Circuit stated: "The Ohio long-arm statute does not grant Ohio courts jurisdiction to the limits of the due process clause of the fourteenth amendment." 279 F.3d at 1354 (citing Goldstein v. Christiansen, 70 Ohio St. 3d 232 (Ohio 1994)). The Federal Circuit further noted that "Goldstein clarified that the General Assembly of Ohio did not intend the long-arm statute to extend to the limits of the due process clause." Id. Alien argues that these statements indicate that the Federal Circuit views Goldstein as the controlling Ohio Supreme Court precedent on this issue, not Perkins. Alien points out, moreover, that many lower Ohio court decisions have interpreted Goldstein as a rejection of the concept of general jurisdiction and a direction to look only to the jurisdictional authority outlined in the Ohio long-arm statute.

Avery rebuts Alien's arguments by noting that the Hildebrand decision (1) never mentions LSI or Delta Sys., and certainly does not overrule either expressly; and (2) does not even mention or discuss the concept of general jurisdiction. Both of these statements are true. Furthermore, Hildebrand does not address the crux of the analysis in LSI, which was the finding that "Ohio courts can maintain personal jurisdiction over an out-of-state defendant conducting activity not enumerated in the Ohio long-arm statute." LSI, 232 F.3d at 1373 (emphasis added). In other words, in LSI, the Federal Circuit (1) conceded that the Ohio long-arm statute does not reach the limits of due process and, (2) found personal jurisdiction based on general jurisdiction anyway. Delta Sys. reached this conclusion, moreover, after Goldstein had already been decided by the Ohio Supreme Court. Hildebrand merely reaches the same conclusion with respect to the first proposition by citing a different case (Goldstein). Because the analysis in Hildebrand does not address general jurisdiction, this Court can not conclude that it intended to overrule either LSI or Delta Sys.

Indeed, a careful reading of Hildebrand reveals that the issue of general jurisdiction was never discussed because the facts simply did not warrant it. After finding that it had personal jurisdiction over the plaintiff, the Southern District of Ohio (Marbley, J.) dismissed his patent infringement cases for failure to prosecute.*fn3 Upon review, the Federal Circuit found that the district court did not have personal jurisdiction over the plaintiff and reversed and remanded.*fn4 The Federal Circuit applied a two-step analysis. First, it found that the plaintiff's minimal contacts with Ohio did not satisfy the Ohio long-arm statute. Next, it found that the exercise of personal jurisdiction would not comport with due process. Accordingly, the Federal Circuit held that personal jurisdiction was lacking. While the defendant and Judge Marbley felt that the mailing of three cease and desist letters into the state of Ohio constituted either doing business or causing tortious injury in the state under Ohio's long-arm statute -- a ...


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.