Authentify Patent Co. v. Strikeforce Technologies, Inc.

39 F. Supp. 3d 1135, 2014 WL 3767480, 2014 U.S. Dist. LEXIS 105655
CourtDistrict Court, W.D. Washington
DecidedJuly 31, 2014
DocketCase No. C13-00741-RSM
StatusPublished
Cited by9 cases

This text of 39 F. Supp. 3d 1135 (Authentify Patent Co. v. Strikeforce Technologies, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Authentify Patent Co. v. Strikeforce Technologies, Inc., 39 F. Supp. 3d 1135, 2014 WL 3767480, 2014 U.S. Dist. LEXIS 105655 (W.D. Wash. 2014).

Opinion

ORDER DENYING MOTION TO DISMISS

RICARDO S. MARTINEZ, District Judge.

I. INTRODUCTION

This matter comes before the Court upon Defendant’s Motion to Dismiss. Dkt. # 9. Defendant, StrikeForce Technologies, Inc., moves to dismiss all claims in Plaintiffs complaint pursuant to Federal Rule of Civil Procedure 12(b)(2). The Court granted jurisdictional discovery and oral [1141]*1141argument to determine the nature and extent of Defendant’s connections to the forum state. Having considered the parties’ briefing and the relevant record, the Court denies Defendant’s motion for the reasons discussed herein.

II. BACKGROUND

This is a patent infringement action arising under the Patent Act, 35 U.S.C. § 1 et seq., and relating to out-of-band (“OOB”) customer authentication. The relevant factual background has been previously discussed in the Court’s Order granting jurisdictional discovery. Dkt. # 23. Plaintiff Authentify Patent. Co. (“Authentify”), a Washington LLC, is the owner of U.S. Patent No. 6,934,858, entitled “System and Method of Using the Public Switched Telephone Network in Providing Authentication or Authorization for Online Transactions,” issued on August 23, 2005 (the “'858 Patent”). The '858 Patent describes and claims a system for authenticating or authorizing on-line transactions using simultaneous or substantially simultaneous communication on two different networks to verify a user’s identity. Dkt. # 1, Ex. A, p. 7. StrikeForce Technologies, Inc. (“StrikeForce”), a Wyoming corporation headquartered in New Jersey, makes and sells an OOB authentication software product known as ProtectID. See Dkt. # 9, pp. 6-7. StrikeForce is the owner of U.S. Patent No. 7,871,599 (the “'599 Patent”), which is directed to a multichannel security system and method for authenticating a user seeking to gain access to, for example, Internet websites and YPN networks. See Dkt. # 9, p. 6. On July 9, 2013, the U.S. Patent and Trademark Office issued to StrikeForce U.S. Patent No. 8,484,698 (the “'698 Patent”), a continuation of the '599 Patent. Authentify’s '858 Patent and StrikeForce’s '599 and '698 Patents all relate to OOB authentication.

The instant action was filed by Authentify on April 26, 2013, and alleges that Stri-keForce’s activities in the United States relating to ProtectID infringe one or more claims of Authentify’s '858 Patent. Dkt. # 1, ¶ 15. On May 10, 2013, counsel for Authentify sent a letter and copy of the Complaint to StrikeForce, notifying Stri-keForce of the filing of litigation and inquiring into StrikeForce’s amenability to settlement. See Dkt. # 12, Ex. 2. Authen-tify had not yet issued a summons when, on May 22, 2013, StrikeForce filed a complaint in the U.S. District Court for the District of New Jersey, seeking declaratory judgment of non-infringement and invalidity of the '858 Patent. StrikeForce subsequently amended its complaint in the New Jersey litigation to include Authentify, Inc., Authentify Patent Co.’s sole and managing member, as a defendant.

StrikeForce’s jurisdictional theory in the New Jersey litigation is that Authentify Patent Co. is the alter-ego of Authentify, Inc., a company with undisputed “continuous and systematic” contacts with New Jersey. StrikeForce Technologies, Inc. v. Authentify Patent Co., No. 13-3242, Dkt. # 35, p. 7, (D.N.J.2014). On January 16, 2014, the New Jersey court denied motions to dismiss and to stay by defendants on the grounds that StrikeForce’s alter-ego jurisdictional theory is appropriately decided on summary judgment, after the parties have engaged in discovery. Id. at ¶ 9.

StrikeForce moves this Court to dismiss the present action for lack of personal jurisdiction and improper venue under Federal Rule of Civil Procedure 12(b)(2). In the alternative, StrikeForce requests transfer of this matter to the U.S. District Court for the District of New Jersey. See Dkt. # 9. The Court found that a more satisfactory showing of the facts was necessary in order to reach a determination on whether StrikeForce’s actions: (1) were [1142]*1142purposefully directed at Washington State residents, and (2) constituted offers to sell the allegedly infringing product. See Dkt. # 23. . Consequently, the Court continued Defendant’s Motion to Dismiss (Dkt. # 9) for five weeks to allow Plaintiff to conduct limited jurisdictional discovery. Id.

Each of the parties submitted a supplemental brief in opposition to or support of Defendant’s Motion to Dismiss based on the facts revealed during jurisdictional discovery. See Dkt. # 24; Dkt. # 26. Plaintiff additionally moves to strike Defendant’s Supplemental Reply (Dkt. # 26) on account of its over-length. See Dkt. # 29.

III. DISCUSSION

A. Standard for Rule 12(b)(2) Dismissal

Plaintiff bears the burden to establish that personal jurisdiction exists. See Lee v. City of Los Angeles, 250 F.3d 668, 692 (9th Cir.2001). Pursuant to Federal Rule of Civil Procedure 12(b)(2), a defendant may move to dismiss a complaint on the ground that the court lacks personal jurisdiction over the defendant. The law of the Federal Circuit determines whether the exercise of personal jurisdiction comports with the requirements of due process in patent infringement actions. Deprenyl Animal Health, Inc. v. University of Toronto Innovations Foundation, 297 F.3d 1343 (Fed.Cir.2002). Where, as here, the district court has allowed the parties to conduct discovery on the jurisdictional issue and held an evidentiary hearing, the plaintiff must prove that jurisdiction exists by a preponderance of the evidence. Data Disc, Inc. v. Sys. Tech. Associates, Inc., 557 F.2d 1280, 1285 (9th cir.1977).

B. Motion to Strike

As a preliminary matter, the Court denies Plaintiffs’s motion to strike. Plaintiff is correct that Defendant exceeded its allowed page limit pursuant to LCR 7(e). Nonetheless, the Court finds that any prejudice to Plaintiff has been offset by its opportunity to respond at oral argument. The Court admonishes that should Defendant fail to comply with page limits in any future filing in this matter, the Court will disregard any pages in excess of the applicable limit.

C.Personal Jurisdiction

Determining “whether 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 assertion of personal jurisdiction violates due process.” Genetic Implant Sys., Inc. v. Core-Vent Corp. 123 F.3d 1455, 1458 (Fed.Cir.1997) (citing Burger King Corp. v. Rudzewicz,

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39 F. Supp. 3d 1135, 2014 WL 3767480, 2014 U.S. Dist. LEXIS 105655, Counsel Stack Legal Research, https://law.counselstack.com/opinion/authentify-patent-co-v-strikeforce-technologies-inc-wawd-2014.