Caddo Systems, Inc. v. Siemens Aktiengesellschaft (AG)

District Court, N.D. Illinois·Decided March 9, 2022·No. 1:20-cv-05927·Unknown

Opinion

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION CADDO SYSTEMS, INC. and 511 TECHNOLOGIES, INC., No. 20 C 05927 Plaintiffs, Judge Thomas M. Durkin v.

SIEMENS AKTIENGESELLSCHAFT (AG) and SIEMENS INDUSTRY, INC.,

Defendants.

MEMORANDUM OPINION AND ORDER Caddo Systems, Inc. and 511 Technologies, Inc. (collectively, “Caddo”) filed patent infringement claims against Siemens Aktiengesellschaft (AG) and Siemens Industry, Inc. (“SII”). Siemens AG moved to dismiss the complaint for lack of personal jurisdiction.1 Caddo opposed and moved for leave to conduct expedited jurisdictional discovery in lieu of dismissal. For the reasons set forth below, Siemens AG’s motion to dismiss is granted and Caddo’s motion for jurisdictional discovery is denied. Background Caddo’s complaint alleges infringement of six patents: U.S. Patent Numbers 7,191,411, 7,216,301, 7,640,517, 7,725,836, 8,352,880, and 10,037,127 (collectively, the “Asserted Patents”). The Asserted Patents are alternatively titled “Active Path

1 SII separately moved for summary judgment on the claims against it, which the Court granted. Caddo Sys., Inc. v. Siemens Aktiengesellschaft (AG), 2022 WL 444134 (N.D. Ill. Feb. 11, 2022). Menu Navigation System” or “Active Path Navigation System.” The patents generally claim methods for displaying graphical user menus, displaying items in a given menu level, and enabling selection thereof via an invention Caddo refers to as an “active

path.” Caddo alleges that Siemens AG’s website practices the patented methods by displaying a hierarchical menu system when users navigate to different sections of the site. It does not identify any other Siemens AG products among its Accused Instrumentalities. See R. 70. Siemens AG is a foreign corporation based in Germany and organized under German law. Its principal places of business are in Munich and Berlin. R 76-1 ¶ 3.

Siemens AG does not have any offices in the United States—it previously subleased office space in Houston, Texas for Lisa Davis, a member of its Managing Board with responsibility for the Siemens energy business. Between July 2014 and February 2021, Siemens AG was registered as a foreign entity doing business in the state of Texas. R. 76-1 ¶ 10 n.3. Davis left the company in February 2020, at which time Siemens AG closed its Houston office. Siemens AG contributed to a pension fund for Ms. Davis through January 2021. R. 85-1 ¶¶ 11-13.

Caddo identified three individuals on LinkedIn it alleges are presently employed by Siemens AG in the United States. R. 82-1 Exs. 22-24. At least two of those employees appear to work for subsidiaries of Siemens AG, while the precise employer of the third is unclear. According to declarations submitted by Siemens AG’s in-house counsel Paul Salazar, the company has not employed anyone in the United States since February 2020, when Ms. Davis left her board position. R. 76-1 ¶ 12; R. 85-1 ¶ 21. Siemens AG holds thousands of U.S. patents. R. 82-1 Exs. 10-13. Caddo also

cited evidence that Siemens AG has entered into purchase contracts and license agreements with at least one U.S.-based software vendor, Progress Software Corporation (“PSC”). The software products Siemens AG purchased allegedly encompass the .NET user interface components of the Accused Instrumentalities, including the Siemens AG website. R. 97, at 2-3. Siemens AG’s website was developed in and is managed from locations outside

the United States (it is hosted in Ireland). R. 85-1 ¶¶ 25-26. When a user accesses the website, at least for the first time, the user is prompted to review and agree to a Cookies Notice, a Privacy Notice, and certain Terms of Use. Acceptance of at least the cookies policy is mandatory in order to use the website, and such use functionally constitutes acceptance of the Terms of Use. The Privacy Notice informs users of certain rights they have against Siemens AG, including the right to obtain information regarding how their personal data is processed and the right to correct

inaccurate personal data. U.S. residents who access the website also have the right to annually request a list of any personal data Siemens AG has disclosed to third parties for direct marketing purposes in the previous year. R. 82-1 Exs. 3-7. The Privacy Notice is required, to at least some extent, by the European Union’s General Data Protection Regulation (“GDPR”) and is included on other international versions of the Siemens AG website. R. 85, at 5; R. 85-2 Ex. 6. Siemens AG also enters into data protection agreements with its U.S. subsidiaries and affiliates, which number in the dozens. These agreements entitle users and customers in the U.S. to certain rights against Siemens AG regarding

protection of their personal data. R. 82-1 Ex. 5. Siemens AG claims that these agreements are not directed toward the U.S., citing to a section that references the GDPR and restricts its geographical scope to “companies located in the European Union Area.” R. 85, at 5-6. Caddo claims that Siemens AG’s website facilitates contacts with customers in the U.S., including specifically in Illinois, in several ways. First, Caddo says the

website enables product sales with customers in the U.S. For example, Caddo alleges that users can navigate the Siemens AG website to product listings for Siemens AG’s “Desigo System,”2 including “valves and actuators,” “automation control,” and “room thermostats,” and make purchases. The website also allows users to select “USA” as a country of interest and create login profiles. R. 82-1 Exs. 19-24. Caddo further alleges that Siemens AG’s website directs new and existing customers to “RUGGEDCOM” sales representatives located in Illinois. R. 82-1 ¶ 24.

Next, Caddo claims Siemens AG uses its website to recruit potential employees in the U.S. Specifically, Caddo cites to 39 job listings in Chicago, IL accessible through Siemens AG’s website. R. 82-1 Ex. 25. Customers in the U.S. can also subscribe to

2 Desigo CC is a building management software program and is one of the Accused Instrumentalities. It is discussed in more detail in the Court’s summary judgment opinion. See Caddo Sys., 2022 WL 444134. newsletters and printed publications by providing their contact information through the website. R. 82-1 Ex. 26. Finally, customers can obtain product support, download software and firmware updates, and obtain other product documentation through the

Siemens AG website. R. 82-1 Ex. 27. Caddo also cites to Siemens AG’s 2020 Annual Report as evidence of U.S.- focused activities. According to Caddo, the Report shows that Siemens AG attributes billions of dollars in revenues to sales in the United States and engages in “the same” research and development activities as its U.S. subsidiaries. R. 82-1 Ex. 8. Siemens AG disputes several of these points at least in part. According to

Salazar, Siemens AG itself does not sell or market any products in the U.S.—rather, its U.S.-based subsidiaries do so. It notes that several of the websites cited by Caddo with various product listings are identified as belonging to its subsidiary, Siemens Switzerland Ltd. Furthermore, RUGGEDCOM is a trademark of Siemens Canada Ltd., which manufactures and sells those products. 85-1 ¶ 8; 85-2 Ex. 4. Siemens AG does not control the day-to-day operations of these subsidiaries. R. 85-1 ¶¶ 5, 7. Siemens AG responds that the Annual Report defines “Siemens” to includes both

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