Cisco Systems, Inc. v. Dexon Computer, Inc.

District Court, N.D. California·Decided June 1, 2021·No. 3:20-cv-04926·Unknown

Opinion

1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 CISCO SYSTEMS, INC., et al., Case No. 20-cv-04926-CRB

9 Plaintiffs, AMENDED ORDER DENYING 10 v. MOTION TO DISMISS

11 DEXON COMPUTER, INC., 12 Defendant.

13 Plaintiffs Cisco Systems, Inc. and Cisco Technology, Inc. (collectively, Cisco) are 14 suing Defendant Dexon Computer, Inc. (Dexon) for trademark infringement, trademark 15 counterfeiting, false designation of origin, unfair business practices under California law, 16 and unjust enrichment.1 Cisco alleges that Dexon has been trafficking counterfeit Cisco 17 products for roughly fifteen years. Dexon moved to dismiss Cisco’s original complaint for 18 lack of personal jurisdiction and the Court granted Cisco’s request to conduct additional 19 jurisdictional discovery. Cisco then filed an amended complaint.2 Dexon has now moved 20 to dismiss the amended complaint for lack of personal jurisdiction and, in the alternative, 21 for the Court to transfer this case to the District of Minnesota. The Court concludes that 22 oral argument is unnecessary and denies Dexon’s motion. 23 24

25 1 This order amends the Court’s previous order denying Dexon’s motion to dismiss (dkt. 37). This amended order contains a different description of Cisco’s allegations regarding software license 26 codes and Product Activation Key Certificates (PAKs). Dexon’s motion for a correction under Rule 60 of the Federal Rules of Civil Procedure is granted. See Dkt. 38. 27 2 The Court denies Dexon’s motion to dismiss the original complaint as moot based on the filing I. BACKGROUND 1 Cisco manufactures networking and communications hardware, software, and 2 related products and services. Amend. Compl. ¶ 12. Cisco has built its brand through 3 significant investment in its CISCO trademark and other related trademarks (Cisco Marks) 4 that Cisco uses in connection with its products and services. Id. ¶¶ 14–17. 5 Dexon is a Minnesota corporation with its headquarters and sole office in 6 Bloomington, Minnesota. Id. ¶ 4; MTD Amend. Compl. at 6. Cisco alleges that “[f]rom at 7 least July 2006 through the present, Dexon has repeatedly and systematically engaged in 8 schemes to traffic counterfeit Cisco products.” Amend. Compl. ¶ 24. Dexon would tell 9 customers that it was selling genuine Cisco products, then deliver the customers 10 counterfeit products bearing Cisco Marks. Id. And when Cisco repeatedly demanded that 11 Dexon both (i) stop selling counterfeit products, and (ii) help Cisco identify the sources of 12 those products, “[i]in almost every instance, Dexon refused to cooperate with Cisco, and 13 refused to identify the counterfeit traffickers who supply it.” Id. 14 Cisco bases these general allegations on numerous specific transactions. For 15 example, in 2015 and 2016, Dexon sold counterfeit Cisco products to companies in Ohio 16 and Missouri. Id. ¶¶ 35–39. In 2017, Dexon sold counterfeit Cisco products to a Cisco 17 investigator in Berkeley, California. Id. ¶ 40. And in 2018 and 2019, Dexon sold 18 counterfeit Cisco products to companies and schools in Arizona, Kentucky, Maryland, 19 Minnesota, Missouri, Nevada, and Texas. Id. ¶¶ 41–48, 53–58. In addition to these sales, 20 Dexon purchased counterfeit Cisco products from a Fremont, California company called 21 PureFutureTech. Id. ¶¶ 51–52.3 22 The Court previously declined to resolve the parties’ disagreement regarding 23 whether these allegations were enough to give the Court personal jurisdiction over Dexon. 24 25 3 Cisco also describes various transactions and events occurring before 2015 as background 26 examples of Dexon’s trafficking practice. See Amend. Compl. ¶¶ 26–33. Cisco alleges that in 2006, Dexon sold counterfeit Cisco products to a Cisco investigator in Virginia; in 2008, the FBI 27 seized counterfeit products from Dexon in Minnesota; in 2010, Dexon sold counterfeit Cisco 1 See Minute Entry (dkt. 24). The Court permitted Cisco to conduct limited jurisdictional 2 discovery relevant to Dexon’s counterfeit sales in California. See id. Based on that 3 discovery, Cisco amended its complaint with additional allegations. See Amend. Compl. 4 ¶¶ 59–63. 5 Cisco now also alleges “that on at least 18 separate occasions during the period 6 spanning from 2017 to 2020, 40 of the Cisco-branded products that Dexon sold/shipped to 7 California are counterfeit.” Id. ¶ 60. Cisco has provided transaction information for each 8 of these sales. See id. Cisco further alleges that Dexon has sold Cisco software licenses to 9 customers in California without authorization. See id. ¶ 61. Dexon “provided its 10 California customers with a counterfeit PAK [Product Activation Key Certificate], which 11 copied a valid code that enabled the customer to access Cisco software without Cisco ever 12 being paid for it.” Id. ¶ 62. Cisco has provided transaction information for 8 sales through 13 which Dexon sold 20 counterfeit software licenses. Id. 14 Cisco further alleges that Cisco software licenses came with End User License 15 Agreements. Id. ¶ 63. These agreements not only indicated that software license sales by 16 unauthorized entities like Dexon were prohibited, but also provided that disputes relating 17 to the End User License Agreements would be “subject to the exclusive jurisdiction of the 18 Federal Courts of the Northern District of California or the California Superior Court for 19 Santa Clara County.” Id. 20 Based on these allegations, Cisco’s amended complaint asserts (1) a federal 21 trademark infringement claim; (2) a federal trademark counterfeiting claim; (3) a federal 22 false designation of origin claim; (4) a California unfair business practices claim; and (5) 23 an unjust enrichment claim. 24 Dexon now moves to dismiss Cisco’s amended complaint for lack of personal 25 jurisdiction. See MTD Amend. Compl. (dkt. 34). In the alternative, Dexon requests that 26 the Court transfer this action to the District of Minnesota. Id. at 18. 27 II. PERSONAL JURISDICTION 1 A. Legal Standard 2 A federal district court’s jurisdiction over a defendant is the same as “the 3 jurisdiction of a court of general jurisdiction in the state where the district court is located.” 4 Fed. R. Civ. P. 4(k)(1)(A). California “allows the exercise of personal jurisdiction to the 5 full extent permissible under the U.S. Constitution.” Daimler AG v. Bauman, 517 U.S. 6 117, 125 (2014); see also Cal. Civ. Proc. Code § 410.10. Under the Fourteenth 7 Amendment’s Due Process Clause, “a tribunal’s authority depends on the defendant’s 8 having such ‘contacts’ with the forum State that ‘the maintenance of the suit’ is 9 ‘reasonable, in the context of our federal system of government,’ and ‘does not offend 10 traditional notions of fair play and substantial justice.’” Ford Motor Co. v. Mont. Eighth 11 Judicial Dist. Ct., 141 S. Ct. 1017, 1024 (2021) (quoting International Shoe Co. v. 12 Washington, 326 U.S. 310, 316–17 (1945)). This inquiry “has long focused on the nature 13 and extent of ‘the defendant’s relationship with the forum state.’” Id. (quoting Bristol- 14 Myers Squibb Co. v. Super. Ct. of Cal., San Francisco Cnty., 137 S. Ct. 1773, 1779 15 (2017)). And that “focus” has resulted in “two kinds of personal jurisdiction: general 16 (sometimes called all-purpose) jurisdiction and specific (sometimes called case-linked 17 jurisdiction.” Id.

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Cisco Systems, Inc. v. Dexon Computer, Inc., (N.D. Cal. 2021).

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