Lake Associates, LLC v. DNZ Products LLC

886 F. Supp. 2d 1203, 2012 WL 3573892, 2012 U.S. Dist. LEXIS 117169
CourtDistrict Court, D. Oregon
DecidedAugust 20, 2012
DocketCase No. 3:12-cv-00497-SI
StatusPublished
Cited by2 cases

This text of 886 F. Supp. 2d 1203 (Lake Associates, LLC v. DNZ Products LLC) is published on Counsel Stack Legal Research, covering District Court, D. Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lake Associates, LLC v. DNZ Products LLC, 886 F. Supp. 2d 1203, 2012 WL 3573892, 2012 U.S. Dist. LEXIS 117169 (D. Or. 2012).

Opinion

OPINION AND ORDER

SIMON, District Judge.

This patent dispute concerns the design of rifle scope mounts. Plaintiff Lake Associates, LLC, doing business as Warne Scope Mounts (“Warne” or “Plaintiff’) and headquartered in Oregon, designs, manufactures, and sells the M233 rifle scope mount. The M233 employs a smooth, cir[1205]*1205cular design, without the protruding “wing” that some scope mounts use to fasten the scope to the mount. Defendant DNZ Products, LLC (“DNZ” or “Defendant”), headquartered in North Carolina, also designs, manufactures, and sells rifle scope mounts. In addition, DNZ holds United States Patent No. D554,730 (the “'730 Patent”). DNZ contends that the '730 Patent covers “wingless” rifle scope mounts, such as the M233. In this action, filed on March 16, 2012, Warne seeks a declaration that its products, including the M233, do not infringe the '730 Patent, a declaration that the '730 Patent is invalid, and an injunction prohibiting DNZ from threatening or asserting the '730 Patent against Warne. Dkt. 1. Seventeen days after Warne filed this action, DNZ filed an action in the United States District Court for the Middle District of North Carolina against Warne and Nikon, Inc.,1 claiming patent infringement and several violations of North Carolina state law. Dkt. 18-6.

Before the court are DNZ’s motion to dismiss pursuant to Fed. R. Civ. P (“Rule”) 12(b)(1) for lack of subject matter jurisdiction and motion to dismiss pursuant to Rule 12(b)(2) for lack of personal jurisdiction. Dkt. 9. In the alternative, DNZ moves for an order transferring this case to the Middle District of North Carolina pursuant to 28 U.S.C. §§ 1404 and 1406. Id. The court finds that DNZ’s contacts with the State of Oregon are insufficient to satisfy the “minimum contacts” test for personal jurisdiction set forth in Int’l Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and its progeny. Accordingly, the court grants DNZ’s motion to dismiss pursuant to Rule 12(b)(2). Because the court grants DNZ’s motion to dismiss pursuant Rule 12(b)(2) for lack of personal jurisdiction, it need not reach DNZ’s motion to dismiss for lack of subject matter jurisdiction. See Potter v. Hughes, 546 F.3d 1051, 1055 (9th Cir.2008) (“Supreme Court precedent is clear that we may choose among threshold grounds for denying audience to a case on the merits.” (internal quotation marks and citation omitted)). Warne’s complaint is, therefore, dismissed without prejudice.

BACKGROUND

Warne is registered and headquartered in Oregon and its manufacturing facility is located in Tualatin, Oregon. Declaration of Charles F. Lake (“Lake Deck”) at ¶ 2 (Dkt. 18). Warne develops, manufactures, and distributes firearm scope mounts. Id. at ¶ 2; Compl. at ¶ 8. Among Warne’s products is a scope mount known as the “M223.” Compl. at ¶ 8.

DNZ is the family business of Timothy and Lisa Coggins. Declaration of Timothy Coggins (“Coggins Deck”) at ¶ 2 (Dkt. 11). Mr. Coggins designs scope mounts and sells them through DNZ. Id. at ¶¶ 2-4. Mr. Coggins designed a scope mount that employs “vertical screw fasteners within the structure of the mount itself rather than being placed in a protruding wing.” Id. at ¶ 6. Mr. Coggins assigned his rights in this design for a “wingless” scope mount to DNZ and obtained the '730 Patent. Id. at ¶ 7; Dkt. 11-1.

Mr. and Mrs. Coggins are residents of North Carolina and have never visited Oregon. Coggins Deck at ¶¶ 15-16. DNZ is organized under the laws of North Carolina and its headquarters and principal place of business are in North Carolina. Id. at ¶ 17. DNZ scope mounts are manufactured by Certified Machining, Inc., also a North Carolina company, with its principal place of business in that state. Id. at [1206]*1206¶ 3. DNZ has no offices, employees, or agents in Oregon. Id. at ¶ 17.

DNZ sells its scope mounts in Oregon through an authorized dealer, through DNZ’s website, and through two independent distributors. Rich’s Gun Shop, located in Donald, Oregon, is the only authorized DNZ dealer in Oregon. Id. at ¶ 21; Declaration of Lee Richeson (“Richeson Decl.”) at ¶ 3 (Dkt. 20). Rich’s Gun Shop has sold between 25 and 30 DNZ scope mounts since it became an authorized DNZ dealer in 2009. Richeson Decl. at ¶ 3, 5. In 2011, DNZ sales to Rich’s Gun Shop totaled $185.85, which is approximately 0.01% of DNZ’s total sales. Cog-gins Decl. ¶ 21. DNZ also makes direct sales from its website. Coggins Decl. at ¶ 18. Approximately 0.6% of DNZ’s “total direct sales by volume and by dollar amount were to Oregon consumers.” Id. The total amount of sales from the DNZ website to Oregon consumers is less than $1,000. Id.

DNZ has a distribution arrangement with UFA Holdings, a wholesaler and distributor based in Calgary, Canada. Second Declaration of Timothy Coggins (“2nd Coggins Deck”) at ¶¶ 11-13 (Dkt. 25). UFA Holdings distributes DNZ products throughout the Pacific Northwest, including in Oregon. Id. at ¶ 13. DNZ is not aware of the percentage of UFA Holdings’ sales of DNZ products that have occurred in Oregon. Id. at ¶ 12. Nonetheless, in 2011, DNZ’s total sales of DNZ products to UFA Holdings for distribution to the entire Pacific Northwest amounted to less than 0.8% of DNZ’s total sales. Id. at ¶ 13. In accordance with its arrangement with UFA Holdings, DNZ has directly shipped DNZ products to Wholesale Sports stores in Oregon. Id. at 14; Declaration of James Treacy at ¶¶ 3-4 (Dkt. 19); Dkt. 19-2,19-3.

DNZ also makes sales through Adventure Bound, Inc., a manufacturing representative based in the State of Washington. 2nd Coggins Deck at ¶ 16. Adventure Bound sells DNZ products on commission in the Northwestern United States and through Amazon.com. Id. Doug Bellmore, an Adventure Bound employee based in Oregon, has attempted to market DNZ products to businesses in Oregon. Declaration of Doug Bellmore at ¶¶ 2, 6-9 (Dkt. 29). As part of this work, Mr. Bellmore corresponds directly with DNZ. Id. at ¶ 8. Mr. Bellmore does not, however, have authority to bind DNZ in contract, and DNZ “has no control” over Mr. Bellmore’s marketing efforts. 2nd Declaration of Doug Bellmore at ¶ 5 (Dkt. 32). Mr. Bellmore has “generated negligible sales of DNZ’s scope mounts in Oregon.” Id. at 6.

Warne contends that “DNZ maintains a distribution center at All Sports Supply, an approximately 65,000 sq. ft. facility in Clackamas, Oregon.” Pl.’s Resp. at 5. The record, however, does not support this contention. The declaration Warne relies on, made by Sean Klaus, an independent sales representative,2 does not state that DNZ maintains a distribution center in Oregon. It states, rather, that “DNZ ... distributes its products through a distribution center maintained at All Sports Supply[.]” Declaration of Sean Klaus at ¶ 7 (Dkt. 21) (emphasis added). Thus, Mr. Klaus’s declaration shows, at most, that All Sports Supply — not DNZ — maintains the distribution center. Mr. Coggins states that DNZ does not “maintain” any distribution center in Oregon. 2nd Coggins Deck at ¶ 5. Mr. Coggins also states that DNZ “has no [1207]

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Bluebook (online)
886 F. Supp. 2d 1203, 2012 WL 3573892, 2012 U.S. Dist. LEXIS 117169, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lake-associates-llc-v-dnz-products-llc-ord-2012.