Multi Tech v. Forchheim

2007 DNH 015

• Court: District Court, D. New Hampshire
• Decided: February 7, 2007
• Docket: 05-CV-403-SM
• Status: Published

Opinion

Multi Tech v . Forchheim 05-CV-403-SM 02/07/07 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Multi Technology Industrial, LLC, Plaintiff

v. Civil N o . 05-cv-403-SM Opinion N o . 2007 DNH 015 Huhtamaki Forchheim f/k/a 4P Folie Forchheim, Defendant

O R D E R

Multi Technology Industrial, L L C (“MTI”) brought suit

seeking a declaration that it is not infringing a patent held by

the defendant, Huhtamaki Forchheim.1 See 28 U . S . C . § 2201.

Huhtamaki moves to dismiss, arguing that the court lacks personal

jurisdiction over it and that venue in this district is improper.

See F E D . R . C I V . P . 12(b)(2) and 12(b)(3). M T I objects.

STANDARD OF REVIEW

“The issue of personal jurisdiction in a declaratory action

for non-infringement is ‘intimately related to patent law’ and

1 The defendant’s correct name is unclear. Plaintiff claims that correspondence it received from the defendant was from Huhtamaki Forchheim, while defendant asserts that its legal name is Huhtamaki Deutschland GmbH & C o . KG. Because neither party believes the distinction is relevant to the present motion, the court refers to the defendant in this case as “Forchheim.” thus governed by Federal Circuit law regarding due process.”

Breckenridge Pharm., Inc. v . Metabolite Labs., Inc., 444 F.3d

1356, 1361 (Fed. Cir. 2006) (quoting Silent Drive, Inc. v . Strong

Indus., Inc., 356 F.3d 1192, 1201 (Fed. Cir. 2003)). When “the

parties have not conducted discovery, the plaintiff need[] ‘only

[ ] make a prima facie showing’ that the defendants [are] subject

to personal jurisdiction.” Silent Drive, Inc. v . Strong Indus.,

326 F.3d 1194, 1201 (Fed. Cir. 2003) (quoting Deprenyl Animal

Health, Inc. v . Univ. of Toronto Innovations Found., 297 F.3d

1343, 1347 (Fed. Cir. 2002)) (alterations in original).

BACKGROUND

The relevant facts, as alleged in the complaint (document

n o . 1 ) are as follows.

MTI, a Delaware limited liability company with its principal

place of business in Brentwood, New Hampshire, “designs,

develops, and manufactures release liners for use in the

construction, automotive and electronics industries.” Forchheim

is a German corporation that manufactures plastic films,

coatings, and silicones.

2 In April 2005, MTI received a letter from Forchheim, through

its counsel, alleging infringement of U.S. Patent N o . 5,143,676

(the “‘676 patent”). MTI’s counsel responded, which resulted in

another letter from Forchheim in October 2005 threatening patent

infringement litigation. This suit followed.

DISCUSSION

“There are two kinds of personal jurisdiction--specific and

general.” Trintec Indus. v . Pedre Promotional Prods., 395 F.3d

1275, 1279 (Fed. Cir. 2005). MTI asserts that it has met its

prima facie burden of showing that Forchheim is subject to

personal jurisdiction under either theory.

I. General Personal Jurisdiction

General personal jurisdiction “requires that the defendant

have ‘continuous and systematic’ contacts with the forum state

and confers personal jurisdiction even when the cause of action

has no relationship with those contacts.” Silent Drive, 326

F.3d. at 1200 (quoting Helicopteros Nacionales de Colombia, S.A.

v . Hall, 466 U.S. 4 0 8 , 414-16 (1984)).

MTI argues that Forchheim is subject to general personal

jurisdiction in New Hampshire because Huhtamaki Packaging, Inc.

3 (“HPI”), a company that shares common ownership with Forchheim,

is registered to do business in the state. The Federal Circuit,

however, has found such relationships, without more, an

insufficient basis upon which to subject a party to general

personal jurisdiction. In Phonometrics, Inc. v . N . Telecom,

Inc., 133 F.3d 1459, 1463 (Fed. Cir. 1998), the Federal Circuit

affirmed a district court ruling finding lack of jurisdiction

over a parent corporation where only its subsidiary operated in

the forum state. Specifically,

the [district] court held that [the parent] established that it does not control [the subsidiary] and that it had no offices, employees, or agents in [the forum state], and neither manufactures nor sells equipment in [the forum state], nor otherwise conducts business there, and [the plaintiff] could provide no evidence to refute these facts.

Here, MTI has failed to show that Forchheim has any offices,

employees, or agents in New Hampshire, or that it otherwise

conducts any business here. To the contrary, the record

indicates that aside from one transaction with M T I , Forchheim has

never sent its products to New Hampshire or solicited business

here, nor does it have any agreements or contracts with New

Hampshire-based entities. (Def.’s Mot. Dismiss, Ex. B (Wilde

Dec.) ¶¶ 2-4.)

4 MTI has proffered evidence that H P I , a corporate relative of

Forchheim, is registered with the New Hampshire Secretary of

State to conduct business here and that HPI has engaged in

business transactions in New Hampshire. There i s , however, a

“‘presumption of corporate separateness that [may] be overcome by

clear evidence.’” Donatelli v . Nat’l Hockey League, 893 F.2d

459, 465 (1st Cir. 1990) (quoting Escude Cruze v . Ortho Pharm.

Corp., 619 F.2d 9 0 2 , 905 (1st Cir. 1980)) (alteration in

original). In cases where the activity of one separate yet

related corporate entity has conferred jurisdiction on another,

“there is invariably a ‘plus’ factor -- something beyond the

subsidiary’s mere presence within the bosom of the corporate

family,” id. at 465-66, such as an agency relationship or some

showing of control. Id. at 466.

MTI asserts that Forchheim is virtually indistinguishable

from HPI because of the company’s unified “Huhtamaki” brand

identity, and because certain administrative and managerial

functions are centralized and serve all of the company’s

divisions, including Forchheim and HPI.

But MTI has failed to show that aside from sharing a common

name and centralized administrative structure, there is any

5 agency relationship between Forchheim and HPI or that Forchheim

is controlled by HPI in any way. In short, MTI has failed to

demonstrate that Forchheim is sufficiently intertwined with HPI

to warrant exercise of general jurisdiction because the evidence

does not show that the two entities share something “‘greater

than that normally associated with common ownership and

directorship.” Donatelli, 893 F.2d at 466 (quoting Hargrave v .

Fibreboard Corp., 710 F.2d 1154, 1160 (5th Cir. 1983)).

Accordingly, MTI has failed to carry its prima facie burden of

showing that this court may exercise general personal

jurisdiction over Forchheim.

II. Specific Personal Jurisdiction

In contrast to general personal jurisdiction, specific

personal jurisdiction “must be based on activities that ‘arise[]

out of’ or ‘relate[] to’ the cause of action and can exist even

if the defendant’s contacts are ‘isolated and sporadic.’” Silent

Drive, 326 F.3d at 1200 (quoting Burger King Corp. v . Rudzewicz,

417 U.S. 4 7 2 , 472-73 (1985)) (alterations in original).

“Determining whether jurisdiction exists over an out-of-state

defendant involves two inquiries: whether a forum state’s long-

arm statute permits the assertion of jurisdiction and whether the

assertion of personal jurisdiction violates federal due process.”

6 Graphic Controls Corp. v . Utah Med. Prods., Inc., 149 F.3d 1382,

1385 (Fed. Cir. 1998) (footnote omitted). Where, as here, the

“long-arm statute is coextensive with the limits of due process,

the two inquiries collapse into a single inquiry: whether

jurisdiction comports with due process.” Inamed Corp. v . Kuzmak,

249 F.3d 1356, 1360 (Fed. Cir. 2001); see Computac, Inc. v . Dixie

News Co., 124 N.H. 3 5 0 , 355 (1983) (explaining that New

Hampshire’s long-arm statute is “coextensive with constitutional

limitations”).

The federal due process inquiry requires the nonresident

defendant to have “certain ‘minimum contacts’ with the forum

‘such that the maintenance of the suit does not offend

traditional notions of fair play and substantial justice.’”

Elecs. for Imaging, Inc. v . Coyle, 340 F.3d 1344, 1350 (Fed. Cir.

2003) (quoting Int’l Shoe C o . v . Washington, 326 U.S. 3 1 0 , 316

(1945) (citations omitted). The Federal Circuit has articulated

a three-part test for evaluating minimum contacts: “‘whether (1)

the defendant purposefully directed its activities at residents

of the forum state, (2) the claim arises out of or relates to the

defendant’s activities with the forum state, and (3) assertion of

personal jurisdiction is reasonable and fair.’” Pennington Seed,

7 Inc. v . Produce Exch. N o . 299, 457 F.3d 1334, 1344 (Fed. Cir.

2006) (quoting Coyle, 340 F.3d at 1350).

MTI contends that the cease and desist letters it received

from Forchheim satisfy the first prong of the minimum contacts

inquiry. The Federal Circuit has held, however, that “without

more, such letters are not sufficient to satisfy the requirements

of Due Process in declaratory judgment actions,” Red Wing Shoe

C o . v . Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1360 (Fed.

Cir. 1998), and that “[a] patentee should not subject itself to

personal jurisdiction in a forum solely by informing a party who

happens to be located there of suspected infringement.” Id. at

1361. Indeed, the court has observed that “the crux of the due

process inquiry should focus first on whether the defendant has

had contact with parties in the forum state beyond the sending of

cease and desist letters or mere attempts to license the patent

at issue.” Brekenridge Pharm. Inc. v . Metabolite Labs. Inc., 444

F.3d 1356, 1366 (Fed. Cir. 2006).

MTI also argues that Forchheim has had contact with New

Hampshire beyond the sending of cease and desist letters —

contacts sufficient to meet the heightened standard discussed in

Brekenridge. But MTI asserts that those additional contacts

8 consist of Forchheim’s corporate relationship with H P I , an

assertion that fails for the same reasons it failed to justify

the exercise of general personal jurisdiction. Exercising

specific personal jurisdiction over Forchheim on the basis of the

cease and desist letters, without more, would be improper.

MTI points to Forchheim’s corporate web site, which, it

asserts, “is designed to broadcast and offer for sale into the

forum its products and services to customers and prospective

users in the forum with the intent of soliciting and establishing

business relationships in New Hampshire.” (Pl.’s O b j . Mot.

Dismiss 15.) The record discloses, however, that the site is

fairly general in nature and is not specifically directed at New

Hampshire residents. Instead, the site “is available to all

customers throughout the country who have access to the

Internet.” Trintec Indus., 395 F.3d at 1281. The mere fact that

New Hampshire residents have access to the site “‘does not by

itself show any persistent course of conduct by the defendants’”

in New Hampshire. Id. (quoting GTE New Media Servs. Inc. v .

BellSouth Corp., 199 F.3d 1343, 1349 (D.C. Cir. 2000)). Even if

the web site was a sufficient contact upon which to justify

exercise of personal jurisdiction, it is of no relevance here,

since the present action, involving patent rights, is unrelated

9 to the web site and would thus fail to satisfy the second prong

of the minimum contacts analysis. Accordingly, Forchheim’s web

presence does little to support MTI’s position that the exercise

of personal jurisdiction over Forchheim is proper in this court.

Finally, MTI asserts that Forchheim has sufficient contacts

with New Hampshire because it markets and sells products in New

Hampshire through its corporate affiliate, H P I , with the

expectation that such products will be sold, eventually, in New

Hampshire. This so-called “stream of commerce theory” is

frequently employed in cases where “the defendant’s contacts are

the result of establishing a distribution network in the forum

[s]tate for the sale of defendant’s products.” Viam Corp. v .

Iowa Export-Import Trading Co., 84 F.3d 4 2 4 , 427 (Fed. Cir.

1996). Under the stream of commerce theory, personal

jurisdiction is proper against a defendant if it “delivers its

products into the stream of commerce with the expectation that

they will be purchased by consumers in the forum [s]tate.”

World-Wide Volkswagen Corp. v . Woodson, 444 U.S. 286, 298 (1980).

MTI’s stream of commerce theory fails, however, for the same

reasons set forth above. Even if it is true that HPI is engaged

in the distribution of products that eventually reach New

10 Hampshire, MTI has failed to establish a sufficient connection

between Forchheim and HPI to justify exercise of personal

jurisdiction over the former based on the conduct of the latter.

See Donatelli, 893 F.2d 459, 465-66 (1st Cir. 1990).

MTI’s claim of personal jurisdiction over Forchheim in this

district is based upon the unsupported premise that Forchheim and

HPI are so intertwined that, for jurisdictional purposes, they

are essentially the same entity. MTI has failed to meet its

prima facie burden of demonstrating the existence of personal

jurisdiction over Forchheim in this forum. Having found no basis

upon which to exercise personal jurisdiction, a discussion of the

venue issue is unnecessary.

CONCLUSION

As the court lacks personal jurisdiction, Forchheim’s motion

to dismiss (document n o . 6 ) is hereby granted. The Clerk of

Court shall enter judgment in accordance with this order and

close the case.

11 SO ORDERED.

Steven J. McAuliffe 'Chief Judge

February 7 , 2007

cc: Arnold Rosenblatt, Esq. Daniel J. Bourque, Esq. Jamie N . Hage, Esq.