Spaceco Business Solutions, Inc. v. Mass Engineered Design, Inc.

942 F. Supp. 2d 1148, 2013 WL 1815894, 2013 U.S. Dist. LEXIS 60746
CourtDistrict Court, D. Colorado
DecidedApril 29, 2013
DocketCivil Action No. 12-cv-02029-RBJ
StatusPublished
Cited by4 cases

This text of 942 F. Supp. 2d 1148 (Spaceco Business Solutions, Inc. v. Mass Engineered Design, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Spaceco Business Solutions, Inc. v. Mass Engineered Design, Inc., 942 F. Supp. 2d 1148, 2013 WL 1815894, 2013 U.S. Dist. LEXIS 60746 (D. Colo. 2013).

Opinion

ORDER

R. BROOKE JACKSON, District Judge.

Before the Court is defendants’ motion to dismiss for lack of personal jurisdiction and improper venue pursuant to Fed. R.Civ.P. 12(b)(2) and 12(b)(3). [docket #21], For the reasons set forth below, the motion is granted.

FACTS

In November 2009 Mass Engineered Design, Inc., a Canadian corporation, and Jerry Moscovitch, Mass’ president, sued 30 defendants in the Eastern District of Texas. They claimed that the defendants were infringing U.S. Patent No. RE 36,978 (the '978 patent), of which Mr. Moscovitch is the owner and Mass his licensee. The patent concerns a dual display system for ■two computer monitors. One of the defendants named in the Texas suit was Space-Co Business Solutions, Inc., a Nevada corporation headquartered in Colorado.

Some of the defendants settled during the nearly three years of litigation that followed. However, in August 2012, apparently unexpectedly, Mass and Moscovitch agreed to dismiss their claims against all remaining defendants. SpaceCo, which was one of the remaining defendants, agreed to dismiss its counterclaims against Mass and Moscovitch.

Shortly following dismissal of the Texas action, SpaceCo filed the present action. The gist of it was summarized as follows:

By virtue of Mass’s dismissal of the Texas action, Mass deprived SpaceCo of the ability [to] challenge the allegation of infringement, but has not withdrawn those allegations of infringement. Therefore, SpaceCo operates with a “cloud over its business” because of these unresolved infringement allegations.

Complaint [# 1] ¶ 15.

Specifically, SpaceCo asserted five claims for relief: (1) a declaration of non-infringement of the '978 patent; (2) a declaration of the invalidity of the '978 patent; (3) a declaration that Mass is estopped from interpreting the '978 patent in a manner contrary to prosecution history; (4) a declaration that Mass is barred from enforcing the '978 patent by reason of waiver, laches or estoppel; (5) a declaration that SpaceCo has immunity under 28 U.S.C. § 1498. Id.

[1151]*1151In the original complaint SpaceCo’s allegation regarding personal jurisdiction was sparse: “This Court has personal jurisdiction over Mass because Mass has established minimum contacts with this forum and the exercise of jurisdiction over Mass would not offend traditional notions of fair play and substantial justice.” Id. ¶ 10.

Before the jurisdictional issue was raised by the filing of the pending motion, however, SpaceCo beefed up its jurisdictional allegations and added two state law tort claims that, as will be discussed, also relate to its effort to establish personal jurisdiction over Mass and Moscovitch in Colorado. The new claims added by the First Amended Complaint are (6) defendants abused the legal process by bringing the Texas action for the ulterior purpose of extracting royalties to which they were not entitled, and (7) malicious prosecution, also based upon the Texas action. The revised allegations relating to personal jurisdiction in the First Amended Complaint are:

11. This Court has personal jurisdiction over Mass Engineered Design-and Jerry Moscovitch because by suing SpaceCo for infringement of the '978 patent they have established minimum contacts with-this forum and the exercise of jurisdiction over them would not offend traditional notions of fair play and substantial justice.
12. Upon information and belief, Mass Engineered Design and Jerry Moseov-. itch are doing business in this District.
13. Upon information and belief, the Defendants have delivered their products into the stream of commerce with the expectation that they will be purchased by consumers in Colorado.
14. Upon information and belief, the Defendants have purposefully availed themselves of the rights and benefits of Colorado law by engaging in systematic and continuous contacts with Colorado.
15. With respect to the Abuse of Process and Malicious Prosecution claims,, this Court has personal jurisdiction over both of the Defendants because the Defendants have intentionally committed, or aided, abetted, actively induced, contributed to, or participated in the commission of tortious acts in another jurisdiction that were expressly aimed at Colorado, with knowledge that the brunt of the injury would be felt in Colorado and which led to foreseeable harm and injury to SpaceCo, a resident of Colorado. Under the circumstances, the Defendants must “reasonably anticipate being haled into court” in Colorado to answer for their tortious acts against a Colorado resident.
16. If the Court should determine that it has personal jurisdiction over the Defendants for some, but not all of the claims alleged in this Complaint, the Court may exercise its supplemental jurisdiction pursuant to 28 U.S.C. § 1367(a) to hear all of the claims, because all of the claims arise out of a common nucleus of operative fact.

Mass and Mr. Moscovitch then filed the pending motion, in support of which they submitted, among other things, the declarations of Ray Wilk, Manager of Product Development for Mass, and Mr. Moscovitch. The Wilk declaration [# 22-5]states that Mass has never owned or maintained an office in Colorado; has no property in Colorado; is not registered to do business in Colorado; has no employees in Colorado; has no relationships with sales agents or distributors in Colorado; and has not signed any agreements with Colorado residents or businesses. Id. ¶¶4-9. Mass does advertise on a website that is generally available on the Internet and is not directed to Colorado residents. In the past it has sold some products to Colorado customers, all of which were initiated by the customer who contacted Mass by tele[1152]*1152phone or email. These sales were (1) between 2005 and 2006, 12 sales with an average sales price of $525; (2) also in 2005, Dell Computer sold five Mass products that it shipped to Colorado; (3) between 2007 and 2008, five sales with an average sales price of $107; (4) no sales in 2009; (5) two sales in 2010 with an average sales price of $139; (6) four sales in 2011 with an average sales price of $168; and (7) one sale in 2012. During these years (2005-2012) Mass repaired or replaced six Mass products under warranty with Colorado residents. All repairs were done in Canada. Id. ¶¶ 10-18. Mr. Wilk also relates the basic timeline of the Texas litigation and states that during the course of the litigation Mass and SpaceCo had licensing and settlement negotiations, for which Mass did not travel, that were unsuccessful. Id. ¶¶ 19-21, 23-24.

The Moscovitch declaration [# 22-7] states that he is the president of Mass; resides in Toronto; does not own, lease or maintain any property in Colorado; has never resided in Colorado; has no interest in any Colorado business; and has never signed any license agreement with any Colorado resident. Id. ¶¶ 1-5. 8.

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942 F. Supp. 2d 1148, 2013 WL 1815894, 2013 U.S. Dist. LEXIS 60746, Counsel Stack Legal Research, https://law.counselstack.com/opinion/spaceco-business-solutions-inc-v-mass-engineered-design-inc-cod-2013.