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Poly-Med, Inc. v. Novus Scientific Pte. Ltd

United States District Court, D. South Carolina, Anderson Division

February 22, 2016

POLY-MED, INC., Plaintiff
v.
NOVUS SCIENTIFIC PTE. LTD, NOVUS SCIENTIFIC, INC. and NOVUS SCIENTIFIC AB, Defendants

ORDER AND OPINION

Plaintiff Poly-Med, Inc. (“Poly-Med”), filed this action against Novus Scientific Pte. Ltd. (“Novus Singapore”), Novus Scientific, Inc. (“Novus USA”), and Novus Scientific AB (“Novus Sweden”) (collectively “Novus Defendants”) seeking monetary damages, injunctive, and equitable relief. (ECF No. 1.)

This matter is before the court pursuant to Novus Sweden’s Motion to Dismiss for Lack of Jurisdiction, Insufficient Service of Process, and Forum Non Conveniens (ECF No. 16); Novus Singapore’s Motion to Dismiss for Lack of Jurisdiction, Insufficient Service of Process, and Forum Non Conveniens (ECF No. 17); and Novus USA’s Motion to Dismiss for Lack of Jurisdiction (ECF No. 18).[1] Poly-Med opposes the aforementioned Motions of Novus Defendants. (ECF Nos. 35, 38, 39.) For the reasons set forth below, the court DENIES Novus Defendants’ Motions to Dismiss for Lack of Jurisdiction and DENIES Novus Singapore and Novus Sweden’s Motions to Dismiss for Insufficient Service of Process and Forum Non Conveniens.

I. JURISDICTION

The court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a) based on Poly-Med’s allegations that the action is between citizens of different states and/or countries and the amount in controversy is in excess of $75, 000.00. (ECF No. 1 at 1 ¶ 1-2 ¶ 4, 3 ¶ 6.) Specifically, Poly-Med alleges that it is a South Carolina corporation with its principal place of business in Anderson, South Carolina; Novus Singapore is a Singaporean corporation with its principal place of business in Singapore; Novus USA is a Delaware corporation with its principal place of business in San Diego, California; and Novus Sweden is a Swedish corporation with its principal place of business in Uppsala, Sweden. (Id.) In this regard, the court is satisfied that complete diversity exists between the parties and the amount in controversy is sufficient.

II. RELEVANT BACKGROUND TO PENDING MOTIONS

Poly-Med is a South Carolina corporation that “designs, develops, and manufactures products and materials [out of bio-absorbable and biodegradable polymers] for use in medical, pharmaceutical and biotechnology applications.” (ECF No. 1 at 1 ¶ 1 & 3 ¶¶ 8-9.) On or about June 8, 2005, Poly-Med alleges that it entered into a Sale of Materials and License Agreement (the “Agreement”) with a Swedish company, Radi Medical Systems, AB (“Radi”). (Id. at 3 ¶ 13.) The Agreement required Poly-Med to develop and manufacture at least 6 different proprietary absorbable surgical meshes for use in hernia repair in human patients. (ECF No. 35-2 at 2 ¶ 10.) “Under the Agreement, Radi was to compensate Poly-Med for its development work, manufacturing and production of the mesh that took place exclusively in South Carolina.” (Id. at ¶ 11.)

In December 2008, Radi transferred its rights under the Agreement to either Novus Singapore or Novus USA.[2] (Id. at 3 ¶ 15; ECF No. 16-1 at 3 ¶ 6.) On or about February 27, 2013, Novus Singapore transferred its interest in the Agreement to Novus Sweden. (ECF No. 16-1 at 3 ¶ 7.) Poly-Med alleges that sometime after assignment of the Agreement to either Novus Singapore or Novus USA, Novus Defendants breached the Agreement by using the mesh in applications other than hernia repair. (ECF No. 1 at 10 ¶ 42.) For example, Novus Defendants allegedly used the mesh in breast reconstruction, which usage “is not authorized by Poly-Med and is in violation of the Agreement.” (Id. at 11 ¶ 48.)

As a result of the aforementioned breach of the Agreement, Poly-Med filed a Complaint against Novus Defendants in this court on May 8, 2015, alleging claims for breach of contract, tortious interference with contract, violation of the South Carolina Trade Secrets Act, SC Code Ann. §§ 39-8-10 to -130 (2014), and violation of the South Carolina Unfair Trade Practices Act, SC Code Ann. §§ 39-5-10 to -560 (2014). (ECF No. 1 at 13-25.) Novus Defendants filed their Motions to Dismiss on July 2, 2015. (ECF Nos. 16, 17, 18.) Poly-Med filed Memoranda in Opposition to the Motions to Dismiss (ECF Nos. 35, 38, 39) on July 30, 2015, to which Novus Defendants submitted Replies in Support of the Motions to Dismiss on August 24, 2015. (ECF Nos. 47-49.)

On November 12, 2015, the court heard argument from the parties on the pending Motions to Dismiss. (ECF No. 62.)

III. LEGAL STANDARD AND ANALYSIS

A. Motion to Dismiss for Lack of Jurisdiction

1. The Parties’ Arguments

Novus Defendants collectively move for dismissal of the Complaint for lack of personal jurisdiction. (ECF Nos. 16 at 7, 17 at 7 & 18 at 5.) In support of their Motions to Dismiss, Novus Defendants submitted Declarations from Thomas Engström, the Chief Executive Officer (“CEO”) of Novus Singapore, Stefan Sowa, the CEO of Novus Sweden, and Tac-Whei Ong, the President of Novus USA. (ECF Nos. 16-1, 16-2, 16-3.) Through these Declarants, Novus Defendants assert that they do not and have never (1) owned real or personal property in South Carolina; (2) maintained telephone service or bank accounts in South Carolina; (3) had any employees who resided in South Carolina; (4) maintained an office in South Carolina; (5) had sales representatives who resided in South Carolina; (6) had any shareholders, directors, or officers who resided in South Carolina; (7) conducted any meetings of their boards or their officers or their shareholders in South Carolina; (8) engaged in direct marketing of products to South Carolina residents; (9) maintained a customer relations network for customers in South Carolina; (10) filed or been required to pay taxes in South Carolina; (11) appointed anyone to accept service of process on their behalf within South Carolina; (12) been licensed to do business in South Carolina; (13) held themselves out as doing business in South Carolina; (14) operated a website from within South Carolina; or (15) transacted any business or made any sales via a website to one or more South Carolina residents. (ECF Nos. 16-1 at 3 ¶ 15-5 ¶ 36, 16-2 at 2 ¶ 4- 5 ¶ 35 & 16-3 at 2 ¶ 4-4 ¶ 33.) Based on the foregoing, Novus Defendants assert that they are not subject to general jurisdiction in South Carolina because they lack continuous and systematic contacts with the state. (ECF Nos. 16 at 8, 17 at 8 & 18 at 6.) Moreover, they assert that the exercise of specific jurisdiction is inappropriate because Poly-Med’s allegations do not establish that Novus Defendants purposefully availed themselves of the privilege of conducting activities in South Carolina, that Poly-Med’s claims arise out of any such activities by Novus Defendants, or that the exercise of jurisdiction would be constitutionally reasonable. (ECF Nos. 16 at 10, 17 at 10 & 18 at 9.)

Poly-Med opposes dismissal of the Complaint asserting that the court has specific personal jurisdiction over Novus Defendants. In this regard, Poly-Med argues that Novus Defendants all have had substantial contacts with South Carolina over a period of several years and, therefore, they purposefully availed themselves of the privilege of conducting business under South Carolina law. (E.g., ECF No. 35 at 12.) In support of this argument, Poly-Med specifies that “[t]he Agreement at issue in this case was originally negotiated by electronic mail messages from and to South Carolina and was executed by Poly-Med in South Carolina[]” (id. at 14); “Most of the performance under the Agreement has taken place at Poly-Med’s facility in Anderson, South Carolina[]” (id.);[3] Novus Defendants had direct contact in and with South Carolina by way of e-mails, telephone conference calls, and a website accessible in South Carolina (id. at 16); and South Carolina was the locale of clinical trials and a place of visitation by Novus Defendants’ employee personnel (id. at 16-18).

Poly-Med next argues that its claims arise out of Novus Defendants’ activities directed at South Carolina. (Id. at 23 (“Novus USA has used all this South Carolina work, as well Poly-Med trade secrets located in South Carolina, to breach the Agreement by selling and/or distributing the TIGR® Mesh outside the scope of the Agreement.”).) Poly-Med also argues that the exercise of jurisdiction over Novus Defendants under South Carolina’s long arm statute is “constitutionally reasonable” because they voluntarily entered into a contract with a South Carolina resident and they have been able to secure local counsel and their ...


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