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National Beverage Screen Printers, Inc. v. DALB, Inc.

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

June 6, 2018

National Beverage Screen Printers, Inc. Plaintiff,
v.
DALB, Inc. Defendant.

          ORDER

         ORDER AND OPINION Plaintiff National Beverage Screen Printers, Inc. (“Plaintiff” or “NBS”), filed the instant action seeking a declaration from the court that Plaintiff is not liable for infringement of Defendant DALB, Inc.'s (“Defendant” or “DALB”) U.S. Patent Nos. 7, 377, 065 (“065 Patent”) and 8, 104, 206 (“206 Patent”). (ECF No. 1.) This matter is before the court on Defendant's Renewed Motion to Dismiss pursuant to Fed.R.Civ.P. 12(b)(2), 12(b)(6), or 12(f). (ECF No. 45 at 1.) In the alternative, Defendant moves to transfer this case to the United States District Court for the Northern District of West Virginia pursuant to 28 U.S.C. § 1406 or 28 U.S.C. § 1631. (Id.) For the reasons stated below, the court GRANTS Defendant's Motion to Dismiss (ECF No. 45 at 1) pursuant to Fed.R.Civ.P. 12(b)(2).

         I. FACTUAL AND PROCEDURAL BACKGROUND

         Both parties appear to be in the business of supplying signage for vending machines. (See, e.g., ECF No. 1-3 at 1.) Plaintiff alleges that on July 8, 2015, it received a letter from Defendant's counsel claiming that Plaintiff's products may infringe on the 065 Patent and/or the 206 Patent. (ECF No. 1 at 2 ¶ 8 (referencing ECF No. 1-3).) In response to an October 20, 2015 letter asserting patent infringement, Plaintiff's counsel sent Defendant a letter on November 5, 2015, stating Plaintiff's basis for believing that it had not infringed on Defendant's patents. (ECF No. 1-4.) On December 2, 2016, Plaintiff alleges that it received a “cease and desist” letter from Defendant's counsel “demand[ing] that NBS immediately cease and desist use of DALB's patented technology . . . no later than December 9, 2016.” (ECF No. 1 at 2 ¶ 10 (referencing ECF No. 1-5).) As a result of the threatening nature of Defendant's December 2, 2016 correspondence, Plaintiff filed a Complaint against Defendant seeking declaratory judgment of noninfringement, attorney's fees, costs, and expenses on December 9, 2016. (Id.) On the same day, Defendant also filed a Complaint for Patent Infringement in the Northern District of West Virginia. See DALB, Inc. v. National Beverage Screen Printers, Inc., C/A No. 3:16-cv-00167-GMG, ECF No. 1 (N.D. W.Va. Dec. 9, 2016).[1]

         On February 3, 2017, Plaintiff filed a Motion to Enjoin. (ECF No. 7.) In response to Plaintiff's Motion to Enjoin, Defendant filed a Combined Opposition to Enjoin Prosecution of the West Virginia Action and a Motion to Dismiss or Transfer on February 16, 2017. (ECF Nos. 9, 11.)[2] On February 23, 2017, Plaintiff filed a Reply in Support of the Motion to Enjoin. (ECF No. 12.) Thereafter, on March 2, 2017, Plaintiff filed Opposition to the Motion to Dismiss or Transfer, to which Defendant filed a Reply in Support of its Motion to Dismiss or Transfer on March 13, 2017. (ECF Nos. 17, 22.) On the same day, Plaintiff filed a Motion to Take Limited Jurisdictional Discovery, which was opposed by Defendant on March 13, 2017. (ECF Nos. 18, 23.)

         On April 27, 2017, Defendant moved the court for a hearing on its Motion to Dismiss or Transfer (ECF No. 9). (ECF No. 32.) On May 18, 2017, the court held a hearing regarding Defendant's Motion to Dismiss or Transfer. (ECF No. 35.) On July 21, 2017, the court denied without prejudice Plaintiff's Motion to Enjoin Prosecution of a Later-Filed Action (ECF No. 7). (ECF No. 41.) On August 4, 2017, the court granted Plaintiff's Motion for Limited Jurisdictional Discovery (ECF No. 18) giving the parties sixty (60) days for discovery on jurisdictional issues. (ECF No. 42.) Within the same Order (ECF No. 42), the court also denied without prejudice Defendant's Motion to Dismiss or Transfer with leave to refile after October 3, 2017.

         On October 9, 2017, Defendant refiled its Motion to Dismiss or Transfer (ECF No. 45), and on October 26, 2017, after receiving an extension (ECF No. 47), Plaintiff responded (ECF No. 49).[3] On November 2, 2017, Defendant replied. (ECF No. 50.) On May 24, 2018, a hearing was held before the undersigned. (ECF No. 66.)

         II. JURISDICTION

         The court has subject matter jurisdiction over this case pursuant to 28 U.S.C. §§ 1331 and 1338 collectively as Plaintiff's request for a declaratory judgment arises under United States patent law, 35 U.S.C. § 1 et seq. and the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202. The parties dispute whether the court has personal jurisdiction over Defendant and the court will address this issue in a later section.

         III. LEGAL STANDARD

         A. Motions to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(2)

         Federal Circuit law applies to the court's jurisdictional analysis because the jurisdictional issue is “intimately involved with the substance of the patent laws.” Nicolas Holiday, Inc. v. 1 Energy Sols., Inc., No. CV 3:13-00877-CMC, 2013 WL 12158523, at *1 (D.S.C. Aug. 8, 2013) (quoting Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995)).

         “To survive a motion to dismiss in the absence of jurisdictional discovery, plaintiffs need only make a prima facie showing of jurisdiction.” Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1231 (Fed. Cir. 2010) (citing Trintec Indus., Inc. v. Pedre Promotional Prods., Inc., 395 F.3d 1275, 1282 (Fed. Cir. 2005)). However, “[o]nce jurisdictional discovery or an evidentiary hearing is completed, the plaintiff's preponderance of the evidence burden applies and the plaintiff no longer has the benefit of favorable interpretations of pleading allegations.” Informaxion Sols., Inc. v. Vantus Grp., 130 F.Supp.3d 994, 998 (D.S.C. 2015) (quoting Estate of Thompson v. Mission Essential Pers., LLC, No. 1:11CV547, 2014 WL 4745947, at *2 (M.D. N.C. Sept. 23, 2014)).[4]

         “A personal jurisdiction determination for an out-of-state defendant is a two-step inquiry: ‘whether a forum state's long-arm statute permits service of process and whether assertion of personal jurisdiction violates due process.'” Grober v. Mako Prod., Inc., 686 F.3d 1335, 1345 (Fed. Cir. 2012) (quoting Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1017 (Fed. Cir. 2009)). South Carolina's long-arm statute has been interpreted to reach the outer bounds permitted by the Due Process Clause.”[5] ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 623 (4th Cir. 1997) (citing Southern Plastics Co. v. Southern Commerce Bank, 423 S.E.2d 128, 130 (S.C. 1992)). Therefore, the appropriate question for the court in considering a personal jurisdiction defense raised by an out-of-state defendant is whether that defendant has “minimum contacts with [South Carolina] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” Id. (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

         “There are two types of personal jurisdiction-general and specific.” Grober, 686 F.3d at 1345. “The analytical framework for determining whether minimum contacts exist differs according to which species of personal jurisdiction-general or specific-is alleged.” Scardino v. Elec. Health Res., LLC, No. 2:14-CV-02900-PMD, 2014 WL 12606303, at *2 n.3 (D.S.C. Oct. 20, 2014). “General [personal] jurisdiction arises when a defendant maintains ‘continuous and systematic' contacts with the forum state even when the cause of action has no relation to those contacts.” LSI Indus. Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000) (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984)). General jurisdiction is proper where the defendant has purposefully “availed himself of the privilege of conducting [activities in the forum state].” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985); see also Daimler AG v. Bauman, 571 U.S. 117, 127 (2014) (“[a] court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so ‘continuous and systematic' as to render them essentially at home in the forum State.”) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)).

         “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 not continuous and systematic.” Grober, 686 F.3d at 1346 (Fed. Cir. 2012) (quoting Autogenomics Inc., 566 F.3d at 1017). “When analyzing specific personal jurisdiction over a nonresident defendant, a court considers 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.'” Grober, 686 F.3d at 1346 (quoting Elecs. For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1350 (Fed. Cir. 2003)). “The plaintiff has the burden of proving parts one and two of the test, and then the burden shifts to the defendant to prove that personal jurisdiction is unreasonable.” Grober, 686 F.3d at 1346 (citing Elecs. For Imaging, 340 F.3d at 1350); see also Xilinx, Inc. v. Papst Licensing GmbH & Co. KG, 848 F.3d 1346, 1353 (Fed. Cir. 2017) (“The first two factors ...


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