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Gro Master, Inc. v. Farmweld, Inc.

United States District Court, N.D. Iowa, Western Division

January 24, 2013

GRO MASTER, INC., a Kentucky corporation, Plaintiff,
v.
FARMWELD, INC., an Illinois corporation, Defendant.

Page 975

Dennis L. Thomte, Thomte Patent Law Office, LLC, Omaha, NE, Timothy J. Zarley, Zarley Law Firm, PLC, Des Moines, IA, for Plaintiff.

Page 976

David Stubstad, Michael F. Coyle, Patrick S. Cooper, Robert H. Futhey, Fraser Stryker PC LLO, Omaha, NE, for Defendant.

MEMORANDUM OPINION AND ORDER REGARDING DEFENDANT'S MOTION TO DISMISS OR TRANSFER

MARK W. BENNETT, District Judge.

TABLE OF CONTENTS

I.

INTRODUCTION 976

A.

Factual Background 976

B.

Procedural Background 977

II.

LEGAL ANALYSIS 978

A.

Personal Jurisdiction 978

1.

Arguments of the parties 978

2.

Analysis 979

a.

Controlling precedent 979

b.

Applicable standards 980

c.

Application of the standards 981

i.

" General" jurisdiction 981

ii.

" Specific" jurisdiction 981

3.

Summary 984

B.

Improper Venue 984

1.

Arguments of the parties 984

2.

Analysis 985

a.

Controlling precedent 985

b.

Venue pursuant to § 1400(b)t 987

i.

The place of infringement and the defendant's place of business 987

ii.

The place where the defendant " resides" 987

c.

Summary 989

C.

Inconvenient Venue 990

1.

Arguments of the parties 990

2.

Analysis 991

a.

Transfer pursuant to § 1406 991

b.

Transfer pursuant to § 1404(a) 991

3.

Summary 994

III.

CONCLUSION 994

An out-of-state corporation has brought this action for infringement of its patent for an " animal feeder with adjustment of a feed discharge opening" against another out-of-state corporation that allegedly manufactures and sells an infringing animal feeder. The defendant has moved to dismiss for lack of personal jurisdiction and improper venue or, in the alternative, for transfer of the action to an appropriate venue. The plaintiff patentholder hangs its contention that personal jurisdiction and venue are proper in this district on the defendant's attendance as an exhibitor at the World Pork Expo in Des Moines, Iowa, in June 2012, its advertisement of its animal feeder in a national magazine, and its sale of a single animal feeder to a customer in Iowa. This case gives off a whiff of forum shopping nearly as potent as the odor emanating from a hog confinement facility.

I. INTRODUCTION

A. Factual Background

In its Complaint (docket no. 2), plaintiff Gro Master, Inc., alleges that it is a Kentucky

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corporation with its principal place of business in Omaha, Nebraska. Gro Master alleges that it is the owner of United States Patent No. 6,923,142 (the '142 patent), issued August 2, 2005, entitled " ANIMAL FEEDER WITH ADJUSTMENT OF A FEED DISCHARGE OPENING." Gro Master also alleges that defendant Farmweld, Inc., is an Illinois corporation with its principal place of business in Teutopolis, Illinois; that Farmweld is selling and offering for sale animal feeders covered by the '142 patent in Iowa and this judicial district and throughout the United States, without an express or implied license; and that, by doing so, Farmweld is willfully infringing the ' 142 patent.

In a Declaration (docket no. 19-2), filed in support of Farmweld's Motion To Dismiss Or, Alternatively, Motion To Transfer Venue (docket no. 19), Francis A. Brummer, the chief executive officer of Farmweld, admits that Farmweld is an Illinois corporation with its principal place of business in Teutopolis, Illinois. He avers that Farmweld is registered to do business in Illinois, but not Iowa; that Farmweld does not maintain any offices, employees, or telephone listings in Iowa; that all of Farmweld's employees are located in Teutopolis, with the exception of a single employee located in Minnesota; that Farmweld does not pay taxes or maintain any bank accounts in Iowa; that Farmweld does not advertise in the yellow pages in Iowa; and that Farmweld does not own any real or personal property in Iowa.

Mr. Brummer also avers that the animal feeder that is presumably the subject of Gro Master's Complaint was developed in Teutopolis, Illinois, not in Iowa, and that all marketing and sales decisions related to the product were made at its offices in Teutopolis. He avers, further, that Farmweld began selling the animal feeder that is presumably the subject of Gro Master's Complaint in January 2012, that it has received orders for 632 such feeders, but that it has sold only one such animal feeder to a customer in Iowa. He also avers that it is his " understanding" that the Iowa customer has a " relationship" with Gro Master, which Gro Master does not deny. In comparison to the single sale to a customer in Iowa, Mr. Bummer avers that 592 of its animal feeders at issue have been sold to Illinois customers, and that the remaining feeders have been sold to customers in Indiana (8), Michigan (5), Mexico (22), Missouri (2), Minnesota (1), and Canada (1). Finally, Mr. Brummer avers that Gro Master's website indicates that it has four dealers in Illinois.

In a Declaration, filed in support of Gro Master's Resistance (docket no. 21), Marvin Wastel, the president and co-owner of Gro Master, avers, inter alia,

5. I attended the World Pork Expo held in Des Moines, Iowa, during June 6-8, 2012. Farmweld had a booth at World Pork Expo and displayed a shelf feeder which I believe infringes one or more claims of the ['142 patent]. Farmweld also had printed materials at its booth which illustrated the shelf feeder and which described the features of the shelf feeder.
6. Farmweld advertised its accused infringing shelf feeder in the September 15, 2012, magazine entitled National Hog Farmer which is a national publication.

Declaration Of Marvin Wastel, ¶¶ 5-6.

B. Procedural Background

In its Complaint, filed October 22, 2012, Gro Master asserts a claim of patent infringement against Farmweld. As relief, it seeks judgment that the '142 patent is valid and enforceable and that Farmweld is willfully infringing it; a permanent injunction enjoining Farmweld's infringement of the '142 patent, whether direct,

Page 978

contributory, or induced; an award of damages to compensate it for Farmweld's infringement, in no less than a reasonable royalty for use of its invention, with interest and costs; double or treble damages for willful infringement; attorneys' fees; and such other relief as the court and/or the jury may deem proper.

Instead of filing an Answer to Gro Master's Complaint, Farmweld filed, on December 3, 2012, the Motion To Dismiss Or, Alternatively, Motion To Transfer Venue (docket no. 19) that is now before me.[1] In its Motion, Farmweld seeks dismissal of Gro Master's Complaint for lack of personal jurisdiction and for improper venue, pursuant to Rule 12(b)(2) and Rule 12(b)(3) of the Federal Rules of Civil Procedure, respectively. In the alternative, Farmweld requests that I transfer this action pursuant to 28 U.S.C. §§ 1404 or 1406 to the Southern District Of Illinois, a forum in which Farmweld alleges that both personal jurisdiction and venue are proper. Gro Master filed a Resistance (docket no. 21) to Farmweld's Motion on December 11, 2012, and Farmweld filed a Reply (docket no. 22) in further support of its Motion on December 20, 2012. No party requested jurisdictional discovery or an evidentiary hearing on the jurisdiction and venue issues.

I do not believe that oral arguments on Farmweld's Motion are likely to be beneficial, where the parties have submitted adequate briefs and affidavits in support of their positions. Moreover, my crowded schedule does not permit the timely scheduling of oral arguments. Therefore, Farmweld's Motion is deemed fully submitted on the written submissions.

II. LEGAL ANALYSIS

In its Motion, Farmweld challenges both personal jurisdiction and venue. Although personal jurisdiction and venue are interrelated questions in this case, I find that they involve sufficiently distinct issues that I should analyze them separately.

A. Personal Jurisdiction

1. Arguments of the parties

Farmweld contends that it does not have the minimum contacts with Iowa that would sustain either " general" or " specific" personal jurisdiction over it in this forum. Farmweld contends that, even if Gro Master is only required to make a prima facie showing of personal jurisdiction at this point in the proceedings, that prima facie showing must be tested in light of facts shown by affidavits and exhibits, as well as factual allegations in the Complaint. Farmweld argues that, in this case, Gro Master has not met its burden, because Farmweld is not registered to do business in Iowa, does not maintain offices in Iowa, and does not own any real or personal

Page 979

property in Iowa; because Farmweld has received only one order for the accused animal feeder from a single customer located in Iowa, constituting less than 0.16 % of the total orders that it has received for that product; and because Iowa has no interest in providing a forum in this case, where neither party is an Iowa resident and no actions giving rise to Gro Master's patent infringement claim occurred in Iowa.

Gro Master contends that this court does have personal jurisdiction over Farmweld, because the Federal Circuit Court of Appeals, the court stating controlling law on the personal jurisdiction issue in this patent case, has held that federal district courts do have personal jurisdiction over out-of-state defendants who appear at a trade show in the district, citing Patent Rights Protection Group, L.L.C. v. Video Gaming Technologies, Inc., 603 F.3d 1364 (Fed.Cir.2010). Here, Gro Master contends, Farmweld's representatives appeared at the World Pork Expo in Des Moines, Iowa, on June 6 through 8, 2012, where they displayed the accused animal feeder and distributed printed materials to attendees that illustrated the accused animal feeder. Gro Master argues that, in addition, Farmweld has advertised the accused animal feeder in the September 15, 2012, issue of National Hog Farmer, a national publication, and Farmweld admits that it has sold an accused animal feeder to an Iowa customer, although there is no identification of the specific location of the Iowa customer. Gro Master argues that these actions establish the necessary minimum contacts for personal jurisdiction over Farmweld. Gro Master argues that other factors do not weigh against the reasonableness of the exercise of personal jurisdiction over Farmweld in this district, because the burden of defending the suit in Iowa rather than Illinois, will not be significant, while Gro Master has an interest in obtaining convenient and effective relief, which it can do more efficiently in this forum from its base in Omaha, Nebraska, just 90 miles from Sioux City, Iowa.

In reply, Farmweld distinguishes the Patent Rights case on which Gro Master relies on the grounds that the defendants in that case attended numerous trade shows in Nevada, not just one, like Farmweld, and the plaintiff in that case was a Nevada company, which gave the Nevada court a " manifest interest" in providing a convenient forum for redressing injuries inflicted by out-of-state actors, but Gro Master is not an Iowa company, either. Moreover, Farmweld argues that the burden on it of litigating in Iowa clearly outweighs Gro Master's interest in adjudicating the dispute in Iowa. Farmweld also contends that courts have held that an advertisement in a nationally distributed publication is not enough to support the exercise of personal jurisdiction in any particular forum. Thus, Farmweld contends that this court does not have personal jurisdiction over it.

2. Analysis

a. Controlling precedent

Gro Master is correct that Federal Circuit law is applicable to the question of personal jurisdiction in this case. See Grober v. Mako Prods., Inc., 686 F.3d 1335, 1345 (Fed.Cir.2012) (" ‘ [W]e apply Federal Circuit law because the jurisdictional issue is " intimately involved with the substance of the patent laws." ’ " (quoting Avocent Huntsville Corp. v. Aten Int'l Co., 552 F.3d 1324, 1328 (Fed.Cir.2008), in turn quoting Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed.Cir.1995)); Merial, Ltd. v. Cipla, Ltd., 681 F.3d 1283, 1292 (Fed.Cir.2012)) (" We review a district court's exercise of personal jurisdiction over an accused infringer without deference, applying Federal Circuit law rather than the

Page 980

law of the regional circuit." ). Therefore, I will apply Federal Circuit law to the personal jurisdiction question presented in Farmweld's Motion.

b. Applicable standards

As the Federal Circuit Court of Appeals has explained, where, as here, the court makes a determination on a question of personal jurisdiction without a request by the parties to conduct discovery or to hold an evidentiary hearing on the question, " plaintiffs need only show a prima facie case of personal jurisdiction." Grober, 686 F.3d at 1345; Autogenomics, Inc. v. Oxford Gene Tech., Ltd., 566 F.3d 1012, 1017 (Fed.Cir.2009). In resolving such a question on this procedural footing, however, the court is not limited to consideration of facts alleged in the Complaint, but may also consider affidavits and other written materials in the absence of an evidentiary hearing. Autogenomics, 566 F.3d at 1017; Electronics for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed.Cir.2003). Even though the information that a district court may consider is broader than it is on a Rule 12(b)(6) motion to dismiss, " a district court must accept the uncontroverted allegations in the plaintiff's complaint as true and resolve any factual conflicts in the affidavits in the plaintiff's favor." Electronics for Imaging, 340 F.3d at 1349. The Federal Circuit Court of Appeals reviews a determination of personal jurisdiction " without deference," but reviews any underlying factual determinations for " clear error." Grober, 686 F.3d at 1345.

Turning to specific standards for determining whether the exercise of personal jurisdiction is proper, " [i]n general, a federal district court may exercise personal jurisdiction over a non-consenting out-of-state defendant if two requirements are satisfied" : (1) " the defendant must be amenable to service of process," which requires examination of the forum state's long-arm statute; and (2) " exercising jurisdiction over the defendant must comport with due process." Patent Rights Protection Group, 603 F.3d at 1368; accord AFTG-TG, L.L.C. v. Nuvoton Tech. Corp., 689 F.3d 1358, 1360 (Fed.Cir.2012); Grober, 686 F.3d at 1345. Iowa's long-arm statute [2] " expands Iowa's jurisdictional reach to the widest due process parameters allowed by the United States Constitution." Hammond v. Florida Asset Fin. Corp., 695 N.W.2d 1, 5 (Iowa 2005) (discussing Rule 1.306 of the Iowa Rules of Civil Procedure). In these circumstances, the first requirement for personal jurisdiction collapses into the second. AFTG-TG, L.L.C. v. Nuvoton Tech. Corp., 689 F.3d 1358, 1360 (Fed.Cir.2012); Grober, 686 F.3d at 1345. Consequently, I turn to the second question, whether exercising personal jurisdiction over Farmweld comports with due process. Grober, 686 F.3d at 1345; Patent Rights Protection Group, 603 F.3d at 1368.

As every law student knows— and most practicing lawyers and judges still remember— there are two types of personal jurisdiction, " general" and " specific,"

Page 981

that comport with due process. AFTG-TG, 689 F.3d at 1360; Grober, 686 F.3d at 1345. " General" personal jurisdiction requires " ‘ continuous and systematic general business contacts' " with the forum, such that haling the defendant into court on any claim satisfies due process. See, e.g., Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785, 789 (Fed.Cir.2011) (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)). In contrast,

" [s]pecific 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." Autogenomics, 566 F.3d at 1017 (citing Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1200 (Fed.Cir.2003)). 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." Elecs. for Imaging, 340 F.3d at 1350. 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. Id. As this court previously explained " [t]he first two factors correspond with the ‘ minimum contacts' prong of the International Shoe [ v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ] analysis, and the third factor corresponds with the ‘ fair play and substantial justice’ prong of the analysis." Inamed Corp. [ v. Kuzmak ], 249 F.3d [1356,] 1360 [ (Fed.Cir.2001) ].

Grober, 686 F.3d at 1346; accord AFTG-TG, 689 F.3d at 1361.

c. Application of the standards

i. " General" jurisdiction

In this case, I do not read any part of Gro Master's Complaint or Resistance to assert that Farmweld has " continuous and systematic" contacts with Iowa, such that " general" personal jurisdiction applies. Id. If Gro Master did intend to assert " general" personal jurisdiction, the undisputed averments in Mr. Brummer's Declaration about Farmweld's lack of offices, property, and routine business contacts with Iowa demonstrate that Farmweld does not have the " ‘ continuous and systematic general business contacts' " with the forum that would warrant haling the defendant into court on any claim. Radio Sys. Corp., 638 F.3d at 789 (quoting Helicopteros Nacionales de Colombia, S.A., 466 U.S. at 416, 104 S.Ct. 1868). Thus, I pass on to whether " specific" jurisdiction applies in this case. AFTG-TG, 689 F.3d at 1360.

ii. " Specific" jurisdiction

Gro Master's contention that, in Patent Rights Protection Group, L.L.C. v. Video Gaming Technologies, Inc.,603 F.3d 1364 (Fed.Cir.2010), the Federal Circuit Court of Appeals held that federal district courts have personal jurisdiction over out-of-state defendants who appear at a trade show in the district does not bear scrutiny. First, in that case, " instead of determining whether either [defendant] had such minimum contacts with Nevada [as would satisfy due process], the district court evaluated only whether exercising personal jurisdiction over either [defendant] should be defeated as being unreasonable, applying the seven-factor test set out [in Ninth Circuit precedent]." I ...


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