Nuance Communications, Inc. v. Abbyy Software House et al

Filing 134

ORDER by Judge Jeffrey S. White granting 108 Motion to Dismiss; finding as moot 128 Motion for Protective Order. (jswlc2, COURT STAFF) (Filed on 8/25/2009)

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1 2 3 4 5 6 7 8 9 10 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA NUANCE COMMUNICATIONS INC, Plaintiff, v. ABBYY SOFTWARE HOUSE, Defendant. / Now before the Court is the motion to dismiss filed by Abbyy Software Ltd. and Abbyy Production LLC ("Moving Defendants") for failure properly to serve in a legally sufficient manner and for lack of personal jurisdiction. Also before the Court is Moving Defendants' motion for protective order seeking to impose a limited stay on any discovery pertaining only to these defendants pending determination of the motion to dismiss. The Court finds both motions appropriate for decision without oral argument. N.D. Civ. L.R. 7-1(b). Accordingly, the Court HEREBY VACATES the hearing date of August 28, 2009. Having carefully reviewed the parties' papers, considered their arguments and the relevant legal authority, the Court hereby GRANTS Moving Defendants' motion to dismiss and FINDS AS MOOT Defendants' motion for a protective order. BACKGROUND Nearly fifteen months after Plaintiff Nuance Communications, Inc. ("Nuance") filed suit against Abbyy USA Software House, Inc. ("Abbyy USA") for patent infringement, Nuance amended its complaint to include identical claims against Russian entity Abbyy Production, ORDER GRANTING MOTION TO DISMISS No. C 08-02912 JSW United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 LLC and Cypriot entity Abbyy Software, Ltd. Defendants filed a motion seeking to dismiss the two foreign defendants for insufficient service of process and for lack of personal jurisdiction. The Court shall address additional facts as necessary to its analysis in the remainder of this Order. ANALYSIS A. Motion to Dismiss for Improper Service. 1. Legal Standard. Federal courts cannot exercise personal jurisdiction over a defendant without proper service of process. Omni Capital Int'l, Ltd. v. Wolff & Co., 484 U.S. 97, 104 (1987). Insufficient service can result in dismissal under Rule 12(b)(5). To determine whether service of process was proper, courts look to the requirements of Federal Rule of Civil Procedure 4. Rule 4(h) governs service over domestic and foreign corporations. 2. Service on Abbyy Software, Ltd. and Abbyy Production, LLC Was Improper Pursuant to Rule 4(h)(2). United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Rule 4(h)(2) also applies to this action because both defendants are foreign corporations. Rule 4(h)(2) provides that a foreign corporation may be served in "a place not within any judicial district of the United States, in any manner prescribed by Rule 4(f) for serving an individual, except personal delivery ...." Rule 4(f) governs service of an individual in a foreign country and states that service abroad is to be effected "by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents." Fed. R. Civ. P. 4(f)(1). The Hague Service Convention is a multi-national treaty that governs service of summons on persons in signatory foreign countries. Volkswagenwerk Aktiengeschellschaft v. Schlunk, et al., 486 U.S. 694, 698 (1988). Requests for service must conform to a model form attached to the Hague Convention. The Hague Convention, art. 3, Nov. 15, 1965, 20 U.S.T. 361, T.I.A.S. 6638, 658 U.N.T.S. 163. The form, as well as all relevant documents, should be sent "by the judicial officer or authority in the state in which the documents originate to the designated central authority of the country in which the recipient is located." Cippolla v. 2 1 2 3 4 5 6 7 8 9 10 Picard Porsche Audi, Inc., 496 A.2d 130, 131-132 (R.I. 1985); see The Hague Convention, art. 4, Nov. 15, 1965, 20 U.S.T. 361, T.I.A.S. 6638, 658 U.N.T.S. 163). "Once a central authority receives a request in the proper form, it must serve the documents by a method prescribed by the internal law of the receiving state or by a method designated by the requester and compatible with that law. The central authority must then provide a certificate of service that conforms to a specific model." Schlunk, 486 U.S. at 698; see The Hague Convention arts. 5-6, Nov. 15, 1965, 20 U.S.T. 361, T.I.A.S. 6638, 658 U.N.T.S. 163. The Hague Convention preempts all state and federal service rules in those countries that signed the treaty. See Schlunk, 486 U.S. at 699 ("by virtue of the Supremacy Clause, U.S. Const., Art. VI, the Convention preempts inconsistent methods of service prescribed by state law in all cases to which it applies"). The Court finds that Plaintiff failed properly to serve Abbyy Software, Ltd. or Abbyy Production, LLC in accordance with the Hague Convention. Plaintiff admits it did not follow the Hague Convention and the process it requires, but contends, without authority, that the "Hague Convention is not an agreed-upon means for service of process in Russia because the Russian Federation has unilaterally suspended all judicial cooperation with the United States in civil matters." (Opp. Br. at 13.) There is no authority for this proposition and nothing before the Court indicates that the Hague Convention is not the proper vehicle for service of the foreign defendants in this matter. Because the Hague Convention ensures that proper service upon foreign defendants will be effected in accordance with Rule 4(h)(2), and because Plaintiff failed to follow Rule 4(h)(2), the Court finds that Plaintiff has not properly served either Abbyy Software, Ltd. or Abbyy Production, LLC. The Court therefore dismisses the Moving Defendants under Rule 12(b)(5) for insufficient service of process. B. Motion to Dismiss for Lack of Personal Jurisdiction. 1. Legal Standard. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Moving Defendants also seek to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. The plaintiff bears the burden to establish personal jurisdiction. Menken v. Emm, 503 F.3d 1050, 1056 (9th Cir. 2007). Where the facts 3 1 2 3 4 5 6 7 8 9 10 are not directly controverted, a plaintiff's version of the facts is taken as true. AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996) ("AT&T"). Likewise, the Court must resolve "`conflicts between the facts contained in the parties' affidavits" in plaintiff's favor, "for purposes of deciding whether a prima facie case for personal jurisdiction exists.'" Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001) (quoting AT&T, 94 F.3d at 588). 2. Plaintiff Has Not Met Its Burden to Show the Court Has Jurisdiction. Plaintiff bears the burden of establishing a prima facie showing of general or specific jurisdiction over each and every defendant it has sued. See Calder v. Jones, 465 U.S. 783, 790 (1984). "Personal jurisdiction over an out-of-state defendant is appropriate if the relevant state's long arm-statute permits the assertion of jurisdiction without violating federal due process." Schwarzenegger v. Fred Martin Motor Company, 374 F.3d 797, 800-801 (9th Cir. 2004). Because California's long arm statute is co-extensive with federal due process requirements, the jurisdictional analyses under California law and federal due process are the same. Id. at 801.1 Due process precludes a court from asserting jurisdiction over a defendant unless the defendant has certain minimum contacts with the forum state. The overriding constitutional principle is that maintenance of an action in the forum must not offend "traditional conception[s] of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 320 (1945). The defendant's "conduct and connection with the forum State" must be such that the defendant "should reasonably anticipate being haled into court there." WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). "In judging minimum contacts, a court properly focuses on `the relationship among the defendant, the forum, and the litigation." Calder, 465 U.S. at 788 (quoting Shaffer v. Heitner, 433 U.S. 186, 204 (1977)). "A defendant whose contacts with a state are `substantial' or `continuous and systematic' can be haled into court in that state in any action, even if the action is unrelated to United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The same due process analysis governs under Federal Circuit law. See, e.g., 3D Systems, Inc. v. Aarotech Laboratories, Inc., 160 F.3d 1373, 1377-1380 (Fed. Cir. 1998). 1 4 1 2 3 4 5 6 7 8 9 10 those contacts." Bancroft & Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984)). This is a "fairly high" standard which "requires that the defendant's contacts be of the sort that approximate physical presence in the state." Id. Here, without submitting any evidence that the Moving Defendants independently have a presence in this jurisdiction, Nuance contends that the Court should impute the contacts of Abbyy USA to the Moving Defendants. However, there is no evidence before this Court upon which to determine that the separate defendant's corporate forms should be disregarded. See 3D Systems, 160 F.3d at 1380 (holding that the corporate form should not be lightly cast aside and finding lack of personal jurisdiction where defendant's only assertion was to pierce the corporate veil). The Court finds the record insufficient to establish general jurisdiction over the Moving Defendants. Specific jurisdiction over a defendant exists where: (1) the defendant has purposefully directed his or her activities at residents of the forum state or the forum state itself; (2) the plaintiff's claim arises out of or relates to those activities; and (3) the assertion of personal jurisdiction is reasonable and fair. Schwarzenegger, 374 F.3d at 802; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985). "The plaintiff bears the burden of satisfying the first two prongs of the test. If the plaintiff fails to satisfy either of these prongs, personal jurisdiction is not established in the forum state." Schwarzenegger, 374 F.3d at 802 (internal citation omitted). "On the other hand, if the plaintiff succeeds in satisfying both of the first two prongs, `the burden then shifts to the defendant to present a compelling case that the exercise of jurisdiction would not be reasonable." Menken, 503 F.3d at 1057 (quoting Schwarzenegger, 374 F.3d at 802, in turn quoting Burger King, 471 U.S. at 476-78) (internal quotations omitted). The Ninth Circuit has noted that the "purposeful availment" prong, "[d]espite its label ... includes both purposeful availment and purposeful direction. It may be satisfied by purposeful availment of the privilege of doing business in the forum; by purposeful direction of activities at the forum; or by some combination thereof." Yahoo! Inc. v. La Ligue Contre Le Racisme et L'Antisemitisme, 433 F.3d 1199, 1206 (9th Cir. 2006). United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 1 2 3 4 5 6 7 8 9 10 Here, because there is no showing that the Moving Defendants purposefully directed any specific activity at residents of California or within the forum state or that the plaintiffs' claim arises out of or relates to those activities, the Court need not reach the issue whether the assertion of personal jurisdiction is reasonable and fair. See Schwarzenegger, 374 F.3d at 802. Again, there is no controlling precedent or evidence sustaining the position that this Court should pierce the corporate veil between the United States defendant, Abbyy USA, and the foreign defendants. Based on the record, the Court finds that it cannot exercise personal jurisdiction over the Moving Defendants. Defendants Abbyy Software, Ltd. or Abbyy Production, LLC are dismissed as defendants. C. Motion for Protective Order. Having dismissed Moving Defendants both for failure properly to serve in a legally sufficient manner and for lack of personal jurisdiction, the Court finds the motion for a protective order moot. CONCLUSION For the reasons stated, the motion to dismiss for lack of service and lack of personal jurisdiction against Defendants Abbyy Software, Ltd. or Abbyy Production LLC is GRANTED. The motion for protective order is moot. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IT IS SO ORDERED. Dated: August 25, 2009 JEFFREY S. WHITE UNITED STATES DISTRICT JUDGE 6

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