Intellectual Ventures I LLC et al v. Sendai Nikon Corporation et al

Filing 39

MEMORANDUM OPINION. Signed by Judge Sue L. Robinson on 4/1/2013. (nmfn)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

INTELLECTUAL VENTURES I LLC,
and, INTELLECTUAL VENTURES II
LLC,
Plaintiffs,
v.
NIKON CORPORATION, SENDAI
NIKON CORPORATION, NIKON
AMERICAS INC., and NIKON INC.,
Defendants.

)
)
)
)
)
)
)
)
)
)
)
)
)

Civ. No. 11-1 025-SLR

Brian E. Farnan, Esquire of Farnan LLP, Wilmington, Delaware. Counsel for Plaintiffs.
Of Counsel: John M. Desmarais, Esquire, Alan S. Kellman, Esquire, and John C
Spaccarotella, Esquire, Jonas R. McDavit, Esquire, and Xiao Li, Esquire of Desmarais
LLP.
Steven J. Balick, Esquire, Tiffany Geyer Lydon, Esquire, and Andrew C. Mayo, Esquire
of Ashby & Geddes, Wilmington, Delaware. Counsel for Defendants. Of Counsel:
Jesse J. Jenner, Esquire, Laurence S. Rogers, Esquire, Stuart W. Yothers, Esquire,
Andrew T. Radsch, Esquire, and Hiroyuki Hagiwara, Esquire of Ropes & Gray LLP.

MEMORANDUM OPINION

Dated: April 1, 2013
Wilmington, Delaware

~~Judge
I. INTRODUCTION
On October 26, 2011, plaintiffs Intellectual Ventures I LLC and Intellectual
Ventures II LLC (collectively "plaintiffs") filed a complaint alleging patent infringement
against defendants Sendai Nikon Corporation ("Sendai"), Nikon Imaging Japan Inc.,
Nikon Americas Inc, and Nikon, Inc. (D.I. 1) Sendai and Nikon Imaging Japan, Inc.
filed a motion to dismiss the complaint for lack of personal jurisdiction or, in the
alternative, to dismiss plaintiffs' claims for induced and joint infringement. (D.I. 16)
Defendants Nikon Americas Inc. and Nikon, Inc. also moved to dismiss plaintiffs' claims
for induced and joint infringement. (D.I. 14) Plaintiffs filed an amended complaint
against defendants Sendai, Nikon Corporation, Nikon Americas Inc., and Nikon Inc.
(the three Nikon defendants are collectively "defendants"). (D. I. 23)
Pending before the court is Sendai's motion to dismiss for lack of personal
jurisdiction or, in the alternative, to dismiss plaintiffs' claims for induced and joint
infringement (D. I. 25) and defendants' motion to dismiss plaintiffs' claims for induced
and joint infringement (D.I. 28). The court has jurisdiction over this matter pursuant to
28 U.S.C. §§ 1331 and 1338(a). For the reasons that follow, Sendai's motion to
dismiss for lack of personal jurisdiction or, in the alternative, to dismiss plaintiffs' claims
for induced and joint infringement is granted as to personal jurisdiction, and defendants'
motion to dismiss plaintiffs' claims for induced and joint infringement is granted as to
joint infringement.

II. BACKGROUND
Plaintiffs are both Delaware limited liability companies, with their principal places

of business in ·Bellevue, Washington. (D.I. 23 at ,-r,-r 1-2) Sendai is a Japanese
corporation, with its principal place of business in Tokyo, Japan. (D.I. 23 at ,-r 4; D.l. 26
at 3) Nikon Corporation is also a Japanese corporation, with its principal place of
business in Tokyo, Japan. (D. I. 23 at ,-r 3) Nikon Americas Inc. is a Delaware
corporation and has its principal place of business in Melville, New York. (D.I. 1 at ,-r 5)
Nikon Inc. is a New York corporation and has its principal place of business in Melville,
New York. (D.I. 1 at ,-r 6)

Ill. STANDARD OF REVIEW
A. Personal Jurisdiction

Rule 12(b)(2) directs the court to dismiss a case when the court lacks personal
jurisdiction over the defendant. Fed. R. Civ. P. 12(b)(2). When reviewing a motion to
dismiss pursuant to Rule 12(b)(2), a court must accept as true all allegations of
jurisdictional fact made by the plaintiff and resolve all factual disputes in the plaintiff's
favor. Traynor v. Liu, 495 F. Supp. 2d 444, 448 (D. Del. 2007). Once a jurisdictional
defense has been raised, the plaintiff bears the burden of establishing, with reasonable
particularity, that sufficient minimum contacts have occurred between the defendant
and the forum to support jurisdiction. See Provident Nat'/ Bank v. Cal. Fed. Sav. &
Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987). To meet this burden, the plaintiff must

produce "sworn affidavits or other competent evidence," since a Rule 12(b)(2) motion
"requires resolution of factual issues outside the pleadings." Time Share Vacation Club
v. Atlantic Resorts, Ltd., 735 F.2d 61, 67 n.9 (3d Cir. 1984).

To establish personal jurisdiction, a plaintiff must produce facts sufficient to

2

satisfy two requirements by a preponderance of the evidence, one statutory and one
constitutional. See id. at 66; Reach & Assocs. v. Oencer, 269 F. Supp. 2d 497, 502 (D.
Del. 2003). With respect to the statutory requirement, the court must determine
whether there is a statutory basis for jurisdiction under the forum state's long-arm
statute. See Reach & Assocs., 269 F. Supp. 2d at 502. The constitutional basis
requires the court to determine whether the exercise of jurisdiction comports with the
defendant's right to due process. See id.; see a/so tnt'/ Shoe Co. v. Washington, 326
U.S. 310, 316 (1945).
Pursuant to the relevant portions of Delaware's long-arm statute, 10 Del. C. §
31 04( c)( 1)-( 4 ), a court may exercise personal jurisdiction over a defendant when the
defendant or its agent:
(1) Transacts any business or performs any character of
work or service in the State;
(2) Contracts to supply services or things in this State;
(3) Causes tortious injury in the State by an act or omission
in this State;
(4) Causes tortious injury in the State or outside of the State
by an act or omission outside the State if the person
regularly does or solicits business, engages in any other
persistent course of conduct in the State or derives
substantial revenue from services, or things used or
consumed in the State;
10 Del. C.§ 3104(c)(1)-(4) (emphasis added). With the exception of (c)(4), the
long-arm statute requires a showing of specific jurisdiction. See Shoemaker v.
McConnell, 556 F. Supp. 2d 351, 354, 355 (D. Del. 2008). Subsection (4) confers
general jurisdiction, which requires a greater number of contacts, but allows the
exercise of personal jurisdiction even when the claim is unrelated to the forum contacts.

3

See Applied Biosystems, Inc. v. Cruachem, Ltd., 772 F. Supp. 1458, 1466 (D. Del.
1991 ).
If defendant is found to be within the reach of the long-arm statute, the court
then must analyze whether the exercise of personal jurisdiction comports with due
process, to wit, whether plaintiff has demonstrated that defendant "purposefully
avail[ed] itself of the privilege of conducting activities within the forum State," so that it
should "reasonably anticipate being haled into court there." World-Wide Volkswagen
Corp. v. Woodson, 444 U.S. 286, 297 (1980) (citations omitted) (emphasis added). For
the court to exercise specific personal jurisdiction consistent with due process, plaintiffs
cause of action must have arisen from the defendant's activities in the forum State.
See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985). For the court to
exercise general personal jurisdiction consistent with due process, plaintiff's cause of
action can be unrelated to defendant's activities in the forum State, so long as
defendant has "continuous and systematic contacts with the forum state." Applied
Biosystems, Inc. v. Cruachem, Ltd., 772 F. Supp. 1458, 1470 (D. Del. 1991).
B. Induced and Joint Infringement
In reviewing a motion filed under Federal Rule of Civil Procedure 12(b)(6), the
court must accept all factual allegations in a complaint as true and take them in the light
most favorable to plaintiff. See Erickson v. Pardus, 551 U.S. 89, 94 (2007); Christopher
v. Harbury, 536 U.S. 403, 406 (2002). A court may consider the pleadings, public
record, orders, exhibits attached to the complaint, and documents incorporated into the
complaint by reference. Tellabs, Inc. v. Makar Issues & Rights, Ltd., 551 U.S. 308, 322

4

(2007); Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1384-85 n.2 (3d
Cir. 1994). A complaint must contain "a short and plain statement of the claim showing
that the pleader is entitled to relief, in order to give the defendant fair notice of what the
... claim is and the grounds upon which it rests." Bell At/. Corp. v. Twombly, 550 U.S.
544, 545 (2007) (internal quotation marks omitted) (interpreting Fed. R. Civ. P. 8(a)). A
complaint does not need detailed factual allegations; however, "a plaintiff's obligation to
provide the 'grounds' of his entitle[ment] to relief requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do."

/d. at 545 (alteration in original) (citation omitted). The "[f]actual allegations must be
enough to raise a right to relief above the speculative level on the assumption that all of
the complaint's allegations are true." /d. Furthermore, "[w]hen there are well-ple[d]
factual allegations, a court should assume their veracity and then determine whether
they plausibly give rise to an entitlement to relief." Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009). Such a determination is a context-specific task requiring the court "to draw on
its judicial experience and common sense." /d.
Under 35 U.S.C. § 271 (b), "[w]hoever actively induces infringement of a patent
shall be liable as an infringer." To demonstrate inducement of infringement, the
patentee must establish, first, that there has been direct infringement and, second, that
the alleged infringer had "knowledge that the induced acts constitute patent
infringement." Global-Tech Appliances, Inc. v. SEB S.A.,- U.S.-, 131 S. Ct.
2060, 2068 (2011 ). "Inducement requires evidence of culpable conduct, directed to
encouraging another's infringement, not merely that the inducer had knowledge of the

5

direct infringer's activities." DSU Medical Corp. v. JMS Co., Ltd., 471 F.3d 1293, 1306
(Fed. Cir. 2006) (en bane in relevant part).
In circumstances where one party performs some of the steps of a patent claim,
and another entity performs other of the claimed steps, a theory of joint infringement
may establish liability. Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1329 (Fed.
Cir. 2008); Leader Techs., Inc. v. Facebook, Inc., 770 F. Supp. 2d 686, 695-96 (D. Del.
2011 ). Joint infringement will only lie, however, "if one party exercises 'control or
direction' over the entire process such that every step is attributable to the controlling
party, i.e., the 'mastermind."' Muniauction, 532 F.3d at 1329 (citing BMC Res. Inc. v.
Paymentech, L.P., 498 F.3d 1373, 1380-81 (Fed. Cir. 2007)). This "control or direction"
standard is "satisfied in situations where the law would traditionally hold the accused
direct infringer vicariously liable for the acts committed by another party that are
required lo complete performance of a claimed method." /d. at 1330 (citation omitted).
If such evidence is lacking, the court will not "unilaterally restructure the claim or the
standards for joint infringement to remedy [ ] ill-conceived claims" requiring multiple
parties to perform different acts within one claim. BMC Res., 498 F.3d at 1381 (citation
omitted).

IV. ANALYSIS
A. Personal Jurisdiction
Plaintiffs advance several theories in support of asserting personal jurisdiction
over Sendai, based on the following facts. 1 Sendai is a wholly owned subsidiary of
1

The parties do not dispute that Sendai itself conducts no business in Delaware,
and has no presence - in terms of employees, officers, facilities, documents, funds, or

6

defendant Nikon Corporation; all of the Nikon defendants are "Nikon Group Companies"
within "the Imaging Company" (alternative nomenclature for Nikon Corporation). (D. I.
35,ex. H)
Sendai manufactures DSLR cameras and sells them to Nikon Corporation in
Japan. These cameras are then sold throughout the United States, including Delaware.
(D.I. 34 at 2) The cameras offer menus in 20 languages (including English) and world
time zones (including United States time zones). (D. I. 34 at 3-4; D.l. 35, ex. E; D. I. 36
at 8)
Defendants Nikon Corporation and Nikon Inc. maintain websites in English
targeting the United States. Nikon Corporation's websites provide information on key
features and specifications, product brochures, and user's manuals for Nikon cameras,
which allow English configurations and contact information for technical support, service
and repair. (D. I. 35, exs. A-E) Nikon Inc.'s websites also provide information about the
Nikon Store and a list of authorized dealers in the United States, including Delaware.
(D.I. 35, exs. F, G)
Nikon Corporation holds a leading market share of DSLR camera sales. (D. I. 34
at 2; D. I. 35, ex. H) According to plaintiffs, "it is reasonable to conclude that Sendai
derives substantial revenue form the sale of its infringing products in Delaware. (D. I. 34
at 5)

Plaintiffs first argue that general jurisdiction is satisfied based on Sendai's

agency relationship with Nikon Corporation and/or Nikon Inc., and because Sendai
Corporation derives substantial revenue from the sale of infringing products within

any other personal or real property- in Delaware. (See D.l. 27,

7

,-r 6)

Delaware. "Agency theory" is one of two theories under which a defendant company
may be subject to personal jurisdiction in Delaware by virtue of the court's personal
jurisdiction over the defendant company's affiliate. 2 See C.R. Bard, Inc. v. Guidant
Corp., 997 F. Supp. 556, 559 (D. Del. 1998). "Under the agency theory, the court may

attribute the actions of a subsidiary company to its parent where the subsidiary acts on
the parent's behalf or at the parent's direction." /d. at 560; see a/so Applied
Biosystems, Inc. v. Cruachem, Ltd., 772 F. Supp. 1458, 1464 (D. Del. 1991) (under the
agency theory, "only the precise conduct shown to be instigated by the parent is
attributed to the parent"); Cephalon, Inc. v. Watson Pharms., Inc., 629 F. Supp. 2d 338,
347-48 (D. Del. 2009) (attributing the sales activities of a Delaware subsidiary to its
parent company for purposes of establishing personal jurisdiction over the parent
company, as the parent directed the subsidiary's sales activities). The agency theory
may be applied not only to parents and subsidiaries, but also to companies that are
"two arms of the same business group," operate in concert with each other, and enter
into agreements with each other that are nearer than arm's length. See Cephalon, Inc.,
629 F. Supp. 2d at 348; Wes/ey-Jessen Corp. v. Pilkington Visioncare, Inc., 863 F.
Supp. 186, 188-89 (D. Del. 1993).
The record at bar does not indicate that Sendai is the principal in an agency
relationship with any of the other defendants but, rather, indicates the contrary. Sendai
is a subsidiary of Nikon Corporation and manufactures cameras at the direction of (and
sells the cameras to) its parent, Nikon Corporation, in Japan. (D. I. 27

2

at~~

5, 7-9)

Piaintiffs do not advance the second theory, that is, the "alter ego theory."

8

Moreover, there is no indication of record that Sendai has any direct business dealings
with either Nikon Inc. or Nikon Americas Inc. (D. I. 27, 1J12) Because Sendai's conduct
is directed by its parent and is limited to activities in Japan, plaintiffs have not asserted
sufficient contacts to establish personal jurisdiction over Sendai under the agency
theory.
Plaintiffs also assert jurisdiction under a "dual jurisdiction theory for stream-ofcommerce activities in which subsections (1) and (4) of Delaware's long-arm statute are
partially satisfied." (D.I. 34 at 6) Dual jurisdiction may be established "when a
manufacturer has sufficient general contacts with Delaware and the plaintiffs' claims
arise out of those contacts." Belden Technologies, Inc. v. L.S. Corp., 829 F. Supp. 2d
260, 267 (D. Del. 201 0) (citing Boone v. Oy Partek Ab, 724 A.2d 1150, 1158 (Del.
Super. 1997)). The dual jurisdiction analysis requires a showing of both: (1) an intent
to serve the Delaware market; and (2) that this intent results in the introduction of the
product into the market and that plaintiffs' cause of action arises from injuries caused by
that product. See Power Integrations, Inc. v. BCD Semiconductor Corp., 547 F. Supp.
2d 365, 371 (D. Del. 2008).
In this regard, plaintiffs argue that Sendai satisfies both prongs of Delaware's
dual jurisdiction theory, based on its contention that: (1) Sendai manufactures the
accused cameras with the intent to serve the United States market, including Delaware,
as evidenced by the camera's "United States-specific configurations;" and (2) the
accused cameras are actually sold in Delaware and Sendai derives substantial
revenues from those sales." (D. I. 34 at 7)
The court acknowledges that the accused cameras are available for sale in
9

Delaware. (See D.l. 35, ex. G) There is no indication in the record, however, that
Sendai has the requisite intent to sell the products it manufactures to Delaware. Its
manufacturing operations are directed by its parent, Nikon Corporation, in Japan. It
sells its finished products exclusively to its parent, Nikon Corporation, in Japan. The
website it maintains is in Japanese and products cannot be purchased through it. (D.I.
27 at 1f 10) The cameras themselves offer menus in some 20 languages and world
time zones. (D. I. 35, ex. E) The court has not heretofore exerted dual jurisdiction over
a foreign subsidiary based on such attenuated facts, and declines to do so in this case.
Because plaintiffs have not established personal jurisdiction over Sendai under
Delaware's long-arm statute, the court need not address whether the exertion of such
jurisdiction satisfies the Due Process Clause.
The court also declines to permit jurisdictional discovery. Such discovery is
appropriate only if a plaintiff "presents factual allegations that suggest 'with reasonable
particularity' the possible existence of the requisite 'contacts between [the party] and
the forum state."' Toys "R" Us, Inc. v. Step Two, S.A. 318 F.3d 446, 456 (3d Cir. 2003).
As Sendai is a Japanese corporation doing business solely in Japan with its parent,
Nikon Corporation, plaintiffs have not proffered sufficient allegations to justify further
discovery. Sendai's motion to dismiss for lack of personal jurisdiction is granted.
B. Induced and Joint Infringement

Plaintiffs allege in their amended complaint that defendants knew of the patentsin-suie and indirectly infringed them (and continue to do so) by "contracting with others

3

The patents-in-suit are United States Patent Nos. 6,121 ,960 ("the '960 patent");
6,181,836; 6,221,686; 6,979,587; and 7,733,368. Defendants Nikon Americas Inc, and
10

to market and sell infringing products with the knowledge and intent to facilitate
infringing sales of the products by others within this District and by creating and/or
disseminating instructions and other materials for the products with like mind and
intent." (D.I. 23

at~

9) Specifically for each patent-in-suit, defendants "either alone or

in conjunction with others, ha[ve] infringed and/or knowingly and intentionally induced
others including its customers to infringe ... by making, using, offering to sell, selling
and/or importing in or into the United States .... " (D.I. 23 at

m29, 33, 37, 41, 45)

Moreover, defendants "possessed, and continue[] to possess, the specific intent to
encourage others, including its customers, to infringe the [patents-in-suit]." (D. I. 23 at
~~

30, 34, 38, 42, 46) For each patent-in-suit, plaintiffs describe the infringing products

and include a specific example. 4
Consistent with the court's analysis in Walker Digital LLC v. Face book, Inc.,
plaintiffs' claims of induced infringement are facially plausible and provide defendants
with adequate notice. 852 F. Supp. 2d 559, 565-566 (D. Del. 2012). Here, plaintiffs
have sufficiently identified, for purposes of Rule 8, that defendants' customers directly
infringe, that defendants encourage the infringement through their marketing and
selling, and that defendants had the requisite knowledge. /d.
With respect to joint infringement, plaintiffs argue that the amended complaint

Nikon, Inc have had knowledge of the patents-in-suit since the filing of the original
complaint in this lawsuit. Defendant Nikon Corporation has had knowledge of the
patents-in-suit since the filing of the amended complaint.
4

For example, plaintiffs allege infringement of the '960 patent 6,121,960 by
"digital imaging products (including but not limited to Nikon's Cool pix S41 00 and S61 00
cameras) .... " (D. I. 23 at~ 29)
11

"alleges sufficient facts to allow ... a reasonable inference that the Nikon entities act
alone and together to infringe." (D.I. 32 at 2) Plaintiffs specified the relationship
between Nikon Corporation and Sendai, as parent and wholly owned subsidiary, with
one controlling the other. (D.I. 23 at ,-r,-r 4, 9; D.l. 32 at 9) Plaintiffs further alleged that
Nikon Corporation maintains a website, which offers product information and user
manuals, as well as contact information for service and technical support; therefore, an
inference that at least defendant Nikon Corporation acts as a mastermind over the
other defendants and/or its customers is reasonable. (D. I. 23 at ,-r,-r 6, 9; D.l. 32 at 8-9)
For each patent-in-suit, defendants "either alone or in conjunction with others" infringed
and/or encouraged its customers to infringe. (D. I. 23 at ,-r,-r 29, 33, 37, 41, 45; D.l. 32 at
9)
As the court has found that it lacks personal jurisdiction over Sendai, plaintiffs
allegations that defendant Nikon Corporation, as a parent company, controls the
distribution of the accused products manufactured by Sendai may not be used for a
showing of joint infringement. Plaintiffs have not alleged any relationship between the
remaining defendants that could plausibly lead to a showing that Nikon Corporation
exercises control or direction over its co-defendants. 5 See Eon Corp. IP Holdings LLC
v. Flo TV Inc., 802 F. Supp. 2d 527, 534-535 (D. Del. 2011). Moreover, there are no

proffered facts showing how each defendant would perform some of the steps of the

5

Maintenance of an informational website does not pass muster for the required
showing of control or direction. While the defendants' names all have "Nikon" in
common, this is also not sufficient for a showing of "control or direction" or that one
defendant could be held vicariously responsible for the acts of the other. See
Muniauction, 532 F.3d at 1329-30.
12

patent claims. /d. Consequently, plaintiffs' complaint does not sufficiently identify a
claim for joint infringement. 6

V. CONCLUSION
For the reasons discussed above, Sendai's motion to dismiss for lack of
personal jurisdiction or, in the alternative, to dismiss plaintiffs' claims for induced and
joint infringement is granted as to personal jurisdiction and defendants' motion to
dismiss plaintiffs' claims for induced and joint infringement is granted as to joint
infringement and denied as to induced infringement.
An appropriate order shall issue.

6

The court concludes that discovery is not warranted on this issue.

13