Snap-on Incorporated

Filing 231

MEMORANDUM OPINION signed by the Honorable Charles P. Kocoras on 5/24/2013.Mailed notice(sct, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SNAP-ON INCORPORATED,
Plaintiff,
v.
ROBERT BOSCH, LLC, ROBERT BOSCH,
GmbH, and BEISSBARTH GmbH,
Defendants.

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09 C 6914

MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:
Now before the Court is Defendant Robert Bosch, GmbH’s (“Bosch GmbH”)
motion to dismiss under Federal Rule of Civil Procedure 12(b)(2) and Plaintiff SnapOn Incorporated’s (“Snap-On”) motion to strike pursuant to Rule 12(f). For the
following reasons, Snap-On’s motion is denied, and Bosch GmbH’s motion is denied.
BACKGROUND1
Snap-On is incorporated under the laws of Delaware with its principal place of
business in Kenosha, Wisconsin. On November 3, 2009, Snap-On filed a complaint
against Robert Bosch, LLC (“Bosch USA”), alleging that Bosch USA infringed on
several of its patents relating to a wheel alignment system used to repair automobiles.

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The Court accepts the uncontested allegations from Snap-On’s first amended complaint as true
and resolves any factual conflicts in Snap-On’s favor. Elec. For Imaging, Inc. v. Coyle, 340 F.3d
1344, 1350 (Fed. Cir. 2003).

On August 18, 2011, Snap-On filed an amended complaint, which added Bosch
GmbH and Beissbarth GmbH (“Beissbarth”) as defendants.

Bosch GmbH and

Beissbarth are corporations organized under the laws of Germany. Beissbarth and
Bosch USA are subsidiaries of Bosch GmbH. The presidents of both subsidiaries
hold high-level management positions at Bosch GmbH. Beissbarth and Bosch GmbH
each distribute their products for sale in North America through Bosch USA.
According to Bosch GmbH’s 2010 Annual Report, Bosch GmbH “is a leading
global supplier of technology and services.” It is comprised of Bosch GmbH and 350
subsidiaries and regional companies, including Beissbarth and Bosch USA. Bosch
GmbH’s subsidiaries are organized into “sectors and divisions.” The “Automotive
Aftermarket” (“AA”) division is run by Bosch GmbH employee Robert Hanser
(“Hanser”). Within AA is the “Business Units” sub-division, run by Bosch GmbH’s
employee Marco Faulenbach (“Faulenbach”).
In October of 2007, Hanser issued a memorandum entitled “Strategy for the
Success and Growth of the Bosch Automotive Aftermarket division.” In the memo,
Hanser expounds the belief that “the greatest opportunities in our market lie in the
field of diagnostics.”

In attempting to reach its goal of “developing Bosch

Diagnostics as a global player and [t]o become the global market leader,” Hanser
announced a “significant step forward” in achieving that goal by Bosch GmbH’s April
2007 acquisition of Beissbarth, whose “key focus is on chassis and axle alignment as
well as brake test stands and test lines.”
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According to Hanser, Beissbarth’s

acquisition meant “significant expansion for our product range in the area on noncontact, optical axle alignment technology.”
Bosch GmbH’s 2007 Annual Report recognized the United States as the
company’s “most important markets outside Germany.” The report identified Bosch
GmbH’s acquisition of Beissbarth as an example of its expansion of its services
business. The Annual Report also recognized Bosch GmbH’s recent acquisition of
two other foreign brake and wheel alignment companies.
In a March 13, 2008 press release, Bosch GmbH announced the acquisition of
the Ashland, Virginia-based company Accu Industries Inc. (“Accu Industries”). A
quote attributed to Hans-Peter Meyen (“Meyen”), a member of the AA’s executive
management, states that “we want to improve the distribution and service offered by
our Bosch Diagnostics business unit in North America.

In this market, Accu

Industries is well established in the aftersales segment, and is therefore a logical
extension to the business we already have in the U.S.”
On November 28, 2008, Bosch GmbH supervisor Faulenbach gave a
presentation titled “Product Launch: NAFTA Easy 3D Wheel Aligner.”

The

presentation advertised the Easy 3D wheel aligner as a “joint engineering effort
combining the best out of Bosch [GmbH] and Beissbarth engineering technology.”
On December 2, 2008, Bosch USA employee James Frazer sent an email to other
Bosch USA employees relating to the topics which were discussed at the Bosch
GmbH meeting. The email instructed the Bosch USA recipients to “provide detailed
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launch plans” for the Easy 3D wheel aligner that was the subject of the Bosch GmbH
presentation four days prior. On December 14, 2008, Bosch GmbH employee Klaus
Michael-Koch sent an email to several Bosch USA employees instructing them to
attend a workshop on wheel aligners and brake testers to determine international
needs which was to take place at Beissbarth’s facility in Munich, Germany, on
January 30, 2009.
On February 5, 2009 a meeting was held at Bosch USA’s Broadview, Illinois
office.

Among those at the meeting included Faulenbach and Bosch GmbH’s

corporate controller Ulrich Thiele (“Thiele”). The meeting minutes reflect that a
discussion took place regarding the Easy 3D wheel aligner, and that Faulenbach gave
a presentation on the technical and financial goals concerning the introduction of the
wheel aligner into the U.S. market.
On March 11, 2009, Faulenbach and Thiele attended another meeting at Bosch
USA’s Illinois office. Minutes of the meeting show that transfer and market prices of
the wheel aligners were one of the topics discussed. Later internal correspondence
indicates that Faulenbach and three other Bosch GmbH employees set the final
transfer price structure. In response to an interrogatory, Bosch GmbH acknowledged
that it provided technical assistance with respect to the allegedly infringing wheel
aligner, but that such assistance was provided in Germany, and that the support ended
prior to the launch of the wheel aligner in the United States market.

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In May 2009, Bosch USA’s Frazer sent an email to another Bosch USA
employee, David Scribner (“Scribner”) with the subject line “Re: Easy 3D Project
Status.” The email contained a request from Faulenbach that Scribner (1) reformat
“open items,” (2) organize a teleconference with Beissbarth “to discuss and gain
agreement, assign responsibilities and due dates,” and (3) “provide the final agreed
OPL to [Faulenbach] by end of next week (6/5) together with a clear overview of the
launch plan.” A meeting was planned for July 30, 2009 where the Easy 3D wheel
alignment system was on the agenda.
On July 14, 2009, Bosch GmbH’s Vice President of Sales Gurcan Karakas
(“Karakas”) emailed Bosch USA employee James Graninger (“Graninger”) and asked
if Graninger had already presented the Easy 3D wheel aligner to Firestone, a potential
customer for the wheel aligner. Graninger responded that the Easy 3D wheel system
was still being evaluated in Ashland, Virginia, and that there were still software issues
that needed to be resolved with Beissbarth. Karakas replied to Graninger and also
sent the email to Faulenbach and Meyen, saying that Graninger’s assessment “was not
satisfactory at all,” and to “Pls clarify the situation rgd Easy 3D in NA during
[Faulenbach’s] visit.” Karakas requested that the Bosch USA team members brief
Faulenbach on the status of the Easy 3D system when he arrived in Illinois in the
coming days.
A subsequent July 15, 2009 email indicates that Bosch USA employees were
“on line” with three Beissbarth employees “conducting live tests” on the Easy 3D
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aligner. Upon the conclusion of the testing session it was agreed that one of the
Beissbarth employees would travel with a development engineer to Virginia to
continue the testing.
On July 16, 2009, Faulenbach attended a meeting at Bosch USA’s Illinois
office. Thiele and Graninger were also present. The meeting minutes show that
“engineering status” was discussed. Graninger emailed Karakas after the meeting and
confirmed that he presented the Easy 3D system status update and that Beissbarth
engineers were being sent to Virginia “to work side by side with our USA team to
urgently resolve these issues.”
On July 15, 2009, Frazer emailed a Bosch USA employee indicating that he
was scheduled to meet with Hanser “this Friday,” and requested a “summary of the
open tech issues” on the infringing aligner in preparation for a meeting that was to
take place the following month.

A three-day meeting occurred from August 5-7,

2009 in Virginia which Faulenbach attended. The minutes indicate that there was a
live demonstration of the Easy 3D wheel aligner as well as a discussion of the sales
and marketing of the product. In November 2009 the Easy 3D Wheel Alignment
system was launched.
On August 18, 2011, Snap-On filed an amended complaint adding Bosch
GmbH and Beissbarth GmbH (“ Beissbarth”) as defendants. On January 16, 2012,
Bosch GmbH filed a motion to dismiss for lack of personal jurisdiction pursuant to
Federal Rule of Civil Procedure 12(b)(2). The Court allowed limited jurisdiction
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discovery which closed in December 2012. The parties have completed briefing, and
the issues are ripe for decision.
LEGAL STANDARD
When a defendant challenges the court's exercise of personal jurisdiction, the
plaintiff bears the burden of demonstrating that personal jurisdiction exists. Merial
Ltd. v. Cipla Ltd, 681 F.3d 1283, 1294 (Fed. Cir. 2012).

When jurisdictional

discovery has been exchanged by the parties, without the occurrence of an evidentiary
hearing, the plaintiff must make a prima facie showing that the defendants are subject
to personal jurisdiction. Electronics, 340 F.3d at 1349; AFTG-TG, LLC v. Nuvoton
Technology Corp., 689 F.3d 1358, 1360 (Fed. Cir. 2012) (when a district court relies
on written submissions from the parties without holding an evidentiary hearing, the
plaintiffs are required to allege a prima facie showing of personal jurisdiction).
DISCUSSION
I. Snap-On’s Motion to Strike
As a preliminary matter, Snap-On moves pursuant to Rule 12(f) to strike three
affidavits which Bosch GmbH attached to its reply brief in support of its motion to
dismiss. In pertinent part, Rule 12(f) permits a district court, on motion of a party, to
“order stricken from any pleading any insufficient defense or any redundant . . .
matter.”

Snap-On asserts that the affidavits were produced after the close of

jurisdictional discovery, and their inclusion prejudices their position because they
cannot refute the assertions contained therein. Because motions to strike can be used
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as delay tactics, they are generally not a favored part of motion practice. United States
v. 416.81 Acres of Land, 514 F.2d 627, 631 (7th Cir. 1975).
Bosch GmbH filed their reply brief in support of its motion to dismiss and
attached the declarations of: (1) Harald Neumann, an employee at Bosch GmbH;
(2) James Frazer, an employee at Bosch USA; and (3) Marco Kempin, an employee of
Beissbarth GmbH. Bosch GmbH contends that the declarations are proper and merely
respond to matters which Snap-On brought into issue. Bosch GmbH has supplied the
three declarations to contest the assertions supplied by Snap-On in opposing Bosch
GmbH’s motion to dismiss. The three declarations merely refute all of Snap-On’s
assertions, which were gleamed from the substantial discovery exchanged by the
parties. The Court determines that Bosch GmbH’s declarations “merely respond[] to
matters placed in issue by the opposition brief” and have been appropriately offered.
See Beck v. Univ. of Wisc. Bd. of Regents, 75 F.3d 1130, 1134 (7th Cir. 1996).
Although Bosch GmbH properly included the declarations, the Court is mindful
of its duty to weigh the credibility of the evidence presented by the parties. The Court
will consider the inability of Snap-On to contest the assertions made by the declarants.
The Court denies Snap-On’s motion to strike.
II. Bosch GmbH’s Motion to Dismiss
Snap-On relies on Rule 4(k)(2) to support their contention that Bosch GmbH
has established minimal contacts in the United States to be subjected to personal
jurisdiction in this forum. Bosch GmbH does not specifically address Rule 4(k)(2) but
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broadly contends that it has not purposefully directed their activities to the United
States to make them subject to the Court’s jurisdiction.
Rule 4(k)(2) was adopted to provide a forum for federal claims in situations
where a foreign defendant lacks substantial contacts with any single state but has
sufficient contacts with the United States as a whole to satisfy due process standards
and justify the application of federal law. Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind.
Com de Equip. Medico, 563 F.3d 1285, 1295-96 (Fed. Cir. 2009) (citing advisory
committee notes to the 1993 amendment establishing Rule 4(k)(2)). Rule 4(k)(2)
establishes jurisdiction over a defendant when process has been served and three
requirements are met: (1) the plaintiff's claim arises under federal law; (2) the
defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and
(3) the exercise of jurisdiction comports with due process. Touchcom, Inc. v. Bereskin
& Parr, 574 F.3d 1403, 1416 (Fed. Cir. 2009). The first two requirements of Rule
4(k)(2) are uncontested and are easily resolved. Snap-On has brought suit against
Bosch GmbH for patent infringement under the Patent Laws of the United States.
Pursuant to 28 U.S.C. § 1338(a), a federal district court has “original jurisdiction of
any civil action arising under any Act of Congress relating to patents, plant variety
protection, copyrights and trademarks. . . .” 28 U.S.C. § 1338(a). See also Kroll v.
Finnerty, 242 F.3d 1359, 1363 (Fed. Cir. 2001); Christianson v. Colt Indus. Operating
Corp., 486 U.S. 800, 809 (1988) (stating that U.S. district courts possess subject
matter jurisdiction over civil actions that arise under any Act of Congress relating to
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patents). Furthermore, Bosch GmbH does not assert that jurisdiction in another state
would be proper. See Touchcom, 574 F.3d at 1415.
The parties contest whether it is constitutional to exert personal jurisdiction
over Bosch GmbH. Whether a court has personal jurisdiction over a defendant in a
patent case is determined according to the law of the Federal Circuit rather than of the
regional circuit in which the case arose because jurisdictional questions are
“‘intimately involved with the substance of the patent laws.’ ” Avocent Huntsville
Corp. v. Aten Int’l Co., 552 F.3d 1324, 1328 (Fed. Cir. 2008) (quoting Akro Corp. v.
Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995)).
Courts may exercise personal jurisdiction over defendants on either of two
bases: general or specific jurisdiction. Touchcom, 574 F.3d at 1410. Snap-On does
not allege general jurisdiction in the present case. Under general jurisdiction, the
exercise of jurisdiction is proper where the defendant has continuous and systematic
contacts with the forum state, even if those contacts are not related to the cause of
action. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984).
Snap-On solely seeks to establish that the Court has specific jurisdiction over Bosch
GmbH.
1. Specific Personal Jurisdiction
In evaluating Bosch GmbH’s contacts, it is significant to note that Rule 4(k)(2)
serves as a federal long-arm statute, which allows a district court to exercise personal
jurisdiction over a foreign defendant whose contacts with the United States, but not
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with the forum state, satisfy due process. Synthes, 563 F.3d at 1296. Rule 4(k)(2)
allows the plaintiff to aggregate a defendant’s contacts with the entire nation as
opposed to an individual forum state. See id.
Specific personal jurisdiction arises out of or relates to the cause of action even
if those contacts are isolated and sporadic. LSI Industires Inc., v. Huddelll Lighting,
Inc., 232 F.3d 1369, 1375 (Fed. Cir. 2000). To satisfy due process, a party must have
minimum contacts with the forum “such that the maintenance of the suit does not
offend traditional notions of fair play and substantial justice.” International Shoe Co.
v. Washington, 326 U.S. 310, 316 (1945); Commisariat A L'Energie Atomique v. Chi
Mei Optoelectronics Corp., 395 F.3d 1315, 1320 (Fed. Cir. 2005). A court may not
exercise personal jurisdiction on the basis of random, fortuitous or attenuated
contacts, or due to the “unilateral activity of another party or a third person.”
Helicopteros, 466 U.S. at 417.

The Federal Circuit applies a three-part test to

determine if personal jurisdiction over a foreign defendant comports with due process:
(1) whether the defendant purposefully directed its activities at residents of the forum;
(2) whether the claim arises out of or relates to the defendant’s activities with the
forum; and (3) whether the assertion of personal jurisdiction is reasonable and fair.
AFTG-TG, LLC, 689 F.3d at 1363.
a. Conduct Purposefully Directed to the United States
Bosch GmbH asserts that Snap-On has failed to establish that Bosch GmbH
purposefully directed their corporation’s activities to the United States. However, the
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evidence indicates that Bosch GmbH made a concerted effort to purposefully focus
their energies and resources in the United States. The record suggests that Bosch
GmbH was not a passive corporate overseer of its subsidiaries, but an involved
participant in the development, marketing and ultimately the sale of the Easy 3D
wheel alignment system to the United States.
Bosch GmbH implores the Court to relegate our consideration to Bosch
GmbH’s individual efforts, to the exclusion of Bosch GmbH’s interactions and
oversight of Bosch USA and Beissbarth. Bosch GmbH offers the declaration of
Harold Neumann who blankly states that Bosch GmbH does not control or direct the
acquisition requirements of Beissbarth or Bosch USA. The evidence highlighted by
Snap-On indicates that Bosch GmbH played a considerable role in directing their
subsidiaries and dictating the parameters of the Easy 3D wheel alignment system.
Beginning in 2007 Bosch GmbH engaged in a series of targeted corporate acquisitions
aimed at increasing the company’s global footprint with respect to the field of
automotive diagnostics. Bosch GmbH’s expansion allowed the company to focus its
subsidiaries’ efforts on the development of cutting edge technology, specifically the
Easy 3D wheel alignment system. In corporate literature Bosch GmbH highlighted its
position that they viewed the United States as the most important market outside of
Germany. To facilitate the company’s focus on the United States, Bosch GmbH
acquired Accu Industries, a Virginia based automotive distribution and service
company, to expand the reach of Bosch Diagnostic in North America. In the years
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building up to the launch of the Easy 3D wheel aligner, Bosch GmbH acquired
Beissbarth and Accu Industries, companies that could respectively manufacture and
distribute a wheel alignment system to the United States.
The priority and importance of the Easy 3D wheel alignment system to Bosch
GmbH is evidenced in the multiple meetings attended by Bosch GmbH’s corporate
executives in the United States.

On three occasions Bosch GmbH’s corporate

executive attended meetings at Bosch USA’s corporate headquarters in Broadview,
Illinois. During those meetings the Easy 3D wheel alignment system was a prominent
topic of discussion. A presentation on the Easy 3D alignment system was given by
Bosch GmbH executives, and developmental issues related to the refinement and sales
of the Easy 3D were discussed. The dual efforts of Bosch GmbH and Bosch USA
indicate that both companies were working together to develop the Easy 3D wheel
alignment system for its entry into the U.S. market.
In addition to the numerous meetings attended in Illinois, Bosch GmbH
corporate executives visited the Bosch USA facilities in Ashland, Virginia on several
occasions. The meetings and consultations in Virginia between the Bosch GmbH
representatives and Bosch USA employees involved the progress of the Easy 3D
wheel alignment system at various stages of development. Technical issues were
resolved with the oversight of Bosch GmbH, testing was conducted, and finally sales
and marketing of the wheel alignment system took place in Virginia. Bosch GmbH

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purposefully traveled to Illinois and Virginia to oversee the development of the Easy
3D wheel alignment system.
The consistent oversight and involvement of Bosch GmbH corporate
executives indicates that Bosch GmbH and its subsidiaries Bosch USA and Beissbarth
were collectively working to achieve the success of the Easy 3D wheel alignment
system in the United States. The deliberate and orchestrated actions of Bosch GmbH
in the United States are sufficient to establish that they purposefully directed their
activities to the residents of the United States.
The Court declines Snap-On’s invitation to determine if they made a prima
facie showing that Bosch GmbH’s activities in the United States constituted patent
infringement. Personal jurisdiction, not liability for patent infringement, is at issue at
this juncture. See Genetic Implant Systems, Inc. v. Core-Vent Corp., 123 F.3d 1455,
1458 (Fed. Cir. 1997). The only question before the Court is whether exercising
jurisdiction over Bosch GmbH comports with due process. See Synthes, 563 F.3d at
1298. Therefore, the Court expresses no opinion concerning Snap-On’s showing of
inducement of infringing conduct or direct infringement on the part of Bosch GmbH.
See id.
b. Claims arise out of Bosch GmbH’s activities in the United States
The second factor in the due process analysis requires the Court to determine if
Snap-On’s claims have arisen out of Bosch GmbH’s conduct in the United States.
Neither party contests this issue, and the Court finds that Bosch GmbH’s contacts
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arise out of the activities within the United States that form the basis for the litigation
in this case.
c. Exercising Jurisdiction would be Reasonable and Fair
Bosch GmbH argues that their limited involvement with the Easy 3D wheel
alignment system is insufficient to give them fair warning that they could be subject to
the jurisdiction of this forum.

In determining whether exercising jurisdiction

comports with “fair play and substantial justice, the Court considers five factors:
“(1) the burden on the defendant, (2) the forum’s interest in adjudicating the dispute,
(3) the plaintiff’s interest in obtaining convenient and effective relief, (4) the interstate
judicial system’s interest in obtaining the most efficient resolution of controversies,
and (5) the shared interest of the states in furthering fundamental substantive
policies.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985).
Bosch GmbH will face a burden in subjecting themselves to a foreign nation’s
judicial system and travelling from Germany.

However, the “progress in

communications and transportation has made the defense of a lawsuit in a foreign
tribunal less burdensome.” Synthes, 563 F.3d at 1299 (quoting World Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 294 (1980). In the past five years,
Bosch GmbH representatives have traveled to the United States on at least five
occasions. In light of the frequency that Bosch GmbH’s representatives traveled to
the U.S. the Court deems Bosch GmbH’s travel requirements as not unduly
burdensome.
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Additionally the burden of travel which must be borne by Bosch GmbH is
outweighed by the interest of the United States in adjudicating Snap-On’s dispute and
obtaining convenient relief of their claims, as contemplated by the second and third
considerations of the due process analysis. See Synthes, 563 F.3d at 1299. The United
States has a strong interest in enforcing its federal patent laws. Id. The United States
also has an interest in discouraging injuries that occur within its boundaries, including
injuries resulting from patent infringement. Beverly Hills Fan Co. v. Royal Sovereign
Corp., 21 F.3d 1558, 1568 (Fed. Cir. 1994). Although Snap-On could have sued
Bosch GmbH in Germany, a suit brought there involving Bosch GmbH in conjunction
with Bosch USA would be unduly cumbersome. Germany does not have a substantial
interest in resolving Snap-On’s expansive U.S. patent infringement claims.

The

United States has a strong interest in resolving patent infringement claims involving
U.S. patents brought by a U.S. based company. Bosch GmbH has availed themselves
of the laws of the United States and it would not offend traditional notions of fair play
and substantial justice to require Bosch GmbH to defend this action. The Court
concludes that Snap-On has established that this Court may exercise personal
jurisdiction over Bosch GmbH.

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CONCLUSION
For the foregoing reasons, Snap-On’s motion to strike Bosch GmbH’s
declarations is denied.

Bosch GmbH’s motion to dismiss for lack of personal

jurisdiction is denied.

_____________________________________
Charles P. Kocoras
United States District Judge
Dated: May 24, 2013 .

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