Computerized Screening, Inc. v. Healthsport, Inc.

Filing 24

ORDER Denying 11 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Richard F. Boulware, II on 7/28/15. (Copies have been distributed pursuant to the NEF - PS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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***

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COMPUTERIZED SCREENING, INC.,

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Plaintiff,

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v.

Case No. 2:14-cv-00573-RFB-NJK
ORDER DENYING MOTION TO DIMISS
OR FOR TRANSFER OF VENUE

HEALTHSPOT INC.,

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Defendant.

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I.

INTRODUCTION

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Plaintiff Computerized Screening, Inc. ( CSI ), a Nevada corporation, has filed suit

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against Healthspot Inc. ( Healthspot ), a Delaware corporation, in the District of Nevada, alleging

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that Healthspot infri

making, having made, using, selling, offering

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infringing product. Compl. ¶ 20, ECF No. 1. Claiming that it lacks

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contacts with Nevada sufficient to subject it to personal jurisdiction and that a Nevada venue is

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Civ. P. 12(b)(2) and (3). Alternatively, in the event it is subject to the personal jurisdiction in

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Nevada, Healthspot has requested a transfer of venue to the Northern District of Ohio. This Court,

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for the reasons discussed below, finds that Healthspot is subject to personal jurisdiction in Nevada

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and that venue is proper. Additionally, this Court finds Healths

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unpersuasive.

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II.

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of venue

BACKGROUND
For purposes of this motion to dismiss for lack of personal jurisdiction

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considers the pleadings and affidavits in the light most favorable to CSI. Graphic Controls Corp.

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v. Utah Med. Products, Inc., 149 F.3d 1382, 1383 n.1 (Fed. Cir. 1998).

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A. Facts

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The following facts are alleged by CSI. CSI is a Nevada corporation with its principal

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place of business in Reno, Nevada. CSI alleges that it is the owner of United States Patent No.

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6,691,436 (the

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the data through a network to store the measurement data in remote d

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14, ECF No. 1.

¶ 10,

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Healthspot is a Delaware corporation with its principal place of business in Dublin, Ohio.

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Compl. ¶ 4, ECF No. 1; Cashman Decl. ¶ 2, ECF No. 11-1. Healthspot is a manufacturer of

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remotely-located healthcare providers to provide near real-time

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medical care to p

Cashman Decl. ¶ 3, ECF No. 11-1; accord Compl. Exs. 2, 3.

On or before April 4, 2013,

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understanding that H

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No. 11-1. At that time, CSI told Healthspot that it believed

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Cashman Decl. ¶ 26, ECF

. Cashman Decl. ¶ 26, ECF No. 11-1. CSI then offered to license its technology
to Healthspot for use in their kiosks. Id.

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CSI alleges that after Healthspot was put on notice that their kiosks might infringe upon

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NACDS )

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tradeshow in Las Vegas, Nevada in August 2013. Bluth Decl. ¶¶ 3 5, ECF No. 16. There, the

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Healthspot demonstrating and advertising the accused product. Id. Healthspot denies ever

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attending the NACDS tradeshow, but admits to visiting Nevada on at least three prior occasions

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for trade shows. Cashman Supp. Decl., ¶ 4 6, ECF No. 19. However, Healthspot asserts that the

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last time the accused product was in Nevada was for the National Council of Behavior conference

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on April 8 9, 2013. Id. at ¶ 6.

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Following the alleged demonstration at the NACDS tradeshow, CSI alleges it engaged in

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correspondence with Healthspot in an attempt to resolve the dispute out of court. Hoekel Decl.

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Ex. 1, ECF No. 15. CSI once more offered to license the technology to Healthspot and informed

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them that if they did not reach a licensing agreement CSI would be compelled to take legal action.

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Id. at 6. In response Healthspot offered to demonstrate their kiosk for CSI in order to alleviate

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Id. at 5. CSI replied that a

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demonstration would not be necessary since they believed they had sufficient information to

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support their allegation of infringement. Id. CSI further stated that if a licensing agreement was

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not reached by April 11, 2014, they would be compelled to take legal action. Id. Healthspot

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warned CSI that if they filed a patent infringement action against Healthspot without further

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examination of the accused product, they would be in violation of Federal Rules of Civil Procedure

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11. Id. at 4.

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The parties then scheduled a conference call for 10:00 am on April 15, 2014 to attempt to

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resolve the dispute. Id. at 1 2. On April 14, after scheduling the conference call, Healthspot filed

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a suit in Ohio seeking declaratory judgement stating

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Id.; Cashman Decl. ¶ 32, ECF No. 11-1. On April 15, 2014, after receiving notice
of the Ohio suit, CSI filed this lawsuit, in Nevada. See Compl.., ECF No. 1.

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B. Procedure

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On April 15, 2014, CSI filed the Complaint in the present case in the District of Nevada.

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ECF No. 1. In its Complaint, CSI alleges one cause of action. Id. CSI claims Healthspot infringed

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infringing product. Id. at 3.

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On June 30, 2014, Healthspot filed the instant Motion to Dismiss for lack of personal
jurisdiction. ECF No. 11.

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III.

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PERSONAL JURISDICTION
A. Legal Standard

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Federal Circuit

rather than regional circuit

law applies when determining whether a

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court has personal jurisdiction in patent infringement actions. Nuance Commc'ns, Inc. v. Abbyy

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Software House, 626 F.3d 1222, 1230 (Fed. Cir. 2010). Absent discovery on the matter, a plaintiff

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is only

to make a prima facie showing of jurisdiction to defeat

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Med. Solutions, Inc. v. C Change Surgical LLC, 541 F.3d 1136, 1140 (Fed. Cir. 2008)

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(internal quotation marks omitted). In order to determine whether a plaintiff has made a prima

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facie showing of personal jurisdiction over the defendant, the trial court must construe all pleadings

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and affidavits in the light most favorable to the plaintiff. Deprenyl Animal Health, Inc. v.

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University of Toronto Innovations Foundation, 297 F.3d 1343, 1347 (Fed. Cir. 2002) (citing

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Graphic Controls, 149 F.3d at 1383 n.1).

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When determining whether a court has jurisdiction over a defendant, the court must

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-arm statute permits service of process, and whether the

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Inamed Corp. v. Kuzmak, 249 F.3d

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1356, 1359 (Fed. Cir. 2001). Because Nevada

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Nevada courts to exercise jurisdiction to the same extent as the Constitution, this Court need only

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consider the constitutional principles of due process. Walden v. Fiore, 134 S. Ct. 1115, 1121

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(2014).

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-arm statute, Nev. Rev. Stat. § 14.065, permits

B. Analysis

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CSI argues that this Court has general jurisdiction over Healthspot. In the alternative, CSI

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argues that this Court has specific jurisdiction over Healthspot. The nature and number of the

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er this Court can exercise either general

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or specific personal jurisdiction. Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip.

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Medico, 563 F.3d 1285, 1297 (Fed. Cir. 2009). The Court finds that, although it lacks general

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jurisdiction over Healthspot, it can exercise specific jurisdiction in the instant case.

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1. General Jurisdiction

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contact

sufficiently

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with the forum state. Grober v. Mako Products, Inc., 686 F.3d 1335, 1346 (Fed. Cir.

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2012) (citations omitted) (finding no general jurisdiction over a defendant who had made

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numerous product shipments to the forum and had attended a tradeshow in the forum). The

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must

nstant and pervasive as to render [it]

Daimler AG v. Bauman, 134 S. Ct. 746, 751 (2014)
(alteration in original) (internal quotation marks omitted).

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CSI fails to meet the high threshold required to establish general jurisdiction over

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Healthspot. Healthspot is a company incorporated in Delaware with its principle place of business

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nor are there allegations that Healthspot owns any property in Nevada. Although Healthspot has

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visited Nevada on several occasions with the accused product, demonstrated the accused product

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in Nevada, and corresponded with and instituted a claim against a Nevada resident, these contacts

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are insu

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2. Specific Jurisdiction

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minimum contacts with

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[the forum] such that the maintenance of the suit does not offend traditional notions of fair play

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and substantial justice

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Washington, 326 U.S. 310, 316

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whether the defendant purposefully directed its activities at residents of the forum, (2) whether the

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claim arises out of or relates to those activities, and (3) whether assertion of personal jurisdiction

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3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1378 (Fed. Cir.

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1998). The plaintiff has the burden of satisfying the first two prongs of the test. Viam Corp. v.

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Iowa Export-Import Trading Co., 84 F.3d 424, 429 (Fed. Cir. 1996). The burden then shifts to the

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defendant to make a compelling case that jurisdiction would be unreasonable. Id.

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Inamed Corp., 249 F.3d at 1360 (quoting International Shoe Co. v.
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a. Purposeful Availment
The purposeful availment requirement (also known as the purposeful direction

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random, fortuitous, or attenuated contacts, or of the unilateral activity of another party or a third

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Avocent Huntsville Corp. v. Aten Int'l Co., 552 F.3d 1324, 1329 (Fed. Cir. 2008) (citing

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Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). The Court may consider a number

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of factors in evaluating purposeful availment. In Beverly Hills Fans Company v. Royal Sovereign

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Corporation, the Federal Circuit held that the fact that the defendant shipped the accused product

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into the forum state after being put on notice that the accused product might infringe upon the

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68 (Fed.

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Cir. 1994). The Federal Circuit has also found that interstate communications addressing the

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accused product and visits to the forum state by the defendant to discuss surrounding infringement

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Electronics For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1351
(Fed. Cir. 2003).

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attended the NACDS tradeshow, but, because the Court must resolve such disputed facts in favor

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of the plaintiff, this assertion is presently irrelevant. See Deprenyl, 297 F.3d at 1347 (

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disputes must be resolved in

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jurisdiction. ). Healthspot visited CSI in Reno on April 4, 2013 to discuss the very issue of

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s favor in order to evaluate its prima facie showing of

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corresponding with CSI for several months in an attempt to resolve the issue outside of court.

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surprise to Healthspot.

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, because the Ohio suit is also an action

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purposefully directed at a resident of Nevada. The central purpose of a declaratory action is often

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to clear the air of infringement charges. Inamed Corp., 249 F.3d at 1362 (internal quotation marks

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omitted). Here, Healthspot demonstrates

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Ohio declaratory action to resolve the dispute. Mot. to Dismiss 2, ECF No. 11. Certainly, a

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judgment in favor of (or, for that matter, against) Healthspot in the Ohio proceeding would affect

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CSI in Nevada. For example, if it is determined tha

it filed the

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on CSI in Nevada are further compounded by the fact that negotiations about the accused product

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were still ongoing at the time the suit was filed. In sum, the filing of the Ohio suit is also an act

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purposefully directed towards Nevada and therefore weighs in favor of finding that Healthspot

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purposefully availed themselves to Nevada.

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In conclusion, Healthspot purposefully directed activities at Nevada. Its alleged use in

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Nevada of the accused product after being put on notice of its potentially infringing characteristics,

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visits to Las Vegas and Reno, and commencement of a related civil action against a Nevada

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resident demonstrate that facing civil liability in the instant case

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See Avocent Huntsville Corp., 552
F.3d at 1329 (quoting Burger King Corp., 471 U.S. at 474).

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b. Relation to Specific Forum Activities

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Burger King Corp., 471 U.S. at 472. This prong is not, as general rule,

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that Healthspot suggests. Mot. to Dismiss 10:24 25, ECF No. 11; See Inamed Corp., 249 F.3d at

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1362 (holding that it is a broad standard

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give rise to or relate to the claim). In Synthes

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claim was sufficiently related to the activities of the defendant in the forum state because the

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defendant displayed a product accused of infringing on the plaintiff patent at a trade show. 563

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F.3d at 1298. The court reasoned that the defendant was displaying the accused product at the

even higher

the defendants actions in the forum state must either

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plaintiff. Id.

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As in Synthes,

actions at tradeshows would also generate

interest in its kiosk to the detriment of CSI. Ultimately, CSI has made a prima facie showing that

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c. Reasonableness/Fair Play and Substantial Justice
A defendant can defeat personal jurisdiction on constitutional grounds if she can make a

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ial justice. Burger

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King, 471 U.S. at 477 78. The factors used to determine whether exercising personal jurisdiction

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the plaintiff's interest in obtaining relief, (4) the interstate judicial system's interest in obtaining the

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most efficient resolution of controversies, and (5) the shared interest of the several states in

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Electronics For Imaging, Inc., 340 F.3d at

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1352.

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would be unreasonable

in which sufficient minimum contacts exist but where the exercise of jurisdiction
Id.

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Healthspot fails to make a sufficiently compelling argument that would render exercise of

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personal jurisdiction constitutionally unreasonable. First, the burden of traveling to Nevada for

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litigation placed on Healthspot (which has made at least five trips to Nevada in less than two years)

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is not constitutionally unreasonable. See Inamed Corp., 249 F.3d at 1363 (concluding that even if

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it were true that a defendant was so ill that he could not stand or sit for longer than one-half hour

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at a time and was unable to travel long distances, a finding of personal jurisdiction in the forum

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state was not so unreasonable as to make it unconstitutional); Synthes, 563 F.3d at 1299 (internal

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citations omitted) ("The burden on [Defendant] is significant, in that [Defendant] will be required

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to traverse the distance between its headquarters in Brazil and the district court in California . . . .

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We note, however, that 'progress in communications and transportation has made the defense of a

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lawsuit in a foreign tribunal less burdensome.' In addition, for at least the last five years,

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[Defendant] representatives have traveled to the United States for, among other things, trade

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shows, which suggests that, as far as [Defendant] is concerned, travel itself is not unduly

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burdensome."). Second, Nevada has a substantial interest in protecting its residents from patent

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infringement. See Electronic Imaging, Inc., 340 F.3d at 1352. Third, CSI has an interest in

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preserving its patent rights and, as a plaintiff, has an interest in litigating in a convenient forum.

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Fourth, although Healthspot has filed a complaint for declaratory relief in Ohio, it is still pending

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and can be consolidated with the current action. See id. Finally, there is no conflict between the

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interests of Nevada a

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Id.
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In conclusion, because Healthspot has sufficient minimum contacts with Nevada, this

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Court has specific personal jurisdiction ov

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pursuant to Fed. R. Civ. Proc. 12(b)(2) is denied.

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IV.

VENUE PROPRIETY

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In moving to dismiss pursuant to Fed. R. of Civ. Proc. 12(b)(3), Healthspot argues that

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venue is improper in Nevada. However, this issue is foreclosed because this Court has personal

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jurisdiction over Healthspot and, by extension, venue is proper. See VE Holding Corp. v. Johnson

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Gas Appliance Co.

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includes any district where there would be personal jurisdiction over the corporate defendant at

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28 U.S.C. § 1391(c).

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dismiss pursuant to Fed. R. Civ. Proc. 12(b)(3) is denied.

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V.

VENUE TRANSFER
Healthspot argues that, even if it is subject to personal jurisdiction in Nevada, the suit

should be transferred to the Northern District of Ohio. Mot. to Dismiss 13:1 2, ECF No. 11.
A. Legal Standard

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Whereas Federal Circuit law guides personal jurisdiction, local circuit law determines

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venue transfer issues. Storage Tech. Corp. v. Cisco Sys., Inc., 329 F.3d 823, 836 (Fed. Cir. 2003).

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Pursuant to 28 U.S.C. § 1404, a district court may transfer a case to another district if it serves the

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Atl.

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Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 134 S. Ct. 568, 581 (2013). When

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determining whether to transfer a case, courts examine various public and private factors. Decker

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Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986). Generally, great

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weight is generally accorded to a plaintiff's choice of forum. Lou v. Belzberg, 834 F.2d 730, 739

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(9th Cir. 1987). The burden is on the party seeking transfer to show that when these factors are

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applied, the balance of convenience clearly favors transfer. Commodity Futures Trading Comm'n

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v. Savage, 611 F.2d 270, 279 (9th Cir. 1979).

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B. Analysis

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1. Public Factors

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The relevant public factors weigh in favor of keeping the claim in Nevada. These factors

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Decker Coal Co., 805 F.2d at 843. As stated

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previously, Nevada has an interest in resolving the claims of its residents. Additionally, since

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Federal Circuit law is controlling in patent issues, there will be no conflict of laws. Transferring

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the claim to the Northern District of Ohio would not alleviate any public burden

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transfer it.

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it would merely

Anticipatory filing of a declaratory action in an infringement suit is also a factor.
Electronics For Imaging, Inc., 340 F.3d at 1351. Although this Court recognizes

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Pacesetter Sys., Inc. v. Medtronic, Inc.,

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678 F.2d 93, 95 (9th Cir. 1982) (

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mechanically applied, but rather is to be applied with a view to the dictates of sound judicial

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administration.

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was an anticipatory suit, or was filed for the purposes of forum shopping. Alltrade, Inc. v. Uniweld

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Products, Inc., 946 F.2d 622, 628 (9th Cir. 1991).

first to file rule is not a rigid or inflexible rule to be

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transferring. Healthspot admittedly filed the Ohio action in anticipation that negotiations would

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continue to fail leaving CSI compelled to file a claim for patent infringement. Mot. to Dismiss

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16:23-

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bad faith. The claim was allegedly filed fifteen minutes after CSI and Healthspot scheduled a

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conference call in hopes of resolving the issue outside of court. Resp. to Mot. to Dismiss 3:10

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11, ECF No. 13. Invoking the potential of Rule 11 sanction, Healthspot dissuaded CSI from filing

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suit before examining the accused product. Healthspot then filed the complaint for declaratory

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relief in Ohio during the time period when it had persuaded CSI to await the outcome of further

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negotiations. The record supports a prima facie conclusion that

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gamesmanship and arguably deceptive. This Court will not, in effect, reward such behavior with

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a choice in forum.

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2. Private Factors

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The relevant private factors also weigh in favor of keeping the claim in Nevada. These

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factors include

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for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses

ess to sources of proof; availability of compulsory process

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and all

Decker Coal

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Co., 805 F.2d at 843 (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)).

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choice in forum is accorded great weight. Lou, 834 F.2d at 739.

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This Court recognizes that the bulk of relevant evidence in patent infringement cases

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usually comes from the alleged infringer and, therefore, weighs in favor of transferring to that

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location. See In re Genetech, Inc., 566 F.3d 1338, 1345 (Fed. Cir. 2009). However, this does not

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home forum. Importantly

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has failed to provide any facts demonstrating that litigating a patent claim in Nevada would be so

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Mot. to Dismiss 15:8-12,

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ECF No. 11.

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Therefore, this Court finds that the Healthspot has failed to make the required showing of

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inconvenience in order to transfer the case to the Northern District of Ohio.

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VI.

CONCLUSION
As CSI has made a prima facie case for specific personal juri

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to Dismiss must be denied. Healthspot may re-raise the issue of personal jurisdiction later should

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evidence be available that supports such a motion at that time. Furthermore, Healthspot has failed

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to make the requisite showing to transfer the case to the Northern District of Ohio, and its Motion

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to Transfer is similarly denied. Accordingly,

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Dismiss for Lack of Jurisdiction, Improper
Venue or, In the Alternative, to Transfer, ECF No. 11, is DENIED.

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Dated: July 28, 2015

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________________________________
RICHARD F. BOULWARE II
UNITED STATES DISTRICT JUDGE

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