Celgard, LLC v. SK Innovation Co., Ltd.

Filing 62

MEMORANDUM AND RECOMMENDATIONS on 18 MOTION to Dismiss for Lack of Jurisdiction or in Alternative, to Transfer filed by SK Innovation Co., Ltd., 27 Amended MOTION to Dismiss for Lack of Jurisdiction DEFEN DANT'S AMENDED MOTION TO DISMISS PLAINTIFF'S COMPLAINT, OR, IN THE ALTERNATIVE, TO TRANSFER filed by SK Innovation Co., Ltd. ( Objections to M&R due by 11/4/2013), ORDER denying 54 MOTION for Leave to File Surreply in Opposi tion to Defendant's Amended Motion to Dismiss Plaintiff's Complaint for Lack of Personal Jurisdiction, or, in the Alternative, to Transfer, granting 42 SEALED MOTION (Sealed - Attorney) Plaintiff's Alternative Motion for Jurisdictional Discovery by Celgard, LLC; (available to Celgard, LLC, SK Innovation Co., Ltd.).. Signed by Magistrate Judge David S. Cayer on 10/16/2013. (blf)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
CHARLOTTE DIVISION
CIVIL ACTION NO. 3:13-CV-00254-MOC-DSC
CELGARD, LLC,
Plaintiff,
v.
SK INNOVATION CO., LTD.,
Defendant.

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MEMORANDUM AND RECOMMENDATION AND ORDER
THIS MATTER is before the Court on the following Motions:
1. “Defendant’s Motion to Dismiss … or, in the Alternative, to Transfer” (document
#18);
2.

“Defendant’s Amended Motion to Dismiss … or, in the Alternative, to Transfer”

(document #27)
3.

“Plaintiff’s … Alternative Motion for Jurisdictional Discovery” (document #42); and

4.

“Plaintiff’s … Motion for Leave to File Surreply …” (document #54); as well as the

parties’ briefs and exhibits.
This matter has been referred to the undersigned Magistrate Judge pursuant to 28 U.S.C.
§ 636(b)(1), and these Motions are now ripe for the Court’s consideration.
Having fully considered the arguments, the record, and the applicable authority,
“Plaintiff’s … Motion for Leave to File Surreply …” (document #54) is denied in the Court’s
discretion. The undersigned will grant “Plaintiff’s … Alternative Motion for Jurisdictional
Discovery” (document #42), and respectfully recommend that Defendant’s Motion to Dismiss be

denied as moot, and that its Amended Motion to Dismiss be denied without prejudice, as
discussed below.

I. FACTUAL AND PROCEDURAL BACKGROUND
This is a patent infringement action. Plaintiff Celgard LLC (“Celgard”) alleges that
Defendant SK Innovation Company, Ltd. (“SKI”) has induced infringement of its patented
separator for lithium ion batteries (United States Patent No. 6,432,586 (“586 patent”)).
Accepting the factual allegations of the Amended Complaint as true, Celgard maintains its
headquarters as well as a major manufacturing plant in Charlotte. Plaintiff is a developer,
manufacturer, and seller of battery separators for lithium ion batteries. These batteries are a
component in electronic products, including electric vehicles and laptop computers.
Defendant SKI is a Korean corporation that competes with Celgard worldwide in the
battery separator market.
Celgard asserts that it is in competition with SKI to be the primary supplier of battery
separators to Saft America, Inc. (“Saft”). Saft manufactures lithium ion batteries in the United
States. Saft has offices and production facilities in Valdese, North Carolina, within the Western
District of North Carolina. Saft’s global purchasing director for battery separators works in its
Valdese office. This employee is responsible for Saft’s supply of separators used in the
production of lithium ion batteries. Celgard “infers and believes” that SKI has made offers to sell
its accused products to Saft here in the forum state. SKI denies making sales here.
Celgard also contends that SKI manufactures and sells separator materials that are
incorporated into lithium ion batteries and sold in consumer electronics products and electric
vehicles in North Carolina.

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Defendant contends that it lacks any “continuous and systematic” contacts with North
Carolina that confer general jurisdiction, discussed infra. Defendant denies conducting any
activity related to the accused products in North Carolina or purposefully directing any of its
relevant activities here. Defendant concedes that it is subject to personal jurisdiction in the
Southern District of New York.
On February 22, 2013, Plaintiff filed its Complaint alleging that Defendant induced
infringement of the subject patent under 35 U.S.C. § 271(b).
On August 20, 2013, Defendant filed its “Amended Motion to Dismiss … or, in the
Alternative, to Transfer [to the Southern District of New York].”
In its Alternative Motion for Jurisdictional Discovery, Plaintiff requests an opportunity to
conduct jurisdictional discovery related to:
(1) SKI’s sales, imports, and offers for sale into the Western District of North
Carolina, the State of North Carolina, and the U.S. of its Accused Lithium Ion
Battery Separators, including through established distribution channels; (2) SKI’s
contacts with North Carolina; (3) SKI’s marketing efforts, including attendance at
national trade shows held annually in the U.S., related to its Accused Lithium Ion
Battery Separators and incorporating these Battery Separators into established
channels of commerce to customers in the Western District of North Carolina, the
State of North Carolina, and the U.S.; (4) SKI’s U.S. marketing officer physically
residing in the United States from 2005 through February 2013 and tasked with
marketing, offering to sell, and selling in the Western District of North Carolina,
the State of North Carolina, and the U.S. SKI’s Accused Lithium Ion Battery
Separators and Lithium Ion Batteries; (5) SKI’s distribution and marketing of the
Accused Lithium Ion Battery Separators through its U.S. and non-U.S.
subsidiaries, including through SK Innovation Americas located in Troy,
Michigan; (6) SKI’s sale of the Battery including the Accused Lithium Ion
Battery Separator to a California company for $30,000; (7) SKI’s negotiations
with the global purchasing director of Saft America, Inc., who communicates with
and purchases from SKI the Accused Lithium Ion Battery Separator and does so
from Saft America, Inc.’s offices located in the Western District of North
Carolina; (8) SKI’s manufacture and sale of polymer base film materials that are
incorporated into infringing lithium ion battery separators for consumer
electronics products sold in the Western District of North Carolina, the State of
North Carolina, and the U.S.; (9) Tesla Motors, Inc.’s purchase and testing of
electric vehicle batteries incorporating SKI’s Accused Lithium Ion Battery
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Separators, and Tesla’s sales or offers for sale of electric vehicles in the Western
District of North Carolina, the State of North Carolina, and the U.S.; (10) Kia
Motors America, Inc.’s use, sale, and offer for sale in the U.S. of electric drive
vehicles incorporating SKI’s Accused Lithium Ion Battery Separators; (11) SKI’s
overall revenues from sales of all products into the Western District of
North Carolina, the State of North Carolina, and the U.S.; and (12) SKI’s payment
of taxes to the U.S. Internal Revenue Service or revenue service of any state or
county in the U.S.; (13) SKI’s joint venture with Continental, announced while
SKI representatives were in the U.S. in January 2012, to make lithium-ion
batteries for electric vehicles, some of which will be sold or imported into the
U.S.
Document #42 at 6-9.

The parties’ Motions have been fully briefed and are ripe for

determination.

II. DISCUSSION
Federal Circuit law governs personal jurisdiction in patent cases. IMO Indus., Inc. v.
SEIM S.R.L., 305-CV-420-MU, 2007 WL 1651838, at *1 (W.D.N.C. June 4, 2007) (noting that
Federal Circuit law applies in determining personal jurisdiction in patent cases). Plaintiff has the
burden of proving personal jurisdiction here.

Thomas v. Centennial Commc'ns Corp.,

3:05CV495, 2006 WL 6151153, at *2 (W.D.N.C. Dec. 20, 2006).
Plaintiff must show that the exercise of personal jurisdiction over the Defendant complies
with the forum state's long-arm statute and the constitutional requirements of due process.
Grober v. Mako Products, Inc., 686 F.3d 1335, 1345 (Fed. Cir. 2012), reh'g denied (Sept. 14,
2012). Since North Carolina's long-arm statute extends jurisdiction to the outer boundaries of
due process, the jurisdiction analysis merges into a single due process inquiry. Thomas, 2006
WL 6151153, at *2.
To be consistent with the limitations of due process, a defendant must have “minimum
contacts” with the forum state “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,
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316 (1945). Minimum contacts can be established by showing “general” or “specific”
jurisdiction. Helicopteres Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 (1984).
A court may exercise general jurisdiction over a non-resident defendant if the defendant
has contacts with the State that are so “continuous and systematic” as to render them “essentially
at home in the forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846,
2851 (2011).
In the absence of general jurisdiction, a court may exercise specific jurisdiction over the
defendant in a cause of action that arises out of the defendant’s activities in the forum state. In
analyzing specific jurisdiction over a defendant, the Federal Circuit considers whether: “(1) the
defendant purposefully directed its activities at residents of the forum state, (2) the claim arises
out of or relates to the defendant’s activities with the forum state, and (3) assertion of personal
jurisdiction is reasonable and fair.” Grober, 686 F.3d at 1346 (citing Elecs. For Imaging, Inc. v.
Coyle, 340 F.3d 1344, 1349 (Fed. Cir. 2003)). Plaintiff has the burden of making a prima facie
showing of specific jurisdiction by satisfying the first two elements. The burden then shifts to
defendant to show that such assertion of personal jurisdiction is not reasonable and fair. Id.
A prima facie case of personal jurisdiction over an alien defendant is made by meeting a
“stream of commerce” standard. IMO Industries, Inc., 2007 WL 1651838, at *1 (citing Beverly
Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1564-65 (Fed. Cir. 1994)). This standard
requires that (1) the alien defendant placed the accused product into the stream of commerce, (2)
the alien defendant knew or should have known the likely destination of the product, and (3) the
alien defendant’s conduct and connections with the forum state are such that it may reasonably
foresee being haled into court within that forum. Id.

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The test for reasonableness is a “multi-factored balancing test that weighs any burdens on
the defendant against various countervailing considerations, including the plaintiff's interest in a
convenient forum and the forum state's interest in resolving controversies flowing from in-state
events.” Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 429 (Fed. Cir. 1996). The
Federal Circuit considers five factors in determining whether jurisdiction would be reasonable:
“(1) the burden on the defendant; (2) the interests of the forum state; (3) the plaintiff's interest in
obtaining relief; (4) the interstate judicial system's interest in obtaining the most efficient
resolution of controversies; and (5) the interest of the states in furthering their social policies.”
Id.
District Courts have broad discretion to allow jurisdictional discovery pursuant to Rule
26 of the Federal Rules of Civil Procedure. Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 64 (4th
Cir. 2003). Where the issue of personal jurisdiction is unclear, the Court may order discovery
directed towards personal jurisdiction issues alone. See e.g., Patent Rights Protection Group,
LLC v. Video Gaming Technologies, Inc., 603 F.3d 1364, 1372 (Fed. Cir. 2010) (district court
abused its discretion in denying plaintiff jurisdictional discovery); Nuance Communications, Inc.
v. Abby Software House, 626 F.3d 1222, 1236 (Fed. Cir. 2010) (district court abused its
discretion in denying plaintiff jurisdictional discovery); SAS Institute Inc. v. World
Programming Ltd., 2011 WL 1059139, *5-*7 (E.D.N.C. Mar. 18, 2011) (allowing jurisdictional
discovery and noting request for jurisdictional discovery typically should be granted "unless
plaintiff's claim appears to be clearly frivolous") (quoting Rich v. KIS California, Inc., 121
F.R.D. 254, 259 (M.D.N.C. 1988) (allowing jurisdictional discovery) and citing 4 J. MOORE, J.
LUCAS & G. GROTHER, MOORE'S FEDERAL PRACTICE, § 26.56(6) (2d ed. 1987));

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Howard Acquisitions, LLC v. Giannasca New Orleans, LLC, 2010 WL 889551 at *7 (D. Md.
Mar. 5, 2010) (allowing jurisdictional discovery).
Applying these legal principles, the undersigned concludes that Plaintiff is entitled to
conduct limited jurisdictional discovery as outlined above. The jurisdictional facts are disputed
here, but should be easily clarified through limited discovery. Accordingly, the undersigned
respectfully recommends that Defendant’s Motion to Dismiss be denied without prejudice to its
right to renew the Motion following completion of jurisdictional discovery.

III. ORDER
IT IS HEREBY ORDERED that:
1.

“Plaintiff’s … Motion for Leave to File Surreply …” (document #54) is DENIED.

2. “Plaintiff’s … Alternative Motion for Jurisdictional Discovery” (document #42); “is
GRANTED. The parties shall conducted limited jurisdictional discussion with a deadline of
December 31, 2013.
IV. RECOMMENDATION
FOR THE FOREGOING REASONS, the undersigned respectfully recommends that:
1.

“Defendant’s Motion to Dismiss … or, in the Alternative, to Transfer” (document

#18) be DENIED AS MOOT.
2.

“Defendant’s Amended Motion to Dismiss … or, in the Alternative, to Transfer”

(document #27) be DENIED WITHOUT PREJUDICE to Defendant’s right to renew the
Motion following jurisdictional discovery.

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V. NOTICE OF APPEAL RIGHTS
The parties are hereby advised that, pursuant to 28 U.S.C. §636(b)(1)(c), written
objections to the proposed findings of fact and conclusions of law and the recommendation
contained in this Memorandum must be filed within fourteen (14) days after service of same.
Failure to file objections to this Memorandum with the District Court constitutes a waiver of the
right to de novo review by the District Judge. Diamond v. Colonial Life, 416 F.3d 310, 315-16
(4th Cir. 2005); Wells v. Shriners Hosp., 109 F.3d 198, 201 (4th Cir. 1997); Snyder v. Ridenour,
889 F.2d 1363, 1365 (4th Cir. 1989).

Moreover, failure to file timely objections will also

preclude the parties from raising such objections on appeal. Thomas v. Arn, 474 U.S. 140, 147
(1985); Diamond, 416 F.3d at 316; Page v. Lee, 337 F.3d 411, 416 n.3 (4th Cir. 2003); Wells,
109 F.3d at 201; Wright v. Collins, 766 F.2d 841, 845-46 (4th Cir. 1985); United States v.
Schronce, 727 F.2d 91 (4th Cir. 1984).
The Clerk is directed to send copies of this Memorandum and Recommendation and
Order to counsel for the parties; and to the Honorable Max O. Cogburn, Jr.
SO RECOMMENDED AND ORDERED.
Signed: October 16, 2013

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