Capsugel Belgium NV v. Bright Pharma Caps, Inc.
Filing
80
OPINION & ORDER: Defendant JC Bio-Tech's Motion to Dismiss 48 is Denied. Signed on 11/13/15 by Magistrate Judge Paul Papak. (gm)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
CAPSUGEL BELGIUM NV and
CAPSUGEL US, LLC,
3:15-cv-321-PK
Plaintiffs,
OPINION AND ORDER
v.
BRIGHT PHARMA CAPS, INC., JC
BRIGHT M LTD., JC BIO-TECH CO
LTD., and KARL CAO,
Defendants.
PAP AK, Magistrate Judge:
Plaintiff Capsugel Belgium NV filed the instant action against Bright Pharma Caps, Inc.
("Bright Phanna") on February 24, 2015. On July 6, 2015, Capsugel Belgium NV filed an
Amended Complaint (#19)joining Capsugel US, LLC (collectively with Capsugel Belgium NV,
"Capsugel") as a plaintiff and JC Bright M Ltd. ("JC Bright"), JC Bio-Tech Co. Ltd. ("JC Bio"),
and Karl Cao as defendants. Capsugel's Amended Complaint asserts claims for patent
infringement as well as claims for false advertising and unfair competition under the Lanham Act
and Oregon law. All of Capsugel's claims arise from or relate to Defendants' production,
marketing, and distribution of Bright-Poly brand empty pill capsules. The court has jurisdiction
over the subject matter of this action pursuant to 28 U.S.C. §§ 1331, 1338(a), and 1367.
Now before the court is Defendant JC Bio's Motion to Dismiss (#48) ("JC Bio's
Motion"), in which JC Bio argues Capsugel's claims against it should be dismissed because it
was not properly served with process and because the court lacks personal jurisdiction over it.
OPINION AND ORDER Page 11
The court has reviewed the record, the relevant exhibits, and all of the briefing. For the reasons
provided below, JC Bio's Motion is DENIED.
FACTUAL AND PROCEDURAL BACKGROUND 1
Capsugel is a manufacturer and distributor of empty pill capsules. Bright Pharma is an
Oregon corporation with its principal place of business in Hood River, Oregon. Bright Phatma
wholesales Bright-Poly brand pill capsules, which are eventually purchased by customers in
Oregon and throughout the United States.
Capsugel alleges Bright-Poly Capsules infringe upon Capsugel's patents and that the
organic line of Bright-Poly capsules contains the synthetic substance sodium lauryl sulfate
("SLS"), which is not permitted in organic products. Capsugel fmiher alleges Defendants
intentionally misrepresent the contents of Organic Bright-Poly capsules by labeling them
"organic" and by adve1iising them as containing "[o]nly three ingredients ... NOP Ce1iified Non
GMO pullulan, Purified water, [and] Carrageenan from sea weed."
JC Bio is a Chinese company that manufactures and supplies Bright-Poly capsules to
Bright Pharma. JC Bio is not registered to do business in Oregon. However, JC Bio has shipped
Bright-Poly capsules to Bright Phmma, and those shipments have anived at ports throughout the
United States, including the Pmi of Portland, Oregon.
On July 7, 2015, Capsugel attempted to effectuate service of process upon JC Bio by
sending a copy of the Amended Complaint and summons by both first class mail and ce1iified
mail, return receipt requested, to JC Bio at 1908 Orchard Road, Hood River, Oregon, 97031.
That address was listed as JC Bio's address in the following documents: (1) a Material Safety
1
For the purpose of ruling on JC Bio's Motion, the comi resolves conflicts between the facts in
the parties' affidavits in Capsugel's favor and accepts Capsugel's version of the facts, where not
directly controverted, as true. See Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001)
(citation omitted) (internal quotation marks omitted).
OPINION AND ORDER Page I 2
Data Sheet for Bright-Poly capsules2, (2) Oregon Tilth online records pe1iaining to JC Bio, (3)
organic certifications issued by Oregon Tilth to JC Bio on August 4, 2014; November 7, 2014;
and May 8, 2015, (4) program compliance certifications issued by Oregon Tilth to JC Bio on
November 7, 2014 and May 8, 2015, and (5) the United States Department of Agriculture's
("USDA") most recent online list of ce1iified USDA organic operations.
On July 9, 2015, Tess Barr, a co-owner of Bright Phanna, signed the return receipt for
the certified mailing and also received the first class mailing containing the summons and
Amended Complaint. Ban subsequently testified that she is not an officer or agent of JC Bio.
On July 23, 2015, JC Bio and the other defendants, represented by Peter Heuser, filed
"Defendants' Unopposed Motion For Extension of Time to Respond to Plaintiff's First Amended
Complaint" ("Motion for Extension of Time"). On July 24, 2015, the comi granted that motion.
Order (#26). JC Bio sought no fmiher extensions and did not otherwise respond to the Amended
Complaint until it filed the present Motion.
On July 29, 2015, Capsugel infonned Peter Heuser-who Capsugel thought was JC Bio's
counsel-that Capsugel had served JC Bio in Hood River at the address that was provided to
Oregon Tilth in connection with the organic ce1iification of JC Bio. Although Heuser also
thought he represented JC Bio, and therefore filed the Motion for Extension of Time on JC Bio's
behalf six days earlier, he was mistaken; JC Bio had not actually retained him. JC Bio
subsequently retained Heuser for the limited purpose of filing the present motion.
2
The Material Safety Data Sheet also listed defendant Bright Pharma as residing at the same
Hood River address.
OPINION AND ORDER Page I 3
LEGAL STANDARDS
I. Service of Process
Proper service of process is required before a court can asse1i personal jurisdiction over a
defendant. See, e.g., Travelers Cas. & Sur. Co. ofAm. v. Brenneke, 551F.3d1132, 1135 (9th
Cir. 2009) (citation omitted). If service of process is challenged prior to entry of default, the
plaintiff bears the burden of establishing the validity of service of process. See Gordon v. United
Rentals, Inc., No. CIV. 09-1344-HU, 2010 WL 1039609, at *2 (D. Or. Mar. 12, 2010); see also
S.E.C. v. Internet Solutions for Bus. Inc., 509 F.3d 1161, 1163 (9th Cir. 2007) ("[A] defendant
moving to vacate a default judgment based on improper service of process, where the defendant
had actual notice of the original proceeding but delayed in bringing the motion until after entry
of default judgment, bears the burden of proving that service did not occur.").
Service of a foreign corporation within the United States can be effectuated in two ways:
(1) "by delivering a copy of the summons and of the complaint to an officer, a managing or
general agent, or any other agent authorized by appointment or by law to receive service of
process and--ifthe agent is one authorized by statute and the statute so requires--by also mailing
a copy of each to the defendant" or (2) by "following state law for serving a summons in an
action brought in courts of general jurisdiction in the state where the district couii is located or
where service is made." Fed. R. Civ. P. 4(h). "[N]either actual notice nor simply naming the
defendant in the complaint will provide personal jurisdiction without 'substantial compliance
with Rule 4."' Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986) (quoting Jackson v. Hayakawa,
682 F.2d 1344, 1347 (9th Cir. 1982)), amended, 807 F.2d 1514 (9th Cir. 1987)
II. Personal Jurisdiction
OPINION AND ORDER Page I 4
An action must be dismissed where the court lacks personal jurisdiction. See Fed. R. Civ.
P. 12(b)(2). There are two components to personal jurisdiction: first, the forum state's long-ann
statute must permit the asse1iion of jurisdiction, and second, the assertion of jurisdiction must
comport with federal constitutional due process mandates. See, e.g., Fireman's Fund Ins. Co. v.
Nat'! Bank of Cooperatives, 103 F.3d 888, 893 (9th Cir. 1996). Oregon's long-aim statute
permits assertions of personal jurisdiction to the full extent allowed under the federal
constitution. See Or. R. Civ. P. 4 L; lvfillennium Enterprises, Inc. v. i\Iillennium ivfusic, LP, 33 F.
Supp. 2d 907, 909 (D. Or. 1999). "Thus, the analysis collapses into a single framework and the
court proceeds under federal due process standards." 1'.Iillennium Enterprises, 33 F. Supp. 2d at
909. Constitutional due process requires there to be sufficient "minimum contacts" between the
party over whom jurisdiction is being exercised and the forum state such that "traditional notions
of fair play and substantial justice" are not offended. International Shoe Co. v. Washington, 326
U.S. 310, 316 (1945) (quoting1Yfilliken v. 1vfeyer, 311U.S.457, 463 (1940)).
On a defendant's motion to dismiss for lack of personal jurisdiction, the plaintiff bears the
burden of establishing personal jurisdiction. See, e.g., Schwarzenegger v. Fred ivfartin 1Yfotor
Co., 374 F.3d 797, 800 (9th Cir. 2004); accord Celgard, LLC v. SK Innovation Co., 792 F.3d
1373, 1378 (Fed. Cir. 2015). "Although the plaintiff cannot rest solely on the allegations of the
complaint to establish that jurisdiction is proper, the complaint's uncontrove1ied factual
allegations must be accepted as true and any factual conflicts in the parties' declarations must be
resolved in the plaintiff's favor." Ukrvaktsina v. Olden Grp., LLC, No. CIV. 10-6297-AA, 2011
WL 5244697, at *l (D. Or. Oct. 30, 2011) (citingAmba 1v!ktg. Sys., Inc. v. Jobar Int'!, Inc., 551
F.2d 784, 787 (9th Cir. 1977); accord Harris Rutskv & Co. Ins. Serv., Inc. v. Bell & Clements
Ltd., 328 F.3d 1122, 1129 (9th Cir. 2003)).
OPINION AND ORDER Page I 5
If the court rules on a motion to dismiss for lack of personal jurisdiction without first
holding a pretrial evidentiary hearing, the plaintiff is only required to establish, through
pleadings and affidavits, a prima facie showing of personal jurisdiction. E.g., Am. Tel. & Tel.
Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996) (citation omitted); accord
Celgard, LLC v. SK Innovation Co., 792 F.3d at 1378. Even where the plaintiff successfully
makes a prima facie showing of personal jurisdiction, it must still establish the jurisdictional
facts by a preponderance of the evidence at some time prior to the close of proceedings. See
Data Disc, Inc. v. Sys. Tech. Associates, Inc., 557 F.2d 1280, 1289 n.5 (9th Cir. 1977).
DISCUSSION
I.
Service of Process
Capsugel properly served JC Bio with process. Federal Rule of Civil Procedure
4(h)(l )(A) permitted Capsugel to serve JC Bio in any manner consistent with Oregon law.
Under Oregon Law, service upon a corporate defendant is presumptively valid if it was
effectuated by a method enumerated in Oregon Rule of Civil Procedure 7D(2)-(3). See Baker v.
Foy, 797 P.2d 349, 354 (Or. 1990). If the presumption arises and there is nothing in the record to
rebut it, the action cannot be dismissed for invalid service of process. See id. Conversely, if
service of process was not effectuated in accordance with an enumerate provision of Rule 7D(2)(3), or if there is evidence in the record to overcome the presumption of valid service, service of
process is valid only if it satisfies the "reasonable notice" standard set forth in Rule 7D( 1). See
id. at 354-55.
A. Oregon's Enumerated Rules for Service of Process
Enumerated rule 7D(3)(b)(ii)(C) permits service upon a corporate defendant by first
class mail and certified mail, return receipt requested, when a registered agent, officer, or
OPINION AND ORDER Page I 6
director of the corporation cannot be found in the county where the action is filed. When the
corporate defendant is not authorized to do business in Oregon, the mailing must be addressed to
the corporation's principal place of business or "to any address the use of which the plaintiff
knows or has reason to believe is most likely to result in actual notice." Id.
In this case, Capsugel mailed a copy of the summons and Amended Complaint to JC Bio
at 1908 .Orchard Road, Hood River, Oregon, 97031. There is no evidence that JC Bio had a
registered agent, officer, or director anywhere in the state of Oregon. 3 Therefore, Capsugel was
permitted to serve JC Bio by mail. See id.; see also }vfech. 1vfktg., Inc. v. Sixxon Precision 1vfach.
Co., No. 5:CV 11-01844 EJD, 2011 WL 4635546, at *2 (N.D. Cal. Oct. 6, 2011).
JC Bio does not dispute that Capsugel sent copies of the summons and Amended
Complaint through both first class mail and certified mail, return receipt requested, to JC Bio as
expressly permitted by Rule 7D(3)(b )(ii)(C). Thus, the only remaining question is whether the
Hood River address was the proper address for effectuating service of process under Oregon law.
Service at the Hood River address was proper because that was the address Capsugel
knew, or had reason to believe, was the most likely to result in actual notice. See id. Capsugel
determined that the Hood River address was the proper address to effectuate service at because it
was listed as JC Bio's address on the Material Safety Data Sheet for Bright-Poly capsules and on
two ce1iifications from Oregon Tilth to JC Bio. 4 Impo1iantly, JC Bio had a legal obligation to
3
Capsugel notes in its brief that JC Bio had a Hood River agent pursuant to FDA regulations
regarding foreign facilities. However, that agent was merely an emergency contact for the FDA,
·
not a registered agent for service of process.
4
As stated above, the Hood River address was also listed as JC Bio's address in numerous other
documents. However, in analyzing whether service was proper, the court only considers those
documents that Capsugel knew about at the time it attempted to effectuate service. See Or. R.
Civ. P. 7D(3)(b)(ii)(C) (pe1mitting service by mail at any address "the use of which the plaintiff
knows or has reason to believe is most likely to result in actual notice" (emphasis added)).
OPINION AND ORDER Page I 7
maintain an accurate address on the Material Safety Data Sheet. See 29 C.F.R. § 1910.1200,
App'x D. Thus, Capsugel knew, or had reason to believe, that mailing service of process to the
Hood River address would most likely result in actual notice to JC Bio. See Or. R. Civ. P.
7D(3 )(b)(ii)(C).
B. Oregon's Catch-All Provision for Service of Process
Even assuming, arguendo, that Capsugel did not comply with Oregon's enumerated rules
of service of process or that the presumption of valid service has been overcome, Capsugel's
service of process upon JC Bio was nevertheless valid, as it satisfied Oregon's reasonable notice
standard. See Or. R. Civ. P. 7D(l). The reasonable notice standard is satisfied by service "in
any manner reasonably calculated, under all the circumstances, to apprise the defendant of the
existence and pendency of the action and to afford a reasonable oppo1iunity to appear and
defend." Id.
Thus, ORCP 7 D(l) focuses not on the defendant's subjective notice but, instead,
on whether the plaintiffs conduct was objectively, reasonably calculated to
achieve the necessary end. That is, regardless of whether the defendant ever
actually received notice, were the plaintiffs effo1ts to effect service reasonably
calculated, under the totality of the circumstances then known to the plaintiff, to
apprise the defendant of the pendency of the action?
Davis Wright Tremaine, LLP v. lvfenken, 45 P.3d 983, 986-87 (Or. App. 2002). In analyzing
whether service was proper under the reasonable notice standard, courts must also consider a
plaintiffs efforts to ensure service was proper both before and after the attempted service. See
Willer v. Tri-Cnty. 1'.Ietro. Transp. Dist. of Oregon, No. 07-CV-303-BR, 2007 WL 2156375, at
*6 (D. Or. July 25, 2007).
As stated above, at the time it attempted to effectuate service of process, Capsugel knew
that the Material Safety Data Sheet for Bright-Poly capsules and two certificates from Oregon
Tilth to JC Bio listed JC Bio's address as being in Hood River. The CoUlt of Appeals of Oregon
OPINION AND ORDER Page I 8
has previously held that the reasonable notice standard is satisfied where notice is effectuated at
the place where the defendant represents an intent to receive notices of impo1iant infonnation.
See Gallogly v. Calhoon, 869 P.2d 346, 348-449 (Or. App. 1994); see also Hoeck v. Schwabe,
Williamson & Wyatt, 945 P.2d 534, 540-41 (Or. App. 1997). The reasoning of Gallogly and
Hoeck apply with equal force in this case. Capsugel was permitted to rely on the Hood River
address at which JC Bio represented an intent to receive imp01iant notices. Therefore, Capsugel
served JC Bio in a manner "reasonably calculated, under all the circumstances, to apprise the
defendant of the existence and pendency of the action and to afford a reasonable oppo1iunity to
appear and defend." Or. R. Civ. P. 7D(l).
Fmihermore, on July 29, 2015, Capsugel informed Peter Heuser that it had served JC Bio
in Hood River at the address that was provided to Oregon Tilth in connection with the organic
certification of JC Bio. At that time, Heuser represented the other defendants in this matter, and
Capsugel believed he represented JC Bio as well. Although Heuser also thought he represented
JC Bio when he filed the Motion for Extension of Time on JC Bio's behalf on July 23, 2015, he
was mistaken; JC Bio had not actually retained him. 5 Capsugel's effo1is to ensure service was
properly effectuated fmther suppo1ts a finding of proper service. See Willer, 2007 WL 2156375,
at *6. Capsugel's service of process therefore satisfied Oregon's reasonable notice standard.
Thus, Capsugel properly served JC Bio with process.
II.
Personal Jurisdiction
Capsugel has made a prima facie showing that the comt has personal jurisdiction ove:· JC
Bio with respect to each of Capsugel's asse1ted claims. There are two varieties of personal
jurisdiction: general jurisdiction and specific jurisdiction. See, e.g., Daimler AG v. Bauman, 134
5
JC Bio retained Heuser sometime after Capsugel contacted him about its eff01ts to effectuate
service upon JC Bio at the Hood River address.
OPINION AND ORDER Page I 9
S. Ct. 746, 754 (2014). The comi finds that it does not have general jurisdiction over JC Bio.
The remainder of the jurisdictional analysis will therefore focus on specific jurisdiction. Specific
jurisdiction must be analyzed with respect to each claim separately. See Action Embroide1y
Corp. v. At!. Embroide1y, Inc., 368 F.3d 1174, 1180 (9th Cir. 2004) (citation omitted).
A. Specific Jurisdiction Regarding the Patent Infringement Claims
Capsugel has made a prima facie showing that the court has specific jurisdiction over JC
Bio with respect to the patent infringement claims. Federal Circuit law governs personal
jurisdiction with respect to patent infringement claims. See, e.g., Electronics For Imaging, Inc.
v. Coyle, 340 F.3d 1344, 1348 (Fed. Cir. 2003); Leupold & Stevens, Inc. v. US. Optics, Inc., No.
3:14-CV-00727-AC, 2015 WL 3606376, at *2 (D. Or. June 4, 2015).
In the context of a patent infringement claim, minimum contacts exist where ( 1) the
defendant purposefully directed its activities at the forum, (2) the plaintiffs claim arises out of or
relates to the defendant's contacts with the forum, and (3) the assetiion of personal jurisdiction is
fair and reasonable. See Celgard, 792 F.3d at 1377. The plaintiff bears the burden on the first
two elements, and if it establishes them, the defendant has a "compelling" burden on the third
element. Patent Rights Prof. Grp., LLC v. Video Gaming Techs., Inc., 603 F.3d 1364, 1369 (Fed.
Cir. 2010) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1985)).
Under Federal Circuit law, purposeful direction exists where a foreign defendant is
alleged to have infringed a patent by selling infringing products in the form either directly or
through an established distribution channel. See Beverly Hills Fan Co. v. Royal Sovereign Cmp.,
21F.3d1558, 1565 (Fed. Cir. 1994); accord Jamison v. Olin Co1p., No. 03-1036-KI, 2004 WL
1098940, at *4 (D. Or. May 14, 2004); see also Patent Enforcement Grp., LLC v. Chassis Tech,
LLC, No. 3:11-CV-925-BR, 2012 WL 12678, at *4 (D. Or. Jan. 3, 2012)(finding personal
OPINION AND ORDER Page 110
jurisdiction over a defendant whose only contacts with Oregon was its sale of 99 units of an
allegedly infringing product to Oregon wholesalers and retailers over the course of almost twelve
years for a total ofless than $1,000 in sales).
Here, JC Bio purposefully directed its activities at Oregon by selling Bright-Poly
capsules to Bright Pharma-an Oregon wholesaler. See Beverly Hills Fan, 21 F.3d at 1565;
Patent Enforcement Grp., 2012 WL 12678, at *4. The record contains evidence of eleven
shipments of Bright-Poly capsules from JC Bio to Bright Pharma. 6 JC Bio's direct shipment of
Bright-Poly capsules to the Pmi of Portland further suppo1is a finding of personal jurisdiction.
See Beverly Hills Fan, 21 F.3d at 1565; Patent Enforcement Grp., 2012 WL 12678, at *4
Additionally, Capsugel's infringement claims against JC Bio are entirely predicated on JC
Bio's manufacture and distribution of Bright-Poly capsules. The infringement claims therefore
arise out of and relate to JC Bio's Oregon-directed activities. See, e.g., Nuance Commc'ns, Inc. v.
Abbyy Software House, 626 F.3d 1222, 1233 (Fed. Cir. 2010); Patent Enforcement Grp, 2012
WL 12678, at *6.
Finally, JC Bio does not argue, and there is nothing in the record indicating, that this
court's exercise of jurisdiction over JC Bio with respect to the patent infringement claims would
6
In suppoti of its Reply (#67), JC Bio included the Declaration of Walter Cao (#68). Cao
testified, among other things, that all of the shipments of capsules from JC Bio to Bright Phanna
were F.0.B. China. Id.~ 4, Ex. 1. At oral argument, Capsugel moved to strike Cao's
declaration. Cao's Declaration does not change the court's conclusion that Capsugel has made a
prima facie showing that the court has personal jurisdiction over JC Bio. See, e.g., Halo
Electronics, Inc. v. Pulse Electronics, Inc., 769 F.3d 1371, 1378 (Fed. Cir. 2014) ("[A] sale may
occur at multiple locations, including the location of the buyer, for purposes of personal
jurisdiction." (citing N. Am. Philips Corp. v. Am. Vending Sales, Inc., 35 F.3d 1576, 1579-80
(Fed. Cir. 1994))), cert. granted, No. 14-1513, 2015 WL 3883472 (U.S. Oct. 19, 2015); Luv N'
care, Ltd. v. lnsta-1\Jix, Inc., 438 F.3d 465, 471-72 (5th Cir. 2006) ("[W]e conclude that a F.O.B.
tenn does not prevent a court from exercising personal jurisdiction over a non-resident defendant
where other factors, such as the quantity and regularity of shipments, suggest that jurisdiction is
proper." (footnote omitted)). Therefore, Capsugel's Motion to Strike is DENIED as moot.
OPINION AND ORDER Page I 11
be unfair or unreasonable. The court therefore declines to dismiss the infringement claims
against JC Bio on fairness grounds. See Patent Rights Prof. Grp., 603 F.3d at 1369 (stating that
the defendant bears a "compelling" to show the exercise of personal jurisdiction over it would
not be fair and reasonable (citing World-Wide Volkswagen, 444 U.S. at 292)).
Thus, Capsugel has made a prima facie showing of personal jurisdiction over JC Bio with
respect to the patent infringement claims.
B. Specific Jurisdiction Regarding the Lanham Act and Related State Law Claims
Capsugel has made a prima facie showing that the court has specific jurisdiction over JC
Bio with respect to the Lanham Act and related state law claims. The specific jurisdiction test
for tort claims, such as those brought under the Lanham Act and related state laws, is similar to
the specific jurisdiction test for patent infringement claims. Minimum contacts exist where (1)
the defendant purposefully directs its activities at the form, (2) the claim "arises out of or relates
to the defendant's forum-related activities," and (3) the assertion of personal jurisdiction is fair
and reasonable. See Brayton Purcell LLP v. Recordon & Recordon, 606 F.3d 1124, 1128 (9th
Cir. 2010). After the plaintiff establishes the first two elements, "the burden shifts to the
defendant to 'present a compelling case' that the exercise of jurisdiction would not be
reasonable." Fred 1Vfartin }vfotor Co., 374 F.3d at 802 (quoting Burger King Corp. v. Rudzewicz,
471 U.S. 462, 476-78 (1985)).
However, unlike patent infringement claims, specific jurisdiction with respect to the
Lanham Act and related state law claims is governed by Ninth Circuit law, which mandates
application of the three-part "Calder-effects" test to determine whether the defendant
purposefully directed its activities at the forum. E.g. Brayton Purcell, 606 F.3d at 1128 (internal
quotation marks omitted) (citing Calder v. Jones, 465 U.S. 783 (1984)). "Under this test, 'the
OPINION AND ORDER Page I 12
defendant allegedly must have (I) committed an intentional act, (2) expressly aimed at the forum
state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.'" Id
(quoting Yahoo! Inc. v. La Ligue Cantre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1206
(9th Cir. 2006) (en bane)).
In this case, the first two parts of the effects test are satisfied by JC Bio's obtaining an
organic ce1iification from Oregon Tilth, sending Bright-Poly capsules to Bright Pharma, and
shipping Bright-Poly capsules to the Pmi of Potiland. Those acts were intentional. Furthermore,
the acts were expressly aimed at Oregon, as they all involved JC Bio reaching into Oregon to
deal with Oregon entities. See Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014) ("[W]e have
upheld the asse1iion of jurisdiction over defendants who have purposefully "reach[ed] out
beyond" their State and into another .... " (quoting Burger King, 471 U.S. at 479-80)).
The third part of the effects test is also satisfied. "The harm element of the effects test is
satisfied when a defendant's intentional act has foreseeable effects in the forum." Slayden v.
Schulz Boat Co., No. 3:13-CV-02259-AC, 2015 WL 225731, at *3 (D. Or. Jan. 16, 2015)
(internal quotation marks omitted) (quoting Brayton Purcell, 606 F.3d atl 131). Here, it was
foreseeable that JC Bio's providing mislabeled capsules to an Oregon wholesaler would cause
Oregon consumers to be misled in their purchase of the capsules. It was also foreseeable that JC
Bio's obtaining and utilizing an invalid accreditation from an Oregon entity would harm that
entity's reputation upon discovery of the misrepresentation. See Brayton Purcell, 606 F.3d at
1131 (holding that hmm to a forum business's reputation and goodwill can satisfy the harm
element of the effects test).
All three parts of the effects test are satisfied. Consequently, JC Bio purposefully
directed its activities at Oregon.
OPINION AND ORDER Page 113
Additionally, the Lanham Act claims and related state law claims arise from and relate to
JC Bio's Oregon contacts because they are based in part on JC Bio's obtaining an organic
ce1iification from Oregon Tilth and on JC Bio's manufacture, sale, and shipment of Bright-Poly
capsules for Bright Pharma.
Finally, JC Bio does not argue, and there is nothing in the record indicating, that this
comi's exercise of jurisdiction over JC Bio with respect to the Lanham Act claims and related
state law claims would be unfair or umeasonable. The court therefore declines to dismiss the
Lanham Act and related state law claims against JC Bio on faimess grounds. See Fred 1\Iartin
2vlotor Co., 374 F.3d at 802 (quoting Burger King, 471 U.S. at 476-78).
Thus, Capsugel has made a prima facie showing of personal jurisdiction over JC Bio with
respect to the Lanham Act and related state law claims.
C. Federal Long Arm Statute
Capsugel has made a prima facie showing that the court has personal jurisdiction over JC
Bio, with respect to the federal claims asserted against it, pursuant to Federal Rule of Civil
Procedure 4(k)(2), sometimes called the "federal long-arm statute." Although personal
jurisdiction has already been sufficiently established on the grounds discussed above, Rule
4(k)(2) provides an additional and alternative basis for the court's exercise of personal
jurisdiction over JC Bio with respect to the federal claims asse1ied against it. Rule 4(k)(2)
confers personal jurisdiction over federal claims outside state-comi jurisdiction. Under both
Ninth Circuit and Federal Circuit law, personal jurisdiction is established under this rule when
(1) the claim arises under federal law, (2) the defendant is not subject to the personal jurisdiction
of any state comi of general jurisdiction, and (3) the federal comi's exercise of personal
jurisdiction comports with due process. See, e.g., Touchcom, Inc. v. Bereskin & Parr, 574 F.3d
OPINION AND ORDER Page I 14
1403, 1412 (Fed. Cir. 2009); Holland Am. Line Inc. v. Wartsila N Am., Inc., 485 F.3d 450, 46162 (9th Cir. 2007).
It is beyond dispute that the patent infringement and Lanham Act claims arise under
federal law. Therefore, the first element of Rule 4(k)(2) is satisfied.
JC Bio bears the burden on the second element of Rule 4(k)(2). See Holland Am. Line,
485 F.3d at 461 (citation omitted) ("If, however, the defendant contends that he cannot be sued in
the forum state and refuses to identify any other where suit is possible, then the federal comi is
entitled to use Rule 4(k)(2)."); accord Touchcom, 574 F.3d 1403, 1415 (Fed. Cir. 2009). JC Bio
alleges that it is not subject to personal jurisdiction in Oregon. It has failed to identify any other
state where it is subject to personal jurisdiction. Consequently, the second element of Rule
4(k)(2) is satisfied. See Holland Am. Line, 485 F.3d at 461; Touchcom, 574 F.3d at 1415.
As to the third and final element of Rule 4(k)(2), the due process analysis is "nearly
identical to traditional personal jurisdiction analysis with one significant difference": rather than
considering contacts between the JC Bio and Oregon, the court considers JC Bio's contacts with
the United States as a whole. Holland Am. Line, 485 F.3d at 462; accord Touchcom, 574 F.3d at
1416. Capsugel offers the following facts to satisfy this element of Rule 4(k)(2): JC Bio
contracted with Oregon Tilth to obtain an organic ce1iification for capsules that did not qualify
for one; JC Bio represented itself has having a place of business in Hood River, Oregon in the
Material Safety Data Sheet for Bright-Poly capsules, in five certifications from Oregon Tilth, in
Oregon Tilth's online listing of "certified organic operators," and in the USDA's most recent
online listing of "certified USDA organic operations"; JC Bio supplied Bright-Poly capsules to
Bright Pharma; JC Bio mislabeled packages of Bright-Poly capsules by using the USDA and
Oregon Tilth "organic" labels prior to sending the packages to Bright Pharma in the United
OPINION AND ORDER Page I 15
States; and JC Bio shipped Bright-Poly capsules intended for Bright Phanna to ports throughout
the United States, including eight shipments arriving in California, one shipment aniving in
Oregon, one shipment mTiving in Florida, and one shipment mTiving in New York.
This evidence establishes that JC Bio purposefully directed its activities at the United
States. See Goes Int'!, AB v. Dodur Ltd., No. 3:14-CV-05666-LB, 2015 WL 5043296, at *9
(N.D. Cal. Aug. 26, 2015); Touchcom, 574 F.3d at 1418; see also Bradford Co. v. Conteyor N
Am., Inc., 603 F.3d 1262, 1273 (Fed. Cir. 2010). In so holding, the couti recognizes that a third
party's contacts with JC Bio (for example, Oregon Tilth's provision of the certifications) do not
foim a sufficient basis for personal jurisdiction. See, e.g., Walden, 134 S. Ct. at 1122. However,
because JC Bio had to reach into the United States to acquire the certifications and listings cited
above, JC Bio has sufficient minimum contacts with the United States to justify the couti's
asse1tion of personal jurisdiction over it. See id. ("[W]e have upheld the asse1tion of jurisdiction
over defendants who have purposefully 'reach[ed] out beyond' their State and into another .... "
(quoting Burger King, 471 U.S. at 479-80)).
Additionally, Capsugel's patent infringement and Lanham Act claims arise out of and
relate to JC Bio's activities in the United States because all of those claims are predicated on
either JC Bio's obtaining organic ce1tifications from Oregon Tilth and the USDA or JC Bio's
manufacture, sale, and shipment of Bright-Poly capsules for Bright Pharma.
Finally, JC Bio does not argue, and there is nothing in the record indicating, that this
comi's exercise of jurisdiction over JC Bio with respect to the federal claims would be unfair or
umeasonable. The cou1i therefore declines to dismiss the federal claims against JC Bio on
fairness grounds. See Patent Rights Prof. Grp., 603 F.3d at 1369 (citing World-Wide
Volkswagen, 444 U.S. at 292); Fred lvfartin 1vfotor Co., 374 F.3d at 802 (quoting Burger King,
OPINION AND ORDER Page I 16
471 U.S. at 476-78); see also Holland Am. Line, 485 F.3d at 462 ("The due process analysis
under Rule 4(k)(2) is nearly identical to traditional personal jurisdiction analysis .... ").
Thus, Capsugel has made a prima facie showing of personal jurisdiction over JC Bio with
respect to the federal claims asseiied against it.
CONCLUSION
For the reasons provided above, JC Bio's Motion to Dismiss (#48) is DENIED.
Dated this 13th day ofNovember, 2015.
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United States Magistrate Judge
OPINION AND ORDER Page I 17
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