LAMBETH MAGNETIC STRUCTURES, LLC v. TOSHIBA CORPORATION
MEMORANDUM & ORDER. For the reasons stated in the Memorandum filed herewith, Defendants Headway Technologies, Inc., SAE Magnetics H.K. Ltd. and TDK Corporation's Motions to Dismiss (Docs. 103 and 127 ) are GRANTED. Accordingly, all claims against Defendants Headway Technologies, Inc., SAE Magnetics H.K. Ltd. and TDK Corporation are DISMISSED WITH PREJUDICE. Signed by Judge Cathy Bissoon on 3/1/17. (jwr)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
LAMBETH MAGNETIC STRUCTURES, )
TOSHIBA CORPORATION, et.al.,
Civil Action No. 14-1526
Judge Cathy Bissoon
MEMORANDUM & ORDER
For the reasons that follow, Defendants Headway Technologies, Inc., SAE Magnetics
H.K. Ltd. and TDK Corporation’s Motions to Dismiss (Docs. 103 and 127) will be GRANTED.
Lambeth Magnetic Structures, LLC, (“Plaintiff” or “Lambeth”), an entity created to
license patents invented by Dr. David N. Lambeth, a retired Carnegie Mellon professor, is the
current owner of U.S. Design Patent No. 7,128,988 (“the ‘988 patent”), entitled “Magnetic
Material Structures, Devices and Methods.” (Third Am.Compl. (Doc. 82) at ¶¶ 23-24). Plaintiff
alleges that “[i]n connection with the ‘988 patent, Dr. Lambeth invented a new magnetic
structure for Hard Disk Drive Devices comprised of the following elements: a substrate; at least
one bcc-d layer which is magnetic, forming a uniaxial symmetry broken structure; and at least
one layer providing a (111) textured hexagonal atomic template disposed between said substrate
and said bcc-d layer” and that “[i]ndependent claims 1 and 27 of the ‘988 patent claim a
magnetic material and a magnetic device, respectively, comprising the [referenced] structure.”
(Id. at ¶¶ 31-32).
On November 14, 2016, Plaintiff instituted this patent infringement action against
Toshiba Corporation. (Compl. (Doc. 1)). Plaintiff alleges that many of Toshiba Corporation’s
hard disk drives (“HDDs”) incorporate the magnetic structure described in the ‘988 patent and
thus infringe on at least claims 1 and 27. (Id. at ¶¶ 36-37). Plaintiff thrice amended its
complaint, filing the currently-operative Third Amended Complaint on June 24, 2016. (Doc. 82).
With the Third Amended Complaint, Plaintiff added, inter alia, Defendants SAE Magnetics H.K.
Ltd. (“SAE”), Headway Technologies, Inc. (“Headway”) and TDK Corporation (“TDK”). (Id.)
Defendants SAE, Headway and TDK (“the moving Defendants”) all move to dismiss the Third
Amended Complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure
12(b)(2). See (Docs. 103 and 107).
Jurisdictional Facts 1
Defendant Headway is a California corporation with its sole business location in
California. Headway designs and manufactures wafer chips for use in recording heads used in
hard disk drives. (Chen Decl. (Doc. 104-1) at ¶¶ 3, 4, 10). Headway supplies its wafer chips to
Defendant SAE in Hong Kong – and nowhere else. (Id. at ¶¶ 4, 10). SAE incorporates
Headway’s wafer chips into head gimbal assemblies (“HGAs”). SAE sells the head gimbal
assemblies in Hong Kong and China. The head gimbal assemblies are subsequently incorporated
into hard disk drive products by companies such as Defendant Toshiba Corporation. Headway
“designs and optimizes recording heads specifically for [Defendant] Toshiba products.” (Doc.
119 at 9; Docs. 119-1-119-8). Headway denies making, using, offering for sale or selling wafer
The Court of Appeals for the Federal Circuit has held that when a court bases its personal
on affidavits and other written materials, and no jurisdictional hearing is conducted, the
plaintiff usually bears only a prima facie burden. Elecs. for Imaging v. Coyle, 340 F.3d
1344, 1349 (Fed.Cir. 2003). On the other hand, [the court has] explained that the
preponderance standard applies where the parties conduct jurisdictional discovery but no
jurisdictional hearing was necessary because the parties indicated to the district court that
the jurisdictional facts were not in dispute. Pieczenik v. Dyax Corp., 265 F.3d 1329, 1334
Celgard, LLC v. SK Innovation Co., Ltd., 792 F.3d 1373, 1378 (Fed.Cir. 2015).
Here, no jurisdictional hearing was conducted. Yet, Plaintiff engaged in non-jurisdictional
discovery with the Toshiba Defendants prior to filing the Third Amended Complaint. That
exchange of information provided documents that led Plaintiff to file the Third Amended
Complaint. Thus, it is not entirely accurate that no jurisdictional discovery has been conducted,
as Plaintiff has relied on the information it obtained from the Toshiba Defendants in making its
jurisdictional arguments as to the moving Defendants. Without clear guidance as to what
standard should apply in this unique scenario, the Court, in an abundance of caution, opts to
apply the more lenient prima facie standard. The Court notes that it does not appear that any of
the jurisdictional facts are in dispute, though no party has explicitly stated the same. Regardless
of the specific factual burden of proof, the dispositive personal jurisdiction conclusion the Court
reaches infra remains the same.
chips to customers located in Pennsylvania, either directly or through distributors or retailers.
(Doc 104-1 at ¶ 16). Headway contends it does not know whether any of its wafer chips have
ever reached Pennsylvania as a component of a third party product. (Id. at ¶ 17). Headway
claims it has no expectation that its wafer chips, as stand-alone chips or as components of third
party products, would be sold to consumers in Pennsylvania. (Id. at ¶ 18). Plaintiffs have
provided evidence that Toshiba hard disk drives incorporating Headway components are offered
for sale in Pennsylvania. (Docs. 119 at 12, 119-15, 119-16, 119-17 at ¶¶ 2-5).
TDK is a Japanese corporation with its principal place of business in Tokyo, Japan.
(Nagata Decl. (Doc. 128-1) at ¶ 3). TDK has no place of business, office or other location in the
United States. (Id. at ¶ 4). TDK subsidiary Headway is its only subsidiary with any U.S.
connection. (Id.) “TDK does not exercise control over when, where or to whom Headway sells
or ships its wafer chips.” (Id.) TDK manufactures a variety of items, including wafer chips used
in hard drives. (Id. at ¶ 5). TDK sells its wafer chips to SAE, a TDK subsidiary. (Id.) SAE
incorporates them into head gimbal assemblies. (Id.) SAE sells its head gimbal assemblies to
third parties in Asia for commercial production of hard disk drives. (Id. at ¶ 6). “TDK does not
control, participate in, track or monitor the further sale of its wafer chips after they are
incorporated into HGAs and sold by SAE to SAE’s customers.” (Id. at ¶ 11). TDK claims no
actual knowledge or information that any of its wafer chips has reached Pennsylvania as a
component of a third party product. (Id. at ¶ 19). TDK has never had a distributor for
Pennsylvania, or otherwise had an established distribution channel for bringing its wafer chips to
Pennsylvania. (Id. at ¶ 20).
SAE is a Hong Kong corporation, with its principal place of business in Hong Kong.
(Han Decl. (Doc. 128-2) at ¶ 3). SAE manufactures head gimbal assemblies. (Id. at ¶ 5). SAE
purchases wafer chips from Headway and TDK for integration into head gimbal assemblies. (Id.)
SAE sells the head gimbal assemblies to customers who incorporate them into hard disk drives.
(Id. at ¶ 6). In some cases, SAE acts as a contractor for the customer and incorporates the head
gimbal assemblies into the hard drives. (Id.) When acting as a contractor, all of the head gimbal
assemblies are owned by the customer and SAE merely performs contract
manufacturing/assembly services at its manufacturing facility in Dongguan, China. (Id.) SAE
sells to Toshiba Corporation hard disk drives that it manufactures that incorporate Headway
wafer chips. (Id. at ¶ 7). SAE ships the finished hard disk drives to locations globally, as
directed by Toshiba. (Id.) None of the shipment locations are in Pennsylvania. (Id.) SAE has
no role or control over any sales or shipments of hard disk drives subsequent to its initial supply
shipment. (Id. at ¶ 8). SAE’s distribution channel for HGAs that incorporate Headway or TDK
wafer chips, as components for commercial production of HDDs, ends with HGA shipments in
Asia to SAE’s customers. (Id. at ¶ 9). SAE’s distribution channel for HDDs that incorporate
Headway wafer chips ends with SAE’s shipments to locations designated by Toshiba, with the
majority of the shipments to Asia, and none of them to Pennsylvania. (Id.) SAE has not made,
used, offered for sale, or sold an HGA or HDD to a customer located in Pennsylvania, either
directly or through distributors or retailers. (Id. at ¶ 17). SAE has no actual knowledge or
information that any of its HGAs or HDDs has ever reached Pennsylvania as a component of a
third party product. (Id. at ¶ 18). SAE does not have a distributor for Pennsylvania, or otherwise
have an established distribution channel for bringing SAE’s HGAs or HDDs to Pennsylvania.
(Id. at ¶ 19).
Plaintiff argues SAE, TDK and Headway’s manufactured component parts are critical to
Toshiba’s finished hard disk drive devices. (Doc. 119 at 8).
Federal Circuit law governs questions of personal jurisdiction over claims of patent
infringement. Autogenomics, Inc. v. Oxford Gene Technology, Ltd., 566 F.3d 1012, 1016
(Fed.Cir. 2009) (“[T]he jurisdictional issue is intimately involved with the substance of patent
law.”). There are two types of personal jurisdiction – general and specific. Plaintiff does not
contend any moving Defendant is subject to general jurisdiction. Thus, the question turns on
whether the Court has specific jurisdiction over any of the non-resident moving Defendants.
A determination as to whether a defendant is subject to specific personal jurisdiction
involves two questions: “first, whether the forum state’s long arm statue permits service of
process and, second, whether the assertion of jurisdiction is consistent with the due process
clause.” Celgard LLC v. SK Innovation Co., Ltd., 792 F.3d 1373, 1377 (Fed.Cir. 2015) (internal
citations omitted). Pennsylvania’s long-arm statute provides for jurisdiction “to the fullest
extent” permitted under the Due Process Clause of the Fourteenth Amendment, 42 Pa. Cons.
Stat. § 5322(b), thus merging the two inquiries into one, i.e., whether the exercise of personal
jurisdiction comports with due process.
Due process requires that a defendant have sufficient “minimum contacts with the [forum
state] such that maintenance of the suit does not offend traditional notions of fair play and
substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation
marks and citations omitted). To determine whether the due process requirement for specific
personal jurisdiction is met the Court considers:
(1) whether the defendant purposefully directed its activities at residents of the forum
state, (2) whether the claim arises out of or relates to the defendant's activities with the
forum state, and (3) whether assertion of personal jurisdiction is reasonable and fair.
Grober v. Mako Products, Inc., 686 F.3d 1335, 1346 (Fed.Cir. 2012) (quoting Elecs. for
Imaging Inc. v. Coyle, 340 F.3d 1344, 1350 (Fed.Cir. 2003)). The plaintiff bears the
burden of affirmatively establishing the first two elements of the due process
requirement. Elecs. for Imaging, 340 F.3d at 1350. If the plaintiff meets its burden, the
burden shifts to the defendant to prove that personal jurisdiction is unreasonable. Id.
“The first two factors correspond with the ‘minimum contacts' prong” of International
Shoe, “and the third factor corresponds with the ‘fair play and substantial justice’ prong.”
Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed.Cir.2001).
Celgard, 792 F.3d at 1377-78.
Plaintiff advances two distinct theories of specific personal jurisdiction. First, Plaintiff
argues a “stream of commerce” jurisdictional theory, relying on Toshiba’s incorporation of the
moving Defendants’ components into hard disk drive devices that are sold nationwide, including
in the Western District of Pennsylvania. (Doc. 119 at 17; Doc. 149 at 15). Second, Plaintiff
argues that the moving Defendants’ relationship and contract with Carnegie Mellon University’s
Data Storage Systems (an entity located in the Western District of Pennsylvania) to fund research
into technologies that will be incorporated into infringing instrumentalities and sold in the
Western District of Pennsylvania subjects the moving Defendants to personal jurisdiction. (Doc.
119 at 23; Doc. 149 at 23). Plaintiff additionally argues as to TDK and SAE that this Court
should exercise jurisdiction pursuant to the Federal long-arm statute. (Doc. 149 at 28).
“The Supreme Court has yet to reach a consensus on the proper articulation of the
stream-of-commerce theory.” AFTG-TG LLC, v. Nuvoton Tech. Corp., 689 F.3d 1358, 1362
(Fed.Cir. 2012); see also Polar Electro Oy v. Suunto Oy, 829 F.3d 1343, 1349 (Fed.Cir. 2016).
What remains unanswered is “whether mere placement into the stream of commerce is sufficient
to establish jurisdiction, or whether intent that the products reach the forum is required.”
Celgard LLC v. SK Innovation Co. Ltd., at 1381 (summarizing the plurality and differing
opinions in Asahi Metal Industry Co. v. Superior Court of California, Solano County, 480 U.S.
102 (1987)). In Asahi, Justice O’Connor, joined by three justices, “opined that mere
foreseeability or awareness is insufficient, and that there must be some additional conduct of the
defendant purposefully directed toward the forum state,” whereas Justice Brennan, joined by
three other justices, concluded that “mere foreseeability or awareness of the defendant that its
product would wind up in the forum state is sufficient.” Polar Electro Oy, 829 F.3d at 1348-49
(summarizing the competing opinions in Asahi).
The Court of Appeals for the Federal Circuit has yet to take a position as to which Asahi
theory should govern its stream of commerce analysis, finding with each fact pattern it analyzes
that the result would be the same under either theory and obviating the need to reach a
conclusion. See, e.g., Polar Electro Oy, 829 F.3d at 1350 (“The record shows that [Defendant’s]
actions satisfy the more stringent tests articulated by Justice O’Connor in Asahi and by Justice
Kennedy in McIntyre, as well as the more flexible test by Justice Brennan.”); Celgard, 792 F.3d
at 1382 (“[W]e do not need to resolve the question as the results of the case are the same under
either formulation of the stream of commerce test.”); Beverly Hills Fan Co. v. Royal Sovereign
Corp., 21 F.3d 1558, 1566 (Fed.Cir. 1994)(“We need not join this debate here, since we find that,
under either version of the stream of commerce theory, plaintiff made the required jurisdictional
As the Court reads them, the facts of this case require this Court to take a position on
which Asahi test applies. Regardless of whether any of the moving Defendants have actual
knowledge that hard drive devices containing their products are offered for sale in Pennsylvania
– and the Court notes that each moving Defendant takes the position that it has no actual
knowledge of the same – the moving Defendants do know that their products are incorporated
into many Toshiba hard disk drives and could reasonably surmise, based on the breadth of
Toshiba’s distribution network, that products containing the moving Defendants’ component
parts are offered for sale in Pennsylvania. This would seem to satisfy the Brennan foreseeability
However, the Court finds not only that the O’Connor test controls but also that it best
comports with the principles of due process, fair play and substantial justice. A defendant must
do more than simply place a product into the stream of commerce. Some purposeful act directed
at the forum state is required. See J. McIntyre Mach. Ltd., v. Nicastro, 564 U.S. 873, 880 -85
(Kennedy, J.) (concluding in a plurality opinion that “purposeful availment” in the form of
“target[ing] the forum” is required under the stream of commerce theory); id. at 890-91 (Breyer,
J., concurring) (rejecting the idea that “a producer is subject to jurisdiction ... so long as it knows
or reasonably should know that its products are distributed through a nationwide distribution
system that might lead to those products being sold in any of the fifty states”); Asahi, 480 U.S. at
111–12 (O’Connor, J.) (requiring “something more than that the defendant was aware of its
product’s entry into the forum State through the stream of commerce”); see also Jennings v. AC
Hydraulic A/S, 383 F.3d 546, 550 n. 2 (7th Cir.2004) (noting that Asahi “left open the question
See Commissariat A L'Energie Atomique v. Chi Mei Optoelectronics Corp., 395 F.3d 1315,
1321–22 (Fed. Cir. 2005) (“The evidence on the established distribution channels presented by
[Plaintiff] suggests that the flow of [Defendant’s] products to Delaware is ‘regular and
anticipated,’ and more than ‘unpredictable currents or eddies,’ thus likely satisfying Justice
Brennan's version of the stream of commerce theory. “); DSM Desotech, Inc. v. Momentive
Specialty Chemicals, Inc., No. 2:15-CV-70, 2015 WL 7450893, at *9 (S.D. Ohio Nov. 24, 2015),
report and recommendation adopted, No. 2:15-CV-70, 2015 WL 8773473 (S.D. Ohio Dec. 14,
2015) (“[Defendant’s] representation that all of its sales of its products […] ‘were made to an
entity in China,’ […] does not, as [Defendant] suggests, defeat personal jurisdiction under a
stream-of-commerce theory.); Kingsmill v. Roundo AB, No. CIV. 12-3524, 2013 WL 3778351,
at *6 (E.D. Pa. July 18, 2013) (“[U]nder Justice Brennan’s standard, although the stream of
commerce does not consist of unpredictable currents or eddies as long as a participant in this
process is aware that the final product is being marketed in the forum State, the possibility of a
lawsuit there cannot come as a surprise.”) (internal citations and quotations omitted); Renner v.
Roundo AB, No. 1:08-CV-209, 2010 WL 3906242, at *9 (W.D. Pa. Sept. 29, 2010) (“Justice
Brennan’s theory would find the necessary minimum contacts whenever there is a ‘regular and
anticipated flow of products from manufacture to distribution to retail sale’”);
whether a plaintiff making a stream-of-commerce argument needs to make an additional showing
that the defendant purposefully directed its business activities at the forum state”); see also
World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 296 (1980) (“[W]e are unwilling to
endorse a[ ] principle that amenability to suit would travel with the chattel.”); accord Davlyn
Manufacturing Co., Inc., v. H&M Auto Parts, Inc., 414 F.Supp.2d 523, 531 (E.D.Pa. 2005)
(applying Federal Circuit law to analyze personal jurisdiction and concluding that the O’Connor
test holds and that “there must be some additional evidence of the defendant’s purpose and intent
to serve the forum state, such as state-specific marketing or design, the provision of customer
support services, or an exclusive contractual relationship with a distributor in the forum state.”).
Accordingly, the Court declines to exercise personal jurisdiction over the moving
Defendants on the theory that they placed their products into the stream-of-commerce. Plaintiff
has failed to make a prima facie showing that jurisdiction would be proper. The Court’s exercise
of jurisdiction would be based on the mere foreseeability that the moving Defendants’ hard drive
disk components would be offered for sale in Pennsylvania as part of finished products they had
no role in distributing. This is insufficient to comport with the requirements of due process. The
individual components manufactured by the moving Defendants are not available or offered for
sale in Pennsylvania. None of the moving Defendants advertise in Pennsylvania. Even relying
on what the Court views as Plaintiff’s strongest fact – that Headway collaborates with Toshiba to
design Headway components specifically for Toshiba hard disk drives – the Court cannot reach
the conclusion that Headway has taken any affirmative steps to direct its products toward
Pennsylvania. The most affirmative action Headway has taken was to distribute its products to
TDK, SAE and/or Toshiba in Asia. There is simply no way for the Court to reach a conclusion
that Headway – or TDK or SAE – has any control over the marketing or distribution scheme
employed by Toshiba for its hard disk drives. The moving Defendants have not targeted the
forum state for distribution of their products.
Moreover, the Court finds that the moving Defendants relationship with the Carnegie
Mellon University’s Data Storage Systems Center (the “DSSC”) insufficient to confer personal
jurisdiction. Plaintiff’s contention, that because the moving Defendants fund research at the
DSSC and have hired former Carnegie Mellon DSSC employees this creates the kind of contact
with the forum state required by due process, misunderstands the tenets of personal jurisdiction.
The type of relationship the moving Defendants have with Carnegie Mellon’s DSSC is
inadequate to confer general jurisdiction – as it is too attenuated – and fails to meet both the
reasonableness requirement of the Court of Appeals for the Federal Circuit’s specific jurisdiction
and the requirement that the infringement claim arise out of or relate to the defendant’s activities
with the forum state. That the subject matter of the research being conducted at the Carnegie
Mellon DSSC overlaps with the subject matter of the suit would not make this Court’s exercise
of personal jurisdiction over the moving Defendants proper.
Plaintiff also argues that TDK and SAE should be subject to personal jurisdiction under
the Federal long-arm statute. (Doc. 149 at 28). The Court disagrees. As Plaintiff explains:
Federal long-arm jurisdiction exists when (1) the plaintiff’s claim arises out of 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. Synthes
(U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip Medico, 563 F.3d 1285, 1294 (Fed.Cir.
A claim for patent infringement arises out of federal law. 28 U.S.C. § 1338(a). Regarding
the second prong, in order to defeat Rule 4(k)(2) jurisdiction, the defendant must “name
some other state in which the suit could proceed.” Touchcom, Inc. v. Bereskin & Parr,
574 F.3d 1403, 1415 (Fed. Cir. 2009) (quotations omitted).
Id. TDK and SAE represent that both entities would be amenable to suit in California, where
Headway is located. (Doc. 153 at 6). Thus, this Court exercising jurisdiction pursuant to the
Federal long-arm statute would be improper.
For the reasons stated above, Defendants Headway Technologies, Inc., SAE Magnetics
H.K. Ltd. and TDK Corporation’s Motions to Dismiss (Docs. 103 and 127) are GRANTED.
Accordingly, all claims against Defendants Headway Technologies, Inc., SAE Magnetics H.K.
Ltd. and TDK Corporation are DISMISSED WITH PREJUDICE.
IT IS SO ORDERED.
March 1, 2017
United States District Judge
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