Canatelo, LLC v. Nuvico, Inc.

Filing 35

OPINION AND ORDER GRANTING 12 MOTION to Dismiss; GRANTING 33 MOTION for Leave to File Spanish language documents filed by Canatelo, LLC. Signed by Judge Jay A Garcia-Gregory on 8/27/2013.(RJC)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
CANATELO, LLC,
Plaintiff

CIVIL NO. 12-1430 (JAG)

v.
NUVICO, INC.,
Defendant

OPINION AND ORDER
GARCIA-GREGORY, D.J.
Before the Court is a motion to dismiss filed by defendant
NUVICO, Inc. (“Nuvico”). (Docket No. 12). Plaintiff Canatelo,
LLC (“Canatelo”) timely filed a response. For the reasons set
forth, the Court GRANTS the motion to dismiss under Fed. R. Civ.
P. 12(b)(2) for lack of personal jurisdiction.
FACTUAL AND PROCEDURAL BACKGROUND
On
action

June

against

specifically
Patent

4,

Nos.

6,476,858

the

2012,

Canatelo

filed

Nuvico

alleging

EasyNet

DVRs,

7,310,111

(hereinafter

“858

patent

that

infringe

(hereinafter
the

a

infringement

Nuvico’s
upon

the

patent”).

products,

Canatelo’s

“111

U.S.

patent”)

Canatelo

seeks

and
to

recover damages, legal fees, and costs pursuant to the Patent
Laws contained in 35 U.S.C. § 271 et seq.

Civil No. 12-1430

2

Nuvico, a corporation incorporated in the State of Delaware
with its principal place of business in New Jersey, moves to
dismiss the present action for lack of personal jurisdiction
under Fed. R. Civ. P. 12(b)(2). Nuvico resells and services
electronic video surveillance and security products, devices,
and

related

Furthermore,

equipment
with

the

that

is

exception

manufactured

of

some

sales

by
to

others.

businesses

located in Puerto Rico, NUVICO does not have any meaningful ties
with the island. Nuvico argues that personal jurisdiction is
absent because it lacks sufficient minimum contacts with Puerto
Rico, and as such the continuation of this action would offend
the traditional notions of fair play and susbtantial justice.
Alternatively,

Nuvico

moves

to

dismiss

or

transfer

the

instant action for improper venue pursuant to Fed. R. Civ. P.
12(b)(3) and 28 U.S.C. § 1400(b). Finally, Nuvico argues that in
the event that this court finds that sufficient contacts exist
to

establish

personal

jurisdiction,

Canatelo’s

claims

for

induced and contributory patent infringement should be dismissed
for failure to state a claim upon which relief can be granted
pursuant to Fed. R. Civ. P. 12(b)(6).
ANALYSIS
In order for a court to be able to adjudicate a case, the
plaintiff

must

be

evidence,

that

the

able

to

court

show,

has

by

a

personal

preponderance
jurisdiction

of

the

over

the

Civil No. 12-1430

3

parties.1 M. Maropakis Carpentry, Inc. v. United States, 609 F.3d
1323, 1327 (Fed. Cir. 2010); see also Daynard v. Ness, Motley,
Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir.
2002).

Whenever

establishing

the
prima

can

defendant

a

move

plaintiff
facie
to

fails

case

of

dismiss

to

meet

personal
the

the

burden

jurisdiction,

action

pursuant

of
a
to

Fed.R.Civ.P. 12(b)(2).
The burden of establishing a prima facie case of personal
jurisdiction is predicated upon a showing that the forum’s longarm

statute

consistent

grants

with

the

jurisdiction

and

Due

Clause

Process

that

its

of

assertion

is

the

Constitution.

Dainippon Screen Mfg. Co., Ltd. v. CFMT, Inc., 142 F.3d 1266,
1269-70

(Fed.

Cir.

1998)

(citations

omitted).

Since

Puerto

Rico’s long-arm statute is coextensive with the limits of due
process,

we

will

compress

it

with

constitutional

inquiry

of

whether the exercise of jurisdiction in this case comports with
due process. See Hannon v. Beard, 524 F.3d 275, 280 (1st Cir.
2008); see also Dainippon Screen, 142 F.3d at 1270 (citations
omitted).
The constitutional test for personal jurisdiction consists
of

a

“minimum

contacts

inquiry”

and

a

“fairness

inquiry.”

Marcinkowska v. IMG Worldwide, Inc., 342 Fed. App’x 632, 635
1

Federal Circuit law governs the jurisdictional analysis in a
case such as this one, where the claim involves issues of patent
law. Autogenomics Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012,
1016 (Fed. Cir. 2009).

Civil No. 12-1430

4

(Fed. Cir. 2009) (citing World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286 (1980)). Specifically, the Due Process Clause of
the Constitution requires a court to first determine whether an
out-of-state defendant has sufficient “minimum contacts” with
the

forum,

and

second,

whether

the

exercise

of

jurisdiction

offends the “traditional notions of fair play and substantial
justice.” International Shoe Co. v. Washington, 326 U.S. 310,
316 (1945). The exercise of personal jurisdiction comports with
due process “if the defendant purposely avails itself of the
privilege of conducting activities within the forum state, such
that the defendant should reasonably anticipate being haled into
court

there.”

citation

and

Marcinkowska,
quotation

342

marks

Fed.

App’x

omitted)

at

635

(quoting

(internal
Hanson

v.

Denckla, 357 U.S. 235, 253 (1958); World-Wide Volkswagen, 444
U.S. at 297)).
Moreover, a court may assert either general or specific
jurisdiction

over

an

out-of-state

defendant.

General

jurisdiction exists when the defendant’s contacts with the forum
state are “substantial” or “continuous and systematic,” even if
said contacts are unrelated to the cause of action. Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984); see
also United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 623
(1st

Cir.

2001).

This

is

a

quite

stringent

and

exacting

standard, “as it permits a defendant to be hauled into court in

Civil No. 12-1430

5

the forum state to answer for any of its activities anywhere in
the world.” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d
797, 801 (9th Cir. 2004) (citation omitted); see also Harlow v.
Children’s Hosp., 432 F.3d 50, 57 (1st Cir. 2005).
In the absence of general jurisdiction, a court may still
exercise

specific

jurisdiction

over

the

defendant

if

the

plaintiff’s cause of action arises from, or relates sufficiently
to, the defendant’s contacts with the forum. Helicopteros, 466
U.S.

at

414;

Swiss

Am.

Bank,

274

F.3d

at

623.

Courts

must

determine if specific jurisdiction exists by applying a three
prong test, assessing “(1) whether the defendant purposefully
directed activities at residents of the forum; (2) whether the
claim arises out or relates to those activities; and (3) whether
assertion

of

personal

jurisdiction

is

reasonable

and

fair.”

Nuance Commc’ns, Inc. v. Abby Software House, 626 F.3d 1222,
1231 (Fed. Cir. 2010) (citing Akro Corp. v. Luker, 45 F.3d 1541,
1545-46 (Fed. Cir. 1995)).
General jurisdiction is not an issue in this case. Canatelo
does

not

dispute

that

general

jurisdiction

over

Nuvico

is

lacking. Whether this omission was by inadvertence or conscious
realization

that

Nuvico

lacks

“continuous

and

systematic”

contacts with Puerto Rico, the argument is waived. See Local
Rule 7 of the District of Puerto Rico. With respect to specific
jurisdiction,

Canatelo

has

failed

to

meet

its

burden

to

Civil No. 12-1430
establish

a

6

prima

facie

case

of

personal

jurisdiction.

An

application of the three prong test requires us to conclude that
an

assertion

of

specific

jurisdiction

over

Nuvico

would

be

inconsistent with constitutional due process.

Specific Jurisdiction
With

respect

to

the

first

prong

of

the

specific

jurisdiction analysis, Canatelo’s main argument is that Nuvico
purposefully

conducted

business

in

the

forum

through

an

established distribution channel with the expectation that its
products would be sold in Puerto Rico. According to Canatelo,
this

distribution

channel

included

an

authorized

dealer

that

sold Nuvico’s products in Puerto Rico. Canatelo argues that even
though Nuvico did not engage in direct sales in Puerto Rico, it
sold its products to various businesses, which in turn sold them
to consumers in the forum. These arguments are unavailing and
fall short from demonstrating that Nuvico purposefully directed
activities at residents of the forum.
First,

it

cannot

be

said

that

Nuvico

has

purposefully

directed its sales to this forum so as to avail itself of the
benefits

and

protections

of

Puerto

Rico

law.

Nuvico,

for

example, has not engaged in marketing and advertising activities
in the forum and has neither targeted nor solicited sales in
Puerto

Rico.

Furthermore,

contrary

to

Canatelo’s

assertions,

Civil No. 12-1430

7

Nuvico does not have and has never had any contractual relation
with Security System Solutions, the alleged authorized dealer.
(Docket No. 26 Exhibit B). As evidenced in the declaration of
Joel Ocasio, President of Security System Solutions, Nuvico has
never

contractually

“authorized,

designated

exclusive

or

Ocasio’s

otherwise,

company

reseller”

of

as

an

Nuvico’s

products. Id. It follows that Nuvico has not demonstrated an
“intent or purpose to serve the residents of this forum” by
engaging

in

direct

sales

and

making

its

products

readily

accessible to consumers. See Commissariat A L’Energie Atomique
v. Chi Mei Optoelectronics Corp., 395 F.3d 1315, 1323 (Fed. Cir.
2005).
Nuvico’s only contact with Puerto Rico has been the sale
and shipment of some products to a few independent vendors since
2005. While it is true that Nuvico’s volume of sales in Puerto
Rico since 2005 amounts to less than 1% of its total sales,
Canatelo is right in pointing out that Nuvico’s sales is not a
dispositive

factor

under

the

first

prong

of

the

specific

jurisdiction analysis. See Ajax Realty Corp. v. J.F. Zook, Inc.,
493 F.2d 818, 821-22 (4th Cir. 1972) (“[A]lthough percentage of
total sales may be a factor to be considered, it cannot be
dispositive,

for

a

small

percentage

of

the

sales

of

a

corporation giant may indeed prove substantial in an absolute
sense.”). Regardless of how substantial were Nuvico’s revenues

Civil No. 12-1430

8

in Puerto Rico, Nuvico’s shipments to two businesses in this
forum were at best isolated and sporadic.
In Beverly Hills Fan Co. v. Royal Sovereign Co., the court
exercised personal jurisdiction over two defendants on the basis
that defendants had placed the accused product in the stream of
commerce, which resulted in the presence of fifty-two fans in
the forum state, and had provided a warranty to those residents
that purchased the product. 21 F.3d 1558, 1563-65 (Fed. Cir.
1994).

Unlike

the

ongoing

relationship

that

existed

between

defendants and the forum in Beverly Hills Fan Co., there is no
evidence

in

this

case

that

Nuvico

has

targeted

Puerto

Rico

residents or that it has served consumers through established
distribution channels. See Id. at 1566 n. 15 (“The presence of
an established distribution channel is a significant factor in
the cases . . . involving the stream of commerce theory. In
[those] cases, in which jurisdiction over the non-resident was
found to exist, there was an established distribution channel
into

the

Nuvico

forum.”).

products

Likewise,

sold

in

there

Puerto

is

Rico

no

are

evidence
covered

by

that
a

the

valid

Nuvico warranty. Since Nuvico’s sporadic and isolated shipments
to

Puerto

Rico

have

been

at

the

request

of

third

parties,

Nuvico’s contacts with Puerto Rico are far less extensive than
defendants’ contacts with the forum state in Beverly Hills. See
AFTG-TG, LLC v. Nuvoton Technology Corp., 689 F.3d 1358, 1365

Civil No. 12-1430

9

(Fed. Cir. 2012) (holding that defendants’ sporadic and isolated
shipments

to

personal

the

forum

state

jurisdiction);

see

were

also

insufficient
Southco

to

Inc.,

establish

v.

Fivetech

Technology Inc., -- F. Supp. 2d --, 2011 WL 71440 at *5 (E.D.
Pa. Jan 10, 2011) (citation omitted) (holding that a defendant
“will not be hauled into a jurisdiction solely as a result of
random, fortuitous, or attenuated contacts, or of the unilateral
activity of another party or a third person”).
Even

assuming

that

Nuvico

has

purposefully

directed

its

activities towards Puerto Rico residents so as to invoke the
benefits

and

protections

of

the

forum’s

laws,

Canatelo

has

failed to establish that its patent infringement claim arises
out

or

relates

Canatelo’s

to

failure

Nuvico’s
to

satisfy

activities
the

towards

relatedness

the

prong

forum.
of

the

specific jurisdiction analysis is fatal to its prima facie case.
“When the nexus between the forum contacts and the cause of
action is too attenuated,” such as in this case, “it violates
fundamental fairness to force a defendant with non-continuous or
non-systematic contacts to defend [it]self in that forum.” Swiss
Am. Bank, 274 F.3d at 623 (citing Massachusetts Sch. of Law at
Andover,

Inc.

v.

Am.

Bar

Ass'n,

142

F.3d

26,

36

(1st

Cir.

1998)). The relatedness prong “ensures fundamental fairness by
protecting a defendant from being hauled into an out-of-state
forum based on a single contact with that forum that is wholly

Civil No. 12-1430

10

unrelated to the suit at issue.” Swiss Am. Bank, 274 F.3d at 623
(citing

World-Wide

Volkswagen,

444

U.S.

at

291-92;

Phillips

Exeter Acad. v. Howard Phillips Fund, 196 F.3d 284, 288 (1st
Cir. 1999)) (emphasis added). It follows that the absence of
evidence linking Canatelo’s claim to Nuvico’s limited contacts
with Puerto Rico precludes this Court from exercising personal
jurisdiction over Nuvico. In other words, Nuvico’s contacts with
Puerto Rico are not sufficiently connected with Canatelo’s cause
of action to satisfy due process.
In
record

Nuvoton,

the

Federal

Circuit

contained

no

evidence

that

noted

that

defendants’

because

the

isolated

and

sporadic shipments to the forum state included the allegedly
infringing products, the plaintiff’s patent infringement claims
did not arise from -or were otherwise related to- these drop
shipments. 689 F.3d at 1361-62. Similarly, there is no evidence
in this case that Nuvico’s drop shipments included the putative
infringing products. The EasyNet DVRs, which became available on
September 2011, have never been sold, shipped, or even used in
Puerto Rico since that date. Since Nuvico’s only contacts with
Puerto

Rico

consist

of

sporadic

and

isolated

shipments

of

products that are not those allegedly infringing on Canatelo’s
patents, there is no nexus between Nuvico’s limited activities
in

the

forum

and

Canatelo’s

patent

infringement

claim.

Cf.

Beverly Hills Fan Co., 21 F.3d at 1565 (finding that the cause

Civil No. 12-1430

11

of action for patent infringement was related to defendant’s
activities

towards

the

forum

because

defendants

purposefully

shipped the accused fan into the forum state). Consequently,
Canatelo’s patent infringement claim does not arise out of, or
sufficiently relate to, Nuvico’s activities in the forum for
purposes of establishing specific jurisdiction.
Finally,

there

is

no

need

to

delve

into

the

arguments

concerning the third prong of the test. See Swiss Am. Bank, 274
F.3d at 626 (“[I]f the plaintiff fails to make a strong showing
with

respect

to

the

first

two

prongs,

then

the

exercise

of

personal jurisdiction is more likely to be found unreasonable
under

the

third

prong.”);

see_also

Akro,

45

F.3d

at

1549

(citations omitted). Canatelo is not being deprived of pursuing
its

patent

personal

infringement

jurisdiction

action

over

in

Nuvico,

another
such

as

forum
Delaware

that

has

and

New

Jersey. Since there has been no purposeful contact related to
Canatelo’s cause of action, an exercise of personal jurisdiction
over Nuvico would necessarily be unreasonable and one that would
offend “the traditional notions of fair play and susbtantial
justice.” International Shoe, 326 U.S. at 316.

Jurisdictional Discovery
Canatelo

argues

that

it

is

entitled

to

jurisdictional

discovery in the event that there is not sufficient evidence to

Civil No. 12-1430

12

justify the assertion of personal jurisdiction over Nuvico.2 The
First Circuit has stated that “a diligent plaintiff who sues an
out-of-state corporation and who makes out a colorable case for
the existence of in personam jurisdiction may well be entitled
to

a

modicum

of

jurisdictional

discovery

if

the

corporation

interposes a jurisdictional defense.” Grp. of Former Employees
of Sprague Caribe v. Am. Annuity Grp., Inc., 388 F. Supp. 2d 3,
5 (D.P.R. 2005) (quoting Sunview Condominium Ass’n v. Flexel
Int’l,

Ltd.,

116

F.3d

962,

964

(1st

Cir.

1997))

(emphasis

added). Moreover, the plaintiff’s “failure to allege specific
contacts, relevant to establish personal jurisdiction, can be
fatal to jurisdictional discovery request.” Mapfre Puerto Rico
v. Guadalupe-Delgado, 608 F. Supp. 2d 255, 263 (D.P.R. 2009)
(citing Swiss Am. Bank, 274 F.3d at 626-27).
Canatelo

is

not

entitled

to

jurisdictional

discovery

in

this case for various reasons. First, Canatelo has failed to
allege

specific

activities

that

Nuvico

purposefully

directed

towards the forum and that were sufficiently related to the
patent infringement action at bar. By failing to do so, Canatelo
did not make a colorable case for the existence of personal
jurisdiction

2

over

Nuvico.

Nuvico

has

effectively

refuted

Since jurisdictional discovery is a procedural matter that is
not unique to patent law, the decision of whether to grant or
deny a party’s request for jurisdictional discovery is governed
by the law of the regional circuit. Nuance, 626 F.3d 1222.

Civil No. 12-1430
Canatelo’s

few

13
specific

factual

allegations,

such

as

the

existence of the so-called authorized dealer. With the exception
of the authorized dealer allegation, Canatelo has relied almost
exclusively

on

“conclusory

non-fact-specific

jurisdictional

allegations.” Jazini v. Nissan Motors Co., 148 F.3d 181, 185-86
(2d

Cir.

1998).

This

conclusory

approach

reflects

Canatelo’s

lack of diligence in providing sufficient evidence to satisfy
the

jurisdictional

three-prong

test.

When

this

happens,

a

request for jurisdictional discovery should be rejected. See id.
(denying plaintiff’s request for jurisidictional discovery on
the basis that the plaintiff made conclusory allegations against
the defendant); see also McLaughlin v. McPhail, 707 F.2d 800,
806 (4th Cir. 1983) (denying jurisdictional discovery on the
basis

that

plaintiff

“offered

nothing

beyond

his

bare

allegations that the defendants had had significant contacs with
the [forum] state. . . .”).
In United States v. Swiss Am. Bank, Ltd., the court denied
a request for jurisdictional discovery on the basis that the
government offered “scant evidence” to support the fact that
they

had

stated

a

“colorable

claim

in

satisfaction

of

the

minimum contacts requirement for specific jurisdiction.” 116 F.
Supp. 2d 217, 222 (D. Mass. 2000). The court emphasized the
government’s

failure

to

make

a

colorable

claim

as

to

the

relatedness element of the test for specific jurisdiction. Id.

Civil No. 12-1430

14

Similarly, Canatelo “has made no colorable claim sufficient to
entitle it to any further discovery.” Id.
Finally, Canatelo’s request for jurisdictional discovery is
“aimed upon finding the exact amount of sales that Nuvico has
undertaken in Puerto Rico over the years; the products that have
been sold to Puerto Rico customers directly or through resellers
and/or

authorized

dealers

and

the

purchasing

system

and

agreements between Nuvico and its Puerto Rico resellers and/or
authorized

dealers.”

(Docket

No.

15).

Nuvico,

however,

has

already submitted declarations and affidavits that refute some
of

Canatelo’s

information
inquiry.
would

conclusory

that

is

Furthermore,

not

cure

the

allegations

relevant
the

to

and

the

information

insufficiency

provide

present
that

of

substantial

jurisdictional

Canatelo

evidence

requests

necessary

to

satisfy the second prong of the personal jurisdiction test. This
information is mostly irrelevant for purposes of establishing
the nexus between Nuvico’s limited activities towards the forum
and Canatelo’s cause of action. Since Canatelo failed to make a
colorable claim for jurisdiction, its request for jurisdictional
discovery is denied. See Nuance, 626 F.3d at 1236 (citations and
quotation

marks

jurisdictional

omitted)
discovery

(stating
“when

it

that
is

a

court

clear

that

may

deny

further

discovery would not demonstrate facts sufficient to constitute a
basis for jurisdiction, or where the request for discovery is

Civil No. 12-1430
based

on

little

15
more

than

a

hunch

that

it

might

yield

jurisdictionally relevant facts.”).

CONCLUSION
For the reasons stated above, the Court GRANTS Nuvico’s
motion to dismiss under Fed. R. Civ. P. 12(b)(2) for lack of
personal

jurisdiction.

infringement

claim

As

against

a

result,

Nuvico

is

Canatelo’s

patent

dismissed

without

prejudice. Consequently, this court need not entertain Nuvico’s
other motions to dismiss under Fed. R. Civ. P. 12(b)(3) for
improper venue and under Fed. R. Civ. P. 12(b)(6) for failure to
state a claim upon which relief cannot be granted.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 27th day of August, 2013.

S/Jay A. Garcia-Gregory
JAY A. GARCIA-GREGORY
United States District Judge