DRAM Technologies, LLC v America II Group, Inc. et al
Filing
234
MEMORANDUM OPINION AND ORDER - for the following reasons, the court DENIES Defendant Elite Semiconductors Motion to Dismiss for Lack of Personal Jurisdiction. Signed by Judge T. John Ward on 9/30/2011. (ch, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
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DRAM TECHNOLOGIES LLC,
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Plaintiff,
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v.
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AMERICA II GROUP, INC. d/b/a AMERICA §
II CORP., ET AL.,
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Defendant.
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CASE NO. 2:10-CV-45-TJW
MEMORANDUM OPINION AND ORDER
I.
Introduction
Before the Court is Defendant Elite Semiconductor Technology Inc.‟s (“Elite
Semiconductor”) Motion to Dismiss for Lack of Personal Jurisdiction. (Dkt. No. 128.) The
Court has carefully considered the motion and the parties‟ respective arguments and for the
following reasons DENIES Defendant Elite Semiconductor‟s Motion to Dismiss for Lack of
Personal Jurisdiction.
II.
Factual and Procedural Background
Plaintiff DRAM Technologies LLC (“DRAM” or “Plaintiff”) has filed this patent
infringement lawsuit against various defendants for their infringement of four of Plaintiff‟s
patents. Elite Semiconductor is a defendant in this patent infringement lawsuit because of its
allegedly infringing memory chips and/or devices. Elite Semiconductor is a company based and
run out of Taiwan. Elite Semiconductor argues that it does not have sufficient contacts with this
forum for it to exercise personal jurisdiction over Elite Semiconductor.
III.
Discussion
A.
Applicable Law Regarding Personal Jurisdiction
Federal Circuit law governs the issue of personal jurisdiction in this patent infringement
case involving an out-of-state defendant. Deprenyl Animal Health, Inc. v. Univ. of Toronto
Innovations Found., 297 F.3d 1343, 1348 (Fed. Cir. 2002). Personal jurisdiction is appropriate
over the defendant if the state‟s long-arm statute permits the assertion of jurisdiction without
violating federal due process. Nuance Commc’ns, Inc. v. Abbyy Software House, 626 F.3d 1222,
1230 (Fed. Cir. 2010). Texas‟s long-arm statute reaches to the constitutional limits; therefore, we
only ask if exercising jurisdiction over the defendant would offend due process and the
jurisdictional analysis under Texas and federal law are the same. Revell v. Lidov, 317 F.3d 467,
469-70 (5th Cir. 2002).
The “constitutional touchstone” for determining whether personal
jurisdiction over the defendant would offend due process is “whether the defendant purposefully
established „minimum contacts‟ in the forum.” Burger King Corp v. Rudzewicz, 471 U.S. 462,
474 (1985) (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). In addition, once the
defendant‟s “minimum contacts” with the forum have been established, the Court must also
consider whether the “assertion of personal jurisdiction would comport with „fair play and
substantial justice.‟” Id. at 466 (citing Int’l Shoe, 326 U.S. at 320).
Personal jurisdiction has generally been divided into two categories: general personal
jurisdiction and specific personal jurisdiction. General personal jurisdiction “requires that the
defendant have „continuous and systematic‟ contacts with the forum state and confers personal
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jurisdiction even when the cause of action has no relationship with those contacts.” Silent Drive,
Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1200 (Fed. Cir. 2003). General personal jurisdiction is
not at issue in the present case. To determine whether specific personal jurisdiction exists,
however, the Federal Circuit applies a three prong test: (1) whether the defendant purposefully
directed activities at residents of the forum; (2) whether the claim arises out of or relates to those
activities; and (3) whether assertion of personal jurisdiction is reasonable and fair. Nuance
Commc’ns, 626 F.3d at 1231. The first two elements relate to the requirement of “minimum
contacts” and the third element relates to the notion of “fair play and substantial justice.” See id.;
Akro Corp. v. Luker, 45 F.3d 1541, 1545-46 (Fed. Cir. 1995).
Where the parties have not conducted jurisdictional discovery, the plaintiff need only make
a prima facie showing that the defendant is subject to personal jurisdiction. Silent Drive, 326 F.3d
at 1201. Under that standard, the pleadings and affidavits are to be construed in the light most
favorable to the plaintiff.
Id.
Where the parties, however, have conducted jurisdictional
discovery, the plaintiff bears the burden of proving by a preponderance of the evidence that
personal jurisdiction exists. See Pieczenik v. Dyax Corp., 265 F.3d 1329, 1334 (Fed. Cir. 2001).1
1
It is not entirely clear that Federal Circuit law requires the preponderance of the evidence burden.
Although Pieczenik was determining personal jurisdiction for a patent infringement lawsuit, it was
also performing its analysis under a unique New York long-arm statute. Pieczenik, 265 F.3d at
1330-1331. Therefore, it is not clear Pieczenik was using Federal Circuit law when it stated that
when the parties have conducted jurisdictional discovery, the plaintiff bears the burden of proving
by a preponderance of the evidence that personal jurisdiction exists. Id. at 1334. Indeed, when
announcing the preponderance of the evidence standard, the court in Pieczenik cited Second
Circuit law. Furthermore, not all courts apply the preponderance of the evidence burden after
jurisdictional discovery. See D & S Turbine Int’l, Inc. v. Research Mgmt. Sys., L.C., Civ.
H-05-2158, 2006 WL 287971, at *2 (S.D. Tex. Feb. 6, 2006) (stating that “[t]he Fifth Circuit,
while not directly addressing the issue, has stated that „[w]hen, as here, the district court conducted
no evidentiary hearing, the party seeking to assert jurisdiction must present sufficient facts as to
make out only a prima facie case supporting jurisdiction.‟”). In any event, the Court applies the
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The parties in this case have conducted jurisdictional discovery, so the Court applies the
preponderance of the evidence burden.
B.
Analysis
The Court holds, for the following reasons, that Plaintiff has met its burden by a
preponderance of the evidence that specific personal jurisdiction exists in this case. Therefore,
the Court DENIES Defendant Elite Semiconductor‟s Motion to Dismiss for Lack of Personal
Jurisdiction.
Since the parties briefed their motion, the Supreme Court recently decided J. McIntyre
Mach., Ltd. v. Nicastro, 131 S.Ct. 2780 (2011). The plurality opinion by Justice Kennedy, joined
by the Chief Justice and Justices Scalia and Thomas, announced a standard for specific personal
jurisdiction that is arguably stricter than the Supreme Court‟s previous standards. See id. at
2783-91 (plurality opinion). Although the common law will clarify the contours of J. McIntyere,
the plurality opinion by Justice Kennedy is not the precedential holding of the Supreme Court.
“When a fragmented Court decides a case and no single rationale explaining the result enjoys the
assent of five Justices, the holding of the Court may be viewed as that position taken by those
Members who concurred in the judgments on the narrowest grounds . . . .” Marks v. United
States, 430 U.S. 188, 193 (1977). Under the rule from Marks, the concurring opinion by Justice
Breyer, which concurs in the Judgment on much narrower grounds, is the binding holding from the
Supreme Court. See J. McIntyre Mach., 131 S.Ct. at 2791-95 (Breyer, J., concurring). But this
Court need not decide that issue, because as will be discussed below, personal jurisdiction is
proper in this case even under the stricter rule pronounced in Justice Kennedy‟s plurality opinion.
preponderance of the evidence burden in this case and holds that the plaintiff meets that burden, so
the plaintiff would surely meet any lower burden that should be applied.
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The plurality opinion in J. McIntyre Mach. focused on the three facts in that case that the
New Jersey Supreme Court had emphasized: “The distributor agreed to sell J. McIntyre‟s
machines in the United States; J. McIntyre officials attended trade shows in several States but not
in New Jersey; and up to four machines ended up in New Jersey.” Id. at 2790. The plurality
opinion also emphasized that the “trial court found that the „defendant does not have a single
contact with New Jersey short of the machine in question ending up in this state.‟” Id. (citations
omitted). As a result, the plurality opinion concluded that “[t]hese facts may reveal an intent to
serve the U.S. market, but they do not show that J. McIntyre purposefully availed itself of the New
Jersey market.” Id.
The facts in the present case present a much stronger reason for this Court to hold that
specific personal jurisdiction is proper in Texas. As noted above, certain memory chips sold by
Elite Semiconductor are the accused infringing products in this case. These memory chips are
sold in packages to major manufacturers of consumer electronics customers, generally outside the
United States, and then those manufacturers incorporate the accused infringing chips into their
products and sell those products worldwide, including to the United States. Elite Semiconductor
sells its chips to, for example, Sony, LG, Western Digital, Seagate Technology, Spansion, and
Samsung, for those companies‟ various consumer electronics devices such as video game
consoles, MP3 players, DVD players, and hard drives. Given that Elite Semiconductor is a large
and sophisticated company that does business in the consumer electronics industry, the Court
presumes that Elite Semiconductor understands that the United States is one of the largest (likely
the largest) consumer electronics markets in the world. Furthermore, Elite Semiconductor is
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aware of how their memory products are being used in the abovementioned devices and that the
abovementioned companies do business in the United States.
Between 2005 and 2010, Elite Semiconductor shipped approximately 1.02 million
packaged memory chips directly to customers in the United States, although Elite Semiconductor
states that these were not directly shipped to Texas. Plaintiff has specifically undertaken the
effort to research whether any accused memory chips are in fact sold in Texas. 2 Plaintiff
researched specific Samsung 3 hard drive models that incorporate one or more of Elite
Semiconductor‟s accused memory chips. After doing further research, at least one retail sales
company, named Micro Center, had over twenty-five Samsung hard drive models (that contained
the accused infringing chips) for sale out of its Houston, Texas store, and that was at the time
Plaintiff filed its brief. Additionally, Plaintiff points out that, generally, Best Buy in Longview
and Tyler, Texas (within this judicial district) sells DVD players, video game consoles, and/or hard
drives by Sony, LG, and Samsung. Elite Semiconductor‟s accused chips, which are incorporated
in other products, are also available for sale on the internet and Plaintiff has found internet sites
that ship these products directly to Texas. Finally, Plaintiff points out that Elite Semiconductor‟s
employees regularly visit several of its United States-based customers and, at one time, had a
United States affiliate, until it was wound up in 2007.
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Elite Semiconductor has been difficult in this case in allowing Plaintiff to conduct its necessary
jurisdictional discovery. Furthermore, although Elite Semiconductor complains about the
sufficiency of Plaintiff‟s evidence, it has not objected to the evidence and it has not moved the
Court to strike any evidence or affidavits of Plaintiff‟s. In light of Elite Semiconductor‟s own
conduct and its failure to move the Court to strike any affidavits or evidence, the Court merely
considers Elite Semiconductor‟s arguments as going to the weight this Court will give that
evidence.
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Incidentally, this Court is also aware, based on the multiple patent infringement lawsuits in this
Court involving Samsung, that Samsung‟s principal place of business in the United States is in
Texas.
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The Court holds that the abovementioned facts, particularly those involving Texas, show
contacts with the state of Texas that are far in excess of the contacts with New Jersey that the
plurality opinion in J. McIntyre Mach. considered. Therefore, based on these facts, the Court
holds that Plaintiff has proven by a preponderance of the evidence that (1) Defendant Elite
Semiconductor purposefully directed activities at residents of the state of Texas by virtue of its
accused memory chips being sold in incorporated products within the state of Texas; (2) Plaintiff‟s
claim arises out of those allegedly infringing activities; and (3) the assertion of personal
jurisdiction is reasonable and fair in this case.4
III.
Conclusion
Therefore, for the foregoing reasons, the Court DENIES Defendant Elite Semiconductor‟s
Motion to Dismiss for Lack of Personal Jurisdiction.
It is so ORDERED.
SIGNED this 30th day of September, 2011.
__________________________________________
T. JOHN WARD
UNITED STATES DISTRICT JUDGE
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The Court also notes that in light of the potentially heightened standard from J. McIntyre Mach.,
even if Plaintiff had not met that standard, the Court would not dismiss this case for lack of
personal jurisdiction. Rather, the appropriate remedy at that point would have been for the Court
to allow Plaintiff to conduct additional jurisdictional discovery. This is because when Plaintiff
conducted its jurisdictional discovery, it conducted that discovery in light of the state of the law
before J. McIntyre Mach. (assuming J. McIntyre Mach. even changed the law). Therefore,
Plaintiff likely stopped its effort in gathering facts to support jurisdiction when Plaintiff had
enough facts to support jurisdiction based on the law before J. McIntyre Mach. Given Elite
Semiconductor‟s large volume of business in the consumer electronics industry and the facts
Plaintiff provided in its briefing in this case, it is likely Plaintiff, upon additional jurisdictional
discovery, would discover additional contacts with the state of Texas.
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