Icon Health & Fitness v. Pednar Products et al

Filing 32

MEMORANDUM DECISION AND ORDER granting 25 Motion to Dismiss for Lack of Jurisdiction; finding as moot 25 Motion to Change Venue. Signed by Judge Ted Stewart on 5/5/14 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
ICON HEALTH & FITNESS, a Utah
Corporation,

MEMORANDUM DECISION AND
ORDER GRANTING MOTION TO
DISMISS

Plaintiff,
v.
PEDNAR PRODUCTS, a California
Corporation and ARTHUR NAREVSKY,
an individual,

Case No. 1:13-CV-152 TS
District Judge Ted Stewart

Defendants.

This matter is before the Court on Defendants’ Motion to Dismiss, or in the alternative to
Transfer Venue. Defendant Pednar Products, Inc. (“Pednar”) moves to dismiss for lack of
subject matter jurisdiction. Defendants Pednar and Arthur Narevsky (“Narevsky”) move to
dismiss for lack of personal jurisdiction. For the reasons discussed below, the Court will dismiss
Pednar as no claims are asserted against it and dismiss Narevsky for lack of personal jurisdiction.
I. BACKGROUND
Defendant Narevsky holds the patent to a fitness roller technology involving a convoluted
(egg crate) design, Patent No. D670,817 (the “’817 Patent”). Narevsky is also the owner of
Pednar.
Plaintiff ICON Health & Fitness (“ICON”) markets a fitness roller with an egg crate
design (the “ICON roller”). Beginning sometime in 2012 or 2013, Narevsky began
communicating with representatives at ICON. Narevsky informed ICON that he believed the
ICON roller infringed the ‘817 Patent and that ICON needed to either buy Narevsky’s foam

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roller or enter into a licensing agreement with Narevsky in order to sell the ICON Roller. On
multiple occasions, through e-mail 1 correspondence, Narevsky himself, or an agent of Narevsky
named Mike Laban, (“Laban”) threatened legal action. In addition, Narevsky mailed product
samples to ICON and held telephone conversations with ICON.
On August 1, 2013, Narevsky attended the Outdoor Retailer Trade Show in Salt Lake
City, where Narevsky and Dave McEvoy (“McEvoy”), an ICON representative, had a
conversation about foam rollers. The exact contents of the conversation are disputed, therefore,
at this stage of the litigation, the Court reviews the facts in the light most favorable to ICON.
According to McEvoy’s Declaration, Narevsky discussed the ‘817 Patent and the possibility of
licensing the ‘817 Patent to ICON. 2 The next day Laban e-mailed McEvoy stating, “Thanks for
spending some time with Art [Narevsky] yesterday. We look forward to discussing this
opportunity with you in more detail. As Art [Narevsky] mentioned, we hold the patent on the
convoluted design (US Design Patent No. D670,817).” 3
From that point until late October 2013, Narevsky and his agents escalated their emailing efforts and threats to sue. For example, on October 8, 2013, Narevsky wrote to McEvoy
at ICON indicating that he desired a 10% royalty agreement. 4 On October 4, 2013, Narevsky
wrote McEvoy noting that he had convinced the legal team to wait to file a lawsuit until further
discussions could occur. 5 On October 21, 2013, Narevsky sent an e-mail to McEvoy stating that

1

Docket No. 27, at 3.

2

Id.

3

Docket No 27 Ex. C, at 3–4.

4

Id. Ex. J.

5

Id. Ex. K.

2

the ordinary observer test would show infringement by ICON’s roller. 6 Again, on October 21,
2013, Narevsky sent an e-mail noting that if he did not hear back that same day about a licensing
agreement involving the convoluted design, his legal team would pursue a lawsuit. 7 On October
24, 2014, ICON filed for declaratory judgment of non-infringement and invalidity. 8 On January
17, 2014, ICON filed an Amended Complaint where it added a patent misuse claim. Defendants
have now moved to dismiss.
II. CLAIMS AGAINST PEDNAR
Defendants argue that there is not subject matter jurisdiction over Pednar because it is not
the owner of the patent at issue. The caption in this matter names both Pednar and Narevsky as
Defendants. However, the Amended Complaint only asserts claims against Narevsky. While
Plaintiff alleges that Pednar and Narevsky are alter egos of each other, Plaintiff does not aver
factual allegations to support such contention. Further, Plaintiff concedes that it does not bring
any claims against Pednar. 9 Because no claims are asserted against Pednar, Defendants’ Motion
to Dismiss Pednar will be granted.
III. PATENT MISUSE
Patent misuse is an affirmative defense that arises from the equitable doctrine of unclean
hands. 10 It is generally treated as an affirmative defense and not an independent cause of

6

Id. Ex. L.

7

Id. Ex. M.

8

Docket No. 2.

9

Docket No. 26, at 12.

10

C.R. Bard, Inc. v. M3 Sys., 157 F.3d 1340, 1372 (Fed. Cir. 1998).

3

action. 11 “Patent misuse refers to a loose collection of activities by which the patent owner is
said to have taken unfair advantage of the patent right in the marketplace.” 12 The Federal Circuit
has characterized patent misuse as the patentee’s act of imposing conditions that “impermissibly
broaden[] the physical or temporal scope of the patent grant with anticompetitive effect.” 13 The
doctrine’s purpose is “preventing a patentee from extending the economic effect beyond the legal
monopoly involved in the grant of the patent.” 14 “Patent misuse occurs where the patent owner
attempts to extend the impact of his patent beyond its proper scope.” 15
ICON alleges that Narevsky and his agents/employees stated that Pednar owned and
would enforce the ‘817 Patent. In fact, Narevsky, not Pednar, owns the ‘817 Patent. ICON
argues that because it thought a company owned the ‘817 Patent, it took the threats of litigation
more seriously than if it knew an individual owned it. ICON argues that if it had known the ‘817
Patent was owned by an individual who “did not have corporate resources to back its
enforcement, its reaction to Narevsky’s threats of litigation would have been different.” 16 ICON
claims that Narevsky’s purpose in repeatedly misrepresenting the ownership of the patent was to
expand the patent’s market benefit, to anticompetitive effect. ICON seeks damages because of
the alleged patent misuse. 17

11

B. Braun Med., Inc. v. Abbott Labs., 124 F.3d 1419, 1428 (Fed. Cir. 1997).

12

R. Moy, Walker on Patents § 18.1 (4th ed. 2006).

13

Windsurfing Int’l, Inc. v. AMF, Inc., 782 F.2d 995, 1001 (Fed. Cir. 1986) (citation and
internal quotation marks omitted).
14

United States v. Teletronics Proprietary, Ltd., 607 F. Supp. 753, 754 (D. Colo. 1983).

15

MACTEC, Inc. v. Gorelick, 427 F.3d 821, 831 (10th Cir. 2005).

16

Docket No. 26, at 13.

17

Docket No. 23, at 9.

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ICON cites B. Braun Medical, Inc. v. Abbott Laboratories to support its position that
patent misuse can be used as an affirmative claim. 18 While courts have allowed patent misuse as
an affirmative declaratory judgment claim, courts have not allowed such a claim to give rise to
an action for damages. 19 In Braun, the defendant in a patent infringement action denied
infringement, asserted a validity defense, and asserted a declaratory judgment counterclaim for
patent misuse. 20 The problem with ICON’s position is that a patent misuse claim cannot itself
establish damages. 21 “An infringer who successfully demonstrates misuse might be entitled to a
declaratory judgment that patent misuse has occurred, but any subsequent relief (such as
damages incurred by the infringer pursuant to such misuse) must be sought through a separate
substantive claim.” 22
In Braun, the Federal Circuit explained that “patent misuse simply renders the patent
unenforceable. . . .[T]he defense of patent misuse may not be converted to an affirmative claim
for damages simply by restyling it as a declaratory judgment counterclaim.” 23 The Federal
Circuit also explained that “[w]hen used successfully, [patent misuse] results in rendering the
patent unenforceable until the misuse is purged. It does not, however, result in an award of

18

Docket No. 26, at 12.

19

B. Braun Med., Inc. v. Abbott Labs, 38 F. Supp. 2d 393, 395 (E.D. Pa. 1999) (“[T]he
principle[] that patent misuse is an unclean hands defense not giving rise to an action for
damages . . . [is] familiar and well-established . . . .”), on remand from 124 F.3d 1419; see also
Linzer Prods. Corp. v. Sekar, 499 F. Supp. 2d, 540, 552–53 (S.D.N.Y. 2007); L-3 Commc’ns
Corp. v. Jaxon Eng’g & Maint., Inc., No. 10-CV-2868-MSK-KMT, 2013 WL 1231875, * 5 n.2
(D. Colo. Mar. 27, 2013) (unpublished opinion).
20

Braun, 124 F.3d at 1422.

21

Id.

22

L-3 Commc’ns Corp., 2013 WL 1231875, * 5 n.2 (citing Braun, 124 F.3d at 1428).

23

Braun, 124 F.3d at 1428.

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damages to the accused infringer.” 24 Thus, despite ICON having pleaded an affirmative cause of
action for patent misuse and having attempted to plead damages related to that cause of action,
this Court will consider the patent misuse claim a declaratory judgment claim and will apply the
personal jurisdiction law applicable to the declaratory judgment action. 25
IV. PERSONAL JURISDICTION
To establish specific jurisdiction the plaintiff must show that (1) the defendant has
purposely directed its activities at residents of the forum, (2) the plaintiff’s claim arises out of or
relates to those activities, and (3) the Court’s exercise of personal jurisdiction is fair and
reasonable. 26 To survive a motion to dismiss for lack of personal jurisdiction without discovery,
plaintiff must make a prima facie showing of personal jurisdiction. 27 Uncontroverted allegations
in the plaintiff’s complaint are accepted as true and the court will resolve any factual conflicts in
the affidavits in the plaintiff’s favor. 28
Personal jurisdiction for invalidity, unenforceability, or non-infringement is determined
by Federal Circuit law “because the jurisdictional issue is intimately involved with the substance
of the patent laws.” 29 Neither party argues that there is general jurisdiction over Narevsky.
Therefore, the Court begins its analysis with specific personal jurisdiction.

24

Id. at1427.

25

Id.

26

Autogenomics, Inc. v. Oxford Gene Tech., 566 F.3d 1012, 1018 (Fed. Cir. 2009).

27

Grober v. Mako Prods., Inc., 686 F.3d 1335, 1345 (Fed. Cir. 2012) (citation omitted).

28

Avocent Huntsville Corp. v. Aten Int’l Co., Ltd., 552 F.3d 1324, 1329 (Fed. Cir. 2008).

29

Id. at 1336.

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In the declaratory judgment context, the specific jurisdiction question turns on the extent
to which the “defendant patentee purposely directs activities at the forum which relate in some
material way to the enforcement or the defense of the patent.” 30
The Federal Circuit has held that “attempts to sell a product or license a patent do not
give rise to personal jurisdiction in declaratory judgment actions for non-infringement or
invalidity.” 31 “[O]nly enforcement or defense efforts related to the patent rather than the
patentee’s own commercialization efforts are to be considered for establishing specific personal
jurisdiction in a declaratory judgment action against the patentee.” 32
In considering enforcement efforts related to the patent, the Federal Circuit has held that
cease-and-desist letters alone, without additional enforcement activities purposefully directed to
the forum, are insufficient to give personal jurisdiction over the defendant patentee in the
declaratory judgment context.33 However, cease-and-desist letters, in combination with other
activities can give rise to personal jurisdiction. 34 These other activities have included extrajudicial patent enforcement by harming plaintiff’s business activities in the forum state, 35
entering into an exclusive license with an entity in the forum state, 36 and initiating a suit seeking

30

Id. at 1332.

31

Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785, 790 (Fed. Cir. 2011).

32

Autogenomics, 566 F.3d at 1020 (citing Avocent, 552 F.3d at 1336).

33

Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed.
Cir. 1998).
34

See, e.g., Autogenomics, 566 F.3d at 1019 (collecting cases).

35

See, e.g., Campbell Pet Co. v. Miale, 542 F.3d 879, 885–87 (Fed. Cir. 2008).

36

See, e.g., Breckenridge Pharm., Inc. v Metabolite Labs., Inc., 444 F.3d 1356, 1366–67
(Fed. Cir. 2006).

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to enforce the same patent that is at issue in the current lawsuit in an unrelated action in the same
district court. 37
In Radio Systems Corp. v. Accession, Inc., a patentee was sued in a declaratory judgment
action in Tennessee. 38 In that case, the patentee contacted Radio Systems in Tennessee seeking a
collaboration wherein Radio Systems would license a product that utilized the patentee’s
patent. 39 The patentee sent additional e-mails and engaged in negotiations but reached no
agreement. 40 In April 2009, the patentee traveled to Tennessee to demonstrate the product to
Radio Systems. 41 Following the meeting, the patentee sent even more e-mails marketing its
product to Radio Systems to no avail. 42 By August 2009, the relationship between the
companies became adversarial and both parties retained counsel. 43
In determining whether there was personal jurisdiction, the district court discounted all
contacts prior to August 2009, including the in-person visit where the patentee traveled to
Tennessee. The district court held, and the Federal Circuit affirmed, that in-person negotiations
are “clearly analogous to the cease-and-desist communication at issue in the bevy of cases on the
subject.” 44 Even though the patentee traveled to Tennessee in an attempt to license its patent, the

37

Viam Corp. v. Iowa Exp.-Imp. Trading Co., 84 F.3d 424, 430 (Fed. Cir. 1996).

38

Radio Sys., 638 F.3d at 787.

39

Id.

40

Id. at 787–88.

41

Id.

42

Id.

43

Id. at 790.

44

Autogenomics, 566 F.3d at 1019.

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Federal Circuit affirmed the district court and held that the patentee’s Tennessee contacts were
insufficient to give rise to specific jurisdiction.
The issue of specific jurisdiction turns on the enforcement activities Narevsky directed at
Utah. ICON argues that Narevsky’s visit to Utah in August 2013 constitutes enforcement
activities in the forum and when taken together with cease-and-desist letters, there is sufficient
enforcement activity in the forum to support personal jurisdiction over Narevsky. Narevsky
argues that his visit to Utah, at most, constitutes attempts to license its patent and is therefore not
relevant to the jurisdictional analysis.
It is undisputed that Narevsky attended a trade show in Utah in August 2013 and
discussed foam rollers with representatives from ICON. ICON argues that this visit was for
enforcement purposes. At this stage of the litigation, the Court resolves all factual conflicts in
Plaintiff’s favor. ICON’s agent McEvoy states in his affidavit that during the conversation in
Utah, Narevsky
aggressively pitched his foam products, with a particular focus on the Pednar
Roller. He told me that the Pednar Roller was patented, and that they had
invested a ton of energy and money into the Roller and the patent, and that they
needed to be compensated for that effort one way or another.45
The next day Laban, Narevsky’s agent, followed up via e-mail stating, “Thanks for
spending some time with Art [Narevsky] yesterday. We look forward to discussing this
opportunity with you in more detail. As Art [Narevsky] mentioned, we hold the patent on the
convoluted design (US Design Patent No. D670,817.” 46 On August 6, 2013, Laban again emailed McEvoy at ICON quoting a price and then stating “[i]f this price will work for you, then

45

Docket No. 27, at 3.

46

Id. Ex. C, at 4.

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we can move forward and fine tune the details. If not, again share your costs with us, and we can
work out a royalty/license agreement and allow you to have them manufactured through
whatever source you already had lined up. Let me know how you would like to proceed and
we’ll see how we can work together on this.” 47
Considering these e-mail exchanges, the Court finds that Narevsky’s visit to Utah in
August 2013, constituted commercialization efforts, not patent enforcement efforts, and is
therefore irrelevant to the jurisdictional analysis. McEvoy’s declaration explains that Narevsky
pitched his products with a particular focus on the foam roller. Additionally, Laban’s follow-up
e-mail focused on either selling or licensing the foam roller to ICON. Such activities are similar
to commercialization efforts that were not considered relevant to the jurisdictional analysis in
Radio Systems. Even if the Court were to find that Narevsky’s visit to Utah constituted
enforcement activity, the e-mails, telephone calls, and in person contact that remain are
analogous to cease-and-desist letters. 48 These contacts are insufficient to support personal
jurisdiction over Narevsky. Therefore the Court lacks jurisdiction over him and this matter must
be dismissed.
A. JURISDICTIONAL DISCOVERY
If the Court is to grant Defendants’ Motion, ICON requests jurisdictional discovery. The
Court will deny ICON’s request because there is no evidence that Pednar’s Utah customers had
purchased products covered by the ‘817 Patent. Further, any sales Pednar may have made to
Utah customers are irrelevant as ICON brings no claims against Pednar.

47

Id. at 3.

48

Autogenomics, 566 F.3d at 1019.

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V. CONCLUSION
It is therefore
ORDERED that the Defendants’ Motion to Dismiss (Docket No. 25) is GRANTED.
Defendants’ Motion in the alternative to transfer venue is therefore denied as moot.
The Clerk of Court is directed to close this case forthwith.
DATED this 5th day of May, 2014.
BY THE COURT:

Ted Stewart
United States District Judge

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