Opinion
Civil Action No. 91-1720, Reference 00-758 Section "L"(3)
June 2, 2000
ORDER REASONS
Before the Court is the motion of defendant Costco Wholesale Corporation ("Costco") to dismiss for lack of personal jurisdiction and venue pursuant to Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure. For the following reasons, defendant Costco's motion to dismiss is GRANTED.
I. BACKGROUND
Plaintiff Hockerson-Halberstadt, Inc. ("HHI") filed this suit on March 13, 2000, alleging patent infringement by defendant Costco. This case was subsequently consolidated with other suits in this Court under Civil Action Number 91-1720, where HHI alleges patent infringement of U.S. Patent Number 4,322,895 (the '895 patent) and U.S. Patent Number 4,259,792. In this particular suit, HHI asserts that Costco has infringed the '895 patent through the sale or offer for sale of footwear embodying the patented invention.
On April 11, 2000, this Court issued an Order and Reasons dismissing a previous suit filed by plaintiff, which alleged essentially the same type of patent infringement, pursuant to Rule 12(b)(2) and (3) of the Federal Rules of Civil Procedure. The Court's ruling formally considered only the contacts Costco had with Louisiana prior to February 19, 1998, which was the date the prior complaint was filed. In the instant suit, plaintiff asserts that jurisdiction is properly based on Costco's contacts with Louisiana after February 19, 1998.
There are few, if any, relevant facts in dispute here. Defendant Costco operates an international chain of membership warehouses that offer merchandise for sale to businesses and individuals at reduced wholesale and retail prices. Costco is a Washington corporation with its principal place of business in Washington State. Costco has never operated any warehouse locations in Louisiana and has no bank accounts, property, offices, agents or employees in Louisiana. Costco has no inventory, sales records or business personnel in Louisiana. Costco is not registered to do business in Louisiana and does not have an agent for service of process in Louisiana. From November 1998 to the present, Costco has operated a website that allowed website visitors to make online purchases, regardless of whether or not the purchaser had a Costco membership. Since November 1998, Costco has shipped a total of $32,252.32 worth of merchandise into Louisiana pursuant to orders made through the website. This revenue represents less than .0000008 of Costco's total sales during that time period. None of the e-commerce sales into Louisiana were sales of the alleged infringing footwear. Thus, the issue before the Court is purely legal: whether this volume of e-commerce sales into a forum state by a nonresident corporate defendant, without more, constitute sufficient contacts to justify the exercise of general personal jurisdiction over that defendant.
II. COSTCO'S MOTION TO DISMISS
Before the Court is Costco's motion to dismiss for lack of personal jurisdiction and venue pursuant to Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure. Costco argues that HHI has presented no evidence that would support personal jurisdiction over Costco in Louisiana, so HHI's complaint should be dismissed for lack of personal jurisdiction and venue. Costco further contends that the Court ruled on this issue when it granted the motion to dismiss the prior suit and that HHI's filing of a second suit warrants an award of costs and attorney fees under 35 U.S.C. § 285. HHI responds by arguing that although Costco's c-commerce sales into Louisiana are relatively small, they are increasing and constitute sufficient contact to subject Costco to general personal jurisdiction. Costco also answers that this Court did not formally rule on the precise issue presented in the instant motion, so the instant suit is not duplicitous litigation entitling Costco to costs or fees. HHI alternatively requests that if the Court finds that HHI has not established enough facts to support a finding of personal jurisdiction, it be provided an opportunity to conduct discovery specific to the issue of jurisdiction.
III. PERSONAL JURISDICTION
When deciding a personal jurisdiction issue in a patent action, a district court should apply Federal Circuit law. See Amana Refrigeration, Inc. V. Quadlux, Inc., 172 F.3d 852, 856 (Fed. Cir. 1999). A court may exercise personal jurisdiction over an out-of-state defendant only when doing so would be (1) permitted by the forum state's long-arm statute, and. (2) consistent with due process. See id. at 857. If assertion of jurisdiction over the out-of-state defendant is permitted by the relevant state's long-arm statute, the sole inquiry is whether or not exercising personal jurisdiction over the defendant comports with federal due process law. See 3D Systems, Inc. v. Aarotech Laboratories, Inc., 160 F.3d 1373, 1376-77 (Fed. Cir. 1998).
When the cause of action arises out of or is related to the defendant's contacts with the forum, the court's jurisdiction is referred to as "specific jurisdiction." See Mink v. AAAA Dev. LLC, 190 F.3d 333, 336 (5th Cir. 1999). When a court's jurisdiction over a defendant is based on the defendant's "continuous and systematic contacts" with the forum state that are unrelated to the activities giving rise to the suit, the court's jurisdiction is said to be based on "general jurisdiction." See id. at 336. In either case, the "minimum contacts" must be analyzed, along with other factors, to determine whether the assertion of personal jurisdiction over a nonresident defendant is permitted. See Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1359 (Fed. Cir. 1998).
The "minimum contacts" test examines the number and nature of a defendant's contacts with the forum state. See id. at 1359. In the minimum contacts analysis, only contacts that are purposefully directed at the forum or its residents are considered. See id. "Random," "fortuitous," or "attenuated" contacts are not considered when analyzing a defendant's contacts. Id. Contacts that result from the unilateral activity of others are likewise disregarded. See id.
IV. ANALYSIS
Louisiana's long-arm statute, La.R.S. 13:3201, extends to the limits of constitutional due process. See Petroleum Helicopters, Inc. v. Avco Corp., 513 So.2d 1188, 1192 (La. 1987). Therefore, the sole question here is whether the exercise of general personal jurisdiction over Costco would comport with federal due process law.
Because Costco has no traditional contacts with Louisiana, the e-commerce sales of products by Costco to Louisiana residents are the only activities upon which personal jurisdiction could be established. Costco's online sales into Louisiana over approximately 18 months total $32,252.32 and represent an extremely small portion of its corporate revenues. Other courts have found similar contacts, without more, to be insufficient to support general jurisdiction. See Stairmaster Sports/Med. Prods., Inc. v. Pacific Fitness Corp., 78 F.3d 602 (Fed. Cir. 1996) (unpublished table decision) (affirming dismissal of nonresident defendant when only contacts were isolated visits by defendant's agents and products shipped into forum which were unrelated to suit and constituted only 3% of total sales); see also VP Intellectual Properties, LLC v. Imtec Corp., No. 99-3136, 1999 WL 1125204, at *3-4 (D.N.J. Dec. 9, 1999) (finding that internet site accessible in forum and $9,500 in sales to forum residents over five years were insufficient to confer general jurisdiction); Haas v. A. M. King Indus., Inc., 28 F. Supp.2d 644, 648 (D. Utah 1998) (concluding that general jurisdiction did not exist when nonresident corporate defendants merely advertised in forum, operated websites and sold less than one percent of national sales in forum state). After reviewing these and other cases, this Court is unable to conclude that the volume of online sales are substantial enough to establish general jurisdiction. Costco's e-commerce activities in Louisiana are incidental or fortuitous contacts that are both unrelated to the alleged infringement and insufficient in nature and number to constitute purposeful availment.
The Court is also unconvinced that the exercise of personal jurisdiction over this defendant would be consistent with traditional fairness considerations. To subject a nonresident corporate defendant to suit in Louisiana solely on the basis of a minuscule number of internet sales that are unrelated to the cause of plaintiffs alleged injury would render established jurisdictional boundaries meaningless. Further, defendants that operate websites accessible to online purchasers would be deprived of the ability to predict with any certainty where they may be subject to suit.
In patent infringement cases, personal jurisdiction and venue involve the same analysis and need not be considered separately. See Hollyanne Corp. v. TFT, Inc., 199 F.3d 1304, 1306-07 (Fed Cir. 1999). Because this Court concludes that the exercise of personal jurisdiction over Costco in this forum is improper, this is also an improper venue.
The decision whether to award attorney fees under 35 U.S.C. § 285 is within the sound discretion of the district court. See Seal-Flex, Inc. v. Athletic Track and Court Constr., 98 F.3d 1318, 1325 (Fed. Cir. 1996). Although the Court's prior ruling indicated that Costco's internet sales were insufficient to support general jurisdiction, those activities were not fully addressed by the Court. The filing of the instant suit, therefore, was not frivolous or unreasonable. Accordingly, the Court will not exercise its discretion to award fees.
As to HHI's request for an opportunlty to conduct jurisdictional discovery, the Court finds that additional discovery would not be fruitful, given the length of time that has elapsed since the filing of suit and the absence of relevant issues of fact. See Villar v. Crowley Maritime Corp., 990 F.2d 1489, 1495 (5th Cir. 1993). As in the first case, plaintiff's request for additional jurisdictional discovery is denied.
V. CONCLUSION
The Court concludes that defendant Costco's contacts with Louisiana are insufficient to support the exercise of personal jurisdiction by this Court. Accordingly, Costco's motion to dismiss for lack of personal jurisdiction and venue pursuant to Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure is HEREBY GRANTED. Plaintiffs complaint against Costco is DISMISSED.