Rhode Island Novelty, Inc. v. Imperial Toy, LLC, 1:14-cv-13568

Background

Imperial Toy, LLC (California) owns U.S. Patent No. 5,498,191 for a bubble-producing toy; Rhode Island Novelty, Inc. (RIN) is a wholesaler that moved its principal place of business to Fall River, Massachusetts in 2012.
In July 2012 Imperial sent a cease-and-desist to RIN; parties negotiated by e-mail and phone and signed a two‑page License Agreement in November 2012 granting RIN exclusive rights (for certain markets) to sell products practicing the ’191 patent for five years in exchange for a 7% royalty.
The License Agreement was executed by RIN in Massachusetts and by Imperial in California; RIN subsequently sent quarterly accounting statements and paid royalties from Massachusetts through September 2013.
RIN alleges Imperial breached the exclusivity provision by permitting multiple third parties (including a license to LightUpToys pursuant to a California settlement) to sell covered products; RIN stopped paying royalties after October 2013 and filed suit in D. Mass. on September 5, 2014 for breach of contract.
Imperial filed a California state suit against RIN the day it was served in Massachusetts; Imperial moved in this Court to dismiss for lack of personal jurisdiction or, alternatively, to transfer to C.D. Cal. The Court denied dismissal and denied transfer.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether D. Mass. has specific personal jurisdiction over Imperial	RIN: License was executed with a Massachusetts business, royalties and accounting flowed from MA, and the breach relates to that contract	Imperial: Negotiations began when RIN was in RI, Imperial never traveled to MA, and the alleged breach (settlement with LightUpToys) occurred in CA	Court: Specific jurisdiction exists — relatedness, purposeful availment, and reasonableness satisfied
Relatedness of claim to Imperial’s MA contacts	RIN: Contract formation and performance (royalties, statements) occurred in MA, so claim arises from MA contacts	Imperial: The core conduct (settlement/licensing to LightUpToys) occurred in CA and is focal	Court: The claim and alleged injury are related to Imperial’s contacts with MA (contract with MA-based RIN)
Purposeful availment by Imperial	RIN: Imperial knowingly entered long-term contract with MA entity and accepted royalties from MA	Imperial: It negotiated with RIN when RIN was in RI and did not physically transact in MA; moving should not create jurisdiction	Court: Imperial purposefully availed itself by establishing continuing obligations with a MA company and receiving benefits from MA-based performance
Whether transfer to Central District of California is warranted under §1404(a)	RIN: First-to-file rule favors this action; plaintiff’s choice of forum entitled to deference; transfer would simply shift inconvenience	Imperial: Most witnesses and events are in CA; CA is more convenient	Court: Denied transfer — first-to-file and plaintiff’s choice of forum weigh against transfer; convenience factors do not overcome presumption

Key Cases Cited

United States v. Swiss Am. Bank, Ltd., 191 F.3d 30 (1st Cir. 1999) (personal jurisdiction requirement)
Foster–Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138 (1st Cir. 1995) (plaintiff’s burden on jurisdictional facts)
Adelson v. Hananel, 510 F.3d 43 (1st Cir. 2007) (prima facie standard for jurisdictional showing)
Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945) (minimum contacts and due process)
Pritzker v. Yari, 42 F.3d 53 (1st Cir. 1994) (general vs. specific jurisdiction framework)
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (purposeful availment in interstate contract cases)
Sawtelle v. Farrell, 70 F.3d 1381 (1st Cir. 1995) (Massachusetts long-arm and jurisdictional analysis)
Phillips Exeter Acad. v. Howard Phillips Fund, Inc., 196 F.3d 284 (1st Cir. 1999) (relatedness test in contract cases)
Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42 (1st Cir. 2002) (ongoing relationship and services in forum support jurisdiction)
Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947) (deference to plaintiff’s forum choice and transfer doctrine)
EMC Corp. v. Parallel Iron, LLC, 914 F. Supp. 2d 125 (D. Mass. 2012) (first‑to‑file rule in venue decisions)
Holmes Grp., Inc. v. Hamilton Beach/Proctor Silex, Inc., 249 F. Supp. 2d 12 (D. Mass. 2002) (overcoming first-to-file presumption requires special circumstances)