HealthSpot, Inc. v. Computerized Screening, Inc.HealthSpot, Inc. v. Computerized Screening, Inc.
OPINION & ORDER [Resolving Doc. 14]
In this patent case, Plaintiff HealthSpot, Inc. (“HealthSpot”) seeks a declaratory judgment that its products do not infringe patent rights held by Defendant Computerized Screening, Inc. (“CSI”). Alternatively, HealthSpot asks for a ruling that CSI’s patent claims are invalid.
I. Background
Both parties sell to the market for health kiosks. Health kiosks come in many forms, but generally are machines that allow for medical services, such as blood pressure testing, to be performed at locations other than doctor’s offices. The dispute concerns Patent No. 6,692,436, (’436 Patent) which Defendant CSI received in 2004.
Plaintiff HealthSpot is a Delaware corporation with its principal place of business in Ohio.
In total, CSI says that it has sold about 4,700 kiosks, of which 1,807 are “active.”
In part, Plaintiff HealthSpot argues that CSI’s communications with HealthSpot regarding HealthSpot’s alleged infringement subject CSI to personal jurisdiction in Ohio. As described below, under controlling Federal Circuit case law, this argument requires that these communications constituted sufficient contacts with Ohio that related to CSI’s defense or enforcement of its patent rights and went beyond
The first contact between the parties appears to have come in April 2012, when Charles Bluth, the President and CEO of Defendant CSI, sent a letter’ tо Steve Cashman, the CEO of Plaintiff Health-Spot. The letter warned that HealthSpot might be infringing CSI’s patent rights.
Then, in February 2013, Bluth sent Cashman another letter.
Representatives of the two companies met in April 2013 in Reno, Nevada.
Several months later, in September 2013, Defendant’s President and CEO Bluth again emailed Cashman. This time, although still indicating some uncertainty about how HealthSpot’s kiosks worked, Bluth said that HealthSpot’s website suggested that HealthSpot was violating CSI’s patent rights.
On December 10, 2013, and after Bluth saw and read an article about HealthSpot in Behavioral Healthcare Magazine,
At this point, communications between the companies shifted to their respective attorneys. Over the next several months, CSI’s attorneys continued to claim that HealthSpot was violating CSI’s patents and should purchase a license.
CSI repeatedly declined these invitations to examine the HealthSpot product, saying that it believed it had sufficient information to support the infringement charge. It told HealthSpot that it would bring an infringement suit on April 11, 2014, if the matter remained unresolved.
On the following Monday, April 14, 2014, the attorneys arranged a call for Tuesday the 15th to disсuss the matter.
II. Personal Jurisdiction
Federal Circuit law governs personal jurisdiction over a patentee defending against a declaratory judgment action because the action is “intimately involved with the substance of the patent laws.”
Defendant CSI has challenged the Court’s personal jurisdiction over it only on due process grounds.
Reaching the long-arm statute question would potentially work an unacceptable unfairness. If the Court were to conclude that personal jurisdiction was constitution
The plaintiff bears the burden of demonstrating that the defendant is subject to personal jurisdiction. Where, as here, a motion to dismiss for lack of personal jurisdiction is decided without an evidentiary hearing, the plaintiff needs only to “make a prima facie showing that defendants are subject to personal jurisdiction.”
Personal jurisdiction comes in two broad forms. Under general personal jurisdiction, a defendant has sufficient contacts with the forum to allow a lawsuit on any claim, whether or not the claim is related to the contacts with the state. Under specific personal jurisdiction, the defendant’s contacts subject it to suit, but only on claims that sufficiently relate to the contacts.
A. General Jurisdiction
Turning first to general personal jurisdiction, due process allows a state to assert general personal jurisdiction over a corporation where “that corporation’s ‘affiliations with the State are so continuous and systematic аs to render [it] essentially at home in the forum State.’ ”
General personal jurisdiction is thus improper where the defendant’s contacts with the state are merely “sporadic and insubstantial,”
Plaintiff HealthSpot’s argument for general personal jurisdiction rests primarily on the CSI kiosks located in Ohio. Pointing to advertising materials on CSI’s website, HealthSpot suggests that CSI’s Ohio kiosks effectively function as virtual offices by performing tests (such as measuring blood pressure), storing information,
Defendant CSI disputes all of these allegations, saying that all of its Ohio kiosks are older models that basically do no more than automate blood pressure and heart rate screening.
B. Specific Jurisdiction
Plaintiff HealthSpot’s arguments for specific personal jurisdiction, however, fare better. The Federal Circuit uses a three part test to analyze constitutional limits on specific personal jurisdiction. First, the defendant must have purposefully directed its activities'at residents of the forum. Second, the plaintiffs claims must arise from or relate to those activities. And third, the assertion of personal jurisdiction must be reasonable and fair under the circumstances.
Because the purpose of patent declaratory judgment actions is to “clear the air of infringement charges” and thus free the plaintiff from unwarranted efforts to use patents to restrain “the free exploitation of non-infringing goods,” the contacts relevant for specific jurisdiction are those that relate to the patent’s enforcement.
Moreover, not all attempts to enforce patents can give rise to specific personal jurisdiction. The mere sending of cease and desist letters is insufficient.
On the other hand, actions that go beyond merely sending cease and desist letters and offers to license can support personal jurisdiction. As the Federal Cir
Thus, in this case, the critical question is whether enough of Defendant CSI’s extensive enforcement related communications to HealthSpot in Ohio went beyond the safe harbor allowed with regard to sending cease and desist letters and offers to license. Although it is a close call, the Court concludes that they did. Against the backdrop of Federal Circuit cases holding that even relatively slight actions outside the safe harbor can suffice, CSI’s apparent threat to Hеalth-Spot’s ability to raise funds and its repeated uncarried out threats of litigation subject CSI to personal jurisdiction in Ohio.
For example, in Electronics for Imaging, Inc. v. Coyle, the Federal Circuit concluded that specific personal jurisdiction was proper based on three actions. First, the declaratory judgment defendant had hired a forum-state attorney to contact the declaratory judgment plaintiff.
Likewise, in Campbell Pet Co. v. Miale, the Federal Circuit found specific personal jurisdiction proper based on relatively minor actions outside the safe harbor.
Fairness requires that patentees have the ability to notify potential infring-ers of the patent and threaten litigation without subjecting themselves to declaratory judgment suits in distant forums. But it does not provide immunity from jurisdiction for repeatedly threatening litigation without following through or for other actions that could well intimidate compliance even in the absence of infringement.
Having concluded that Defendant CSI has engaged in enforcement activities that go beyond the mere sending of cease and desist letters and offers to license, the Court turns to the third prong of the Federal Circuit’s test. “When a defendant seeks to rely on the ‘fair play and substantial justice’ factor to avoid the exercise of jurisdiction by a court that otherwise would have personal jurisdiction over the defendant, ‘he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.’ ”
In this case, Defendant CSI has not advanced fairness arguments that go beyond the contention that it engaged only in sending cease and desist letters and offers to license protected by the safe harbor. As described above, the Court rejects this contention. The Court therefore concludes that CSI has not carried its burden of demonstrating that subjecting it to per
III. Anticipatory Filing
In the alternative, Defendant CSI argues that this case should be dismissed or transferred to the District of Nevada because Plaintiff HealthSpot impermissibly filed its declaratory judgment suit in anticipation of CSI’s infringement suit. It says that this “procedural fencing” should overcome the' general first-to-file rule and lead the Court to decline to exercise its discretion to hear this declaratory judgment action.
A. Governing Law
As an initial matter, the parties appear to disagree about what circuit’s law applies to this argument. Defendant CSI relies primarily on Sixth Circuit precedent, pointing to Foundations Worldwide, Inc. v. Oliver & Tate Enterprises, Inc.
On the other hand, Plaintiff HealthSpot relies on the Federal Circuit’s decision in Electronics for Imaging, Inc. v. Coyle.
B. Law and Analysis
The Federal Circuit clearly stated its test for declining to follow the first to file rule in Electronics for Imaging:
We apply the general rule’favoring the forum of the first-filed case, unless considerations of judicial and litigant economy, and the just and effective disposition of disputes, requires otherwise. Exceptions are not rare, but we havе explained that there must be sound reason that would make it unjust or inefficient to continue the first-filed action. While it is true that a district court may consider whether a party intended to preempt another’s infringement suit when ruling on the dismissal of a declaratory action, we have endorsed that as merely one factor in the analysis. Other factors include the convenience and availability of witnesses, or absence of jurisdiction over all necessary or desirable parties, or the possibility of consolidation with related litigation, or considerations relating to the real party in interest. The considerations affecting transfer to or dismissal in favor of another forum do not change simply because the first-filed action is a declaratory action. 79
In Micron Technology, Inc. v. Mosaid Technologies, Inc., the Federal Circuit reiterated this test, and further specified that in cases “when the discretionary determination [of whether to entertain a declaratory judgment action] is presented after the filing of an infringement action, the jurisdiction question is basically the same as a transfer action under [28 U.S.C. § 1404(a) ].”
Here, Defendant CSI has advanced no argument that witnesses will be unavailable in Ohio. The only party CSI says this Court lacks jurisdiction over is itself, and, as noted above, the Court rejects that argument. And therе is no related litigation for consolidation other than the infringement claim in Nevada, which could just as easily be consolidated here. Thus, the only additional factor Defendant could potentially succeed in establishing is “the interest of justice.”
As provided in Electronics for Imaging and Micron, the mere fact that the complaint was filed in anticipation of an infringement suit does not overcome the “general rule favoring the forum of the first-filed case.” To be sure, Defendant CSI does go further, arguing that Plaintiff HealthSpot sought to delay CSI’s filing of its infringement suit in bad faith so that HealthSpot cоuld obtain its. favored forum.
CSI refrained from filing its infringement suit on April 11, 2014. On Monday April 14, 2014, the parties schеduled a conference call for the following morning.
Defendant CSI says that when Health-Spot indicated ,on April 11, 2014, that it would consider a license or other nonjudicial resolution after further investigation, HealthSpot impermissibly sought “to delay CSI and ensure its own action would be filed first.”
The Court concludes that Plaintiff HealthSpot’s interpretation is the better one. Over the course of multiple emails, HealthSpot had maintained that it wanted the chance to demonstrate its product to Defendant CSI before deciding whether to proceed with a license, product modification, or otherwise.
Moreover, CSI has not explained why HealthSpot would send an email to delay CSI’s filing of its coercive suit rather than simply filing its own declaratory judgment action prior to April 11, 2014. HealthSpot had been aware of CSI’s April 11, 2014, deadline since CSI announced it in a March 31, 2014 email.
Defendant CSI also argues that the Court should decline to exercise jurisdiction over this case by deploying a presumption that declaratory judgment actions filed shortly before corresponding coercive suits are improper. But in support, CSI points only to Foundations Worldwide, which, as discussed above, relied on Sixth Circuit law.
IV. Conclusion
For the foregoing reasons, the Court DENIES Defendant CSI’s motion to dismiss or transfer.
IT IS SO ORDERED.
Notes
. Doc. 14.
. Id.
. Doc. 19.
. Doc. 26.
. Doc. 13 at 2. The '436 Patent initially had fifty-seven claims. In 2011,-a reexamination certificate confirmed the patentability of these claims, as well as eight new ones. Id.
. Doc. I at 1.
. Doc. 14 — 1 at 1.
.Id.
. Id.
. Id.
. Id. at 1-2.
. Id. at 2.
. Id.
.Doc. 26-1.
. Doc. 21-7.
. Id.
. Doc. 21-8.
. Id.
. Id.
. Doc. 26-4 at 3.
. Doc. 1 at 3.
.Doc. 19 at 12.
. Id.
. Id. at 12-13.
. See Doc. 26-1 at 1.
. Doc. 1-5.
. Doc. 1 at 3.
. Doc. 19 at 6.
. Id. at 13.
. See Doc. 14-2.
. Id.
. Id. at 5.
. Id. at 1-2.
. See Doc. 1.
. Doc. 14 at 8; see Computerized Screening Inc. v. Healthspot, Inc., No. 2:14-CV-00573 (D. Nev. filed Apr. 15, 2014).
. Akro Corp. v. Luker,
. Graphic Controls Corp. v. Utah Med. Prods. Inc.,
.Doc. 14 at 2.
. Id. (citations omitted).
. Hildebrand v. Steck Mfg. Co.,
. Ins. Corp. of Ireland, Ltd. v. Cоmpagnie des Bauxites de Guinee,
. Elecs. for Imaging, Inc. v. Coyle,
. Id.
. Daimler AG v. Bauman, - U.S. -,
. Id. at 760.
. Id. at 761 n. 19.
. Campbell Pet Co. v. Miale,
. Daimler AG,
. Id. at 761 n. 18 (internal citations omitted).
. Doc. 19 at 9-11.
. Id. at 10-11.
. Doc. 26 at 1-3.
. AFTG-TG, LLC v. Nuvoton Tech. Corp.,
. Avocent Huntsville Corp. v. Aten Int’l Co.,
. Id. at 1335-36 (internal citations omitted).
. Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc.,
. Id. at 1361.
. Id. at 1360-61.
. Avocent,
. Elecs. for Imaging, Inc. v. Coyle,
. Id.
. Id.
. Id.
. Id. (internal quotation marks and citation omitted).
. Campbell Pet Co. v. Miale,
. Id. at 881-82.
. Id. at 882.
. Id. at 886.
. Id.
.Plaintiff HealthSpot also points to an interview that Bluth gave to Columbus Business First, an online Ohio publication. See Doc. 19 at 7 (citing Doc. 21-5). This interview was given after the complaint in this case was filed. The issue of whether post-complaint contacts can be considered is somewhat unsettled. See 4A Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1069 (3d ed.2013). Most courts to consider the issue have held that contacts arising after a complaint has been filed cannot support personal jurisdiction, see Todd David Peterson, The Timing of Minimum Contacts, 79 Geo. Wash. L.Rev. 101, 141 (2010), but at least one commentator has suggested that this restriction has been insufficiently reasoned, see id. at 155-58; see also Todd David Peterson, The Timing of Minimum Contacts After Goodyear and McIntyre, 80 Geo. Wash. L.Rev. 202, 237-241 (2011). The parties have not addressed this issue, and the Court is not aware of any Federal Circuit case squarely deciding it. To the degree contacts arising after the complaint can be considered, Bluth’s interview statements are analogous to allegations of infringement targeted to the plaintiff’s customers in the forum state in Campbell Pet, and thus would provide additional support for specific personal jurisdiction. But because thе Court concludes that CSI's other contacts subject it to specific personal jurisdiction, it need not resolve this unsettled timing issue.
. Campbell Pet,
. Id. (quoting Elecs. for Imaging, Inc. v. Coyle,
. No. 1:13-CV-506,
. Id.
. Id.
.Id.
.
. Id. at 1345-46 (citing two additional Federal Circuit cases).
. Id. at 1347-48 (internal quotation marks, alterations, paragraph break, and citations omitted).
.
. Id. at 904-05.
. Doc. 14 at 9.
. Doc. 14-2 at 3.
. Doc. 14 at 8.
. Id.
. Id. at 9.
. See Doc. 19 at 16-17.
. See Doc. 14-2.
. Id.
. Id. at 5.
. See Doc. 26 at 9 (citing Foundations Worldwide, Inc. v. Oliver & Tate Enters., Inc., No. 1:13-CV-506,
.Micron Tech., Inc. v. Mosaid Tech., Inc.,