N THE UNTED STATES DSTRCT COURT FOR THE DSTRCT OF DELAWARE! GODO KASHA P BRDGE 1, ) ) Plantff, ) ) V. ) TCL COMMUNCATON TECHNOLOGY) HOLDNGS LMTED, a Chnese ) Corporaton, TCT MOBLE LMTED, a ), Hong Kong Corporaton, and TCT MOBLE) (US), NC., a Delaware Corporaton, ) Defendants. ) : ) ' ) ; Cvl Acton No. 15-634-SLR-SRF REPORT AND RECOMMENDATON. NTRODUCTON Presently before the court n ths patent nfrngement acton s the moton to dsmss for lack of personal jursdcton pursuant to Federal Rule of Cvl Procedure 12(b )(2) of defendants TCL Communcaton Technology Holdngs Lmted ("TCL Holdngs") and TCT Moble Lmted ("TCT Hong Kong"). (D.. 17) For the followng reasons, recommend that the court deny the moton to dsmss.. BACKGROUND 1 Plantff Godo Kasha P Brdge 1 ("P Brdge") fled ths acton on July 24, 2015 aganst TCL Holdngs, TCT Hong Kong, and TCT Moble (US), nc. ("TCT US"), assertng causes of 1 The factual background s taken from the amended complant fled on July 14, 2016, unless otherwse ndcated. (D.1. 63) n a stpulaton fled on July 11, 2016, the partes agreed that the amendments to the complant dd not substantvely change the allegatons n the pendng moton to dsmss. (D.1. 62) As such, the partes reque~ted that the court apply the arguments set forth n the moton to dsmss wth equal force to the allegatons n the amended complant, wthout further submssons by the partes.
acton for the alleged nfrngement of three patents owned by P Brdge. 2 (D.. 1) The patentsn-sut are drected to technology declared essental to one or more of the W-CDMA and LTE communcaton standards mplemented n moble phones and tablets that use these standards. (D.. 63 at f 30) P Brdge s a corporaton organzed and exstng under the laws of Japan wth ts prncpal place of busness n Tokyo, Japan. (d. at f 1) TCL Holdngs s a corporaton organzed and exstng under the laws of Chna wth a prncpal place of busness n Shenzhen, Guangdong, People's Republc of Chna. (d. at f 2) TCT Hong Kong s a wholly-owned subsdary of TCL Holdngs, and s a corporaton organzed and exstng under the laws of Hong Kong wth ts regstered offce n Kowloon, Hong Kong. (d. at f 4) TCT US s a Delaware corporaton and wholly-owned subsdary oftcl Holdngs wth ts prncpal place of busness n rvne, Calforna. (d. at f 5) Pror to flng the orgnal complant, P Brdge attempted to engage n lcensng negotatons wth TCL Holdngs. (d. at ff 18-26) On December 15, 2014, P Brdge sent a letter to TCL Holdngs offerng to lcense P Brdge's patent portfolo cover_ng W-CDMA, LTE, and related standards used n moble telecommuncatons on far, reasonable, and nondscrmnatory ("FRAND") terms. (d. at r 18) Havng receved no response, P Brdge sent a follow-up letter on January 26, 2015. (d. at ff 19-20) Agan, TCL Holdngs faled to respond, and P Brdge sent a second follow-up letter on February 27, 2015. (d. at ff 21-22) After TCL Holdngs faled to respond to the thrd letter, P Brdge sent a fourth letter on Aprl 6, 2015, 2 The patents-n-sut nclude Unted States Patent Nos. 7,373,295 ("the '295 patent"), 8,351,538 ("the '538 patent"), and 8,385,239 ("the '239 patent") (collectvely, the "patents-n-sut"). 2
demandng a response f TCL Holdngs wshed to reman elgble for FRAND rates on the patent portfolo. (d. at ff 23-24) TCL Holdngs dd\not respond to the Aprl 2015 letter. (d. at f 25) The. amended complant alleges that TGL Holdngs, TCT Hong Kong, and TCT US have nfrnged the patents-n-sut by desgnng, manpfacturng, usng, marketng, mportng, offerng for sale, and sellng moble phones and tablets ~nder the brands "Alcatel OneTouch" and "TCL" (the "Accused Products"). (d. at f 7) TCL Holdngs and TCT Hong Kong mport large numbers ofmoble devces nto the Unted States for dstrbuton throughout the Unted States, ncludng Delaware, and ntend for those products to be sold n Delaware. (d. at f 12) The record reflects that the Accused Products were avalable at W almart and Best Buy locatons n Wlmngton, Delaware, and recepts ndcate that the Accused Products were purchased by customers n Delaware from these store locatons. (d. at f 14) The Accused Products were also avalable for purchase through webstes such as Amazon.com that would shp the accused products to customers n Delaware. (d.) TCL Holdngs' webste descrbes the company as "a global moble termnal manufacturer and nternet servce provder" that sells products n the Unted States both drectly and through natonwde retalers such as Walmart and Best Buy. (D.. 23, Ex. A) TCL Holdngs mantans an "Alcatel OneTouch" storefront on the Amazon.com webste through whch t sells the Accused Products drectly to Unted States consumers, ncludng the Alcatel OneTouch Pop C9. (d., Exs. F, G, H) TCT Hong Kong s nvolved n the desgn and manufacture of the Alcatel OneTouch Pop C9. (d., Ex. ) TCT Hong Kong s the only entty that appears on the manufacturng orgn label of both the Alcatel OneTouch Pop C9 and the Alcatel OneTouch Evolve 2. (D.. 23, Exs. J & K; D.. 25, Exs. A &D) TCT Hong Kong al~o sells and dstrbutes the Accused Products n! 3
the Unted States through ts webste at www.a~catelonetouch.us, where the Terms and Condtons page dentfes TCT Hong Kong as the entty responsble for the page. (D.. 23, Exs. L&M). LEGAL STANDARD Rule 12(b)(2) drects the court to dsm~s a case when the court lacks personal jursdcton over the defendant. Fed. R. Cv. P. 12(b )(2). When revewng a moton to dsmss pursuant to Rule 12(b)(2), a court must accept L true all allegatons of jursdctonal fact made by the plantff and resolve all factual dsputes n the plantffs favor~ Traynor v. Lu, 495 F. Supp. 2d 444, 448 (D. Del. 2007). Once ajur1dctonal defense has been rased, the plantff bears the burden of establshng, wth reasonable partcularty, that suffcent mnmum contacts have occurred between the defendant and the f~rum to support jursdcton. See Provdent Nat 'l Bank v. Cal. Fed. Sav. & Loan Ass 'n, 819 F.2d 434, 437 (3d Cr. 1987). To meet ths burden, the plantff must produce "sworn affdavts or other competent evdence," snce a Rule 12(b)(2) moton "requres resoluton of factual ssues ojtsde the pleadngs." Tme Share Vacaton Club v. Atlantc Resorts, Ltd., 735 F.2d 61, 67 n.9 (3~ Cr. 1984). To establsh personal jursdcton, a plantff must demonstrate facts suffcent to satsfy. both a statutory and a consttutonal requremel. Wth respect to the statutory analyss, the court analyzes the long-arm statute of the state n whch the court s located. See MO ndus., nc. v. Kekert AG, 155 F.3d 254, 259 (3d Cr. 1998). Next, the court must determne whether exercsng jursdcton over the movng defendant n ths state comports wth the due process clause of the Unted States Consttuton. See d.; Autogenomcs, nc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1016 (Fed. Cr. 2009) (notng that the court must apply the law of the Federal Crcut to the consttutonal nqury n patent cases). 4
. Pursuant to the relevant portons of Delaware's long-arm statute, 10 Del. C. 3104( c )(1 )- ( 4), a court may exercse personal jursdcton over a defendant when the defendant or ts agent: (1) Transacts any busness or performs any character of work or servce n the State; (2) Contracts to supply servces or thngs n ths State; (3) Causes tortous njury n the State by an act or omsson n ths State; (4) Causes tortous njury n the State or outsde of the State by an act or omsson outsde the State f the person regul~rly does or solcts busness, engages n any other persstent course of condtct n the State or derves substantal revenue from servces, or thngs us~d or consumed n the State. 10 Del. C. 3104(c)(l)-(4). Wth the excepton of subsecton (c)(4), the long-arm statu~e requres a showng of specfc jursdcton. See Shoemaker v. McConnell, 556 F. Supp. 2d 351, 354-55 (D. Del. 2008). Subsecton (c)(4) confors general jursdcton, whch requres a great. number of contacts, but allows the exercse of ~ersonal jursdcton even when the clam s unrelated to the forum contacts. See Appled BLsystems, nc. v. Cruachem, Ltd., 772 F. Supp. 1458, 1466 (D. Del. 1991). f a defendant s found to be wthn the reach of the long-arm statute, the court then must analyze whether the exercse of personal jursd,cton comports wth due process by determnng whether the plantffhas demonstrated that the defendant "purposefully aval[ed] tself of the. prvlege of conductng actvtes wthn the forum State," so that t should "reasonably antcpate beng haled nto court there." World-Wde Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980) (ctatons omtted). For the court to exercse specfc personal jursdcton consstent wth due process, a plantffs cause of acton must have arsen from the defendant's actvtes n the forum state. See Burger Kng Corp. v. Rudzewcz, 471 U.S. 462, 472 (1985). The court may exercse general personal jursdcton consstent wth due process f the plantffs cause of acton s unrelated to the defendant's actvtes n the forum state, so long as the defendant has 5
"contnuous and systematc contacts wth the forum state." Appled Bosystems, nc., 772 F. Supp. at 1458. V. DSCUSSON A. Consderaton of the Mao Declaraton As a prelmnary matter, P Brdge alleges that the court should not consder the Mao Declaraton submtted n support of TCL Holdngs and TCT Hong Kong's moton to dsmss because the declarant s not an employee of ether defendant, but acts as legal counsel for TCL Communcaton (Nngbo) Co., Ltd. ("TCL-Nngbo"), a wholly-owned subsdary oftcl Holdngs. (D.. 22 at 2) Accordng to P Brdge, the Mao Declaraton s nadmssble under Federal Rules of Evdence 104(a) and 602 because t provdes no bass to assume that Mao's poston n TCL-Nngbo provdes hm wth knowledge of the operatons of TCT Hong Kong and TCL Holdngs. 3 (d. at 3) P Brdge further contends that the representatons n the Mao Declaraton are nconsstent wth publc statements and legal flngs made by TCL Holdngs and TCT Hong Kong. (d.) n response, TCL Holdngs and TCT Hong Kong contend that the court should credt the Mao Declaraton because TCL-Nngbo s a TCL Holdngs subsdary that s drectly nvolved wth the desgn of Alcatel OneTouch branded phones, and Mao, as a member 3 Durng the March 29, 2016 oral argument on the pendng moton, P Brdge also ndcated that the Mao Declaraton was procedurally defectve pursuant to 28 U.S.C. 1746. (3/29/2016 Tr. at 17:21-18:5) n response, counsel for TCL Holdngs and TCT Hong Kong alleged that P Brdge's argument should be deemed waved, as t was not presented n the brefng. (d. at 50:20-51 :3) Pursuant to 28 U.S.C. 1746(1), a declaraton executed outsde of the Unted States must contan the followng language: " declare... under penalty of perjury under the laws of the Unted States of Amerca that the foregong s true and correct. Executed on (date). (Sgnature)." The court need not determne whether P Brdge has waved ths argument, or whether the Mao Declaraton s procedurally defcent pursuant to 28 U.S.C. 1746, n vew of ts concluson that the evdence must be consdered n the lght most favorable to P Brdge at ths stage of the proceedngs. 6
of the legal department, has nformaton regardng the corporate structure and operatons of the TCL enttes. (D.. 27 at 2) When revewng a moton to dsmss pursuant to Rule 12(b)(2), a court must accept as true all allegatons of jursdctonal fact made by the plantff and resolve all factual dsputes n the plantffs favor. Traynor v. Lu, 495 F. Supp. 2d 444, 448 (D. Del. 2007). Once a jursdctonal defense has been rased, the plantff bears the burden of establshng, wth reasonable partcularty, that suffcent mnmum contacts have occurred between the defendant and the forum to support jursdcton. See Provdent Nat 'l Bank v. Cal. Fed. Sav. & Loan Ass 'n, 819 F.2d 434, 437 (3d Cr. 1987). To meet ths.burden, the plantff must produce "sworn affdavts or other competent evdence," snce a Rule 12(b )(2) moton "requres resoluton of factual ssues outsde the pleadngs." Tme Share Vacaton Club v. Atlantc Resorts, Ltd., 735 F.2d 61, 67 n.9 (3d Cr. 1984). Where, as here, the dstrct court does not hold an evdentary hearng, a plantff need only establsh a "prma face case of personal jursdcton and the plantff s enttled to have ts allegatons taken as true and all factual dsputes drawn n ts favor." Mller Yacht Sales, nc. v. Smth, 384 F.3d 93, 97 (3d Cr. 2004); see also Metcalfe v. Renassance Marne, nc., 566 F.3d 324, 330 (3d Cr. 2009) (ctng Pnker v. Roche Holdngs Ltd., 292 F.3d 361, 368 (3d Cr. 2002)). When a defendant submts contradctory evdence through an affdavt, a plantff may not rest on the allegatons n the complant, but must come forward wth affdavts or other competent evdence to show that personal jursdcton s proper. Byrd v. Aaron's, nc., 14 F. Supp. 3d 667, 685 n.8 (W.D. Pa. 2014) (ctng n re Chocolate Confectonary Anttrust Ltg., 602 F. Supp. 2d 538, 556 (M.D. Pa. 2009)). Any conflct of facts between the plantff and defendant must be resolved n favor of the plantff. Barrett v. Catacombs Press, 44 F. Supp. 2d 717, 722 (E.D. Pa. 7
1999) (ctng TJS Brokerage & Co., nc. v. Mahoney, 940 F. Supp. 784, 787 (E.D. Pa. 1996); D MarkMktg., nc. v. Lousana Health Serv. &ndemnty Co., 913 F. Supp. 402, 405 (E.D. Pa. 1996) ). Once a plantff has sustaned ts burden of producng competent evdence showng that jursdcton s proper, the Rule 12(b )(2) moton wll be dened despte any controvertng presentaton by the defendant. Chocolate Confectonary, 602 F. Supp. 2d at 557 (ctng Cateret Sav. Bank, F.A. v. Shushan, 954 F.2d 141, 142 n.1 (3d Cr. 1992)). n vew of the foregong case authortes, any factual dscrepances between the Mao Declaraton and the affdavts and evdence suppled by P Brdge must be resolved n favor of P Brdge. Consequently, the court need not make a determnaton regardng the admssblty of the Mao Declaraton at ths stage of the proceedngs. B. Long-Arm Statute TCL Holdngs and TCT Hong Kong contend that the court lacks personal jursdcton over them under Delaware's long-arm statute because they are foregn companes that do not conduct busness or mantan contnuous and systematc contacts n Delaware. (D.. 18 at 5-8) Accordng to TCT Hong Kong, ts U.S. actvty s lmted to the submsson of certfcaton documents for certan cellular telephones sold n the Unted States to the Federal Communcatons Commsson ("FCC"), but t does not manufacture, mport, or sell phones n the Unted States and does not drect any actvtes to Delaware. (d. at 7) n response, P Brdge contends that personal jursdcton exsts under subsectons ( c )( 1) and ( c )(3) of the Delaware long-arm statute because TCL Holdngs and TCT Hong Kong engage n drect sales to Delaware customers through onlne stores, and P Brdge has produced evdence of two nstances of sales to dstrbutors n Delaware. (D.. 22 at 11-12) 8
The evdence provded by P Brdge demonstrates that TCT Hong Kong manufactures at least two of the accused devces. Specfcally, the FCC flngs dentfy TCT Hong Kong as the manufacturer of both the Alcatel OneTouch Evolve 2 and the Alcatel OneTouch Pop C9, as do pctures of the nsde of those devces. (D.. 23, Exs. J & K; D.. 25, Exs. A & D) Moreover, P Brdge has produced evdence ndcatng that TCT Hong Kong sells ts products through ts! webste; www.alcatelonetouch.us. (D.. 23, Exs:. L & M) Specfcally, the webste lsts for sale varous Alcatel One Touch models, and the Terms & Condtons porton of the webste lsts the contact address for TCT Hong Kong n rvne, Calforna. (d.) The record reflects that sales of the Alcatel OneTouch dol 3 were made to a Delaware customer by TCT Hong Kong through ths webste. (D.. 24, Ex. ) Smlarly, the record contans evdence 9f TCL Holdngs' webste, whch establshes that TCL Holdngs manufactures and sells products!n North Amerca, bult partnershps wth retal! gants such as W almart and Best Buy, and own~ nne global research and development centers and a global factory that produces mllons of d;evces per year. (D.. 23, Ex. A) The record! reflects that TCL Holdngs mantans an Amazon.com storefront, through whch t sells devces drectly to Delaware customers. (D.. 23, Exs. F-H;D.. 24, Ex. E) The evdence suggests that a Delaware customer purchased an Alcatel OneTouch Pop C9 and an Alcatel OneTouch dol 3 through the Amazon.con storefront and had t shpped to a Delaware address. (D.. 24, Exs. E- H) Delaware.courts have held that a sngle drect sale of an nfrngng product to a Delaware customer satsfes subsecton ( c )( 1) of the Delaware long-arm statute as a suffcent busness transacton to establsh jursdcton. See Fredman v. Alcatel Asthom, 752 A.2d 544, 549 (Del. Ch. 1999). The record n the present case suggests that both TCT Hong Kong and TCL Holdngs 9
made drect sales of Accused Products to Delaware customers through ther respectve webstes,. and the allegatons n the complant establsh that these allegedly nfrngng sales are the source ofthe clams at ssue. (D.. 24, Exs. E-; D.. 1) Therefore, P Brdge has satsfed subsecton (c)(l) of the Delaware long-arm statute. P Brdge has also satsfed subsecton (t)(3) of the Delaware long-arm statute, whch requres evdence establshng that a non-resdeht caused tortous njury.n the state. Delaware courts have held that a non-resdent's "ntentolfal shpment of the accused product to Delaware" satsfes the requrement of subsecton ( c )(3). Graphcs Prop. Holdngs nc. v. Asus Computer nt'l, nc., 964 F. Supp. 2d 320, 326 (D. Del. 2d13) ("The [nfrngng] act occurred n Delaware because the products were delvered to Delaware customers who... then used the products n ] Delaware."). The record n the present acton r1 ~flects that sales of the Alcatel OneTouch dol 3 were made to a Delaware customer by TCT Hdng Kong through the alcatelonetouch.us webste and shpped to the customer's Delaware address. (D.. 24, Ex. ) The evdence further suggests. that a Delaware customer purchased an Alcatel OneTouch Pop C9 and an Alcatel OneTouch dol. 3 through the Amazon.com storefront manta~ed by TCL Holdngs and had t shpped to a D~laware address. (D.. 24, Exs. E-H) Ths e~dence s suffcent to satsfy P Brdge's burden to establsh the exstence of jursdcton over TCT Hong Kong and TCL Holdngs under 3104(c)(3).. The case law cted by TCL Holdngs and TCT Hong Kong s napposte. TCL Holdngs and TCT Hong Kong rely on two cases that co.nducted a general jursdcton analyss and dd not reach the specfc jursdcton factors. See n re Enterprse Rent-A-Car Wage & Hour Employment Practces Ltg., 735 F. Supp. 2d 277, 315-16 (W.D. Pa. 2010) (requrng webste to specfcally target the forum state or relate to the parent's busness actvtes n the forum state n 10
a general jursdcton analyss); Kloth v. S. Chrstan Unv., 494 F. Supp. 2d 273, 281 (D. Del. 2007) (assessng general jursdcton, not specfc jursdcton, under the Delaware long-arm statute). Moreover, there s no evdence on the present record that an operatonal subsdary actually makes the sales resultng from the transactons through the webstes run by TCL Holdngs and TCT Hong Kong. See n re Naz Era Cases Aganst German Defendants Ltg., 320 F. Supp. d 204, 220 (D.N.J. 2004) (webstf dd not connect customers to the parent corporaton tself, but rather lnked customers t~ subsdares). P Brdge further clams that personal jupsdcton exsts under a "dual jursdcton". or "stream of commerce" theory, 4 whch combnes subsectons (c)(l) and (c)(4) 5 of the long-arm statute. See Robert Bosch LLC v. Alberee Pro4s., nc., 70 F. Supp. 3d 665, 672-76 (D. Del. 2014). The approach was adopted by Delaware courts as a mechansm by whch to apply the long-arm statute to "stream of commerce" stu~tons, or stuatons n whch a non-resdent places 4 Courts wthn ths dstrct dsagree as to whetller the dual jursdcton theory s supported by the Delaware long-arm statute. Several recent cases have supported applcaton of the doctrne, notng that the Delaware Supreme Court has had opportuntes to repudate the doctrne but has faled to do so. See Polar Electro Oy v. Suuntd Oy, C.A. No. 11-1100-GMS, 2015 WL 2248439, at *4 (D. Del. May 12, 2015); Robert Bosch LLC v. Alberee Prods., nc., 70 F. Supp. 3d 665, 674-75 (D. Del. 2014) (ctng Boone, 724 A.2~ at 1156, aff'd, 707 A.2d 765 (Del. 1998); Wrght v. Am. Home Prods. Corp., 768 A.2d 518, 531 :(Del. Super. Ct. 2000)). However, another judge has predcted that the Delaware Supreme Court would not adopt the dual jursdcton theory, concludng that the Delaware Supreme Court's statements n LaNuova regardng subsectons ( c )(1) and ( c )( 4) were mere dcta. Round Rock Research LLC v. ASUSTeK Computer nc., 967 F. Supp. 2d 969, 976-77 (D. Del. 2013). The Round Rock court noted that the Delaware Superor Court's adopton of the dual jursdcton theory s nconsstent wth well-establshed prncples that the long-arm statute should be separately analyzed from due process consderatons, and ts nterpretaton should flow from the statutory language. d. at 976. Because the Delaware Supreme Court has not overruled the dual jursdcton theory, and the Federal Crcut has recently upheld ts applcaton, see Polar Electro Oy v. Suunto Oy, 2016 WL 3913449, at *7 (Fed. Cr. July 20, 2016), ths court wll proceed wth the dual jursdcton analyss. 5 Subsecton (c)(l) confers "specfc" jursdcton over a non-resdent defendant; subsecton ( c )( 4) confers "general" jursdcton. See, e.g.~ LaNuova D & B, S.p.A. v. Bowe Co., 513 A.2d 764, 768 (Del. l986);boonev. OyPartekAb, 1724A.2d 1150, 1155 (Del. Super. Ct. 1997),aff'd, 1 707 A.2d 765 (Del. 1998). 11
ts product n the market place and may, under certan crcumstances, be found to have suffcent contacts wth Delaware. [T]he enumerated actvtes n [subsecton (4)]- should be analyzed to determne whether there s an ntent or purpose on the part of the [non-resdent] to serve the Delaware market wth ts product. Lkewse, when analyzng [subsecton] (1) t s not mportant that the [non-resdent] tself act n Delaware. nstead, fthe ntent or purpose on behalf of the [non-resdent] to serve the Delaware market results n the ntroducton of the product to ths State and plantffs cause of acton arses from njures caused by that product, ths secton s satsfed. Power ntegratons, nc. v. BCD Semcdnductor Corp., 547 F. Supp. 2d 365, 371-72 (D. Del. 2008). "Thus, the dual jursdcton analyss requres a showng of both: (1) an ntent to serve the Delaware market; and (2) that ths ntent results n the ntroducton of the product nto the market and that plantffs cause of acton arses from njures caused by that product." Belden Techs., nc. v. LS Corp., 829 F. Supp. 2d 260, 267 (D. Del. 2010) (ctng Power ntegratons, 547 F. Supp. 2d at 372). "Under the Delaware long-arm statute, the 'touchstone' of stream-of-commerce theory relates to the frst prong of ths analyss, the '~tent and purpose to serve the Delaware market."' Eastman Chem. Co. v. AlphaPet nc., C.A. No./ 09-971-LPS-CJB, 2011WL6004079, at *16 (D. Del. Nov. 4, 2011) (ctng Power ntegratons,:547 F. Supp. 2d at 372). A non-resdent defendant's ntent to serve the Unted States mhrket s suffcent to establsh an ntent to serve the Delaware market, unless there s evdence that the defendant ntended to exclude Delaware from ts marketng and dstrbuton efforts. Power ntegratons, nc., 547 F. Supp. 2d at 373. The record n the present case establshes TCT Hong Kong's ntent to serve the Delaware market by manufacturng and sellng phones, whch t actvely markets n the Unted States and dstrbutes through natonal retalers lke Best Buy. (D.. 23, Exs. J & K; D.. 24) Under the relevant case authortes regardng dual jursdbton, TCT Hong Kong's ntent to dstrbute the 12..
products throughout the Unted States s suffcent to establsh TCT Hong Kong's ntent to serve the Delaware market specfcally. 6 See Robert Bosch LLC v. Alberee Prods., nc., C.A. No. 12-574-LPS, 2016 WL 1180131 (D. Del. Mar. 16, 2pl6); Power ntegratons, 547 F. Supp. 2d at 373; Eastman Chem., 2011WL6004079, at *16; Lkewse, TCL Holdngs has presented evdence that t manufactures moble phones and sells them throughout the Unted States. (D.. 23, Ex. A; D.. 24) The record further reflects that sales have been made n Delaware at retalers such as Best Buy and Walmart. (D.. 24, Exs. A-D); Robert Bosch, C.A. No. 12-574-LPS, Memorandum Order, D.. 357; D.. 360 at f 4 (D. _Del. Mar. 17, 2016) ("Furthermore, the fnshed... products have actually been sold by Costco n Delaware."). The foregong evdence establshes that TCL Holdngs and TCT Hong ~ong ntended to serve the Unted States market wthout excludng Delaware, thereby satsfyng :the frst prong of the dual jursdcton analyss. The record also shows that both TCL Holdngs and TCT Hong Kong's ntroducton of ther products to the Delaware market gves rs~ to P Brdge's njures under the second prong of the dual jursdcton analyss. See Robert Bosch, C.A. No. 12-574-LPS, Memorandum Order, D.. 357; D.. 360 at f 4 (D. Del. Mar. 17, 2016) ("[]t s undsputed that ths cause of acton ; 6 The pluralty decson wrtten by Justce KeJedy n the Unted States Supreme Court's decson n J. Mcntyre Mach., Ltd. v. Ncastro, 131 S. Ct. 2780 (2011) rejected the dea that an ntent to serve the Unted States market could demonstrate purposeful avalment of the forum state. Ncastro, 131 S. Ct. at 2790. The Supreme Court's pluralty decson concluded that "the defendant's transmsson of goods permts the exercse of jursdcton only where the defendant can be sad to have targeted the forum; as a general rule t s not enough that the defendant mght have predcted that ts goods wll reach the forum state." d. at 2788. However, dual jursdcton cases n ths dstrct are dstngushable because they "d[ o] not rely solely on targetng the natonal market to satsfy the stream-of-commerce test," and also stress the mportance of establshng that the accused products are shpped to Delaware and that a relatonshp exsts wth end users of the products n Delaware. Eastman Chem., 2011WL6004079, at *18 (Ctng Power ntegratons, 547 F. Supp. 2d at 367). The D~trct ofnew Jersey has stressed that "Ncastro does not clearly or conclusvely defne the breadth and scope of the stream of commerce theory, as there was not a majorty consensus on a sngular test." Otcon, nc. v. Sebotek Hearng Sys., LLC, 865 F. Supp. 2d 501, 513 (D.N.J. 2011).: 13
arses from njures caused by those products."). TCL Holdngs sells drectly to U.S. customers through Amazon.com and partners wth domestc dstrbutors such as W almart and Best Buy to sell products to Delaware customers. (D.. 24, Exs. C & D; D.. 23, Ex. A) Moreover, the record demonstrates that TCT Hong Kong's phone~ are sold at a Best Buy locaton n Delaware. (D.. 24, Ex. A; D.. 25, Ex. A) No evdence on:the record suggests that TCL Holdngs and TCT Hong Kong ntended to exclude.delaware from ~her efforts to dstrbute the Accused Products n the Unted States. Thus, the second prong of th~ test for stream of commerce jursdcton under the Delaware long-~ statute has been met. Se,;e Graphcs Prop. Holdngs, nc., 79 F. Supp. 3d at 662 (statutory analyss satsfed by evdence of sales n Delaware by three physcal resale outlets); Polar Electro, 2015 WL 2248439, at*~ (statutory analyss satsfed by evdence of eght e-commerce transactons made n Delaware); Robert Bosch LLC, 70 F. Supp. 3d at 678-80 (stream of commerce jursdcton over out of state manufacturer and seller found when sales were made to U.S. chan retaler wth a locator n Delaware, and sad store sold the accused product). C. General Jursdcton P Brdge contends that TCT Hong Kong s also subject to general jursdcton under subsecton (c)(4) of the Delaware long-arm statute because TCT Hong Kong represented n prevous ltgaton that t was ncorporated n Delaware. (O.. 22 at 17) However, the record reflects that TCT Hong Kong s a Hong Kong corporaton. (D.. 63 at,-r 4) The Delaware Secretary of State webste dentfes TCT US as a Delaware corporaton (D.. 23, Ex. E), but contans no lstng for TCT Hong Kong (D.. 28, Ex. A). P Brdge ctes no case authorty to support the proposton that a representaton regardng a corporaton's state of ncorporaton made n an unrelated ltgaton consttutes su~cent evdence to overcome documentary, 14
1! evdence confrmng the corporaton's state of n,corporaton presented n the nstant case. As prevously stated, a plantff cannot rely only on the allegatons n the complant when a defendant presents affdavts and evdence that r~fute those allegatons. See Byrd v. Aaron 's, nc., 14 F. Supp. 3d 667, 685 n.8 (W.D. Pa. 2014) (ctng n re Chocolate Confectonary Anttrust Ltg., 602 F. Supp. 2d 538, 556 (M.D. Pa. 2009)). Relyng on allegatons n a complant from another ltgaton n another jursdcton would appear to be even more tenuous. Therefore, TCT Hong Kong s not subject to general jursdcton n Delaware based on a representaton made n a prevous ltgaton n another jursdcton. D. Due Process The court next turns to the due process analyss. n support of the moton to dsmss, TCT Hong Kong and TCL Holdngs contend that P Brdge's cause of acton does not arse from the actvtes oftcl Holdngs or TCT Hong Kpng n Delaware. (D.. 18 at 9) Specfcally, TCL Holdngs and TCT Hong Kong assert thatnether company conducts busness n the Unted States or Delaware, and TCT Hong Kong's co11tacts wth the FCC are unrelated to the cause of acton. (d.) Accordng to TCL Holdngs and TCT Hong Kong, jursdcton s not approprate when based on a defendant's relatonshp wth 1ts wholly-owned subsdares responsble for the sale and mportaton of accused products n the Unted States. (d.) n response, P Brdge contends that exercsng personal jursdcton over TCL Holdngs and TCT Hong Kong comports wth due process because they placed the Accused Products n the stream of commerce, they knew the lkely destnaton of the products, and they should have reasonably antcpated beng brought nto court n Delaware based on ther conduct. (D.. 22 at 18) Accordng to P Brdge, exercsng pers~ral jursdcton over a defendant who sells products natonally comports wth due process. (d. at 19) 15
n Asah Metal ndustry Co. v. Superor Court, Justce O'Connor explaned that [t]he "substantal connecton" between the defendant and the forum State. necessary for a fndng of mnmum contacts must come about by an acton of the defendant purposefully drected toward the forum State. The placement of a product nto the stream of commerce, wthout. more, s not an act of the defendant purposefully drected toward the forum State. 480 U.S. 102, 112 (1987) (pluralty opnon) (nternal ctaton omtted). Ths test s satsfed when a party engages n "[a]ddtonal conduct.~. ndcat[ng] an ntent or purpose to serve the market n the forum State, for example... marketng the product through a dstrbutor who has agreed to serve as the sales agent n the forum ~tate." d. P Brdge has submtted evdence ndc~tng that TCL Holdngs and TCT Hong Kong purposefully avaled themselves of the prvlegj of conductng busness n Delaware by ntroducng ther products n the Unted States p.arket wth the knowledge that some of those products would end up n Delaware and they sllould antcpate beng sued n Delaware. (D.. 23, Exs. A, F-H, L-M; D.. 24, Exs. E-) Ths evd~nce supports an nference "that the dstrbuton channel formed by [TCL Holdngs and TCT Hong Kong] was ntentonally establshed, and that! defendants knew, or reasonably could have for~seen, that a termnaton pont of the channel was [Delaware]." Robert Bosch, C.A. No. 12-574-LPS, Memorandum Order, D.. 357; D.. 360 at f 6 (D~ Del. Mar. 17, 2016) (quotng Beverly Hlts Fan Co. v. Royal Soveregn Corp., 21 F.3d 1558, 1564 (Fed. Cr. 1994)). Smlar to the facts before the court n Robert Bosch, the record n the present -case demonstrates that TCL Holdngs and TCT Hong Kong had knowledge that ther products were dstrbuted natonwde through retalers such as Best Buy and W almart, and they "purposefully shpped the accused [products] nto.[delaware] through an establshed dstrbuton channel [and] [t]he cause of acton for patent nfrngement s alleged to arse out of these 16
actvtes." Robert Bosch, C.A. No. 12-574-LPS, Memorandum Order, D.. 357; D.. 360 at f 6 (D. Del. Mar. 17, 2016) (quotng Beverly Hlls Fan Co., 21 F.3d at 1565). Because the Accused Products were actually sold n Delaware, and TCL Holdngs and TCT Hong Kong "purposefully avaled [themse~ves] of the prvleges and laws of Delaware" by manufacturng and sellng products for the U.S. µarket, exercsng jursdcton over TCL Holdngs and TCT Hong Kong based on stream:of commerce comports wth due process. Robert Bosch, C.A. No. 12-574-LPS, Memorandum Order, D.. 357; D.. 360 at f 7 (D. Del. Mar. 17, 2016). Consequently, recommend th~t the court deny the pendng moton to dsmss, as P Brdge has met ts prma face burden of e~tablshng that the court's exercse of personal jursdcton over TCL Holdngs and TCT Hong!Kong s proper. E. Jursdctonal Dscovery! P Brdge requests lmted jursdctonal/ dscovery n the event that the court.! contemplates grantng TCL Holdngs and TCT!Hong Kong's partal moton to dsmss. (D.. 22 at 19) TCL Holdngs and TCT Hong Kong oppose P Brdge's request. (D.. 27 at 7-8) Havng concluded that the exercse of personal jursdc~on over TCL Holdngs and TCT Hong Kong s proper, recommend that the court deny the request for jursdctonal dscovery. V. CONCLUSON For the foregong reasons, recommend that the court deny TCL Holdngs and TCT Hong Kong's partal moton to dsmss for lack of personal jursdcton under Fed. R. Cv. P. 12(b)(2). Ths Report and Recommendaton s fled pursuant to 28 U.S.C. 636(b)(l)(B), Fed. R. Cv. P. 72(b)(l), and D. Del. LR 72.1. The partes may serve and fle specfc wrtten objectons wthn fourteen (14) days after beng, served W:th a copy of ths Report and Recommendaton. 17
Fed. R. Cv. P. 72(b)(2). The objectons and responses to the objectons are lmted to ten (10) pages each. The falure of a party to object to legal conclusons may result n the loss of the rght to de novo revew n the Dstrct Court. See Sncavage v. Barnhart, 171 F. App'x 924, 925 n.1 (3d Cr. 2006); Henderson v. Carlson, 812 F.2d ~74, 878-79 (3d Cr. 1987). The partes are drected to the court's Stab.dng Order for Objectons Fled Under Fed. R. Cv. P. 72, dated October 9, 2013, a copy ofwhbh s avalable on the court's webste, http://www.ded.uscourts.gov. Dated: August 1 7, 2016 18