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SportPet Designs Inc v. Cat1st Corp.

United States District Court, E.D. Wisconsin

March 2, 2018

SPORTPET DESIGNS INC., Plaintiff,
v.
CAT1ST CORPORATION and JUN TAKEUCHI, Defendants.

          DECISION AND ORDER

          LYNN ADELMAN, DISTRICT JUDGE

         SportPet Designs Inc. brings this action against Cat1st Corp. and Jun Takeuchi alleging patent, trademark, and copyright infringement and violations of Wisconsin's Deceptive Trade Practices Act. SportPet's claims concern the production, importation, advertisement, and sale of pet products, such as play structures for cats. Cat1st moves to dismiss for improper venue and failure to state a claim upon which relief can be granted.[1] Fed.R.Civ.P. 12(b)(3), (6). Takeuchi joins Cat1st's motion and further moves to dismiss for lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2). I will address personal jurisdiction and venue before considering the sufficiency of the complaint.

         I. PERSONAL JURISDICTION

         Personal jurisdiction primarily concerns “the defendant's relationship to the forum State.” Bristol-Myers Squibb Co. v. Superior Court of California, 137 S.Ct. 1773, 1779 (2017). There are “two types of personal jurisdiction: ‘general' (sometimes called ‘all-purpose') jurisdiction and ‘specific' (sometimes called ‘case-linked') jurisdiction.” Id. at 1780. “For an individual, the paradigm forum for the exercise of general jurisdiction is the individual's domicile . . . .” Id. (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011)). The parties agree that Takeuchi, a resident of Japan, is not domiciled in Wisconsin so is not subject to general jurisdiction here.

         “Specific jurisdiction is very different.” Id. While “[a] court with general jurisdiction [over a defendant] may hear any claim against that defendant, . . . . for a . . . court to exercise specific jurisdiction, . . . . there must be ‘an affiliation between the forum and the underlying controversy, '” usually, “activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation.” Id. (Goodyear, 564 U.S. at 919). Moreover, a court can only “exercise personal jurisdiction over an out-of-state defendant if the defendant has ‘certain minimum contacts with [the State] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'” Goodyear, 564 U.S. at 923 (alteration in original) (internal quotation marks omitted) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

         The exercise of specific jurisdiction is appropriate where a defendant's “conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (quoting Int'l Shoe, 326 U.S. at 316; World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). How that rule applies “will vary with the quality and nature of the defendant's activity, but it is essential . . . that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Id. at 474-75 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)).

         SportPet alleges and Takeuchi concedes that, in 2011, he visited Wisconsin on behalf of his company D-Culture, then a distributor for SportPet in Japan, and spent 10 days here meeting with SportPet and its CEO, Adam Kellogg. According to Kellogg, “[Takeuchi] was highly inquisitive during this trip about the details of SportPet's patents and trademarks, ” and “[a] large majority of this business trip was spent discussing the intellectual property that forms the basis for the lawsuit here.” Kellogg Decl., ECF No. 30-1, ¶¶ 5-6. SportPet argues that Takeuchi “traveled to Wisconsin to . . . enhance his knowledge of SportPet's intellectual property and business dealings” and “then used this knowledge to manufacture . . . infringing products, ” using “Cat1st as a conduit to import the infringing products to the United States, where they are sold throughout the United States and in Wisconsin.” Pl.'s Br., ECF No. 30, at 5.

         Even accepting the truth of SportPet's arguments and allegations, it overstates the significance of Takeuchi's 2011 business trip. While a defendant's “physical entry into the [forum] State . . . is certainly a relevant contact, ” Walden v. Fiore, 134 S.Ct. 1115, 1122 (2014), the exercise of specific jurisdiction is only appropriate where a plaintiff's asserted claims actually “arise out of” the defendant's activities in the state, Burger King, 471 U.S. at 472 (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)). SportPet is not suing Takeuchi for anything he did during his lone trip to Wisconsin. Instead, it is suing him and his company for infringing its publicly disclosed intellectual property and using deceptive trade practices based on the production, importation, advertisement, and sale of goods years later.

         SportPet has not shown that any of its claims arise out of Takeuchi's activities in Wisconsin. It alleges, “The Defendants manufactured the infringing products in China.” Am. Compl., ECF No. 11, ¶ 13. It alleges that they “imported the infringing products into the United States”-though it does not say into what state or states they imported them. Id. It then vaguely alleges that “[Takeuchi] and Cat1st are selling the infringing products online, ” id. ¶ 42, including (presumably) to consumers in Wisconsin. However, its specific allegations and filings concerning the actual advertisement and sale of accused products only implicate Cat1st. See Id. ¶¶ 54-56, ¶¶ 59-61, ¶¶ 64-66, ¶¶ 69-71, ¶¶ 74-76, ¶¶ 79-87 (describing various product listings and attributing them to Cat1st); see also ECF No. 21-5, at 1 (listing items ordered from Amazon.com as sold by Cat1st). I cannot exercise specific jurisdiction over Takeuchi based on one contact with Wisconsin for which he is not being sued, his contacts in the United States but outside of Wisconsin, or his mere affiliation with Cat1st and its presumed contacts in Wisconsin.

         SportPet argues that personal jurisdiction is appropriate here based on Federal Rule of Civil Procedure 4(k)(2), which provides, “For a claim that arises under federal law, serving a summons . . . establishes personal jurisdiction over a defendant if . . . the defendant is not subject to jurisdiction in any state's courts of general jurisdiction” and “exercising jurisdiction is consistent with the United States Constitution and laws.” However, where a defendant lacks the requisite minimum contacts with the forum state, exercising personal jurisdiction there over that defendant is inconsistent with constitutional due process. See World-Wide Volkswagen, 444 U.S. at 291.

         “The plaintiff bears the burden of establishing personal jurisdiction.” Brook v. McCormley, 873 F.3d 549, 552 (7th Cir. 2017). SportPet has failed to satisfy that burden with respect to its claims against Takeuchi. Therefore, I will grant Takeuchi's motion to dismiss for lack of personal jurisdiction and dismiss him from this case.

         II. IMPROPER VENUE

         Cat1st argues that this district is an improper venue for SportPet's patent claims against it. “Any civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.” 28 U.S.C. § 1400(b). Cat1st is incorporated, and therefore “resides, ” in Nevada, so its residence does not provide a basis for venue in this district. See TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S.Ct. 1514, 1521 (2017). Thus, the parties dispute only whether venue is proper here under the second prong of § 1400(b), specifically focusing on whether Cat1st has a regular and established place of business in this district.

         The Federal Circuit recently defined what constitutes a defendants' “regular and established place of business” for patent venue purposes. See In re Cray Inc., 871 F.3d 1355, 1361-64 (Fed. Cir. 2017). First, there must be “a physical, geographical location in the district from which the business of the defendant is carried out.” Id. at 1362. Second, the place of business must be “regular, ” meaning that it “operates in a ‘steady[, ] uniform[, ] orderly [, and] methodical' manner”; “sporadic activity cannot create venue.” Id. (alterations in original) (quoting 8 The Century Dictionary and Cyclopedia 5050 (William Dwight Whitney & Benjamin E. Smith eds., rev. 1911)). Third, the place of business must be “established, ” meaning that it has “sufficient permanence” and is “‘stable, ' . . . not transient.” Id. at 1363. Finally, “it must be a place of the defendant, ” meaning that “the defendant must establish or ratify the place of business.” Id.

         The court also described relevant considerations in assessing whether a defendant has a regular and established place of business in the district. These include “whether the defendant owns or leases the place, or exercises other attributes of possession or control over the place”; “whether the defendant conditioned employment on an employee's continued residence in the district or the storing of materials at a place in the district so that they can be distributed or sold from that place”; and the defendant's “[m]arketing or advertisements . . . to the extent they ...


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