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Semcon IP Inc. v. TCT Mobile International Ltd.

United States District Court, E.D. Texas, Marshall Division

July 1, 2019

SEMCON IP INC., Plaintiff,
v.
TCT MOBILE INTERNATIONAL LIMITED, TCL COMMUNICATION TECHNOLOGY HOLDINGS LIMITED, Defendants.

          MEMORANDUM OPINION AND ORDER

          RODNEY GILSCRAP UNITED STATES DISTRICT JUDGE

         Before the Court is Defendant TCT Mobile International Limited's (“TCT International”) Rule 12(b)(2) Motion to Dismiss (the “Motion”). (Dkt. No. 14.) By its Motion, TCT International, a Hong Kong company, asserts that this Court lacks personal jurisdiction over it because it does not manufacture the products made the subject of this suit nor does it import them into the United States or offer to sell or or sell them in the United States. (See Id. at 1-3.) Having considered the briefing and evidence proffered by the parties, and for the reasons set forth herein, the Court is of the opinion that the Motion should be and hereby is DENIED.

         I. Background

         Semcon IP Inc. (“Semcon”) accuses TCT International of infringing U.S. Patent Nos. 7, 100, 061; 7, 596, 708; 8, 566, 627; and 8, 806, 247 “by making, using, selling, offering to sell, and/or importing, and by actively inducing others to make, use, sell, offer to sell and/or importing, products, ” such as smartphones, that embody these patents (the “Accused Products”). (Dkt. No. 1 ¶¶ 16.) TCT International asserts that it does not manufacture the Accused Products but instead purchases them from Huizhou TCL Mobile Communication Co. Ltd. (“TCL Huizhou”). (Dkt. No. 29-2, at 1.) TCT International in turn sells the Accused Products to TCT Mobile (US) Inc. (“TCT US”), who then sells the products to retailers in the United States. (Id.) TCT International asserts that the sale of the Accused Products to TCT U.S. occurs in Hong Kong, China and that it has no control over TCT US's subsequent importation or sale of these products into the United States and into Texas. (Dkt. No. 33, at 5.) Therefore, TCT International contends that this Court lacks personal jurisdiction over it. (Dkt. No. 14, at 5.)

         II. Legal Standard

         Federal Circuit law governs personal jurisdiction where “a patent question exists.” See Celgard, LLC v. SK Innovation Co., 792 F.3d 1373, 1377 (Fed. Cir. 2015). “[W]hether a defendant is subject to specific personal jurisdiction in the forum state involves two inquiries: first, whether the forum state's long-arm statute permits service of process and, second, whether the assertion of jurisdiction is consistent with due process.” Id. “Because the Texas long-arm statute extends to the limits of federal due process, the two-step inquiry collapses into one federal due process analysis.” Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008); accord Grober v. Mako Prod., Inc., 686 F.3d 1335, 1345 (Fed. Cir. 2012) (“California and federal due process limitations are coextensive, and thus the inquiry collapses into whether jurisdiction comports with due process.”).

         For due process to be satisfied, the defendant must have “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted). “A court must inquire whether the defendant has ‘purposefully directed his activities' at the forum state and, if so, whether ‘the litigation results from alleged injuries that arise out of or relate to those activities.'” Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1361-62 (Fed. Cir. 2006) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). The minimum contacts test is satisfied if a defendant “delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state.” Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1566 (Fed. Cir. 1994) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98 (1980)).

         Upon a showing of purposeful minimum contacts, the defendant bears the burden to prove unreasonableness. Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1351-52 (Fed. Cir. 2003). In rare circumstances, a defendant may defeat the exercise of personal jurisdiction by “present[ing] a compelling case that the presence of some other considerations would render jurisdiction unreasonable.” Burger King, 471 U.S. at 477.

         “Where, as here, a district court's disposition as to the personal jurisdictional question is based on affidavits and other written materials in the absence of an evidentiary hearing, a plaintiff need only to make a prima facie showing that defendants are subject to personal jurisdiction.” MI Drilling Fluids UK Ltd. v. Dynamic Air Ltda., 890 F.3d 995, 999 (Fed. Cir. 2018). “[A] district court must accept the uncontroverted allegations in the plaintiff's complaint as true and resolve any factual conflicts in the affidavits in the plaintiff's favor.” Id.

         III. Discussion

         TCT International argues that Semcon's (“Semcon”) stream of commerce argument is flawed because “Semcon's reliance on the stream of commerce theory continues to neglect the Supreme Court's 2017 Bristol-Myers Squibb decision, and in any event relies on TCT [International]'s mere knowledge rather than showing the required purposeful targeting.” (Dkt. No. 33, at 1.) The Court disagrees with TCT International on both points. The Court finds that jurisdiction over TCT International is appropriate under the stream of commerce theory. The Supreme Court's recent Bristol-Meyers decision did not abrogate the stream of commerce theory. Moreover, while the Federal Circuit has not yet determined whether the stream of commerce theory requires “an action of the defendant purposefully directed toward the forum state” or “a mere act of placing a product in the stream of commerce with the expectation that it would be purchased in the forum state, ” the Court finds that jurisdiction is proper in this case under either version of the stream of commerce theory. Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1233 (Fed. Cir. 2010) (quoting Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 112 (1987)).

         A. Bristol-Myers did not Abrogate the Stream of Commerce Theory

         TCT International argues that the stream of commerce theory was abrogated by the Supreme Court's decision in Bristol-Myers Squibb Co. v. Superior Court of California. 137 S.Ct. 1773 (2017). The Court finds nothing in the Supreme Court's opinion to indicate a shift in the Supreme Court's stream of commerce jurisprudence. Neither the Supreme Court's majority opinion nor Justice Sotomayor's dissent even mention the stream of commerce theory. The Supreme Court does not purport to alter its overall jurisprudence regarding specific jurisdiction, noting instead that the Supreme Court's “settled principles regarding specific jurisdiction control this case.” Id. at 1781.

         In Bristol-Myers, the Supreme Court held that a California state court could not exercise personal jurisdiction over Bristol-Myers as to products liability claims related to Bristol-Myers' prescription drug Plavix brought by nonresidents of California who “were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California.”[1]Id. The Supreme Court rejected the argument that Bristol-Myer's connection with a distributor in California was sufficient to establish personal jurisdiction in California as to injuries that occurred elsewhere, in part because “the nonresidents have adduced no evidence to show how or by whom the Plavix they took was distributed to the pharmacies that dispensed it to them.” Id. at 1783. In other words, the nonresident plaintiffs did not show that their injuries ÔÇťarise out of or relate ...


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