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Polar Electro Oy v. Suunto Oy

United States District Court, D. Delaware

August 29, 2017

POLAR ELECTRO OY, Plaintiff,
v.
SUUNTO OY, AMER SPORTS WINTER & OUTDOOR d/b/a SUUNTO USA, and FIRSTBEAT TECHNOLOGIES OY, Defendants.

          MEMORANDUM

         I. INTRODUCTION

         Plaintiff Polar Electro Oy ("Polar") filed this patent infringement lawsuit against Defendants Suunto Oy ("Suunto"), Amer Sports Winter & Outdoor ("ASWO"), and Firstbeat Technologies Oy ("Firstbeat") (collectively, "Defendants"). (D.I. 1). Polar alleges that the Defendants infringe U.S. Patent Nos. 5, 611, 346 and 6, 537, 227 ("patents-in-suit").

         Before the court is Suunto's motion to dismiss for lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2). (D.I. 58). Suunto originally filed its motion on January 26, 2012. (D.I. 22). The court issued an Order on September 15, 2014, holding Suunto's motion in abeyance while the parties engaged in jurisdictional discovery. (D.I. 37). On March 13, 2015, Suunto filed a supplemental brief, renewing its original motion to.dismiss for lack of personal jurisdiction.[1] (D.I. 58.) On May 12, 2015, the court issued a Memorandum Opinion and Order granting Suunto's motion to dismiss for lack of personal jurisdiction. (D.I. 75, 76). The court determined that jurisdiction over Suunto was proper under the Delaware long arm statute. Id. The court, however, did not find that Suunto had the necessary minimum contacts with Delaware, required by the due process clause, to exercise personal jurisdiction. Id. Thereafter, the court granted Polar's Motion for Entry of Final Judgment Pursuant to Federal Rule of Civil Procedure 54(b) and entered judgment in favor of Suunto Oy. (D.I. 81). On August 17, 2015, Polar filed its Notice of Appeal to the Federal Circuit. (D.I 83). On appeal, the Federal Circuit vacated the court's determination that personal jurisdiction over Suunto was lacking. The Federal Circuit determined that Suunto's purposeful shipping to Delaware supported a finding of minimum contacts with the state, and they remanded the case for a determination of whether exercising jurisdiction over Suunto would be reasonable and fair. See Polar Electro Oy v. Suunto Oy, 829 F.3d 1343, 1351 (Fed. Cir. 2016). For the reasons that follow, the court finds that exercising jurisdiction would be unfair and unreasonable.

         II. BACKGROUND

         Polar is a company operating and existing under the laws of Finland, with its principal place of business in Kempele, Finland. (D.I. 1, ¶1). Suunto is also a Finnish company, with its principal place of business in Vaanta, Finland. Id. ¶ 2. Polar alleges that Suunto's accused products infringe the patents-in-suit, which relate generally to heart-rate monitoring for athletic performance applications. Id. ¶ 13-15.

         Suunto does not sell its accused products directly in the United States. (D.I. 58 at 4). ASWO, a Delaware corporation, contracts with Suunto to distribute Suunto products in the United States. Id. ASWO is responsible for working with brick-and-mortar retailers in the United States (including Delaware), but it does not solicit sales in Delaware. Id. ASWO contracts with Metro Mountain Sports, a third party, independent sales agency, to solicit sales from retailers of Suunto products in Delaware. (D.I. 61 at 9). There are two retailers in Delaware-with a total of three retail locations-that sell the allegedly infringing products. (D.I. 58 at 4). Customers can use the "Dealer Locator" feature of the Suunto website-suunto.com/us-to locate the physical addresses of these retailers in Delaware. Id. ASWO maintains that feature. Id.

         Moreover, ASWO fulfills online orders of Suunto products made through the Suunto website, via its own e-commerce platform. Id. 4-5. ASWO pays a hosting fee for the Suunto.com/us portion of the website. Id. Therefore, although U.S. customers search for products on the Suunto website, they actually transact with ASWO to make a purchase. Id. at 4. To date, eight e-commerce transactions have been made in Delaware. Id.

         Products sold on ASWO's e-commerce platform are shipped to the ASWO warehouse in Tennessee. Id. at 3. Until recently, shipments for ASWO's retail customers have also been delivered to the Tennessee warehouse. Id. Now, ASWO directs the retail shipments to a U.S. port and then on to the retail customer. Id. ASWO takes title and assumes the risk of loss for all Suunto products at Suunto Oy's shipping dock in Vantaa, Finland. Id. So, while Suunto is responsible for packaging, ASWO bears the cost of shipping and determines where to ship the products. Id. Before ASWO takes title, Amer Sport European Center actually takes title to the products Suunto manufactures, and moves them to finished goods before transferring title to ASWO. Id. When the e-commerce products arrive at ASWO's Tennessee warehouse, ASWO then directs shipment from the warehouse to the purchasers. Id.

         Suunto has other contacts with the United States at large, but not specifically with Delaware. In particular, Suunto has worked with a U.S. market research group to study the U.S. market generally. Id. at 9. ASWO, however, is responsible for the creation and execution of its own sales and marketing plans for the Suunto products in the U.S. Id. at 5.

         Further, ASWO is an independent company that contracts with Suunto to distribute Suunto's products in the United States. Id. at 6. ASWO is not an agent of Suunto-Suunto does not control or direct the day-to-day operations at ASWO, and it does not finance ASWO. Id.

         III. STANDARD OF REVIEW

         In patent cases, the Federal Circuit reviews the district court's personal jurisdiction determination without deference. The Federal Circuit applies their own law to those jurisdictional issues that are "intimately involved with the substance of the patent laws." Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995).[2]

         The plaintiff bears the burden of establishing that the defendants are properly subject to the court'sjurisdiction. See J. MclntyreMach., Ltd. v. Nicastro, 131 S.Ct. 2780, 2792 (2011) (Breyer, J., concurring); ICT Pharms., Inc. v. Boehringer Ingelheim Pharms., Inc.? 147 F.Supp.2d 268, 270-71 (D. Del. 2001). When jurisdictional discovery is conducted, there is no jurisdictional hearing, and the jurisdictional facts are in dispute, the plaintiff must make only a prima facie showing of jurisdiction. Celgard, LLC v. SK Innovation Co., 792 F.3d 1373, 1-378 (Fed. Cir. 2015). "Under the prima facie standard, the court must resolve all factual disputes in the plaintiffs favor." Polar Electro, 829 F.3d at 1347-48 (Fed. Cir. 2016).

         Personal jurisdiction is derived from two separate sources: state statutory law and U.S. constitutional due process. Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1359-60 (Fed. Cir. 2001).

         The Delaware long-arm statute provides in relevant part:

[A] court may exercise personal jurisdiction over any nonresident, or a personal representative, who in person or through an agent:
1. Transacts any business or performs any character of work or ...

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