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Compliance Software Solutions, Corp. v. Moda Technology Partners

July 31, 2008

COMPLIANCE SOFTWARE SOLUTIONS, CORPORATION, PLAINTIFF,
v.
MODA TECHNOLOGY PARTNERS, INC., MICHAEL S. GOETTER, STEVEN P. MELICK AND ANEXINET CORP., DEFENDANTS.



The opinion of the court was delivered by: Judge Blanche M. Manning

MEMORANDUM AND ORDER

Defendants MODA Technology Partners, Inc., ("MODA"), Michael S. Goetter, and Steven P. Melick move to dismiss the claim against them pursuant to Federal Rule of Civil Procedure 12(b)(2), the due process clause of the federal constitution, and the Illinois long-arm statute.

BACKGROUND

The Plaintiff Compliance Software Solutions, Corporation ("CSSC") is an Illinois corporation with its principal place of business in Buffalo Grove, Illinois. CSSC creates unique software used to monitor high-tech, pharmaceutical and biotechnology production and laboratory facilities to ensure that such facilities comply with pertinent regulations. CSSC alleges that MODA infringes CSSC's copyright in certain proprietary software and CSSC's U.S. Patent 6,904,370 ("370 Patent"). CSSC's Environmental Monitoring Software System ("EMSS") software is designed to asses and to document firms' facility operations, collect microbial and/or particulate counts, and to analyze and trend the data to ensure that the environmental control systems are operating as intended. CSSC filed suit against MODA, a Pennsylvania corporation with a principal place of business in Wayne, Pennsylvania, after CSSC became aware of MODA's allegedly infringing software MODA-EM. CSSC and MODA are competitors in the same industry.

MODA and Mike Goetter, MODA's Vice President of Product Strategy, attended the 2007 Pittcon Conference and Exposition in Illinois ("Pittcon"). Pittcon was a conference held in Illinois that showcased the latest products and services available in analytical chemistry and applied spectroscopy. According to CSSC, MODA and Mr. Goetter were at Pittcon doing business that directly relates to CSSC's allegations of infringement.

Furthermore, according to CSSC, the Defendants did business that directly relates to CSSC's allegations of infringement with Abbott Laboratories ("Abbott"). Abbott is a company located in Illinois. According to CSSC, MODA actively marketed MODA's accused software to Abbott.

In addition, according to CSSC, Steven Melick, MODA's President, was the President and CEO of The Sycamore Group when it was sued by CSSC in the Northern District of Illinois in 2005. CSSC and The Sycamore Group settled, and Mr. Melick signed the Settlement Agreement ("Agreement") in connection to the lawsuit in Pennsylvania.

ANALYSIS

In ruling on a motion to dismiss pursuant to Rule 12(b)(2) based on lack of personal jurisdiction, the court may consider matters outside the pleadings, such as affidavits and other materials submitted by the parties. See FED R. CIV. P. 12(b). The plaintiff bears the burden of establishing personal jurisdiction. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). In making its determination regarding personal jurisdiction the court must resolve any factual disputes in the plaintiff's favor, but must accept the allegations in the complaint as true only to the extent that they are not controverted by other evidence in the record. Id. The court must also accept uncontested jurisdictional facts presented by the defendant as true. Connolly v. Samuelson, 613 F.Supp. 109, 111 (N.D. Ill.1985).

To determine whether the court has personal jurisdiction over a nonresident defendant in a patent case, the court applies "the law of the federal circuit rather than that of the regional circuit in which the case arose." Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1359 (Fed. Cir. 2001) (quoting Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed. Cir. 1995)); David White Instruments, LLC. v. TLZ, Inc., No. 02 C 7156, 2003 WL 21148224, at *9 (N.D. Ill. May 16, 2003). The district court may exercise personal jurisdiction over the defendant in a patent infringement case if (1) jurisdiction exists under the state long-arm statute and (2) exercise of jurisdiction would be consistent with the limitation of the due process clause. Trintec Indus. v. Pedre Promotional Prods., 395 F.3d 1275, 1279 (Fed. Cir. 2005) (citation omitted). Under the Illinois long-arm statute, Illinois state courts have general jurisdiction over nonresident defendants "doing business" in Illinois and specific jurisdiction over nonresident "transactions" in Illinois. 735 ILL. COMP. STAT. §§ 5/2-209 (a) & (b). Because Illinois' long-arm statute extends to the maximum extent permitted by the Illinois and United States Constitution, the long-arm statute is coextensive with federal due process requirements. 735 ILL. COMP. STAT § 5/2-209(c); see, e.g., RAR, Inc. v. Turner Diesel Ltd., 107 F.3d 1272, 1276 (7th Cir.1997).

The Due Process Clause of the Fourteenth Amendment to the United States Constitution limits when a state may assert personal jurisdiction over nonresident defendants. Pennoyer v. Neff, 95 U.S. 714, 733, 24 L.Ed. 565 (1878). To exercise personal jurisdiction consistent with federal due process, a defendant must have (1) "certain minimum contacts with the forum state such that (2) 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, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

Under the "minimum contacts" test, a defendant may be subject to either specific or general jurisdiction. Specific jurisdiction refers to jurisdiction over a defendant if a suit "arises out of" or "relates to" the cause of action even if those contacts are "isolated and sporadic." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73, 105 S.Ct. 2174, 85 L.Ed.2d 538 (1985). CSSC's allegations focus on Defendants' isolated contacts rather than any systematic or continuous contacts. Therefore, the court must determine whether Defendants' contacts with Illinois are such that the court can exercise specific jurisdiction over the Defendants'.

Specific Jurisdiction

In examining a defendant's contacts with a particular state, the court must determine whether the defendant "purposefully availed itself of the privilege of conducting activities" in the forum state so that it "should reasonably anticipate being haled into court there." RAR, Inc. v. Turner Diesel Ltd., 107. F.3d at 1277. In other words, the focus of the court's inquiry must be on the "relationship among the defendant, the forum, and the litigation." Heritage House Rests., Inc. v. Cont'l Funding Group, Inc., 906 F.2d 276, 283 (7th Cir.1990). The main factor in a specific jurisdiction analysis is foreseeability-was it reasonably foreseeable to the defendant that its action could result in litigation in the state in question. Burger King Corp. v. Ruzewicz, 471 U.S. 462, 472-74, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Contacts that are "random, fortuitous, or attenuated" are not thus sufficient to establish that a state's exercise of personal jurisdiction over the defendant was foreseeable. Heritage House Rests., Inc. v. Cont'l Funding Group, Inc., 906 F.2d at 283. ...


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