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Kolcraft Enterprises, Inc. v. Artsana USA, Inc.

United States District Court, N.D. Illinois, Eastern Division

August 6, 2014

KOLCRAFT ENTERPRISES, INC., Plaintiff,
v.
ARTSANA USA, INC. d/b/a CHICCO USA, INC. and ARTSANA, S.p.A. d/b/a ARTSANA GROUP, Defendants.

OPINION AND ORDER

SARA L. ELLIS, District Judge.

Plaintiff Kolcraft Enterprises, Inc. ("Kolcraft") filed suit against Defendants Artsana USA, Inc. ("Artsana USA") and Artsana, S.p.A. ("Artsana S.p.A."). Kolcraft alleges that Defendants infringe U.S. Patent No. 8, 388, 501, entitled "Play Gyms and Methods for Operating the Same, " through the manufacture and sale of certain play yard products bearing the Lullaby trademark. Before the Court is Artsana S.p.A.'s motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2) and (b)(6). Because Artsana S.p.A. is not subject to general or specific jurisdiction in Illinois, Artsana S.p.A.'s motion [27] is granted.

BACKGROUND[1]

Artsana S.p.A. is an Italian corporation headquartered in Grandate, Italy. Artsana S.p.A. is known for baby products, including strollers, play yards, and toys, which are marketed under the "Chicco" name. Artsana S.p.A. has numerous subsidiaries, including International Artsana S.A. ("International Artsana"), which is headquartered in Luxembourg. Artsana USA is a wholly owned and operated subsidiary of International Artsana. International Artsana provided initial investment funding to Artsana USA when it was formed.

Although they are separate companies, these three entities share some officers and directors. Mario Merlo, International Artsana's Director, is a member of Artsana S.p.A.'s Board of Directors. The chief financial officer of Artsana S.p.A., Michele Lerici, is Artsana USA's president and one of its two board members. The other board member, Giovanni Galbiati, is the coordinator of corporate matters for Artsana S.p.A. Both Mr. Lerici and Mr. Galbiati live in Italy, where Artsana USA's annual meetings are conducted. Artsana USA employees also travel to Artsana S.p.A.'s headquarters throughout the year for various meetings.

Nonetheless, corporate formalities are observed. Artsana USA pays its own taxes and files its own financial statements. It maintains its own banking relationships separate and apart from International Artsana and Artsana S.p.A. It has its own employees in the United States who are not also on Artsana S.p.A.'s payroll. At the same time, Artsana S.p.A. does not have a presence in Illinois. It does not pay taxes, own property, or have employees, facilities, bank accounts, telephone listings, or mailing addresses in Illinois. Artsana S.p.A. is not licensed or registered to do business in Illinois, nor does it have a registered agent in Illinois.

Artsana S.p.A. owns twenty-two active trademark registrations for the "Chicco" brand name. It also owns the Lullaby trademark used on the accused play yard products. Artsana USA is the exclusive licensee of the "Chicco" brand name in the United States. It also is Artsana S.p.A.'s distributor and sales representative in the United States and Canada for certain products as set forth in a 2006 sales representative agreement.[2] Pursuant to that agreement, Artsana S.p.A. is to pay Artsana USA a commission on the net invoiced amount for all sales in the United States and Canada. Artsana USA is also to "[d]iligently and faithfully... serve Artsana [S.p.A.]... as [its] exclusive distributor and sales representative in the USA and Canada" and to "use its best endeavors to improve the... goodwill of Artsana [S.p.A.]... in the USA and Canada, to promote and market the Products in the USA and Canada and to seek orders for the Products in the Territory and generally to do such other matters and things to... assist Artsana [S.p.A.]... in the promotion, distribution, marketing and sale of the Products in the Territory." Ex. E to Resp. § 8.1.1. The agreement provides that Artsana USA is "[n]ot to do anything that may prevent the sale or interfere with the development of the Products inside or outside the USA or Canada or otherwise engage in any conduct which is prejudicial to the business of Artsana [S.p.A.]... or the marketing of the Products generally." Id. § 8.1.3. Artsana USA agreed to bear various costs, including all the "[c]osts and expenses relating to new and redeveloped Products and packaging of such new and redeveloped Products" and all "[l]egal fees with respect to orders from any Customer in the USA and Canada." Id. § 8.1.23. Artsana S.p.A. has the right "to reject any order for the Products received from [Artsana USA] or from a Customer or potential customer of the Products in the USA and/or Canada" for any reason and "[f]rom time to time to extend the range of Products and/or to discontinue any of the same." Id. § 9.1. All sales made pursuant to the agreement in the United States and Canada are subject to certain conditions of sale that are subject to change as Artsana S.p.A. may determine in its sole and absolute discretion. Id. § 9.3. The agreement provides that Artsana USA "ha[s] no authority whatsoever to execute any agreements or undertakings in the name of or on behalf of Artsana [S.p.A.]... or to undertake any obligation in the name of or on behalf of Artsana [S.p.A.]... or to make or give any promises, warranties, guarantees or representations concerning the Products." Id. § 9.4.3.

The sales agreement, however, is limited to certain defined products. Artsana USA also has its own product design, research, development, sales, and marketing operations that are performed separately from those of Artsana S.p.A. and International Artsana. Massimiliano Caforio, Artsana S.p.A.'s general counsel and its designated 30(b)(6) witness, testified that the accused play yard products are designed, developed, marketed, and sold autonomously by Artsana USA. Artsana S.p.A. is not involved with nor does it direct the research, design, or development of the accused play yard products. It also does not offer, sell, promote, or advertise the accused products in the United States.

LEGAL STANDARD

A motion to dismiss under Rule 12(b)(2) challenges whether the Court has jurisdiction over a party. The party asserting jurisdiction has the burden of proof. See Tamburo v. Dworkin, 601 F.3d 693, 701 (7th Cir. 2010). The Court may consider affidavits and other competent evidence submitted by the parties. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). If the Court rules on the motion without a hearing, the plaintiff need only establish a prima facie case of personal jurisdiction. GCIU-Emp'r Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1023 (7th Cir. 2009). The Court will "read the complaint liberally, in its entirety, and with every inference drawn in favor of" the plaintiff. Central States, Se. & Sw. Areas Pension Fund v. Phencorp Reinsurance Co., 440 F.3d 870, 878 (7th Cir. 2006) (quoting Textor v. Bd. of Regents of N. Ill. Univ., 711 F.2d 1387, 1393 (7th Cir. 1993)). "[O]nce the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, " however, "the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction." Purdue, 338 F.3d at 783. Any dispute concerning relevant facts is resolved in the plaintiff's favor. Id. at 782-83.

In patent cases, the Court applies the law of the Federal Circuit to determine whether personal jurisdiction exists. Hildebrand v. Steck Mfg. Co., Inc., 279 F.3d 1351, 1354 (Fed. Cir. 2002). Under Federal Circuit law, personal jurisdiction is appropriate if authorized by Illinois' long-arm statute and consistent with due process. Id. Illinois allows for personal jurisdiction to the full extent authorized by the Illinois and United States Constitutions. KM Enters., Inc. v. Global Traffic Techs., Inc., 725 F.3d 718, 732 (7th Cir. 2013). To the extent the federal and Illinois constitutional inquiries diverge, "the Illinois constitutional standard is likely more restrictive than its federal counterpart." Id. But because no substantive difference has yet been identified, a single due process inquiry suffices. C.H. Johnson Consulting, Inc. v. Roosevelt Rds. Naval Station Lands & Facilities Redevelopment Auth., No. 1:12-cv-08759, 2013 WL 5926062, at *2 (N.D. Ill. Nov. 5, 2013) ("In light of the Seventh Circuit's assessment in [ Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 715-16 (7th Cir. 2002)] and the absence of post- Rollins [ v. Elwood, 565 N.E.2d 1302, 1315 (Ill. 1990)] guidance from the Illinois courts as to how Illinois and federal law may differ as a practical matter in regard to personal jurisdiction, a single due process inquiry will suffice."); Russell v. SNFA, 987 N.E.2d 778, 785-86, 2013 IL 113909, 370 Ill.Dec. 12 (2013). In order to satisfy the Due Process Clause, the defendant must have "certain minimum contacts with [the forum state] 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, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Millikin v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). Minimum contacts exist where "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1984).

Personal jurisdiction comes in two forms: general and specific. General jurisdiction arises when the defendant has "continuous and systematic" contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). A defendant is subject to general jurisdiction only where its contacts with the forum state are so substantial that it can be considered "constructively present" or "at home" in the state. Goodyear Dunlop Tires Ops., S.A. v. Brown, ___ U.S. ___, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011). Alternatively, the Court has specific jurisdiction when "the defendant purposely direct[s] its activities at residents of the forum" and "the plaintiff's claim arises from or relates to those activities." Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785, 789 (Fed. Cir. 2011).

ANALYSIS

Artsana S.p.A. argues that it is not subject to either general or specific jurisdiction in Illinois. Kolcraft responds, however, that Artsana S.p.A. exerts complete control over Artsana USA, whose contacts with Illinois should be imputed to Artsana S.p.A., thus making Artsana S.p.A. subject to general jurisdiction here. Kolcraft also argues alternatively that Artsana S.p.A. has committed ...


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