JOHN TUNHEIM, District Judge
Defendant moves to dismiss this patent infringement action for lack of personal jurisdiction. Defendant also moves to dismiss plaintiff DB Industries, Inc. from the case and to transfer venue to the Northern District of California. For the following reasons, the Court grants the motion to dismiss plaintiff DB Industries, Inc., but denies defendant's motion in all other respects.
BACKGROUND
Plaintiffs DB Industries, Inc. and Sinco, Inc. ("DB" and "Sinco," respectively) filed this patent infringement action against defendant B O Manufacturing, Inc. ("BO"). DB is a Minnesota corporation with its principal place of business in Red Wing, Minnesota. Sinco, a wholly owned subsidiary of DB, is a Delaware corporation with its principal place of business in Middletown, Connecticut. Defendant BO is a California corporation with its principal place of business in South San Francisco, California.
The patent at issue in this case is United States Patent No. 6,609,621 B2 ("'621 Patent"), entitled "Net Anchorage Methods and Apparatus." The '621 Patent describes a method of net anchorage to prevent loose items from falling off storage shelves. Sinco is the sole owner of the '621 Patent. BO manufactures and sells competing products.
BO has filed a motion to dismiss plaintiff DB Industries, Inc., to dismiss plaintiffs' complaint for lack of personal jurisdiction, or to strike plaintiffs' complaint, and for change of venue. Following a hearing, United States Magistrate Judge Franklin Noel issued a Report and Recommendation to the Court with respect to this motion. The Magistrate Judge recommended dismissing DB from the case, finding personal jurisdiction over BO, and declining to transfer the matter out of the District of Minnesota. BO timely objected to portions of the Report and Recommendation, and the plaintiffs' timely response to the objections followed.
Under 28 U.S.C. § 636(b)(1), the Court makes a de novo review of those portions of the Report and Recommendation to which the defendant objects. The plaintiffs' complaint, the Magistrate Judge's Report and Recommendation, the defendant's objections, the plaintiffs' response, the transcript of the motions hearing, and the relevant case law have each been carefully examined. For the reasons set forth below, the Court overrules the defendant's objections and adopts the Magistrate Judge's Report and Recommendation.
ANALYSIS
I. IMPROPER PLAINTIFF
BO asserts that DB does not have standing as a plaintiff in this case. The Court agrees. The Patent Act explains, "[a] patentee shall have remedy by civil action for infringement of his patent." 35 U.S.C. § 281; Prima Tek II, L.L.C. v. A-Roo Co., 222 F.3d 1372, 1376-77 (Fed. Cir. 2000). Only the holder of legal title to a patent at the time of the infringement can bring an action for damages resulting from the infringement. See Crown Die Tool Co. v. Nye Tool Mach. Works, 261 U.S. 24, 40 (1923); Enzo APA Son, Inc. v. Geapag A.G., 134 F.3d 1090, 1092-93 (Fed. Cir. 1998); Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1579-80 (Fed. Cir. 1991). Assignees and exclusive licensees may have standing to participate in a patent infringement suit in some situations. See Prima Tek, 222 F.3d at 1377. Sinco is the sole owner of the '621 Patent; DB is neither an assignee nor exclusive licensee. Absent an ownership interest in the patent at issue, DB does not have standing to sue BO for the patent infringement and is not a proper plaintiff in this matter. BO's motion to dismiss DB as a plaintiff is therefore granted.
II. PERSONAL JURISDICTION
The Federal Circuit maintains exclusive jurisdiction over appeals from a district court when the district court's jurisdiction is based on claims arising under the patent laws of the United States. See 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1376-77 (Fed. Cir. 1998). As the instant case is based on a patent infringement claim, Federal Circuit law controls. Nevertheless, in determining whether the Court has personal jurisdiction over a nonresident defendant, the Court looks first to the forum state's long-arm statute and the Due Process Clause of the United States Constitution. Id. Minnesota's long-arm statute, Minn. Stat. § 543.19, extends jurisdiction over nonresident defendants to the fullest degree allowed by the Due Process Clause. See Guinness Import Co. v. Mark VII Distribs., Inc., 153 F.3d 607, 614 (8th Cir. 1998) (citing Trident Enter. v. Kemp George, 502 N.W.2d 411, 414 (Minn.Ct.App. 1993)). To determine whether personal jurisdiction is proper under the Due Process Clause, the Federal Circuit employs a three-prong test. Under this analysis, the Court examines: (1) whether the defendant purposefully directed its activities to residents of the forum state; (2) whether the claim arises out of or relates to those activities; and (3) whether the assertion of personal jurisdiction is reasonable and fair. See 3D Sys., 160 F.3d at 1378 (citing Akro Corp. v. Luker, 45 F.3d 1541, 1545-46 (Fed. Cir. 1995)).
BO intentionally distributed and sold its allegedly infringing products within Minnesota, and secured profits from those sales. In 2002, sales in Minnesota of the allegedly infringing products constituted 2.43 percent of BO's overall domestic sales of the products. Minnesota sales of the products continued in 2003. In short, BO purposefully directed its activities toward forum state residents when it distributed and sold the allegedly infringing products in Minnesota. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-98 (1980); cf. Hanson v. Denckla, 357 U.S. 235, 253 (1958) (unilateral activity by a third party cannot satisfy minimum contacts).
The second prong of the test is also fulfilled. "[T]he proper test for `giving rise' to a cause of action is . . . whether the activity in the forum state is a basis for the cause of action." Hollyanne Corp. v. TFT, Inc., 199 F.3d 1304, 1308 n. 4 (Fed. Cir. 1999). Patent infringement occurs when someone "without authority makes, uses, offers to sell or sells any patented invention." 35 U.S.C. § 271(a) (emphasis added). BO manufactures and tests its products in California. However, as noted previously, BO distributes and sells its allegedly infringing products in Minnesota. This activity constitutes BO's contacts with the forum market. BO's distribution and sales in Minnesota therefore triggered the plaintiffs' cause of action, satisfying the second prong.
Finally, the assertion of personal jurisdiction is reasonable and fair. In making this assessment, the Court balances five factors: (1) the nature and quality of the defendant's contacts with the forum state; (2) the quantity of the contacts; (3) the relationship between the cause of action and the contacts; (4) the forum state's interest in providing a forum for its residents; and (5) the convenience of the parties. See World-Wide Volkswagen, 444 U.S. at 299.
A. "Reasonable and Fair" Factors 1-3
BO argues that its contacts with Minnesota are not extensive enough to support personal jurisdiction. BO points out that it distributes its products nationwide, sells more of the allegedly infringing products in California than in any other state, and makes only 2.43% of its sales of the allegedly infringing products in Minnesota. The Court is not persuaded. As discussed above, BO marketed, sold, and shipped its products to Minnesota customers. These contacts with Minnesota were neither random nor fortuitous. Rather, BO's actions were intentional and regular. Further, a small percentage of sales does not necessarily denote either a small quantity of products or number of transactions. Finally, as noted previously, the instant cause of action arises directly from BO's contacts with Minnesota. Factors one through three weigh in favor of finding personal jurisdiction in this Court.
B. "Reasonable and Fair" Factor 4
The fourth factor concerns Minnesota's interest in the action. Although Sinco is not a Minnesota resident, Minnesota has other interests in this litigation. Minnesota's "interest in discouraging injuries that occur within the state" is well established. Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1568 (Fed. Cir. 1994). Patent infringement injury "occurs in the state where the infringing product is sold." Id. at 1570-71. The products at issue were sold in Minnesota. Since any injury occurred in Minnesota, the state has an interest in discouraging such injury by way of instate litigation.
Additionally, Minnesota "has definite and well-defined interests in commerce and scientific development." Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 430 (Fed. Cir. 1996). Interests in commerce and scientific development are impacted when another party infringes on a patent and thus stifles creative development and diverts instate sales. Minnesota thus has an interest in the potential effect on commerce and scientific development that may result from the alleged infringement in this case.
Finally, while no longer a party in this case, DB, a Minnesota resident, has an interest in this matter. As the sole owner of Sinco, the outcome of this litigation will affect DB. Minnesota has an interest, albeit a more attenuated one, in ensuring that an adequate forum is available to its residents. In sum, the Court is satisfied that Minnesota has an interest in this action, and that factor four therefore weighs in favor of finding personal jurisdiction over BO.
C. "Reasonable and Fair" Factor 5
The fifth factor, touching on the convenience of the parties, also weighs in favor of finding jurisdiction. First, documents relating to the device design and the '621 Patent are located in Minnesota. The Minnesota-based IPLM Group drafts and prosecutes Sinco's patents, making much of the information related to the '621 Patent and many of the people involved in the patent most easily available in Minnesota. Also, Wes Cutter, a former DB employee who worked with Sinco in designing the device at issue, resides in Minnesota. Location of documents and other evidence is an important factor when analyzing party convenience. See Serco Servs. Co. v. Kelley Co., 51 F.3d 1037, 1040 (Fed. Cir. 1995).
BO argues that documents are easily copied and transported, in either hardcopy or electronic form. While this statement is increasingly true, it applies equally to BO and does little to demonstrate why it is more reasonable for Sinco to have to copy and transport evidence than for BO to copy and transport evidence. Additionally, such assertion neglects the inconvenience inherent in copying and transporting potentially voluminous documents, as well as in arranging for the participation of out-of-state witnesses.
The defendant also fails to compellingly identify why the Northern District of California is a more appropriate forum. As BO is located in California, a California courtroom is presumably more convenient for BO. However, the availability and location of witness Cutter and IPLM employees makes Minnesota a convenient forum for the plaintiffs. Additionally, plaintiffs have chosen Minnesota as their preferred forum. Any potential burden on BO, such as traveling to Minnesota, is not one of those "unique burdens . . . [given] significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction." Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102, 114 (1987). Having weighed the relevant factors, the Court concludes that this case does not present "the rare situation in which the plaintiff's interest and the state's interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum." Viam Corp., 84 F.3d at 429 (internal quotations omitted). In other words, the assertion of personal jurisdiction is reasonable and fair.
As all factors weigh in favor of finding personal jurisdiction, the Court finds that personal jurisdiction is proper in this Court. Defendant's motion to dismiss or strike plaintiffs' complaint for lack of personal jurisdiction is therefore denied.
III. TRANSFER
BO seeks to transfer the instant action from Minnesota to the Northern District of California. In a motion to transfer venue, the Court applies the law of the regional circuit to which appeal from this court would normally lie. See Regents of the Univ. of California v. Eli Lilly Co., 119 F.3d 1559, 1565 (Fed. Cir. 1997). Under 28 U.S.C. § 1404(a), the Court examines three factors when deciding a motion to transfer: (1) the convenience of the parties; (2) the convenience of the witnesses; and (3) the interests of justice. See Terra Int'l, Inc. v. Mississippi Chem. Corp., 119 F.3d 688, 691 (8th Cir. 1997). BO bears the burden of showing that the balance of these factors "strongly favors" transfer. Brockman v. Sun Valley Resorts, Inc., 923 F. Supp. 1176, 1179 (D. Minn. 1996). Ultimately, the decision of whether to transfer a case is committed to the discretion of the district court. Terra Int'l, 119 F.3d at 691; see also In re Carnegie Mellon Univ., 1995 WL 769024, at *2 (Fed. Cir. Dec. 18, 1995) ( citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947)).
A. Convenience of Parties and Witnesses
The Court accords significant weight to the plaintiff's choice of forum. See K-Tel Int'l., Inc. v. Tristar Prods., Inc., 169 F. Supp.2d 1033, 1045 (D. Minn. 2001). The mere fact that the case is to be heard outside the defendant's home state cannot alone be an adequate reason for a change of venue in a diversity action, since in such an action one of the parties will almost always have to litigate in a foreign state. Hughes v. Wheeler, 364 F.3d 920, 925 (8th Cir. 2004). In other words, transfer should be denied if the effect is simply to shift the inconvenience to the other party. See Graff v. Qwest Communications Corp., 33 F. Supp. 2d 1117, 1121 (D. Minn. 1999) (citation omitted); Norval Indus., Inc. v. Superior Cox, 515 F. Supp. 895, 899 (D. Minn. 1981). In this case, BO is attempting to transfer this case to the district in which it maintains its principal place of business. BO has not provided a basis for such transfer other than to assert that it would be more convenient for it to litigate this matter there. Sinco's decision to file in Minnesota indicates that Sinco considers Minnesota a convenient forum. As discussed previously, documents and other evidence relevant to this matter are likely to be found in both Minnesota and California. In light of the above, a transfer to California would only serve to shift the inconvenience between the parties. Thus, this factor weighs in favor of maintaining this action in Minnesota.
With respect to the convenience of witnesses, each side asserts that potential witnesses reside in their respective preferred forum. The development, testing, research, and production of BO's products occur in South San Francisco, California and witnesses connected to those processes may be called by BO. However, as previously mentioned, potential witnesses for Sinco reside in Minnesota. Transferring venue from Minnesota to California would simply shift inconvenience from BO's witnesses to the Sinco's witnesses. Additionally, BO's potential witnesses appear to be BO employees, to whom BO has ready access. In contrast, at least one of Sinco's potential witnesses who lives in Minnesota is not a Sinco employee. Thus, it may be important for the Court to have jurisdiction over this witness. The witness convenience factor does not support a transfer.
The Court notes, however, that BO has not identified any particular witnesses who may be inconvenienced if this litigation proceeds in Minnesota rather than in California.
BO relies on Amersham Pharmacia Biotech, Inc. v. Perkin-Elmer Corp., in which the court granted a defendant's motion to transfer, despite the fact that 3.7 percent of the allegedly infringing devices were sold in the forum state and the defendant resided in the forum state. 11 F. Supp. 2d 729, 730 (S.D.N.Y. 1998). The court in Amersham, however, premised much of its decision on the fact that no putative witnesses or documents were located in the original forum. Id. That fact is absent in the instant case.
B. Interests of Justice
With respect to the interests of justice factor, BO argues that naming DB as a plaintiff was wrongful conduct in that it was simply a strategic device to create the appearance of a connection between plaintiff Sinco and Minnesota. According to BO, DB lacks any real interest in the instant case, and Minnesota venue is unimportant to Sinco. Thus, BO contends, Sinco's choice of forum deserves "substantially less" deference. See Cardiac Science, Inc. v. Koninklijke Philips Elecs. N.V., 2003 WL 22213116, *2 (D. Minn. Sept. 20, 2003) (forum-shopping or wrongful conduct may overcome deference to plaintiff's choice of forum); see also Reiffin v. Microsoft Corp., 104 F. Supp. 2d 48, 52 (D.D.C. 2000).
BO's arguments are not persuasive. Initially, "[t]hat it is to plaintiff's advantage to adjudicate the dispute in the [forum state] does not militate against its right to have access to that court." Beverly Hills Fan, 21 F.3d at 1568-69. Further, in light of Sinco's decision to file in Minnesota, the fact that the infringement occurred in Minnesota, and that Minnesota is legitimately convenient for Sinco, Sinco obviously has an interest in keeping this litigation in Minnesota. Finally, despite the Court's conclusion that DB is not a proper plaintiff, DB maintains a plausible interest in the instant litigation. Namely, the alleged infringement occurred in DB's home state and involved its subsidiary. The Court is satisfied that plaintiff's choice of Minnesota as a forum and inclusion of DB as a plaintiff was not motivated by wrongful considerations and accordingly remains entitled to deference.
BO also insists that in applying § 1404(a) in a patent infringement case, the "center of gravity test" trumps any remaining deference to the plaintiffs' choice of forum. This test, which provides a guideline for forum selection in patent infringement actions, considers "the location of a product's development, testing, research and production. Also relevant is the place where marketing and sales decisions are made, rather than where limited sales activity has occurred." Osteotech, Inc. v. GenSci Regeneration Sciences, Inc., 6 F. Supp. 2d 349, 357-58 (D.N.J. 1998) (citing Beverly Hills Fan, 21 F.3d at 1558). BO provided no authority to show the three-prong test mandated by the language in § 1404(a) and the law in this Circuit has been supplanted by this standard in patent infringement actions. In fact, this court has previously pointed out that the courts of this Circuit do not typically apply the center of gravity test. See Radisson Hotels Intern., Inc. v. Westin Hotel Co., 931 F. Supp. 638, 642 n. 4, (D. Minn. 1996). Moreover, this test also considers the location of the allegedly infringing activity, which in this case includes Minnesota. Id.
In light of Sinco's choice of forum and the fact that transferring the case from Minnesota to California would, at best, simply shift the burden of party and witness inconvenience from BO to Sinco, the Court finds that BO has not met its burden of demonstrating that a transfer is necessary in this case. Therefore the Court denies BO's motion for change of venue.
ORDER
Based on the foregoing, all the records, files, and proceedings herein, the Court OVERRULES defendant's objection [Docket No. 46] and ADOPTS the Magistrate Judge's Report and Recommendation [Docket No. 42]. Accordingly, IT IS HEREBY ORDERED that defendant's motion to dismiss plaintiff DB Industries, Inc., to dismiss plaintiffs' complaint, or to strike plaintiff's complaint, and for change of venue [Docket No. 22] is GRANTED IN PART and DENIED IN PART. The motion is GRANTED with respect to the dismissal of plaintiff DB Industries, Inc. and is DENIED in all other respects.
IT IS FURTHER ORDERED that plaintiff DB Industries, Inc. is DISMISSED from the case.