Intellectual Property Law

Magistrate Judge Thynge: Recommended Defendants? motions to dismiss for lack of personal jurisdiction and for failure to state a claim be GRANTED.

By Karen E. Keller, Andrew A. Lundgren et al.

In this patent infringement action, Quantum Loyalty Systems, Inc., et al. v. TPG Rewards, Inc., et al., C.A. No. 09-022-SLR-MPT (D. Del. Dec. 23, 2009), Defendant John Galinos (?Galinos?) moved to dismiss plaintiffs? complaint for lack of personal jurisdiction and Defendants TPG Rewards, Inc. (?TPG?) and Galinos (collectively ?Defendants?) moved to dismiss plaintiffs? complaint for failure to state a claim for which relief may be granted. Regarding Galinos jurisdiction motion, Judge Thynge noted that the specific jurisdiction provisions of the Delaware long arm statute, 10 Del. C. § 3104(c)(1) and (c)(3), require plaintiff to prove a ?nexus between the cause of action and the conduct used as the basis for jurisdiction.? Id. at 11 (internal quotation omitted). However, plaintiffs only allegation in support of jurisdiction was that Galinos incorporated TPG in Delaware, despite that the cause of action for patent infringement ?[did] not arise from the act of incorporating.? Id. Furthermore, ?the fiduciary shield doctrine prohibits acts performed by an individual in the individual?s capacity as a corporate employee from serving as the basis for personal jurisdiction over that individual.? Id. (internal quotation omitted). Plaintiffs alleged no facts ?Galinos personally made, used, offered to sell, or sold any alleged infringing product in Delaware.? Id. at 12. Furthermore, plaintiffs failed to point to any support for the contention that any injury, under 10 Del. C. § 3104(c)(3), occurred in Delaware. Id. In fact, plaintiffs were incorporated in Nevada and had a principal place of business in Nevada, such that any injury would have occurred in Nevada. Id. at 12-13.

After finding that plaintiffs also failed to allege sufficient contacts to support a finding of general jurisdiction, Judge Thynge recommended the Court grant Defendants? motion to dismiss for failure to state a claim because the facts support the conclusion that plaintiff claimed ?infringement by a product whose only appearance in the market preceded the critical date of the patent-in-suit.? Id. at 21-22. ?[P]roof that [defendants?] product infringes [plaintiffs?] patent would also prove that the product anticipates under 35 U.S.C. § 102(b) . . . .? Id. at 22.

Quantum Loyalty Systems, Inc., et al. v. TPG Rewards, Inc., et al., C.A. No. 09-022-SLR-MPT (D. Del. Dec. 23, 2009)

Full post as published by Delaware IP Law Blog on December 28, 2009 (boomark / email).