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VISUAL SEC. CONCEPTS, INC. v. KTV

June 29, 2000

VISUAL SECURITY CONCEPTS, INC., PLAINTIFF,
V.
KTV, INC. ET AL., DEFENDANTS.



The opinion of the court was delivered by: Katz, Senior District Judge.

MEMORANDUM & ORDER

The plaintiff, Visual Security Concepts, Inc. (VSC), has sued several defendants for patent infringement related to the manufacture of a clear-cabinet television set used in correctional institutions. The present motion to dismiss submitted by defendant Korea Electronics Company, Ltd. (KEC), contends, inter alia, that it is not subject to personal jurisdiction in this court. Because the plaintiff has not met its burden of showing that KEC has the necessary minimum contacts with this forum, the motion will be granted. The court does not reach the other grounds for dismissal raised by the defendant.

I. Standards

A federal court may exercise personal jurisdiction over a non-resident defendant to the extent permitted under applicable state law, see Fed.R.Civ.P. 4(e), and Pennsylvania authorizes long-arm jurisdiction to the extent permitted by the due process clause. See 42 Pa.C.S. § 5322(b).*fn1 Once jurisdiction has been challenged, the plaintiff "bears the burden of establishing either that the cause of action arose from the defendant's forum-related activities (specific jurisdiction) or that the defendant has continuous and systematic contacts with the forum state (general jurisdiction)." Mellon Bank (East) v. DiVeronica Bros., 983 F.2d 551, 554 (3d Cir. 1993) (citations, punctuation omitted). In most cases, the plaintiff's jurisdictional allegations must be supported by appropriate affidavits or documents, as a motion brought pursuant to Federal Rule of Civil Procedure 12(b)(2) requires resolution of factual issues. See TJS Brokerage & Co., Inc. v. Mahoney, 940 F. Supp. 784, 787 (E.D.Pa. 1996).

The plaintiff may meet its burden and present a prima facie case for exercising personal jurisdiction by "establishing with reasonable particularity sufficient contacts between the defendant and the forum state." Mellon Bank (East) PSFS v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992) (citations omitted). Jurisdiction is proper only if the defendant has constitutionally sufficient "minimum contacts" that indicate that it has "purposefully directed" its activities toward the forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). In other words, fortuitous contacts are inadequate, as the minimum contacts must be "such that [a defendant] should reasonably anticipate being haled into court" in the forum. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). As is particularly important in this case, "with regard to producers or sellers of goods, the mere foreseeability that a product one sells may end up in the forum state does not render the seller amenable to suit in the forum state." Pennzoil Prods. Co. v. Colelli & Assoc., Inc., 149 F.3d 197, 203 (3d Cir. 1998) (citations, punctuation omitted). Furthermore, even if minimum contacts are demonstrated, the court may exercise personal jurisdiction only if doing so would comport with "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945).

II. Jurisdictional Facts

KEC is a Korean corporation with its principal place of business in Korea. See Am.Compl. ¶ 3; Jae Hoon Lee Aff. (1) ¶ 4.*fn2 It manufactures electronics products and components, including television sets, that are exported to numerous countries, including the United States. See Lee Aff. (1) ¶ 4. KEC is not licensed to do business in Pennsylvania and has no office, property, telephone, mailing address, sales agent or representative, agent for service of process, or bank accounts in Pennsylvania. See id. ¶ 3. Nor does it advertise in Pennsylvania. See id.

While KEC admits that it manufactures clear televisions, it does so only for KTV, Inc., one of the other defendants, and only to meet KTV's specifications. See id. ¶ 4; see also Jong Hyun Kim Dep. at 45, 51. KEC describes KTV as its "distributor." Lee Aff. (1) ¶ 4. KTV, in turn, is a New Jersey corporation. See id. ¶ 5. KEC owns fifty percent of KTV's outstanding stock while another unrelated Korean corporation, Kolon Company, owns the other fifty percent. See Lee Aff. (2) ¶ 4; see also Lee Aff. (1) ¶ 5 (stating that KEC's ownership interest in KTV is not a "majority or controlling interest"); Kim Dep. at 14 (explaining that one other entity has ownership interest and that KEC does not "own" KTV); Sung Soo Park Dep.*fn3 at 6, 12-13 (stating that he believes that "KEC supplies some materials" to KTV and that KEC does not own KTV).

KEC itself has never sold or delivered any television sets of any type to Pennsylvania and has not itself shipped televisions to or through Pennsylvania. All KEC televisions sold in the United States are "shipped by Korea Electronics Co., Ltd. F.O.B. Korea, to KTV, Inc." Lee Aff. (1) ¶ 6. KEC does not have input into KTV's sales or marketing decisions but rather fills orders placed by that company. See Lee Aff. (2) ¶¶ 5, 7; Kim Aff. ¶ 2 (KTV is an "independent company and makes all financial, pricing, purchasing, sales, and marketing decisions internally and independently of Korea Electronics"). KTV has no authority to act on KEC's behalf and has no power to bind KEC. See Kim Aff. ¶ 3. KEC is not paying any part of KTV's attorneys' fees in this matter because "this is KTV's problem, so KTV pays all the expenses." Kim Dep. at 51.

There is currently no evidence suggesting that any clear television sets were sold in Pennsylvania, and Mr. Lee states that he is unaware of any sets ever having been sold in Pennsylvania. See Lee Aff. (1) ¶ 6. Plaintiff's only information on this subject consists of rather cryptic references in redacted documents. See Plf. Ex. E. The first of these documents is a December 12, 1997, fax from the "Visual Product Division" of KEC to Mr. Kim and copied to Mr. Jang at KTV. The second page of this fax contains a header entitled "Prison Market, Access." The text, which is in English, describes the author's belief that there is a growing demand by state prison systems for a clear cabinet television. The writer asks KEC to prepare several samples quickly. Mr. Kim explains that this was faxed to him in his capacity as president of KTV before he began working for KEC. See Kim Aff. ¶ 8.

The next three documents contain redacted minutes of meetings held, respectively, on April 7, 1998; February 2, 1998; and January 12, 1998. Each contains a heading referring to prisons and a subheading referring to American Institutional, which is also a named defendant. These notes state, respectively: (1) "Pennsylvania is delaying the mandate for a clear set because of the higher price involved."; (2) "Teddy informs me that there was a general meeting of 27 Pennsylvania DOC managers at which the 13CLR was discussed and recommended."; and (3) "American Institutional has visited all of the Pennsylvania facilities and received uniformly positive responses." There is no information as to who attended the meeting, although the parties seem to agree that a KTV employee, Jay Bergen, wrote the notes. Mr. Lee states, however,

Korea Electronics does not have in its files the memoranda or notes attached to [plaintiff's] documents entitled "meetings." Korea Electronics never received such things from KTV other than purchase orders. The "internal memorandum" referred to in the opposition memo is not an internal memo between KTV and Korea Electronics. Korea Electronics does not and did not have any meetings with KTV regarding sales, marketing or anything else referenced in the documents. If these notes relate to meetings, they are not meetings that Korea Electronics attended, knew of, or otherwise had anything to do with in any way.

Lee Aff. (2) ¶ 9. Mr. Kim acknowledges the possibility that he might have received those notes but comments that each of the items are dated before he was hired at KEC and that he would not have informed KEC of any of the information in those notes. See Kim Aff. ¶ 6; see also Kim. Dep. at 39-41 (stating ...


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