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Lambeth Magnetic Structures, LLC v. Toshiba Corp.

United States District Court, W.D. Pennsylvania

March 1, 2017

LAMBETH MAGNETIC STRUCTURES, LLC Plaintiff,
v.
TOSHIBA CORPORATION, et.al ., Defendants.

          MEMORANDUM & ORDER

          Cathy Bissoon United States District Judge.

         For the reasons that follow, Defendants Headway Technologies, Inc., SAE Magnetics H.K. Ltd. and TDK Corporation's Motions to Dismiss (Docs. 103 and 127) will be GRANTED.

         I. MEMORANDUM

         Background

         Lambeth Magnetic Structures, LLC, (“Plaintiff” or “Lambeth”), an entity created to license patents invented by Dr. David N. Lambeth, a retired Carnegie Mellon professor, is the current owner of U.S. Design Patent No. 7, 128, 988 (“the ‘988 patent”), entitled “Magnetic Material Structures, Devices and Methods.” (Third Am.Compl. (Doc. 82) at ¶¶ 23-24). Plaintiff alleges that “[i]n connection with the ‘988 patent, Dr. Lambeth invented a new magnetic structure for Hard Disk Drive Devices comprised of the following elements: a substrate; at least one bcc-d layer which is magnetic, forming a uniaxial symmetry broken structure; and at least one layer providing a (111) textured hexagonal atomic template disposed between said substrate and said bcc-d layer” and that “[i]ndependent claims 1 and 27 of the ‘988 patent claim a magnetic material and a magnetic device, respectively, comprising the [referenced] structure.” (Id. at ¶¶ 31-32).

         On November 14, 2016, Plaintiff instituted this patent infringement action against Toshiba Corporation. (Compl. (Doc. 1)). Plaintiff alleges that many of Toshiba Corporation's hard disk drives (“HDDs”) incorporate the magnetic structure described in the ‘988 patent and thus infringe on at least claims 1 and 27. (Id. at ¶¶ 36-37). Plaintiff thrice amended its complaint, filing the currently-operative Third Amended Complaint on June 24, 2016. (Doc. 82). With the Third Amended Complaint, Plaintiff added, inter alia, Defendants SAE Magnetics H.K. Ltd. (“SAE”), Headway Technologies, Inc. (“Headway”) and TDK Corporation (“TDK”). (Id.) Defendants SAE, Headway and TDK (“the moving Defendants”) all move to dismiss the Third Amended Complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). See (Docs. 103 and 107).

         Jurisdictional Facts[1]

         Defendant Headway is a California corporation with its sole business location in California. Headway designs and manufactures wafer chips for use in recording heads used in hard disk drives. (Chen Decl. (Doc. 104-1) at ¶¶ 3, 4, 10). Headway supplies its wafer chips to Defendant SAE in Hong Kong - and nowhere else. (Id. at ¶¶ 4, 10). SAE incorporates Headway's wafer chips into head gimbal assemblies (“HGAs”). SAE sells the head gimbal assemblies in Hong Kong and China. The head gimbal assemblies are subsequently incorporated into hard disk drive products by companies such as Defendant Toshiba Corporation. Headway “designs and optimizes recording heads specifically for [Defendant] Toshiba products.” (Doc. 119 at 9; Docs. 119-1-119-8). Headway denies making, using, offering for sale or selling wafer chips to customers located in Pennsylvania, either directly or through distributors or retailers. (Doc 104-1 at ¶ 16). Headway contends it does not know whether any of its wafer chips have ever reached Pennsylvania as a component of a third party product. (Id. at ¶ 17). Headway claims it has no expectation that its wafer chips, as stand-alone chips or as components of third party products, would be sold to consumers in Pennsylvania. (Id. at ¶ 18). Plaintiffs have provided evidence that Toshiba hard disk drives incorporating Headway components are offered for sale in Pennsylvania. (Docs. 119 at 12, 119-15, 119-16, 119-17 at ¶¶ 2-5).

         TDK is a Japanese corporation with its principal place of business in Tokyo, Japan. (Nagata Decl. (Doc. 128-1) at ¶ 3). TDK has no place of business, office or other location in the United States. (Id. at ¶ 4). TDK subsidiary Headway is its only subsidiary with any U.S. connection. (Id.) “TDK does not exercise control over when, where or to whom Headway sells or ships its wafer chips.” (Id.) TDK manufactures a variety of items, including wafer chips used in hard drives. (Id. at ¶ 5). TDK sells its wafer chips to SAE, a TDK subsidiary. (Id.) SAE incorporates them into head gimbal assemblies. (Id.) SAE sells its head gimbal assemblies to third parties in Asia for commercial production of hard disk drives. (Id. at ¶ 6). “TDK does not control, participate in, track or monitor the further sale of its wafer chips after they are incorporated into HGAs and sold by SAE to SAE's customers.” (Id. at ¶ 11). TDK claims no actual knowledge or information that any of its wafer chips has reached Pennsylvania as a component of a third party product. (Id. at ¶ 19). TDK has never had a distributor for Pennsylvania, or otherwise had an established distribution channel for bringing its wafer chips to Pennsylvania. (Id. at ¶ 20).

         SAE is a Hong Kong corporation, with its principal place of business in Hong Kong. (Han Decl. (Doc. 128-2) at ¶ 3). SAE manufactures head gimbal assemblies. (Id. at ¶ 5). SAE purchases wafer chips from Headway and TDK for integration into head gimbal assemblies. (Id.) SAE sells the head gimbal assemblies to customers who incorporate them into hard disk drives. (Id. at ¶ 6). In some cases, SAE acts as a contractor for the customer and incorporates the head gimbal assemblies into the hard drives. (Id.) When acting as a contractor, all of the head gimbal assemblies are owned by the customer and SAE merely performs contract manufacturing/assembly services at its manufacturing facility in Dongguan, China. (Id.) SAE sells to Toshiba Corporation hard disk drives that it manufactures that incorporate Headway wafer chips. (Id. at ¶ 7). SAE ships the finished hard disk drives to locations globally, as directed by Toshiba. (Id.) None of the shipment locations are in Pennsylvania. (Id.) SAE has no role or control over any sales or shipments of hard disk drives subsequent to its initial supply shipment. (Id. at ¶ 8). SAE's distribution channel for HGAs that incorporate Headway or TDK wafer chips, as components for commercial production of HDDs, ends with HGA shipments in Asia to SAE's customers. (Id. at ¶ 9). SAE's distribution channel for HDDs that incorporate Headway wafer chips ends with SAE's shipments to locations designated by Toshiba, with the majority of the shipments to Asia, and none of them to Pennsylvania. (Id.) SAE has not made, used, offered for sale, or sold an HGA or HDD to a customer located in Pennsylvania, either directly or through distributors or retailers. (Id. at ¶ 17). SAE has no actual knowledge or information that any of its HGAs or HDDs has ever reached Pennsylvania as a component of a third party product. (Id. at ¶ 18). SAE does not have a distributor for Pennsylvania, or otherwise have an established distribution channel for bringing SAE's HGAs or HDDs to Pennsylvania. (Id. at ¶ 19).

         Plaintiff argues SAE, TDK and Headway's manufactured component parts are critical to Toshiba's finished hard disk drive devices. (Doc. 119 at 8).

         Analysis

         Federal Circuit law governs questions of personal jurisdiction over claims of patent infringement. Autogenomics, Inc. v. Oxford Gene Technology, Ltd., 566 F.3d 1012, 1016 (Fed.Cir. 2009) (“[T]he jurisdictional issue is intimately involved with the substance of patent law.”). There are two types of personal jurisdiction - general and specific. Plaintiff does not contend any moving Defendant is subject to general jurisdiction. Thus, the question turns on whether the Court has specific jurisdiction over any of the non-resident moving Defendants.

         A determination as to whether a defendant is subject to specific personal jurisdiction involves two questions: “first, whether the forum state's long arm statue permits service of process and, second, whether the assertion of jurisdiction is consistent with the due process clause.” Celgard LLC v. SK Innovation Co., Ltd., 792 F.3d 1373, 1377 (Fed.Cir. 2015) (internal citations omitted). Pennsylvania's long-arm statute provides for jurisdiction “to the fullest extent” permitted under the Due Process Clause of the Fourteenth ...


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