Delaware Patent Litigation Report : Delaware Intellectual Property Lawyer & Attorney : Morris James Law Firm : Delaware Patent Litigation Report

After taking jurisdictional discovery, plaintiffs amended their complaint to add an additional defendant, Cardio Holdings LLC (“Cardio”).  Defendants WCT and Cardio move to dismiss the amended complaint arguing lack of personal jurisdiction because WCT has insufficient contacts with Delaware and cannot have Cardio’s contacts attributed to it under an alter ego theory; lack of subject matter jurisdiction over the declaratory judgment claims against Cardio because it does not own the patent-in-suit; and the “first to file” rule mandates dismissal in favor of a prior-filed action pending in the Eastern District of Texas.  Plaintiffs are a Delaware corporation with its principal place of business in Massachusetts and a Minnesota corporation also domiciled in Minnesota.  WCT is an LLC organized and domiciled in Texas.  WCT has two members, Cardio, a Delaware LLC with its principal place of business in Texas and a Georgia LLP.  Each member owns 50%. One of Cardio’s director’s serves as WCT’s Managing Director and Cardio has been the sole source of funding for WCT to date.  WCT’s contacts with Delaware are not sufficient to establish jurisdiction.  Correspondence from and negotiations for a license with an out-of-state patentee cannot, without more, support personal jurisdiction.  Nor is their evidence to show some fraud, injustice or inequity between WCT and Cardio to support an alter ego theory.  Finally, citing to Carlton Investments v. TLC Beatrice Int’l Holdings, Inc., the Court concludes that WCT is a separate jural entity not subject to the personal jurisdiction of its members.  The simple presence in this jurisdiction of a person with management authority with respect to the entity will not itself subject the entity to jurisdiction.  In addition, because the court has determined that WCT is not an alter ego of Cardio, plaintiffs have also failed to demonstrate the existence of a substantial controversy with respect to Cardio.  As an aside, the Court notes that even if jurisdiction did exist, the first-to-file rule would be grounds for dismissing the action.