Magistrate Judge Fallon Recommends Denial of 12(b)(2) Motion Without Prejudice and Limited Jurisdictional Discovery.

Magistrate Judge Sherry R. Fallon recently denied without prejudice a foreign defendant’s motion to dismiss for lack of personal jurisdiction.  Sony Corp. v. Pace PLC, et al., Civ. No. 15-288-SLR (D. Del. Feb. 12, 2016).  It was undisputed that the defendant, a United Kingdom corporation with its principal place of business in England, designed allegedly infringing digital cable and satellite television set-top box models, but that those models were manufactured by third parties outside the United States and shipped to ports outside of Delaware by the defendant’s subsidiary—a Delaware limited liability company with its principal place of business in Florida.  It was also undisputed that the defendant transferred title to allegedly infringing products outside of Delaware, and that the subsidiary sold the products to national cable providers including Comcast and DirecTV, which have Delaware customers.

The plaintiff argued that personal jurisdiction could be maintained over the foreign defendant under a “dual jurisdiction” or “steam of commerce” theory, which “implicates both subsections (c)(1) and (c)(4) of the Delaware long-arm statute. . . . Specifically, Sony argues that Pace Americas offers for sale the accused set-top boxes to cable and satellite service providers who Pace knew or should have known were reselling or providing those devices to customers in Delaware, demonstrating an intent to serve the United States market at large via its subsidiary.”  Judge Fallon acknowledge a split among the Court regarding whether the Delaware Supreme Court would recognize this theory of personal jurisdiction, but proceeded to analyze the theory on the basis that the Delaware Supreme Court had not yet overruled application of the theory.  Ultimately, while Judge Fallon found no evidence that the foreign defendant intended to exclude Delaware from its distribution in the United States, the plaintiff “failed to allege facts sufficient to satisfy the second prong of the analysis because there is no evidence on the record that the Accused Products were actually sold in Delaware.”  On that basis, Judge Fallon recommended denying the motion to dismiss, without prejudice, and allowing limited jurisdictional discovery on sales to Delaware customers that would satisfy the second prong of the analysis.