District Judge Andrew Carter granted defendant Cequel’s motion to dismiss the complaint for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). Plaintiff RTI sued defendant Cequel for infringement of RTI’s U.S. Patent 5,425,085 (“the ’085 patent”) directed “to the routing of telephone calls based upon cost” and U.S. Patent 5,519,769 (“the ’769 patent”) directed “to a method for updating a database in a telephone call routing system.” Cequel responded by filing the instant 12(b)(2) motion.
Cequel is a Delaware company with its principal place of business in Missouri that provides IP-based services including Voice over Internet Protocol (VoIP) telephone services throughout the 50 states. Cequel’s only connection to New York is that it uses a third party’s transmission network and fiber route that passes through New York (“the New York pass through”). Cequel does not have an office, employee, or property in New York, and it does not solicit business, transact business, or derive substantial revenue from goods or services in New York.
The court held that there was no general personal jurisdiction over Cequel because RTI “has not alleged facts that establish” that the operators of the New York pass through are Cequel’s agents, “primarily employed by [Cequel] and not engaged in similar services for other clients,” such that Cequel is “doing business” in New York through them. “Moreover, the lack of an office, employees, bank accounts, or property in the forum is significant.” The court commented that under RTI’s view, “[i]t is difficult to see where jurisdiction would end; foreign-state . . . corporations could be found ‘at home’ essentially anywhere, based on the briefest and most trivial of contacts.”
The court also held that RTI could not establish specific jurisdiction over Cequel because the operators of the New York pass through are not Cequel’s agents, and because Cequel did not commit a tortious act in New York or cause an injury in New York. RTI advanced two theories: first, that Cequel’s use of the New York pass through constituted physical presence in New York; and second, that the alleged injury occurred in New York because RTI held the allegedly infringed patents in New York. RTI’s first theory failed because Cequel was not present in New York when the alleged infringement occurred, and the “operators of the [New York pass through] cannot be characterized as Cequel’s agents for purposes of jurisdiction.” RTI’s second theory also failed because the site of injury in patent infringement cases is “the place where the infringing sale is made” and Cequel made no sales in New York.
Case: Rates Tech. Inc. v. Cequel Commc’ns, LLC, No. 13 Civ. 0011 (ALC) (FM) (S.D.N.Y. Mar. 25, 2014)