Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-02469/USCOURTS-cand-4_06-cv-02469-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

APPLIED ELASTOMERICS, INCORPORATED, a

California corporation,

Plaintiff,

v.

Z-MAN FISHING PRODUCTS, INCORPORATED,

a South Carolina corporation,

Defendant.

 /

No. C 06-2469 CW

ORDER DENYING

DEFENDANT'S

MOTION TO DISMISS

FOR LACK OF

PERSONAL

JURISDICTION

Defendant Z-Man Fishing Products, Incorporated moves for

dismissal of the action against it for lack of personal

jurisdiction. Plaintiff Applied Elastomerics, Incorporated opposes

this motion. The matter was submitted on the papers. Having

considered all of the papers filed by the parties, the Court denies

Defendant's motion and finds that Defendant has the necessary

minimum contacts to provide this Court with specific jurisdiction

over it.

Case 4:06-cv-02469-CW Document 21 Filed 08/10/06 Page 1 of 21
United States District Court

For the Northern District of California

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BACKGROUND

Plaintiff is a California corporation, located in South San

Francisco. It invents and patents certain chemical compositions,

composites and articles made from these compositions and

composites. Many of its patents, such as U.S. Patent No.

5,884,639, "Crystal Gels With Improved Properties," concern gel

polymers. Plaintiff manufactures and sells toys made of the gel

polymers it has invented. In addition, Plaintiff commercializes

its technology by licensing its patents, proprietary technology and

know-how to third parties and provides consulting services to third

parties. Plaintiff's president is John Chen; he handles all of the

business aspects of commercializing the technology he invents and

develops. His wife, Judy Chen, is Plaintiff's secretary and

treasurer. The Chens are Plaintiff's only two employees.

Defendant is a South Carolina corporation. It develops and

manufacturers fishing lure components and fishing lures for major

lure manufacturers. Since Defendant's inception, its operations

have been exclusively in South Carolina; it has never been

authorized to do business in any State other than South Carolina. 

Defendant has no bank accounts and owns no property in California. 

It has never been involved in any litigation in California (other

than this action) and has never paid any taxes or other fees at any

time to the State of California. Defendant does not have employees

or agents in California. Nor has Defendant ever engaged in any

direct marketing or targeted efforts to sell any of its products in

California. Defendant does not maintain a direct sales force for

its products anywhere and does not market its products to the

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general public or on a retail basis. Instead, it sells its

products to manufacturers and those manufacturers generally package

and label the lures created by Defendant under their respective

manufacturers' brand names for sale to retailers. According to the

United States Patent and Trademark Office, Defendant is considered

a "large entity."

On April 25, 2001, Mike Shelton, Defendant's Vice-President of

Marketing and Sales and Director of Technoloy, from his office in

South Carolina, telephoned Mr. Chen, who was at Plaintiff's office

in South San Francisco. Mr. Shelton was leading Defendant's

efforts to develop a stronger, softer and more buoyant plastic lure

than those on the market at the time; he believed that Plaintiff

may have possessed technology that could help develop Defendant's

new and improved plastic lure. Prior to this call Mr. Chen had

never heard of Defendant or its product line. 

According to the facsimile that Mr. Shelton sent Mr. Chen

later that day, Defendant was "interested in obtaining a license

agreement" under Plaintiff's U.S. Patent 5,884,639 "for the purpose

of manufacturing and sale of fishing lure products." Chen Dec.,

Ex. A. Included in the facsimile was Mr. Shelton's request that he

and Myrna Wauhop, who at the time was Defendant's president,

schedule a trip to San Francisco to meet with Mr. Chen and discuss

the project. Mr. Chen states that he was surprised by Defendant's

request to meet face-to-face in California because he was

accustomed to negotiating patent license agreements solely by

teleconferencing and through facsimile communications. The

facsimile concluded: "One of the most exciting parts of this

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potential relationship is being able to draw upon your vast

experience and knowledge. Also knowing that under the protection

of your U.S. patent, the product line will be safe from outside

infringement." Id. 

Following the telephone call and facsimile, Mr. Chen sent Mr.

Shelton and Ms. Wauhop a confidentiality agreement and a draft

patent license agreement. The first draft of the license

agreement, like all the following drafts and the final agreement,

contained a choice-of-law clause providing that California law

would govern the agreement and a dispute resolution clause

requiring the parties to attempt to settle any disputes through

negotiations to be held in San Mateo County, California. From

their respective offices, Mr. Shelton and Mr. Chen negotiated by

telephone and facsimile some of the terms of the parties'

relationship. There was no negotiation, however, as to the choiceof-law and dispute resolution provisions in the license agreement.

On May 19, 2001, Mr. Shelton and Ms. Wauhop arrived at

Plaintiff's office in South San Francisco to meet with Mr. Chen. 

With Mr. Shelton and Ms. Wauhop was Don Rawlins from Color

Technologies, Inc. (CTI), the corporation that would manufacture,

and make the molds for, Defendant's fishing lure products. The

topics to be discussed at the meeting, as presented in a facsimile

sent to Mr. Chen a few days before the meeting, were:

"(1) Marketing potential aspects; (2) Patents; (3) Technical

aspects; (4) Royalty Agreements; (5) Licensing agreements." Chen

Dec., Ex. E.

Discussed during the meeting in South San Francisco were

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various aspects of the potential licensing and business

relationship between the parties, including what patents Defendant

would license from Plaintiff, royalties Defendant would be required

to pay under the license, the fact that Defendant wanted the

license to be exclusive and other terms of the license agreement. 

The parties also discussed Defendant's need to obtain technical

assistance and know-how from Plaintiff to manufacture the fishing

lures. At this meeting, Mr. Chen was asked to formulate gels that

could be used to make the fishing lures and to send Defendant

samples of the gels for evaluation. Mr. Chen agreed to do so; he

also agreed to do conduct tests of the gels at Plaintiff's office

and to provide Defendant with instructions as to how to conduct its

own tests. If Defendant found any of these gels to be suitable,

Plaintiff and Defendant, assuming they could agree on the terms,

would enter into the license agreement to allow Defendant to

commercialize the product. This meeting was the only face-to-face

meeting between the parties and the only trip that any

representative of Defendant made to California at any time relating

to the license agreement or matters at issue in this litigation. 

Following the meeting in California, Mr. Chen provided

Defendant with several gel samples. Mr. Shelton then faxed

Plaintiff an overview of the sequence of events for the development

of the fishing lure product line. The facsimile stated in part:

Applied Elastomerics, Inc. to provide 2lbs to 5lbs samples of

gel compound for testing.

Color Technology, Inc. to mold and test product for

evaluation. Color Tech to work with Applied Elastomerics in

the development of product line.

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Before presenting the finished product to industry customers,

Z-Man Fishing Products will notify Applied Elastomerics, Inc.

as to which formulation will be used for the product line. 

Applied Elastomerics will notify Z-Man Fishing Products that

they can present the product line for commercialization. All

notifications will be in writing.

Z-Man Fishing Products to issue a check for $25,000.00 to

Applied Elastomerics. This check will be held until the

signing of the Royalty/License agreement.

Mr. Chen responded that, prior to formulating a two to five pound

sample, he would send a second set of small size samples for

Defendant's evaluation. After receiving this set of samples,

Defendant ordered five pounds of one of the gel compositions that

Mr. Chen had previously sent. Mr. Chen prepared and shipped the

gel to Defendant.

In July, 2001, Plaintiff and Defendant entered into a patent

and technology license agreement. Mr. Chen, on behalf of

Plaintiff, executed the agreement on July 18, 2001. The agreement

was then sent to South Carolina. Mr. Shelton, on behalf of

Defendant, executed the agreement six days later. As noted above,

the agreement contains a California choice-of-law clause and a

clause requiring the parties to negotiate disputes in California.

Defendant states that for the remainder of 2001, it worked

with CTI, specifically Mr. Rawlings, further to develop its new

product line. According to Defendant, it and CTI had "some

contact" with Mr. Chen during the development phase of the product

line. The product line, however, was developed at Defendant's

facility in South Carolina and CTI's facility in Georgia, where it

was initially manufactured; any involvement by Mr. Chen in the

development of the fishing lure product line was by way of

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communications made over the telephone and facsimiles.

 Plaintiff states that, after the license agreement was

executed, Defendant and its manufacturing partner CTI continued to

seek technical assistance and gel formulations from Plaintiff on an

ongoing basis from August, 2001 through at least March, 2003. Mr.

Chen provided new gel samples, new gel formulations, technical

advice on how to handle the gels in the manufacturing process,

technical advice on how to store the gels, what products to order

from suppliers and other technical information and know-how. In

January, 2003, for example, at the request of Defendant and CTI,

Plaintiff sent Defendant forty-four and a half pounds of new,

improved gel developed and made by Plaintiff in California. To

provide this technical assistance, Mr. Chen telephoned Defendant

and CTI more than a hundred times, in addition to the numerous

facsimiles and mailings that were exchanged between the parties and

the numerous times that Defendant and CTI telephoned Mr. Chen. Mr.

Rawlins declares that, over the course of the development and postmarket improvements of the fishing lure product, CTI, on behalf of

Defendant, sought Mr. Chen's assistance anywhere from once per week

to several times per day. He states that he spoke with Mr. Chen

more than a hundred times and spent at least a hundred hours with

Mr. Chen on the phone. According to Mr. Rawlins: "Without the

technical information and know-how, the ongoing technical

assistance and trouble shooting, and the gel samples and gel

formulation that Z-Man and CTI (on behalf of Z-Man) sought and

received from Mr. Chen in California, Z-Man and CTI could not have

developed the particular fishing lure product that Z-Man ultimately

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For the Northern District of California

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marketed." Rawlins Dec., ¶ 13.

Plaintiff states that, in addition to requesting technical

assistance, Defendant sought its assistance with the fishing lure

product in other ways. Defendant requested that Plaintiff apply

for additional patents to strengthen Defendant's ability to prevent

competitors from copying Defendant's licensed product. Plaintiff

did as requested. Defendant also asked Plaintiff to assist in

determining whether certain of Defendant's competitors' products

were infringing Plaintiff's patents. Defendant sent samples of the

potentially infringing product to Plaintiff in California and

requested that Plaintiff have the products analyzed for

infringement. Plaintiff again did as requested.

Between June, 2001 and February, 2004, Defendant sent to

Plaintiff nine royalty payments owed under the license agreement. 

Each of these payments was made by check drawn from a South

Carolina account maintained by Defendant. The checks were mailed

by Defendant to Plaintiff's office in South Francisco. Plaintiff

claimed that these payments were not sufficient to cover the full

amount of minimum royalties due pursuant to the license agreement

and, in 2005, the parties disputed what was owed, if anything. 

Defendant refused to pay the alleged minimum royalties Plaintiff

believed were due, and instead attempted to negotiate a new license

agreement. Plaintiff refused to enter into a new agreement and

brought this suit for breach of contract and breach of the covenant

of good faith and fair dealing.

Defendant contends that it does not have sufficient minimum

contacts with California to allow this Court to exercise personal

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jurisdiction over it and that any assertion of personal

jurisdiction is unreasonable. In May, 2006, it filed this motion.

In June, 2006, the day before Plaintiff timely filed its opposition

to this motion, Defendant filed a complaint against Plaintiff in

the District of South Carolina. The complaint contains twenty-one

claims, including fraud in the inducement, breach of the license

agreement for failure to provide formulations within the scope of

patent rights licensed under the agreement, breach of the license

agreement for failure to maintain exclusivity, misappropriation of

trade secrets, tortious interference with contractual relations,

conversion and numerous declaratory relief claims. 

LEGAL STANDARD

Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a

defendant may move to dismiss for lack of personal jurisdiction. 

The plaintiff then bears the burden of demonstrating that

jurisdiction exists. Schwarzenegger v. Fred Martin Motor Co., 374

F.3d 797, 800 (9th Cir. 2004). The plaintiff "need only

demonstrate facts that if true would support jurisdiction over the

defendant." Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995);

Fields v. Sedgwick Assoc. Risks, Ltd., 796 F.2d 299, 301 (9th Cir.

1986). Uncontroverted allegations in the complaint must be taken

as true. AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588

(9th Cir. 1996). However, the court may not assume the truth of

such allegations if they are contradicted by affidavit. Data Disc,

Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1284

(9th Cir. 1977). Conflicts in the evidence must be resolved in the

plaintiff's favor. AT&T, 94 F.3d at 588.

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If material facts are controverted or if the evidence is

inadequate, a court may permit discovery to aid in determining

whether personal jurisdiction exists. Data Disc, 557 F.2d at 1285

n.1. If the submitted materials raise issues of credibility or

disputed questions of fact, the district court has the discretion

to hold an evidentiary hearing in order to resolve the contested

issues. Id.

DISCUSSION

There are two independent limitations on a court's power to

exercise personal jurisdiction over a non-resident defendant: the

applicable State personal jurisdiction rule and constitutional

principles of due process. Sher v. Johnson, 911 F.2d 1357, 1361

(9th Cir. 1990); Data Disc, 557 F.2d at 1286. California's

jurisdictional statute is co-extensive with federal due process

requirements; therefore, jurisdictional inquiries under State law

and federal due process standards merge into one analysis. Rano v.

Sipa Press, Inc., 987 F.2d 580, 587 (9th Cir. 1993).

The exercise of jurisdiction over a non-resident defendant

violates the protections created by the due process clause unless

the defendant has "minimum contacts" with the forum State so that

the exercise of jurisdiction "does not offend traditional notions

of fair play and substantial justice." International Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945). Personal jurisdiction may be

either general or specific. 

General jurisdiction exists where the defendant's contacts

with the forum State are so substantial or continuous and

systematic that jurisdiction exists even if the cause of action is

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unrelated to those contacts. Bancroft & Masters, Inc. v. Augusta

Nat'l, Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). The standard for

establishing general jurisdiction is "fairly high." Id.; Brand v.

Menlove Dodge, 796 F.2d 1070, 1073 (9th Cir. 1986). The

defendant's contacts must approximate physical presence in the

forum State. Schwarzenegger, 374 F.3d at 801. Factors considered

in evaluating the extent of contacts include whether the defendant

makes sales, solicits or engages in business, designates an agent

for service of process, holds a license, or is incorporated in the

forum State. Bancroft & Masters, 223 F.3d at 1086. 

Specific jurisdiction exists where the cause of action arises

out of or relates to the defendant's activities within the forum. 

Data Disc, 557 F.2d at 1286. Specific jurisdiction is analyzed

using a three-prong test: (1) the non-resident defendant must

purposefully direct its activities or consummate some transaction

with the forum or a resident thereof; or perform some act by which

it purposefully avails itself of the privilege of conducting

activities in the forum, thereby invoking the benefits and

protections of its laws; (2) the claim must be one which arises out

of or results from the defendant's forum-related activities; and

(3) the exercise of jurisdiction must be reasonable. Lake v. Lake,

817 F.2d 1416, 1421 (9th Cir. 1987). Each of these conditions is

required for asserting jurisdiction. Insurance Co. of N. Am. v.

Marina Salina Cruz, 649 F.2d 1266, 1270 (9th Cir. 1981). 

A showing that a defendant "purposefully availed" itself of

the privilege of doing business in a forum State typically consists

of evidence of the defendant's actions in the forum, such as

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executing or performing a contract there. Schwarzenegger, 374 F.3d

at 802. The requirement of purposeful availment ensures that the

defendant should reasonably anticipate being haled into the forum

State court based on its contacts. World-Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286, 297 (1980). The purposeful availment test

is met where "the defendant has taken deliberate action within the

forum state or if he has created continuing obligations to forum

residents." Ballard, 65 F.3d at 1498. 

The second factor requires that the claim arise out of or

result from the defendant's forum-related activities. A claim

arises out of a defendant's conduct if the claim would not have

arisen "but for" the defendant's forum-related contacts. 

Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1322 (9th Cir.

1998).

Once the plaintiff has satisfied the first two factors, the

defendant bears the burden of overcoming a presumption that

jurisdiction is reasonable by presenting a compelling case that

specific jurisdiction would be unreasonable. Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 472-73 (1985); Haisten v. Grass Valley

Medical Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986). Seven

factors are considered in assessing whether the exercise of

jurisdiction over a non-resident defendant is reasonable: (1) the

extent of the defendant's purposeful interjection into the forum

State's affairs, (2) the burden on the defendant, (3) conflicts of

law between the forum State and the defendant's home jurisdiction,

(4) the forum State's interest in adjudicating the dispute, (5) the

most efficient judicial resolution of the dispute, (6) the

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plaintiff's interest in convenient and effective relief, and

(7) the existence of an alternative forum. Caruth v. International

Psychoanalytical Ass'n, 59 F.3d 126, 128 (9th Cir. 1995); Roth v.

Garcia Marquez, 942 F.2d 617, 623 (9th Cir. 1991).

Plaintiff argues that it has made a prima facie case that this

Court has specific jurisdiction over Defendant. Defendant

disagrees, maintaining that it has not purposefully availed itself

of the privilege of conducting activities within California, thus

invoking any benefits and protections of California law, and

therefore does not have sufficient minimum contacts with California

for this Court to exercise jurisdiction over it. 

(1) Purposeful Availment

The first factor used to determine whether specific personal

jurisdiction is proper is whether the defendant purposefully

availed itself of the benefits and protections of the laws of the

forum State. See Schwarzenegger, 374 F.3d at 802 (noting that the

purposeful availment analysis is most often used in suits sounding

in contract). Defendant contends that it did not purposefully

avail itself of the privilege of conducting activities in

California. According to Defendant, all it did was contact

Plaintiff to discuss a potential relationship, visit Plaintiff once

in California, enter into a contract with Plaintiff that Defendant

executed in South Carolina, occasionally talk with Mr. Chen about

the product line that was being developed and manufactured on the

east coast, and send checks from South Carolina to Plaintiff's

office in California. Defendant acknowledges that the license

agreement has a California choice-of-law provision, but downplays

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1

Defendant's suggestion that Gates Learjet may no longer be

good law because it predates Burger King is without merit. In

Burger King, the Supreme Court found that a choice-of-law provision

standing alone would be insufficient to confer jurisdiction. 471

U.S. at 482. Gates Learjet does not hold otherwise. 

14

the significance of that provision. Defendant's attempt to

downplay that provision and its deliberate actions within

California by which it availed itself of the benefits and

protection of California laws, however, fails.

As Plaintiff correctly notes, courts have found purposeful

availment based on contacts similar to Defendant's contacts with

California. For example, in Gates Learjet Corp. v. Jensen, 743

F.2d 1325, 1331 (9th Cir. 1984), the Ninth Circuit held that the

defendant purposefully availed itself of the benefits and

protections of Arizona law when it solicited a distributorship

agreement in Arizona and the agreement specifically provided that

Arizona law governed it.1 Similarly, in Advideo v. Kimel Broadcast

Group, Inc., 727 F. Supp. 1337 (N.D. Cal. 1989), the court found

that the defendant's contacts with California were limited to the

negotiation and signing of a single contract with the plaintiff, a

California corporation. The court then explained:

The mere signing of a contract with an out-of-state party does

not confer jurisdiction in that party's home state. However,

the contract signed by defendant expressly stated that legal

disputes arising from the contract would be resolved in

accordance with California law. Although a governing law

provision standing alone is not sufficient to confer

jurisdiction, the Supreme Court has ruled that “a

choice-of-law provision should [not] be ignored in considering

whether a defendant has ‘purposefully invoked the benefits and

protections of a State's laws' for jurisdictional purposes.”

This Court is of the opinion that defendant purposefully

availed itself of the benefits and protections of California's

laws. Defendant knew it was transacting business with a

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California corporation. . . . Defendant negotiated the

modification of other terms in the contract that plaintiff

initially proposed. In the event plaintiff had in some manner

breached the agreement, defendant would have been entitled to

the protection and benefits afforded by California law. Based

on defendant's deliberate affiliation with California, the

negotiations it conducted with plaintiff regarding the

contractual terms, and the clearly stated governing law

provision in the final contract, defendant had reason to

anticipate being haled into court in California. Accordingly,

this Court finds that defendant purposefully availed itself of

the privilege of conducting business in California, thereby

invoking the benefits and protections of its laws. 

727 F. Supp at 1340-41 (citations omitted).

Defendant's contacts with California are not "random,”

“fortuitous,” or “attenuated” or based on the “unilateral activity

of another party or a third person.” Burger King, 471 U.S. at 575. 

As established above, and as Defendant concedes, Defendant was the

one who reached out to California to contact Plaintiff regarding a

business arrangement. Defendant requested a face-to-face meeting

and Defendant traveled to California, where the parties negotiated

the terms of the license agreement. See Decker Coal Co. v.

Commonwealth Edison Co., 805 F.2d 834, 840 (9th Cir. 1986)

("conducting contract negotiations in the forum state will probably

qualify as an invocation of the forum law's benefits and

protections"); Data Disc, 557 F.2d at 1287 ("By participating in

the contract negotiations in California, STA purposefully availed

itself of the privilege of carrying out activities in that

state."). Defendant then entered into a license agreement, with

California choice-of-law and California dispute resolution

provisions, with a company based only in California, without

attempting to modify the choice-of-law and dispute resolution

provisions. By entering into that agreement, Defendant created

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continuing obligations between the parties, knowing that many of

those obligations could only be carried out by Plaintiff in

California.

Purposeful availment requires a finding that the defendant

performed some type of affirmative conduct which allows or promotes

the transaction of business within the forum State. Doe v. Unocal

Corp., 248 F.3d 915, 923 (9th Cir. 2001). The Court makes that

finding and concludes that Defendant purposefully availed itself of

the laws and benefits of California's law and thus it should have

reasonably anticipated being haled into court here.

(2) Arising Out Of

The second factor addresses whether the claim arises out of or

results from the defendant's forum-related activities. Applying

the Panavision “but-for” test, the question, therefore, is this:

but for Defendant's contacts with California, would Plaintiff’s

claims have arisen?

The answer is no. If Defendant had not contacted Plaintiff

and had not negotiated and entered into the license agreement at

issue, Plaintiff would have no breach of contract claims against

Defendant. Defendant does not argue otherwise. Defendant's forumrelated activities gave rise to each of Plaintiff’s claims. 

(3) Reasonableness

The third and final factor that the Court must consider is

whether exercising jurisdiction over Defendant is reasonable and

fair. Because the first two prongs of the specific jurisdiction

test have been met, Defendant must overcome the presumption of

reasonableness by presenting a compelling case that the exercise of

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jurisdiction would not be reasonable. Defendant contends that it

presents such a case; it addresses each of the seven factors

mentioned above. 

(a) Reasonableness factors

(i) Purposeful injection

The Ninth Circuit instructs, "Even if there is sufficient

‘interjection’ into the state to satisfy the purposeful availment

prong, the degree of interjection is a factor to be weighed in

assessing the overall reasonableness of jurisdiction under the

reasonableness prong.” Panavision, 141 F.3d at 1323 (quoting

Core-Vent v. Nobel Indus. AB, 11 F.3d 1482, 1488 (9th Cir. 1993)).

Defendant contends that, given the paucity of evidence to show

even purposeful availment by Defendant, there is insufficient

evidence to show that Defendant purposefully injected itself into

California such that it should have reasonably expected to have to

defend itself here. But the Court did not find that there was a

paucity of evidence to show purposeful availment. Nor did the

Court find that there is insufficient evidence to show that

Defendant should have reasonably expected to have to defend itself

in California. As noted above, the license agreement provides

that, in the event of a dispute, the parties would attempt to

negotiate a settlement of the dispute in California. If it was

Plaintiff's preference to negotiate disputes in California,

Defendant reasonably should have expected that Plaintiff would

litigate disputes in California. 

By seeking out Plaintiff, traveling to California to negotiate

the terms of the business relationship and license agreement with

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Plaintiff, and requiring Plaintiff to perform contractual

obligations in California, Defendant purposefully injected itself

into California affairs. Thus, this factor weighs in favor of

finding that jurisdiction over Defendant is reasonable.

(ii) Burden on Defendant of Litigating in California

 Although Defendant's burden of litigating in California is a

factor in the assessment of reasonableness, the Ninth Circuit

instructs that, unless the “inconvenience is so great as to

constitute a deprivation of due process, it will not overcome clear

justifications for the exercise of jurisdiction.” Id. (quoting

Caruth v. Int'l Psychoanalytical Ass'n, 59 F.3d 126, 128-29 (9th

Cir. 1995)).

Defendant admits that the burden of litigating this case in

California, while substantial, is not insurmountable. It notes

that Mr. Chen is the only potential witness living in California;

all Defendant's potential witnesses live on the east coast. 

Regardless, Defendant would not be deprived of due process by

having to litigate in California. The Court concludes that this

factor is neutral. 

(iii) Conflicts of law/Sovereignty

This factor requires the Court to consider the extent to which

the exercise of jurisdiction in California would conflict with the

sovereignty of South Carolina, Defendant's state of domicile. 

Defendant acknowledges that such a conflict is not a concern in

this case. Thus, this factor is also neutral.

(iv) Forum State's interest

Defendant argues that, because a California resident was not

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injured by the tortious conduct of an out-of-State party,

California has no real interest in this litigation and this factor

is, at best, neutral. This argument is not persuasive. As another

court in this district has found, "California has a strong interest

in seeing that its residents are provided an effective means of

redress when deprived of the benefits of their contractual

bargains." Advideo, 727 F. Supp. at 1341. The Court concludes

that this factor weighs in favor of finding that jurisdiction over

Defendant is reasonable.

(v) Most efficient judicial resolution 

In Panavision, the Ninth Circuit noted that this factor, which

focuses on the location of evidence and witnesses, is no longer

weighed heavily given the modern advances in communication and

transportation. 141 F.3d at 1323. When a case involves a limited

amount of evidence and few potential witnesses, this factor is

"probably neutral." Id. Plaintiff contends that this is a case

where this factor is neutral. According to Plaintiff, this is a

simple breach of contract case; the complaint contains only two

causes of action. Defendants, however, contend that this is not a

simple case and point to their recent South Carolina lawsuit,

which, as noted above, contains over twenty claims for relief. 

Defendant's claims, however, are not currently before this Court. 

Nonetheless, even if this case remains a breach of contract case,

as noted above, all of Defendant's witnesses are on the east coast. 

The Court finds that this factor weighs slightly in favor of

Defendant. 

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(vi) Plaintiff's interest in convenient and 

effective relief

The Ninth Circuit has noted that, in evaluating the

convenience and effectiveness of relief for the plaintiff, it has

"given little weight to the plaintiff's inconvenience." 

Panavision, 141 F.3d at 1323. But courts have not simply ignored

the plaintiff's inconvenience. See Colt Studio, Inc. v. Badpuppy

Enterprise, 75 F. Supp. 2d 1104, 1111 (C.D. Cal. 1999) ("the

importance of the forum to the plaintiff's interest in convenient

and effective relief is apparent in this case, as plaintiff is a

California resident"). Here, Plaintiff is a small company;

Defendant is not. Any time Mr. Chen has to be outside of

California to litigate this case would be a burden on Plaintiff. 

The Court finds that this factor weighs slightly in favor of

Plaintiff.

(vii) Existence of an alternative forum

Plaintiff concedes that South Carolina is an alternative forum

for this case and that this factor weighs in favor of Defendant. 

But, as the Ninth Circuit instructs, "No factor is dispositive; a

court must balance all seven." Panavision, 141 F.3d at 1322.

(b) Balancing of the reasonableness factors

Balancing these factors, the Court concludes that, although

some factors weigh in Defendant's favor, Defendant has failed to

present a compelling case that the Court's exercise of jurisdiction

would be unreasonable. All of the requirements for the exercise of

specific, personal jurisdiction are satisfied. Because the Court

finds that specific jurisdiction is appropriate, it does not

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address general jurisdiction.

CONCLUSION

For the foregoing reasons, the Court DENIES Defendant's Motion

to Dismiss for Lack of Personal Jurisdiction (Docket No. 7). 

IT IS SO ORDERED.

Dated: 8/10/06 

CLAUDIA WILKEN

United States District Judge

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