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Amazon Web Services, Inc. v. Global Equity Management S.A.

United States District Court, E.D. Virginia, Richmond Division

September 13, 2017

AMAZON WEB SERVICES, INC. and VADATA, INC., Plaintiffs,
v.
GLOBAL EQUITY MANAGEMENT, S.A., Defendant.

          MEMORANDUM OPINION

          M. HANNAH LAUCK UNITED STATES DISTRICT JUDGE

         This matter comes before the Court on five motions: (1) Defendant Global Equity Management, S.A.'s ("GEMSA") "Rule 12(b)(5)[1] Motion to Quash Insufficient Service of Process" (the "Motion to Quash"), (ECF No. 18); (2) GEMSA's "Rule 12(b)(2)[2] Motion to Dismiss for Lack of Personal Jurisdiction" (the "Motion to Dismiss"), (ECF No. 20); (3) Plaintiffs Amazon Web Services, Inc. and VADATA, Inc.'s (collectively, the "Amazon Plaintiffs") "Motion to Enjoin [GEMSA] From Litigating More Than 30 Collateral Identical Customer Suits in the Eastern District of Texas" (the "Motion to Enjoin"), (ECF No. 25); (4) GEMSA's "Motion to Strike or Stay [the Amazon Plaintiffs'] Motion to Enjoin" (the "Motion to Strike"), (ECF No. 27); and, (5) GEMSA's "Opposed Motion to Withdraw as Counsel" (the "Motion to Withdraw"), (ECF No. 35).

         The matters are ripe for disposition. The Court dispenses with oral argument because the materials before it adequately present the facts and legal contentions, and argument would not aid the decisional process. For the reasons that follow, the Court will: (1) deny the Motion to Quash and the Motion to Dismiss; (2) deny the Motion to Enjoin and the Motion to Strike as moot; and, (3) grant the Motion to Withdraw subject to the conditions stated in this Memorandum Opinion.[3]

         I. Procedural and Factual Background

         The Amazon Plaintiffs bring this case seeking a declaratory judgment of noninfringement and invalidity of two patents purportedly assigned to and owned by GEMS A: United States Patent Numbers 6, 690, 400 (the "'400 patent") and 7, 356, 677 (the "'677 patent") (collectively, the "GEMSA Patents").

         In light of GEMSA's status as a patentee not residing in the United States, and pursuant to 35 U.S.C. § 293, [4] the Amazon Plaintiffs requested permission to serve GEMSA by alternative means. (ECFNo. 10.) The Court granted that request on the following basis:

According to records filed with the Patent and Trademark Office, GEMSA is an Australian corporation with a principal place of business at 458 Morphett Road, Warradale, South Australia 5046. (Mem. Supp. Mot. Ex. A, Patent Assignment Abstract of Title for the '400 Patent at 1, ECF No. 11-3; Mem. Supp. Mot. Ex. B, Patent Assignment Abstract of Title for the '677 Patent at 1, ECF No. 11-4.) Additionally, the Amazon Plaintiffs indicate that the file wrappers for the GEMSA Patents do not reflect that GEMSA has designated with the Patent and Trademark Office a person on whom process may be served. (See Pis.' Mem. Supp. Mot. 2-3, ECF No. 11.)

(Mem. O. 2, ECF No. 16.) The Court allowed the Amazon Plaintiffs to serve process by two means: (1) "[publication in a newspaper of general circulation, such as The New York Times or The Washington Post"; and, (2) "[p]ersonal service on GEMS A's United States Patent and Trademark correspondence address: William P. Ramey III of the law firms of Ramey & Browning, PLLC and/or Ramey & Schwaller, LLP, 5020 Montrose Boulevard, Suite 750, Houston, Texas 77006." (Id.) One week after the Court's order, the Amazon Plaintiffs filed proof of service by attaching a summons served on Mr. Ramey, (ECF No. 17), and a copy of The Washington Post's classified section dated Thursday, August 18, 2016, (ECF No. 17-1).

         GEMSA then filed two motions simultaneously: the Motion to Quash and the Motion to Dismiss. The Motion to Quash seeks to quash the attempted service of process on GEMSA because it failed to "comply with Due Process requirements." (Mot. Quash 1.) The Motion to Dismiss seeks to dismiss the case against GEMSA because "GEMSA did not initiate the patent application process in [the Eastern District of Virginia], has no relevant contacts to [the Eastern District of Virginia, ] and has already subjected itself to personal jurisdiction in [the United States District Court for the Eastern District of Texas]." (Mem. Supp. Mot. Dismiss 2, ECF No. 21.) The Amazon Plaintiffs responded to both motions in one response, (ECF No. 24), and GEMSA did not reply. The time to reply has expired.

         Before the Court ruled on the Motion to Quash and the Motion to Dismiss, the Amazon Plaintiffs filed the Motion to Enjoin, and GEMSA responded via the Motion to Strike. The Motion to Enjoin, which is now moot, sought a ruling from this Court enjoining GEMSA from litigating more than 30 collateral suits in the United States District Court for the Eastern District of Texas. GEMSA sought to strike the Motion to Enjoin pending resolution of the Motion to Quash and the Motion to Dismiss. Before the Court ruled on the Motion to Enjoin and the Motion to Strike, the United States District Court for the Eastern District of Texas transferred GEMSA's claims against the Amazon Plaintiffs to this Court. (See Global Equity Management, S.A. v. Amazon Web Services, Inc., et al., 3:17cv81.)[5] Accordingly, the Court will deny both the Motion to Enjoin and the Motion to Strike as moot.

         GEMSA then filed the Motion to Withdraw, "reqest[ing] that William P. Ramey, III, Martin Conn and Matthias Kaseorg, and the law firms of Ramey & Schwaller, LLP and Moran Reeves & Conn PC, be permitted to withdraw as counsel of record for GEMSA." (Mot. Withdraw 1.) The Amazon Plaintiffs oppose the Motion to Withdraw "[o]ut of an abundance of caution ... because it is uncertain whether by granting [the Motion to Withdraw], the Court may divest itself of jurisdiction over former counsel with respect to ordering sanctions for pre-withdrawal misconduct." (Opp'n Mot. Withdraw 2, ECF No. 36.) GEMSA filed a reply, refuting the Amazon Plaintiffs' argument and stating that the Court could permit withdrawal while ordering GEMSA to hire substitute counsel. The Court addresses these pending motions, seriatim, below.

         II. Analysis: Motion to Quash

         GEMSA's Motion to Quash advances one argument: that, by serving process in the manner approved by this Court and under 35 U.S.C. § 293, the Amazon Plaintiffs failed to comply with the due process requirements of the Fifth Amendment to the United States Constitution.[6] Specifically, GEMSA argues that, by attempting service by publication in a newspaper of general circulation and by serving GEMS A's outside counsel, the Amazon Plaintiffs served process in the manner most convenient to them, while neglecting to serve process in the manner most likely to reach GEMSA. Although GEMSA essentially concedes that the Amazon Plaintiffs complied with 35 U.S.C. § 293, [7] GEMSA argues that doing so fails to satisfy due process. In essence, GEMSA challenges the constitutionality of the effectuated service. GEMSA's argument fails.

         A. Federal Rule of Civil Procedure 12(b)(5) in Patent Cases

         Federal Rule of Civil Procedure 12(b)(5)[8] permits a defendant to challenge the method of service attempted by the plaintiff.[9] In patent infringement cases, federal law provides for two methods of service. See Nutrition Physiology Corp. v. Enviros Ltd, 87 F.Supp.2d 648, 652 (N.D. Tex. 2000). First, the plaintiff may serve non-resident defendants who maintain a regular and established place of business in accordance with 28 U.S.C. § 1694.[10] Second, the plaintiff may serve non-resident patentees in suits relating to that patent or the rights thereunder pursuant to 35 U.S.C. § 293. This case involves service under § 293.

         B. The Amazon Plaintiffs' Service Complied With 35 U.S.C. § 293 and this Court's Order

         The Amazon Plaintiffs complied with 35 U.S.C. § 293 and this Court's order when serving GEMSA: (1) by publication; and, (2) through GEMSA's outside counsel. Section 293 provides that if an alien patentee does not designate, through a submission to the United States Patent and Trademark Office ("USPTO"), an agent for service of process, "the United States District Court for the Eastern District of Virginia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs.'" 35 U.S.C. §293 (emphasis added).

         Here, GEMSA is a non-resident that has not designated a domestic agent for service of process through the USPTO. Thus, the Amazon Plaintiffs correctly looked to § 293 for guidance on how to serve process. In accordance with § 293, the Amazon Plaintiffs served GEMSA by publication; and, as ordered by this Court under the authority provided to it in § 293, the Amazon Plaintiffs served process on GEMSA's counsel. Accordingly, the Amazon Plaintiffs complied with § 293.

         C. The Amazon Plaintiffs' Service of Process Did Not Violate the Constitution

         Because the Amazon Plaintiffs complied with § 293, GEMSA's argument turns on the constitutionality of the service of process. The Court finds the Amazon Plaintiffs' service of process fell well within constitutional bounds.

         GEMS A tersely argues that due process requires "that the most likely method of reaching the defendant (i.e., serving the defendant itself, rather than others close to the defendant) [be] used for service." (Mem. Supp. Mot. Quash 3, ECF No. 19.) GEMSA cites no authority in the context of § 293 in support of this argument. In fact, GEMSA omits any authority at all regarding the constitutionality of serving process under § 293, and the Court sees none.

         Instead, GEMSA relies on McDonald v. Mabee, 243 U.S. 90, 92 (1917), for the premise that a plaintiff may use substitute service only if the plaintiff attempts service in the manner most likely to reach the defendant.[11] The standard articulated in that 1917 decision has been updated. Subsequent Supreme Court case law explains that service satisfies due process when it provides "notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950); see also Snider Int'l Corp. v. Town of Forest Heights, M/., 739F.3d 140, 146 (4th Cir. 2014) (citing Mullane, 339 U.S. at 314-15). Due process does not require actual notice, and notice will suffice if it is either: (1) "reasonably certain to inform those affected"; or, (2) "not substantially less likely to bring home notice than other of the feasible and customary substitutes." Id. at 315.

         Here, the Amazon Plaintiffs' service provided notice reasonably certain to apprise GEMS A of the claims against it. Indeed, by publishing notice in The Washington Post and by serving process on GEMS A's outside counsel, [12] the Amazon Plaintiffs took action that was reasonably certain to (and which did) inform GEMS A of the case. Whether a different method- i.e., service on GEMS A in Australia-would have been feasible does not diminish the constitutionality of the actions taken by the Amazon Plaintiffs. The Court will deny the Motion to Quash.

         III. Analysis: Motion to Dismiss

         Relatedly, GEMSA's Motion to Dismiss challenges personal jurisdiction on due process grounds. In a two-page argument with few citations to authority, GEMS A argues that "this Court lacks personal jurisdiction over this lawsuit [because] GEMS A did not initiate the patent application process in this District, has no relevant contacts in this District[, ] and has already subjected itself to personal jurisdiction in a different U.S. Court." (Mem. Supp. Mot. Dismiss 1, ECF No. 21.) GEMSA's Motion to Dismiss fails because GEMSA purposefully availed itself of the privileges of patent ownership through its contacts with the USPTO in the Eastern District of Virginia.

         A. The Court Could Find that GEMSA Waived Any Challenge to Personal Jurisdiction By Filing the Motion to Quash First and Separately

         As a preliminary matter, because GEMSA filed the Motion to Quash first and, in a separate filing, its personal jurisdiction challenge, the Court-technically-could rule that GEMSA waived the latter arguments. See 5C Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1361 (3d ed.) ("According to Rule 12(g), once a party has chosen to make a Rule 12(b) motion, any available Rule 12(b) defenses must be joined in that motion or those that are omitted will be waived."). Federal Rule of Civil Procedure 12(g)(2) requires that a defendant make all challenges under Rule 12 in the same motion. See Fed. R. Civ. P. 12(g)(2) ("Except as provided in Rule 12(h)(2) or (3), [13] a party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier ...


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