Judge Carter Dismisses Case For Lack Of Jurisdiction - Rates Technology v. Cequel

by Robins Kaplan LLP
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Case Number: 1:13-cv-00011-ALC-FM (Dkt. 34)

Judge Carter dismissed Rates Technology’s complaint for infringement of two patents for lack of personal jurisdiction. The patents, U.S. Patent Nos. 5,425,085 (“Least cost routing device for separate connection into phone line”) and 5,519,769 (“Method and system for updating a call rating database”), were also at issue in Rates Techs. Inc. v. Broadvox Holding Co. LLC, where in January, Judge Scheindlin, refused Broadvox’s request to dismiss for lack of personal jurisdiction. In this case, defendant Cequel is incorporated in Delaware, has no offices, employees, bank accounts, or property in New York. Neither does it have any customers in New York. It does, however, use an optical fiber route that runs from Virginia to Chicago that also passes through New York.

The court rejected Rates’s argument that Cequel is systematically and continuously doing business in New York through an agent from which it leased transmission equipment. The court rejected this argument, saying that only New York agents who were “primarily employed by the defendant and not engaged in similar service for other clients” could create jurisdiction for a defendant. In this case, Rates offered no facts showing that the supposed agents were primarily employed by Cequel. The court also rejected Rates’s argument for specific jurisdiction, saying that New York’s long arm statute, §302(a)(3)(i), which requires “the [injurious] act to have consequences in the state,” counts as the location of the act “the location of the original event which caused the injury, not the location where the resultant damages are subsequently felt by the defendant.” Noting that many courts look to the location of a sale of a patented technology as the situs of injury, and that no New Yorkers could access Cequel’s network, the court rejected Rate’s argument and dismissed the case.

Rates requested the court to order discovery for jurisdictional topics should the court find a lack of personal jurisdiction. The court rejected this request, saying that Rate’s amended complaint made only “sparse allegations” and that defendant had supplied specific information about its lack of New York contacts, and so concluded by stating that “the Court is skeptical that additional discovery would cure the deficiencies in Plaintiff’s pleading.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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