Meteoro Amusement Corp. v. Six Flags
2003 U.S. Dist. LEXIS 8813, 2003 WL 21221959, 267 F. Supp. 2d 263 (2003)
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Rule of Law:
A federal district court in New York lacks personal jurisdiction over a foreign corporation in a patent infringement case if the corporation's direct contacts via an interactive website do not constitute a tortious act within the state, and its in-state subsidiaries do not establish an agency or "mere department" relationship. When venue is improper, a court may, in its discretion, transfer the case to a proper venue for the convenience of parties and witnesses, giving substantial weight to witness convenience.
Facts:
- Between 1997 and 1998, Meteoro Amusement Corp. (Meteoro) offered to sell Six Flags, Inc. (SFI) and other companies the technology embodied in its pending '115 patent.
- In 1998 and 1999, copies of a video illustrating Meteoro's technology were distributed to SFI and made available for public viewing on Meteoro’s website.
- In December 2000, SFI announced the anticipated debut of its 'X' roller coaster, manufactured by Arrow Communications, for its Magic Mountain theme park in Valencia, California.
- The 'X' roller coaster vehicles move 360 degrees forward or backward, similar to Meteoro's patented device.
- In September 2001, Meteoro’s CEO notified SFI’s CEO that the 'X' roller coaster would infringe Meteoro's pending patent application (Serial Number 09/814,083, which became the '115 patent) upon its issuance.
- In November 2001, the United States Patent and Trademark Office published Meteoro’s '083 application; the 'X' roller coaster opened to a limited audience in December 2001 and to the general public in January 2002.
- Meteoro's '115 patent, entitled “Modularized Amusement Ride and Training Simulation Device,” was issued on May 14, 2002.
- Meteoro's '961 patent was issued on November 12, 2002.
Procedural Posture:
- Meteoro Amusement Corp. filed a civil action against Six Flags, Inc. in the U.S. District Court for the Northern District of New York on July 31, 2002.
- Meteoro filed an amended complaint on November 15, 2002, alleging patent infringement of the ’115 and ’961 patents.
- Six Flags, Inc. moved to dismiss the entire action for failure to state a claim (Fed. R.Civ.P. 12(b)(6)), lack of subject matter jurisdiction (Fed.R.Civ.P. 12(b)(1)), and improper venue (Fed.R.Civ.P. 12(b)(3)).
- Alternatively, Six Flags, Inc. moved the court to transfer venue pursuant to 28 U.S.C. § 1404(a).
- On March 18, 2003, the District Court denied Six Flags, Inc.'s motion to dismiss as to the 12(b)(1) and 12(b)(6) grounds from the bench, but reserved judgment on the 12(b)(3) ground and the § 1404(a) motion to transfer venue.
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Issue:
Is venue proper in the Northern District of New York for a patent infringement claim against Six Flags, Inc., a foreign corporation, when its direct contacts with the district through an interactive website and the activities of its New York subsidiaries do not establish general or specific personal jurisdiction under New York's C.P.L.R. §§ 301 and 302(a)(2)?
Opinions:
Majority - MCCURN, Senior District Judge
No, venue is not proper in the Northern District of New York because the court lacks personal jurisdiction over Six Flags, Inc. under New York's long-arm statutes. The court first analyzed general personal jurisdiction under C.P.L.R. § 301. It found that SFI itself was not 'doing business' in New York in a continuous and systematic manner; mere ownership and operation of an interactive website, without more, does not satisfy the 'solicitation plus' standard. Furthermore, SFI's New York subsidiaries (the Great Escape subsidiaries) were neither 'agents' nor 'mere departments' of SFI. The 'agency' test was not met because Meteoro failed to show that SFI’s business was so significantly dependent on the subsidiaries’ revenue (which comprised less than three percent of SFI's total revenue) that SFI would enter the market directly if the subsidiaries were absent. The 'mere department' test was also not met despite common ownership: Meteoro did not establish sufficient financial dependence, pervasive control over personnel selection (one overlapping CEO was insufficient), or direct control over marketing and operational policies beyond normal shareholder involvement. While an SFOI SEC filing indicated SFI’s Senior Vice President for marketing supervised SFOI’s marketing programs and park general managers reported to SFI’s Executive Vice Presidents, this was deemed insufficient to show 'pervasive' control, and a unified marketing image on a website alone was insufficient. Next, the court analyzed specific personal jurisdiction under C.P.L.R. § 302(a)(2) for committing a 'tortious act within the state.' Meteoro alleged patent infringement through SFI’s website by 'offering to sell' and 'selling' season passes to Northern District residents for use at the 'X' roller coaster in California. The court found this connection 'quite tenuous.' SFI rebutted that online passes bought by New York residents could only be used at theme parks within a 300-mile radius of their billing address, meaning for New York/New Jersey parks, not directly for Magic Mountain in California. Thus, Meteoro failed to show SFI committed an infringing sale within New York. As jurisdiction was lacking under New York’s long-arm statute, a due process analysis was unnecessary. Consequently, venue in the Northern District of New York was improper. However, the court exercised its discretion under 28 U.S.C. § 1404(a) to transfer the case rather than dismiss it. The Western District of Oklahoma (SFI's corporate headquarters) was deemed a proper venue where the action could have been brought. Weighing the convenience factors, the court gave substantial weight to the convenience of witnesses. SFI identified a near majority of its potential witnesses (including many from Oklahoma City, California, Missouri, and Utah) in other districts, while Meteoro identified only two witnesses (one in N.D.N.Y., one in New Mexico), both of whom would be inconvenienced regardless of the chosen forum. The location of most documents in Oklahoma City and the disagreement on the necessity of viewing the roller coaster also supported transfer. Therefore, the court denied SFI’s motion to dismiss for improper venue but granted its request to transfer venue to the Western District of Oklahoma.
Analysis:
This case significantly clarifies the high threshold for establishing both general and specific personal jurisdiction over a foreign corporation in New York, particularly in the context of internet activities and subsidiary relationships. It reinforces that New York's C.P.L.R. § 301 requires a 'continuous and systematic' presence, and mere website interactivity or general corporate oversight of subsidiaries is insufficient to establish an 'agency' or 'mere department' relationship. The court also delineates the situs of injury for patent infringement from online sales, emphasizing the direct connection between the sale and the forum state. Furthermore, the decision highlights the federal courts' preference for transferring improper venue cases under 28 U.S.C. § 1404(a) rather than dismissing them, prioritizing the convenience of numerous witnesses and the location of evidence over the plaintiff's chosen, but improper, forum.
