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LLC v. Ceramtec GmbH

United States District Court, D. Colorado

September 8, 2014

C5 MEDICAL WERKS, LLC, Plaintiff,
v.
CERAMTEC GmbH, Defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS

R. BROOKE JACKSON, District Judge.

This matter is before the Court on Defendant's Motion to Dismiss for Lack of Jurisdiction Pursuant to FRCP 12(b)(2). ECF No. 15. The motion argues that this Court lacks personal jurisdiction over the defendant. For the reasons explained below, the motion is denied.

I. Factual Background

The underlying dispute here is about whether the defendant holds a trademark in the color pink in ceramic components for prostheses, and whether plaintiff's products infringe on that trademark. Plaintiff C5 Medical Werks, LLC ("C5") is a Delaware company headquartered in Grand Junction, Colorado. C5 produces ceramic components for medical prostheses. Those components use a ceramic composite called "Cerasurf." According to C5, Cerasurf appears pink because it contains chromium oxide.

Defendant CeramTec GmbH ("CeramTec") is a German company that also produces ceramic prosthetic components. CeramTec's composite, "Biolox Delta, " contains chromium oxide and appears pink. While CeramTec appears to be one of the largest producers of these ceramic components in the U.S. market, the company has no physical presence in Colorado. Its website is, obviously, available worldwide, but it lacks any Colorado-specific content. CeramTec also claims not to "solicit business in Colorado, send agents into Colorado to solicit business, hold itself out as doing business in Colorado, or conduct its business in Colorado." ECF No. 15 at 3.

The dispute between the two companies boils down to the following. Defendant CeramTec had, at one time, a patent on the use of chromium oxide in its ceramic medical implants. Among other attributes, chromium oxide hardens the components. The use of chromium oxide also allegedly imparts a pink hue to the components. After the expiration of CeramTec's patent, other companies, including plaintiff C5, began using chromium oxide. C5 claims that as a result, its ceramic medical components took on a pink hue. In the meantime, CeramTec initiated an application with the U.S. Patent and Trademark Office ("USPTO") seeking to trademark the color pink in its medical devices. C5 views this application as an improper attempt to continue to reap the benefits of a patent on chromium oxide. CeramTec's application explains that the company has been selling its pink product in interstate commerce for more than a decade, and that it had "widely displayed and promoted" its products throughout the United States. Hughes Decl., Ex. F ¶ 2. While the USPTO denied CeramTec's application for listing on the Principal Register, it permitted the company to list its trademark (the color pink) on the Supplemental Register. Such listing gives rise, in part, to CeramTec's attempts to enforce its trademark against C5's use of the color pink.

In late 2013, CeramTec sent a cease and desist letter to C5 in Colorado objecting to C5's continued production of pink ceramic implants. That letter expressed an intent to defend CeramTec's "worldwide" intellectual property rights. C5 also alleges that around the same time CeramTec seized C5's products from a tradeshow in Paris, France. Finally, C5 alleges that CeramTec has participated in three national industry conferences here in Colorado where the defendant promoted its pink products and publicized the fact that it was seeking a trademark on the color and would enforce its trademark against competitors in Colorado. CeramTec disputes this characterization of its actions. It argues that the conferences were not directed at Colorado residents and were designed to be generally educational for industry members rather than a specific opportunity to promote its products. ECF No. 15 at 3-4. CeramTec admits to sponsoring the conferences but denies that it made any effort to enforce its trademark at those events or in any other manner in Colorado besides sending the cease and desist letter.

On March 3, 2014, C5 initiated a lawsuit in this Court asserting three causes of action. The first two seek cancellation of trademarks in the USPTO's Supplemental Register. ECF No. 1 at 21-24. The third cause of action is for a declaratory judgment that C5's own products, although they appear pink and contain chromium oxide, do not infringe on the aforementioned trademarks. Id. at 24-26.

On May 6, 2014, CeramTec moved to dismiss C5's complaint on the grounds that this Court lacks personal jurisdiction over CeramTec. A month later, CeramTec filed a complaint in the District Court of Delaware alleging trademark infringement, unfair competition, and deceptive trade practices against C5. The Court discussed these issues with the parties at a scheduling conference on August 12, 2014. Counsel for CeramTec could not promise that it would serve its complaint in the Delaware case if the instant case were dismissed for lack of jurisdiction, although it did in fact serve the complaint shortly after the scheduling conference. See ECF No. 32.

II. Analysis

A. Standard of Review

To establish personal jurisdiction over an out-of-state defendant, "a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment." Employers Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1159 (10th Cir. 2010). Colorado's "long-arm" statute, C.R.S. § 13-1-124, has been interpreted to confer the maximum jurisdiction permitted by constitutional due process. Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005). Therefore, the Court need only determine whether exercise of jurisdiction over the defendant comports with due process.

The Due Process Clause "operates to limit the power of a State to assert in personam jurisdiction over a nonresident defendant." Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-14 (1984). In order to exercise jurisdiction, the out-of-state defendant must have "minimum contacts" with the forum state such that the exercise of jurisdiction does not "offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. State of Wash. Office of Unemployment Comp. and Placement, 326 US. 310, 323 (1945). In all, the defendant's contacts with the forum must be such that it is foreseeable that the defendant could "reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).

Minimum contacts may be established in two ways. First, general jurisdiction exists where the defendant has "continuous and systematic" contacts with the forum state such that exercising personal jurisdiction is appropriate even if the cause of action does not arise out of those contacts. See Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846, 2851 (2011). Second, specific jurisdiction exists where the cause of action is "related to" or "arises out of" the defendant's activities within the forum state. See Helicopteros Nacionales, 466 U.S. at 414 (citation omitted). In such cases, jurisdiction is proper "where the contacts proximately result from actions by the defendant himself that create a substantial connection' with the forum State." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (emphasis in original) (citations omitted). In general, specific jurisdiction may be had over a nonresident defendant only where that defendant "purposefully directed" its actions at the forum state or "purposefully availed' itself of the privilege of conducting activities or consummating a transaction in the forum state." Dudnikov v. Chalk & ...


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