Synoptek, LLC v. Synaptek Corp.

Citation: 326 F. Supp. 3d 976Docket: Case No.: SACV 16-01838-CJC(JCGx)

Court: District Court, C.D. California; March 5, 2017; Federal District Court

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Plaintiff Synoptek, LLC initiated legal action against Defendant Synaptek Corporation on October 4, 2016, alleging four claims: 1) trademark infringement under Section 32 of the Lanham Act, 15 U.S.C. 1114; 2) false designation of origin and unfair competition under Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a); 3) cancellation of registration for a confusingly similar mark under Sections 14 and 37 of the Lanham Act, 15 U.S.C. 1064, 1119; and 4) unfair competition and unfair business practices under California Business Professions Code § 17200 et seq. Synaptek moved to dismiss the case for lack of personal jurisdiction and improper venue or, alternatively, to transfer the case to the Eastern District of Virginia. This motion was denied by the Court.

Synoptek is a California limited liability company based in Irvine, specializing in IT management services, including core infrastructure management and cloud services. It holds the SYNOPTEK trademark, registered on May 6, 2008, with usage dating back to January 1, 2007. Conversely, Synaptek is a Virginia corporation located in Reston, primarily serving as a government contractor, notably for the Department of Veterans Affairs. Its services involve conducting wireless site surveys to optimize wifi installations across VA medical centers, with engineers monitoring installations remotely and conducting post-installation testing.

Synaptek conducted operations at several VA medical centers in California, including Long Beach. Four former employees are noted: Mr. Talamantes (who did not work onsite), Mr. Mowat (onsite field engineer), Mr. Oatham (principal wireless engineer overseeing various projects), and Mr. Goecke (supported a client in D.C. without involvement in California centers). Synaptek was also a prime contractor for the Defense Logistics Agency and engaged a subcontractor in Manteca, CA, for work in Tracy, CA. Additionally, 14 other employees were likely dispatched to California centers, though they reside elsewhere. 

Mr. Goecke worked from his home in Tracy, received employment correspondence and promotional materials from Synaptek, and had a Synaptek email and business cards. Mr. Oatham, based in San Jose, was recruited through interviews, similarly received a Synaptek jacket, and traveled to project sites for two weeks at a time. He was provided with a corporate card, per diem, and reimbursed for work-related expenses. Synaptek also reported taxable income in California during his employment and maintained a website accessible in California, although it does not sell services or advertise there. 

The document discusses the criteria for personal jurisdiction in federal courts, noting that plaintiffs must establish jurisdiction and that courts can dismiss cases without an evidentiary hearing per Federal Rule of Civil Procedure 12(b)(2).

The plaintiff must establish a prima facie case of jurisdictional facts to counter a motion to dismiss without an evidentiary hearing. If the plaintiff's factual assertions are unchallenged, they are accepted as true. Conflicting facts in supporting affidavits favor the plaintiff. In the absence of a federal statute on personal jurisdiction, the district court applies the relevant state law, which in California allows jurisdiction as long as it does not violate state or federal constitutional standards. California's long-arm statute permits jurisdiction based on any constitutionally permissible basis.

Personal jurisdiction is categorized as general or specific. General jurisdiction applies when a foreign corporation's affiliations with a state are so substantial that they are considered "at home" there, allowing for any claims against them irrespective of their activities in the forum state. Specific jurisdiction, on the other hand, requires a direct connection between the forum and the legal dispute, focusing on activities occurring within the forum state that justify the court's authority.

For specific jurisdiction to be valid, the non-resident defendant must have "minimum contacts" with the forum state, ensuring the suit does not violate fair play and substantial justice principles. The Ninth Circuit uses a three-part test to evaluate these contacts: 1) the defendant must purposefully avail themselves of conducting activities in the forum; 2) the plaintiff's claim must arise from the defendant's forum-related activities; and 3) exercising jurisdiction must be reasonable. The plaintiff is responsible for proving the first two elements of this test.

A plaintiff who establishes jurisdiction shifts the burden to the defendant to demonstrate that exercising jurisdiction would be unreasonable. The jurisdictional inquiry varies based on the claim's nature, with tort claims, including trademark infringement, requiring a "purposeful direction" test. Synaptek is not subject to general jurisdiction in California as its contacts do not equate to being "at home" in the state; it is incorporated and has its principal business outside California and serves less than ten VA medical centers there as part of a larger nationwide contract. For general jurisdiction, the standard is that an individual is subject in their domicile, while a corporation is subject where it is considered "at home." The court noted that finding Synaptek subject to general jurisdiction would extend the court's authority beyond constitutional limits, impacting out-of-state defendants' ability to predict liability. However, Synaptek is subject to specific jurisdiction in California due to its intentional activities directed at the state, including hiring California employees and sending materials and supplies there. The court dismissed Synaptek's claims of having "attenuated" contacts, emphasizing that its actions justify jurisdiction despite occurring at federal enclaves, referencing precedent that supports jurisdiction based on sufficient minimum contacts within the state.

Foreseeability of harm in intellectual property infringement claims dictates that loss is expected in the forum where the infringement occurs, as established in Washington Shoe Co. v. A-Z Sporting Goods Inc. Synoptek has shown that Synaptek used the allegedly infringing mark in California through various means such as reports and business cards, indicating that Synaptek was aware of the likelihood of infringement occurring there. The Ninth Circuit requires claims to arise out of or relate to the defendant's activities in the forum, applying a "but for" test to establish this connection. Even actions outside of California that result in harm within the state can satisfy this test. B. C's contacts with California over four years, combined with its alleged tortious conduct in London, resulted in injury to ASR in California, fulfilling the requirement. Synaptek's argument that its activities must occur solely within California is incorrect; a single purposeful contact can justify jurisdiction if it gives rise to the cause of action. Synoptek's claims arise from Synaptek's actions directed at California, meeting the relatedness requirement. The burden of proving that jurisdiction would be unreasonable now shifts to Synaptek, which has failed to present a compelling case against jurisdiction. The Ninth Circuit assesses seven factors to evaluate reasonableness, including the defendants' purposeful involvement in the forum, the burden of defending there, and the forum state's interest in the case. Despite the logistical challenges for Synaptek, these do not negate its purposeful injection into California's affairs, and such burdens alone cannot preclude specific jurisdiction.

Sovereignty is deemed neutral due to the lack of conflict between Virginia and California in this case. California has a strong interest in providing its residents with effective redress for torts. Although Synaptek claims that efficiency favors Virginia due to the travel needs of fifteen witnesses, advancements in communication and travel diminish the significance of this factor. The presence of witnesses near California supports Synaptek's interest in convenient relief. While the Eastern District of Virginia is an alternative forum, its lighter docket does not render jurisdiction in California unreasonable, as the location of evidence and witnesses is balanced between both districts.

Synaptek's motion to dismiss for improper venue is denied, as the plaintiff must demonstrate proper venue once challenged. Venue under 28 U.S.C. § 1391 is valid where Synaptek resides, which is determined by its contacts in the district. Synaptek has established sufficient contacts through hiring an employee in Long Beach and providing services to the Long Beach VA medical center, meeting the criteria for personal jurisdiction.

Even with proper venue, a court can transfer the case for convenience under 28 U.S.C. § 1404(a) if the action could have been brought in the transferee district and if transfer serves the convenience of parties and witnesses and the interests of justice. Several factors are considered in this analysis, including the negotiation location of relevant agreements, familiarity with governing law, plaintiff's forum choice, parties' contacts, litigation costs, availability of witnesses, access to evidence, and public policy of the forum state. Synaptek, being a Virginia corporation, could have pursued the case in the Eastern District of Virginia.

The moving party must prove that a transfer is justified, as established in Williams v. Bowman. Synaptek failed to meet this burden. Although Synaptek is based in Virginia, its counterpart, Synoptek, operates in California, making the convenience of parties, witnesses, availability of compulsory process, and evidence location neutral. Since the claims are primarily grounded in federal law, familiarity with the governing law is also neutral across both states. Synaptek's activities were directed toward California, while Synoptek is situated in this district, indicating the parties' contacts do not favor transfer. The plaintiff's choice of forum in California further argues against transfer. Although some factors slightly favor transfer, such as the decision-making occurring in Virginia and the alleged infringement taking place in California, the overall analysis shows that most factors are neutral or oppose transfer. The court notes that litigation costs may be higher in this district due to its busy caseload, but this factor is not weighed heavily. Consequently, Synaptek's motion to dismiss for lack of personal jurisdiction, improper venue, and to transfer venue is denied. The court finds the matter suitable for decision without a hearing, vacating the scheduled hearing on March 20, 2017.