Cisco Systems, Inc. v. Dexon Computer, Inc.

Background

Cisco Systems, Inc. and Cisco Technology, Inc. sued Dexon Computer, Inc. The complaint asserted federal trademark infringement, federal trademark counterfeiting, false designation of origin, unfair business practices under California law, and unjust enrichment. Cisco alleged that Dexon had trafficked counterfeit Cisco products for approximately fifteen years by representing that products were genuine and then supplying counterfeit products bearing Cisco marks.

The amended complaint described sales to customers in several states, including a 2017 sale to a Cisco investigator in Berkeley, California. Cisco also alleged that, from 2017 through 2020, Dexon sold at least 40 counterfeit Cisco-branded products and 20 counterfeit software licenses to California customers. Cisco further alleged that Dexon bought counterfeit Cisco products from a company in Fremont, California. The software licenses allegedly included counterfeit product activation certificates that copied valid codes and allowed access to Cisco software without payment to Cisco.

Dexon is described in the opinion as a Minnesota corporation with its headquarters and sole office in Bloomington, Minnesota. Dexon moved to dismiss the amended complaint for lack of personal jurisdiction. In the alternative, it asked the court to transfer the case to the District of Minnesota.

Personal Jurisdiction

Personal jurisdiction is a court’s authority to exercise its power over a defendant. The court focused on specific jurisdiction, which applies when the defendant’s contacts with the forum state are connected to the lawsuit. Under the Ninth Circuit’s test, the plaintiff must show that the defendant purposefully directed activities at the forum, that the claims arise out of or relate to those activities, and that exercising jurisdiction would be reasonable.

The court held that Cisco’s allegations satisfied those requirements at the motion-to-dismiss stage. First, the alleged direct and repeated sales of counterfeit products and software licenses to California customers were intentional acts expressly aimed at California. The court rejected Dexon’s argument that California sales were too small a percentage of its overall sales, reasoning that the alleged sales were not random, isolated, or accidental.

Second, the court found a direct connection between Dexon’s California contacts and Cisco’s claims because Cisco alleged that the California sales themselves violated federal and California law. Third, the court found that exercising jurisdiction was reasonable. Although some witnesses and evidence were likely in Minnesota, other witnesses and allegedly counterfeit products were likely in California, and Dexon did not deny that it routinely conducted business there.

Transfer Request

The court also denied Dexon’s request to transfer the case under 28 U.S.C. § 1404(a), which allows transfer for convenience and in the interest of justice. The court considered the relevant factors, including the locations of agreements, witnesses, evidence, and the parties’ contacts with each forum; the plaintiff’s choice of forum; and which state’s law would govern.

The court concluded that transfer to Minnesota was not appropriate. Although many relevant agreements were negotiated and executed outside California and Dexon identified Minnesota witnesses and documents, many transactions underlying Cisco’s claims occurred in California. Cisco asserted both federal and California claims, the court was more familiar with the governing law than a Minnesota court would be, and witnesses and evidence were likely located in both states.

Disposition

The court denied Dexon’s motion to dismiss and denied Dexon’s request to transfer the case to the District of Minnesota. The ruling addressed jurisdiction and forum, not whether Cisco ultimately proved its trademark and related claims. The order also states that Dexon’s motion under Rule 60 of the Federal Rules of Civil Procedure to correct the earlier order was granted, resulting in this amended order.