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

Background

Cisco filed this action accusing Dexon Computer, Inc. of trafficking counterfeit Cisco products. Dexon then sought indemnification and contribution from twenty third-party defendants, including Softnetworks, alleging that they sold allegedly counterfeit Cisco products to Dexon.

Dexon is a Minnesota corporation, and Softnetworks is a New Jersey corporation. Softnetworks sold 40 Cisco transceivers to Dexon for $400.00 and shipped them from New Jersey to Minnesota. Dexon indicated that it later sold at least some of those transceivers to California consumers.

Motions

Softnetworks moved to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction and Rule 12(b)(3) for improper venue. Dexon opposed that motion and filed a motion under 18 U.S.C. § 1404 to transfer the case to the District of Minnesota.

Personal Jurisdiction

The court focused on specific personal jurisdiction, which permits a court to hear claims connected to a defendant’s contacts with the forum state. Under the Ninth Circuit’s three-part test, the party asserting jurisdiction must show that the defendant purposefully engaged with the forum, that the claim arose out of or related to those forum activities, and, if the first two requirements are met, that exercising jurisdiction would be reasonable.

The court granted Softnetworks’ motion because Dexon failed to satisfy the second requirement. Dexon identified Softnetworks’ interactive website, Softnetworks’ visits to Cisco’s website, and contracts involving California terms as contacts with California. But Dexon did not claim that it used Softnetworks’ website to order the products at issue, and the court found the other asserted contacts unrelated to Softnetworks’ sale to Dexon.

The court also rejected Dexon’s argument that the claims related to California because Dexon later sold the products to California consumers. The court stated that Dexon, not Softnetworks, controlled where the products were sold after Softnetworks sold them to Dexon. The relevant sale involved emails and shipments between New Jersey and Minnesota, and Dexon provided no evidence that Softnetworks’ California contacts had anything to do with that sale.

Because Dexon failed to satisfy the second requirement, the court did not address the first and third requirements. The court also denied Dexon’s request for jurisdictional discovery, finding that the request was based on little more than a hunch that it might produce relevant facts.

Transfer

The court denied Dexon’s motion to transfer under 28 U.S.C. § 1404(a). It concluded that most relevant factors continued to weigh against transferring the case, including that Cisco asserted claims under federal and California law, many transactions underlying Cisco’s claims occurred in California, Dexon had meaningful contacts with California, and California remained Cisco’s chosen forum.

The court considered Dexon’s third-party indemnification and contribution claims but found that they did not change the transfer analysis. Although Minnesota would be more convenient for Dexon, the third-party defendants were geographically dispersed, and it was unclear that most evidence and witnesses relating to those claims would be in Minnesota. The court also noted Dexon’s delay in seeking transfer, although it said that delay was not dispositive.

Disposition

The court resolved the matter without oral argument, vacated the hearing scheduled for April 28, 2023, granted Softnetworks’ motion to dismiss for lack of jurisdiction, and denied Dexon’s motion to transfer.