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Ford Motor Co. v. Autel U.S. Inc.

United States District Court, E.D. Michigan, Southern Division

February 13, 2017

FORD MOTOR COMPANY, a Delaware corporation, and FORD GLOBAL TECHNOLOGIES, LLC, Delaware Limited Liability Company, Plaintiffs and Counterclaim Defendants,
v.
AUTEL U.S. INC, a New York corporation, and AUTEL INTELLIGENT TECHNOLOGY CO., LTD, a Chinese corporation, Defendants and Counter Claimants,
v.
LAUNCH TECH CO. LTD, a Chinese corporation, INNOVA ELECTRONICS, CORP., a California corporation, and IEON CHEN, an individual, Counterclaim Defendants.

          OPINION AND ORDER GRANTING IEON CHENS' AND LAUNCH TECH CO. LTD'S MOTIONS TO DISMISS FOR LACK OF PERSONAL JURISDICTION (DKTS. 57 AND 65)

          TERRENCE G. BERG UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         In this this action alleging trade secret misappropriation and trademark and copyright infringement, Ford claims that Autel obtained access to Ford's proprietary automobile-diagnostic software, hacked it, copied proprietary information, and pasted that information into Autel's own diagnostic software.[1] Autel denies the allegations, and contends in response that Counterclaim Defendants Launch Tech Co. Ltd, [2] Innova Electronics, and Ieon Chen teamed up with Ford to craft and spread Ford's allegations to damage Autel's position in the marketplace-in essence to take out the competition. Third Party Defendants Chen and Launch have moved to dismiss the case against them on the ground that the Court lacks personal jurisdiction over them. Because Autel has failed to present a prima facie case that the Court has personal jurisdiction over Chen and Launch, Chen's and Launch's motions are GRANTED and Autel's claims against them are DISMISSED WITHOUT PREJUDICE.

         II. BACKGROUND

         Chen is the CEO of Innova, a Nevada corporation. Dkt. 57, Pg. ID 1595. He lives in California. Dkt. 57, Pg. ID 1595. He does no business in Michigan and has not entered into any contracts here. Dkt. 57, Pg. ID 1595. Twice, in connection with this matter, Chen affirmatively contacted a Michigan resident by email. On August 23, 2013, Chen emailed Colin Fielding at Bosch Automotive. Dkt. 57, Pg. ID 1595. And on October 3, 2013, Chen emailed Ken Dornoy of Ford. Dkt. 57, Pg. ID 1596. Both emails concerned information Innova had obtained relating to Ford's diagnostic software and Autel's diagnostic software. These emails set off a series of communications between Chen and Ford's lawyers, who are located in Utah. Dkt. 57, Pg. ID 1597.

         Launch is a Chinese corporation headquartered in Shenzhen, China. Dkt. 65, Pg. ID 1838. It manufactures automotive diagnostic tools and sells them throughout the world using third-party distributors. Dkt. 65, Pg. ID 1838. In the United States, Launch sells to two third-party distributors, Matco Tools and Launch Tech, Inc. Dkt. 65, Pg. ID 1838. Launch Tech, Inc. is a California corporation. Launch Tech, Inc. is not a subsidiary of Launch; their relationship is that of customer and vendor. Dkt. 65, Pg. ID 1839. Launch does no business in Michigan. Dkt. 65, Pg. ID 1839. It has neither offices nor employees here, owns no property here, has no bank accounts here, and neither ships nor sells here. Dkt. 65, Pg. ID 1839.

         Autel alleges that Launch asked Chen to establish an ongoing relationship with Ford and that Launch supplied information to Chen that Chen then relayed to Ford. Dkt. 38, Pg. ID 814. Autel further alleges that the information Launch supplied included a false claim: that Autel used a program called PARSEALL.EXE to hack Ford's diagnostic software. Dkt. 38, Pg. IDs 814-815. And Autel alleges that Launch, Chen, and Ford knew or should have known that the PARSEALL.EXE hacking claim was false. Dkt. 38, Pg. ID 815.

         Chen and Launch filed their motions to dismiss in September of 2016. Dkts. 57, 65. Autel opposed both motions. Dkts. 69, 75. Following full briefing, the Court held oral argument on November 30, 2016.

         III. ANALYSIS

         Chen and Launch argue that this Court lacks both general and specific jurisdiction over them. Dkt. 57, Pg IDs 1601-1615; Dkt. 65, Pg. IDs 1844-1849. Autel concedes that this Court lacks general jurisdiction, but maintains that it has specific jurisdiction over them. Dkts. 69, 75.

         A. Standard of Review.

         A federal court's exercise of jurisdiction over litigants must be both “(1) authorized by the law of the state in which it sits, and (2) in accordance with the Due Process Clause of the Fourteenth Amendment.” Neogen Corp. v. Neo Gen Screening, Inc., 282 F.3d 883, 888 (6th Cir. 2002). Michigan's long-arm statute, Mich. Comp. Laws §§ 600.715 (corporations) and 600.705 (individuals), governs issues of personal jurisdiction and gives the “maximum scope of personal jurisdiction permitted by the due process clause of the Fourteenth Amendment.” Chrysler Corp. v. Fedders Corp., 643 F.2d 1229, 1236 (6th Cir. 1981). Accordingly, if jurisdiction is proper under the Fourteenth Amendment, it is also proper under Michigan's long-arm statute.

         Due process is satisfied if a defendant has “sufficient minimum contacts” with the forum state “such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted). “But the plaintiff cannot be the only link between the defendant and the forum. Rather, it is the defendant's conduct that must form the necessary connection with the forum State.” Walden v. Fiore, 134 S.Ct. 1115, 1122 (2014) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985)). For the Court to find that it has specific personal jurisdiction over Chen and Launch, three factors must be met: (1) the defendant must “purposefully avail himself [or itself] of the privilege of acting in the forum state;” (2) “the cause of action must arise from the defendant's activities there;” and (3) “the acts of the defendant ... must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.” Southern Mach. Co. v. Mohasco Indus., Inc., 401 F.2d 374, 381 (6th Cir. 1968).

         B. ...


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