Free Sur-Reply Brief - District Court of Delaware - Delaware

Case 2:06-cv-00223-TJW-CE Document 114 Case 1:07-cv-00400-GMS Document 62

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION REMBRANDT TECHNOLOGIES, LP, Plaintiff, v. CHARTER COMMUNICATIONS, INC., CHARTER COMMUNICATIONS OPERATING, LLC, COX COMMUNICATIONS, INC., COXCOM, INC., COX ENTERPRISES, INC., CSC HOLDINGS, INC. AND CABLEVISION SYSTEMS CORPORATION, Defendants. § § § § § § § § § § § § § §

CASE NO. 2:06-CV-223 [TJW] JURY TRIAL REQUESTED

REMBRANDT TECHNOLOGIES, LP'S SURREPLY IN OPPOSITION TO COXCOM INC.'S MOTION TO DISMISS COMPLAINT FOR LACK OF PERSONAL JURISDICTION

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This Court has personal jurisdiction over CoxCom. Rembrandt has met its burden of showing that CoxCom has contacts with Texas sufficient to support both specific and general personal jurisdiction. CoxCom has failed to meet its burden of making a compelling showing that it would be unreasonable for this Court to exercise personal jurisdiction over it. A. Coxcom Has Sufficient Contacts with Texas for Personal Jurisdiction. The record before the Court shows that CoxCom has had purposeful contacts with Texas out of which Rembrandt's claims arise, thereby warranting specific personal jurisdiction. CoxCom does not deny, nor could it deny, that its contacts with Texas were purposeful and intended, or that Rembrandt's cause of action for patent infringement arises out of those purposeful contacts. The record also shows that CoxCom has had continuous and systematic contacts with the State of Texas, thereby warranting general personal jurisdiction. CoxCom has had a long history of substantial, continuous and systematic contacts with Texas, directing its cable operations at Texas residents since the 1970s. Opposition Brief at pp. 5-9. CoxCom concedes, as it must, that it operated a cable business in Texas until the end of 2003. Reply Brief at 2. The record further shows that CoxCom's cable operations in Texas continued until, at least, May 2006. Opposition Brief at 6-8. Contrary to Mr. Spalding's Declaration, the Asset Purchase Agreement with Cebridge stated that CoxCom and Cox Communications "owned and operated" the cable television systems being sold in Texas. Opposition Brief at 9 & n. 34. CoxCom suggests that this Court lacks personal jurisdiction because it no longer has cable operations in Texas. CoxCom states that it made a "business decision" in 2003 to stop operating cable companies in Texas and another Cox entity "assumed ownership" of those assets in December 2003. Whether CoxCom divested its Texas assets at the end of 2003 or in mid2006, as the Asset Purchase Agreement suggests, does not matter. Neither transaction allows REMBRANDT'S SURREPLY IN OPPOSITION TO COXCOM'S MOTION TO DISMISS
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CoxCom to avoid personal jurisdiction in this instance.

Rembrandt asserts claims against

CoxCom for patent infringement, including patent infringement that CoxCom committed in Texas prior to its decision to stop doing business here. The federal courts have not recognized a "business decision" exception to the personal jurisdiction rules. Once a defendant has created purposeful contacts with a state, it cannot erase those contacts by leaving that state. "[O]ne cannot defeat personal jurisdiction by a move away from the state in which the underlying events took place." Steel v. United States, 813 F.2d 1545, 1549 (9th Cir. 1987). General jurisdiction may be assessed by evaluating the defendant's

contacts with the state over a reasonable number of years up to the date the suit was filed. Alpine View Co, Ltd. v. Atlas Capco AB, 205 F.3d 208, 217 (5th Cir. 2000). Similarly, in the context of specific personal jurisdiction, "the determination of amenability to suit takes place at the time of the relevant contacts." Steel v. United States, 813 F.2d at 2549.1 In fact, accepting CoxCom's suggestion that moving out of state renders one's past contacts with the state effectively null and

1

The cases cited by CoxCom (Reply Brief at 3-4) are inapposite, and CoxCom's "backbone" argument is a red-herring. The crux of the matter is that CoxCom is clearly subject to specific personal jurisdiction in this case regardless of the "backbone." In its Reply, CoxCom did not attempt to rebut that argument. Rather, CoxCom's cases address only the issue of when limited, isolated contacts may constitute "continuous and systematic" contacts sufficient to establish general personal jurisdiction. Rembrandt does not rely solely on the "backbone," however, as a basis for asserting general personal jurisdiction. The "backbone" is only one of a myriad of CoxCom's contacts with Texas dating back to the 1970s: cable systems, interactive website services, Internet services, etc. Opposition Brief at pp. 5-9 and accompanying notes. Together, these contacts support general personal jurisdiction. CoxCom contends that, for jurisdictional purposes, its prior contacts "disappeared" when it left the state. The federal cases addressing this issue support Rembrandt. See Harlow v. Children's Hosp., 432 F.3d 50, 61 (1st Cir. 2005); Alpine View Co., Ltd. v. Atlas Copco AB, 205 F.3d 208, 217 (5th Cir. 2000); Steel v. United States, 813 F.2d 1545, 1549 (9th Cir. 1987). Finally, lest CoxCom's Reply Brief be read to contend otherwise, it is not the law that isolated contacts cannot support specific personal jurisdiction. See, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S. Ct. 2174 (1985), citing McGee v. Int'l Life Ins. Co., 355 U.S., at 223 ("So long as it creates a `substantial connection' with the forum, even a single act can support jurisdiction."). REMBRANDT'S SURREPLY IN OPPOSITION TO COXCOM'S MOTION TO DISMISS
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void - as if they never occurred - would eliminate specific jurisdiction. Specific jurisdiction allows redress for an injury caused in the state by a party no longer doing business in that state.2 B. This Court's Exercise of Personal Jurisdiction over CoxCom Is Reasonable. Having purposefully directed its activities at Texas residents, CoxCom must, in order to defeat jurisdiction, "present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Burger King 471 U.S. at 476-477 (emphasis added). The law affords this opportunity to defendants so that "jurisdictional rules may not be employed in such a way as to make litigation `so gravely difficult and inconvenient' that a party unfairly is at a `severe disadvantage' in comparison to his opponent." Id. CoxCom has not come close to making such a showing. CoxCom suggests that jurisdiction in this Court is unreasonable because Texas has no greater interest than Delaware in trying this case and that this case could be conveniently tried in Delaware, where Rembrandt has filed other suits. This Court's interest in exercising jurisdiction over unlawful acts of patent infringement that have occurred within its territorial jurisdiction over a prolonged period is neither attenuated nor lost because CoxCom thereafter left the State. Nor is this Court's interest in adjudicating Rembrandt's claims attenuated because Rembrandt is not a citizen of Texas. Rembrandt is not a citizen of Delaware, either. Moreover, the judicial case management statistics cited by CoxCom do not establish that Rembrandt's claims against CoxCom would be resolved more expeditiously in Delaware. To the

2

Harlow v. Children's Hosp., 432 F.3d at 61 ("`For purposes of specific jurisdiction, contacts should be judged when the cause of action arose, regardless of a later lessening or withdrawal.' A defendant cannot avoid jurisdiction by shrinking its contacts with the forum after the tort."); see also, Burger King, 471 U.S. at 476 ("So long as a commercial actor's efforts are `purposefully directed' toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.")
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REMBRANDT'S SURREPLY IN OPPOSITION TO COXCOM'S MOTION TO DISMISS

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contrary, the statistics suggest that this Court has more experience than the Delaware court in adjudicating patent cases and that this Court is able to dispose of a much heavier caseload in less time than the Delaware court.3 Moreover, neither case cited by CoxCom holds that the relative caseloads of the forum court and some other court in which the suit is not pending, but in which it might be filed, is a significant factor in determining whether exercise of personal jurisdiction by the forum court is unreasonable. The critical facts are that CoxCom chose to do business in this State for many years; Rembrandt's cause of action arises out of that business; Rembrandt chose to bring its action in this forum; and this suit will continue in this Court against the other defendants regardless of the outcome of this Motion. The interstate judicial system's interest in obtaining the most efficient resolution of this controversies is best served, therefore, by denying the Motion and allowing this suit to proceed with CoxCom as a party to it. C. The Agreement Does Matter.

CoxCom is wrong when it suggests that the August 25, 2006 Agreement between Rembrandt, Cox Enterprises, Inc., Cox Communications, and CoxCom (collectively, the "Cox Parties") had nothing to do with personal jurisdiction and has no bearing on the issues before the Court. The genesis of the Agreement was personal jurisdiction. It is undisputed that the Cox Parties asked Rembrandt to dismiss Cox Enterprises and Cox Communications "on the grounds that (i) the Court does not have personal jurisdiction over [them] and (ii) CoxCom is the Cox entity that operates and/or oversees the various cable businesses and franchises." Carter Aff. ¶ 2.
3

CoxCom's Reply at 7-8. Moreover, CoxCom ignores the fact that this case has been on file since June 2006, that it was transferred to this Court in September 2006, that CoxCom answered in October 2006, and that CoxCom did not move to dismiss until December 2006. If this case were dismissed and Rembrandt had to file elsewhere, it would lose the benefit of its time on this docket and would start at the end of the line on the next court's docket. REMBRANDT'S SURREPLY IN OPPOSITION TO COXCOM'S MOTION TO DISMISS
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Rembrandt agreed to dismiss CoxCom's parents in exchange for an agreement that CoxCom is the proper Cox entity to respond to Rembrandt's claims of infringement in this case, that Rembrandt could reach all of Cox's cable operations through CoxCom, and that Rembrandt did not need to add any other Cox entities or affiliates to assert its infringement claims against Cox's cable operations. CoxCom and its parents entered this agreement in August 2006 despite knowing that Cox Southwest had "assumed ownership" of CoxCom's cable assets at the end of 2003, and that CoxCom and Cox Southwest had sold those assets in May 2006. CoxCom should not be able to avoid the bargain it made by now claiming that the asset transfer to Cox Southwest insulates it from personal jurisdiction. Rembrandt is entitled to the benefit of its bargain.4 In conclusion, due process is clearly satisfied in this case. The fact that CoxCom allegedly decided to stop doing business in Texas in 2003 does not divest this Court of personal jurisdiction. Rembrandt has sued CoxCom for patent infringement, including infringement that occurred in Texas before CoxCom made or implemented that decision. The record contains no basis for concluding that CoxCom should not have reasonably anticipated having to defend in a Texas court claims arising out of its extensive cable operations in Texas. Moreover, CoxCom agreed to be the proper party to answer Rembrandt's patent infringement claims in this action and to be the party through whom all of Cox's cable operations could be reached.

4

The Agreement also allows this Court to consider all Cox cable operations in Texas in deciding whether it is fair to require CoxCom to defend against Rembrandt's infringement claims in this Court. This Court has jurisdiction over CoxCom based on its concession that it operated cable companies in Texas through 2003. The Asset Purchase Agreement with Cebridge establishes that CoxCom continued to have an interest in cable operations in Texas until May 2006. But even if it did not, the Court may consider the cable operations of any other Cox entity from 2004 to the present in determining whether it is fair to require CoxCom to defend against Rembrandt's infringement claims in this Court. The cases cited by CoxCom do not preclude the Court from considering the contacts of other Cox entities. CoxCom and its parents agreed that it is the proper party to defend all of Cox's cable operations against Rembrandt's infringement claims.
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REMBRANDT'S SURREPLY IN OPPOSITION TO COXCOM'S MOTION TO DISMISS

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DATED: February 5, 2007

Respectfully submitted,

/s/ Sam Baxter____________________ Sam Baxter State Bar No. 01938000 McKOOL SMITH, P.C. 505 E. Travis, Suite 105 Marshall, Texas 75670 Telephone: (903) 927-2111 Telecopier: (903) 927-2622 [email protected] Jeffrey A. Carter State Bar No. 03919400 McKOOL SMITH, P.C. 300 Crescent Court, Suite 1500 Dallas, Texas 75201 Telephone: (214) 978-4006 Telecopier: (214) 978-4044 [email protected] Travis Gordon White State Bar No. 21333000 McKOOL SMITH, P.C. 300 W. 6th Street, Suite 1700 Austin, Texas 78701 Telephone: (512) 692-8700 Telecopier: (512) 692-8744 [email protected] Robert M. Parker State Bar No. 15498000 Robert Christopher Bunt State Bar No. 00787165 PARKER & BUNT, P.C. 100 E. Ferguson, Suite 1114 Tyler, Texas 75702 Telephone: (903) 531-3535 Telecopier: (903) 533-9687 [email protected] [email protected]

REMBRANDT'S SURREPLY IN OPPOSITION TO COXCOM'S MOTION TO DISMISS

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Franklin Jones, Jr. State Bar No. 00000055 JONES & JONES, INC. 201 W. Houston Street P.O. Drawer 1249 Marshall, Texas 75670 Telephone: (903) 938-4395 Telecopier: (903) 938-3360 [email protected] ATTORNEYS FOR PLAINTIFF REMBRANDT TECHNOLOGIES, LP

CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was filed electronically in compliance with Local Rule CV-5(a). As such, this document was served on all counsel who have consented to electronic service. Local Rule CV-5(a)(3)(A). Pursuant to Fed. R. Civ. P. 5(d) and Local Rule CV-5(e), all other counsel of record not deemed to have consented to electronic service were served with a true and correct copy of the foregoing by U.S. mail, on this the 5th day of February, 2007. /s/ Sam Baxter_________________________ Sam Baxter

REMBRANDT'S SURREPLY IN OPPOSITION TO COXCOM'S MOTION TO DISMISS

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