Case 3:05-cv-05097-GEB-TJB Document 14 Filed 03/06/06 Page 1 of 8 PageID: 166
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`NOT FOR PUBLICATION
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
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`Civ. No. 05-5097 (GEB)
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`MEMORANDUM OPINION
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`COMMENCE CORP.,
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`Plaintiff,
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`v.
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`SELLTIS, L.L.C., et al.,
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`Defendants.
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`BROWN, Chief Judge
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`This matter comes before the Court upon the motion of defendants Selltis, LLC
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`(“Selltis”), David Erath, Brian Gardner, and Mario Igrec (“Individual Defendants,” referred to
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`collectively with Selltis as “Defendants”) to dismiss the action by plaintiff Commence
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`Corporation (“Commence”) for copyright infringement, common law unfair competition,
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`common law conversion, and injunctive relief. Defendants seek to dismiss the action for lack of
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`personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), improper venue under Rule
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`12(b)(3) and 28 U.S.C. § 1406(a), and failure to state a claim upon which relief may be granted
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`under Rule 12(b)(6), or, in the alternative, to transfer venue to the Eastern District of Louisiana
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`under 28 U.S.C. §§ 1404(a) and 1406(a). For the reasons set forth below, Defendants’ motion to
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`dismiss is denied.
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`I. BACKGROUND
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`Selltis is a Louisiana limited liability company, with Erath serving as Chief Executive
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`Officer, Gardner serving as President, and Igrec serving as Chief Technology Officer.
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`Commence is the developer and exclusive owner of software known as Commence Version 4.1
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`and Larry Caretsky serves as President. Selltis negotiated a software license agreement with
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`Commence to allow Selltis to distribute Version 4.1. The agreement was based upon a one-time
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`payment of $300,000 from Selltis to Commence and the payment was made via wire transfer in
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`one lump sum payment. The initial term of the license agreement was to expire on December 31,
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`2003, and an amendment to the license agreement, signed by Erath on December 18, 2003, and
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`Caretsky on December 31, 2003, extended the term to June 30, 2004.
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`Commence filed its Complaint with this Court on October 21, 2005, alleging that despite
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`the expiration of the agreement, Defendants continue to use and distribute Version 4.1.
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`Defendants filed their motion to dismiss or transfer on January 4, 2006.
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`II. ANALYSIS
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`A.
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`Personal Jurisdiction Exists Over Defendants and Venue is Proper
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`Under Federal Rule of Civil Procedure 12(b)(3), a defendant may bring a motion to
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`dismiss for improper venue pursuant to 28 U.S.C. § 1406. The burden is on the defendant to
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`merely show that, “all relevant things considered, the case would be better off transferred to
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`another district.” In re United States, 273 F.3d 380, 388 (3d Cir. 2001). Although they allege
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`improper venue, Defendants appear to acknowledge that venue would be proper given personal
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`jurisdiction, which makes the determination of personal jurisdiction the optimal consideration.
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`(Defs.’ Br. at 4 n.2.)
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`Under Federal Rule of Civil Procedure 12(b)(2), a defendant may bring a motion
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`challenging the court’s right to exercise personal jurisdiction over them. “[O]nce the defendant
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`raises the question of personal jurisdiction, the plaintiff bears the burden to prove, by a
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`preponderance of the evidence, facts sufficient to establish personal jurisdiction.” Carteret Sav.
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`Bank, F.A. v. Shushan, 954 F.2d 141, 146 (3d Cir.), cert. denied 506 U.S. 817 (1992). In doing
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`so, the plaintiff must “establish[] jurisdictional facts through sworn affidavits or other competent
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`evidence” and may not “rely on the bare pleadings alone . . . .” Time Share Vacation Club v.
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`Atlantic Resorts, Ltd., 735 F.2d 61, 66 n.9 (3d Cir. 1984)(citation omitted).
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`Federal Rule of Civil Procedure 4(e) “authorizes personal jurisdiction over non-resident
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`defendants to the extent permissible under the law of the state where the district court sits.”
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`Mellon Bank (East) PSFS, Nat’l Ass’n v. Farino, 960 F.2d 1217, 1221 (3d Cir. 1992)(citation
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`omitted). Personal jurisdiction over a non-resident defendant is proper where “the defendant’s
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`conduct and connection with the forum State are such that he should reasonably anticipate being
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`haled into court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
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`(1980)(citations omitted). Thus, where “a corporation purposefully avails itself of the privilege
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`of conducting activities within the forum State, . . . it has clear notice that it is subject to suit
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`there . . . .” Id.
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`This Court has stated that “New Jersey’s long arm jurisdiction permits the assertion of in
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`personam jurisdiction as far as is constitutionally permissible under the Fourteenth Amendment.”
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`Eaton Corp. V. Maslym Holding Co., 929 F. Supp. 792, 796 (D.N.J. 1996)(citations omitted).
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`Thus, the existence of personal jurisdiction is limited only by due process concerns and can exist
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`where there is general or specific jurisdiction over the defendants. Id. General jurisdiction is
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`established by demonstrating that the defendant has systematic and continuous contacts with the
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`forum state.” Id. (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414
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`n.9 (1984)). Specific jurisdiction is established where the litigation arises out of or relates to the
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`defendant’s forum contacts, provided that the defendant has “certain minimum contacts with [the
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`forum] such that the maintenance of the suit does not offend traditional notions of fair play and
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`substantial justice.” Id. (citing Helicopteros, 466 U.S. at 414).
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`Here, Commence alleges that Selltis has sufficient minimum contacts with New Jersey
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`related to the cause of action for a finding of specific or general jurisdiction. Specifically,
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`Commence alleges that Defendants transact business in New Jersey, repeatedly contacted
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`Commence in New Jersey, that the Individual Defendants acted on behalf of Selltis in negotiating
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`the license agreement, and set up a sales office in New Jersey. Therefore, Plaintiff has
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`sufficiently established a prima facie case that personal jurisdiction exists. See Carteret Sav.
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`Bank, 954 F.2d at 142 n.1 (citations omitted); 2 James Wm. Moore et al., Moore’s Federal
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`Practice §12.31[5] (3d ed. 2005). Accordingly, Defendants’ motion to dismiss for lack of
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`personal jurisdiction is denied.
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`B.
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`Fiduciary Shield Doctrine Does Not Preclude Suit Against Individual Defendants
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`The Individual Defendants additionally allege that, even were the Court to find personal
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`jurisdiction against Selltis, personal jurisdiction does not extend to them because they acted as
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`business agents and are protected by the fiduciary shield doctrine. However, this Court recently
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`addressed a similar matter and adopted the Fourth Circuit’s reasoning in holding that “if the
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`complaint sufficiently alleges that the defendants had a direct personal involvement in a tort
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`committed in the forum state, then personal jurisdiction over the defendants does not conflict
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`with the fairness required by the due process clause.” In re Royal Dutch/Shell Transport Sec.
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`Litig., 380 F. Supp. 2d 509, 550 (D.N.J. 2005)(Bissell, C.J.)(citations omitted). Furthermore, the
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`Court recognized the limited reach of the fiduciary shield doctrine with respect to tort cases. Id.
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`The Court also noted the applicable exceptions to the fiduciary shield doctrine: the commission
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`of tortious acts in a corporate capacity and the violation of a statutory scheme that provides for
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`personal, as well as corporate, liability. Id. at 550 n.10.
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`This Court found the Fourth Circuit’s reasoning consistent with the Supreme Court’s
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`holding in Calder v. Jones, 465 U.S. 783 (1984). There, the Supreme Court concluded “that
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`while defendants’ contacts with the forum ‘are not to be judged according to their employer’s
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`activities there, . . . their status as employees does not somehow insulate them from jurisdiction.
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`Each defendant’s contacts with the forum State must be assessed individually.’” In re Royal
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`Dutch, 380 F. Supp. 2d at 550 (quoting Calder, 465 U.S. at 790). Therefore, with the allegations
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`against Selltis and the Individual Defendants of the commission of torts in New Jersey, the
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`fiduciary shield doctrine offers no protection to the Individual Defendants, especially considering
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`that the first exception is applicable here. As a result, this Court’s jurisdiction extends to the
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`Individual Defendants and Defendants’ motion to dismiss is denied.
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`C.
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`Copyright Registration is Prerequisite Only to Filing of Infringement Suit
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`Defendants contend that Commence’s Complaint should be dismissed because
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`Commence failed to register the copyright prior to the alleged acts and registration of a copyright
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`is a prerequisite for filing an infringement suit. Commence challenges Defendants’ assertion that
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`the crux of the Complaint is the infringement claim in that Commence has also brought unfair
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`competition and conversion claims that were not specifically challenged by Defendants.
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`“[N]o action for infringement of the copyright in any United States work shall be
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`instituted until preregistration or registration of the copyright claim has been made in accordance
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`Case 3:05-cv-05097-GEB-TJB Document 14 Filed 03/06/06 Page 6 of 8 PageID: 171
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`with this title.” 17 U.S.C. § 411. Further, this Court has adopted the Fifth Circuit’s holding that
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`the requirements of Section 411 are satisfied when an application for registration, fee, and
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`deposit are received at the Copyright Office. Sebastian Int’l., Inc. v. Consumer Contact (PTY)
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`Ltd., 664 F. Supp. 909, 912 (D.N.J. 1987), vacated on other grounds, 847 F.2d 1093 (3d Cir.
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`1988)(citing Apple Barrel Productions v. Beard, 730 F.2d 384, 386-87 (5th Cir. 1984)).
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`Defendants allege that Commence did not register its copyright until June 20, 2005, yet
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`the allegations of copyright infringement took place in 2003, 2004, and May 2005. Commence
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`alleges that registration is a prerequisite for filing an infringement action, but not a prerequisite
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`for ownership of a copyright, although acknowledging that registration is a prerequisite for the
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`award of statutory damages and attorney’s fees. See 17 U.S.C. § 412.
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`A House report accompanying Section 411 states that “a copyright owner who has not
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`registered his claim can have a valid cause of action against someone who has infringed his
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`copyright, but he cannot enforce his rights in the courts until he has made registration.” H.R.
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`Rep. No. 94-1476, at 157 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5773. Furthermore,
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`“[o]nce registration takes place, a subsequent infringement action may address infringing acts
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`that occurred either after or before that registration, provided that the filing of the infringement
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`action occurs within the term set in the statute of limitations.” 2 Melville B. Nimmer & David
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`Nimmer, Nimmer on Copyright § 7.16[B][1][a] (2005). Although no Third Circuit authority
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`squarely addresses that reasoning, there is similarly none that rejects it. Therefore, where, as
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`here, Plaintiff registered the copyright before filing the Complaint, a cause of action exists for the
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`alleged acts occurring prior to registration and Defendants’ motion to dismiss under Rule
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`12(b)(6) is denied.
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`Case 3:05-cv-05097-GEB-TJB Document 14 Filed 03/06/06 Page 7 of 8 PageID: 172
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`D.
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`Transfer of Case
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`With personal jurisdiction over Defendants established, venue is proper in the District of
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`New Jersey. The Court may, “[f]or the convenience of parties and witnesses, in the interest of
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`justice,” transfer this action to any other district where it might have been brought. 28 U.S.C. §
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`1404(a). Additionally, the decision to transfer must incorporate “all relevant factors to determine
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`whether on balance the litigation would more conveniently proceed and the interests of justice
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`better served by transfer to a different forum.” Rappoport v. Steven Spielberg, Inc., 16 F. Supp.
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`2d 481, 498 (D.N.J. 1998)(quoting Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir.
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`1995)). The burden is on the moving party “to show the proposed alternative forum is not only
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`adequate, but also more convenient than the present forum.” Id. at 499 (citations omitted).
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`Furthermore, the Third Circuit deems the plaintiff’s choice of forum a “paramount concern” and
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`“‘entitled to greater deference’ when a plaintiff chooses its home forum.” Id. (citations omitted).
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`Although Defendants cite the decision in D’Anton Jos, S.L. v. Doll Factory, Inc., 937 F.
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`Supp. 320 (S.D.N.Y. 1996), for support, the district court there acknowledged the substantial
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`weight given to plaintiff’s choice of forum in all cases but those where there is “little material
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`connection between the chosen forum and the facts and issues of the case.” Id. at 323. Given the
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`material connection of the facts and issues of the case with this forum, this Court finds that a
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`consideration of all factors, including the convenience of the parties and witnesses and the
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`interests of justice, weighs in favor of denying Defendants’ motion to transfer the case pursuant
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`to 28 U.S.C. § 1404(a).
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`III. CONCLUSION
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`For the foregoing reasons, Defendants’ motion to dismiss, or, in the alternative, to
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`transfer, is denied. Defendants must file their answer to Commence’s Complaint within twenty
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`(20) days of the entry of this Memorandum Opinion and accompanying Order.
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`Dated: March 3, 2006
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` s/ Garrett E. Brown, Jr.
`GARRETT E. BROWN, JR., U.S.D.J.
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