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Participants at Trade Shows in the United States Who Display Potentially Infringing Products Are Subject to the Jurisdiction of Federal Courts Under the Due Process Clause

April 17, 2009

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Last Month at the Federal Circuit - May 2009

Judges: Schall (author), Friedman, Bryson

[Appealed from: S.D. Cal., Judge Lorenz]

In Synthes (U.S.A.) v. G.M. dos Reis Jr. Ind. Com. de Equip. Medico, No. 08-1279 (Fed. Cir. Apr. 17, 2009), the Federal Circuit reversed and remanded the district court’s dismissal of the suit based on lack of personal jurisdiction over G.M. dos Reis Jr. Ind. Com. de Equip. Medico (“GMReis”), holding that under Fed. R. Civ. P. 4(k)(2), GMReis’s contacts within the United States as a whole were sufficient to give a federal district court personal jurisdiction over GMReis.

Synthes (U.S.A.) (“Synthes”), a medical device company with its principal place of business in Pennsylvania, served GMReis, a Brazilian company with headquarters in Brazil, with a summons and complaint at a trade show in San Diego, California. The complaint accused GMReis of infringing U.S. Patent No. 7,128,744 (“the ’744 patent”). The ‘744 patent covered certain aspects of devices for securing bone plates to immobilize bones to promote healing of fractures.

At the trade show, GMReis displayed samples of five locking bone plates, though they also displayed prominent signs stating that the bone plates were not approved by the FDA and were not for sale in the United States. GMReis also attended seven trade shows in the United States since 2003. GMReis sold one product for veterinary use to a customer in the United States, purchasing some parts and products from the United States for use and sale in Brazil, consulting with two American companies regarding potential purchase and development of components for nonaccused products, and receiving inquiries from two U.S. companies after the 2007 trade show asking whether GMReis’s products were available for purchase in the United States, to which GMReis responded they were not.

The district court dismissed the suit, holding that under Fed. R. Civ. P. 4(k)(2), GMReis did not have sufficient contacts within the United States to warrant either general personal jurisdiction or specific personal jurisdiction. Synthes appealed.

The Federal Circuit applied Rule 4(k)(2) based on a three-part test, which permits a court to exercise jurisdiction over a foreign defendant if (1) the claim against the defendant arises under federal law, (2) the defendant is not subject to the personal jurisdiction of any state court of general jurisdiction, and (3) the exercise of personal jurisdiction comports with due process.

The Court stated that the claim arose out of federal law, as it was a claim for patent infringement. Further, the Court noted that neither party disputed GMReis’s contention that it is not subject to personal jurisdiction in any forum in the United States. Under these circumstances, the Court applied a due process analysis under Rule 4(k)(2) and considered GMReis’s contacts with the nation as a whole.

To determine whether general personal jurisdiction applied, the Court analyzed whether GMReis maintained continuous and systematic general business contacts with the forum, even if the cause of action had no relation to those contacts. The Federal Circuit agreed with the district court that the district court did not have general personal jurisdiction over GMReis based on GMReis’s minimal contacts, which included attendance at trade shows, purchases of parts and a machine, the sale of a product for veterinary application to one customer, and a pair of consultations about product development. The Court held these contacts within the United States were not “continuous and systematic general business contacts.” Slip op. at 19.

However, the Court disagreed with the district court’s holding that it lacked specific personal jurisdiction over GMReis. The Court determined that by bringing bone plates into the United States and displaying them at a booth at the trade show in San Diego to permit attendees of the meeting to view the plates, GMReis purposefully directed its activities in the United States. The Court noted that although GMReis informed the trade show participants that its products were not for sale, it still purposefully directed its travel into the United States and displayed its products at the trade show attended by U.S. residents.

The Court further determined that the claim for patent infringement arose out of GMReis’s activities within the forum, because they arose directly out of GMReis’s bringing the locking bone plates into the United States, displaying them at the trade show, and trying to generate interest in the products among attendees of the trade show. The Court noted that the issue of personal jurisdiction did not require a determination that GMReis’s activities rose to the level of patent infringement, but merely required a showing that the exercise of jurisdiction over GMReis comports with due process.

Finally, the Court analyzed whether jurisdiction over GMReis was reasonable and fair, relying on five factors: (1) the burden on the defendant, (2) the forum’s interest in adjudicating the dispute, (3) the plaintiff’s interest in obtaining convenient and effective relief, (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the states in furthering fundamental substantive policies.

The Court held with respect to factor (1) that any burden on GMReis requiring it to travel the distance between Brazil and the United States was tempered by its willingness and ability in the past to travel to the United States. The Court additionally held that factors (2)-(4) weighed in favor of jurisdiction in this case. Finally, with respect to factor (5), the Court noted, “[T]he forum, the United States, has an interest in furthering the social policy favoring the exchange of technological ideas and business.” Id. at 24. The Court further noted that interested parties, foreign and domestic, are welcome to attend trade shows in the United States, set up booths, and discuss their products. If, however, a party brings allegedly infringing products to a trade show, the Court did not see the Due Process Clause of the Fifth Amendment standing in the way of a district court’s exercise of jurisdiction over the party.

As a result, the Federal Circuit held that the district court had personal jurisdiction over GMReis, reversed the district court’s judgment dismissing Synthes’s complaint for lack of personal jurisdiction, and remanded the case to the district court for further proceedings.

Summary authored by Bradley E. Edelman, Esq.