Scope of Delaware Long-Arm Statute Is Unclear
January 19, 2005
Last Month at the Federal Circuit - February 2005
Judges: Dyk (author), Rader, and Friedman
In Commissariat a L’Energie Atomique v. Chi Mei Optoelectronics Corp., No. 04-1139 (Fed. Cir. Jan. 19, 2005), the Federal Circuit vacated a district court’s dismissal for lack of jurisdiction and remanded for limited jurisdictional discovery.
Plaintiff, Commissariat a L’Energie Atomique (“CEA”), sued Chi Mei Optoelectronics Corporation (“CMO”) and others in the U.S. District Court for Delaware for patent infringement of two patents directed to liquid crystal display (“LCD”) technology. CMO, a Taiwanese manufacturer of LCD products, moved to dismiss CEA’s complaint for lack of personal jurisdiction. CEA contended that the record was sufficient to establish jurisdiction, but if not, it should be allowed to conduct discovery. CMO argued that it had not transacted business nor performed any type of work in Delaware and that it had no operations in Delaware. However, CMO did not submit evidence to contradict CEA’s allegation that CMO derived substantial revenue from sales of its products in Delaware. Instead, CMO argued that the mere introduction of its products into the stream of commerce was not sufficient to establish personal jurisdiction under the Delaware long-arm statute. The district court found the record insufficient to satisfy the requirements for the longarm statute, because although CEA had demonstrated that CMO derived substantial revenue from its sales in North America, it had failed to demonstrate that it derived substantial revenue specifically from Delaware.
The Federal Circuit disagreed, concluding that the evidence presented by CEA sufficiently demonstrated that CMO sells a large volume of LCDs to companies that incorporate the displays into their final products and that these products are likely sold in Delaware in substantial quantities. However, the question of whether that showing is sufficient for personal jurisdiction could still not be answered by the Federal Circuit because the scope of the stream of commerce theory under Delaware law is not clear and the issue has yet to be directly addressed by the Delaware Supreme Court. Moreover, the Court ruled that the issue should not be resolved on the present record because the district court had declined to order jurisdictional discovery. The mere fact that Plaintiff had argued that the record was sufficient to establish jurisdiction without discovery was not a waiver of its rights to the discovery in the event the district court disagreed.