Jurisdictional Reach May Be Longer Than District Court Thought
February 02, 2001
Last Month at the Federal Circuit - March 2001
Judges: Dyk (author), Lourie, and Linn
In Delta Systems, Inc. v. Indak Manufacturing Corp., No. 00-1225 (Fed. Cir. Feb. 2, 2001) (nonprecedential decision), the Federal Circuit vacated the district court’s dismissal of Delta Systems, Inc.’s (“Delta”) patent infringement suit for improper venue and remanded the case to determine whether the federal due process requirements for the exercise of general jurisdiction had been met.
Delta initiated the action in the U.S. District Court for the Northern District of Ohio against Indak Manufacturing Corp. (“Indak”) for infringement of its design patent. Delta’s complaint arose from Indak’s manufacture in Illinois of two preproduction prototype plunger switches that allegedly infringed the patent. The record showed that Indak, an Illinois corporation with its principal place of business in Illinois, had never sold or offered for sale any of the allegedly infringing prototype switches in Ohio. Accordingly, Indak argued that it was not subject to personal jurisdiction in Ohio, and therefore, the action should be dismissed for improper venue.
According to the district court, personal jurisdiction over Indak was dependent on a two-part showing: (1) that Indak was subject to Ohio’s longarm statute; and (2) that the exercise of personal jurisdiction comported with the requirements of the federal Due Process Clause. The district court concluded that Delta had failed on part one of this showing because Indak simply was not subject to Ohio’s long-arm statute. Accordingly, the Court dismissed the action for lack of proper venue.
Reviewing the case de novo, the Federal Circuit agreed that there were insufficient contacts between Ohio and the alleged infringement to confer personal jurisdiction over Indak under the Ohio long-arm statute. But, the Court determined, the long-arm statute was not the only source of jurisdiction over an out-of-state defendant under Ohio law.
The Court cited LSI Industries, Inc. v. Hubbell Lighting, Inc., 232 F.3d 1369 (Fed. Cir. 2000), where it had recently held that a federal district court in Ohio could use the Ohio long-arm statute to exercise personal jurisdiction in an infringement suit over an out-of-state defendant who does business in the state, but did not commit the allegedly infringing acts in the state. In LSI, the Court stated that personal jurisdiction would be proper where the defendant is amenable to process in the forum state and where the exercise of personal jurisdiction complies with federal due process. A defendant would be amenable to service if the defendant could be subject to the jurisdiction of a court of general jurisdiction in the state in which the district is located. According to the Federal Circuit, a defendant conducting activity that meets the federal due process threshold for general jurisdiction is necessarily amenable to process under Ohio’s “doing business” standard as described in Ohio Supreme Court cases and is therefore subject to the district court’s personal jurisdiction.
Based on its decision in LSI, the Federal Circuit held that the district court may properly exercise personal jurisdiction over Indak if that company maintains the “continuous” and “systematic” contacts with Ohio sufficient to satisfy the standard for general jurisdiction as set forth by the United States Supreme Court. Accordingly, the district court decision was vacated and remanded to determine whether the federal due process requirements for the exercise of general jurisdiction would have been met.