395 F.3d 1315 (Fed. Cir. 2005), 04-1139, Commissariat A L'Energie Atomique v. Chi Mei Optoelectronics Corp.

Docket Nº:04-1139.
Citation:395 F.3d 1315
Party Name:COMMISSARIAT A L'ENERGIE ATOMIQUE, Plaintiff-Appellant, v. CHI MEI OPTOELECTRONICS CORPORATION, Defendant-Appellee, and Dell Computer Corporation, Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Samsung Electronics Canada, Inc., Samsung International, Inc., Sun Microsystems, Inc., and Viewsonic Corporation, Defendants.
Case Date:January 19, 2005
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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395 F.3d 1315 (Fed. Cir. 2005)

COMMISSARIAT A L'ENERGIE ATOMIQUE, Plaintiff-Appellant,

v.

CHI MEI OPTOELECTRONICS CORPORATION, Defendant-Appellee,

and

Dell Computer Corporation, Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Samsung Electronics Canada, Inc., Samsung International, Inc., Sun Microsystems, Inc., and Viewsonic Corporation, Defendants.

No. 04-1139.

United States Court of Appeals, Federal Circuit

January 19, 2005

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Gaspare J. Bono, McKenna Long & Aldridge LLP, of Washington, DC, argued for plaintiff-appellant. With him on the brief were Song K. Jung, Matthew T. Bailey and Lora A. Brzezynski.

William J. Marsden, Jr., Fish & Richardson P.C., of Wilmington, Delaware, argued for defendant-appellee. With him on the brief was Eugene B. Joswick. Of counsel on the brief was Michael J. McKeon, of Washington, DC. Also of counsel were Brian T. Racilla, of Washington, DC, and Rex Huang, of Boston, Massachusetts.

Before RADER, Circuit Judge, FRIEDMAN, Senior Circuit Judge, and DYK, Circuit Judge.

DYK, Circuit Judge.

Plaintiff-Appellant Commissariat à l'Energie Atomique ("CEA") appeals the district court judgment dismissing its patent infringement action against Defendant-Appellee Chi Mei Optoelectronics Corporation ("CMO") for lack of jurisdiction. We hold that the district court erred in denying CEA's request for jurisdictional discovery, and therefore vacate the judgment of dismissal and remand for limited jurisdictional discovery and for further consideration of the district court's jurisdiction based on that discovery.

BACKGROUND

Plaintiff-Appellant CEA is a French government research agency that develops new technologies for sale and license to the private sector for commercial use. CEA owns U.S. Patent Nos. 4,701,028, and

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4,889,412, directed to technology for the design and manufacture of liquid crystal displays ("LCDs") and related products. An LCD is a type of flat panel display that is used in products such as computer monitors and television screens.

Defendant-Appellee CMO is a Taiwanese manufacturer of LCD products, including LCD modules that are alleged by CEA to infringe their patents. CMO is the third largest LCD module maker in the world. The company generally sells its modules directly to original equipment manufacturers ("OEM's") that subsequently incorporate the CMO modules into computer monitors. The computer monitors, in turn, are shipped to major brand name computer manufacturers, which then ship their products to a myriad of large retailers in the United States for sale to consumers, both online via the Internet, and in stores. CMO makes no direct sales to retailers.

CEA instituted this action in the United States District Court for the District of Delaware on May 19, 2003, against CMO and other companies, alleging infringement of the two patents. The action is still pending against the other parties and has been consolidated with additional actions brought by CEA against other LCD manufacturers, OEMs, name-brand computer manufacturers, and retailers. See, e.g., Commissariat à l'Energie Atomique v. Fujitsu Ltd., Civ. No. 03-1036 (D.Del. Nov. 13, 2003); Commissariat à l'Energie Atomique v. Best Buy Co. of Minn., Civ. No. 03-931 (D.Del. Oct. 6, 2003).

On July 15, 2003, CMO moved to dismiss CEA's complaint for lack of personal jurisdiction. At that time, the court had not yet set a discovery timetable for the case. CEA did not seek to conduct formal discovery before responding to the motion. CEA did submit documentary evidence with its response, and argued that the existing record was sufficient to deny the motion. CEA also argued that, if the record was not sufficient, it should be allowed to conduct discovery.

CEA presented industry data demonstrating that CMO sells over $1 billion of its products worldwide, including in the United States; that CMO supplies roughly 12% of the LCD market; that CMO is the number one supplier of 19" LCD monitors; and that North America accounts for approximately 30% of all computer monitor purchases. Industry data also indicate that CMO shipped approximately 2,950,000 LCD modules in the first five months of 2003. CEA further documented the existence of an established distribution network for LCD products, with published industry data on actual and forecasted sales that document the flow of displays from LCD suppliers such as CMO, through to OEMs, and on to name-brand computer manufacturers. Evidence was also presented of orders for devices incorporating CMO products placed, in Delaware, prior to the date CEA filed its complaint, and evidence of post-filing sales of such devices in Delaware. CEA did not produce any direct evidence of pre-filing sales of devices incorporating CMO products in Delaware. However, CEA alleged in its complaint that CMO derived "substantial revenue from services or things used or consumed within [Delaware]." (J.A. at 43.)

CMO submitted evidence that it had not transacted business itself, nor performed any type of work in Delaware, and that it had no operations in Delaware, no employees who work or reside in Delaware, held no license to do business in Delaware, and did not own, lease, use or otherwise possess any property in Delaware. However, CMO did not submit any evidence to contradict CEA's allegation that CMO derived substantial revenue from sales of its products to Delaware. Nor did CMO submit evidence to contradict CEA's assertion

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that its products, as incorporated by OEMs into computer monitors, were likely to reach Delaware. Instead, CMO argued that mere introduction of its products into the "stream of commerce," standing on its own, was not sufficient to establish personal jurisdiction under the Delaware long arm statute. 1

On September 22, 2003, the district court dismissed the action against CMO for lack of personal jurisdiction, pursuant to Rule 12(b) (2) of the Federal Rules of Civil Procedure. Commisseriat A L'Energie Atomique v. Chi Mei Optoelectronics Corp., 293 F.Supp.2d 423 (D.Del.2003). The court rejected arguments that sections 3104(c) (1), (3), and (4) of the Delaware long arm statute conferred jurisdiction.

CEA relied particularly on section 3104(c) (4), which establishes personal jurisdiction over a defendant that "[c]auses tortious injury in the State or outside of the State by an act or omission outside of the State if the person regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in the State." Del.Code Ann. tit. 10, § 3104(c) (4) (2003). Our cases make clear that the tortious injury caused by patent infringement occurs within the state where the allegedly infringing sales are made. N. Am. Phillips Corp. v. Am. Vending Sales, Inc., 35 F.3d 1576, 1579 (Fed.Cir. 1994); Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1571 (Fed.Cir. 1994).

CEA maintained that section 3104(c) (4) was applicable because CMO "derives substantial revenue" from its sales of LCD panels in the United States, including Delaware. The court found the record insufficient to satisfy the requirements of the long arm statute, because although CEA had demonstrated that CMO derived substantial revenue from its sales to North America, it had failed to demonstrate that it derived substantial revenue specifically from Delaware. 293 F.Supp.2d at 429. The court also found that under Delaware law, in order to maintain jurisdiction under a "stream of commerce theory ... the defendant must have an 'intent or purpose to serve the Delaware market with their [sic] product.' " Id. (quoting Boone v. Oy Partek Ab, 724 A.2d 1150, 1158...

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