Minnesota Min. and Mfg. Co. v. Nippon Carbide Industries Co., Inc.

• Decision Date: 11 October 1995
• Docket Number: No. 94-3284,94-3284
• Citation: 63 F.3d 694
• Parties: MINNESOTA MINING and MANUFACTURING COMPANY, a Delaware Corporation, Appellant, v. NIPPON CARBIDE INDUSTRIES CO., INC., a Japanese Corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 694

63 F.3d 694

35 U.S.P.Q.2d 1791

MINNESOTA MINING and MANUFACTURING COMPANY, a Delaware Corporation, Appellant, v. NIPPON CARBIDE INDUSTRIES CO., INC., a Japanese Corporation, Appellee.

No. 94-3284.

United States Court of Appeals Eighth Circuit.

Submitted May 18, 1995.

Decided Aug. 11, 1995.

Rehearing and Suggestion for Rehearing En Banc Denied Oct. 11, 1995.

Michael Ciresi, Minneapolis, MN, argued (Deborah J. Palmer, Ronn B. Kreps, and Shelley Carthen Watson, on brief), for appellant.

Louis Touton, Los Angeles, CA, argued (Sally J. Whiteside, Minneapolis, MN, on brief), for appellee.

Before RICHARD S. ARNOLD, Chief Judge, WOOD, Jr., ^* Senior Circuit Judge, and FAGG, Circuit Judge.

RICHARD S. ARNOLD, Chief Judge.

The District Court dismissed a breach-of-contract action brought by Minnesota Mining & Manufacturing Co. (3M) against Nippon Carbide Industries Co., Inc. (NCI), after finding that NCI did not have the necessary minimum contacts with Minnesota to support personal jurisdiction. For reasons set forth below, we reverse and remand for proceedings consistent with this opinion.

I.

Minnesota Mining & Manufacturing Co., through the work of one of its employees, Dr. Joseph McGrath, invented cellular retroreflective sheeting. This sheeting is made up of cellular or encapsulated lenses which retroreflect light and illuminate signs without temporarily distracting a driver's sight. 3M applied for and received a United States patent, typically referred to as the McGrath Patent. In addition to the United States patent, 3M owns eleven foreign patents for the same invention. ¹ Four of those eleven patents are involved in this case.

In the late 1980s, 3M sued Seibu Polymer Chemical Industry Co., Ltd., and Seibulite International, Inc., in France, Australia, Canada, the Republic of China, the United Kingdom, and the United States, alleging that Seibu produced and sold a retroreflective sheeting known as Ultralite Grade (ULG) which infringed upon the McGrath Patent. In trials before the United States International Trade Commission and the High Court of Justice in the United Kingdom, the McGrath patent was held to be valid and infringed. NCI then bought part of the Seibu product line, including the retroreflective sheeting assets. In 1991, 3M and NCI began a series of negotiations in an attempt to resolve 3M's claims of patent infringement.

During those discussions, NCI and 3M personnel conducted several meetings: one meeting in Minnesota, one in Los Angeles, one in Honolulu, and two in Tokyo. Also there were extensive phone calls, letters, and facsimiles between Japan and St. Paul, Minnesota, 3M's headquarters. Drafts of an agreement were sent back and forth between the two companies as they were reviewed and edited. When the language of the contract finally had been agreed upon, the contract was signed by NCI and then sent to 3M. The contract became effective and binding upon the parties on the date 3M executed it in St. Paul, Minnesota, April 29, 1992. ²

After entering into this agreement, NCI developed and began making and selling a retroreflective-sheeting product called Nikkalite Ultralite Special Grade Sheeting (ULS). Recognizing that this new sheeting related to the earlier settlement discussions between the parties, NCI contacted 3M in September of 1992 to discuss whether ULS fell within the terms of the April 1992 contract.

This second set of negotiations took place over a year and a half with at least eight meetings in St. Paul and three other meetings in Tokyo. Some testing of the ULS sheeting occurred in Minnesota in the joint presence of NCI and 3M scientists. Throughout this time, numerous phone calls, letters, and facsimiles were sent between the two companies' principal places of business. Also, 3M found out that NCI had continued selling its surplus of ULG after it had executed the agreement. NCI states that 3M knew and orally agreed that NCI could sell out its surplus inventory.

When it became clear that the negotiations were not going to resolve 3M's and NCI's dispute about ULS and the surplus ULG, 3M filed this diversity action on March 7, 1994, against NCI. In Count I of the complaint, 3M claims that NCI breached the 1992 settlement agreement by continuing to make, use, or sell ULG sheeting in France, Italy, and Germany, where 3M owns unexpired equivalents to the McGrath Patent. Count II alleges that NCI has continued to make, use, or sell ULS, an encapsulated-lens retroreflective sheeting, in France, Germany, and Japan, where 3M has unexpired McGrath Patents. ULS, 3M alleges, is Covered Retroreflective Sheeting within the meaning of the agreement, so that by selling ULS, NCI has again violated the agreement.

NCI is a Japanese company with its principal place of business in Tokyo. NCI does not have an office or a mailing address in Minnesota and is not licensed to do business in the state. NCI does not have a bank account or any property in Minnesota. NCI does not have any employees working in Minnesota; NCI's employees have visited Minnesota only to meet with 3M during the negotiations we have described. 3M is a Delaware corporation, with its principal place of business in St. Paul, Minnesota. Each corporation operates internationally.

II.

To determine whether a court has personal jurisdiction over a nonresident defendant we ask two questions: (1) whether the applicable state long-arm statute (Minn.Stat. Sec. 543.19 (1988)) is satisfied; and (2) whether a court's exercise of jurisdiction is consistent with the Due Process Clause of the Fourteenth Amendment. Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1387 (8th Cir.1995).

Minnesota has consistently held that its legislature intended the long-arm statute to have the maximum extraterritorial effect allowed under the Fourteenth Amendment. Domtar, Inc., v. Niagara Fire Insurance Co., 518 N.W.2d 58, 60-61 (Minn.App.1994), aff'd, 533 N.W.2d 25 (Minn.1995). Because Minnesota has interpreted its long-arm statute to be coextensive with the limits of due process, we turn to consider whether the assertion of jurisdiction over this defendant offends due process.

Under the Due Process Clause, jurisdiction over a nonresident is proper only if the defendant has such minimum contacts with the forum state that the maintenance of a suit does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Whether the minimum contacts are sufficient depends on whether the defendant, by some act, "purposefully avail[ed] itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of its laws." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958)). This test is met if a defendant has deliberately engaged in activities, such as having created continuing obligations, within a state, and such actions invoke the benefits and protection of a state's laws. Id. at 475-76, 105 S.Ct. at 2183. One of the essential foundations of personal jurisdiction exists when a controversy is related to or arises out of a defendant's contacts with the forum, and there is a relationship among the defendant, the forum, and the litigation. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn. 8 & 9, 104 S.Ct. 1868, 1872 nn. 8 & 9, 80 L.Ed.2d 404 (1984); Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2579, 53 L.Ed.2d 683 (1977).

Once it has been decided that a defendant purposefully established contacts with a forum state, these contacts must be considered in light of other factors to determine whether the assertion of personal jurisdiction would agree with fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. at 320, 66 S.Ct. at 160. There are three primary factors which are to be considered: (1) the nature and quality of the contacts, (2) the quantity of the contacts, and (3) the relation of the cause of action to the contacts. Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 819 (8th Cir.1994). In addition to those considerations, there are two secondary factors as well: the interest of the forum state in the litigation and the convenience or inconvenience to the parties. Thompson v. Ecological Science Corp., 421 F.2d 467, 469 (8th Cir.1970). Because the first three factors are closely interrelated, we consider them together.

In 1991, 3M notified NCI that it had purchased a product line that was in...