M-I Drilling Fluids Uk Ltd. v. Dynamic Air Ltda

• Citation: 890 F.3d 995
• Decision Date: 14 May 2018
• Docket Number: 2016-1772
• Parties: M-I DRILLING FLUIDS UK LTD., M-I LLC, Plaintiffs-Appellants v. DYNAMIC AIR LTDA., Defendant-Appellee
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

890 F.3d 995

M-I DRILLING FLUIDS UK LTD., M-I LLC, Plaintiffs-Appellants

v.DYNAMIC AIR LTDA., Defendant-Appellee

2016-1772

United States Court of Appeals, Federal Circuit.

Decided: May 14, 2018

Sean Daniel Jordan, Jackson Walker LLP, Austin, TX, argued for plaintiffs-appellants. Also represented by Peter Carl Hansen ; Crystal J. Parker, Houston, TX; Scott J. Pivnick, Alston & Bird LLP, Washington, DC.

J. Derek Vandenburgh, Carlson, Caspers, Vandenburgh, Lindquist & Schuman, P.A., Minneapolis, MN, argued for defendant-appellee. Also represented by Alan Gary Carlson, Nathan D. Louwagie, Todd S. Werner.

Before Reyna, Hughes, and Stoll, Circuit Judges.

Concurring opinion filed by Circuit Judge Reyna.

Hughes, Circuit Judge.

M-I Drilling Fluids U.K. Ltd. and M-I LLC sued Dynamic Air Ltda. in the U.S. District Court for the District of Minnesota, alleging infringement of five U.S. patents. The district court dismissed the case for lack of personal jurisdiction. Because Rule 4(k)(2) of the Federal Rules of Civil Procedure supports the exercise of specific personal jurisdiction over Dynamic Air Ltda., we reverse and remand for further proceedings.

I

M-I Drilling is a private limited company organized under the laws of the United Kingdom and has its principal place of business in the United Kingdom. M-I LLC (together with M-I Drilling, M-I) is a U.S. company incorporated in Delaware with its principal place of business in Texas. M-I supplies systems and equipment used in handling drilling waste created, for instance, around oil rigs in offshore oil exploration platforms.

Relevant here, M-I Drilling owns five U.S. patents— U.S. Patent Nos. 6,702,539 B2, 6,709,217 B1, 7,033,124 B2, 7,186,062 B2, and 7,544,018 B2 (the asserted patents). M-I LLC is an exclusive licensee of the asserted patents. The patents are generally directed to methods, systems, and apparatuses used in the collection, conveyance, transportation, and storage of drilling waste created around undersea oil wells. The patents are claimed to cover, among other things, pneumatic conveyance systems installed around oil drilling rigs and used to transfer drill cuttings from the oil rigs to receiving ships.

Dynamic Air Ltda. (DAL) is a corporation organized under the laws of Brazil and has its principal place of business in Brazil. DAL is a subsidiary of Dynamic Air Inc. (DAI), a Minnesota corporation with its principal place of business in Minnesota.

Between October 2011 and January 2012, the Brazilian state-owned oil company Petróleo Brasileiro S.A. (Petrobras) requested proposals for the installation of pneumatic conveyance systems on ships to assist in the removal of waste created by drilling undersea oil wells. M-I Swaco do Brasil—Comércio Serviços e Mineração Ltda., M-I Drilling's "sister company and customer" in Brazil, and DAL both submitted their proposals. J.A. 13. DAL won the bid and thereafter designed, manufactured, and operated at least three pneumatic conveyance systems. In February 2013, DAL installed a conveyance system that pneumatically conveyed drill cuttings from "P-59," an offshore oil drilling rig, onto the HOS Resolution , a U.S.-flagged ship. In August 2013, DAL installed a similar conveyance system on board the HOS Pinnacle , another U.S.-flagged ship, to remove drill cuttings from "P-III," another offshore oil drilling rig.

M-I then sued DAL in the U.S. District Court for the District of Minnesota, alleging that DAL infringed the asserted patents by making, selling, and operating pneumatic conveyance systems such as those on the HOS Pinnacle and the HOS Resolution . DAL moved to dismiss for lack of personal jurisdiction under Rule 12(b)(2), arguing that the district court could not exercise specific personal jurisdiction over it under Rule 4(k)(2) consistent with due process. The district court granted that motion and dismissed the case after finding that, although the alleged infringing activities took place on U.S.-flagged ships that are themselves U.S. territory, the contract between Petrobras and DAL did not identify the ships on which DAL would be required to make installations. As such, in the district court's view, DAL did not purposefully avail itself of the privilege of conducting activities within the United States because its contacts with the HOS Pinnacle and the HOS Resolution were exclusively due to the unilateral activity of Petrobras. J.A. 19–20. The court also concluded that the exercise of specific personal jurisdiction over DAL would neither be reasonable nor fair. J.A. 22–25.

M-I appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II

Personal jurisdictional issues in patent infringement cases are reviewed de novo and under our precedent. Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip. Medico , 563 F.3d 1285, 1293 (Fed. Cir. 2009).

Where, as here, a "district court's disposition as to the personal jurisdictional question is based on affidavits and other written materials in the absence of an evidentiary hearing, a plaintiff need only to make a prima facie showing that defendants are subject to personal jurisdiction." Elecs. for Imaging, Inc. v. Coyle , 340 F.3d 1344, 1349 (Fed. Cir. 2003). Moreover, "[i]n the procedural posture of a motion to dismiss, a district court must accept the uncontroverted allegations in the plaintiff's complaint as true and resolve any factual conflicts in the affidavits in the plaintiff's favor." Id. ; see Graphic Controls Corp. v. Utah Med. Prods., Inc. , 149 F.3d 1382, 1383 n.1 (Fed. Cir. 1998) (noting that the district court's task in evaluating whether the plaintiff has made a prima facie showing of personal jurisdiction over the defendant requires construing the pleadings and affidavits in the light most favorable to the plaintiff).

Rule 4(k)(2) allows "a court to exercise personal jurisdiction over a defendant if (1) the plaintiff's claim arises under federal law, (2) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction, and (3) the exercise of jurisdiction comports with due process." Synthes , 563 F.3d at 1293–94. "The third requirement under Rule 4(k)(2) —the due process analysis—contemplates a defendant's contacts with the entire United States, as opposed to the state in which the district court sits." Id. at 1295. " Rule 4(k)(2), therefore, serves as a federal long-arm statute, which allows a district court to exercise personal jurisdiction over a foreign defendant whose contacts with the United States, but not with the forum state, satisfy due process." Id. at 1296.

Here, the parties only dispute the third requirement—whether exercise of personal jurisdiction over DAL comports with due process. "[D]ue process requires only that in order to subject a defendant to a judgment in personam, [the defendant must] have certain minimum contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ " Int'l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer , 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940) ). "Depending on their nature and number, a defendant's contacts with a forum can provide a court with general jurisdiction or specific jurisdiction." Synthes , 563 F.3d at 1297. M-I asserts only specific personal jurisdiction. Relevant to that determination, we apply a three-part test considering whether: (1) the defendant purposefully directed its activities at residents of the forum; (2) the claim arises out of or relates to the defendant's activities with the forum; and (3) assertion of personal jurisdiction is reasonable and fair. Id . The plaintiff bears the burden as to the first two requirements, and if proven, the burden then shifts to the defendant to "present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Burger King Corp. v. Rudzewicz , 471 U.S. 462, 477, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ; Grober v. Mako Prods., Inc. , 686 F.3d 1335, 1346 (Fed. Cir. 2012).

The district court found here that DAL's contacts with the HOS Pinnacle and the HOS Resolution were "due to the unilateral activity of [Petrobras] and random insofar as [they were] completely dependent on Petrobras's direction."¹ J.A. 19. Because Petrobras "had exclusive control over where the accused systems were installed," id. , the district court concluded that DAL had not " ‘purposefully availed itself of the privilege of conducting activities’ within the United States," J.A. 19–20. To bolster its analysis, the court relied on Bellisio Foods, Inc. v. Prodo Pak Corp. , a breach of contract action in which the district court concluded that the defendants had not purposefully directed their activities to Minnesota because the plaintiff asked for contract performance in Minnesota after negotiations over the contract formation had concluded. No. 07-CV-4520(PJS/JJG), 2008 WL 4867352, at *6–9 (D. Minn. Nov. 4, 2008). M-I argues that the court's analysis is inconsistent with our relevant precedent. We agree.

Our subject matter jurisdiction over this appeal is grounded in the commercial tort of patent infringement, not a contract dispute between the parties. In patent infringement disputes, our precedent makes clear that "the jurisdictional inquiry is relatively easily discerned from the nature and extent of the commercialization of the accused products or services by the defendant in the forum." Avocent Huntsville Corp. v. Aten Int'l Co. , 552 F.3d 1324, 1332 (Fed. Cir. 2008) (emphasis added). We have held, for instance, that a Brazilian defendant purposefully directed its allegedly infringing activities to the United States where its representative brought the accused products into the United States from Brazil to display the items at a trade show. Synthes , 563 F.3d at 1297–98 ; accord Nuance Commc'ns, Inc. v. Abbyy Software House , 626 F.3d 1222, 1234 (Fed. Cir. 2010) ("Abbyy...