AFTG–TG, LLC v. Nuvoton Tech. Corp.

• Decision Date: 24 August 2012
• Docket Number: 2011–1307.,Nos. 2011–1306,s. 2011–1306
• Citation: 689 F.3d 1358,104 U.S.P.Q.2d 1217
• Parties: AFTG–TG, LLC and Phillip M. Adams & Associates, LLC, Plaintiffs–Appellants, v. NUVOTON TECHNOLOGY CORPORATION and Nuvoton Technology Corporation America, Defendants, and Pegatron Corporation, Pegatron Technology Service, Inc., and Unihan, Defendants–Appellees. AFTG–TG, LLC and Phillip M. Adams & Associates, LLC, Plaintiffs–Appellants, v. Winbond Electronics Corporation and Winbond Electronics Corporation America, Defendants, and ASUSTeK Computer Inc. and ASUS Computer International, Inc., Defendants–Appellees, and MSI Computer Corp. and Micro–Star International Corporation Ltd., Defendants.
• Court: U.S. Court of Appeals — Federal Circuit

689 F.3d 1358

104 U.S.P.Q.2d 1217

AFTG–TG, LLC and Phillip M. Adams & Associates, LLC, Plaintiffs–Appellants,

v.NUVOTON TECHNOLOGY CORPORATION and Nuvoton Technology Corporation America, Defendants,andPegatron Corporation, Pegatron Technology Service, Inc., and Unihan, Defendants–Appellees.

AFTG–TG, LLC and Phillip M. Adams & Associates, LLC, Plaintiffs–Appellants,

v.Winbond Electronics Corporation and Winbond Electronics Corporation America, Defendants,andASUSTeK Computer Inc. and ASUS Computer International, Inc., Defendants–Appellees,

and

MSI Computer Corp. and Micro–Star International Corporation Ltd., Defendants.

Nos. 2011–1306, 2011–1307.

United States Court of Appeals, Federal Circuit.

Aug. 24, 2012.

Gregory D. Phillips, Dumke Law, LLC, of Salt Lake City, UT, argued for plaintiffs-appellants. On the brief was Ezekiel R. Dumke, IV, Quinn Dumke LLC, of Salt Lake City, UT.

Ronald S. Lemieux, Cooley LLP, of Palo Alto, CA, argued for defendants-appellees. With him on the brief was Vidya R. Bhakar.

Before RADER, Chief Judge, NEWMAN, and O'MALLEY, Circuit Judges.

PER CURIAM opinion filed by the court. Chief Judge RADER concurs.

PER CURIAM.

AFTG–TG LLC (“AFTG”) and Phillip M. Adams & Associates, LLC (“Adams”) (collectively “AFTG”) appeal the United States District Court for the District of Wyoming's dismissal of defendants Pegatron Corporation (“Pegatron”), Pegatron Technology Service, Inc. (“PTS”), Unihan, ASUSTeK Computer Inc. (“ASUSTeK”), and ASUS Computer International (“ASUS”) for lack of personal jurisdiction. Because the record and pleadings demonstrate insufficient contacts with the forum state, this court affirms.

I.

AFTG filed two actions in the District of Wyoming, claiming that the defendants infringe several of its patents. Pegatron, PTS, and Unihan are named as defendants in one case; ASUSTeK and ASUS are named as defendants in the other. AFTG's allegations are the same in both cases. The complaints generally allege that the defendants' manufacturing, use, testing, and importation of computer chips, motherboards, computers, and other products directly infringe AFTG's patents and that the defendants knowingly and intentionally induce and contribute to others' infringement. A list of asserted claims for the patents-in-suit accompanies the infringement assertions. The complaint against Pegatron, PTS, and Unihan also alleges misappropriation of trade secrets. In both cases, the defendants filed motions to dismiss for lack of personal jurisdiction.

Because the district court relied on the complaint and written submissions without holding an evidentiary hearing, AFTG is required to allege only a prima facie showing that the defendants are subject to personal jurisdiction in Wyoming. Elecs. For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed.Cir.2003). For purposes of this evaluation, this court accepts uncontroverted allegations in the complaint as true and resolves factual disputes in the plaintiffs' favor. Id.

The district court evaluated its personal jurisdiction under Wyoming's long-arm statute. See Trintec Indus. v. Pedre Promotional Prods., Inc., 395 F.3d 1275, 1279 (Fed.Cir.2005). Its two-step analysis first looked to the state long-arm statute and then determined the proper application of due process requirements. Id. Wyoming's personal jurisdiction statute explicitly reaches to the full extent of the United States and Wyoming constitutions. See e.g.,Wyo. Stat. Ann. § 5–1–107(a) (“A Wyoming court may exercise jurisdiction on any basis not inconsistent with the Wyoming or United States constitution.”); Markby v. St. Anthony Hosp. Sys., 647 P.2d 1068, 1070 (Wyo.1982). Because Wyoming's long-arm statute incorporates the reach of due process, the district court collapsed the jurisdictional analysis into a single due process inquiry.

Personal jurisdiction takes two forms: specific and general. “Specific jurisdiction ‘arises out of’ or ‘relates to’ the cause of action even if those contacts are ‘isolated and sporadic.’ ... General jurisdiction arises when a defendant maintains ‘continuous and systematic’ contacts with the forum state even when the cause of action has no relation to those contacts.” LSI Indus. v. Hubbell Lighting, Inc., 232 F.3d 1369, 1375 (Fed.Cir.2000) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472–73, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), and Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414–16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984)). In the present case, general jurisdiction is not at issue; accordingly, the district court evaluated its specific jurisdiction over the defendants. Specific jurisdiction entails a three-part test: (1) whether the defendant purposefully directs activities at the forum's residents; (2) whether the claim arises out of or relates to those activities; and (3) whether assertion of personal jurisdiction is reasonable and fair. Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1231 (Fed.Cir.2010).

AFTG asserted similar allegations in the action against ASUSTeK and ASUS, and in the action against Pegatron, PTS, and Unihan. AFTG does not claim that these defendants engaged in direct sales in Wyoming. Instead, AFTG argues for jurisdiction under a “stream-of-commerce” theory, contending that the defendants sold their products to various companies, who in turn sold them to consumers in Wyoming.

The district court found AFTG's “bare formulaic accusation,” which simply parroted the statutory language, insufficient to establish personal jurisdiction. The district court reasoned that the complaint did not allege sufficient facts to demonstrate minimum contacts with Wyoming. In particular, the trial court found that AFTG's stream-of-commerce theory was mere conjecture. AFTG merely speculated that the defendants placed accused devices into the stream of commerce, knowing they would reach Wyoming. The record did not contain any evidence and the complaint did not allege any facts that demonstrated the defendants' contacts with Wyoming. In the absence of such allegations, the district court rejected AFTG's stream-of-commerce arguments.

In AFTG's action against Pegatron, PTS, and Unihan, the district court noted there was “no evidence or allegation that the infringing technologies or products actually reached Wyoming.... [T]he closest evidence is the contributory infringement and inducement claims that refer generally to users in Wyoming. These claims are insufficient to permit the exercise of the Court's jurisdiction.” Likewise, the district court determined that AFTG's misappropriation-of-trade-secrets claim against Pegatron, PTS, and Unihan did not establish jurisdiction. The complaint vaguely alleged improper conduct in the form of the knowing use of proprietary technology protected by trade secret. According to the district court, neither the record nor the complaint set forth anything more than a conclusory accusation without a claim of any specific use of trade secrets within Wyoming. Likewise, AFTG's supporting exhibits, which included copies of the patents, assignment, and incorporation records, related to standing and did not support personal jurisdiction. Because AFTG did not provide sufficient facts to support its claims and allegations of contacts with Wyoming, the district court determined that AFTG did not make a prima facie showing of personal jurisdiction and dismissed the claims against Pegatron, PTS, and Unihan without prejudice.

In the related action against ASUSTeK and ASUS, the district court reviewed declarations regarding those defendants' contacts with Wyoming. ASUS admitted making drop shipments to Wyoming addresses at the instruction of its third-party resellers. The resellers were not residents of Wyoming. Because the shipments were not initiated by ASUS, but at the direction of third-party resellers, the district court found no purposeful direction toward Wyoming. In addition, the district court noted that AFTG did not allege or otherwise assert that its infringement claims arose from or were otherwise related to these drop shipments. The record, moreover, contained no evidence that the shipments included infringing products. Given the extremely limited nature of ASUS's contacts, and the lack of any alleged contacts by ASUSTeK, the district court concluded that exercising personal jurisdiction in Wyoming was inappropriate. The district court, accordingly, dismissed the claims against ASUS and ASUSTeK.

We now review the district court's dismissal of both actions.

II.

The Supreme Court has yet to reach a consensus on the proper articulation of the stream-of-commerce theory. In the absence of such a consensus, this court has assessed personal jurisdiction premised on the stream-of-commerce theory on a case-by-case basis by inquiring whether the particular facts of a case support the exercise of personal jurisdiction. The district court employed that fact-driven approach in these actions and correctly found insufficient contacts to support the exercise of personal jurisdiction in Wyoming.

A.

The Supreme Court recently revisited the stream-of-commerce theory in McIntyre Machinery, Ltd. v. Nicastro, ––– U.S. ––––, 131 S.Ct. 2780, 180 L.Ed.2d 765 (2011). The Court, however, declined to resolve its long-standing split on that theory.

In McIntyre, the Court was asked to revisit questions left open in Asahi Metal Industry Co. v. Superior Court of California, Solano County, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). In Asahi, the Court's members disagreed whether a defendant could be subject to personal jurisdiction in a forum merely because the defendant had placed a product in the stream of commerce. Justice Brennan, writing for four Justices, evaluated personal jurisdiction under the stream-of-commerce theory by relying on considerations of foreseeability. Justice Brennan wrote that “jurisdiction premised on the placement of a product into the stream of commerce is consistent with the...