Amburn v. Harold Forster Industries, Ltd.

• Decision Date: 14 December 1976
• Docket Number: Civ. A. No. 76-71002.
• Parties: Raymond D. AMBURN and Agro-Magnetics, Inc., Plaintiffs, v. HAROLD FORSTER INDUSTRIES, LTD. and Qsine Corporation, Ltd., Defendants.
• Court: U.S. District Court — Western District of Michigan

423 F. Supp. 1302

Raymond D. AMBURN and Agro-Magnetics, Inc., Plaintiffs, v. HAROLD FORSTER INDUSTRIES, LTD. and Qsine Corporation, Ltd., Defendants.

Civ. A. No. 76-71002.

United States District Court, E. D. Michigan, S. D.

December 14, 1976.

Owen E. Perry and Ernie L. Brooks, Southfield, Mich., for plaintiffs.

Emmett E. Eagan, Detroit, Mich., for defendants.

OPINION AND ORDER QUASHING SERVICE OF PROCESS OF DEFENDANTS

CORNELIA G. KENNEDY, District Judge.

The defendants in this action, two Canadian corporations, have moved for dismissal for lack of jurisdiction over the person of either defendant.

Plaintiffs are a Michigan resident and a Michigan corporation, the patentee and exclusive licensee of a patent on a device which magnetically treats seeds to attempt to increase crop yields. Defendants are accused of manufacturing and selling a similar device which is alleged in Count I of the Complaint to infringe the plaintiffs' patent. Count II charges unfair competition by defendants in the manner in which they have promoted their product.

No infringement is alleged to have occurred here in Michigan. As stated by the United States Supreme Court in Carbice Corp. v. American Patents Development Co., 283 U.S. 27, 33, 51 S.Ct. 334, 336, 75 L.Ed. 819 (1931):

Infringement, whether direct or contributory, is essentially a tort, and implies invasion of some right of the patentee.

The invasion of that right would occur where the infringing article is sold or used or where infringement is induced. See Honeywell, Inc. v. Metz Apparatewerke, 509 F.2d 1137 (7th Cir. 1975). None of these possible contacts are claimed to have occurred or existed in Michigan.

Further, defendants have established that they have not been present in Michigan, have never sold the infringing product in Michigan, and there is no claim that an infringing product has ever been brought to the State of Michigan for sale by others, nor have any orders been solicited in the State of Michigan. No agent of either defendant has claimed to have ever been in Michigan, or to have acted here either directly or indirectly. Thus, defendants neither have had nor presently have any contacts in the State of Michigan.

Further, it is not alleged or claimed that either defendant has engaged in unfair competition with plaintiffs in the State of Michigan.

The defendants do have representatives in Minnesota, Washington, Montana, Wisconsin, Iowa, Illinois and Indiana.

It is plaintiffs' contention that since they are Michigan residents and citizens and have been damaged by reason of defendants' sale or delivery of the infringing product in the states noted above and that since plaintiffs' infringement claim is a federally created cause of action, Fifth Amendment due process requirements can be met by aggregating defendants' contacts in all 50 states and service of process may be made under the Michigan long-arm statute, M.C. L.A. § 600.705(2).

Since neither defendant is or has been present in the State of Michigan, or had any contacts or agents here and neither can be served here, the motion to dismiss tests the due process limits of the federal court's jurisdiction, as well as restrictions or limitations on that jurisdiction by court rule or statute. Count I, the patent infringement claim, is a federal cause of action, hence the extent of the Court's jurisdiction is governed by federal law; service of process is likewise governed by federal law. However, since Rule 4(d)(7) and 4(e) of the Federal Rules of Civil Procedure permit service outside a state in the manner permitted by the statutes of the forum state, the Michigan long-arm statute and decisions construing it must also be considered.¹

Although the record reveals no contacts between defendants and the State of Michigan, it is clear that defendants do a substantial and continuous business in the United States, limited to the seven states named above. In similar circumstances, several courts have determined that personal jurisdiction is present on the basis of the defendants' "aggregate contacts" with the United States. One such court has defined the appropriate test, as follows:

When a federal court is asked to exercise personal jurisdiction over an alien defendant sued on a claim arising out of federal law, jurisdiction may appropriately be determined on the basis of the alien's aggregated contacts with the United States as a whole, regardless of whether the contacts with the state in which the district court sits would be sufficient if considered alone.

Cryomedics, Inc. v. Spembly, Ltd., 397 F.Supp. 287, 290 (D.Conn., 1975), citing Von Mehren and Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv.L. Rev. 1121, 1123-25 n. 6 (1966).

In the instant case the aggregate contacts of each defendant within the 50 states would appear to be sufficient to give the United States, as a sovereign, jurisdiction over defendants. Those contacts are sufficient for the Court to find that defendants invoked the benefits and protection of the laws of the United States, and it is fair for the United States to subject them to personal jurisdiction for their acts and conduct within the United States. As stated by Judge Wilson in his scholarly opinion in First Flight Co. v. National Car Loading Corp., 209 F.Supp. 730, 736 (E.D.Tenn., 1962)

One fundamental principle of the Anglo-American law of jurisdiction is that a sovereignty has personal jurisdiction over any defendant within its territorial limits, and that it may exercise that jurisdiction by any of its courts able to obtain service upon the defendant.

The jurisdiction of the United States to the extent it wishes to exercise it, is limited only by the due process requirements of the Fifth Amendment; i. e., that the defendant has such "minimum contacts" with the state that the exercise of jurisdiction does not "offend `traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945): Travelers Health Assn. v. Virginia, 339 U.S. 643, 70 S.Ct. 927, 94 L.Ed. 1154 (1950). Although these cases dealt with Fourteenth Amendment due process restrictions on the states, their reasoning applies equally to the Fifth Amendment,² since the sovereign powers of the United States are at least as broad as those of its states.

Although some decisions have limited the personal jurisdiction of federal courts to the same jurisdiction as the forum state and required minimum contacts in the forum state, the aggregate contacts test would seem the correct one. See Cryomedics, Inc. v. Spembly, Limited, 397 F.Supp. 287 (D.Conn., 1975), where it was applied in a patent infringement case; Holt v. Klosters Rederi A/S, 355 F.Supp. 354 (W.D.Mich., 1973), an action for death on the high seas; and Edward J. Moriarty & Co. v. General Tire and Rubber Co., 289 F.Supp. 381 (S.D. Ohio, 1967), an action under the Sherman Act.

The United States has, however, by rule, imposed restrictions upon the exercise of personal jurisdiction by its courts. Rule 4(f) of the Federal Rules of Civil Procedure provides:

Territorial Limits of Effective Service. All process other than a subpoena may be served anywhere within the territorial limits of the state in which the district court is held and, when authorized by a statute of the United States or by these rules, beyond the territorial limits of that state.

Congress has in some few instances such as antitrust cases provided for nation-wide service of process. It has not done so for patent infringement claims. Thus, where, as here, the defendants are foreign corporations, federal law generally requires, in view of Rule 4(f), that the corporation have an agent within the forum state.

Plaintiffs do not contest this general proposition but assert that pursuant to Rule 4(d)(7) service in the instant case may be made under the Michigan long-arm statutes, M.C.L.A. § 600.715(2) which provides:

Same; limited personal jurisdiction.

The existence of any of the following relationships between a corporation or its agent and the state shall constitute a sufficient basis of jurisdiction to enable the courts of record of this state to exercise limited personal jurisdiction over such corporation and to enable such courts to render personal judgments against such corporation arising out of the act or acts which create any of the following relationships:

(1) The transaction of any business within the state.

(2) The doing or causing any act to be done, or consequences to occur, in the state resulting in an action for tort.

(3) The ownership, use, or possession of any real or tangible personal property situated within the state.

(4) Contracting to insure any person, property, or risk located within this state at the time of contracting.

(5) Entering into a contract for services to be performed or for materials to be furnished in the state by the defendant.

The Michigan long-arm statute is an attempt by the state legislature to provide the broadest jurisdiction it could under the due process principle of International Shoe v. Washington, supra. The Committee comments on sections 701-741 of the Revised Judicature Act of 1961 leave no doubt that the legislature comprehended the effect of the principles established by International Shoe and its progeny. See Committee notes, RJA §§ 701-741, preceding M.C.L.A. § 600.701.

It remains, however, a state statute and the power of the State of Michigan is limited by the due process requirements of the Fourteenth Amendment. There must be some contact of a defendant with Michigan. It must have invoked the benefits or protection of the laws of the State of Michigan, if not directly at least indirectly through an agent as in Honeywell, Inc. v. Metz Apparatewerke, supra.

Plaintiffs urge that their citizenship and residence in the State of Michigan are sufficient. They have been injured and since the person of one plaintiff and the business operation of...