Brunswick Corp. v. Suzuki Motor Co., Ltd.

• Decision Date: 30 November 1983
• Docket Number: Civ. A. No. 82-C-654.
• Citation: 575 F. Supp. 1412
• Parties: BRUNSWICK CORPORATION, Plaintiff, v. SUZUKI MOTOR COMPANY, LTD., U.S. Suzuki Motor Corporation, Franklin Motors Incorporated, Mitsubishi Electric Corporation, and Hitachi Ltd., Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

575 F. Supp. 1412

BRUNSWICK CORPORATION, Plaintiff, v. SUZUKI MOTOR COMPANY, LTD., U.S. Suzuki Motor Corporation, Franklin Motors Incorporated, Mitsubishi Electric Corporation, and Hitachi Ltd., Defendants.

Civ. A. No. 82-C-654.

United States District Court, E.D. Wisconsin.

November 30, 1983.

COPYRIGHT MATERIAL OMITTED

Glenn O. Starke and Thomas M. Wozny, Andrus, Sceales, Starke & Sawall, Milwaukee, Wis., for plaintiff.

Duffern N. Helsing, Tustin, Cal., for defendants Suzuki Motor Co., Ltd. and U.S. Suzuki Motor Corp. Fred Wiviott, Whyte & Hirschboeck, Milwaukee, Wis., for defendant Franklin Motors Inc.

Walter S. Davis and Terrence J. Gaffney, Davis & Kuelthau, Milwaukee, Wis., and Paul L. Ahern, and Hoken S. Seki, Seki, Jarvis & Lynch, Chicago, Ill., for Mitsubishi Elec. Corp.

William J. Mulligan, Mulcahy & Wherry, Milwaukee, Wis., and John A. Fogarty, Jr., Kenyon & Kenyon, New York City, for defendant Hitachi Ltd.

DECISION AND ORDER

REYNOLDS, Chief Judge.

Brunswick Corporation ("Brunswick") is a manufacturer of outboard motors and stern drives and has its principal place of business at Fond du Lac, Wisconsin, in the Eastern District of Wisconsin. Brunswick owns various patents relating to outboard motors and related equipment, among them United States Letters Patents Nos. 3,805,759 and 4,088,108 relating to ignition systems, and 3,967,446 relating to an exhaust relief silencing apparatus.

On May 28, 1982, Brunswick brought this patent infringement action against Suzuki Motor Company, Ltd. ("Suzuki Motor"), a Japanese company; U.S. Suzuki Motor Corporation ("U.S. Suzuki"), the California subsidiary of Suzuki Motor; and Franklin Motors Incorporated ("Franklin Motors"), a local dealer of Suzuki products in Oak Creek, Wisconsin. All three of these defendants are charged with infringement of the three above-described patents by their manufacture and sale of Suzuki outboard motors. The suit also charges Hitachi Ltd. ("Hitachi"), a Japanese company, with contributory infringement of patents 3,805,759 and 4,088,108, and charges Mitsubishi Electric Corporation ("MELCO"), a Japanese company, with contributory infringement of patent 3,805,759. The contributory infringement allegations are based on the sale to Suzuki Motor of ignition systems manufactured by Hitachi and MELCO and incorporated in the Suzuki outboard motors. Jurisdiction of this court is predicated on 28 U.S.C. § 1338(a), and venue is alleged to be proper under 28 U.S.C. § 1400(b).

Franklin Motors has answered the complaint, denying infringement and the validity of the patents. MELCO and Hitachi have moved to dismiss this action based on lack of personal jurisdiction. U.S. Suzuki and its Japanese parent, Suzuki Motor, have moved to dismiss for improper venue.

I. FACTUAL BACKGROUND

The ignition systems alleged to infringe Brunswick's patents are manufactured by Hitachi and MELCO in Japan where they are sold to Suzuki Motor, another Japanese concern. Suzuki Motor then incorporates the ignition systems, along with the allegedly infringing exhaust silencer, into outboard motors it manufactures in Japan. Some of these outboard motors are sold in Japan to U.S. Suzuki, a wholly-owned California subsidiary of Suzuki Motor. U.S. Suzuki imports the outboard motors into California and sells at least some of them to Franklin Motors in Wisconsin where they are sold to the public.

II. PERSONAL JURISDICTION OVER HITACHI AND MELCO

Hitachi and MELCO are Japanese companies. Neither controls the disposition of its ignition systems once they are sold to Suzuki Motor in Japan; neither owns property or maintains a place of business in Wisconsin. Neither of these Japanese parents has an employee, a bank deposit, or a telephone listing in Wisconsin. Neither parent has entered contracts, made sales, performed services, or solicited business directly in Wisconsin.

Both Hitachi and MELCO manufacture products in Japan and sell them in the United States through subsidiaries that they partially or wholly own. Hitachi has seven such subsidiaries, among them the wholly-owned Hitachi America, Ltd. This subsidiary sold Hitachi products in Wisconsin during the years 1977-1982. It is agreed that these sales were not isolated or insubstantial in amount. The sales were made through two retail dealers of Hitachi products located in Wisconsin.¹

MELCO sells its products in the United States through its wholly-owned U.S. subsidiary, Mitsubishi Electric America, Inc. ("MEA"). MEA, in turn, sells MELCO products in Wisconsin through two additional subsidiaries wholly-owned by MEA: Mitsubishi Electric Sales America, Inc. ("MESA") and Mitsubishi Electronics America, Inc. ("MELA"). MESA and MELA sell MELCO products in Wisconsin to at least twenty-three retail dealers in the state. Between 1975 and 1982, MELCO's sales through its subsidiaries in Wisconsin amounted to $9,435,652.

MELCO and Hitachi each assert that they exercise no day-to-day operational control or general policy control over their wholly-owned subsidiaries. The subsidiaries have separate corporate charters, separate by-laws, separate accounting records, and boards of directors that meet separately. The control is interlocking only insofar as two Hitachi officers also hold honorary directorships with two United States subsidiaries.

None of the products MELCO and Hitachi sell through their subsidiaries in Wisconsin include outboard motor ignition systems or any other products accused of infringing the patents-in-suit.

Brunswick seeks personal jurisdiction directly over MELCO and Hitachi as Japanese parent companies. Accordingly, Brunswick has obtained extraterritorial service of process on MELCO and Hitachi in Japan. As an alternative ground for dismissal of the complaint, MELCO has challenged the sufficiency of Brunswick's extraterritorial service. The Court rejects this argument as without merit and regards service upon both Japanese parents as proper.

Brunswick contends that through the substantial, continuous, and systematic activities of their wholly-owned subsidiaries, Hitachi and MELCO are "doing business" in Wisconsin, and thus they are subject to personal jurisdiction in this court under section 801.05(1)(d) of Wisconsin's long-arm statute. Wis.Stat. § 801.05(1)(d).

Hitachi and MELCO argue to the contrary that their United States subsidiaries are separate, independent entities whose activities cannot be ascribed to their corporate Japanese parents, particularly when none of the Wisconsin contacts involving those subsidiaries is related to the patents in suit. Furthermore, even if Wisconsin's long-arm statute permits an exercise of in personam jurisdiction over Hitachi and MELCO, such an exercise of jurisdiction, it is argued, would contravene the due process limitations of the Fifth Amendment.²

For MELCO and Hitachi to be subject to this court's in personam jurisdiction, service of process on those defendants must be authorized under Wisconsin's long-arm statute and must not offend the due process clause of the Constitution.

A. The Wisconsin Long-Arm Statute

The plaintiff has the burden of establishing jurisdiction under the Wisconsin long-arm statute, but the provisions of the act are to be liberally construed in favor of exercising in personam jurisdiction. Lincoln v. Seawright, 104 Wis.2d 4, 9, 310 N.W.2d 596 (1981). The statute represents an attempt to codify the due process requirements of "minimum contacts" set forth in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Consequently, a showing of compliance with section 801.05 by the plaintiff raises a presumption of compliance with due process, a presumption the defendant is permitted to rebut. Lincoln, 104 Wis.2d at 10-11, 310 N.W.2d at 599.

Section 801.05(1)(d) of Wisconsin's long-arm statute provides as follows:

A court of this state having jurisdiction of the subject matter has jurisdiction over a person served in an action pursuant to s. 801.11 under any of the following circumstances:

(1) Local presence or status. In any action whether arising within or without this state, against a defendant who when the action is commenced:

* * * * * *

(d) Is engaged in substantial and not isolated activities within this state, whether such activities are wholly interstate, intrastate, or otherwise.

Wis.Stat. § 801.05(1)(d). This provision contemplates a requirement similar to that of "doing business" in Wisconsin, which calls not just for an isolated transaction but for "substantial" activities which are "continuous and systematic." Modern Cycle Sales, Inc. v. Burkhardt-Larsen Co., 395 F.Supp. 587, 588-89 (E.D.Wis.1975). The Wisconsin Supreme Court has identified five factors influencing whether contacts with the forum state are substantial and not isolated: (1) the quantity of the contacts; (2) the nature and quality of the contacts; (3) the source of the contacts and their connection with the cause of action; (4) the interests of the State of Wisconsin; and (5) the convenience of the parties. Nagel v. Crain Cutter Co., 50 Wis.2d 638, 648, 184 N.W.2d 876 (1970). These factors are to be balanced by the Court with an eye toward determining the reasonableness of subjecting the nonresident defendant to suit in Wisconsin.

The flexible language of this "doing business" provision was meant to define when a defendant is "present" in the forum state according to the less rigid, more qualitative due process standard mandated in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Personal jurisdiction under section 801.05(1)(d), Wis.Stat., demands that a defendant be sufficiently "present" in Wisconsin so that requiring him to come to this forum to defend himself does not offend traditional notions of fair play and substantial justice. Under the due process analysis of International Shoe, "presence" in the forum, so defined, is but one possible basis for personal jurisdiction, not necessary...