Hollyanne Corp. v. TFT

• Citation: 199 F.3d 1304
• Parties: (Fed. Cir. 1999) HOLLYANNE CORPORATION, Plaintiff-Appellant, v. TFT, INC., Defendant-Appellee. 99-1229 DECIDED:
• Decision Date: 15 December 1999
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1304

199 F.3d 1304 (Fed. Cir. 1999)

HOLLYANNE CORPORATION, Plaintiff-Appellant, v. TFT, INC., Defendant-Appellee.

99-1229

United States Court of Appeals for the Federal Circuit

DECIDED: December 15, 1999

Appealed from: United States District Court for the District of Nebraska Chief Judge William G. Cambridge

Dennis L. Thomte, Zarley, McKee, Thomte, Voorhees & Sease, of Omaha, Nebraska, argued for plaintiff-appellant.

Bruce D. Vosburg, Fitzgerald, Schorr, Barmettler & Brennan, P.C., of Omaha, Nebraska, argued for defendant-appellee.

Before MICHEL, Circuit Judge, SKELTON, Senior Circuit Judge, and SCHALL, Circuit Judge.

MICHEL, Circuit Judge.

HollyAnne Corporation ("HollyAnne") appeals from the January 6, 1999 order of the United States District Court for the District of Nebraska, granting defendant TFT, Inc.'s ("TFT") motion to dismiss for lack of personal jurisdiction and improper venue and ordering the transfer of the case to the United States District Court for the Northern District of California. This appeal was submitted for our decision following oral argument on November 10, 1999. Because we hold that the district court properly dismissed for lack of personal jurisdiction but improperly transferred the case under 28 U.S.C. § 1404(a), we affirm the portion of the order dismissing the case but vacate the portion transferring the case.

BACKGROUND

HollyAnne, a Nebraska corporation, filed a patent infringement suit against TFT, a California corporation, in the United States District Court for the District of Nebraska on July 29, 1998. TFT filed a motion to dismiss for lack of personal jurisdiction and improper venue, or in the alternative, to transfer venue to the United States District Court for the Northern District of California. On January 6, 1999, the district court issued an order granting the motion to dismiss for lack of personal jurisdiction and improper venue and directing the clerk to transfer the case to the Northern District of California. HollyAnne filed a timely appeal with this court on January 28, 1999.

HollyAnne is the owner of United States Patent No. 4,575,750 for a "COMMUNICATIONS APPARATUS FOR USE WITH CABLE TELEVISION SYSTEMS" and United States Patent No. 5,548,323 for a "MULTIPLE INPUT PROCESSOR FOR CABLE TELEVISION HEAD END CONTROLLER." HollyAnne's original complaint alleged that TFT infringed those patents by making, having made, using, offering for sale or selling devices embodying those patented inventions. TFT sells products known as the "911 cable encoder/decoder" and the "cable home alert device." In its brief to this court, HollyAnne asserts that both of these products infringe its patents.

The trial court found that TFT was not qualified to do business in Nebraska, had no registered agent in the state, had no employees, bank accounts, offices, or real estate interests in the state, and had not sold the infringing products in the state. The court did find, however, the TFT had one independent sales representative in Nebraska, who also represented other companies, and that its officers had made one presentation of the allegedly infringing products in Nebraska. According to the district court's findings, however, neither the activities of the representative nor the presentation resulted in sales of the infringing products in Nebraska. These findings are not disputed by the parties.

Relying on a five-factor test articulated by the United States Court of Appeals for the Eighth Circuit in Wessels, Arnold & Henderson v. National Medical Waste, Inc., 65 F.3d 1427, 1432 (8th Cir. 1995), and the application of those factors by district courts in similar patent cases, the district court determined that it did not have personal jurisdiction over TFT. The court found that it did not have general jurisdiction because TFT's "contacts with Nebraska are not 'continuous or systematic.'" The court further reasoned that it did not have specific jurisdiction because "the infringement litigation does not come about solely because of the Defendant's contacts with Nebraska." In addition, referencing 28 U.S.C.§ 1404(a), the district court judge determined that California would be a more convenient forum for the case and transferred it to the United States District Court for the Northern District of California.

HollyAnne challenges the dismissal of the case for lack of personal jurisdiction and improper venue. In addition, HollyAnne asserts that the transfer of venue to the United States District Court for the Northern District of California was void because the district court did not have the power to both dismiss and transfer a case. TFT argues that a decision by this court on personal jurisdiction "is moot, since in either case the transfer will take effect."

Because this was a civil action arising under an act of Congress relating to patents, the district court had subject matter jurisdiction under 28 U.S.C. § 1338(a). This court's jurisdiction is based on 28 U.S.C. § 1295(a)(1).

DISCUSSION

HollyAnne argues that the district court should have applied the three-prong minimum contacts test articulated by this court in Akro Corp. v. Luker, 45 F.3d 1541, 1545-46, 33 USPQ2d 1505, 1508-09 (Fed. Cir. 1995), rather than the five-prong Eighth Circuit test spelled out in Wessels, Arnold & Henderson, 65 F.3d at 1432. TFT does not dispute that Federal Circuit precedent controls personal jurisdiction determinations for patent cases in federal district court. TFT asserts, however, that even under Akro the federal district court in Nebraska did not have personal jurisdiction.

TFT also argues that the personal jurisdiction question is not properly appealed to this court because the district court, "at the same time and in the alternative [to its order dismissing the suit for lack of jurisdiction] ordered the transfer of the case to the United States District Court for the Northern District of California." Because a holding that the transfer of venue was proper would render a decision by this court on personal jurisdiction moot, we address the transfer question first.

I. TRANSFER OF VENUE

The district court determined that, in patent cases, venue and personal jurisdiction involve the same analysis and do not need to be considered separately. It also determined that in this case there was no personal jurisdiction, and presumably, therefore, that venue was improper. Referencing 28 U.S.C. § 1404(a), the trial judge found (1) that the facts giving rise to the patent infringement case occurred in another state; (2) the defendant's documents were located in another state; and (3) the convenience of the witnesses weighed in TFT's favor. Thus, it transferred the case to the Northern District of California.

TFT argues that the district court had the power to transfer the case despite its finding of no personal jurisdiction. HollyAnne counters that the district court does not have the power to transfer a case once the district court has dismissed it for lack of personal jurisdiction. HollyAnne argues that 28 U.S.C. § 1406(a) allows the court in which venue is not proper to either dismiss or transfer a case, not both. TFT asserts that the court is not prevented from deciding to dismiss and transfer.

A district court can transfer venue under either 28 U.S.C.§ 1404(a) or 28 U.S.C § 1406(a). Section 1404(a) allows a court where venue is proper to transfer a case to a more convenient forum. Section 1406(a) allows a court to either dismiss or transfer a case when venue is improper. See Martin v. Stokes, 623 F.2d 469, 471 (6th Cir. 1980).¹ In this case the district court determined that venue was improper because personal jurisdiction did not lie; thus the case was dismissed. Then the district court determined, apparently in the alternative, that the Northern District of California was a more convenient forum and ordered the case transferred pursuant to section 1404(a). Even if the court intended to transfer the action under section 1406(a), that action is not proper when combined with a dismissal. Accordingly, we hold that once it had decided that it lacked personal jurisdiction and had dismissed the complaint, the district court could not properly transfer the case to the Northern District of California.²

Because the transfer was improper as unauthorized under section 1404(a) and contrary to section 1406(a), we vacate the order transferring the case to the Northern District of California.

II. Personal Jurisdiction

Whether or not a court has personal jurisdiction over a party is a question of law that this court reviews de novo. See 3D Sys. v. Aarotech Labs., Inc., 160 F.3d 1373, 1376, 48 USPQ2d 1773, 1775 (Fed. Cir. 1998). Personal jurisdiction over an out-of-state defendant is proper if the forum state's long-arm statute permits the assertion of jurisdiction. See id. In interpreting a long-arm statute this court defers to the forum state's highest court. Id. at 1377, 48 USPQ2d at 1775. Nebraska's Supreme Court has interpreted its state's long-arm statute as coextensive with the limits of due process. See Crystal Clear Optical, Inc. v. Silver, 531 N.W.2d 535, 539 (Neb. 1995). Thus, the district court properly defined the question before it as whether the assertion of personal jurisdiction over TFT was a violation of due process under the Constitution of the United States.

The parties agree that Federal Circuit precedent, not the personal jurisdiction law of the Eighth Circuit as applied by the district court, controls in this case. In addition, HollyAnne does not dispute the district court's finding that it did not have general jurisdiction over TFT. Thus the question before this court is whether specific jurisdiction over TFT in Nebraska was established according to the Federal Circuit test.

In Akro this court outlined a three-prong test for determining if specific jurisdiction exists: (1) whether the defendant purposefully directed its activities at the residents of the forum; (2) whether...