Inamed Corp. v. Kuzmak

• Decision Date: 15 May 2001
• Docket Number: DEFENDANT-APPELLEE,No. 00-1292,PLAINTIFFS-APPELLANTS,00-1292
• Citation: 58 USPQ2d 1774,249 F.3d 1356
• Parties: (Fed. Cir. 2001) INAMED CORPORATION, INAMED DEVELOPMENT COMPANY AND BIOENTERICS CORPORATION,, v. LUBOMYR I. KUZMAK,
• Court: U.S. Court of Appeals — Federal Circuit

Page 1356

249 F.3d 1356 (Fed. Cir. 2001)

INAMED CORPORATION, INAMED DEVELOPMENT COMPANY AND BIOENTERICS CORPORATION, PLAINTIFFS-APPELLANTS, v. LUBOMYR I. KUZMAK, DEFENDANT-APPELLEE.

No. 00-1292

United States Court of Appeals for the Federal Circuit

May 15, 2001

Appealed from: United States District Court for the Central District of California, Judge Margaret M. Morrow

[Copyrighted Material Omitted] Christopher E. Chalsen, Milbank, Tweed, Hadley & McCloy Llp, of New York, New York, argued for plaintiffs-appellants. With him on the brief were Tedd W. Van Buskirk, Lawrence T. Kass, and Michael N. Nitabach.

Kevin R. Klein, Larson & Taylor, Plc, of Alexandria, Virginia, argued for defendant-appellee. With him on the brief was Ross F. Hunt, Jr..

Before Clevenger, Linn, and Dyk, Circuit Judges.

Clevenger, Circuit Judge

Inamed Corp., Inamed Development Co., and BioEnterics Corp. (collectively, "Inamed" or "appellants") appeal from an order of the United States District Court for the Central District of California dismissing their action for declaratory judgment against defendant Lubomyr I. Kuzmak, M.D., for lack of personal jurisdiction. Inamed Corp. v. Kuzmak, No. 99-2160 (C.D. Cal. Feb. 24, 2000) ("Inamed Corp."). Because we conclude that the district court erred in determining that it lacked personal jurisdiction over the defendant, we reverse and remand.

I.

This appeal stems from a declaratory judgment action related to four patents directed to devices and methods for the surgical treatment of obesity. The defendant-appellee, Dr. Kuzmak, is listed as a co-inventor of U.S. Patent No. 4,592,339 ("the '339 patent"), directed to an adjustable silicone gastric band used to constrict the size of a stomach, and U.S. Patent No. 4,696,288 ("the '288 patent"), directed to a method for performing gastric banding surgery using a calibrating tube and electronic sensor apparatus. Dr. Kuzmak is also listed as sole inventor of U.S. Patent No. 5,074,868 ("the '868 patent"), directed to a reversible gastric band, and U.S. Patent No. 5,226,429 ("the '429 patent"), directed to a method for performing a gastric banding operation via laparoscopic surgery. At all times relevant to this appeal, Dr. Kuzmak has been a resident of New Jersey. The appellants are all corporations with principal places of business in California.

Between 1989 and 1993, Inamed entered into four license agreements with Dr. Kuzmak involving his four patents. The fourth agreement, dated July 1, 1993 ("the 1993 Agreement"), superseded the three previous agreements between Dr. Kuzmak and Inamed. The 1993 Agreement granted Inamed an exclusive license to practice all four patents in exchange for royalty fees based on Inamed's commercial exploitation of the patents. From 1992 to 1998, Inamed made annual royalty payments to Dr. Kuzmak of more than $1.3 million based on the sale of gastric bands manufactured in California by Inamed. In 1998, Inamed attempted to renegotiate the license agreement. When these negotiations proved unsuccessful, Inamed terminated the contract on December 6, 1998.

Following the contract's termination, Dr. Kuzmak sent a letter to Inamed, dated December 21, 1998, containing the following language concerning three of the four patents:

For the record, we should note that we do not concede that the '339 patent is invalid and would, in fact, contend that [Inamed] infringes valid claims of the '339 patent.

Regarding the '429 patent, [Inamed] is clearly a willful infringer of this patent.

It also appears from what we have seen that [Inamed] induces infringement of the '288 patent and thus that [Inamed] is currently a willful infringer of the '288 patent as well.

On February 26, 1999, Inamed commenced a declaratory judgment action against Dr. Kuzmak in California, seeking a declaration of patent invalidity, unenforceability, and noninfringement. Inamed also alleged patent misuse and breach of contract. On April 5, 1999, Dr. Kuzmak filed a motion to dismiss for lack of personal jurisdiction. The district court subsequently found that Dr. Kuzmak's contacts with California were not sufficient to support the exercise of either general or specific jurisdiction over him, and thus dismissed the action. Instrumental to the district court's determination were the factual findings that Dr. Kuzmak's license agreements with Inamed had already been terminated, and that Dr. Kuzmak conducted all discussions concerning these agreements via telephone and mail from New Jersey. Inamed Corp., slip. op. at 10. Inamed now appeals.

II.

Whether a court has personal jurisdiction over a defendant is a question of law which we review de novo. Dainippon Screen Mfg. Co. v. CFMT, Inc., 142 F.3d 1266, 1269, 46 USPQ2d 1616, 1619 (Fed. Cir. 1998). Moreover, we apply the law of the Federal Circuit, rather than that of the regional circuit in which the case arose, when we determine whether a district court properly declined jurisdiction, because the jurisdictional question at issue here is "intimately involved with the substance of the patent laws." Akro Corp. v. Luker, 45 F.3d 1541, 1543, 33 USPQ2d 1505, 1506 (Fed. Cir. 1995).

Determining whether personal jurisdiction exists over an out-of-state defendant involves two inquiries: whether a forum state's long-arm statute permits service of process, and whether the assertion of personal jurisdiction would violate due process. Genetic Implant Sys., Inc. v Core-Vent Corp., 123 F.3d 1455, 1458, 43 USPQ2d 1786, 1788 (Fed. Cir. 1997) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-76 (1985)). However, because California's long-arm statute is coextensive with the limits of due process, the two inquiries collapse into a single inquiry: whether jurisdiction comports with due process. Dainippon, 142 F.3d at 1270, 46 USPQ2d at 1619-20; see also Cal. Civ. Proc. Code §§ 410.10 (Deering 2001); Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1320, 46 USPQ2d 1511, 1514 (9th Cir. 1998).

In the seminal case on personal jurisdiction, International Shoe Co. v. Washington, 326 U.S. 310 (1945), the Supreme Court held that "due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Id. at 316 (emphasis added). The first "minimum contacts" prong of the due process inquiry focuses on whether the defendant "has purposefully directed his activities at residents of the forum and the litigation results from alleged injuries that arise out of or relate to those activities." Burger King, 471 U.S. at 471-76. The second prong of "fair play and substantial justice" gives the defendant an opportunity to "present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Id. at 476-77. In the first prong, the burden of proof is on the plaintiff to establish "minimum contacts." However, in the second prong, the burden of proof is on the defendant to demonstrate the presence of other considerations that render the exercise of jurisdiction unreasonable. Akro, 45 F.3d at 1546, 33 USPQ2d at 1509.

In Akro, we summarized the Supreme Court's jurisprudence by setting forth a three-factor test to determine whether asserting jurisdiction over an out-of-state defendant comports with due process. The three factors are: (1) whether the defendant "purposefully directed" its activities at residents of the forum; (2) whether the claim "arises out of or relates to" the defendant's activities with the forum; and (3) whether assertion of personal jurisdiction is "reasonable and fair." Akro, 45 F.3d at 1545, 33 USPQ2d at 1508. The first two factors correspond with the "minimum contacts" prong of the International Shoe analysis, and the third factor corresponds with the "fair play and substantial justice" prong of the analysis. Id.

Inamed argues that Dr. Kuzmak's various contacts and activities directed at California residents make him amenable to personal jurisdiction there. We agree.

A.

In determining whether Dr. Kuzmak purposefully directed his activities at residents of California, the first and most important point of contact is the letter dated December 21, 1998, which Dr. Kuzmak sent to Inamed after the termination of their 1993 agreement. Although Dr. Kuzmak, through his counsel, actually sent the infringement letter to Inamed's attorney in New York, because Inamed's attorney was Inamed's agent for the purpose of receiving the correspondence, the fact that he was located in New York is immaterial. See Akro, 45 F.3d 1546, 33 USPQ2d at 1509. Dr. Kuzmak's contact is still considered to be directed at Inamed, a resident of California.

Dr. Kuzmak contends that his letter should be ignored because it could not have created an "objectively reasonable apprehension" that suit will be brought against Inamed. However, the letter clearly asserts that Inamed willfully infringed at least two of Dr. Kuzmak's patents and alleges infringement of another. The fact that Dr. Kuzmak chose to use the term "willful" in conjunction with "infringement" is significant. It indicates that he was aware--and perhaps intentionally communicating his awareness--of the treble damages and attorney fees to which he may be entitled in a successful infringement action against Inamed. See 35 U.S.C. §§§§ 284, 285 (1994). Hence, Dr. Kuzmak's challenge to the consideration of his infringement letter in our due process inquiry is simply without merit.

We have, however, repeatedly held that the sending of an infringement letter, without more, is insufficient to satisfy the requirements of due process when exercising jurisdiction over an out-of-state patentee. See, e.g., Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361, 47 USPQ2d 1192, 1197 (Fed. Cir. 1998) ("As this court has stated...