Maxchief Invs. Ltd. v. Wok & Pan, Ind., Inc.

• Decision Date: 29 November 2018
• Docket Number: 2018-1121
• Citation: 909 F.3d 1134
• Parties: MAXCHIEF INVESTMENTS LIMITED, Plaintiff-Appellant v. WOK & PAN, IND., INC., Defendant-Appellee
• Court: U.S. Court of Appeals — Federal Circuit

909 F.3d 1134

MAXCHIEF INVESTMENTS LIMITED, Plaintiff-Appellant

v.WOK & PAN, IND., INC., Defendant-Appellee

2018-1121

United States Court of Appeals, Federal Circuit.

Decided: November 29, 2018

Michael J. Bradford, Luedeka Neely Group, PC, Knoxville, TN, argued for plaintiff-appellant. Also represented by Mark P. Crockett.

Patricia Louise Ray, D&R IP Law Firm, APLC, Alhambra, CA, argued for defendant-appellee. Also represented by Tony Wong, Monterey Park, CA.

Before Dyk, Reyna, and Hughes, Circuit Judges.

Dyk, Circuit Judge.

Maxchief Investments Limited ("Maxchief") appeals from the judgment of the District Court for the Eastern District of Tennessee. The district court dismissed Maxchief’s declaratory judgment action against Wok & Pan, Ind., Inc. ("Wok") for lack of personal jurisdiction and dismissed Maxchief’s tortious interference claim for lack of subject matter jurisdiction. Because Wok lacked sufficient contacts with the forum state of Tennessee for personal jurisdiction as to both the declaratory judgment claim and the tortious interference claim, we affirm.

BACKGROUND

Maxchief makes plastic folding tables. It has its principal place of business in China and distributes one of its tables—the UT-18 table—exclusively through Meco Corporation ("Meco"), which is located in Greenville, Tennessee. Meco sells the UT-18 tables to retailers such as Staples, Inc. ("Staples") and The Coleman Company ("Coleman"), which in turn sell the tables to consumers.

Wok competes with Maxchief in the market for plastic folding tables, and also has its principal place of business in China. Wok is the owner of U.S. Patent Nos. 5,957,061, 8,881,661, 8,931,421, and 9,089,204 (collectively, "the Wok patents"), which are directed to folding tables.

Two separate actions are relevant here. In February 2015, Wok filed suit against Maxchief’s customer, Staples, in the Central District of California, alleging that Staples’ sale of Maxchief’s UT-18 table infringed the Wok patents. See Wok & Pan, Ind., Inc. v. Staples, Inc. , No. 2:15-cv-00809 (C.D. Cal.) ("the Staples action"). Staples requested that Meco, the distributor of the table, defend and indemnify Staples. Meco in turn requested that Maxchief defend and indemnify Meco and Staples. The Staples action is stayed pending the outcome of this case.

Separate from the Staples action, Maxchief filed this action against Wok in the Eastern District of Tennessee. In its amended complaint, filed on September 2, 2016, Maxchief sought declarations of non-infringement or invalidity of all claims of the Wok patents. The complaint also alleged tortious interference with business relations under Tennessee state law. Wok moved to dismiss all claims for lack of personal jurisdiction.¹ There is no contention here that Wok is subject to general jurisdiction in Tennessee. Maxchief claims only that Wok is subject to specific personal jurisdiction.

On September 29, 2017, the district court dismissed the declaratory judgment claim for lack of personal jurisdiction. Maxchief Invs. Ltd. v. Wok & Pan, Ind., Inc. , No. 2:15-CV-153, 2017 WL 6601921 (E.D. Tenn. Sept. 29, 2017). The court held that Maxchief failed to allege that Wok had sufficient minimum contacts with Tennessee, because although Wok "sought to enforce the patents against other parties in other courts," Wok "did not seek to enforce [its] patents in the forum state of Tennessee." Id . at *7.

With respect to the state law tortious interference claim, the district court noted that Maxchief had not "explicitly allege[d]" that the court had subject matter jurisdiction over this claim, and indicated that amendment of the complaint would be futile and unduly prejudicial to Wok because "there is no independent federal basis for subject matter jurisdiction on this claim." Id. at *9–10.

Maxchief timely appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

DISCUSSION

The central issue in this case is whether there is specific personal jurisdiction over Wok for the declaratory judgment and state law tortious interference claims. Given the centrality of patent law to these claims, here personal jurisdiction is governed by the law of our circuit. See Xilinx, Inc. v. Papst Licensing GmbH & Co. KG , 848 F.3d 1346, 1352 (Fed. Cir. 2017) (stating that Federal Circuit law applies to personal jurisdiction over claim seeking declaratory judgments of non-infringement and invalidity); 3D Sys., Inc. v. Aarotech Labs., Inc. , 160 F.3d 1373, 1377 (Fed. Cir. 1998) (holding that Federal Circuit law applies to personal jurisdiction over state law claims where the "resolution of the patent infringement issue" would be a "significant factor" in resolving those state law claims). We review the question of personal jurisdiction de novo. Xilinx , 848 F.3d at 1352.

I. DECLARATORY JUDGMENT CLAIM

The parties dispute whether personal jurisdiction exists over Counts I, II, and III of the complaint, which seek declaratory judgments of non-infringement or invalidity of three of the Wok patents.

Personal jurisdiction must comport with the state’s long-arm statute and with due process under the U.S. Constitution. Id. Tennessee’s long-arm statute allows the exercise of personal jurisdiction to the full extent permissible under the U.S. Constitution. See First Cmty. Bank, N.A. v. First Tenn. Bank, N.A. , 489 S.W.3d 369, 383–84 (Tenn. 2015) (citing Tenn. Code Ann. § 20-2-214(a)(6) ). Thus, the sole question here is whether the exercise of jurisdiction would be consistent with due process.

Due process requires that a defendant have sufficient "minimum contacts" with the forum state such that the suit not offend "traditional notions of fair play and substantial justice." Bristol-Myers Squibb Co. v. Superior Court of Cal. , ––– U.S. ––––, 137 S.Ct. 1773, 1785, 198 L.Ed.2d 395 (2017) (quoting Int’l Shoe Co. v. Washington , 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ).

The minimum contacts inquiry involves two related requirements. First, the defendant must have purposefully directed its conduct at the forum state. See Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 924, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011). Second, the claim must "arise out of or relate to the defendant’s contacts with the forum." Bristol-Myers , 137 S.Ct. at 1780 (brackets omitted).

A declaratory judgment claim arises out of the patentee’s contacts with the forum state only if those contacts "relate in some material way to the enforcement or the defense of the patent." Avocent Huntsville Corp. v. Aten Int’l Co. , 552 F.3d 1324, 1336 (Fed. Cir. 2008). Accordingly, in this context the minimum contacts prong requires some enforcement activity in the forum state by the patentee. Id. For example, we have found minimum contacts where the patentee sent infringement notice letters to an entity doing business in the forum state and traveled there to discuss the alleged infringement, see Xilinx , 848 F.3d at 1354, or where the patentee entered into an exclusive licensing agreement with an entity in the forum state that would permit the licensee to litigate infringement claims against third party infringers of the licensed patents, see Breckenridge Pharm., Inc. v. Metabolite Labs., Inc. , 444 F.3d 1356, 1366 (Fed. Cir. 2006) (citing Akro Corp. v. Luker , 45 F.3d 1541, 1546 (Fed. Cir. 1995) ).²

Maxchief contends that Wok’s lawsuit against Staples in the Central District of California created sufficient contacts with Tennessee because the suit sought a broad injunction against "all those in active concert" with Staples, including its "distributors," and the distributor of Staples’ table was Meco, a Tennessee resident. Appellant’s Br. at 16. Maxchief maintains this lawsuit had "effects" in Tennessee because Wok’s requested injunction would extend to Meco, and Maxchief would respond to any injunction by changing its Tennessee activities. According to Maxchief, the Staples lawsuit therefore created jurisdiction under Calder v. Jones , 465 U.S. 783, 791, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), where the Supreme Court held that a California court had jurisdiction over two Florida newspapermen because their intentional conduct in Florida was calculated to cause injury in California.

Contrary to Maxchief’s argument, it is not enough that Wok’s lawsuit might have "effects" in Tennessee. Rather, jurisdiction "must be based on intentional conduct by the defendant" directed at the forum. Walden v. Fiore , 571 U.S. 277, 286, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) ; see 4A Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1069.1 (4th ed. 2018) ("Wright & Miller") ("The ‘effects test’ continues to have viability, but only when the defendant’s conduct both has an effect in the forum state and was directed at the forum state by the defendant ...."). In Calder , the defendants "expressly aimed" "their intentional, and allegedly tortious, actions" at California: they relied on phone calls to California sources for their article, wrote the story about the plaintiff’s activities in California, and caused reputational injury in California by writing the allegedly libelous article and causing it to be circulated in the state. See 465 U.S. at 788–90, 104 S.Ct. 1482. "Indeed, because publication to third persons is a necessary element of libel, the defendants’ intentional tort [in Calder ] actually occurred in California." Walden , 571 U.S. at 288, 134 S.Ct. 1115 (internal citation omitted). By contrast, Wok’s lawsuit against Staples—filed in California against a California resident—was directed at California, not Tennessee. The lawsuit alleged that the actions taken by a non-resident of Tennessee (Staples) infringed the patents. The fact that the requested injunction might apply to a Tennessee resident (Meco) and non-party to the action (acting in concert with the defendant) is too attenuated a connection to satisfy minimum contacts.

This case is analogous to Walden . There, Nevada plaintiffs sued an...