Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc.

• Citation: 148 F.3d 1355,47 USPQ2d 1192
• Decision Date: 30 June 1998
• Docket Number: HOCKERSON-HALBERSTAD,INC,No. 97-1474,97-1474
• Parties: RED WING SHOE COMPANY, INC., Plaintiff-Appellant, v., Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

Page 1355

148 F.3d 1355

47 U.S.P.Q.2d 1192

RED WING SHOE COMPANY, INC., Plaintiff-Appellant, v. HOCKERSON-HALBERSTADT, INC., Defendant-Appellee.

No. 97-1474.

United States Court of Appeals,

Federal Circuit.

June 30, 1998.

Jeff H. Eckland, Faegre & Benson, LLP, of Minneapolis, Minnesota, argued for plaintiff-appellant. With him on the brief was William L. Roberts.

James E. Uschold, James E. Uschold, PLC, of New Orleans, Louisiana, argued for defendant-appellee.

Before RADER, SCHALL, and BRYSON, Circuit Judges.

RADER, Circuit Judge.

Red Wing Shoe Company, Inc. (Red Wing) brought an action against Hockerson-Halberstadt, Inc. (HHI) seeking a declaratory judgment of noninfringement, invalidity, and unenforceability of U.S. Patent No. 4,322,895 (the '895 patent). The United States District Court for the District of Minnesota dismissed the action for lack of personal jurisdiction. See 966 F.Supp. 833 (D.Minn.1997). Because Red Wing has not shown that HHI has sufficient contacts with Minnesota to support personal jurisdiction in that forum, this court affirms.

I.

HHI is a Louisiana corporation with its principal place of business in New Mexico. HHI's sole business is licensing and enforcing the rights associated with two patents, one of which is the '895 patent. The '895 patent claims an athletic shoe which provides improved support and stability for the wearer's heel. HHI, however, does not manufacture shoes or any other product. Red Wing, a Minnesota corporation with its principal place of business in Minnesota, manufactures footwear.

In October 1995, HHI sent a letter to Red Wing at its Minnesota office. In the letter, HHI suggested that several of Red Wing's products infringed the '895 patent. HHI's letter also offered Red Wing a non-exclusive license under the '895 patent. The letter further offered to negotiate license terms and indicated that HHI had already negotiated or was in the process of negotiating licenses with numerous well-known companies such as Adidas, Asics, Brooks, L.A. Gear, Nike, and Reebok. Red Wing responded by letter in December 1995, enclosing copies of Red Wing's product catalogs and requesting an extension of time to consider HHI's letter.

Two weeks later, HHI sent a letter granting Red Wing an extension of time. The letter also asserted that additional products in Red Wing's catalogs also infringed the '895 patent. In March 1996, Red Wing responded to HHI's allegations of infringement. Red Wing's letter analyzed each of the products in question and concluded that none of Red Wing's products infringed. Red Wing enclosed cutaway samples of its products to facilitate comparison with the claims of the '895 patent.

A month later, HHI responded with a rebuttal of Red Wing's infringement analysis. HHI reasserted that Red Wing's products infringed the '895 patent and repeated its offer to extend Red Wing a nonexclusive license based on a lump sum payment or a per unit royalty. In August 1996, Red Wing responded in turn that none of its products infringed the '895 patent and professed no interest in "license negotiations with HHI." A week later, on August 23, 1996, Red Wing filed a declaratory judgment action against HHI in the United States District Court for the District of Minnesota alleging noninfringement, invalidity, and unenforceability of the '895 patent.

HHI moved to dismiss the action for lack of personal jurisdiction. To show that HHI had sufficient "minimum contacts" with Minnesota for personal jurisdiction, Red Wing relied heavily on HHI's three warning letters. Red Wing pointed out that these letters not only sought to inform Red Wing of potential infringement but also solicited business with Red Wing in Minnesota. In addition, Red Wing established that all of HHI's thirty-four licensees sell products in Minnesota. Moreover, six of those licensees maintain their own retail stores or possess a registration to do business in Minnesota. None of HHI's licensees, however, is incorporated in Minnesota or has its principal place of business in that state. Moreover, HHI has had no dealings with its licensees in that state. HHI exercises no control over the sales activities of its licensees.

The district court determined that it lacked personal jurisdiction over HHI and granted the motion to dismiss. Red Wing appeals.

II.

This court applies the law of the Federal Circuit, rather than that of the regional circuits, to determine personal jurisdiction in a patent infringement case. See Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1564-65, 30 USPQ2d 1001, 1006 (Fed.Cir.1994). This choice of governing law applies as well to personal jurisdiction in declaratory judgment actions that involve patentees as defendants. See Akro Corp. v. Luker, 45 F.3d 1541, 1543, 33 USPQ2d 1505, 1506-07 (Fed.Cir.1995). Because the parties do not dispute the jurisdictional facts, the question of personal jurisdiction in this case resolves itself into one of law. See id. at 1543.

In general, a district court's personal jurisdiction over a non-consenting defendant outside the boundaries of the forum is a two-step inquiry. First, the district court determines whether a provision makes the defendant amenable to process, which usually depends on whether the defendant "could be subjected to the jurisdiction of a court of general jurisdiction in the state in which the district is located." Fed.R.Civ.P. 4(k)(1)(A). Second, the district court ensures that "maintenance of the suit does not offend 'traditional notions of fair play and substantial justice' " that are embodied in the Due Process Clause. ^* International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)).

For the first step in this analysis, the district court acknowledged the Minnesota long-arm statute. See Minn.Stat. § 543.19 (1988). Minnesota courts have consistently held that this long-arm statute reaches as many extraterritorial defendants as the Due Process Clause will allow. See, e.g., Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 29 (Minn.1995); Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 410 (Minn.1992). Thus, in this case, the two-step inquiry folds into one: whether an exercise of personal jurisdiction over HHI would offend Due Process.

To discern the limits of Due Process on the extraterritorial reach of its state statute, the district court properly examined whether HHI had established "minimum contacts" with Minnesota, "such that [it] should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). The district court also performed the second part of the Due Process inquiry: "Once it has been decided that a defendant purposefully established minimum contacts within the forum State, these contacts may be considered in light of other factors to determine whether the assertion of personal jurisdiction would comport with 'fair play and substantial justice.' " Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting International Shoe, 326 U.S. at 320, 66 S.Ct. 154). These factors may serve to "establish the reasonableness of jurisdiction upon a lesser showing of minimum contacts than would otherwise be required." Id. at 477, 105 S.Ct. 2174. Likewise, they may also establish a "compelling case" that would "render jurisdiction unreasonable" even though "minimum contacts" are present. Id.; see also Asahi Metal Indus. Co. v. Superior Ct. of Cal., 480 U.S. 102, 121-22, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (Stevens, J., concurring in judgment).

The "minimum contacts" test examines the number and nature of a defendant's contacts with the forum. In general, when the cause of action at issue "arises out of or relates to" those contacts, a court may properly assert personal jurisdiction, even if those contacts are "isolated and sporadic." Burger King, 471 U.S. at 472-73, 105 S.Ct. 2174. Jurisdiction in this situation has the name "specific jurisdiction." In fact, "even a single act can support jurisdiction," so long as it creates a "substantial connection" with the forum, as opposed to an "attenuated affiliation." Id. at 475 & n. 18, 105 S.Ct. 2174 (citing McGee v. International Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957)). In contrast, a defendant whose contacts with a forum are "continuous and systematic" may be subject to jurisdiction even when the cause of action has no relation to those contacts. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Jurisdiction in this situation has the name "general jurisdiction." In both situations, contacts only add to the quantum for personal jurisdiction when purposefully directed at the forum or its residents. "Random," "fortuitous," or "attenuated" contacts do not count in the minimum contacts calculus. Burger King, 471 U.S. at 475, 105 S.Ct. 2174. Similarly, contacts resulting from the "unilateral activity" of others do not count. Id. at 475 & n. 17, 105 S.Ct. 2174.

III.

Red Wing argues that HHI has sufficient minimum contacts with Minnesota to satisfy Due Process and thus to permit the Minnesota statute to effect personal jurisdiction. According to Red Wing, the three letters that HHI sent to Red Wing in Minnesota are contacts directly related to the declaratory judgment action. Without the assertion of infringement in these letters, Red Wing asserts it would have no cause to seek declaratory judgment at all. Thus, Red Wing argues that the cause of action arises out of HHI's letters. In addition, Red Wing contends that HHI's offers to license the '895 patent amounted to a purposeful effort to negotiate business with a Minnesota resident. On these theories, Red Wing asserts that HHI's three letters alone suffice to show minimum contacts.

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