Viam Corp. v. Iowa Export-Import Trading Co.

• Decision Date: 22 May 1996
• Docket Number: No. 95-1262,EXPORT-IMPORT,95-1262
• Citation: 84 F.3d 424,38 USPQ2d 1833
• Parties: VIAM CORPORATION and Vehicle Power Accessories, Plaintiffs-Appellants, v. IOWATRADING CO., and Spal S.r.l., Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

Page 424

84 F.3d 424

38 U.S.P.Q.2d 1833

VIAM CORPORATION and Vehicle Power Accessories, Plaintiffs-Appellants, v. IOWA EXPORT-IMPORT TRADING CO., and Spal S.r.l., Defendants-Appellees.

No. 95-1262.

United States Court of Appeals Federal Circuit.

May 22, 1996.

Charles E. Wills, Charles E. Wills Law Corporation, Los Angeles, California, argued, for plaintiffs-appellants.

Daniel J. Cosgrove, Zarley, McKee, Thomte, Voorhees & Sease, P.L.C., Des Moines, Iowa, argued, for defendants-appellees. With him on the brief was Bruce W. McKee.

Before MICHEL, PLAGER, and RADER, Circuit Judges.

PLAGER, Circuit Judge.

Believing itself threatened with a suit for patent infringement, plaintiff Viam Corporation, a California company, brought a declaratory judgment action in the California district court against the defendants, Spal Corporation, an Italian company and owner of the patent at issue, and its exclusive licensee, Iowa Export-Import Corporation, an Iowa company. The complaint alleged noninfringement and invalidity of the patent. The Italian company moved for dismissal of the suit on the ground that the court was without personal jurisdiction over it, and the Iowa company moved for dismissal on the grounds that without the Italian company, which it considered an indispensable party to the suit, it too was entitled to dismissal. The district court granted the motions. Viam Corp. v. Iowa Export-Import Trading Co., 1995 WL 544971, 35 USPQ2d 1505 (C.D.Cal. February 13, 1995).

Viam appeals. The case requires us to examine principles of due process under the Fifth Amendment as they affect personal jurisdiction over a foreign entity in the context of a declaratory judgment patent action.

BACKGROUND

Spal is an Italian corporation that makes universal power windows for cars. Iowa Export-Import Corporation ("Iowa Export") is an Iowa corporation with the exclusive right to advertise, market and distribute Spal products in North America. Spal ships the products from Italy, through Canada, to Des Moines, Iowa. Viam is a California corporation that competes with Iowa Export and Spal in the automobile-power-accessories market. ¹

Iowa Export's lawyers wrote to Viam stating that Viam's Kodak universal power kit, which Viam was displaying at a trade show in Las Vegas, was covered by a United States patent owned by Spal (the '386 patent). Viam promptly filed a declaratory judgment action in the Central District of California against Iowa Export and Spal, seeking a declaration that the '386 patent is invalid and that Viam does not infringe the patent. Spal moved to dismiss on the basis that process The trial court granted Spal's motion to dismiss, finding that service on Spal had thus far been deficient under Federal Rule of Civil Procedure 4 and the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents ("Hague Convention"), and that Spal's limited contacts with California did not constitute the "minimum contacts" required to support personal jurisdiction under International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Given its separate finding of no personal jurisdiction over Spal, the trial court did not let Viam attempt to perfect service on Spal in compliance with the Hague Convention.

had not been served properly and that the trial court lacked personal jurisdiction over Spal.

Iowa Export then moved to dismiss the complaint on the grounds that Spal was a necessary party under Fed. R. Civ. Proc. 19. Because Iowa Export had filed its answer in the case, the trial court treated the motion as one for judgment on the pleadings. The trial court granted the motion, finding that dismissal is required when an indispensable party cannot be joined under Rule 19, that Spal was an indispensable party to an adjudication of invalidity because it owned the patent and had retained substantive rights in its patent notwithstanding its exclusive marketing agreement with Iowa Export, and that the lack of personal jurisdiction over Spal prevented the court from joining Spal.

DISCUSSION

1.

We review the district court's determination that it lacks personal jurisdiction over Spal, an issue of law, without deference to the view of the district court. Akro Corp. v. Luker, 45 F.3d 1541, 1543, 33 USPQ2d 1505, 1506 (Fed.Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 2277, 132 L.Ed.2d 281 (1995). In order to determine whether personal jurisdiction exists over a defendant, the court must determine whether jurisdiction lies under both the applicable state long-arm statute and the Due Process Clause of the Federal Constitution. The California long-arm statute extends the reach of personal jurisdiction to the limits of the Federal Constitution. See Michigan Nat'l Bank v. Superior Ct., 23 Cal.App.3d 1, 6, 99 Cal.Rptr. 823, 826 (1972); Belmont Indus., Inc., v. Superior Court, 31 Cal.App.3d 281, 285, 107 Cal.Rptr. 237, 239-40 (1973). The question before us, then, is whether sufficient contacts exist between Spal and the State of California to satisfy the requirements of International Shoe. ²

Courts use various ways to describe whether, in a given case, there have been sufficient contacts between the defendant over whom jurisdiction is asserted and the forum State. Some cases talk in terms of "specific jurisdiction," usually with reference to a situation in which the cause of action arises directly from the defendant's contacts with the forum State. See, e.g., Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n. 15, 105 S.Ct. 2174, 2182 n. 15, 85 L.Ed.2d 528 (1985). For that purpose, specific jurisdiction is to be distinguished from "general jurisdiction," referring to the situation in which the defendant's contacts at issue have no necessary relationship to the cause of action. Although that distinction may be analytically helpful in some fact situations, it is not useful here.

The analytical tool useful in cases in which the defendant's contacts are the result of establishing a distribution network in the forum State for the sale of defendant's products is generally referred to as the "stream of commerce" theory. In Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 30 USPQ2d 1001, (Fed.Cir.1994), this court, in determining whether a federal district court had personal jurisdiction over an out-of-state corporation accused of patent infringement, adopted and applied the stream of commerce theory. In reaching Subsequently, in Akro Corp. v. Luker, 45 F.3d 1541, 33 USPQ2d 1505 (Fed.Cir.1995), we took the same approach to a case in which the out-of-state party was the patentee, rather than the alleged infringer. We saw no reason to vary the choice-of-law rule, as between out-of-state infringers and patentees. Id. at 1543. The choice of law regarding the applicable rule governing personal jurisdiction thus was to be the Federal Circuit rule, not the regional circuit rule.

that result, we first concluded that the choice of law--whether to apply stream of commerce theory, and which version to apply (see Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987))--was a decision for this court; our courtesy rule under which we are guided by the law of the regional circuit on certain procedural matters was not applicable to an issue which, though procedural in nature, was so intimately involved in the substance of enforcement of the patent right.

All the reasons for adopting and applying the stream of commerce theory to the question of personal jurisdiction over an out-of-state alleged infringer as defendant, fully explored in Beverly Hills Fan, are equally applicable to the same question regarding an out-of-state patentee as defendant. When the patentee sues the alleged infringing tortfeasor who is the out-of-state defendant, it is easy to see why the defendant should be held to respond if there have been sufficient contacts with the forum State. It may at first blush seem strange in a declaratory judgment action to apply the same standard to the patentee, when it is the infringer, the putative tortfeasor, who is suing the (presumably) innocent patentee.

But the question of personal jurisdiction is not a function of wrongdoing. Rather it is a question of the power of a judicial forum to decide the issues brought before it. A patentee who seeks to enforce its patent may bring an infringement action in a proper forum, and issues regarding the validity and enforceability of the patent may be raised by the defendant. Under our law, a potential defendant in an infringement suit may, in a proper case, preempt the patentee and initiate a suit challenging the enforcement of the patent. The issues on the merits are essentially the same in either situation; the test for personal jurisdiction, for the forum's power to hear the issues, should be the same. See Akro, 45 F.3d at 1545, 33 USPQ2d at 1508. Furthermore, as in Beverly Hills Fan, we need not join the debate in Asahi as to which version of the stream of commerce theory is the correct one, because under either theory the result we reach here would be the same. We proceed, then, to decide the issue with those background rules before us.

2.

"[D]ue 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." International Shoe, 326 U.S. at 316, 66 S.Ct. at 158. "Minimum contacts" is understood to require that a defendant has "purposefully availed himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958). And, "[t]he forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation...