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United States: Federal Circuit Softly Splits With Seventh, Ruling That A Defendant Cannot Consent To A Jurisdiction To Preclude Application Of Fed. R. Civ. P. 4(k)(2)
Merial Limited, BASF Agro B.V. v. CIPLA Ltd., et al., Nos.
2011-1471, 1472 (Fed. Cir. 2012), a decision from the federal Court
of Appeals level court with jurisdiction over patent appeals,
deserves a read by international practitioners — at least
the part of the decision that involves the discussion of service of
process. (There is another interesting ruling in this decision
relating to exterritoriality, which I will address in my next
post.)
The decision analyzed whether a District Court's entry of a
default judgment was appropriate. This question, in turn, depended
on whether personal jurisdiction existed in the District Court some
years earlier. The Federal Circuit found that Federal Circuit law,
rather than the law of any of the "numbered" Circuits in
which the District Court rendering the decision was located,
governed the analysis. Ultimately, however, the issue turned on the
Court of Appeals interpretation of the Federal Rules of Civil
Procedure, so the determination has broader applicability than to
just patent cases.
The Federal Rule at issue is Rule 4(k)(2), which "was
adopted to provide a forum for federal claims in situations where a
foreign defendant lacks substantial contacts with any single state
but has sufficient contacts with the United States as a whole to
satisfy due process standards and justify the application of
federal law". In the words of the Federal Circuit, the Rule
"approximates a federal long-arm statute",
allowing district courts to exercise
personal jurisdiction even if the defendant's contacts with the
forum state would not support jurisdiction under that state's
long-arm statute, as long as (1) the plaintiff's claim arises
under federal law, (2) the defendant is not subject to personal
jurisdiction in the courts of any state, and (3) the exercise of
jurisdiction satisfies due process requirements.
Given this standard, specifically requisite # 2, the question
arose how a plaintiff proved that the defendant is not subject to
personal jurisdiction in the courts of any state. The Federal
Circuit ruled that, given the difficulties of requiring a plaintiff
to prove that "the defendant is not subject to personal
jurisdiction in the courts of any state", the Court
recognized a burden-shifting rule that "if the defendant
contends that he cannot be sued in the forum state and refuses to
identify any other where suit is possible, then the federal court
is entitled to use Rule 4(k)(2)."
The principal question on this part of the appeal was whether
the defendant could identify after-the-fact a jurisdiction that it
would have been willing to have been sued, rather than a
jurisdiction where it could have been sued in the earlier
proceeding. The Federal Circuit majority would not permit the
defendant to do so, fearing gamesmanship after-the-fact. The
dissent would have permitted it. As the dissent recognizes, it is a
signal characteristic that a defendant can consent to jurisdiction
— even in a place where it might not otherwise have been
sued. Also, says the dissent, the Federal Circuit majority decision
appears to conflict with the Seventh Circuit's decision in
ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d
548 (7th Cir. 2001), which, the dissent says, did in fact permit
the defendant to name another jurisdiction and thereby preclude
application of Rule 4(k)(2) finding.
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