United States: Letters to the Plaintiff from Outside Forum Suffices for Personal Jurisdiction

In a case involving a complaint for declaratory judgment, the U.S. Court of Appeals for the Federal Circuit reversed the district court's dismissal for lack of personal jurisdiction. Silent Drive Inc. v. Strong Industries, Inc., Case No. 02-1329 (Fed. Cir. April 16, 2003).

The parties are competitors in the manufacture of trailing axles. Strong, a Texas company, had obtained an injunction in an earlier state court case in Texas for misappropriation of trade secrets. Silent Drive, an Iowa company, was not involved in that earlier Texas case. It was, however, involved in the joint development of the product involved in that case. Strong also obtained a patent that it claimed was infringed by the product that Silent Drive jointly developed with the party to the earlier Texas state court case.

Strong wrote letters to Silent Drive in Iowa and to its customers outside of Iowa, notifying them about and enclosing copies of the state court injunction and the patent. Strong also issued a press release, which was received by a potential customer of Silent Drive in Iowa, describing the injunction and the patent. In the press release, Strong indicated it would not be possible for anyone to make a certain kind of axle without infringing its patent.

Based on these letters, Silent Drive filed a declaratory judgment action in a federal court in Iowa seeking, among other things, a declaration that the Texas state court injunction could not be enforced against Silent Drive, a declaration of patent invalidity and non-infringement of the Strong patent and a finding of tortious interference with contractual relationships. The district court dismissed the action for lack of personal jurisdiction despite finding that the letters sent by Strong were purposefully directed at the forum state and arose out of a patent count. Silent Drive appealed.

The Federal Circuit, applying the law of the regional circuit to the personal jurisdiction issue, reversed the district court. Although the court agreed that the letters sent by Strong, by themselves, did not confer personal jurisdiction over Strong on the patent count, and that there was no federal subject matter jurisdiction over the tortious interference count (so it did not reach the question of personal jurisdiction on that court), the Court held that Silent Drive properly asserted both subject matter and personal jurisdiction over the claim regarding the Texas state court injunction. The Federal Circuit reasoned that the issue of whether the Texas injunction could be enforced against Silent Drive requires a federal due process analysis. As part of that analysis, the Court noted that the letters sent by Strong constituted an attempt to enforce the injunction against Silent Drive in Iowa, which subjected Strong to personal jurisdiction in Iowa. Thus, the Court concluded that the exercise of supplemental jurisdiction over the other two counts was proper and reversed the dismissal of the complaint.