United States: A Foreign Corporation That Installed Infringing Products On U.S.-Flagged Ships May Be Sued For Patent Infringement In Any Federal Court, Regardless Of Connection To That Forum

Abstract

The U.S. Court of Appeals for the Federal Circuit determined that a Brazilian corporation that installed infringing conveyor systems on a U.S.-flagged ship could be sued for patent infringement in a court located in Minnesota, a state where the infringer had no contacts.

Determining where a U.S. company may be sued for infringement, and in particular whether a court has personal jurisdiction over an infringer, typically involves considering whether the infringer has sufficient contacts with the state where the court sits to make it fair for a court in that state to decide a case involving that infringer.

Determining where a foreign company may be sued for patent infringement, and in particular whether a court has personal jurisdiction over an infringer, can involve considering whether the foreign company may be sued in an any state court. If not, under Rule 4(k)(2) of the Federal Rules of Civil Procedure, the foreign infringer may be sued in a federal court regardless of whether the infringer has contacts within the state where the court sits, so long as the infringer has sufficient contacts throughout the entire United States. This provision effectively acts as a federal long-arm statute, allowing a foreign infringer to be sued in a U.S. federal court.

Background

As a result of a bidding process among Brazilian companies, Petrobras engaged DAL to install pneumatic conveyers to transport waste cuttings created by drilling undersea oil wells, and DAL installed conveyor systems on the  HOS Resolution  and the  HOS Pinnacle, both U.S.-flagged ships.

M-I Drilling and its exclusive licensee sued DAL in Minnesota federal court for infringing five U.S. patents by making, selling, and operating pneumatic conveyor systems on the  HOS Pinnacle  and the  HOS Resolution.

DAL attempted to dismiss the case, arguing that it was not reasonable or fair under "due process" principles for the case to be heard by the Minnesota federal court.

The district court agreed with DAL and dismissed the case, finding that although the infringing acts took place on U.S.-flagged ships, DAL had not purposefully directed its activities within the United States because the contract between Petrobras and DAL did not identify the ships on which DAL would be required to make installations. So DAL's contacts with the  HOS Pinnacle  and the  HOS Resolution  were exclusively due to the unilateral activity of Petrobras, and the exercise of specific personal jurisdiction over DAL would be neither reasonable nor fair.

The M-I Drilling Decision

On appeal, the Federal Circuit explained that due process requires only that a defendant have certain minimum contacts with the forum consistent with traditional notions of fair play and substantial justice. Considerations for determining whether such minimum contacts exist include (1) whether the defendant purposefully directed its activities at residents of the forum, (2) whether the claim arises out of or relates to the defendant's activities with the forum, and (3) whether the assertion of personal jurisdiction is reasonable and fair.

Here, DAL installed pneumatic conveyor systems on the  HOS Pinnacle  and the  HOS Resolution  and then deliberately continued to engage in infringing activities aboard the U.S.-flagged ships despite M-I's warnings that DAL's systems infringed the asserted patents. Nothing more is required to show that DAL purposefully directed its activities at the United States, because even if the contract between Petrobras and DAL directed where the accused systems were installed and operated, DAL controlled the specifics of its own continued performance under the contract.

M-I's claims for patent infringement arose from or related to DAL's accused infringing activities in the United States. So DAL needed to show why jurisdiction unreasonable and failed to do so.

The court weighed five due process factors to determine whether it was reasonable and fair for the federal court in Minnesota to hear the case: (1) DAL's burden, (2) the United States' interest in adjudicating the dispute, (3) M-I's interest in obtaining convenient and effective relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the states in furthering fundamental substantive social policies.

Factors 1-3 were supported because the United States has a substantial interest in enforcing the federal patent laws and M-I is a U.S. plaintiff trying to enforce its U.S. patents for alleged infringing activity in the U.S.-flagged ships constituting a U.S. territory. Factors 4-5 were supported because there is no competing U.S. forum available to M-I for its infringement claims so there is no clash of social policies or with which to compare the efficiency of a resolution. There is no reason to believe that the Federal Government's interest in its foreign relations policies with Brazil will be hindered by allowing the district court to exercise personal jurisdiction over DAL. The court held that the federal court in Minnesota had personal jurisdiction over DAL because Rule 4(k)(2) comports with due process.

A separate concurring opinion provided additional reasoning why the exercise of personal jurisdiction here does not offend traditional notions of fair play and substantial justice.

Although recognizing that DAL has waived the issue of whether U.S. patent law extends to U.S.-flagged ships on the high seas, the concurring opinion explained that it is worth recognizing the Supreme Court's increasing interest in international activity that bears on U.S. patent laws and that a U.S. patent owner should have a way to recover from the harm of patent infringement in international waters. If U.S. law does not apply to infringing activity on a U.S.-flagged ship in international water, then it is possible that no law applies and the patent owner would have no remedy for patent infringement.

Strategy and Conclusion

A foreign corporation that installed infringing conveyor systems on a U.S.-flagged ship could be sued for patent infringement in a court located in Minnesota, a state where it had no contacts. It was reasonable and fair for the court to hear a case where the allegedly infringing activity is purposely directed toward the United States even where the activities are performed pursuant to a contract with and at the request of a third party.

Further Information
The Federal Circuit opinion in M-I Drilling Fluids UK Ltd. V. Dynamic Air Ltda  can be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
23 Sep 2018, Seminar, Chicago, United States

Finnegan is a sponsor of the Intellectual Property Owners Association Annual Meeting, supporting the Women in IP Networking Brunch.

26 Sep 2018, Webinar, Washington, DC, United States

This latest series of webinars will explore emerging trends in the changing intellectual property (IP) legal environment in Europe and the United States.

26 Sep 2018, Webinar, Washington, DC, United States

This latest series of webinars will explore emerging trends in the changing intellectual property (IP) legal environment in Europe and the United States.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions