MAXCHIEF INVESTMENTS LIMITED V. WOK & PAN, IND., INC.
Before Dyk, Reyna, and Hughes. Appeal from the United States District Court for the Eastern District of Tennessee.
Summary: In the context of a suit for a declaration of non-infringement and invalidity of a patent, the “minimum contacts” prong of personal jurisdiction is satisfied only if the patentee directed some patent enforcement activity to the forum state.
Maxchief Investments Limited (“Maxchief”) is a Chinese manufacturer that distributes foldable tables in the United States through a Tennessee distributor, Meco. Meco sells the tables to retailers including Staples (a California resident) and Coleman (a Kansas resident). Wok & Pan, Ind., Inc. (“Wok”), also a Chinese company, owns patents directed to foldable tables. Wok filed a patent infringement lawsuit against Staples in California. Staples requested defense and indemnification from Meco, and Meco, in turn, sought defense and indemnification from Maxchief. In response, Maxchief filed a declaratory judgment action against Wok in Tennessee, seeking declarations of non-infringement and invalidity and alleging tortious interference with business relations under Tennessee state law. Maxchief claimed that Wok is subject to specific personal jurisdiction in Tennessee due to the effect Wok’s California lawsuit could have on Maxchief’s ability to continue distribution in Tennessee. Maxchief also argued that Wok created minimum contacts with Tennessee when it sent an infringement notice letter to Maxchief’s lawyer in Tennessee alleging infringement by Coleman, a Kansas resident. The district court dismissed the declaratory judgment claims for lack of personal jurisdiction and the tortious interference claim for lack of subject matter jurisdiction. Maxchief appealed.
The Federal Circuit affirmed. With respect to the declaratory judgment claims, the Federal Circuit held that, although Wok’s requested injunction against Staples might apply to distribution activities performed in Tennessee, the connection would be too attenuated to satisfy minimum contacts with Wok to the forum state. In addition, it was not enough that Wok “directed the lawsuit at an entity (Staples) that Wok knew had a Tennessee connection (Meco).” The Federal Circuit confirmed that the harmful ‘effects test’ for specific personal jurisdiction “continues to have viability, but only when the defendant’s conduct both has an effect in the forum state and was directed at the forum state by the defendant.” Furthermore, “the personal jurisdiction inquiry for patent declaratory judgment claims focuses on patent enforcement activities directed at residents of a forum,” and Wok had only sought to enforce its patents against Staples in California. Additionally, Wok’s letter sent to Maxchief’s lawyer in Tennessee alleging infringement by Coleman, a Kansas company, is a considered a contact with Kansas and not Tennessee. Moreover, merely sending a patent infringement notice letter does not meet the “fair play and substantial justice” prong of the personal jurisdiction test, because patentees are given latitude to inform others of their patent rights without subjecting themselves to jurisdiction.
With respect to the tortious interference claim, the Federal Circuit held that there was no personal jurisdiction over Wok, and thus did not consider the subject matter jurisdiction issues. The Federal Circuit explained that a notice letter typically satisfies “minimum contacts,” because the unique policy considerations for patent law do not apply to a tortious interference claim. However, because the notice letter was a contact with Kansas and not Tennessee, it did not suffice to establish personal jurisdiction over Wok in Tennessee. Thus, the Federal Circuit affirmed the dismissal of the declaratory judgment and tortious interference actions.