Stream of Commerce Contacts Insufficient to Maintain Personal Jurisdiction
Addressing a stream-of-commerce argument on personal jurisdiction, the U.S. Court of Appeals for the Federal Circuit affirmed a district court’s decision that it lacked jurisdiction over a patent infringement action in which the plaintiff failed to show sufficient contacts with the forum state. AFTG-TG, LLC v. Nuvoton Tech. Corp. et al., Case Nos. 11-1306, -1307 (Fed. Cir., Aug. 24, 2012) (per curiam) (Rader, C.J., concurring).
Non-practicing entity AFTG filed its patent infringement suit against multiple defendants in federal district court in Wyoming. While it did not claim that defendants engaged in direct sales in Wyoming, AFTG argued for jurisdiction under a “stream-of-commerce” theory, contending that defendants sold their products to various companies, who in turn sold them to consumers in Wyoming. The district court found AFTG’s accusations insufficient to establish personal jurisdiction, noting that there was “no evidence or allegation that the infringing technologies or products actually reached Wyoming.”
The Federal Circuit upheld the district court’s decision, by employing a fact-driven approach found in its own precedent interpreting the Supreme Court’s stream-of-commerce precedent. The Federal Circuit concluded that AFTG’s “bare formulaic accusation” that the defendants maintain sufficient contacts with Wyoming were not supported by any allegations, facts or declarations identifying sales in Wyoming.
The Court noted that the Supreme Court has yet to address its long-standing split on the stream-of-commerce theory; questions that have remained since Asahi. In Asahi, members of the Supreme Court disagreed about whether a defendant could be subject to personal jurisdiction in a forum merely because the defendant had placed a product in the stream of commerce. Justice Brennan, writing for four justices, articulated a stream-of-commerce theory based on foreseeability, concluding that as long as the participant is aware that the final product is being marketed in the forum, the possibility of a lawsuit there cannot be a surprise. Justice O’Connor and three other justices rejected this approach, instead concluding that the party’s action must be purposefully directed toward the forum.
Despite urging by Chief Judge Rader in the concurring opinion to clarify the Federal Circuit’s precedent on personal jurisdiction in stream-of-commerce cases, the Court did not stake its position in either Justice Brennan’s or Justice O’Connor’s articulations.