Latest Federal Court Cases - December 2018

Schwabe, Williamson & Wyatt PC

Schwabe, Williamson & Wyatt PC

Maxchief Investments Ltd. v. Wok & Pan, Ind., Inc., Appeal No. 2018-1121 (Fed. Cir. Nov. 29, 2018)

In the only precedential patent decision this week, the Federal Circuit addressed the extent to which a court has declaratory judgment jurisdiction in a given forum based on actions outside of that forum.

Wok is a Chinese company that makes folding tables and owns patents concerning same.  Maxchief is a competitor and sells its tables through a distributor in Tennessee.  In 2015, Wok sued Staples in California alleging patent infringement with respect to Staples’ sales of one of Maxchief’s tables.  Staples sought indemnification from the Tennessee distributor, which sought indemnification from Maxchief.

Maxchief then filed a declaratory judgment action in Tennessee, seeking declaratory judgment of noninfringement and invalidity, as well as asserting a claim of tortious interference.  The district court dismissed the suit.

On appeal the Federal Circuit affirmed.  It held that there were insufficient contacts with Tennessee to support personal jurisdiction in Tennessee.  Maxchief argued that Wok’s suit against Staples in California would have “effects” in Tennessee, given that any injunction would affect the distributor in Tennessee.  The Court stated that “it is not enough that Wok’s lawsuit might have ‘effects’ in Tennessee.  Rather, jurisdiction ‘must be based on intentional conduct by the defendant’ directed at the forum.”

With respect to the tortious interference claim, Maxchief relied on a letter sent from Wok to Coleman, a Kansas company, which was copied to Maxchief’s lawyer in Tennessee.  The Court first confirmed that “a single letter directed to a business in the forum state could well create personal jurisdiction over a tortious interference claim.”  But the Court held that the letter was directed to Coleman, advising it of Coleman’s allegedly infringing activity.  “Thus, Wok’s letter alleging infringement by Coleman is properly considered a contact with Kansas, not Tennessee.”  For this reason, the Court affirmed that the Tennessee court did not have jurisdiction concerning the tortious interference claim.

The opinion can be found here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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