1 General Jurisdiction

The pleadings and affidavits reveal the following facts, which the Court may consider in
determining whether Plaintiff has met its burden of establishing a prima facie case of personal
jurisdiction. See Purdue Research Found., 338 F.3d at 782 (citing Nelson, 717 F.2d at 1123)
(explaining that any factual disputes must be resolved in the plaintiff's favor).

Schroeder is a California resident who does not own or rent property in Illinois and has no
Illinois bank accounts. He is a passive limited partner/investor in a real estate fund that owns
property in {llinois and other states. Schroeder is the Vice President of Engineering of FreeHand,
a Nevada corporation with its principal place of business in California. He is also a part owner of
FreeHand.' Schroeder did not personally participate in FreeHand’s demonstrations of the accused
products to the Chicago Symphony Orchestra and the Lyric Opera, and he has not participated in any
other demonstrations of FreeHand’s products in Illinois. Schroeder has not solicited sales of the
accused products in Illinois.

Schroeder has traveled to Illinois on four occasions in the last ten years: two visits were to
see family members, one was to present a one-day seminar on behalf of a former employer, and the
last was to attend an informal settlement conference in this case. While he was in Illinois for the
settlement conference, Schroeder also met with employees of an investment banking firm to whom
FreeHand was looking for additional financing. Schroeder has not otherwise appeared in Illinois in

relation to this litigation.

" The parties argue at length about the extent of Schroeder’s investment in FreeHand, but
the Court need not resolve that issue to decide the merits of the present motion.

4



CONCLUSION
For the foregoing reasons, Defendant Theodore L. Schroeder’s Motion to Dismiss Amended
Complaint for Lack of Personal Jurisdiction (doc. no. 59-1] is granted. Theodore L. Schroeder is

Hay/od

hereby dismissed from this action.

SO ORDERED. ENTERED:
Ronald A. Guzman
United States Judge


is essential in each case that there be some act by which the defendant purposefully avails itself of
the privilege of conducting activities within the forum State, thus invoking the benefits and
protections of its laws.’”).

Plaintiff alleges that the following activities confer specific jurisdiction: (1) Schroeder met
with Illinois investment bankers to obtain financing for FreeHand; and (2) he induced FreeHand to
infringe Plaintiff's patent. First, Schroeder’s meeting with possible financial backers does not satisfy
the second prong of the Alo test because the claim of inducement did not arise from that activity.
The meeting occurred several months after this lawsuit was filed, and it was not related to
Schroeder’s alleged inducement to infringe. Therefore, the Court need not address Schroeder’s
argument that the fiduciary shield doctrine prevents the finding of jurisdiction based on this contact.
See In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litig., 750 F. Supp. 330, 334
(N.D. Ill. 1990) (Easterbrook, J., sitting by designation) (explaining that under the Illinois fiduciary
shield doctrine, “persons who act only in a representative capacity do not expose themselves to
personal jurisdiction”).

Second, Schroeder’s alleged acts of inducement were not purposefully directed at Illinois or
its residents and thus fail to demonstrate specific jurisdiction under the first Akro prong. Plaintiff
relies on Honeywell, Inc. v. Metz Apparatewerke, 509 F.2d 1137 (7th Cir. 1975), which stated that
“induced infringement . . . is a tortious act committed within the state of Illinois.” Id. at 1142.
However, Honeywell did not dispense with the requirement that the defendant must purposefully
direct its activities to the forum state. To the contrary, the evidence in Honeywell demonstrated that
the defendant “purposely” promoted sales in Illinois and “ensured that such infringement would take

place.” Jd. at 1142, 1144 (explaining that “it can hardly be said that [the defendant’s] alleged



Plaintiff does not claim that Schroeder’s limited travels to Illinois and his investment in an
unrelated real estate fund are sufficient to confer general jurisdiction, and it is clear that they are not.
See Burger King, 471 U.S. at 475 (holding that a defendant should “not be haled into a jurisdiction
solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts”). Plaintiff instead argues that
general jurisdiction lies because Schroeder’s alleged acts of inducement caused a “continuous”
injury, citing Beverly Hills Fan Co. v. Royal Sovereign Corp., 21 F.3d 1558, 1563 (Fed. Cir. 1994).
However, as Schroeder correctly points out, Plaintiff misreads the holding in Beverly Hills Fan.
That case did not find that an act of inducement, by itself, constitutes continuous and systematic
contacts for purposes of determining general jurisdiction. To the contrary, it held that in a case
involving a continuous tort, forum contacts occurring after the cause of action arose may be relevant
to the specific jurisdiction inquiry. Id. (contrasting cases in which forum contacts after the tort was
committed had no relation to the cause of action). Therefore, Plaintiff has failed to demonstrate
continuous and systematic contacts between Schroeder and Illinois that would subject him to general
jurisdiction in this state.

2. Specific Jurisdiction

The Federal Circuit, in Akro Corp, v. Luker, 45 F.3d 1541 (Fed. Cir. 1995), “outlined a three-
prong minimum contacts test for determining if specific jurisdiction existed: (1) whether the
defendant purposefully directed its activities at residents of the forum, (2) whether the claim arises
out of or relates to those activities, and (3) whether assertion of personal jurisdiction is reasonable
and fair.” 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1378 (Fed. Cir. 1998) (citing Akro,
45 F 3d at 1545-46) (commenting that the Federal Circuit has “followed this test consistently”); see

also Burger King, 471 U.S. at 475 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)) (*[I]t



inducement was purposefully directed to Illinois residents. The allegations of inducement include
Schroeder’s design of the product and his opinion that the product did not infringe Sitrick’s patents.’
These acts occurred in California, and Plaintiff has not demonstrated that they were directed to
Illinois more than to any other state where the accused product is sold. Plaintiff does not allege that
Schroeder even had knowledge of FreeHand’s efforts to market the accused device in Illinois, let
alone the purposeful intent to enter the Illinois forum.

Furthermore, Plaintiff's argument that Schroeder’s inducement is continuing in Illinois
because infringement is still occurring in the state conflates the allegations against Schroeder with
those against FreeHand. The acts of infringement allegedly committed by FreeHand are not the same
as the acts allegedly committed by Schroeder. Indeed, Plaintiff has repeatedly argued that he does
not seek to reach Schroeder indirectly on a theory of piercing the corporate veil but rather directly
for his acts of inducing infringement separate and apart from the claims against FreeHand. The
determinative issue is therefore whether Schroeder’s own acts were directed to I!linois, and the acts
of his co-defendant are irrelevant in this context. See Burger King, 471 U.S. at 475 (“Jurisdiction
is proper... where the contacts proximately result from actions by the defendant himself that create
a ‘substantial connection’ with the forum State.”) (emphasis in original).

Plaintiff has failed to show that Schroeder had sufficient minimum contacts with Illinois to
demonstrate a prima facie case of either general or specific jurisdiction. Accordingly, it would
offend traditional notions of fair play and substantial justice to hale Schroeder into court in Illinois.

See Int’l Shoe, 326 U.S. at 316.

? Schroeder denies that he designed the accused products and that FreeHand or anyone
else relied on his opinion that the products were not infringing. However, as stated above, the
Court must resolve all disputed facts in Plaintiff's favor.

8



‘Minute Order Form (06/97)

United States District Court, Northern District of Iinois

Name of Assigned Jud; Sitting Judge if Oth
ne Megiseate Sudge Ronald A. Guzman than Assigned Judge
CASE NUMBER 02 C 1568 DATE 9/24/2004
CASE DAVID H. SITRICK vs. FREEHAND SYSTEMS, INC., et al
TITLE ‘s

[ln the following box (a) indicate the party filing the motion, e.g, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.]

MOTION:

DOCKET ENTRY:

qd) a Filed motion of [ use listing in “Motion” box above.]

Q) Qo Brief in support of motion due

@) a Answer brief to motion due__. Reply to answer briefdue____.

(4) Oo Ruling/Hearingon___—_—sset for__—_at

(5) oO Status hearing[held/continued to] [set for/re-set for] on setfor at

(6) Qa Pretrial conference[held/continued to] [set for/re-set for]on__setfor__—at_.
(7) im Trial[set for/re-set for] on__at

(8) a [Bench/Jury trial] [Hearing] held/continued to__at

(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OFRCP4(m) OLocal Rule 41.1 OO FRCP41(a)(1) OI FRCP41(a)(2).

ao {Other docket entry] ENTER MEMORANDUM OPINION AND ORDER: Defendant
Theodore L. Schroeder’s Motion to Dismiss Amended Complaint for Lack of Personal Jurisdiction [doc.
no. 59-1] is granted, Theodore L. Schroeder is hereby dismissed from this action.

a) [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required.

umber of notices

Notices mailed by judge's staff. dem A

vs {ep 27 200
lotified counsel by telephone.

oY | Docketing to mail notices. Yor

Mail AO 450 form.

date docketed

docketing deputy initats

Copy to judge/magistrate judge,

courtroom
cG deputy's
initials

1. wc. Date/timesreceived in

central Clerk's Office rralling deputy initials



involvement in the events related to this case was passive in nature”); see also Beverly Hills Fan,
21 F.3d at 1567 (emphasizing “the intentional nature of the foreign defendant{’s] conduct” in
Honeywell).

Unlike the “making” or “using” of an accused article, the act of inducing infringement is
“conceptual,” rather than “purely physical” in nature. See N. Am. Philips Corp. v. Am. Vending
Sales, Inc., 35 F.3d 1576, 1579 (Fed. Cir. 1994). But while the situs of inducement is not easily
determined, the fact that the accused product was sold or offered for sale in the forum state alone is
not dispositive. Cases finding specific jurisdiction for inducement have turned on whether the
defendants intended infringement to occur inside the forum, not merely whether infringement
ultimately did occur there. See Beverly Hills Fan,21 F.3d at 1566-68; Honeywell, 509 F.2d at 1142,
1144.

Plaintiff cites the following excerpt from Schroeder’s deposition to show that Schroeder’s
acts of inducement were “personal and purposeful”:

Q: So you did some sort of review of the patent to determine if
you thought... .

A J looked at several of the claims. I went through the abstract
and all these little diagrams and stuff, and from the best of my
knowledge at that time, I though{t] that either the — that the
claims had to be interpreted narrowly enough that it didn’t
apply to [FreeHand], or there was prior art that would
invalidate any of those claims if they were interpreted more
broadly.

(P1.’s Resp. Def.’s Mot. Dismiss at 9.)
Even if the Court were to agree with Plaintiffs strained characterization of Schroeder’s

testimony, the fact that the alleged inducement was purposeful would not demonstrate that the



The Federal Circuit has explained that before exercising personal jurisdiction over a defendant, “the
court must determine whether an applicable statute potentially confers jurisdiction by authorizing
service of process on the defendant, and whether the exercise of jurisdiction would satisfy the
requirements of due process.” Deprenyl, 297 F.3d at 1349. The Illinois long-arm statute confers
jurisdiction over causes of action arising from several enumerated acts as well as “on any other basis
now or hereafter permitted by the Illinois Constitution and the Constitution of the United States.”
735 ILL. Comp. STAT. 5/2-209(a), (c); see Deprenyl, 297 F.3d at 1349 (noting that Federal Rule of
Civil Procedure 4(k)(1)(A) “allows a plaintiff to rely on the state long arm statute . . . to obtain
statutory authorization for the exercise of personal jurisdiction”). Thus, the Illinois long arm statute
reaches any defendant that due process will allow, and “the two-step inquiry folds into one: whether
an exercise of personal jurisdiction over [the defendant] would offend [d]ue [p]rocess.” Red Wing
Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1358 (Fed. Cir. 1998).

The due process inquiry has two parts. First, the defendant must have “purposefully
established ‘minimum contacts’ in the forum State.” Burger King Corp. v. Rudzewicz, 471 U.S. 462,
474 (1985) (citation omitted). Second, the exercise of jurisdiction over the defendant must not
offend traditional notions of fair play and substantial justice. Int’ Shoe Co. v. Washington, 326 U.S.
310, 316 (1945) (citation omitted). A plaintiff may establish either general jurisdiction through
“contact[s] of a ‘continuous and systematic’ nature,” Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. 408, 416 (1984), or specific jurisdiction if the cause of action relates to or arises out
of the defendant’s contacts with the forum, see Burger King, 471 U.S. at 472. Plaintiff claims this

Court has both general and specific jurisdiction over Schroeder.


transfer the case to the Northern District of California, which was denied on March 24, 2003. Sitrick
later moved to amend the complaint to add claims against Schroeder for inducing infringement in
violation of 35 U.S.C. § 271(b). Sitrick alleged that Schroeder induced FreeHand to infringe its
patents by: (1) developing and producing the hardware and software used in the accused systems;
(2) developing the user’s guide for the systems; and (3) determining that FreeHand’s systems were
not infringing and/or that Sitrick’s patent claims would be invalid based on prior art after being
informed about the Sitrick patents and FreeHand’s alleged infringement thereof. See Sitrick v.
FreeHand Sys., Inc., No. 02 C 1568, 2004 WL 725306, at *1 (N.D. Ill. Mar. 31, 2004) (Sitrick IN).
The Court granted Plaintiffs motion to amend, finding that there was no undue delay or prejudice

and that the proposed amendment was not clearly futile. See id. at *3-7.

DISCUSSION

Schroeder brings this motion to dismiss for lack of personal jurisdiction pursuant to Federal
Rule of Civil Procedure 12(b)(2). Once a defendant has moved to dismiss for lack of personal
jurisdiction, the “plaintiff bears the burden of establishing that the Court may exercise personal
jurisdiction over the defendant[].” Steel Warehouse of Wis., Inc. y. Leach, 154 F.3d 712, 715 (7th
Cir. 1998); see also Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (“*{T]he
burden of proof is met by a prima facie showing that personal jurisdiction is conferred under the
relevant jurisdictional statute.’”) (quoting Nelson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th
Cir.1983)). The law of the Federal Circuit governs the issue of personal jurisdiction in this patent
case. See Deprenyl Animal Health, Inc. v, Univ. of Toronto Innovations Found., 297 F.3d 1343,

1348 (Fed. Cir. 2002); Hildebrand v. Steck Mfg. Co., Inc., 279 F.3d 1351, 1354 (Fed. Cir. 2002).


IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION DOCKETED
SEP 27 2004

DAVID H. SITRICK, )
)
Plaintiff, )

) Judge Ronald A. Guzman
ve )

) 02 C 1568

)
FREEHAND SYSTEMS, INC., and )
THEODORE L. SCHROEDER, )
)
Defendants. )

MEMORANDUM OPINION AND ORDER

Before the Court is Defendant Theodore L. Schroeder’s Motion to Dismiss Amended
Complaint for Lack of Personal Jurisdiction. For the reasons set forth below, Schroeder’s motion

is granted.

BACKGROUND

Plaintiff filed this patent infringement suit against Defendant FreeHand Systems, Inc.
(“FreeHand”) on March 5, 2002. The original complaint alleged that electronic music display
systems sold by FreeHand infringe two of Sitrick’s patents that cover systems for electronically
displaying music scores. This Court denied FreeHand’s motion to dismiss for lack of personal
jurisdiction, finding that FreeHand’s marketing efforts in Illinois, including a meeting it had with
the Chicago Symphony Orchestra and the Lyric Opera, constituted sufficient minimum contacts with
the state. See Sitrick v. FreeHand Sys., Inc., No. 02 C 1568, 2002 WL 31443128, at *3-5 (N.D. Ill.

Oct. 30, 2002) (Sitrick J). On November 12, 2002, FreeHand filed an answer and a motion to

AO