Court Opinion

ID: 4345697
Source: CourtListenerOpinion
Date Created: 2018-11-29 17:00:35.45835+00
Date Added: 2024-06-11T14:20:35.985785
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                 ______________________

       MAXCHIEF INVESTMENTS LIMITED,
              Plaintiff-Appellant

                            v.

               WOK & PAN, IND., INC.,
                  Defendant-Appellee
                ______________________

                       2018-1121
                 ______________________

   Appeal from the United States District Court for the
Eastern District of Tennessee in No. 2:15-cv-00153-JRG-
MCLC, Judge J. Ronnie Greer.
                 ______________________

              Decided: November 29, 2018
                ______________________

    MICHAEL J. BRADFORD, Luedeka Neely Group, PC,
Knoxville, TN, argued for plaintiff-appellant. Also repre-
sented by MARK P. CROCKETT.

    PATRICIA LOUISE RAY, D&R IP Law Firm, APLC,
Alhambra, CA, argued for defendant-appellee. Also
represented by TONY WONG, Monterey Park, CA.
                ______________________

    Before DYK, REYNA, and HUGHES, Circuit Judges.
2     MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.

DYK, Circuit Judge.
    Maxchief Investments Limited (“Maxchief”) appeals
from the judgment of the District Court for the Eastern
District of Tennessee.      The district court dismissed
Maxchief’s declaratory judgment action against Wok &
Pan, Ind., Inc. (“Wok”) for lack of personal jurisdiction
and dismissed Maxchief’s tortious interference claim for
lack of subject matter jurisdiction. Because Wok lacked
sufficient contacts with the forum state of Tennessee for
personal jurisdiction as to both the declaratory judgment
claim and the tortious interference claim, we affirm.
                       BACKGROUND
    Maxchief makes plastic folding tables. It has its prin-
cipal place of business in China and distributes one of its
tables—the UT-18 table—exclusively through Meco
Corporation (“Meco”), which is located in Greenville,
Tennessee. Meco sells the UT-18 tables to retailers such
as Staples, Inc. (“Staples”) and The Coleman Company
(“Coleman”), which in turn sell the tables to consumers.
    Wok competes with Maxchief in the market for plastic
folding tables, and also has its principal place of business
in China. Wok is the owner of U.S. Patent Nos. 5,957,061,
8,881,661, 8,931,421, and 9,089,204 (collectively, “the Wok
patents”), which are directed to folding tables.
    Two separate actions are relevant here. In February
2015, Wok filed suit against Maxchief’s customer, Staples,
in the Central District of California, alleging that Staples’
sale of Maxchief’s UT-18 table infringed the Wok patents.
See Wok & Pan, Ind., Inc. v. Staples, Inc., No. 2:15-cv-
00809 (C.D. Cal.) (“the Staples action”). Staples request-
ed that Meco, the distributor of the table, defend and
indemnify Staples. Meco in turn requested that Maxchief
defend and indemnify Meco and Staples. The Staples
action is stayed pending the outcome of this case.
MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.    3

    Separate from the Staples action, Maxchief filed this
action against Wok in the Eastern District of Tennessee.
In its amended complaint, filed on September 2, 2016,
Maxchief sought declarations of non-infringement or
invalidity of all claims of the Wok patents. The complaint
also alleged tortious interference with business relations
under Tennessee state law. Wok moved to dismiss all
claims for lack of personal jurisdiction. 1 There is no
contention here that Wok is subject to general jurisdiction
in Tennessee. Maxchief claims only that Wok is subject to
specific personal jurisdiction.
    On September 29, 2017, the district court dismissed
the declaratory judgment claim for lack of personal juris-
diction. Maxchief Invs. Ltd. v. Wok & Pan, Ind., Inc., No.
2:15-CV-153, 2017 WL 6601921 (E.D. Tenn. Sept. 29,
2017). The court held that Maxchief failed to allege that
Wok had sufficient minimum contacts with Tennessee,
because although Wok “sought to enforce the patents
against other parties in other courts,” Wok “did not seek
to enforce [its] patents in the forum state of Tennessee.”
Id. at *7.
     With respect to the state law tortious interference
claim, the district court noted that Maxchief had not
“explicitly allege[d]” that the court had subject matter
jurisdiction over this claim, and indicated that amend-
ment of the complaint would be futile and unduly prejudi-
cial to Wok because “there is no independent federal basis

   1    Maxchief’s complaint also alleged unfair competi-
tion under the Lanham Act, 15 U.S.C. § 1125, but in
response to Wok’s motion to dismiss for lack of personal
jurisdiction, Maxchief did not argue that personal juris-
diction existed over this claim. The district court there-
fore dismissed the unfair competition claim for lack of
personal jurisdiction, and that claim is not involved in
this appeal.
4     MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.

for subject matter jurisdiction on this claim.” Id. at *9–
10.
    Maxchief timely appealed. We have jurisdiction un-
der 28 U.S.C. § 1295(a)(1).
                       DISCUSSION
     The central issue in this case is whether there is spe-
cific personal jurisdiction over Wok for the declaratory
judgment and state law tortious interference claims.
Given the centrality of patent law to these claims, here
personal jurisdiction is governed by the law of our circuit.
See Xilinx, Inc. v. Papst Licensing GmbH & Co. KG, 848
F.3d 1346, 1352 (Fed. Cir. 2017) (stating that Federal
Circuit law applies to personal jurisdiction over claim
seeking declaratory judgments of non-infringement and
invalidity); 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d
1373, 1377 (Fed. Cir. 1998) (holding that Federal Circuit
law applies to personal jurisdiction over state law claims
where the “resolution of the patent infringement issue”
would be a “significant factor” in resolving those state law
claims). We review the question of personal jurisdiction
de novo. Xilinx, 848 F.3d at 1352.
            I. DECLARATORY JUDGMENT CLAIM
     The parties dispute whether personal jurisdiction ex-
ists over Counts I, II, and III of the complaint, which seek
declaratory judgments of non-infringement or invalidity of
three of the Wok patents.
    Personal jurisdiction must comport with the state’s
long-arm statute and with due process under the U.S.
Constitution. Id. Tennessee’s long-arm statute allows
the exercise of personal jurisdiction to the full extent
permissible under the U.S. Constitution. See First Cmty.
Bank, N.A. v. First Tenn. Bank, N.A., 489 S.W.3d 369,
383–84 (Tenn. 2015) (citing Tenn. Code Ann. § 20-2-
214(a)(6)). Thus, the sole question here is whether the
MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.   5

exercise of jurisdiction would be consistent with due
process.
    Due process requires that a defendant have sufficient
“minimum contacts” with the forum state such that the
suit not offend “traditional notions of fair play and sub-
stantial justice.” Bristol-Myers Squibb Co. v. Superior
Court of Cal., 137 S. Ct. 1773, 1785 (2017) (quoting Int’l
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
    The minimum contacts inquiry involves two related
requirements. First, the defendant must have purposeful-
ly directed its conduct at the forum state. See Goodyear
Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924
(2011). Second, the claim must “arise out of or relate to
the defendant’s contacts with the forum.” Bristol-Myers,
137 S. Ct. at 1780 (brackets omitted).
     A declaratory judgment claim arises out of the pa-
tentee’s contacts with the forum state only if those con-
tacts “relate in some material way to the enforcement or
the defense of the patent.” Avocent Huntsville Corp. v.
Aten Int’l Co., 552 F.3d 1324, 1336 (Fed. Cir. 2008).
Accordingly, in this context the minimum contacts prong
requires some enforcement activity in the forum state by
the patentee. Id. For example, we have found minimum
contacts where the patentee sent infringement notice
letters to an entity doing business in the forum state and
traveled there to discuss the alleged infringement, see
Xilinx, 848 F.3d at 1354, or where the patentee entered
into an exclusive licensing agreement with an entity in
the forum state that would permit the licensee to litigate
infringement claims against third party infringers of the
licensed patents, see Breckenridge Pharm., Inc. v. Metabo-
lite Labs., Inc., 444 F.3d 1356, 1366 (Fed. Cir. 2006)
6       MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.

(citing Akro Corp. v. Luker, 45 F.3d 1541, 1546 (Fed. Cir.
1995)). 2
    Maxchief contends that Wok’s lawsuit against Staples
in the Central District of California created sufficient
contacts with Tennessee because the suit sought a broad
injunction against “all those in active concert” with Sta-
ples, including its “distributors,” and the distributor of
Staples’ table was Meco, a Tennessee resident. Appel-
lant’s Br. at 16. Maxchief maintains this lawsuit had
“effects” in Tennessee because Wok’s requested injunction
would extend to Meco, and Maxchief would respond to any
injunction by changing its Tennessee activities. Accord-
ing to Maxchief, the Staples lawsuit therefore created
jurisdiction under Calder v. Jones, 465 U.S. 783, 791
(1984), where the Supreme Court held that a California
court had jurisdiction over two Florida newspapermen
because their intentional conduct in Florida was calculat-
ed to cause injury in California.
    Contrary to Maxchief’s argument, 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. Walden v. Fiore,
571 U.S. 277, 286 (2014); see 4A Charles Alan Wright &
Arthur R. Miller, Federal Practice & Procedure § 1069.1
(4th ed. 2018) (“Wright & Miller”) (“The ‘effects test’
continues to have viability, but only when the defendant’s

    2   Maxchief points to Wok’s shipments and sales of
tables in Tennessee to establish minimum contacts, but
concedes that “the personal jurisdiction inquiry for patent
declaratory judgment claims . . . focuses on patent en-
forcement activities directed at residents of a forum.”
Appellant’s Br. at 15. Shipments and sales of patented
products by the patent holder are not enforcement activi-
ties, and thus do not qualify as relevant minimum con-
tacts. See Avocent, 552 F.3d at 1336.
MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.       7

conduct both has an effect in the forum state and was
directed at the forum state by the defendant . . . .”). In
Calder, the defendants “expressly aimed” “their inten-
tional, and allegedly tortious, actions” at California: they
relied on phone calls to California sources for their article,
wrote the story about the plaintiff’s activities in Califor-
nia, and caused reputational injury in California by
writing the allegedly libelous article and causing it to be
circulated in the state. See 465 U.S. at 788–90. “Indeed,
because publication to third persons is a necessary ele-
ment of libel, the defendants’ intentional tort [in Calder]
actually occurred in California.” Walden, 571 U.S. at 288
(internal citation omitted). By contrast, Wok’s lawsuit
against Staples—filed in California against a California
resident—was directed at California, not Tennessee. The
lawsuit alleged that the actions taken by a non-resident of
Tennessee (Staples) infringed the patents. The fact that
the requested injunction might apply to a Tennessee
resident (Meco) and non-party to the action (acting in
concert with the defendant) is too attenuated a connection
to satisfy minimum contacts.
     This case is analogous to Walden. There, Nevada
plaintiffs sued an out-of-state defendant for conducting an
allegedly unlawful search while the plaintiffs were in
Georgia preparing to board a plane bound for Nevada. Id.
at 279–81. The Court held that the Nevada courts lacked
jurisdiction even though the plaintiffs were Nevada
residents and “suffered foreseeable harm in Nevada”
because the defendant’s “relevant conduct occurred entire-
ly in Georgia.” Id. at 289, 291. The defendant’s “actions
in Georgia did not create sufficient contacts with Nevada
simply because he allegedly directed his conduct at plain-
tiffs whom he knew had Nevada connections.” Id. at 289.
So too here. Wok’s California lawsuit did not create
sufficient contacts with Tennessee simply because Wok
directed the lawsuit at an entity (Staples) that Wok knew
had a Tennessee connection (Meco).
8     MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.

    In support of its position, Maxchief also relies on Si-
lent Drive, Inc. v. Strong Industries, Inc., 326 F.3d 1194
(Fed. Cir. 2003). That reliance is misplaced. In Silent
Drive, we held that the defendants created minimum
contacts with Iowa by making efforts to enforce a Texas
state court injunction against the plaintiff, an Iowa resi-
dent. See id. at 1204–05. Specifically, the defendants
sent letters to the plaintiff in Iowa detailing the serious
consequences of disobeying the Texas injunction, which
specifically named the plaintiff and the location of its
headquarters in Iowa. Id. Under those circumstances,
the defendants’ enforcement efforts created sufficient
contacts with Iowa. Unlike the situation in Silent Drive,
here there is no allegation that Wok has sent letters to a
Tennessee resident in an attempt to enforce an out-of-
state injunction against it.
     Finally, Maxchief argues that Wok created minimum
contacts related to patent enforcement by sending an
infringement notice letter to Maxchief’s lawyer in Tennes-
see. As discussed more fully below, because this letter
alleged infringement by Coleman, a Kansas company that
is not alleged to operate in Tennessee, the letter consti-
tutes a contact with Kansas, not Tennessee, regardless of
the fact that it was mailed to a lawyer in Tennessee. For
this reason alone there is no personal jurisdiction in
Tennessee over the declaratory judgment claim. Alterna-
tively, even if the letter qualified as a minimum contact
with Tennessee, under Red Wing Shoe Co. v. Hockerson-
Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998), merely
sending notice letters of patent infringement does not
satisfy the “fair play and substantial justice” prong of the
personal jurisdiction inquiry, because principles of fair
play “afford a patentee sufficient latitude to inform others
of its patent rights without subjecting itself to jurisdiction
in a foreign forum.” Id. at 1360–61; cf. Xilinx, 848 F.3d at
1354 (personal jurisdiction over declaratory judgment
MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.     9

action proper where patentee sent notice letters and
visited plaintiff in the forum state).
    Accordingly, the district court lacked personal juris-
diction over the declaratory judgment claim.
            II. TORTIOUS INTERFERENCE CLAIM
    Maxchief also asserted a claim for tortious interfer-
ence under Tennessee state law, alleging that Wok dam-
aged Maxchief’s business relationships with its customers
“by sending objectively and subjectively baseless asser-
tions of patent infringement” to these customers. J.A. 95–
96. The district court dismissed this claim for failure to
sufficiently allege original subject matter jurisdiction and
concluded that an amendment to include such an allega-
tion should not be permitted. It concluded that “there is
no independent federal basis for subject matter jurisdic-
tion on this claim, [and] the Court need not reach the
issue of whether the Court has personal jurisdiction.”
J.A. 15. We need not decide the issue of subject matter
jurisdiction because here there is no personal jurisdiction
over the tortious interference claim. 3 See Ruhrgas AG v.
Marathon Oil Co., 526 U.S. 574, 578 (1999).

   3    Contrary to the district court’s conclusion that
“there is no independent federal basis for subject matter
jurisdiction on this claim,” there may well be original
subject matter jurisdiction over this claim under 28
U.S.C. § 1338. Here, to prevail on its tortious interference
claim, Maxchief would have to prove that Wok engaged in
“unfounded litigation,” see Trau-Med of Am., Inc. v. All-
state Ins. Co., 71 S.W.3d 691, 701 n.5 (Tenn. 2002), which
in turn would require Maxchief to prove non-infringement
or invalidity of Wok’s patents. Our past cases have “con-
cluded that similar state law claims premised on allegedly
false statements about patents raised a substantial ques-
tion of federal patent law,” thus conferring jurisdiction
10    MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.

    We conclude that there is no personal jurisdiction
over the tortious interference claim. It may be that
sending a single notice letter into the forum state, di-
rected to a customer doing business in the state, could
provide personal jurisdiction over a tortious interference
claim. See Burger King Corp. v. Rudzewicz, 471 U.S. 462,
475 n.18 (1985) (“So long as it creates a ‘substantial
connection’ with the forum, even a single act can support
jurisdiction.”) As explained above, in the context of

under § 1338. Forrester Envtl. Servs., Inc. v. Wheelabra-
tor Techs., Inc., 715 F.3d 1329, 1334 (Fed. Cir. 2013)
(citing Additive Controls & Measurement Sys., Inc. v.
Flowdata, Inc., 986 F.2d 476, 478 (Fed. Cir. 1993); Hunter
Douglas, Inc. v. Harmonic Design, Inc., 153 F.3d 1318,
1329 (Fed. Cir. 1998)).
     These cases “may well have survived the Supreme
Court’s decision” in Gunn v. Minton, 568 U.S. 251 (2013).
See Forrester, 715 F.3d at 1334. To be sure, in Gunn the
mere existence of a patent law issue did not confer § 1338
federal jurisdiction over a claim alleging malpractice in
the handling of a patent case. Id. at 259–61; Forrester,
715 F.3d at 1334; Xitronix Corp. v. Kla-Tencor Corp., 882
F.3d 1075, 1076 (Fed. Cir. 2018). But because a tortious
interference claim like the one presented here involves
determining infringement and validity, this is a situation
in which there is potential for “inconsistent judgments
between state and federal courts,” see Forrester, 715 F.3d
at 1334, a circumstance that Gunn itself indicated could
support federal jurisdiction, 568 U.S. at 261–62. See also
Xitronix, 882 F.3d at 1078 (holding that a Walker Process
monopolization claim “does not present a substantial
issue of patent law” in part because “[t]here is no dispute
over the validity of the claims”). We leave this issue for
another day.
MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.    11

declaratory judgment claims, notice letters typically
satisfy the “minimum contacts” prong. See Xilinx, 848
F.3d at 1354; Red Wing, 148 F.3d at 1360. The same is
true for tortious interference claims predicated on false
allegations of patent infringement: in both contexts, the
patentee purposefully directs activities at the forum state
by sending notice letters to residents of the state. In the
declaratory judgment context, notice letters do not suffice
for personal jurisdiction because they do not satisfy the
“fair play and substantial justice” prong due to policy
considerations unique to patent law. See Red Wing, 148
F.3d at 1360–61; Silent Drive, 326 F.3d at 1206. But
those policy considerations, which are premised upon the
interest in patent enforcement, do not apply to state law
tortious interference claims, which primarily serve to
protect the business relationships of in-state businesses.
See Silent Drive, 326 F.3d at 1206 (explaining that the
patent-specific policy concerns discussed in Red Wing do
not apply to “state court injunctions, which are designed
to operate primarily in the forum”). Thus, a single letter
directed to a business in the forum state could well create
personal jurisdiction over a tortious interference claim.
    But here, there is no claim that the allegedly infring-
ing entity receiving Wok’s notice letter—Coleman—was a
resident of the forum state or did business there. To the
contrary, Maxchief’s complaint refers to “The Coleman
Company, Inc. of Wichita, Kansas.” J.A. 89. Thus, Wok’s
letter alleging infringement by Coleman is properly
considered a contact with Kansas, not Tennessee. Wok
sent its letter to Maxchief’s lawyer, who was responding
on Coleman’s behalf and was located in Tennessee. We
have repeatedly held, however, that merely sending a
notice letter to a lawyer in the forum state does not con-
stitute activity directed at the forum state where the
entity alleged to infringe does not operate in the state.
See Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed.
Cir. 2001) (holding that a letter alleging infringement of a
12     MAXCHIEF INVESTMENTS LIMITED v. WOK & PAN, IND., INC.

California resident was “directed at” California; “the fact
that [the lawyer receiving the letter] was located in New
York is immaterial”); Akro, 45 F.3d at 1546 (holding that
notice letters were directed to the allegedly infringing
entity in Ohio, not to the entity’s lawyer in North Caroli-
na). Accordingly, Wok’s letter alleging infringement by
Coleman was directed to Coleman in Kansas, not the
lawyer responding on Coleman’s behalf in Tennessee.
    In sum, the district court lacked personal jurisdiction
over both the declaratory judgment and tortious interfer-
ence claims.
                        CONCLUSION
   We hold that Maxchief has not established that per-
sonal jurisdiction over Wok is proper in Tennessee.
Accordingly, we affirm the district court’s dismissal of
Maxchief’s complaint.
                       AFFIRMED
                           COSTS
     No costs.