The World in U.S. Courts: Summer 2017 - Personal Jurisdiction/Forum Non Conveniens
Rolf Kraemer sued Whizcut America, Inc.—a US company—and its Swedish parent Whizcut AB for patent infringement. Personal jurisdiction was based on an allegation that Whizcut-AB sold the allegedly infringing goods to its US subsidiary, and that the parent’s Internet presence was so significant as to be an independent basis for jurisdiction.
The District Court in Ohio observed that Kraemer was required to satisfy the different jurisdictional tests of the Ohio “long-arm” statute and the Due Process Clause of the US Constitution, but concluded that neither test had to be examined in detail because no relevant US contacts by Whizcut-AB had been alleged at all. Specifically, the Court found that Whizcut-AB delivered its products to its US subsidiary in Sweden for importation into the US, and so Whizcut-AB could not be seen as selling the allegedly infringing product in the US. In the course of its discussion, the Court sided with the line of authority finding that provisions in shipping documents describing when the risk of loss transferred (e.g., “FOB” or “Free Carrier”) were not themselves probative of the question when title transferred.
The Court also considered whether Whizcut-AB’s website satisfied the “sliding scale” test of the Zippo case to establish jurisdiction based on a defendant’s “purposeful availment’ of the protections of the law of the forum State. This test “distinguishes between interactive websites, where the defendant establishes repeated online contacts with residents of the forum state, and passive websites, where the defendant merely posts information on the site.” Jurisdiction will much more likely be found in the case of the interactive website than the passive one. Here, the Court found Kraemer had not made a strong showing because the Whizcut-AB website was only “semi-interactive,” permitting viewers to send messages and respond to job postings but not purchase products. Nor had Kraemer affirmatively alleged that any Ohio resident had used any of the website’s interactive features. This fact, combined with the website’s inability to support a purchases, persuaded the Court that the website’s connection with the forum was inadequate to support jurisdiction.
The Court also rejected Kraemer’s argument that jurisdiction over Whizcut-AB could be based on its 51% ownership of its US subsidiary and the overlap of one corporate employee. It found this showing insufficient to overcome the presumption that distinct corporations, even if in a parent-subsidiary relationship, should be treated independently for jurisdictional purposes.
[Editor’s note: The Kraemer case also appears in the Intellectual Property – Patent section of this report.]