Personal Jurisdiction In Michigan Over Taiwanese Manufacturer Based On Manufacturer’s Custom-Manufacture Of Allegedly Infringing Products For Michigan Corporation

The World in U.S. Courts: Winter 2018 - Intellectual Property – Patents | December.21.2017

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BOS GmbH & Co. KG v. Macauto Industrial Co., Ltd., US District Court for the Eastern District of Michigan, December 21, 2017

A German manufacturer and its US subsidiary (Bos) sued a Taiwanese corporation and its US subsidiary for infringing a patent relating to the production of retractable rear window shades for automobiles. The Taiwanese corporation (Macauto) argued that it was not subject to personal jurisdiction in Michigan over the claim, and sought dismissal.

The Court observed that precedent from the US Court of Appeals for the Federal Circuit, which has jurisdiction over appeals in patent infringement cases, requires that jurisdiction be judged based on the law of the forum State and be consistent with the Due Process Clause of the US Constitution. Because Michigan asserts jurisdiction to the full extent permitted under the Due Process Clause, only the constitutional test was relevant. That test requires a plaintiff to show that the defendant “purposefully directed its activities at residents of the forum state” and the litigation arises out of or is related to those activities. If those showings are made, the burden falls on the defendant to show that that requiring it to participate in the litigation is otherwise unreasonable or unfair.

The Court stated that the plaintiff would have to satisfy the requirements of the “stream of commerce” theory of personal jurisdiction, and that two versions of this test appeared in the law. It observed that the Federal Circuit had followed the more stringent of the tests, requiring that a defendant not only place a product into “the stream of commerce” in the US with a “reasonable expectation that it could end up in the forum state,” but also that it have undertaken conduct “specifically targeting the forum state.” In the case at bar, the plaintiffs alleged that Macauto custom-manufactured for, and sold its products to, the Michigan-based Ford Motor Company, and that cars containing the products were sold in that State. The Court found this conduct to reflect the required “targeting” of Michigan, especially given the requirement that facts be construed “in the light most favorable to Plaintiff” where a jurisdictional motion is decided without discovery or an evidentiary hearing.

The Court also rejected Macauto’s argument that subjecting it to jurisdiction was unfair, stating that Macauto’s burden among other things was to establish that Michigan’s interests in having the case adjudicated in-State are “so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum.” The Court noted that cases increasingly find that technology has reduced the burden associated with litigation in the US against a non-US entity, and found the fact that Macauto and its US subsidiary (over which jurisdiction was not challenged) were represented by the same counsel also to suggest that the burden of litigation would not be unreasonable. It also recognized that Michigan has a “significant interest in discouraging patent infringement-related injuries that impact the residents of this state from products sold here.”

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