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Precor Inc. v. Keys Fitness Products

U.S. Court of Appeals, Federal Circuit


February 05, 1999

PRECOR INCORPORATED, PLAINTIFF-APPELLANT,
v.
KEYS FITNESS PRODUCTS, L.P. AND SEATTLE ATHLETIC & EXERCISE, INC., DEFENDANTS, AND MACRO PROGRESS DEFENDANT-APPELLEE.

Before Michel, Clevenger, and Gajarsa, Circuit Judges.

The opinion of the court was delivered by: Michel, Circuit Judge,

DECISION

Plaintiff-Appellant Precor Incorporated appeals from the order of the United States District Court for the Western District of Washington dismissing Precor's patent infringement suit against Defendant-Appellee Macro Progress for lack of personal jurisdiction. See Precor Inc. v. Keys Fitness Prods., L.P., No. C97-1608WD (W.D. Wash. Apr. 29, 1998). The district court held that the exercise of personal jurisdiction over Macro Progress, a Taiwanese corporation, would be unreasonable. The court, however, did not address the threshold question of whether the exercise of personal jurisdiction would otherwise comport with due process and the coterminous limits of the Washington long-arm statute. Because we hold that, as a matter of law, the exercise of personal jurisdiction over Macro Progress was not shown to have been unreasonable, we vacate the district court's order and remand for a determination, in accordance with the applicable constitutional and statutory standards, of whether personal jurisdiction may properly be exercised.

DISCUSSION

I.

Precor, a Delaware corporation with its principal place of business in Bothell, Washington, is a manufacturer of fitness equipment for home and commercial use. In 1995, U.S. Patent No. 5,383,829 (the "'829 patent") was issued to Larry Miller for an invention entitled "Stationary Exercise Device." The '829 patent's specification states that it "relates to a stationary exercise device for simulating running and stepping motions." '829 pat., col. 1, ll. 10-12. The abstract explains that the invention "permits the user[']s foot to travel in an inclined, oval path of travel." Precor exclusively licensed the '829 patent and introduced a fitness product covered by the patent. This new product was entitled the "EFX Elliptical Crosstrainer" and utilized a pair of foot supports connected to opposite sides of a wheel in a manner that permits the user's feet to travel in an elliptical path during exercise.

On October 7, 1997, Precor filed suit against Keys Fitness Product, L.P. ("Keys Fitness"), a Texas limited partnership, and Seattle Athletic and Exercise, Inc. ("Seattle Athletic"), a Washington corporation, in the Western District of Washington. Precor asserted infringement of the '829 patent by a product called the "E-Trainer," allegedly manufactured and sold by the defendants. Precor amended its complaint on October 29, 1997, to add as a further defendant Macro Progress, a Taiwanese corporation with its principal place of business in Taiwan. With respect to Macro Progress, Precor alleged:

"Defendant Macro Progress has continuously manufactured and exported, offered for sale, and sold products, especially products offered and sold under the name "E-Trainer", that infringe Precor's patent rights, inter alia, through manufacturing and shipping, directly or indirectly, products to Defendant Keys [Fitness] or other distributors for subsequent distribution or sale in Washington state and other parts of the U.S.A. Included among the Washington retail outlets is Defendant Seattle Athletic. The activities of Defendant Macro Progress constitute offers for sale or sales in the state of Washington and the Western District of Washington. Accordingly, both jurisdiction and venue are proper in this Court under 28 U.S.C. § 1391(c) and 1400(b)." Amended Complaint, ¶ 8. Precor's President additionally alleged, by affidavit, that in excess of 30,000 allegedly infringing devices manufactured by Macro Progress had been shipped to the United States and distributed by Keys Fitness. Decl. of William W. Potts in Supp. of Def. Precor Inc.'s Opp'n to Mot. to Dismiss or Stay, ¶ 6 (Apr. 13, 1998). Moreover, he declared that "[a]lthough I have not been able to confirm the exact nature of the relationship, I believe that the two companies have a common ownership, partnership, or agency relationship." Id.

On March 4, 1998, Precor and Keys Fitness entered into a settlement agreement. Consequently, the parties and the court agreed to dismiss the complaint as to Keys Fitness and Seattle Athletic on March 9, 1998. On March 19, 1998, Macro Progress moved to dismiss Precor's claims for lack of personal jurisdiction or, alternatively, to stay the suit pending reexamination of the '829 patent. The district court granted Macro Progress's motion with respect to dismissal in an order dated April 29, 1998.

The district court reasoned:

"Under Federal Circuit law, specific jurisdiction requires a showing that the defendant "purposefully directed [its] activities at residents of" the forum state and that "the litigation results from alleged injuries that arise out of or relate to those activities." Akro Corp. v. Luker, 45 F.3d 1541, 1545 (Fed. Cir. 1995) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-76 (1985)). Satisfaction of these two conditions alone, however, is insufficient. The exercise of personal jurisdiction must also be reasonable. Id. at 1549. Personal jurisdiction is unreasonable where "the plaintiff's interest and the state's interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum." Beverly Hills Fan v. Royal Sovereign Corp., 21 F.3d 1558, 1568 (Fed. Cir. 1994)."

"In the present case, the exercise of personal jurisdiction over Macro would be unreasonable. Macro is based in Taiwan. "The unique burdens placed upon one who must defend itself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders." Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 114 (1987). The State of Washington has little interest in adjudicating this case. The "E-Trainer" products in question are subject to a settlement agreement with former defendant Keys, and Macro has no other Washington customers. Finally, plaintiff has an adequate remedy in another forum. Suit can be brought in Taiwan or in any state where Precor finds infringing goods manufactured and sold by Macro Progress." Precor, slip op. at 2.

Precor timely appealed from the district court's order of dismissal and we have jurisdiction to hear this appeal pursuant to 28 U.S.C. § 1295(a)(1) (1994). Our review of whether the district court had jurisdiction over Macro Progress is de novo. See Viam Corp. v. Iowa Export-Import Trading Co., 84 F.3d 424, 427, 38 USPQ2d 1833, 1834 (Fed. Cir. 1996).

II.

We hold that it would not be unreasonable for the district court to exercise personal jurisdiction over Macro Progress. The Supreme Court has stated that "where a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985). Such considerations include: (1) the burden on the defendant; (2) the forum State's interest in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the shared interests of the States in furthering fundamental substantive policies. See id. at 476-77 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)).

Macro Progress did not "present a compelling case" of such unreasonableness before the district court. *fn1 Although it was established that Macro Progress is a Taiwanese corporation, Macro Progress provided no evidence of the particular burdens it would bear if it were required to defend itself in the Western District of Washington. Thus, for example, Macro Progress provided no evidence of its size, financial resources, or prior experience of dealing with the legal system of the United States. While Macro Progress did not establish that it would suffer an undue burden if it had to defend the suit, other considerations weigh heavily in favor of the reasonableness of exercising jurisdiction. The State of Washington certainly has a significant interest in having a court within its boundaries hear a patent infringement suit brought by a corporation whose principal place of business is Washington and predicated on acts occurring in that State. Precor also has a considerable interest in having its infringement suit heard in the State in which it primarily transacts business and has corporate offices. It is, of course, efficient to have this suit continue in the forum in which it was commenced. Finally, all the States, including Washington, have "definite and well-defined interests in commerce and scientific development." Viam, 84 F.3d at 430, 38 USPQ2d at 1837.

The district court placed particular weight on the fact that Macro Progress is a Taiwanese corporation. However, there is, of course, no per se rule that it is unduly burdensome for a foreign corporation to defend itself in federal court. Although the district court took note of the "unique burdens" placed on foreign defendants as described in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 114 (1987), that case presented facts very different from those alleged here. In Asahi Metal, unreasonableness was found when the only issue to be resolved by the California court was the indemnity claim of a Taiwanese corporation against a Japanese corporation and that question was probably to be governed by foreign law. By contrast, in the instant case, the Washington federal district court has been asked to decide whether a Taiwanese corporation, that has allegedly sold its products through distributors in Washington to Washington customers, has infringed a United States patent exclusively licensed by a corporation principally operating in Washington. This action, of course, arises under and is governed by the patent laws of the United States.

We further do not agree with the district court that the assertion of personal jurisdiction is rendered unreasonable by the fact that the other defendants have settled with Precor. Precor still possesses an unresolved claim for past acts of infringement against Macro Progress and Macro Progress is not bound by the other defendants' settlement agreement. Finally, unlike the district court, we place little weight on whether Precor "has an adequate remedy in another forum." Precor, slip op. at 2. Given that Precor principally operates in Washington and that Precor has alleged predicate acts of infringement of a United States patent in Washington, we are mindful of no reason why it would be unreasonable for Precor to bring suit against Macro Progress in Washington and we find both irrelevant, not to mention highly doubtful, the district court's unsupported statement that "[s]uit can be brought in Taiwan." Id.

III.

Although we hold that it is not unreasonable for the federal district court in Washington to assert personal jurisdiction over this defendant in this suit, we express no opinion as to whether the assertion of personal jurisdiction would otherwise comport with due process and the coterminous limits of the Washington long-arm statute, Wash. Rev. Code § 4.28.185 (1998). See Genetic Implant Sys., Inc. v. Core-Vent Corp., 123 F.3d 1455, 1458, 43 USPQ2d 1786, 1788 (Fed. Cir. 1997) (describing the Washington long-arm statute as "co-extensive with the limits of due process" (citing Quigley v. Spano Crane Sales & Serv., Inc., 422 P.2d 512, 514 (Wash. 1967); Tyee Constr. Co. v. Dulien Steel Prods., Inc., 381 P.2d 245, 251 (Wash. 1963)). Because the district court erroneously granted the dismissal on grounds of unreasonableness and did not consider the threshold question of whether the assertion of personal jurisdiction would accord with constitutional and statutory standards, we vacate the dismissal and remand the case so that the district court can give full consideration to that dispositive issue.

COSTS

Each party to bear its own costs.


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