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Attractive U.S. markets provide an increasing incentive to foreign companies to capitalize on their intellectual property by obtaining U.S. patents. This trend is apparent, considering that in 2000 as many as 44.3% of all filings in the U.S. Patent and Trademark Office were foreign. See www.uspto.gov/go/taf/us_stat.pdf. As U.S. patent owners, these foreign companies receive a recognized U.S. property right that is enforceable in U.S. district courts. As a plaintiff, a foreign company, to varying degrees, may pick and choose its forum in which to enforce its patent�an inevitable consequence that many U.S. companies may dread. Jurisdiction over foreign defendants under 1993 rule On the other hand, before 1993, a U.S. company pre-emptively taking a truly foreign company to court to seek a declaration of noninfringement or invalidity of a patent was limited to the U.S. District Court for the District of Columbia under 35 U.S.C. 293. Now, Fed. R. Civ. P. 4(k)(2) gives U.S. companies an infrequently used option of bringing such actions (and other federal law claims) in their home districts, even if the foreign patentee has no contacts at all within that state. Prior to 1993, the difficulty centered upon obtaining personal jurisdiction over a foreign defendant. If a U.S. company wanted to bring a patent lawsuit against a foreign company, it had to obtain jurisdiction by either a state long-arm statute, a federal rule allowing for personal jurisdiction if nationwide service of process was allowed or, for declaratory judgment actions, filing the lawsuit in the U.S. District Court for the District of Columbia pursuant to 35 U.S.C. 293 if there was no registered agent filed with the PTO. However, in many cases, these options were either unavailable or unattractive. The first option was unavailable if the foreign company was truly foreign-that is, it had no offices, employees, registered agents, etc., such that the company lacked sufficient contacts with any state for personal jurisdiction. For a patent infringement suit, the second option was not available because the U.S. patent laws do not provide for nationwide service of process. The third option may not have been particularly attractive, especially if the U.S. company was not located near the District of Columbia or lacked the financial ability or desire to maintain a suit there. Thus, U.S. companies were placed at a disadvantage compared to their foreign counterparts in obtaining a preferred forum for patent cases. This difficulty was not limited to patent cases, but also arose in many other types of federal claims against foreign defendants. Many courts recognized this difficulty, and it was directly addressed by the U.S. Supreme Court in Omni Capital Int’l Ltd. v. Rudolf Wolff & Co. Ltd., 484 U.S. 97, 111 (1987). In that case, involving the Commodity Exchange Act, commodities futures investors brought an action against marketers of a trading program on the ground that they fraudulently induced the plaintiffs to participate in violation of various securities laws. The defendants impleaded a British corporation, but these claims were dismissed because the district court concluded that the requirements of the Louisiana long-arm statute were not met. On appeal, the 5th U.S. Circuit Court of Appeals, sitting en banc, affirmed in a per curiam opinion. Point Landing Inc. v. Omni Capital Int’l Ltd., 795 F.2d 415 (5th Cir. 1986). On petition for certiorari, the Supreme Court held that the district court lacked personal jurisdiction over the British corporation, as there was no implied authorization for nationwide service of process under the Commodity Exchange Act and the requirements of the Louisiana long-arm statute were not met. Speaking about what it perceived to be a gap in personal jurisdiction law, however, the court stated, “[w]e are not blind to the consequences of the inability to serve process on [two foreign defendants]. A narrowly tailored service of process provision, authorizing service on an alien in a federal-question case when the alien is not amenable to service under the applicable state long-arm statute, might well serve the ends of the [Commodity Exchange Act] and other federal statutes. It is not for the federal courts, however, to create such a rule as a matter of common law. That responsibility, in our view, better rests with those who propose the Federal Rules of Civil Procedure and with Congress.” 484 U.S. at 111. In 1993, Congress responded by enacting Rule 4(k)(2), which gives entities based in the United States the ability to commence actions against truly foreign corporations in any U.S. district court under certain circumstances. Rule 4(k)(2) reads, “If the exercise of jurisdiction is consistent with the Constitution and laws of the United States, serving a summons or filing a waiver of service is also effective, with respect to claims arising under federal law, to establish personal jurisdiction over the person of any defendant who is not subject to the jurisdiction of the courts of general jurisdiction of any state.” Congress noted that this “paragraph corrects a gap in the enforcement of federal law . . . [when] the defendant was shielded from the enforcement of federal law by the fortuity of a favorable limitation on the power of state courts, which was incorporated into the federal practice by the former rule.” Rule 4 Advisory Committee Notes (1993). As Rule 4(k)(2) has made its way through the federal courts, the intricacies and potential for this rule have emerged. To initiate a lawsuit, a U.S. entity may serve process on the defendant through Rule 4(f), which authorizes worldwide service over foreign defendants. This rule then works in tandem with Rule 4(k)(2). CFM Inc. v. Steag Microtech Inc., 965 F. Supp. 561, 564 n.2 (D. Del. 1997). Service then will establish personal jurisdiction under the rule if a plaintiff can satisfy three requirements: The claim must arise under federal law, the defendant must be beyond the jurisdiction reach of any state court and the exercise of jurisdiction must not offend the Constitution or other federal law. United States v. Swiss American Bank Ltd., 191 F.3d 30 (1st Cir. 1999). As detailed below, these requirements are particularly suited to patent cases against foreign companies. If a U.S. company wants a determination that the foreign-owned U.S. patent is invalid or not infringed, the first 4(k)(2) requirement is always satisfied because lawsuits to declare U.S. patents invalid or not infringed arise under the U.S. patent statute. The second requirement will be satisfied if the foreign company is truly foreign-that is, it has no offices, property, employees or registered agents in any state in such capacity as to meet the requirements of the state long-arm statute. Pharmachemie B.V. v. Pharmacia SpA, 934 F. Supp. 484, 487 (D. Mass. 1996). The third requirement will likely be satisfied as well, because such actions relate to a U.S. patent that the foreign company has obtained and with which it is threatening the U.S. company. However, the advisory committee further notes that aliens residing in a foreign country should not be subject to forum selections so onerous that injustice could result. It may also be possible for a U.S. company under this rule to bring a claim to enforce its own patents against a foreign company in the U.S. company’s district of choice if the above three elements can be satisfied. In Progressive Games Inc. v. Amusements Extra Inc., 83 F. Supp. 2d 1185 (D. Colo. 1999), the U.S. patentee succeeded in establishing that some of the foreign defendants were subject to jurisdiction under Rule 4(k)(2) because, while they had insufficient contacts with any particular state to establish long-arm jurisdiction, they did have sufficient contacts with the United States as a whole related to their infringing activities to warrant application of this rule. In Pharmachemie B.V., 934 F. Supp. at 484, the foreign company argued that Rule 4(k)(2) was not applicable because it was subject to personal jurisdiction and service of process for lawsuits affecting its patent rights in the U.S. District Court for the District of Columbia pursuant to 35 U.S. 293. After an extensive review of the legislative history of Rule 4(k)(2), the district court determined that the plain language of Rule 4(k)(2) applies to a foreign defendant not subject to the jurisdiction of the courts “of general jurisdiction of any state.” Because the U.S. District Court for the District of Columbia, like all federal courts, is a court of limited jurisdiction, the literal requirements for the exercise of jurisdiction pursuant to Rule 4(k)(2) were found to have been satisfied. Id. Rule used in remarkably few patent cases Because Rule 4(k)(2) is particularly applicable to patent cases, it is somewhat surprising that there have been remarkably few patent cases in which this rule has been used. The only two reported patent cases, Pharmachemie B.V. and Progressive Games Inc., addressed above, both found Rule 4(k)(2) applicable. More recently, Rule 4(k)(2) was applied to maintain jurisdiction over a Belgian company in a patent lawsuit in an unreported decision. Monsanto Co. v. Bayer BioScience N.V., No. 4:03CV00042 (E.D. Mo. July 1, 2003). To date, the Federal Circuit has not explicitly addressed the requirements of Rule 4(k)(2), but has affirmed a district court’s assertion of personal jurisdiction under the rule, stating “[w]e discern no error in the district court’s ruling.” Cochran Consulting Inc. v. Ulwatec USA Inc., 102 F.3d 1224, 1232 (Fed. Cir. 1996). Of course, Rule 4(k)(2) is not limited to patent cases and may apply to any claim based on federal law, including other IP claims such as copyright and trademark claims. The rule is also not limited to claims against foreign companies, but applies to actions against foreign individuals and partnerships as well. Steven G. Spears is a partner in the intellectual property practice of the Houston office of Howrey Simon Arnold & White. His practice focuses on patent, trade secret and trademark litigation and consulting involving the chemical and biotechnology industries. Michelle C. Replogle is an associate in the same office. Her practice focuses on patent and trade secret litigation, prosecution and counseling. The authors represented the plaintiffs in Monsanto v. Bayer BioScience, a case discussed in this article.

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