Merial Limited, BASF Agro B.V. v. CIPLA Ltd., et al., Nos. 2011-1471, 1472 (Fed. Cir. 2012), a decision from the federal Court of Appeals level court with jurisdiction over patent appeals, deserves a read by international practitioners — at least the part of the decision that involves the discussion of service of process.  (There is another interesting ruling in this decision relating to exterritoriality, which I will address in my next post.)

The decision analyzed whether a District Court’s entry of a default judgment was appropriate.  This question, in turn, depended on whether personal jurisdiction existed in the District Court some years earlier.  The Federal Circuit found that Federal Circuit law, rather than the law of any of the “numbered” Circuits in which the District Court rendering the decision was located, governed the analysis.  Ultimately, however, the issue turned on the Court of Appeals interpretation of the Federal Rules of Civil Procedure, so the determination has broader applicability than to just patent cases.

The Federal Rule at issue is Rule 4(k)(2), which “was adopted to provide a forum for federal claims in situations where a foreign defendant lacks substantial contacts with any single state but has sufficient contacts with the United States as a whole to satisfy due process standards and justify the application of federal law”.  In the words of the Federal Circuit, the Rule “approximates a federal long-arm statute”,

allowing district courts to exercise personal jurisdiction even if the defendant’s contacts with the forum state would not support jurisdiction under that state’s long-arm statute, as long as (1) the plaintiff’s claim arises under federal law, (2) the defendant is not subject to personal jurisdiction in the courts of any state, and (3) the exercise of jurisdiction satisfies due process requirements.

Given this standard, specifically requisite # 2, the question arose how a plaintiff proved that the defendant is not subject to personal jurisdiction in the courts of any state.   The Federal Circuit ruled that, given the difficulties of requiring a plaintiff to prove that “the defendant is not subject to personal jurisdiction in the courts of any state”, the Court recognized a burden-shifting rule that “if the defendant contends that he cannot be sued in the forum state and refuses to identify any other where suit is possible, then the federal court is entitled to use Rule 4(k)(2).”

The principal question on this part of the appeal was whether the defendant could identify after-the-fact a jurisdiction that it would have been willing to have been sued, rather than a jurisdiction where it could have been sued in the earlier proceeding.  The Federal Circuit  majority would not permit the defendant to do so, fearing gamesmanship after-the-fact.  The dissent would have permitted it.  As the dissent recognizes, it is a signal characteristic that a defendant can consent to jurisdiction — even in a place where it might not otherwise have been sued.  Also, says the dissent, the Federal Circuit majority decision appears to conflict with the Seventh Circuit’s decision in ISI Int’l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548 (7th Cir. 2001), which, the dissent says, did in fact permit the defendant to name another jurisdiction and thereby preclude application of Rule 4(k)(2) finding.