Federal Circuit Says Gilstrap’s Grant of CA Transfer to Chinese Company was Improper

The U.S. Court of Appeals for the Federal Circuit (CAFC) in a precedential order yesterday granted a petition for writ of mandamus vacating Judge Rodney Gilstrap’s transfer of two cases out of the Eastern District of Texas to California. The petition was brought by Stingray IP Solutions, LLP and was opposed by TP-Link Technologies, a Chinese company, which Stingray accused of patent infringement.

Stingray first filed the patent infringement suits in the Eastern District of Texas and TP-Link moved to dismiss for lack of personal jurisdiction or to transfer the cases to the Central District of California pursuant to 28 U.S.C. § 1406. After the Texas court granted transfer under Section 1406, Stingray petitioned the Federal Circuit for mandamus “solely on the issue of whether TP-Link’s unilateral, post-suit consent to personal jurisdiction in another state (California) defeated application of Rule 4(k)(2).”

Federal Rule of Civil Procedure 4(k)(2) states:

“For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if:

(A) the defendant is not subject to jurisdiction in any state’s courts of general jurisdiction; and

(B) exercising jurisdiction is consistent with the United States Constitution and laws.”

The CAFC’s opinion noted that district courts have been “deeply split” over whether a foreign defendant can defeat Rule 4(k)(2) personal jurisdiction by unilaterally consenting to suit in a different district. This divide warrants mandamus review, explained the CAFC. “Resolving this disagreement is important, as it will ‘reduce the widespread disparities in rulings on th[is] fundamental legal standard[],’” said the court, quoting In re Micron Tech., Inc.

While TP-Link argued that mandamus relief is inappropriate for rulings on Section 1406 motions because appeal from a final judgment is possible, the CAFC said “[w]hile that is ordinarily true, there may also be, as we have already explained, ‘narrow circumstances’ in which mandamus relief is granted because ‘doing so is important to ‘proper judicial administration.’”

TP-Link also argued that the Rule 4(k)(2) issue was not properly before the CAFC because Stingray did not adequately present it to the district court and therefore forfeited it and that  Stingray could have brought suit in the Central District of California regardless of consent, but the CAFC dismissed both of these arguments as well.

Turning to the merits, the Federal Circuit focused on the so-called negation requiremet of Rule 4(k)(2), which requires “the defendant is not subject to jurisdiction in any state’s courts of general jurisdiction.” Citing previous Federal Circuit and Supreme Court case law to support its view, the court explained that unilateral post-suit consent does not satisfy the defendant’s burden under the negation requirement:

“[W]e now confirm that ‘the defendant’s burden under the negation requirement entails identifying a forum where the plaintiff could have brought suit—a forum where jurisdiction would have been proper at the time of filing, regardless of consent.’… A defendant (such as TP-Link) cannot simply use a ‘unilateral statement of consent’ to preclude application of Rule 4(k)(2) and ‘achieve transfer into a forum it considers more convenient (or less convenient for its opponent).’”

The court thus vacated and remanded the district court’s transfer order, but noted that “[i]n further proceedings consistent with this order, the district court may find it necessary to assess whether TP-Link can satisfy Rule 4(k)(2)’s negation requirement on the grounds that Stingray ‘could have brought suit’ in the Central District of California, independent of TP-Link’s post-suit consent.”

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