IP Law Daily Dismissal of IP claims on forum non conveniens grounds was improper
Monday, March 14, 2016

Dismissal of IP claims on forum non conveniens grounds was improper

By Peter Reap, J.D., LL.M.

The federal district court in Chicago abused its discretion by dismissing, on forum non conveniens grounds, a suit brought by Halo Creative & Design Ltd., Halo Trademarks Ltd., and Halo Americas Ltd. (collectively, “Halo”), against Comptoir Des Indes, and its CEO, David Ouaknine (collectively, “appellees”), asserting copyright, patent, and trademark infringement, the U.S. Court of Appeals for the Federal Circuit has ruled (Halo Creative & Design Limited v. Comptoir Des Indes Inc., March 14, 2016, Dyk, T.). There was no evidence that the Federal Court of Canada would be an adequate forum for the resolution of Halo’s claims. Thus, the lower court’s decision was reversed and the case remanded.

Halo own two U.S. design patents, 13 U.S. copyrights, and one U.S. common law trademark relating to 25 of their furniture designs. Halo is located in Hong Kong. Halo sued the appellees, Canadian citizens, in the Northern District of Illinois. Halo asserted that the appellees infringed their intellectual property and violated Illinois consumer fraud and deceptive business practices statutes.

The appellees moved to dismiss on forum non conveniens grounds, contending that the Federal Court of Canada would be a superior forum. The district court granted the motion and dismissed the case. Halo appealed.

Forum non conveniens allows a federal district court to dismiss a suit over which it would normally have jurisdiction if trial in a foreign forum would best serve the convenience of the parties and the ends of justice. Whether dismissal would promote convenience and justice should be determined by weighing various private and public interest factors.

In Piper Aircraft Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981), the Supreme Court explained that every forum non conveniens inquiry must begin with a determination of whether there exists an alternative forum that is both adequate and available to hear the case. Id. at 254 n.22. An alternative forum is available if “the defendant is ‘amenable to process’ in the other jurisdiction.” Id. An alternative forum is adequate unless “the remedy offered by the other forum is clearly unsatisfactory,” as when “the alternative forum does not permit litigation of the subject matter of the dispute.” Id.

It is clear after Piper Aircraft that an alternative forum is not adequate unless it permits litigation of the subject matter of the dispute, the Federal Circuit noted. The moving party bears the burden of persuasion as to the adequacy of the alternative forum. The appellees failed to meet that burden here, the court held.

The first requirement for an alternative forum is availability, i.e., that all parties are amenable to process and are within the forum’s jurisdiction. The appellees would be amenable to process in Canada. Halo did not dispute that it too would be subject to the Federal Court of Canada’s jurisdiction if it filed suit there. Thus, the Federal Court of Canada is an available alternative forum.

Halo vigorously contested that the Federal Court of Canada would be an adequate forum. The district court based its adequacy analysis exclusively on Halo’s copyright claims, and, on appeal, the appellees continued to focus solely on copyright in defending the adequacy of the Federal Court of Canada. The district court posited that because Canada, Hong Kong, and the United States are all signatories to the Berne Convention, Halo is “entitled to all of the protections offered by Canadian [copyright] law to Canadian citizens.”

The Berne Convention requires national treatment, which means that authors should enjoy in other countries the same protection for their works as those countries accord their own authors, the Federal Circuit observed. The Berne Convention does not require that member countries provide remedies for extraterritorial infringing activity. Nor does the Berne Convention require that Canada apply its laws extraterritorially. The district court improperly conflated “national treatment” with extraterritorial enforcement, according to the appellate court. There was no indication that Canadian citizens could successfully sue in Canada with respect to exclusively extraterritorial infringement.

Halo’s complaint seeks redress for alleged infringement of its United States intellectual property rights that occurred in the United States. Territoriality is always of concern in intellectual property disputes. The copyright and patent laws of the United States certainly reflect such territoriality, the court noted. United States copyright law, for example, generally admits of no remedy for extraterritorial infringement unless a predicate act of infringement was first committed within the United States. The appellee provided no evidence that Canadian copyright law operates any differently.

The only evidence that the appellees submitted to the district court was a printout of a webpage from the site of the Federal Court of Canada, simply showing that the Federal Court of Canada has jurisdiction to adjudicate “intellectual property rights, including copyright, industrial design . . . patents . . . and trade-marks.” But this evidence demonstrated nothing more than the unremarkable proposition that the Federal Court of Canada has jurisdiction over Canadian intellectual property disputes. For the first time on appeal, the appellees also cited certain provisions of the Canadian Copyright Act. But neither these provisions nor any other in the Canadian Copyright Act provide a remedy for extraterritorial infringement, the court said.

It was undisputed that the only evidence of any connection to Canada in the record was that the appellees have their principal place of business there. But this fact alone could not suffice. There was no evidence of any predicate act of infringement that occurred in Canada—let alone evidence that such a predicate act, if found, would enable the Federal Court of Canada under Canadian law to redress subsequent infringing acts in the United States.

The district court explained that “the United States has recognized the potential of applying the copyright laws of other nations and perhaps Canada could do likewise.” But this was mere speculation as to what the Canadian courts would do. The district court cited no support for the proposition that a Canadian court could or would apply United States copyright law, or, for that matter, patent or trademark law. Nor did the appellees provide any such evidence.

Based on the evidence in the record, the Federal Court of Canada would fail to provide any potential avenue for redress for the subject matter of Halo’s dispute, even with regard to Halo’s claims of copyright infringement, the court reasoned. The district court abused its discretion in concluding otherwise.

It was particularly important that a forum non conveniens movant demonstrate the adequacy of an alternative forum when the dispute implicates the enforcement of intellectual property rights, the Federal Circuit explained. The policies underlying United States copyright, patent, and trademark laws would be defeated if a domestic forum to adjudicate the rights they convey was denied without a sufficient showing of the adequacy of the alternative foreign jurisdiction. It is largely for this reason that district courts have routinely denied motions to dismiss on forum non conveniens grounds when United States intellectual property rights form the crux of the dispute.

The case is No. 2015-1375.

Attorneys: Barry Horwitz (Greenberg Traurig LLP) for Halo Creative & Design Limited, Halo Trademarks Limited, and Halo Americas Limited. Mark Ray Bagley (Tolpin & Partners, PC) for Comptoir Des Indes Inc.

Companies: Halo Creative & Design Limited; Halo Trademarks Limited; Halo Americas Limited; Comptoir Des Indes Inc.

MainStory: TopStory Copyright Trademark Patent FedCirNews

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