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The United States Court of Appeals for the Federal Circuit is now open and in session.

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Scott, save the United States and this honorable court.

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Good morning.

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We have four argued cases today.

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The first of these is number 151375, Halo Creative

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and design versus comp for industries.

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Mr. Horwitz.

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Good morning, your honor.

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Terry Horwitz on behalf of the courts.

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May it please the court, counsel.

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After diligent research by both parties, this is the only case that we have identified in all of US history where a US district court

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has abdicated jurisdiction over U.S.

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patents and told the plaintiff that they should go and enforce those patents in a different country.

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What was the evidence that the district court relied on in making this historical determination?

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Well, the only evidence that was presented in defendant's motion on the adequacy of the Canadian forum is a declaration by the defendant's U.S.

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attorney that says, you know, I went on the internet and I found this website of the Federal Court of Canada.

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which says that that court has jurisdiction over patent, trademark, and copyright claims.

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I'm a little unclear as to what happened here, and I'm not sure that it's clear from the complaint what happened.

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What is the connection with Canada?

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Were these designs created in Canada and of the infringing, allegedly infringing product, and then shipped to the Far East where the products were made?

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What do we know about that?

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I think we know very little about that.

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The designs, as far as we're concerned, were originally created in Hong Kong, where our client created these original designs.

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You're a client, but what about the accused infringer's designs?

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We know very little about where those designs came from.

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We assume that the direction to copy the original designs from our client

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was probably based in Canada.

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The person who was in Canada made the direction to copy those pieces.

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But the record doesn't show where the designs were created.

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I do not believe that the record shows where the designs were created.

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So, you know, that website is referring to Canadian patents and Canadian trademarks and Canadian copyright claims.

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But the main issue in this case is in every other case, including the Seventh Circuit cases that defendants rely on,

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The defendants who moved for forum non-convenience dismissal provided affidavits by legal experts from the target forum.

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In the Streutelstil Bulgaria case, the party offered competing testimony of experts in Bulgarian law.

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Kemal V. Hilram, the defendant submitted an affidavit of Vernon Kassin, an expert in Saudi law.

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And in Mercier v. Sheraton, the First Circuit held that an affidavit submitted by a Turkish attorney and law professor was still not sufficient to prove that Turkey

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was an inadequate forum because the affidavit failed to address key legal issues.

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The plaintiff there didn't offer a competing affidavit, but the defendant's motion was still denied because the defendant bears the burden of proof on forum nonconvenience cases.

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And all we have here is a web page from the federal court of Canada.

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The district court abused... In addition to your patent claims, you have some other claims too, right?

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You have copyright and trademark claims?

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That's correct.

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I mean, is there any question about whether Canada can hear those type of claims and grant you relief on those type of claims?

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And would that be overlapping with your patent claims?

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So first of all, they would not be overlapping with the patent claims because the two patents that are at issue in this case cover different furniture designs than the ones that are covered by the trademark and the ones that are covered by the several copyrights.

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Secondly, to go back to your earlier question, the trademark simply

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Well, the trademark and the patent claims we don't believe can be adjudicated in a Canadian court.

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In fact, there was just a case that came down from the Southern District of New York yesterday.

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See, the issue is the defendants will very likely claim that they're... So the only claim that you think potentially could be litigated in the Canadian court is maybe the copyright claim?

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Yes, if any claim could possibly litigate it in Canadian court, it would be the copyright claim.

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Wait, I don't understand how the copyright claim could be litigated in Canada if there was no

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connection between the infringing acts in Canada, at least under US law, there's a predicate act doctrine in copyright which suggests that sometimes a foreign infringement may be the subject of a US suit, but there has to be a predicate act in the United States.

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What is the predicate

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here in Canada.

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That's the problem I'm having.

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I agree with you.

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I believe defendants would say the Predicate Act was there, you know, the defendant's CEOs or whichever individual said, hey, we like these furniture pieces.

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Maybe someone over there in Asia can make some identical furniture pieces and we can sell them at a cheaper value.

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But the trouble is we don't know that that happened.

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That's exactly correct.

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We don't know that that happened.

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Now, but theoretically, under the Berne Convention, there is some arguable claim that Canada could

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hear these copyright issues.

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But of course, we believe there's still not enough evidence on that point because they never submitted, as I said, an affidavit of a legal expert.

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We have no actual hard evidence that any court in Canada has ever heard a case involving furniture design copyrights.

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We just don't know if that has ever happened before.

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And so given all these other cases where legal experts were required and there was evidence, there was evidence in these other cases where a legal expert said, yes, I've seen these types of cases.

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This is how the court would handle it.

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In this case, we have nothing other than the US attorney making arguments as to how Canadian law would apply.

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Is there any question of personal jurisdiction here?

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In this case?

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Yeah, did the defendant have sufficient contacts?

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Yes, of course, because they've sold products into the stream of commerce that landed all throughout the United States.

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So we believe there's very clear jurisdiction against both the defendants in this case.

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Did their sales take place in the

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Is it the northern district of Illinois?

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That's correct, the northern district.

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And I'd like to point out, so the district court abused this discretion by failing to hold the defendants to this burden of proof.

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I mean, first of all, the district court artificially lowered the standards.

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The general rule is that the vexation and oppression of a defendant must be out of all proportion to plaintiff's convenience or burden.

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But the district court here just said, oh, the vexation and the oppression must outweigh.

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He lowered it to a preponderance standard, which is simply not true.

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He also said, the public interest factors do not compel denial of the motion.

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But of course, it's defendant's burden to show that the factors actually lean towards granting the motion because an equal balance of the factors will always favor the plaintiff's foreign choice.

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And they like to say that this is an isolated turn of phrase.

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Well, but the opinion is replete with uncertainty.

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They say, perhaps Canada could apply the laws.

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The district court never actually found that the Canadian court would actually apply U.S.

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law.

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He just said, oh, it's possible that maybe Canada could apply those laws.

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That falls far short of meeting the burden.

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And on top of that, there's all this other uncertainty.

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Well, familiarity with the law would not pose a problem if Canada applies its own law.

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and the possibility that it doesn't apply its own law.

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I mean, with all these ifs and possiblies and probablies and perhapses, there's just no way that you can ever find there's an actual proof here that meets the essential conditions for dismissal, a drastic remedy to dismiss a complaint under this forum nonconvenience doctrine.

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And we have numerous other cases that have identical factual scenarios.

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The Jose Armando Bermudez case from the Southern District of New York, all of the parties in that case were foreign.

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All of the parties were foreign, and they asserted trademark and copyright claims.

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And yet, in many of those cases, just like Greenlight Capital, Motown Records, many of these cases, the defendants said, hey, the Dominican Republic, they have trademark and copyright laws.

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Or hey, Israel, they have trademark and copyright laws.

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But in each of those cases, just saying that was not enough, all of those courts held, you haven't proven anything that they actually can hear US claims.

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There's absolutely no way that the Canadian court can hear US patent claims and US trademark claims.

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And most of the authorities are pretty clear on that avenue.

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The district court also abused this discretion by putting this erroneous view of the proportionality requirement.

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Again, the oppression and the vexation must be out of all proportion to plaintiff's convenience or burden.

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And the defendants never even attempted to claim oppression or vexation.

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They admitted in their reply brief below that they refrained from using terms as harsh as oppression and vexation.

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And they just said, oh, litigating in Montreal would be far more convenient for us.

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And traveling to Chicago and translating documents would be unnecessary expenses.

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The forum non-convenience doctrine does not exist to enable a defendant to avoid all costs associated with defending itself.

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And on this same point, the district court didn't even find oppression or vexation.

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He just said that the plaintiffs would have similar costs in either forum, so the defendant's costs would be higher, obviously, if they had to travel anywhere other than their home forum.

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That's not an appropriate comparison.

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I mean, the defendant's argument is now going to say, well, the oppression vexation is not an absolute requirement because US forum is not actually convenient to them because they're traveling all the way from Asia.

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But there are no cases that support this claim that you can entirely disregard a plaintiff's convenience or even

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that you're supposed to consider it, is this forum actually convenient to the plaintiff?

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Plaintiffs get a presumption of convenience because plaintiffs do not typically file inconvenient lawsuits.

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You can overcome that presumption with vexation and oppression, but that didn't happen here.

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And we also have several cases that say defendants cannot rely on any inconvenience to the plaintiff and witnesses whose expenses plaintiffs will bear.

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And another case is nothing prevents a plaintiff from burdening itself with an inconvenient forum.

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So in the end, what we're left with is the defendants are trying to create a new rule.

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A foreign infringer who's based near the United States can get out of jail free with the foreign nonconvenience doctrine as long as the foreign defendant is close to the United States and the foreign plaintiff is farther from the United States.

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And this rule would destroy the incentives for foreign companies to protect and enforce their intellectual property rights in the United States.

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For a company based in Asia, if they sell most of their products here in the US,

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It's completely reasonable for them to obtain patents here, obtain copyright and trademark protection in this country, and bring suit in this country if someone is violating and infringing those property rights.

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And it would be wrong as a policy matter.

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So, for example, let's say Samsung, an Asian company, sued a Canadian company like Research in Motion for patent infringement.

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in the Eastern District of Texas.

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Defendants proposed rule.

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And the district court's reasoning in this case would say, you know, Samsung, you're foreclosed from suing in the United States because you also have Canadian patents.

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You can just go sue them in Canada because it's not really convenient for research in motion to have to travel all the way down to Texas to defend itself.

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That's essentially what's going on in this case.

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And this court should not adopt defendants' new rule.

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It should recognize these words have meaning.

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The forum nonconvenience requirements of oppression and vexation out of all proportion to a plaintiff's convenience or burden, they cannot just be disregarded entirely just because a plaintiff is foreign and happens to reside farther away from the United States than the defendant.

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The district court also abused this discretion by finding an unreasonable balance of the factors.

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The defendants concede that many of the factors do not favor them.

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And so the only issues are the ease of access.

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So they complain about transporting documents and the costs of translation.

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Documents are not even transported anymore.

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They're just scanned and produced electronically.

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And 18 months before this, very opinion, the very same district court recognized the ease of access to hard drive and electronic data storage makes it pretty easy for that Chinese entity to produce its documents here in Illinois.

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The other complaint they have is the cost of obtaining attendance of willing witnesses.

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And it's really just not that difficult to travel from Canada to Illinois.

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It's many cases recognized.

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It's a very short journey compared to what the burden the plaintiffs are undertaking.

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I see that I'm in my time now for my rebuttal, so I will yield.

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Okay.

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Thank you.

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Mr. Bagley.

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Morning, Your Honor.

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May it please the court, the case before you now is... Let me tell you what my problem is.

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You focus on the copyright claim potentially being something that could be litigated in Canada.

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I'm having difficulty in seeing that when I don't see that you've established any connection between the copyright infringement and anything that happened in Canada.

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There's no showing that the design was made in Canada, certainly the furniture,

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wasn't made in Canada.

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And the United States wouldn't enforce a copyright claim unless there was some connection with the United States, a predicate act in the United States.

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And I don't see the basis for assuming that Canada would behave differently.

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What's your response to that?

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Well, Your Honor, I believe that, first of all, that's not necessarily something that came up at the trial court level.

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But I think the presumption, and the entirely reasonable presumption is,

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That CDI is, of course, based in Montreal.

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They came up with their own furniture designs, which are now accused to be... But we don't know where they came up with the designs.

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Well, if we're asking about the power... Correct.

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I mean, this record does not show where the designs were created.

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They do not show that they were created in Canada, correct?

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The record does not show that.

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I would agree with that.

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I would believe that... I believe they were, honestly, looking at it reasonably.

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CDI is located in... Well, we have to go with what the record shows.

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So why is it that where no designs were created in Canada, where no infringement took place in Canada, where no manufacturing took place in Canada, what basis is there for believing that the Canadian courts would enforce a copyright claim involving infringement in the United States?

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Well, there's two issues there.

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First, I believe the Canadian courts would enforce

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If they found an infringement, they would enforce it against a company that's within its own physical jurisdiction.

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Why?

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I mean, what's the basis for that?

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The United States wouldn't do that, right?

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If there was no connection between infringement in the United States, no design, no infringement here, no manufacturing here, we wouldn't entertain a copyright claim, right?

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Well, if the copyright claim were against a United States company, speaking hypothetically, I suppose,

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The United States company had a foreign designer come up with a copyright design, and it was manufactured only outside the United States and sold only outside of the United States.

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I would still think the United States court would take jurisdiction.

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They would say, we have inherent authority over the company.

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What case suggests that?

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My reading of the US cases is that you can't have a copyright infringement suit here under US law unless there's a predicate act in the United States.

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Okay, well, then that is your reading of the course, and I don't necessarily have an answer to that.

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Honestly, as we've gone through it, I think both parties have assumed that... Well, yes, that's the problem.

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You're asking us to assume that since you're a Canadian company, you created the designs in Canada, you

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maybe produce the furniture in Canada or something like that.

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But none of that is in the record.

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And it's your burden to show all of this to have the case dismissed.

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It's not your opponent's burden to rebut it.

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Certainly that is the case, that it is our burden.

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And you haven't shown anything that suggests the Canadian courts can hear any of these claims, except conjecture.

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I do believe we submitted a declaration by the CEO of CDI and I'm just thinking of my own going over what I know of the record.

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I believe it said that their employees are located in Montreal.

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Now if their employees are located in Montreal, someone had to do this design and it wouldn't

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What could have been in Asia, right?

[00:19:05] Speaker 01:
Because the furniture is manufactured in Asia, not in Canada.

[00:19:09] Speaker 01:
The record does show that, right?

[00:19:14] Speaker 02:
Yeah, I believe the record does show it was manufactured in Canada.

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I'm sorry, in Asia.

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But all of CDI's employees are in Montreal, and the Predicate Act, would it not have been a predicate act to instruct that these

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uh... designs be manufactured i believe that instruction would have necessarily might be wrong there is anything in the record showing that anybody in canada uh... conveyed that instruction to somebody in asia or certainly that any designs were created in canada we don't know but i will admit that the record did not get that specific into to who specifically who in cd i ordered that certain furniture uh...

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designs, furniture orders be made.

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And I would only suggest that that is, yes, a very specific issue, but I think looking at it reasonably, it was someone who happened, it was someone who was employed by CDI and that's a natural, it's a natural conclusion from the facts that are before the court.

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If CDI's employees are in Montreal,

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CDI's CEO is in Montreal.

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I believe that's also in the declaration.

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Then some of those employees had to start this train going, had to make these orders.

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How do we know that?

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I mean, couldn't the people in Asia come up with the design?

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I think we know that by the fact that the way a modern company works, that if all your employees are in a certain place,

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a company doesn't do something without some of its employees ordering that to be done.

[00:21:00] Speaker 01:
Well, they could have traveled to Asia and worked on the design in Asia, right?

[00:21:08] Speaker 02:
I suppose they could have.

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But they would still be Canadian citizens.

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So if a Canadian citizen travels to Asia and meets with these people in Asia, the Asian people say, look, we've got this great new design.

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Why don't we implement it?

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And they agree it's all done in Asia and the Canadian citizen flies back.

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You think that that's just because it was Canadian citizen involved in that discussion, it's enough to be sued in Canada?

[00:21:40] Speaker 02:
I would if it was the Canadian company that is the one who was benefiting from that.

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And what's your support for that?

[00:21:47] Speaker 02:
I do not have before me any specific support for that.

[00:21:49] Speaker 02:
I will admit that.

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And it was your burden to prove all of this?

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to get this case dismissed.

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And you don't have anything to tell us today for why that would be true.

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I believe it was our burden, and I believe we proved that CDI is a Canadian company headquartered in Canada, specifically in Montreal.

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And until I stand here before you, I sincerely thought that was enough.

[00:22:11] Speaker 01:
What case says that's enough?

[00:22:17] Speaker 02:
I'm not aware of a specific case that says that's enough.

[00:22:21] Speaker 03:
What case did you cite in your briefs to the district court that said it's enough?

[00:22:28] Speaker 02:
I don't recall what case we cited.

[00:22:29] Speaker 02:
No, I don't know that we cited one that said it was enough.

[00:22:32] Speaker 02:
I think the presumption was, if you have a Canadian company, that the courts of Canada are going to have jurisdiction over it.

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And that's as far as the analysis went.

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And quite frankly, I didn't even realize that that might be a problem.

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I didn't come up in any of the briefing to this court that that might be a problem.

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And I understand if you have a concern about it.

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And to that, I would simply say that the Canadian court, they would take the subject matter jurisdiction of the copyright.

[00:23:07] Speaker 03:
Do you have any dispute about personal jurisdiction?

[00:23:10] Speaker 03:
Here, setting aside the CEO, I know you have a dispute about that.

[00:23:13] Speaker 03:
But do you have any dispute that the District of Illinois has personal jurisdiction over your

[00:23:19] Speaker 02:
And not over the company, we don't.

[00:23:22] Speaker 02:
The allegation was a stream of commentary.

[00:23:24] Speaker 03:
So we know that the federal court in Illinois can hear these claims.

[00:23:28] Speaker 03:
We have no doubt that the federal court in Illinois can adjudicate all of the claims brought by the plaintiff.

[00:23:35] Speaker 02:
At least as to the company.

[00:23:36] Speaker 03:
Yes, as to the company.

[00:23:37] Speaker 03:
Correct.

[00:23:38] Speaker 03:
You haven't told us one thing today that suggests the Canadian court can adjudicate any of those claims.

[00:23:44] Speaker 03:
I mean, how isn't that an abuse of discretion?

[00:23:50] Speaker 02:
When I looked at all the other case law, I don't ever recall seeing that this level of detail was required.

[00:24:00] Speaker 03:
What case law suggests that a defendant is entitled to be sued where it wants?

[00:24:06] Speaker 03:
The case law is the opposite.

[00:24:08] Speaker 03:
A plaintiff is normally entitled to sue where it wants as long as there's personal jurisdiction over the defendant.

[00:24:14] Speaker 03:
You seem to be espousing the exact opposite role.

[00:24:17] Speaker 02:
I don't think I am.

[00:24:18] Speaker 02:
I think I'm asking the court to follow the doctrine of forum non-convenience as it's laid out in some of these cases.

[00:24:25] Speaker 03:
Look, I can talk about... Which requires that the suit can be heard by another jurisdiction.

[00:24:33] Speaker 03:
It requires you to prove it.

[00:24:35] Speaker 03:
And you have established one single thing beyond the fact that you're a resident in that country.

[00:24:47] Speaker 02:
Well, I don't know how to respond to that, I believe.

[00:24:50] Speaker 02:
And as I saw this case coming in, I believe that that was enough.

[00:24:59] Speaker 02:
If you look at some of the other cases that have dismissed cases in favor of foreign forms for the forum nonconvenience, I think they've done so without having to prove it to this quite level of a predicate act in that

[00:25:16] Speaker 02:
in that country.

[00:25:19] Speaker 02:
You know, we had the creative technologies case that sort of explained the whole reason why a foreign country would enforce a copyright of a citizen of a member, a treaty member to that convention.

[00:25:53] Speaker 01:
Do you have anything further?

[00:25:57] Speaker 02:
I do have a number of things further.

[00:26:03] Speaker 02:
One of the things that counsel was talking about here is the relative convenience of the two forums in terms of travel costs.

[00:26:14] Speaker 02:
HALO is suggesting that this court should compare the travel costs that HALO had to go to between Hong Kong and Chicago

[00:26:23] Speaker 02:
with the travel cost that CDI would have to go to between Montreal and Chicago.

[00:26:28] Speaker 02:
In terms of what this court is actually trying to decide, that simply wouldn't make any sense.

[00:26:33] Speaker 02:
Remember that you're comparing two potential trial venues, Chicago and Montreal.

[00:26:37] Speaker 02:
Therefore, the only thing that makes sense is a comparison of, say, HALO's travel costs between Hong Kong and Chicago with HALO's travel costs between Hong Kong and Montreal.

[00:26:49] Speaker 02:
And it was said in the briefs, those are approximately the same.

[00:26:52] Speaker 02:
CDI's travel costs between Chicago and Montreal are real and significant, and its travel costs, if it's in Chicago, are non-zero.

[00:27:05] Speaker 03:
Are they located in Montreal?

[00:27:07] Speaker 02:
They are located in the Montreal metro area, yes.

[00:27:10] Speaker 03:
So instead of driving, they have to fly from Montreal to Chicago?

[00:27:14] Speaker 02:
Pretty much that is the case.

[00:27:15] Speaker 03:
Which is how long of a flight?

[00:27:18] Speaker 03:
And it costs how much money?

[00:27:20] Speaker 03:
I mean, it's insignificant.

[00:27:22] Speaker 03:
if you're talking about travel costs, to go from Montreal to Chicago.

[00:27:25] Speaker 03:
It's like litigating a case in the Eastern District of Texas when you're headquartered in Chicago or DC or Silicon Valley.

[00:27:34] Speaker 03:
It's probably less.

[00:27:37] Speaker 02:
It is probably less, but it is a real cost that weighs on one side of the issue that doesn't weigh on the other side.

[00:27:43] Speaker 02:
And so we're talking about travel costs.

[00:27:44] Speaker 02:
We're also talking about the costs of moving samples.

[00:27:47] Speaker 02:
And not only documents which can be scanned into electronic form and shared that way,

[00:27:52] Speaker 02:
We're talking about pieces of furniture here that are potentially shipped from Montreal to Chicago or staying in Montreal.

[00:27:59] Speaker 02:
And that's on the balance of the issues.

[00:28:03] Speaker 01:
Furniture shipped from Montreal?

[00:28:04] Speaker 01:
What evidence is there that any of this furniture ever was in Montreal?

[00:28:10] Speaker 03:
I mean, the furniture is in Illinois already, isn't it?

[00:28:14] Speaker 03:
That's why you're being sued for infringement.

[00:28:15] Speaker 03:
You're selling furniture in Illinois that they claim

[00:28:19] Speaker 03:
violates their design.

[00:28:21] Speaker 02:
No, I'm not talking about the furniture that's already in Illinois.

[00:28:23] Speaker 02:
I'm talking about what evidence is at the Montreal headquarters of CDI.

[00:28:29] Speaker 01:
But the record doesn't show anything about any furniture or potentially infringing furniture being in Montreal.

[00:28:35] Speaker 01:
It's shipped from the Far East to the United States, right?

[00:28:41] Speaker 02:
In the normal course of sales, yes.

[00:28:45] Speaker 02:
But in order to get it for a trial, HALO is going to have to

[00:28:50] Speaker 02:
arranged for even its prototypes and things that were designed.

[00:28:55] Speaker 02:
And yes, I'm presuming that what was happening in Montreal, which I think is a reasonable assumption.

[00:29:03] Speaker 02:
Are there any other questions from the court?

[00:29:09] Speaker 01:
No.

[00:29:10] Speaker 01:
Thank you.

[00:29:10] Speaker 01:
Thank you very much.

[00:29:11] Speaker 01:
Mr. Horowitz, you have three minutes if you need it.

[00:29:18] Speaker 00:
Thank you, Your Honors.

[00:29:19] Speaker 00:
First of all,

[00:29:20] Speaker 00:
Just to say, we agree with what you said, that there does not appear to be any proof of any predicate act in the record.

[00:29:26] Speaker 00:
And respectfully, we believe that Defendants' Council is employing the same conjecture that was employed in their original motion and in the district court's opinion.

[00:29:35] Speaker 00:
Secondly, we agree that the furniture is not produced in Canada.

[00:29:39] Speaker 00:
As you've said, it's produced in the Far East and transported over here.

[00:29:43] Speaker 00:
As a third issue, defendants raised the creative technologies case.

[00:29:47] Speaker 00:
And I'd just like to point out,

[00:29:48] Speaker 00:
In that case, both parties were based in Singapore.

[00:29:52] Speaker 00:
So, of course, the Predicate Act was in Singapore because all the products that were manufactured in that case were manufactured in Singapore.

[00:29:59] Speaker 00:
The copyright infringement that was going on originated in Singapore in that case.

[00:30:04] Speaker 00:
So it made sense in that case to dismiss that one over to Singapore.

[00:30:10] Speaker 00:
And then finally, defendants raised a point about also physical samples and prototypes

[00:30:16] Speaker 00:
Again, very little on this in the record, but we just wanted to also point out how kind of ridiculous this argument is on its face, because the defendants travel into the United States multiple times each year.

[00:30:29] Speaker 00:
This is alleged in our complaint, and we served them in Las Vegas at the Las Vegas furniture show.

[00:30:34] Speaker 00:
They travel voluntarily in the United States at least three times a year with dozens of furniture samples, like whole showrooms, hundreds of square feet of different pieces of furniture,

[00:30:45] Speaker 00:
that they voluntarily bring into the United States to sell their products and to market them.

[00:30:49] Speaker 00:
And so then to say that one time bringing maybe 25 samples to Chicago would be a significant burden when they do it three times a year.

[00:30:57] Speaker 00:
And by the way, they bring it into Las Vegas and North Carolina, both of which are much farther than Montreal is from Chicago.

[00:31:04] Speaker 00:
So we just think that this argument about bringing furniture samples is a little bit belied by their own actions.

[00:31:12] Speaker 00:
So with that, if there aren't any other questions, I'm happy to yield.

[00:31:17] Speaker 01:
Okay.

[00:31:18] Speaker 01:
Thank you, Mr. Horwitz.

[00:31:19] Speaker 01:
Thank both counsel.

[00:31:19] Speaker 01:
The case is submitted.