[00:00:07] Speaker 01: Our next case is MI Drilling Fluids UK Limited versus Dynamic Air LTDA. [00:00:19] Speaker 01: Case number 16-1772. [00:00:21] Speaker 01: Mr. Jordan, you've reserved three minutes rebuttal. [00:00:33] Speaker 03: Yes, Your Honor. [00:00:35] Speaker 01: All right. [00:00:35] Speaker 01: We're ready. [00:00:35] Speaker 01: You may proceed. [00:00:39] Speaker 03: Good morning. [00:00:39] Speaker 03: May it please the court? [00:00:41] Speaker 03: The sole question before the court is whether, under Rule 4K2 and consistent with due process, a US court can exercise personal jurisdiction over DAL for MI's patent infringement claims. [00:00:54] Speaker 03: The answer is yes, and the reasons are straightforward. [00:00:57] Speaker 03: DAL transported, installed, and operated equipment on US territory, specifically US flagged vessels, that infringed MI's patents. [00:01:07] Speaker 03: Indeed, DAL continued to operate the infringing equipment for years. [00:01:11] Speaker 04: Suppose we conclude, and I find this case kind of procedurally very complicated, but suppose we disagree with both you and the district court that US flagships are US territory for purposes of the Patent Act. [00:01:26] Speaker 04: What do we do then? [00:01:28] Speaker 04: Because at least my reading of our precedent and Supreme Court precedent is that that's a merits question, not a jurisdiction question. [00:01:35] Speaker 04: So we couldn't affirm on an alternative basis. [00:01:39] Speaker 04: But it would be seemingly futile to send it back if, as a matter of law, a US flagship in international waters is not US territory for the purpose of the Patent Act. [00:01:52] Speaker 03: I would agree with you, Judge Hughes, that if it's not, it's probably futile to send it back. [00:01:57] Speaker 04: We could alternatively affirm on the basis of 12b6 failure to state a claim. [00:02:03] Speaker 03: You probably could, Judge Hughes. [00:02:05] Speaker 03: That is, as you have stated, this is sort of the question out of the box, the a priori question. [00:02:11] Speaker 03: Are these US flag vessels US territory? [00:02:16] Speaker 03: And we contend that under well-established law and precedent, they are US territory. [00:02:24] Speaker 03: There is a single seminal case the court is aware of from our briefing, Gardner versus Howe. [00:02:29] Speaker 00: That's not binding on us, right? [00:02:31] Speaker 00: That's not binding precedent on us, right? [00:02:34] Speaker 03: It's not binding precedent other than the fact that it has been recognized for literally since 1865 and as recently by Congress, as in the legislative history of the 1990 Inventions in Outer Space Act, where Congress recognized the former. [00:02:52] Speaker 00: But wasn't it questioned in DECA and Ocean Sciences by our predecessor court? [00:02:57] Speaker 03: It was questioned, but notably, Your Honor, it was never impliedly or expressly overruled. [00:03:02] Speaker 03: And as this Court's aware, Congress is presumed to legislate with knowledge of judicial rulings. [00:03:09] Speaker 03: And so when Congress says in 1990, which is after those decisions, that Gardner is law recognizing that you have that. [00:03:18] Speaker 00: Congress, you're talking about the legislative history of the Outer Space Act, right? [00:03:21] Speaker 00: Right. [00:03:22] Speaker 00: One person saying that it's law, or that a ship is US territory for purposes of patent law. [00:03:30] Speaker 00: Is Congress legislating that? [00:03:32] Speaker 03: Well, two points in response, Your Honor. [00:03:35] Speaker 03: The Gardner case has been extant since 1865, and with Congress being presumed to know about that decision. [00:03:41] Speaker 03: And that decision squarely addresses this issue and says, for purposes of patent law, US territory includes US flag vessels. [00:03:48] Speaker 03: Congress is presumably aware of that decision. [00:03:50] Speaker 03: They've amended the patent law a number of times since then, and they've never said it doesn't apply to US flag vessel. [00:03:57] Speaker 00: I hear what you're saying. [00:03:58] Speaker 00: I also would just, how do you respond to the point that the Supreme Court has talked about this doctrine several times since Gardner? [00:04:05] Speaker 00: and has reiterated the fact that the idea that it is a U.S. [00:04:10] Speaker 00: territory is a metaphor, is the language that's used. [00:04:13] Speaker 00: It's a metaphor for purposes of determining jurisdiction and thinking about jurisdiction, not necessarily something that should require us to say Congress intended U.S. [00:04:22] Speaker 00: patent laws to extend to U.S. [00:04:24] Speaker 00: flagged vessels. [00:04:26] Speaker 03: Judge Stoll, I think since the decision that you're talking about, the decisions that you refer to as a metaphor, [00:04:32] Speaker 03: that the U.S. [00:04:33] Speaker 03: Supreme Court has issued several decisions that are much stronger in terms of saying this is U.S. [00:04:39] Speaker 03: territory. [00:04:39] Speaker 03: In other words, the decisions like Cunard versus Mellon that they're citing to in 1923, remember, in 1952, the United States Supreme Court issues the Lauritsen case. [00:04:50] Speaker 03: And the Lauritsen case says, in unmistakable language, the law of the flag supersedes the territorial principle, even for purposes of criminal jurisdiction of personnel on a merchant ship. [00:05:00] Speaker 03: because it is, quote, deemed to be a part of the territory of that sovereignty whose flag it flies. [00:05:05] Speaker 00: This is a case about choice of law. [00:05:08] Speaker 00: Lauritsen is talking about choice of law. [00:05:10] Speaker 00: It's not talking about whether US laws extend to a ship. [00:05:13] Speaker 00: Do I remember that correctly? [00:05:15] Speaker 00: I mean, it was, I believe that there was a finding of jurisdiction, and then there was a determination, OK, whose law applies? [00:05:21] Speaker 00: Is it Binge law or US law? [00:05:22] Speaker 03: Right. [00:05:23] Speaker 03: And it has to do with criminal law, but it also cites, Your Honor, to another case that's worth reviewing, which is the United States versus Flores case. [00:05:30] Speaker 03: which is, again, post-Cunard, but before Lawrence. [00:05:35] Speaker 03: And Lawrence incites it with approval. [00:05:36] Speaker 03: That's a case, Your Honor, of a vessel that's in the Belgian Congo and a river in the Belgian Congo. [00:05:41] Speaker 03: And the US Supreme Court says, number one, Congress has authority to make laws that have jurisdiction on a US vessel under Article III, Section 2 of the maritime power. [00:05:51] Speaker 03: And it says, indeed, Congress did with regard, in that instance, with regard, again, to a criminal issue. [00:05:57] Speaker 03: I want to come back to your thing on the inventions in our space act and say another reason why beyond the legislative history that matters. [00:06:03] Speaker 03: Because to the extent that there's a negative inference that the other side would like to draw saying well, you know, Congress hasn't explicitly said anything more than it applies to U.S. [00:06:12] Speaker 03: territory. [00:06:13] Speaker 03: The invention in our space act, remember, is very clear in Congress saying that [00:06:19] Speaker 03: inventions that are on transitory objects in space are going to be protected by US patent law. [00:06:24] Speaker 00: I agree. [00:06:25] Speaker 00: I think that might cut both ways, though, against you, because there was a decision by Congress to expressly have a statute talking about inventions on outer space. [00:06:34] Speaker 00: But there is no such equivalent for flagged vessels. [00:06:38] Speaker 03: Well, it might, but for the fact that the Gardner case has been cited repeatedly since 1865, Congress has clearly been aware of it. [00:06:46] Speaker 03: And Congress has never [00:06:48] Speaker 03: legislated to change the patent law to say that territory doesn't apply. [00:06:54] Speaker 03: The law of the flag doctrine, which says that U.S. [00:06:57] Speaker 03: flag vessels are U.S. [00:06:59] Speaker 03: territory subject to U.S. [00:07:01] Speaker 03: law, is well established. [00:07:03] Speaker 03: I mean, one case I'd like to cite the court, too, that I think is [00:07:07] Speaker 03: that is relevant. [00:07:08] Speaker 03: But let me get to that in a second. [00:07:09] Speaker 03: I want to go beyond US case law for a second. [00:07:12] Speaker 04: So based on this argument, is the converse true that if there's a flagship of another country stationed in a United States harbor, which is clearly within the United States territory, it is nevertheless immune from patent infringement claims because it flies the flag of a foreign nation? [00:07:32] Speaker 03: The reverse, I think, might well be true. [00:07:37] Speaker 03: What the cases have said in terms of jurisdiction for a foreign flag vessel in US territory has said that only if something has happened, which would affect the peace and dignity if there's some sort of major crime or something. [00:07:48] Speaker 03: So it might. [00:07:49] Speaker 00: Is that the Brown versus Duchenne case? [00:07:52] Speaker 03: It's Brown versus Duchenne. [00:07:53] Speaker 03: And I think the building loose case before that. [00:07:56] Speaker 03: But I did want to raise something quickly. [00:07:57] Speaker 03: This is not just US law that recognizes law of the flag. [00:08:00] Speaker 03: This is also treaty law, including treaties that they've cited. [00:08:04] Speaker 03: For example, the UN Convention on Law of the Sea at Article 92 says this. [00:08:08] Speaker 03: Quote, ships shall sail under the flag of one state only and save in exceptional cases expressly provided for in international treaties or in this convention shall be subject to exclusive jurisdiction on the high seas. [00:08:21] Speaker 03: Article 6. [00:08:22] Speaker 03: of the Convention on the High Seas Act says the same thing. [00:08:25] Speaker 03: So this is customary international law, two different treaties that are echoing what case after case from the U.S. [00:08:31] Speaker 03: Supreme Court. [00:08:32] Speaker 03: I'm talking from Lorentz and versus Larson Ford. [00:08:34] Speaker 01: So it seems to me that this issue is more of a 12b6 issue. [00:08:37] Speaker 01: It's a subject matter jurisdiction issue. [00:08:41] Speaker 01: It does. [00:08:42] Speaker 01: The reach of U.S. [00:08:43] Speaker 01: panel on it. [00:08:44] Speaker 01: This is a personal jurisdiction question that we have before us. [00:08:47] Speaker 03: Right. [00:08:49] Speaker 03: And I'd like to get to that issue. [00:08:50] Speaker 03: I want to make sure I answer all the court's questions on this law of the flag issue. [00:08:54] Speaker 01: So the question here is whether, to what extent does a flag vessel, US flag vessel, provide minimum contacts? [00:09:04] Speaker 03: Right. [00:09:05] Speaker 03: Here's our view of that, Your Honor. [00:09:08] Speaker 03: If it is US territory, [00:09:10] Speaker 03: then it is U.S. [00:09:11] Speaker 03: territory for all purposes. [00:09:12] Speaker 03: You have the benefit of U.S. [00:09:13] Speaker 03: laws, and it is as though you were acting in a U.S. [00:09:17] Speaker 01: state or jurisdiction. [00:09:18] Speaker 01: But still, we're looking at minimum contacts. [00:09:20] Speaker 01: Right. [00:09:20] Speaker 01: Even if this case involved Alabama, we would be looking at that. [00:09:24] Speaker 01: No one would argue, well, Alabama's a U.S. [00:09:27] Speaker 01: state. [00:09:28] Speaker 01: Right. [00:09:28] Speaker 01: Right. [00:09:29] Speaker 01: We'd be arguing, what's the strength of the minimum contact? [00:09:32] Speaker 01: So, regardless here, we're looking at what's the strength. [00:09:36] Speaker 01: Under the facts of this case, what's the strength of the minimum contact? [00:09:39] Speaker 03: Right. [00:09:40] Speaker 03: And let me get to that, Judge Raina. [00:09:42] Speaker 03: First of all, as you've raised, Your Honor, we know that Rule 4K2 was adopted specifically to ensure that there would be a federal forum for federal claims where there aren't sufficient contacts with a specific state. [00:09:54] Speaker 03: That's why we're here. [00:09:55] Speaker 03: We're here because we're supposed to be here. [00:09:56] Speaker 03: We're supposed to be here because when there isn't contact with the US state, but there are contacts with the nation, i.e. [00:10:02] Speaker 03: something like a US territory here, then there should be jurisdiction. [00:10:06] Speaker 03: Now, what are the minimum contacts here? [00:10:08] Speaker 03: Here, the record is uncontroverted. [00:10:10] Speaker 03: The DAL, as I noted at the beginning, transported, installed, and operated infringing equipment on these US vessels for years, between 2013 and 2015. [00:10:21] Speaker 03: They continued to do so. [00:10:23] Speaker 01: They were advised in 2013 of our complaint, and they even got a translated copy of it, and knew for two years that we were- So with the minimum contact cases that I'm familiar with, you're looking to see where the agreement was signed. [00:10:39] Speaker 01: Where did the parties reside? [00:10:42] Speaker 01: And things of that nature. [00:10:44] Speaker 01: Here, all you have is a ship. [00:10:48] Speaker 00: Isn't that your argument? [00:10:50] Speaker 00: You're talking about specific jurisdiction, right? [00:10:53] Speaker 00: We are. [00:10:53] Speaker 00: And so you're talking about that they actually conduct, they were on the ship or U.S. [00:10:58] Speaker 00: territory for purposes of jurisdiction performing the acts that are alleged of infringement. [00:11:04] Speaker 03: Exactly, Your Honor. [00:11:05] Speaker 03: They were literally, in some ways it's an unusual case because sometimes it's someone selling a product or something that goes into a jurisdiction. [00:11:12] Speaker 03: Here they are in the jurisdiction operating this equipment that is infringing. [00:11:18] Speaker 03: And in that regard, it falls directly within the notion of doing business in a US forum, directing activities into a US forum. [00:11:28] Speaker 03: I think, Judge Rayna, what may go to your point is, I think of the court's case, the Synthes case. [00:11:34] Speaker 03: The Synthes case that was decided and involved a Brazilian defendant that this court held could come and was from a US jurisdiction. [00:11:42] Speaker 03: It wasn't something where they had a contract. [00:11:44] Speaker 03: If you remember, they would come to trade shows in the United States. [00:11:47] Speaker 03: And in fact, as this court acknowledged, they weren't even trying to sell to individuals in the United States. [00:11:52] Speaker 03: They came to a trade show and expressly were saying, we don't have FDA approval. [00:11:56] Speaker 03: We're not seeking to sell people in the US. [00:11:59] Speaker 03: But what this court said is, when you came into the US and when you were appearing in those trade shows, you were taking advantage of the privilege of doing business in the United States. [00:12:08] Speaker 03: You were directing those activities into the floor. [00:12:10] Speaker 03: That's precisely what happens here. [00:12:12] Speaker 03: They were, when they're on U.S. [00:12:13] Speaker 01: territory. [00:12:14] Speaker 01: In most cases it's because the minimum contacts has effect on the market of that particular forum that's located in that particular forum, the consumers, and things of that nature. [00:12:26] Speaker 01: But here, I'm dubious as to the strength of the minimum contacts on the U.S. [00:12:34] Speaker 01: flagship. [00:12:36] Speaker 03: I understand, Judge, and hopefully I... And that being all. [00:12:40] Speaker 03: Here's what I think, and the other side talks about you have to be exploited in the US market. [00:12:44] Speaker 03: I think that's not quite correct. [00:12:46] Speaker 03: If we go back to Burger King and International Shoe and the basic principles, the basic principles of minimum contacts, particularly in this context of specific jurisdiction, is that they are on fair notice, that they may be hauled into court in a US forum. [00:13:00] Speaker 03: It's not about you have to have been exploiting the US market to some degree. [00:13:04] Speaker 03: It's that you have sufficient contacts, and you've done business enough to know that you may be [00:13:09] Speaker 03: in the US forum. [00:13:12] Speaker 03: We cited you to the Intercon case. [00:13:14] Speaker 03: This is the Oklahoma case. [00:13:16] Speaker 03: I think it's at pages 39 and 40 of our brief. [00:13:19] Speaker 03: That was out of the 10th Circuit in Oklahoma. [00:13:21] Speaker 03: And it was a company that was accidentally, initially accidentally, using a web server in Oklahoma. [00:13:27] Speaker 03: And after they learned that they were accidentally using it, they continued to use it for just a few months, four months in order not to interrupt service to customers. [00:13:35] Speaker 03: And they went to the court, and they said, well, this was something we intended to do, and we weren't there very long. [00:13:41] Speaker 03: The 10th Circuit said, look, that may have been true when you first found out, but when you stayed for another four months, you were taking advantage of doing business in that forum. [00:13:49] Speaker 03: Now plainly, they weren't trying to exploit that forum in a commercial way. [00:13:53] Speaker 03: They were just trying to bridge a customer service gap. [00:13:56] Speaker 03: Here, this company is making money. [00:13:58] Speaker 03: They're getting profit from operating for years infringing patents on US territory. [00:14:02] Speaker 00: You also rely on the T.C. [00:14:04] Speaker 00: Heartland case, right? [00:14:05] Speaker 03: We do, Your Honor. [00:14:06] Speaker 03: I would note that the Court is probably aware that the US Supreme Court granted cert last month in that case. [00:14:12] Speaker 03: However, as this Court is also aware, the US Supreme Court takes questions presented. [00:14:16] Speaker 03: And not necessarily not the whole case. [00:14:18] Speaker 03: The question presented accepted by the Supreme Court has to do with the venue issues, not the personal jurisdiction issues. [00:14:24] Speaker 03: So we would hope that the reasoning in T.C. [00:14:26] Speaker 03: Heartland applies. [00:14:28] Speaker 03: Running low on time, but I'd like to address your point. [00:14:32] Speaker 03: The T.C. [00:14:32] Speaker 03: Heartland case, [00:14:33] Speaker 03: The Oklahoma case I just mentioned, the Worldtronics case, all of which are covered at pages 37 to 40 in our opening brief, repeatedly reject, pre-rejection of what my colleagues on the other side's argument is, which is that, gee, if a customer asks us to do this, then we haven't really purposely directed activities into the forum. [00:14:53] Speaker 03: All those cases say that's not true. [00:14:55] Speaker 03: As you know, Judge Zola and T.C. [00:14:57] Speaker 03: Heartland, I believe it was less than 2% of the products. [00:15:01] Speaker 03: A very minimal amount of products were going into Delaware. [00:15:03] Speaker 03: The court said, if you did it, and it doesn't matter that it's not that many. [00:15:07] Speaker 03: What matters is that by putting those products into Delaware, into that forum, you were aware that you might be hauled into court there. [00:15:16] Speaker 03: That's the inquiry. [00:15:17] Speaker 03: Not whether you're trying to exploit the market. [00:15:19] Speaker 03: If you've done enough business, and this court has said, even a single substantial contact is sufficient to establish minimum contacts. [00:15:27] Speaker 03: Last point I'd like to make before I sit down is remember also the standard here. [00:15:32] Speaker 03: We only have to make a prima facie case. [00:15:34] Speaker 03: We just have to make a prima facie case for personal jurisdiction. [00:15:38] Speaker 03: We think, given the evidence in this case, we clearly have that. [00:15:47] Speaker ?: OK, thank you. [00:15:48] Speaker 01: Yeah. [00:15:48] Speaker 01: Councilor Vandenberg. [00:15:49] Speaker 02: Yes. [00:15:50] Speaker 02: Thank you, your honor. [00:15:51] Speaker 02: May it please the court. [00:15:53] Speaker 02: This case is fundamentally about Brazilian commerce. [00:15:57] Speaker 02: not United States commerce. [00:15:59] Speaker 02: The defendant, DAL, is a Brazilian entity that markets pneumatic conveying systems in Brazil. [00:16:07] Speaker 00: I want to ask you some of the same questions that Judge Hughes referred to earlier. [00:16:11] Speaker 00: In your brief, you argued that in the alternative, dismissal in this case is proper because US patent law does not extend to a US black vessel. [00:16:21] Speaker 00: What would be the basis for that? [00:16:23] Speaker 00: Would that be a 12b6 decision? [00:16:25] Speaker 00: What would that be? [00:16:26] Speaker 02: Having it gone around several times at the district court level and thought about it, the most reasonable basis to do it would be for failure of state of claim under Rule 12b6. [00:16:36] Speaker 02: It ultimately goes to the heart of whether or not they have stated a claim. [00:16:42] Speaker 02: Now, in terms of the question of whether this court can reach that issue, the court doesn't need to. [00:16:47] Speaker 02: If it affirms the district court on the [00:16:50] Speaker 02: on the other personal jurisdiction arguments, it doesn't mean to reach the issue. [00:16:53] Speaker 02: But if you don't, an appellate court is well accepted, does have the authority to decide an issue for the first time on appeal. [00:17:02] Speaker 02: It doesn't happen that often, but the court does have the authority. [00:17:06] Speaker 02: And this case fits exactly the circumstances where courts that do so exercise that discretion. [00:17:14] Speaker 00: Was there a 12b6 motion filed below? [00:17:17] Speaker 02: There was originally a 12b6 motion filed. [00:17:20] Speaker 02: Now, we have a little crosstalk in the brief on this issue. [00:17:25] Speaker 02: The party that filed the brief was DAI, not DAL, the appellee here. [00:17:31] Speaker 01: But the district court has already made a ruling on this issue. [00:17:33] Speaker 02: And the district court ruled on it, although, again, complicating this unusual case, ruled on it in the second case. [00:17:42] Speaker 02: that MI filed against the DAI. [00:17:45] Speaker 02: DAI got dismissed from this case. [00:17:47] Speaker 02: They refiled against DAI. [00:17:49] Speaker 02: DAI raised it a second time in that case. [00:17:52] Speaker 02: And the district court has ruled on it. [00:17:54] Speaker 00: And that goes- What's the status of that case? [00:17:56] Speaker 02: That case is, MI has actually, as I understand it, withdrawn, dismissed their claim of infringement. [00:18:05] Speaker 02: And the only thing that's really left to be resolved is an issue of DAI's request for attorney's fees. [00:18:12] Speaker 02: in that case. [00:18:13] Speaker 02: But getting back to the question of why should this court decide this issue of the ship as territory if it doesn't affirm the lack of personal jurisdiction, first of all, what the courts say when they look at these discretionary issues is, is it a question of law? [00:18:29] Speaker 02: That is certainly the case here. [00:18:31] Speaker 02: It is a pure question of law. [00:18:33] Speaker 02: Secondly, they look to, has the issue, in fact, been fully briefed by the parties? [00:18:40] Speaker 02: It has been here. [00:18:41] Speaker 02: It's been fully briefed actually three times, one in one district court case, one in another district court case, and then here again on appeal. [00:18:48] Speaker 02: And a third factor that actually isn't in the other cases but makes it even stronger here is that the district court has, in fact, ruled on the issue. [00:18:57] Speaker 02: If you don't decide it and you just say, well, we're going to wait till later, then the parties are going to be forced to go back and spend years litigating this issue. [00:19:07] Speaker 02: Infringement, validity, damages, the whole merits of a patent case [00:19:11] Speaker 02: only to come up to this court three years later with this same dispositive legal issue. [00:19:17] Speaker 02: And mine's owned by a big company. [00:19:20] Speaker 02: That may not be a big deal for them. [00:19:21] Speaker 02: It's a big deal for DAL to spend that time. [00:19:23] Speaker 01: And it's a big deal for the district court. [00:19:25] Speaker 01: If that's your position, why didn't you just waive jurisdiction and get to the meat of the matter? [00:19:30] Speaker 02: Well, because in some sense, DAL [00:19:33] Speaker 02: has no problem if this case is simply resolved on the issue of personal jurisdiction. [00:19:38] Speaker 02: And it is also a dispositive issue. [00:19:39] Speaker 01: You're saying that if you resolve it on personal jurisdiction, we should go ahead and resolve the subject matter question. [00:19:46] Speaker 02: That is not correct, Your Honor. [00:19:47] Speaker 02: If you affirm on lack of personal jurisdiction, DAL has no interest in whether or not this court reaches that issue of ship pass territory. [00:19:56] Speaker 02: It might be good for the patent bar to finally put to bed this issue that's been [00:20:00] Speaker 02: out there, doesn't come up very often. [00:20:02] Speaker 02: They say it comes up all the time. [00:20:04] Speaker 02: It actually comes up very infrequently. [00:20:06] Speaker 02: And when it does, it's usually in the context of criticizing Gardner. [00:20:11] Speaker 01: Just as an aside, if the district court has already ruled on the subject matter issue, and that's favorable to you. [00:20:19] Speaker 02: No. [00:20:20] Speaker 02: No, I'm sorry. [00:20:20] Speaker 02: The district court ruled against DAL. [00:20:23] Speaker 02: The district court said that Gardner is the binding law, and it's going to follow Gardner. [00:20:29] Speaker 02: So another reason, there is now, for the first time in 150 years, there actually is another case out there that follows Gardner. [00:20:36] Speaker 02: It's the district court in this case. [00:20:38] Speaker 02: And since we're talking about that case, let me just talk about that issue, if I could briefly. [00:20:45] Speaker 02: It comes down to this question of the law of the flag doctrine is ultimately not a statutory construction tool. [00:20:53] Speaker 02: It is a common law choice of law principle. [00:20:57] Speaker 02: It comes into play only when the underlying statute that you're trying to decide what its geographic scope is, when the statute itself doesn't define its own geographic scope. [00:21:11] Speaker 02: That was the case in Gardner. [00:21:13] Speaker 02: In 1865, when Gardner was decided, the US patent law had no provision whatsoever specifying what its geographic scope was. [00:21:23] Speaker 02: That was later changed, first in 1870 and then again in 1952, to add and express geographic scope. [00:21:31] Speaker 02: And that's just a critical difference here, because every case that's decided whether a ship is a territory, not for choice of law, but for a literal interpreting the words of a statute, every case has come out concluding that it is not a territory, that that metaphor does not apply. [00:21:53] Speaker 02: in the statutory construction context. [00:21:56] Speaker 02: So let me just address the arguments that they make here. [00:21:58] Speaker 02: First of all, they make essentially a congressional acquiescence argument. [00:22:03] Speaker 01: How does the fact that we're dealing with a US flagship affect the minimum contacts and analysis? [00:22:13] Speaker 02: It is critically important in that context, because we can't just ignore the fact that the forum that they want to point to is being a contact with the United States. [00:22:23] Speaker 02: is something that is different than physical U.S. [00:22:27] Speaker 02: territory. [00:22:29] Speaker 02: In this case, the... Why would that matter? [00:22:35] Speaker 02: It matters because ships move. [00:22:38] Speaker 02: In this case, a U.S. [00:22:41] Speaker 02: ship owner itself made the unilateral decision to bring this U.S. [00:22:46] Speaker 02: flag ship down to Brazil for the purpose of itself engaging in Brazilian commerce. [00:22:53] Speaker 02: So when I- Let me ask you this. [00:22:57] Speaker 04: Let's assume we agree with the district court that US flagships are US territory. [00:23:04] Speaker 04: And so for purposes of the personal jurisdiction analysis, we have to assume that there was acts of infringement on US territory. [00:23:15] Speaker 04: We're not going to- I mean, if it's US territory, it's US territory. [00:23:18] Speaker 04: I don't understand how it matters whether it's a ship [00:23:21] Speaker 04: or it's an island or it's something else if it's US territory. [00:23:25] Speaker 04: It may go to the strengths of the contacts, but if the contact is the acts of infringement are actually occurring on the ship, which is US territory, why isn't that enough to establish personal jurisdiction under K2? [00:23:42] Speaker 02: We do need to separate the question of whether or not Congress has created a cause of action [00:23:50] Speaker 02: from the issue of due process. [00:23:53] Speaker 04: One is statutory, one is constitutional. [00:23:55] Speaker 04: I'm trying to move on to the personal jurisdiction question. [00:23:58] Speaker 04: I understand there's a very difficult question of whether this is U.S. [00:24:01] Speaker 04: territory or not. [00:24:02] Speaker 04: But if it's U.S. [00:24:03] Speaker 04: territory, if the ship is U.S. [00:24:06] Speaker 04: territory, and the act of infringement occurs in U.S. [00:24:10] Speaker 04: territory, what makes a difference whether it's a ship or Guam or Texas? [00:24:17] Speaker 04: It's all occurring in [00:24:19] Speaker 02: But again, we still need to apply principles of due process. [00:24:23] Speaker 02: That's a constitutional requirement. [00:24:25] Speaker 02: It's separate from, again, we're assuming for the purpose of this hypothetical that Congress extended those laws. [00:24:31] Speaker 04: But isn't the point of K2 that if there's sufficient contact with the United States as a forum, but there's insufficient contact with any single district, that you can get essentially jurisdiction [00:24:45] Speaker 04: anywhere where there's any kind of minimal contact. [00:24:48] Speaker 04: I'm not stating it correctly. [00:24:50] Speaker 04: But K2 is supposed to resolve the problem of whether when there's enough contact with the forum, but there's not contact enough with any specific district court. [00:25:00] Speaker 02: But it expressly requires that the assertion of jurisdiction comply with principles of due process. [00:25:08] Speaker 02: It doesn't eliminate that requirement. [00:25:11] Speaker 04: Sure, but if you're infringing in the United States territory, [00:25:16] Speaker 04: But maybe the confusion here is you're still relying on the district court's notion that you didn't direct this conduct into U.S. [00:25:26] Speaker 04: territory because of the contract. [00:25:27] Speaker 04: Put that aside. [00:25:28] Speaker 04: Assume I don't agree with that at all. [00:25:32] Speaker 04: Let's just assume you know this is U.S. [00:25:34] Speaker 04: territory and you know when you're going on these U.S. [00:25:37] Speaker 04: flagships that you're infringing. [00:25:39] Speaker 04: Isn't that sufficient context to [00:25:42] Speaker 04: obviate any due process concerns? [00:25:44] Speaker 02: The due process analysis is ultimately a complicated fact-specific analysis. [00:25:49] Speaker 02: So you can't just look at this one fact in isolation. [00:25:52] Speaker 02: This is US territory and say, that's the only fact. [00:25:56] Speaker 02: There are other facts in this. [00:25:58] Speaker 04: What are the other facts? [00:25:59] Speaker 02: Well, first, of course, is the contractual thing that goes to the question of whether or not it was a purposeful availment. [00:26:07] Speaker 02: But it's also a critical fact that this ship itself has been moved to Brazilian jurisdictional waters. [00:26:14] Speaker 02: So you've got Brazilian citizens. [00:26:16] Speaker 04: But I don't care about that, because I assume, for purposes of the law, that this is a US territory wherever you move it. [00:26:26] Speaker 02: Maybe I'm not making myself clear. [00:26:28] Speaker 02: Well, you are. [00:26:29] Speaker 04: Let me stand here, please. [00:26:31] Speaker 04: I don't want to hide what I'm concerned about, which is, [00:26:36] Speaker 04: I don't see this as the complicating factor here is I think we're all struggling with the notion of a ship that can be moved as part of U.S. [00:26:44] Speaker 04: territory. [00:26:44] Speaker 04: But if we answer that question in the affirmative and assume it's just like a state or a territory or anything else. [00:26:51] Speaker 04: Issues like this arise all the time, where you have two foreign companies that enter into contracts in foreign companies, and most of the activity takes place in foreign countries. [00:27:01] Speaker 04: But if they commit acts of infringement here in the United States, they're subject to being hauled into a district court under K2 for patent infringement claim. [00:27:11] Speaker 02: Again, there are other facts that come into play, and we need to look at the circumstances as a whole. [00:27:16] Speaker 02: Again, one important distinguishing fact here is that [00:27:20] Speaker 02: DAL was not there doing business with the US flagship. [00:27:25] Speaker 02: In other words, again, the US flagship was unilaterally brought to Brazil. [00:27:30] Speaker 02: DAL was unilaterally sent to the flagship. [00:27:33] Speaker 04: You don't have to be doing business with the flagship. [00:27:37] Speaker 04: You have to be doing business in the flagship territory. [00:27:41] Speaker 00: Like for example, it was Arizona. [00:27:42] Speaker 00: You weren't doing business with the state of Arizona, but you were in Arizona doing business with the company that required you to come to Arizona. [00:27:52] Speaker 02: Again, the test as it's been set forth is whether you are purposefully directing activities at the forum. [00:28:00] Speaker 02: So even if we're willing to interpret the forum here as being the ship, it's still relevant whether or not we're directing activities, for example, specifically at the ship [00:28:10] Speaker 02: as opposed to just traveling on the ship. [00:28:12] Speaker 00: And this is where we- What about being on the trip and performing the alleged activities that are the alleged infringement? [00:28:18] Speaker 02: Well, again, consider the hypothetical we put in a brief. [00:28:21] Speaker 02: A Japanese citizen gets on a ferry in Japan to travel from one island to another island. [00:28:30] Speaker 02: And in the course of that, they make a phone call on their iPhone. [00:28:33] Speaker 02: Are they now subject to being sued, having to go all the way to the United States [00:28:38] Speaker 02: to answer for this infringement, hey, they used an infringing product on a US flagship. [00:28:43] Speaker 00: I understand the hypothetical, but what about the facts of your case, in a situation where your client went onto the ship and performed activities that are being alleged of infringement? [00:28:53] Speaker 02: But I guess that is my hypothetical, too. [00:28:55] Speaker 02: When the Japanese citizen uses the phone, it's the same thing. [00:28:59] Speaker 02: It's use of the invention. [00:29:01] Speaker 02: And in some sense, our case is actually more compelling, because there were multiple ships at issue here. [00:29:08] Speaker 02: Look at what happens if you accept their argument. [00:29:11] Speaker 02: That means that we have a lawsuit here in the United States for infringement of their US patent. [00:29:16] Speaker 02: We have a lawsuit in Norway for infringement of their Norwegian patent because there was a Norwegian flagship. [00:29:21] Speaker 00: That happens. [00:29:22] Speaker 00: What if you were in Norway and you were also in the US? [00:29:25] Speaker 02: There's multiple patents. [00:29:27] Speaker 02: But in those normal cases, a party has sought out Norway. [00:29:30] Speaker 02: They've tried to make money from Norway. [00:29:34] Speaker 04: No, quit saying they've tried to make money from the country. [00:29:36] Speaker 04: They've tried to make money in the country. [00:29:39] Speaker 04: So if you try to make money on a Norway flagship, you're trying to make money in their territory. [00:29:43] Speaker 04: If you're trying to make money on a US flagship, you're trying to make money in their territory. [00:29:48] Speaker 04: I don't understand the distinction. [00:29:50] Speaker 04: I think you have a very good argument that the Patent Act doesn't reach flagships as a territory. [00:29:56] Speaker 04: But if you lose on that, [00:29:58] Speaker 04: then it seems to matter not one jot to me that this is a ship versus a state versus an island. [00:30:04] Speaker 02: But then the last argument I want to turn to on that point, Your Honor, is that fair and reasonable prom. [00:30:09] Speaker 02: Because that's where the Supreme Court has said that, look, there are sometimes where there will be contacts with the forum. [00:30:17] Speaker 02: But the remaining circumstances are such that it's simply not fair and reasonable under the specific facts of that case. [00:30:24] Speaker 02: And if any case can claim to be [00:30:26] Speaker 02: unusual and compelling, it's this case. [00:30:31] Speaker 02: There's never been another case, at least it's been cited in the briefs here, where a party has asserted personal jurisdiction based solely on the flag of a ship. [00:30:40] Speaker 02: So even if you accept that, OK, it's territory and we've got to just put on our blinders and accept the fact, we still need to look at the fair and reasonable factors, as the district court did here, and look at those factors and decide whether or not this is one of those cases where that [00:30:56] Speaker 02: kicks in and says the defendant is not subject to jurisdiction. [00:30:59] Speaker 01: Thank you very much. [00:31:00] Speaker 02: Thank you. [00:31:02] Speaker 01: We have three minutes. [00:31:06] Speaker 03: I'd like to begin addressing an administrative point. [00:31:08] Speaker 03: And to judge you, your initial question, actually, I think the correct answer is actually the court could not affirm on a 12b6 ground. [00:31:17] Speaker 03: Because as my colleague noted, they did not raise a 12b6 challenge in this case. [00:31:22] Speaker 03: a different company in the other case raised a 12-B-6. [00:31:25] Speaker 04: So if we disagree with you about the reach of the Patent Act, then the remedy is to remand to the district court with an instruction to dismiss for lack of 12-B-6 instead of doing it for ourselves. [00:31:38] Speaker 03: It may well be that I wanted to make sure you understood. [00:31:42] Speaker 04: Frankly, I just wanted to, if that's the way we're going, eliminate [00:31:46] Speaker 04: kind of ministerial stuff by the district court. [00:31:48] Speaker 04: But if they have to do it, they have to do it. [00:31:50] Speaker 03: Right. [00:31:50] Speaker 03: And as was noted earlier, the district court's decision was actually decided this was US territory. [00:31:56] Speaker 03: These vessels were. [00:31:57] Speaker 03: It was in the context of a 12-year motion, that kind of motion. [00:32:00] Speaker 03: I want to address quickly on the US territory bit and then come back to the personal jurisdiction test. [00:32:08] Speaker 03: They mentioned the 1952 Patent Act, and your question is Judge Stoll. [00:32:12] Speaker 04: Yeah. [00:32:13] Speaker 04: You have a limited time. [00:32:14] Speaker 04: I'd rather hear from you on the personal jurisdiction stuff. [00:32:16] Speaker 03: Great. [00:32:17] Speaker 04: Okay. [00:32:18] Speaker 04: I think you made a good case on your point. [00:32:20] Speaker 04: Okay. [00:32:20] Speaker 04: Why is it that you think, despite almost everything here occurring in Brazil, you still have personal jurisdiction in Minnesota just because the act of infringement occurred on U.S. [00:32:34] Speaker 04: territory? [00:32:35] Speaker 03: Judge Hughes, I would go back to the point that you made, which is this is the reason Rule 4K2 is here. [00:32:41] Speaker 03: Everyone acknowledges there aren't contacts with the state. [00:32:43] Speaker 03: There have to be sufficient contacts with the nation. [00:32:46] Speaker 03: So in other words, if it's within a US territory, as you were noting earlier, it doesn't matter. [00:32:51] Speaker 03: You're not trying to exploit it. [00:32:52] Speaker 03: If the US territory qualifies and the patent law applies there, then if you've directed activities into that territory, you should be subject to jurisdiction. [00:33:00] Speaker 04: Now, we come to the reasonable and fair. [00:33:02] Speaker 04: Under the reasonableness, is there any minimum context requirement for the particular district court you choose under K-2, or can you just basically go anywhere? [00:33:12] Speaker 03: My understanding, Your Honor, is you could go to any U.S. [00:33:15] Speaker 03: district court in terms of personal jurisdiction, because 4K-2 allows that with the U.S. [00:33:22] Speaker 03: Forum. [00:33:23] Speaker 03: On the reasonable and fair analysis, very quickly, [00:33:26] Speaker 03: As the court is aware, there are five factors. [00:33:29] Speaker 03: The first one is burden. [00:33:31] Speaker 03: It was their heavy burden to show that there's a compelling reason why, despite their contacts, there shouldn't be jurisdiction. [00:33:38] Speaker 03: They did not show that there was actually an undue burden on DAL to litigate. [00:33:42] Speaker 03: They did not show how many witnesses were going to come, what are all the documents that are going to have to be translated. [00:33:48] Speaker 03: They just made broad conclusory statements and didn't show that. [00:33:50] Speaker 03: So they did not show in the record that there is an undue burden. [00:33:54] Speaker 03: There is, the U.S. [00:33:56] Speaker 03: has, as this Court is well aware, a substantial interest in enforcing U.S. [00:33:59] Speaker 03: patents and addressing and remedying injuries on U.S. [00:34:03] Speaker 03: territory. [00:34:04] Speaker 03: And that's substantial, regardless of the domiciliaries. [00:34:06] Speaker 03: We have a U.S. [00:34:07] Speaker 03: plaintiff and a non-U.S. [00:34:08] Speaker 03: plaintiff. [00:34:09] Speaker 03: And third, the plaintiff here, MI, has a strong interest in enforcing US patents because, as we noted in our brief, only US courts can enforce US patents. [00:34:19] Speaker 03: We can't get a remedy for this in Brazil. [00:34:21] Speaker 03: A Brazilian court can't give us an injunction or those things. [00:34:23] Speaker 03: There's no reason to believe that they could. [00:34:25] Speaker 03: So if we can't come to this court, then MI is without a remedy. [00:34:30] Speaker 01: OK. [00:34:30] Speaker 01: Thank you very much. [00:34:31] Speaker 01: That concludes today's hearings. [00:34:33] Speaker 01: This court now stands in recess. [00:34:38] Speaker ?: The honor report is adjourned for tomorrow morning at 5.