Over the last several decades, the United States District Court for the District of Delaware has become a hotbed for patent litigation.1 The District of Delaware can typically exercise jurisdiction over company defendants in patent-infringement lawsuits2 because over 50% of all publicly traded companies in the United States, including 64% of the Fortune 500 companies, are incorporated in this small state.3
However, jurisdiction issues become murky when a plaintiff sues a non-resident defendant with limited contacts to Delaware. One such situation arises when a non-resident defendant, having no presence in the state and conducting no relevant acts in the state, is accused of indirect infringement because the defendant’s accused products are sold in Delaware. This fact pattern has resulted in an intra-district split on whether Delaware’s long-arm statute permits Delaware courts to exercise jurisdiction over such non-resident defendants.4
The Delaware long-arm statute, in relevant part, states that:
[A] court may exercise personal jurisdiction over any nonresident . . . who . . .
(1) Transacts any business or performs any character of work or service in the State;
(2) Contracts to supply services or things in this State;
(3) Causes tortious injury in the State by an act or omission in this State; [or]
(4) Causes tortious injury in the State or outside of the State by an act or omission outside the State if the person regularly does or solicits business, engages in any other persistent course of conduct in the State or derives substantial revenue from services, or things used or consumed in the State . . . .5
The key disagreement between the Delaware district court judges is whether Delaware’s long-arm statute embraces the “stream-of-commerce” theory of personal jurisdiction.6 Under this theory, “even if no subsection of the long-arm statute is fully satisfied, ‘jurisdiction is appropriate under partial satisfaction of § 3104(c)(1) and (c)(4).’”7 Proponents of the theory contend that under this “partial satisfaction” approach, “jurisdiction exists when a defendant displays ‘an intent to serve the Delaware market’ and ‘this intent results in the introduction of a product into the market and . . . plaintiff’s cause of action arises from injuries caused by that product.”8 Opponents of the theory, on the other hand, contend that the interpretation of the long-arm statute “should flow from the statutory language,” and that “partial-satisfaction” of the statute is insufficient to meet the statutory requirements for jurisdiction.9
These two opposing perspectives were discussed in detail in two recent district court opinions issued by Chief Judge Stark and Judge Andrews.10 Interestingly, even though the cases involved overlapping defendants, the presiding judges ruled differently on whether the court had jurisdiction.11
In Round Rock Research v. ASUSTek Computer Inc., the district court addressed a motion to dismiss for lack of personal jurisdiction filed by ASUSTek Computer Inc., a Taiwanese company.12 The plaintiff there accused ASUSTek of patent infringement based on the sale of various computer monitors, tablets, notebooks, and personal computers.13 The record established that ASUSTek sold the computer products to its Singapore subsidiary, which then sold the computers to a California subsidiary.14 The California subsidiary sold the computers to retailers such as Best Buy and Office Depot, which ultimately sold the accused devices in Delaware.15 Judge Andrews dismissed ASUSTek from the case for lack of jurisdiction because he found that ASUSTek did “not transact any business in Delaware . . . [did] not perform any work in Delaware . . . [did] not contract to do anything in Delaware . . . [and did] not sell or offer to sell any computers in Delaware.”16 As such, Judge Andrews found that ASUSTek did “nothing that begins to meet §§ 3104 (c)(1), (2), or (3).”17
In Graphics Properties Holdings, Inc. v. ASUS Computer International, Judge Stark was presented with a motion to dismiss under nearly identical facts and the same defendant as in Round Rock Research.18 Judge Stark found that ASUSTek was subject to personal jurisdiction in Delaware because ASUSTek was “aware of and actively utilize[d] [the] reseller outlets to sell the accused devices” in Delaware, even though ASUSTek never actually conducted any activity in the state.19 In coming to his decision, Judge Stark analyzed theRound Rock decision and concluded that “notwithstanding the contrary, and not unreasonable, prediction of a fellow Judge of this Court[,]” the Delaware Supreme Court would likely “hold that the ‘stream-of-commerce’ theory . . . provide[s] a basis for personal jurisdiction under Delaware law, even though the theory is not expressly authorized by Delaware’s long-arm statute.”20 Judge Stark’s decision was based in part on the Delaware Supreme Court’s mandate that “Delaware’s long arm statute . . . is to be broadly construed to confer jurisdiction to the maximum extent possible under the Due Process Clause” and the fact that “[t]he Delaware Supreme Court has had several opportunities to reject the dual jurisdiction theory but has refrained from doing so.”21
In sum, non-resident defendants haled into Delaware district court under the stream-of-commerce theory of jurisdiction may consider contesting jurisdiction under Delaware’s long-arm statute. That said, the likelihood of prevailing on such a motion, given the non-uniform application of Delaware’s long arm statute, may depend on the presiding judge. Until the Delaware Supreme Court resolves this issue, litigants and the district court may be forced to address this issue on a case-by-case basis.