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Judge Stark denies motion to dismiss for lack of personal jurisdiction and improper venue

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In Graphic Properties Holdings, Inc. v. Asus Computer International, C.A. No. 13-864-LPS (D. Del. Sept. 29, 2014), Chief Judge Leonard P. Stark denied defendants ASUS Technology Pte Ltd. (“ASUS Singapore”) and ASUSTek Computer Inc.’s (“ASUS Taiwan”) (collectively the “Foreign Defendants”) motion to dismiss for lack of personal jurisdiction and improper venue. First, addressing the long-arm statute prong of the personal jurisdiction inquiry, Judge Stark resolved the issue of whether the Court would recognize a theory of “dual jurisdiction” (i.e., “stream of commerce”) based on “partial satisfaction” of subsections (1) and (4) of the Delaware long-arm statute, 10 Del. C. § 3104. Id. at 4-10. As Judge Stark explained, under a stream of commerce 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 … plaintiffs cause of action arises from injuries caused by that product.’” Id. at 6. Because the Delaware Supreme Court has not provided an express opinion on this issue, Judge Stark’s role was limited to predicting how the Supreme Court would rule. Id. at 7. Considering that the (i) Delaware Supreme Court has refrained from rejecting the dual jurisdiction theory despite having several opportunities to do so; (ii) that “no Delaware state court has rejected the dual jurisdiction theory”; and (iii) that “Delaware’s long arm statute … is to be broadly construed to confer jurisdiction to the maximum extent possible under the Due Process Clause”, Judge Stark concluded the “Delaware Supreme Court, if faced with the issue, would hold that the ‘stream-of-commerce’ theory does provide a basis for personal jurisdiction under Delaware law, even though the theory is not expressly authorized by Delaware’s long-arm statute.” Id. at 8-9. Judge Stark reached this conclusion notwithstanding the fact that a fellow Judge of the Court reached a “contrary, and not unreasonable” conclusion regarding the stream of commerce theory. Id. at 6-7, 9 (citing Round Rock Research LLC v. ASUSTeK Computer Inc., 967 F. Supp. 2d 969 (D. Del. 2013)).

Applying the stream of commerce theory, Judge Stark explained that “[a] non-resident firm’s intent to serve the United States market is sufficient to establish an intent to serve the Delaware market, unless there is evidence that the firm intended to exclude from its marketing and distribution efforts some portion of the country that includes Delaware.” Id. at 9. In the instant matter, Judge Stark found evidence that the Foreign Defendants not only targeted the United States generally by selling to ASUS Computer International (“ASUS California”) in California, but that they also targeted Delaware specifically given that “there are least three physical resale outlets (Best Buy stores) inside Delaware that stock and sell the accused devices.” Id. at 10. Accordingly, Judge Stark found the long-arm statute prong satisfied.

Judge Stark also found the constitutional due process prong of the personal jurisdiction inquiry satisfied given that the “Foreign Defendants,by way of ASUS California, purposefully ship the accused devices into Delaware through established distribution channels such as Best Buy” and therefore “purposefully avail [themselves] of the privilege of conducting activities within [Delaware], thus invoking the benefits and protections of its laws.” Id. at 12-13.

While denying the motion to dismiss as of the date of the opinion, Judge Stark agreed with the Foreign Defendants’ assertion that “plaintiff only provided facts showing sales of accused devices in Delaware five months after the filing of the Complaint.” Id. at 14. Because a court “cannot base jurisdiction on events that occurred after the filing of [the] complaint” in view of the “arising under” language of Delaware’s long-arm statute, Judge Stark found that the Foreign Defendants will be required to show “[f]acts that the accused devices were on sale in Delaware prior to the filing of this suit” in order for the Court to sustain jurisdiction over the Foreign Defendants. Id. at 13-14. Judge Stark noted that the Court will be “prepared to reevaluate whether it can properly exercise jurisdiction over the Foreign Defendants as the case proceeds.” Id. at 14.

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