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Judge Sleet grants motion to dismiss for lack of personal jurisdiction

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In Polar Electro Oy v. Suunto Oy et al., C.A. No. 11-1100-GMS (D. Del. May 12, 2015), Judge Gregory M. Sleet granted defendant Suunto Oy’s (“Suunto”) motion to dismiss for lack of personal jurisdiction. Plaintiff Polar Electro Oy (“Polar”) filed this patent infringement lawsuit against defendants Suunto, Amer Sports Winter & Outdoor (“ASWO”), and Firstbeat Technologies Oy. Id. at 1. As Judge Sleet explained, “Polar is a company operating and existing under the laws of Finland, with its principal place of business in Kempele, Finland” and “Suunto is also a Finnish company, with its principal place of business in Vaanta, Finland.”  Id. at 2.  Further, “Suunto does not sell its accused products directly in the United States,” but rather contracts with “ASWO, a Delaware corporation . . . to distribute Suunto products in the United States.”  Id.

Considering Suunto’s motion, Judge Sleet found that the Delaware long-arm statute was met under a theory of “dual jurisdiction” or “stream of commerce” jurisdiction, which “arises from at least partial satisfaction of subsections (1) and (4) of the Delaware long-arm statute.” Id. at 6. Specifically, Judge Sleet first found that Suunto had an “intent to serve the Delaware market.” Judge Sleet explained that “Suunto’s relationship with ASWO clearly demonstrates an intent to serve the United States market at large” and 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 7. Judge Sleet further noted that “there is no dispute that Polar alleges patent infringement for Suunto products that are sold in Delaware.” Id. at 8.

Despite finding the Delaware long-arm statute satisfied, Judge Sleet nevertheless concluded that “due process considerations prevent the exercise of jurisdiction over Suunto.” Id. at 10. Judge Sleet noted that “releasing a product into the stream of commerce, without ‘something more,’ cannot furnish a basis to exercise jurisdiction.” Id. at 9. Judge Sleet then explained that “Suunto sells its products through a U.S. distributor,” ASWO, and that “[a]s Polar itself acknowledges, the goal of the distribution agreement is to increase Suunto’s market share in the United States at large, without any particular focus on Delaware (or any state for that matter).” Id. Judge Sleet concluded that “ASWO’s ultimate dealings with retailers in Delaware may have been foreseeable, but the court sees no evidence of intent–there is not ‘something more’ beyond placing the product into the stream of commerce.” Id.

UPDATE: Following this decision, the Federal Circuit vacated Judge Sleet’s determination that personal jurisdiction was lacking because it determined that Suunto purposefully shipped to Delaware. The Federal Circuit remanded to Judge Sleet for a determination of whether exercising jurisdiction over Suunto would be reasonable and fair, and Judge Sleet has now found that exercising jurisdiction would be unreasonable and unfair. Polar Electro Oy v. Suunto Oy, et al., C.A. No. 11-1100-GMS, Memo. at 1-2 (D. Del. Aug. 29, 2017). In reaching this conclusion, Judge Sleet noted the lack of uniformity of personal jurisdiction jurisprudence in patent law. Id. at 4, n.2. Nevertheless, His Honor explained that the burden on Suunto was “undoubtedly high” because it “has no physical presence in the United States, let alone Delaware–Suunto lacks real estate, employees or agents in Delaware. The record also suggests that Suunto never directly solicited sales for its products within Delaware. Suunto is not an out-of-state manufacturer, operating elsewhere within the United States, but, is instead, a Finnish company with its principal place of business in Finland. Not only would Suunto have to travel to Delaware to defend itself in this lawsuit, it would also have to submit to a foreign nation’s judicial system.” Id. at 7. Moreover, while there “is no doubt that Suunto intended for its products to reach the United States [a different defendant] ‘provided the destination addresses, took title to the goods in Finland, and directed and paid for shipping.’ Suunto exercised zero control over where its products ended up within the United States.” Id. at 8-9.

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