Mailings Are Not “Offers For Sale” And Don’t Trigger Jurisdiction

Posted on | March 12, 2010 | 2 Comments

2010-1158 Dustcap Products v. J&S Fabrication
D/MN 09-cv-1179
Judge Ann Montgomery

Patentee/plaintiff Dustcap appeals to the Federal Circuit from the order of Judge Ann Montgomery dismissing its action for lack of personal jurisdiction.  J&S is incorporated and located in Pennsylvania, the case brought in Minnesota.  The case involved 6,874,541, generally directed to a slip cover for protecting HVAC components during installation and construction.

Dustcap conceded there was not general jurisdiction–J&S did not have any continuous or systematic contacts with Minnesota.  Rather, it argued specific jurisdiction.  Specific jurisdiction exists if (1) the exercise of jurisdiction is permitted by the forum state’s long-arm statute; and (2) the exercise of jurisdiction by the courts of the forum state comports with the Due Process Clause of the United States Constitution. See Genetic Implant Sys., Inc. v. Core-Vent Corp., 123 F.3d 1455, 1458 (Fed. Cir. 1997) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-76 (1985)).

Minnesota interprets its long-arm statute commensurate with the Due Process Clause.  The combined inquiry thus asks (1) whether the defendant “purposefully directed” its activities at residents of the forum; (2) whether the claim “arises out of or relates to the defendant’s activities with the forum;” and (3) whether the assertion of personal jurisdiction is “reasonable and fair.”  Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360
(Fed Cir. 2001).

The Court summarized the alleged contacts here as follows:

Plaintiff alleges J&S purposefully directed activities at residents of Minnesota by: (1) mailing advertisements to several [6] Minnesota businesses;1 (2) placing an advertisement in a nationally circulated magazine; and (3) operating a website that allows prospective customers to purchase the Smith Slip over the internet.

Order, p. 5.  The Court further noted that J&S had no offices or employees in Minnesota, and had never sold any of the allegedly infringing product in Minnesota, including via the website.  Id.

Judge Montgomery found these allegations insufficient to establish personal jurisdiction.  The mailing of circulars received particular attention because Dustcap contended that the mailings were “offers to sell” and therefore infringing acts.  This would not only satisfy the first prong of the test, but also the second–that the infringement claim “arises out of or relates to the defendant’s activities with the forum.”

However, the Court found that the mailings were not offers for sale, using the Federal Circuit’s decisions in Rotec and Group One.  The Court wrote:

Plaintiff relies on 3D Systems, Inc. v. Aarotech Laboratories., Inc., 160 F.3d 1373 (Fed. Cir. 1998) to support his assertion that an offer to sell is any communication by the defendant to prospective buyers that includes a description and price. However, in Rotec Industries, Inc., v. Mitsubishi Corp., 215 F.3d 1246, 1255 (Fed. Cir. 2000), the Federal Circuit revisited its interpretation of “offer to sell” in 3D Systems and concluded that the phrase must be read according to the norms of traditional contract law. Id. at 1254-55. Under contract law, an offer is a communication “which the other party could make into a binding contract by simple acceptance.” Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1048 (Fed. Cir. 2001). Based on this principle, courts often conclude that advertisements and promotional materials do not constitute offers. Moldflow Corp. v. Simcon, Inc., 296 F. Supp. 2d 34 (D. Mass. 2003). Here, J&S’s advertisement listed a variety of options available to prospective buyers, but lacked the definite terms that would create a binding contract between J&S and the recipient if the recipient simply accepted. Additional, material terms, including price, quantity, and terms of delivery, needed to be negotiated. J&S’s advertisements were merely invitations to bargain, not offers to sell.

Order, p. 6.  The Court then quickly dispensed with the national advertising (via a national publication) and the website arguments.  Opinion, p. 7

2010-1158 Order

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