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M-I Drilling Fluids UK Ltd. v. Dynamic Air Ltda.

United States Court of Appeals, Federal Circuit

May 14, 2018

M-I DRILLING FLUIDS UK LTD., M-I LLC, Plaintiffs-Appellants
v.
DYNAMIC AIR LTDA., Defendant-Appellee

          Appeal from the United States District Court for the District of Minnesota in No. 0:13-cv-02385-ADM-HB, Judge Ann D. Montgomery.

          Sean Daniel Jordan, Jackson Walker LLP, Austin, TX, argued for plaintiffs-appellants. Also represented by Peter Carl Hansen; Crystal J. Parker, Houston, TX; Scott J. Pivnick, Alston & Bird LLP, Washington, DC.

          J. Derek Vandenburgh, Carlson, Caspers, Vanden-burgh, Lindquist & Schuman, P.A., Minneapolis, MN, argued for defendant-appellee. Also represented by Alan Gary Carlson, Nathan D. Louwagie, Todd S. Werner.

          Before Reyna, Hughes, and Stoll, Circuit Judges.

          OPINION

          HUGHES, CIRCUIT JUDGE

         M-I Drilling Fluids U.K. Ltd. and M-I LLC sued Dynamic Air Ltda. in the U.S. District Court for the District of Minnesota, alleging infringement of five U.S. patents. The district court dismissed the case for lack of personal jurisdiction. Because Rule 4(k)(2) of the Federal Rules of Civil Procedure supports the exercise of specific personal jurisdiction over Dynamic Air Ltda., we reverse and remand for further proceedings.

         I

         M-I Drilling is a private limited company organized under the laws of the United Kingdom and has its principal place of business in the United Kingdom. M-I LLC (together with M-I Drilling, M-I) is a U.S. company incorporated in Delaware with its principal place of business in Texas. M-I supplies systems and equipment used in handling drilling waste created, for instance, around oil rigs in offshore oil exploration platforms.

         Relevant here, M-I Drilling owns five U.S. patents- U.S. Patent Nos. 6, 702, 539 B2, 6, 709, 217 B1, 7, 033, 124 B2, 7, 186, 062 B2, and 7, 544, 018 B2 (the asserted patents). M-I LLC is an exclusive licensee of the asserted patents. The patents are generally directed to methods, systems, and apparatuses used in the collection, conveyance, transportation, and storage of drilling waste created around undersea oil wells. The patents are claimed to cover, among other things, pneumatic conveyance systems installed around oil drilling rigs and used to transfer drill cuttings from the oil rigs to receiving ships.

         Dynamic Air Ltda. (DAL) is a corporation organized under the laws of Brazil and has its principal place of business in Brazil. DAL is a subsidiary of Dynamic Air Inc. (DAI), a Minnesota corporation with its principal place of business in Minnesota.

         Between October 2011 and January 2012, the Brazilian state-owned oil company Petróleo Brasileiro S.A. (Petrobras) requested proposals for the installation of pneumatic conveyance systems on ships to assist in the removal of waste created by drilling undersea oil wells. M-I Swaco do Brasil - Comércio Serviços e Mineração Ltda., M-I Drilling's "sister company and customer" in Brazil, and DAL both submitted their proposals. J.A. 13. DAL won the bid and thereafter designed, manufactured, and operated at least three pneumatic conveyance systems. In February 2013, DAL installed a conveyance system that pneumatically conveyed drill cuttings from "P-59, " an offshore oil drilling rig, onto the HOS Resolution, a U.S.-flagged ship. In August 2013, DAL installed a similar conveyance system on board the HOS Pinnacle, another U.S.-flagged ship, to remove drill cuttings from "P-III, " another offshore oil drilling rig.

         M-I then sued DAL in the U.S. District Court for the District of Minnesota, alleging that DAL infringed the asserted patents by making, selling, and operating pneumatic conveyance systems such as those on the HOS Pinnacle and the HOS Resolution. DAL moved to dismiss for lack of personal jurisdiction under Rule 12(b)(2), arguing that the district court could not exercise specific personal jurisdiction over it under Rule 4(k)(2) consistent with due process. The district court granted that motion and dismissed the case after finding that, although the alleged infringing activities took place on U.S.-flagged ships that are themselves U.S. territory, the contract between Petrobras and DAL did not identify the ships on which DAL would be required to make installations. As such, in the district court's view, DAL did not purposefully avail itself of the privilege of conducting activities within the United States because its contacts with the HOS Pinnacle and the HOS Resolution were exclusively due to the unilateral activity of Petrobras. J.A. 19-20. The court also concluded that the exercise of specific personal jurisdiction over DAL would neither be reasonable nor fair. J.A. 22-25.

         M-I appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

         II

         Personal jurisdictional issues in patent infringement cases are reviewed de novo and under our precedent. Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de ...


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