As a lawyer, I am used to reaching into my stocking on Christmas eve to find yet another lump of sumptuous coal. Hard and black as my own cynical heart, it is but fuel for engine of my enemies' destruction.
This year, however, I was presently surprised to return to the office after spending the entire holiday sick in bed to find a new opinion to discuss on the blog. Everyone wins today.
IBM Corp. v. Rakuten, Inc., C.A. No. 21-461 (D. Del. Dec. 22, 2022) presents an interesting issue of personal Jurisdiction I hadn't seen before. The plaintiff, IBM, sued Rakuten a Japanese corporation (and seller of cool Japanese goods) along with its U.S. subsidiary Ebates. After suit was filed, Rakuten transferred several patents in its portfolio to Ebates, who then asserted them against IBM as permissive counterclaims. All the while, Rakuten maintained that the Court lacked personal Jurisdiction (Ebates conceded jurisdiction).
Judge Williams, however, found the maneuver of shuffling the patents off to Ebates sufficient to confer personal jurisdiction over the Japanese Rakuten, stating:
Here, Rakuten Japan has purposefully availed itself of the privilege of conducting activities within the forum State (Delaware). Rakuten Japan acquired property-the '861, '968, and '960 patents-and assigned them to its subsidiary-Ebates Performance Marketing, which is a Delaware corporation. Rakuten Japan intentionally assigned those patents to Ebates Performance Marketing with the intent to assert those patents as permissive counterclaims. Lastly, Rakuten Japan used Ebates Performance Marketing to assert those patents in this action in Delaware. The Court finds Rakuten Japan's conduct sufficient to establish that it has minimum contacts with this forum.
IBM Corp, at 11.
Purposeful availment! Minimum contacts! The real classics of civil procedure.
The court went on to specify that it was basing this grant of jurisdiction on an agency theory, noting:
In effect, Ebates Performance Marketing is acting as Rakuten Japan's agent. In Delaware, "a defendant company may be subject to personal jurisdiction in Delaware by virtue of the court's personal jurisdiction over the defendant company's affiliate" under the agency theory. . . . Rakuten Japan is subject to personal jurisdiction in Delaware because Ebates Performance Marketing appears to be acting on Rakuten Japan's behalf or at its direction when it asserted the permissive counterclaims in this action.
Id. at 9 n.4
The decision also has some good stuff about issue preclusion. Please don't read it though, I'm hoping to squeeze another post out of it on Thursday.
Happy Holidays!
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