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Grupo Petrotemex, S.A. DE C.V. v. Polymetrix AG

United States District Court, D. Minnesota

March 5, 2019

Grupo Petrotemex, S.A. DE C.V., and DAK Americas, LLC, Plaintiffs,
Polymetrix AG, Defendant.

          Eric W. Schweibenz, John F. Presper, J. Derek Mason, and Robert S. Mattson, Oblon, McClelland, Maier & Neustadt, LLP, and Barbara J. D'Aquila, Margaret Rudolph, and Laura J. Borst, Norton Rose Fulbright U.S. LLP, for Plaintiffs.

          Todd A. Noah, Stephen H. Youtsey, and Igor Shoiket, Dergosits & Noah LLP, and Bernard E. Nodzon, Jr., Theodore M. Budd, and Timothy M. Sullivan, Faegre Baker Daniels LLP, for Defendant.



         This is a multi-continent patent infringement litigation between two companies involved in the manufacture of “polyethylene terephthalate, ” or “PET, ” which is used to create plastic bottles and containers. In July 2016, Plaintiffs Grupo Petrotemex, S.A. DE C.V., a Mexican company, and DAK Americas, LLC, its American affiliate (collectively, “GPT/DAK”), filed a complaint accusing Defendant Polymetrix AG, a Swiss company, of selling foreign PET manufacturers a technical process that infringed three of GPT/DAK's U.S. patents and then inducing those manufacturers to export the resulting PET to the United States, in violation of U.S. patent law. Polymetrix adamantly denies these claims. The case slowly proceeded through discovery throughout 2016 and 2017, punctuated by various disputes over the scope of GPT/DAK's discovery into Polymetrix's foreign clients.

         However, in March 2018, Polymetrix brought an even more fundamental issue to the Court's attention: whether an actual “case or controversy” even existed under Article III, such that this Court could lawfully exercise jurisdiction over the litigation. Specifically, Polymetrix moved to dismiss GPT/DAK's complaint under Fed.R.Civ.P. 12(b)(1), and argued that, because no evidence existed showing that PET produced using the at-issue process had ever entered the United States, much less with Polymetrix's knowledge or approval, GPT/DAK was essentially litigating a future, speculative worry, rather than an “actual” and “concrete” “injury in fact” that was “fairly traceable” to Polymetrix. See Spokeo v. Robins, 136 S.Ct. 1540, 1548 (2016). GPT/DAK riposted that this motion was procedurally improper, because Federal Circuit law holds that “importation” is a merits question, rather than a jurisdictional concern, see Litecubes, LLC v. Northern Light Products, Inc., 523 F.3d 1353 (Fed. Cir. 2008), and that, in any event, at least a few shipments of PET manufactured at a Polish plant, using Polymetrix's allegedly infringing process, entered the United States in 2016, and thus injured GPT/DAK.

         At the June 2018 motion hearing, the Court noted the paucity of evidence in support of an “injury” that was “fairly traceable” to Polymetrix, even under the Federal Circuit's lenient Article III standing requirements for patent infringement plaintiffs. The Court also expressed concern about continuing this expensive, protracted international patent litigation based on mere hypothetical fears. Accordingly, the Court ordered the parties to engage in 90 days of focused, jurisdictional discovery to determine if evidence existed from which GPT/DAK could prove “injury in fact” and “causation” under Article III. Following that 90-day discovery period, and additional briefing, the Court held two evidentiary hearings, first on January 8, 2019, and then again on January 22, 2019.

         After carefully reviewing the evidence submitted by the parties, both at the hearings and in the parties' supplemental submissions (including the relevant deposition transcripts), the Court has now satisfied itself that an actual “case or controversy” exists here, such that the Court may exercise Article III jurisdiction over this action. Whether GPT/DAK's claims could survive a properly-placed Rule 56 motion remains a question for a future date. The Court explains its reasoning at greater length below.[2]

         I. DISCUSSION

         A. The Law

         Article III of the Constitution limits the jurisdiction of the federal courts to “Cases” and “Controversies.” U.S. Const., art. III, § 2, cl. 1. Accordingly, any federal court plaintiff must have case-or-controversy “standing” to assert a claim-specifically, a plaintiff must show “(1) [that he] suffered an ‘injury in fact' . . . which is . . . ‘actual or imminent, not conjectural or hypothetical'; (2) [that there is a] causal connection between the injury and the conduct complained of [that is] ‘fairly traceable to the challenged action of the defendant'; and (3) that ‘[it is] likely, as opposed to merely speculative, that the injury will be ‘redressed by a favorable decision.'” 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1377 (Fed. Cir. 2012) (cleaned up) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992)). Similarly, a dispute must be “ripe for adjudication, ” and must not “rest[] upon contingent future events that may not occur as anticipated, or indeed may not occur at all.” Sandoz, Inc. v. Amgen, Inc., 773 F.3d 1274, 1278 (Fed. Cir. 2014) (quoting Texas v. United States, 523 U.S. 296, 300 (1998)); see also id. (observing that “standing” and “ripeness” are both “helpful guides” in determining whether a plaintiff has satisfied “the absolute constitutional minimum for a justiciable controversy under Article III”). These constitutional doctrines exist to prevent federal courts from “issuing advisory opinions based upon hypothetical facts.” Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d 1330, 1338 (Fed. Cir. 2007); accord Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101 (1998) (“Hypothetical jurisdiction produces nothing more than a hypothetical judgment-which comes to the same thing as an advisory opinion, disapproved by this Court from the beginning.”).

         As such, “[i]t is well-established that any party, and even the court sua sponte, can raise the issue of standing for the first time at any stage of the litigation.” Pandrol USA, LP v. Airboss Ry. Products, Inc., 320 F.3d 1354, 1367 (Fed. Cir. 2003). If subject matter jurisdiction, either through standing, ripeness, or some other doctrine, is found lacking, “the Court has no authority to go further than dismissing the case.” Shoots v. iQor Holdings US, Inc., No. 15-cv-563 (SRN/SER), 2016 WL 6090723, at *2 (D. Minn. Oct. 18, 2016) (citing Ex Parte McCardle, 74 U.S. 506, 514 (1868)).

         Admittedly, in the patent law context, Article III standing is seldom challenged. This is likely because the Federal Circuit holds that a “‘[c]onstitutional injury in fact' occurs when a party infringes a patent in violation of a party's exclusionary rights.” Drone Tech., Inc. v. Parrot, S.A., 838 F.3d 1283, 1292 (Fed. Cir. 2016) (quoting Morrow v. Microsoft Corp., 499 F.3d 1332, 1339-40 (Fed. Cir. 2007)); accord Pandrol, 320 F.3d at 1368 (“Establishing ownership of a patent that has been infringed satisfies the requirements of Article III standing.”). In other words, the case law appears to suggest, so long as a patent holder alleges that they own a patent, and that another party is actively infringing that patent, a federal court can exercise subject matter jurisdiction over that dispute.

         What is more, this lenient understanding of jurisdiction appears to apply even if virtually all of the allegedly infringing behavior occurred overseas. According to the Federal Circuit, because the question of “whether [] allegedly infringing act[s] happened in the United States is an element of the claim for patent infringement, not a prerequisite for subject matter jurisdiction, ” “[t]here [is] no need for [] district court[s] to consider whether [foreign defendants have] imported products into the United States in order to determine whether [they have] jurisdiction over [a] case.” Litecubes, 523 F.3d at 1366 (emphasis added). Rather, any dispute over “importation, ” or other extraterritorial conduct, must be resolved “in a Rule 12(b)(6) motion to dismiss for failure to state a claim or in a motion for summary judgment.” Id. at n.14.[3]

         All of that said, the Federal Circuit has never held that, in the face of facts suggesting that a foreign defendant has not at all harmed a U.S. patent holder under the U.S. patent laws, a federal court should not consider whether it may exercise Article III jurisdiction over the dispute. Cf. Am. Canoe Ass'n, Inc. v. Murphy Farms, Inc., 326 F.3d 505, 515 (4th Cir. 2003) (“The ultimate responsibility of the federal courts, at all levels, is to reach the correct judgment under law. Though that obligation may be tempered at times by concerns of finality and judicial economy, nowhere is it greater and more unflagging than in the context of subject matter jurisdiction issues, which call into question the very legitimacy of a court's adjudicatory authority.”). Such a jurisdictional inquiry seems especially prudent when the facts suggest problems with both “standing” and “ripeness.” See, e.g., Sandoz, 773 F.3d at 1278; Teva Pharm., 482 F.3d at 1337-38.

         The Court finds that it is faced with such a unique set of facts here, in that GPT/DAK's infringement case appears to be potentially premature and based on the “independent actions” of foreign actors “not before the court.” Lujan, 504 U.S. at 560. Accordingly, lenient Federal Circuit law notwithstanding, the Court is dutybound to undertake a standing analysis here. Moreover, because the Court construes Polymetrix's Fed.R.Civ.P. 12(b)(1) motion as a “factual attack” on GPT/DAK's standing, the Court will not accept the allegations in GPT/DAK's complaint as true, and will instead independently review the facts to determine whether GPT/DAK has proven standing by a preponderance of the evidence. See Shoshone Indian Tribe v. United States, 672 F.3d 1021, 1030 (Fed. Cir. 2012). “In resolving these disputed predicate jurisdictional facts, ” the Court will “review evidence extrinsic to the pleadings, ” including all the evidence submitted by GPT/DAK during and after the evidentiary hearings. Id.; accord Sandusky Wellness Ctr., LLC v. MedTox Sci., Inc., 250 F.Supp.3d 354, 257 (D. Minn. 2017) (“When addressing a factual attack [to subject matter jurisdiction], a court may consider matters outside of the pleadings and weigh the evidence.”).[4]

         However, in accordance with binding Federal Circuit precedent, the Court will take care to not rule on the merits of GPT/DAK's suit, i.e., whether GPT/DAK has proven by a preponderance of the evidence that PET made using the (allegedly) infringing process was imported into the United States, and, if so, whether Polymetrix knowingly induced its clients (or other downstream entities) to engage in such importation. See 35 U.S.C. §§ 271(b), (g). For obvious reasons, the Court cannot require a plaintiff to prove its entire case in response to a jurisdictional challenge. See Litecubes, 523 F.3d at 1360-61 (“Subject matter jurisdiction does not fail simply because the plaintiff might be unable to ultimately succeed on the merits”; rather, “a failure to prove the allegations alleged in a complaint requires a decision on the merits, not a dismissal for lack of subject matter jurisdiction.”); accord Am. Farm Bureau Fed'n v. U.S. Envtl. Prot. Agency, 836 F.3d 963, 968 (8th Cir. 2016) (“The standing inquiry is not, however, an assessment of the merits of a plaintiff's claim. In assessing a plaintiff's Article III standing, we must assume that on the merits the plaintiffs would be successful in their claims.”). This is especially so when a plaintiff has ...

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