Lead Opinion
Opinion for the court filed by Circuit Judge LOURIE.
Dissenting opinion filed by Circuit Judge SCHALL.
Cipla Ltd. (“Cipla”) joins with Velcera, Inc. and FidoPharm, Inc. (collectively, “Velcera”) in appealing from a judgment entered by the United States District Court for the Middle District of Georgia in favor of Merial Ltd. and Merial SAS (collectively, “Merial”) holding Cipla in contempt for violating an earlier injunction and holding Velcera in contempt for acting in concert with Cipla to violate that injunction. Merial Ltd. v. Cipla Ltd., No. 3:07-CV-125 (CDL),
Background
The Patented Pest Control Technology
This appeal concerns patented compositions for protecting domestic dogs and cats from infestation with ectoparasites, e.g., fleas and ticks. In particular, the dispute centers on topically applied or “spot on” veterinary compositions containing pestici-dal N-phenylpyrazole derivatives, such as fipronil, applied directly to the skin of an animal. BASF’s U.S. Patent 5,232,940 (“the '940 patent”), now expired, claimed fipronil and fipronil-based compositions as well as methods of using such compositions for pest control. Merial, as the exclusive licensee of the '940 patent, developed commercially successful spot-on fipronil compositions sold under the brand name Frontline.
In addition to producing flpronil-only products, Merial devised dual-acting pest control compositions covered by U.S. Patent 6,096,329 (“the '329 patent”). In particular, the '329 patent claims spot-on compositions containing fipronil combined with a second active ingredient — specifically, an insect growth regulator (“IGR”). In contrast to pesticides, which work through direct toxicity, IGRs act not by killing individual parasites but rather by interrupting the life cycle within a parasite population. The '329 patent discloses numerous IGRs — such as methoprene, for example' — -that mimic natural insect hormones to prevent immature or juvenile-stage parasites from reaching reproductive maturity, thereby limiting and eventually depleting an infestation. In the pesticide-plus-IGR compositions disclosed in the '329 patent, the paired active ingredients complement one another through their distinct methods of action to achieve improved pest protection relative to either agent administered alone. Merial markets compositions combining fipronil and meth-oprene as Frontline Plus, the leading veterinary flea and tick treatment in the United States.
The 2008 Default Judgment
Cipla is a pharmaceutical company incorporated under the laws of India with its principal place of business in Mumbai, India. In November 2007, Merial filed suit against Cipla and various internet retailers in the United States District Court for the Middle District of Georgia alleging infringement of the '940 and '329 patents (“the 2007 complaint”). Merial alleged that Cipla was subject to personal jurisdiction in the district court by virtue of Ci-pla’s alleged contacts with and conduct within the state of Georgia, and Merial provided Cipla with service of process in Mumbai by courier and registered mail. According to the 2007 complaint, Cipla and the defendant online retailers sold throughout the United States spot-on veterinary pesticide products known as “Cipla Protektor” and “Cipla Protektor Plus” that constituted infringing formulations of fi-pronil or fipronil and methoprene, respectively.
Neither Cipla nor any of the other defendants responded to the 2007 complaint
[Cipla], as well as those persons and entities in active concert with [Cipla] who have notice of this order, are herewith permanently enjoined from committing any act that infringes or causes or induces infringement of any claim of the '940 or '329 patents, including but not limited to making, having made, using, causing to be used, selling, causing to be sold, offering for sale, and causing to be offered for sale in the United States, and importing and causing to be imported into the United States, any product that infringes any claim of the '940 or '329 patents, including but not limited to the veterinary products denominated CI-PLA PROTEKTOR that contain fipronil and the products denominated CIPLA PROTEKTOR PLUS that contain fipro-nil and methoprene.
BASF Agro B.V. v. Cipla Ltd., No. 3:07-CV-125 (CDL) (M.D.Ga. Mar. 6, 2008), ECF No. 18, slip op. at 2-3 (“Default Order ”). On April 14, 2008, Cipla filed in the court an “informal” communication that referenced the default proceedings but was “not intended to constitute an appearance,” in which Cipla denied infringing or having “any presence in the United States and in this judicial district” and requested dismissal of the action. J.A. 1130-31. The district court denied Cipla’s request for such “informal equitable assistance” and entered final judgment on April 15, 2008. BASF Agro B.V. v. Cipla Ltd., No. 3:07-CV-125 (CDL) (M.D.Ga. Apr. 15, 2008), ECF Nos. 22, 23.
The PetArmor Plus Venture
Velcera was formed in 2004 to develop veterinary pharmaceuticals for companion animals such as dogs and cats, beginning with products for inhalation-based drug delivery. Led by former Merial executives, Velcera later began preparations to enter the market for flea and tick control products. In particular, Velcera intended to introduce products that would “directly compete” with Merial’s Frontline series “at a substantially lower price.” J.A. 2222. Through its relationship with a two-person British company known as Omnipharm Ltd. (“Omnipharm”), Velcera engaged with Cipla to develop, test, manufacture, and distribute such products, and by April 2011 those efforts culminated in U.S. sales of spot-on pest control compositions containing fipronil and methoprene — sold as Pe-tArmor Plus and Velcera Fipronil Plus (collectively, “PetArmor Plus”) — that prompted the contempt proceedings at issue in this appeal. See J.A. 2222-27. We now briefly recount the roles played by each of the principal entities, and their many subsidiaries, in the development and production of PetArmor Plus.
In February 2008, Velcera established FidoPharm as its wholly owned subsidiary, and, on the same day, FidoPharm executed a license and development agreement with Omnipharm under which Omnipharm would develop the PetArmor Plus formulations and license those formulations exclusively to FidoPharm for sale in the United States. J.A. 2225-26. In addition, the license and development agreement between FidoPharm and Omnipharm identified Cipla as the intended manufacturer of PetArmor Plus. Id. FidoPharm simultaneously entered into a separate manufacture and supply agreement with QEDetal Ltd. (“QEDetal”) — an Irish entity held en
Like Velcera, Cipla entered into its own set of parallel development and supply agreements with Omnipharm and QEDe-tal, respectively, in April 2008. Under its development agreement with Omnipharm, Cipla agreed to conduct laboratory testing and otherwise assist in the development and regulatory approval of the PetArmor Plus formulations. J.A. 2226. In addition, Cipla’s manufacture and supply agreement with QEDetal specified that Cipla would satisfy QEDetal’s requirements for fulfilling PetArmor Plus orders placed by Fi-doPharm pursuant to the FidoP-harm/QEDetal manufacture and supply agreement. Id.
In practice, the parties’ interrelated web of agreements and intermediaries involved in producing and distributing PetArmor Plus functioned as follows: Velcera (through FidoPharm) would place an order for PetArmor Plus with Omnipharm, which would then pass the order to Cipla. Upon producing the product in India, Cipla would transfer ownership of the new Pe-tArmor Plus to QEDetal LZE,
With their contractual agreements in place, Velcera, Cipla, and Omnipharm worked to develop PetArmor Plus and secure regulatory approval in the United States. Through FidoPharm, Velcera worked with Omnipharm to design the Pe-tArmor Plus formulation and directed Ci-pla to manufacture and test candidate formulations in India. In addition, Velcera established LoradoChem, Inc. (“Lorado-Chem”) as a wholly-owned subsidiary of Velcera’s wholly-owned FidoPharm subsidiary to file the regulatory applications necessary for approval to import and sell PetArmor Plus in the United States. Lo-radoChem prepared and submitted to the United States Environmental Protection Agency (“EPA”) an “Identical/Substantially Similar Product” pesticide registration application, which facilitates expedited registration for products that are substantially similar or identical to a previously registered pesticide formulation. See 7 U.S.C. § 136a(c)(3)(B). In communications with the EPA, LoradoChem identified PetArmor Plus as “identical or substantially similar” to Merial’s previously registered Frontline Plus products and submitted experimental data generated by Cipla to support that assertion. Indeed, those data showed that PetArmor Plus contains the same concentrations of fipro-nil and methoprene as Frontline Plus. As required by the EPA, LoradoChem also submitted Cipla’s EPA establishment number 87688-IND-01 with its application, identifying Cipla as the sole manufacturer of PetArmor Plus. In view of Lora-doChem’s submissions, the EPA approved PetArmor Plus for pesticide registration
Soon thereafter, PetArmor Plus production began. Upon request, Cipla manufactured each unit of PetArmor Plus for delivery to QEDetal, transfer to QEDetal LZE and FidoPharm, and eventual importation into the United States. Cipla supplied PetArmor Plus in finished, market-ready condition, with the pesticide formulation provided in single-dose pipettes and enclosed in its final retail packaging. Cipla’s PetArmor Plus packaging included Cipla’s EPA establishment number, as required for all pesticide products sold in the United States, as well as U.S. telephone numbers promising 24-hour customer support. An exemplary unit of PetArmor Plus, finished and ready for sale, is depicted below:
[[Image here]]
Br. Appellee at 43. The first shipments of PetArmor Plus arrived in the United States in March 2011 and were offered for sale the following month.
The 2011 Contempt Proceedings
Having become aware of Cipla’s role in the impending commercial launch of Pe-tArmor Plus, Merial filed a motion for contempt in the United States District Court for the Middle District of Georgia on March 28, 2011 (the “contempt proceedings”). J.A. 1135-54. Merial contended that Cipla’s activities relating to PetArmor Plus violated that court’s 2008 injunction against infringement of the '329 patent.
Meanwhile, Velcera had filed a declaratory judgment complaint against Merial in the United States District Court for the District of Delaware on February 11, 2011, alleging noninfringement and invalidity of the '329 patent (the “Delaware action”).
In the contempt proceedings, Cipla sought to vacate the 2008 injunction as void, alleging that the district court had lacked personal jurisdiction over Cipla when it issued the Default Order in 2008. Cipla and Velcera argued that even if the injunction rested on sound jurisdictional footing, their production and sale of PetAr-mor Plus did not violate the court’s earlier order. Velcera further maintained that, as a non-party to the underlying default judgment, it was not subject to the injunction and, regardless, that it had not acted in concert with Cipla to violate the injunction. Finally, Velcera contended that the contempt proceedings should be stayed pending a decision on the '329 patent’s validity in the co-pending Delaware action.
The district court declined to stay the contempt proceedings and issued its decision on June 21, 2011. The court concluded that Cipla had been subject to its jurisdiction when it issued the 2008 injunction pursuant to Federal Rule of Civil Procedure 4(k)(2) instead of the Georgia long-arm statute, that PetArmor Plus was not more than colorably different from Cipla’s previously enjoined Protektor Plus product, and that Cipla and Velcera had knowingly acted in concert to violate the court’s order. Contempt Order,
Cipla and Velcera timely appealed from the district court’s judgment of contempt; we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).
Disoussion
We review a district court’s exercise of personal jurisdiction over an accused infringer without deference, applying Federal Circuit law rather than the law of the regional circuit. Nuance Commc’ns v. Abbyy Software House,
Between them, Cipla and Velcera (collectively, “Appellants”) present a panoply of arguments disputing various aspects of the Contempt Order. We will address each in turn.
I
Appellants first challenge the contempt judgment as founded on an invalid injunction, alleging that the district court lacked personal jurisdiction over Cipla when it issued the default judgment in 2008. Appellants therefore argue that the district court erred in denying Cipla’s motion to vacate the 2008 default judgment and injunction pursuant to Fed.R.Civ.P. 60(b)(4). In particular, Appellants contend that Rule 4(k)(2) could not have conferred jurisdiction over Cipla in the Middle District of Georgia due to Cipla’s present assertion of consent to jurisdiction in the Northern District of Illinois and Merial’s failure to observe effective procedures for service of process in India. Furthermore, Cipla asserts that the district court’s rebanee on Rule 4(k)(2) was impermissible because Merial did not plead Rule 4(k)(2) as a basis for personal jurisdiction in the 2007 complaint.
Merial responds that Rule 4(k)(2) was applicable when it filed suit in 2007, that Cipla had denied contacts with Illinois or any other U.S. jurisdiction at that time, and that Cipla’s belated consent to jurisdiction in Illinois does not defeat Rule 4(k)(2) because there is no independent basis for jurisdiction in that forum. Merial argues further that Cipla’s complaints regarding service of process are untimely and therefore waived on appeal. Finally, Merial argues that it is irrelevant whether or not its original complaint explicitly mentioned Rule 4(k)(2) because there is no requirement to plead a specific basis for personal jurisdiction and because courts may rely on that rule even when it has not been cited by the parties.
For the reasons set forth below, we hold that Rule 4(k)(2) supports the district court’s exercise of personal jurisdiction over Cipla in entering the 2008 default judgment and injunction and that the district court therefore correctly denied Ci-pla’s motion to vacate that judgment on jurisdictional grounds.
A
“Rule 4 is the starting point for any personal jurisdiction analysis in federal court.” Synthes (U.S.A) v. G.M. Dos Reis Jr. Ind. Com. De Equip. Medico,
Rule 4(k)(2) was adopted to provide a forum for federal claims in situations
B
As noted, one precondition for applying Rule 4(k)(2) is that the defendant must not be subject to personal jurisdiction in the courts of any state (sometimes called the “negation requirement”). Id. at 1293. Although the burden of establishing personal jurisdiction ordinarily falls on the plaintiff, in the context of Rule 4(k)(2) that general proposition would saddle the plaintiff with an extraordinary challenge in “proving a negative many times over,” that is, demonstrating that the defendant is not subject to jurisdiction in each of the fifty states. Touchcom, Inc. v. Bereskin & Parr,
During the contempt proceedings, Cipla identified the Northern District of Illinois as an alternate forum for suit and claimed that if it had been sued there “in October 2007 or 2008, Cipla would have agreed that there was personal jurisdiction.” Appellants contend that this proclamation necessarily divested the district court of personal jurisdiction and consequently rendered the default judgment void. In contrast, Merial maintains, and the district court held, that the proper inquiry when a defendant seeks to overturn a default judgment predicated on Rule 4(k)(2) by consenting to an alternate forum “is to determine whether the defaulted action could have been brought in that designated forum in the first place under that forum’s long-arm jurisdiction.” Contempt Order,
The district court correctly concluded that Cipla’s ex post consent to suit in the Northern District of Illinois was not independently sufficient to prevent it from exercising personal jurisdiction under Rule 4(k)(2). Discussing the negation requirement in Touchcom, we stated that a defendant can “avoid the application of [Rule 4(k)(2) ] only when it designates a suitable forum in which the plaintiff could have brought suit.”
In any event, we need not decide today the general requirements for a defendant to prevent the application of Rule 4(k)(2) by consenting to suit in another jurisdiction, for it suffices in this case to hold that a defendant, like Cipla, challenging a prior default judgment may not do so by naming another forum that would not have had an independent basis for jurisdiction at the time of the original complaint. As the district court recognized, the incentives for gamesmanship under a contrary rule would be particularly acute in such cases because the defaulting party could use a simple, unilateral statement of consent not only to achieve transfer into a forum it considers more convenient (or less convenient for its opponent), but also to undo an adverse final judgment for the chance to litigate from a clean slate. See Contempt Order,
In addition, we find no clear error in the district court’s application of the foregoing principles to the facts of this case. To support its claims that personal jurisdiction would have existed in Illinois, Cipla presented documents indicating that it had a relationship with an Illinois corporation dating to 2003, but that evidence contains only bare statements of expected collaboration and provides no details regarding the extent of any resulting contacts with Illinois by the time Merial filed suit. Cipla also submitted evidence suggesting that it made “over 86 shipments or sales of products” to companies in Illinois in the past three years. Br. Def.-Appellant Cipla at 32 (citing J.A. 2684-2808). But that evidence does not show that any such shipments arrived in Illinois before Merial filed suit in November 2007,
C
As a predicate to establishing personal jurisdiction, Rule 4(k)(2) also requires service of process or waiver of service, and Federal Rule of Civil Procedure 4(f) governs the requirements for serving a party in a foreign country. Rule 4(f)(1) indicates that a party may be served out
Appellants argue that exercising personal jurisdiction over Cipla pursuant to Rule 4(k)(2) would violate due process because Merial’s 2007 service in India was legally deficient. Appellants allege that when it filed the 2007 complaint, Merial served Cipla in Mumbai via “courier and registered post” in an attempt to comply with Rule 4(f)(2)(A), but Rule 4(f)(2) generally applies only “if there is no internationally agreed means” of service. Because Merial bypassed the Central Authority of India, Appellants assert that Merial’s service of process failed to meet mandatory standards under the Hague Convention and was therefore insufficient to support personal jurisdiction under Rule 4(k)(2). Accordingly, Appellants argue that the district court’s 2008 default order and injunction must be vacated as void for lack of personal jurisdiction.
As Merial correctly notes, however, Appellants have raised the issue of insufficient service for the first time on appeal. As that contention surely could have been, but was not, presented in Cipla’s Rule 60(b)(4) motion or raised before the district court during the subsequent contempt proceedings, we deem that argument waived and need not consider it here. See SEC v. Internet Solutions for Bus. Inc.,
D
In general, parties may satisfy federal pleading standards by alleging personal jurisdiction generally, without asserting a specific basis for the court’s personal jurisdiction over a defendant. 4 Wright, et al., supra, § 1067.6. Furthermore, our precedent holds that Rule 4(k)(2) can be considered even when the plaintiff has affirmatively pled a different basis for personal jurisdiction. See Touchcom,
In the 2007 complaint, Merial alleged that the district court had “personal jurisdiction over CIPLA by virtue of its actions ... within this State and judicial district, or its systematic and continuous contact with this State and judicial district,” J.A. 837, and that allegation stood uncontested until the contempt proceedings arose several years later. In the contempt proceedings, Cipla argued, and the district court concluded, that the available record did “not support a finding that Cipla had sufficient contacts with the state of Georgia for it to be subject to personal jurisdiction under the Georgia long-arm statute for the present action,” but the court agreed with Merial that it could evaluate whether its jurisdictional requirements had nonetheless been satisfied pursuant to Rule 4(k)(2). Contempt Order,
As Cipla notes, “[a] defendant is always free to ignore the judicial proceedings, risk a default judgment, and then challenge that judgment on jurisdictional grounds.” Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee,
But such claims of reliance and unfair surprise ring hollow where, as here, it is beyond dispute that Cipla had actual notice of suit and chose to risk a default judgment, based on its subjective assessment of the complaint
Cipla attempts to distinguish Touchcom on the basis that we were not reviewing a default judgment in that case, so vacatur was not necessary there for the plaintiff to amend its complaint on remand. Those distinctions are unavailing. In Touchcom, the plaintiffs pursued a legal malpractice claim against a Canadian law firm for alleged errors in prosecuting a U.S. patent, alleging that the governing state long-arm statute conferred personal jurisdiction on the district court in view of the defendant’s contacts with the forum state.
The Eleventh Circuit considered the retroactive application of Rule 4(k)(2) following a default judgment in Oldfield v. Pueblo de Bahia Lora, S.A,
Finally, we note that Cipla had a full opportunity to litigate over personal jurisdiction during the contempt proceedings, and, having lost on that issue, now insists that the default judgment must nonetheless be vacated because the basis for jurisdiction alleged in the 2007 complaint differed from the basis ultimately relied upon by the district court. But the judgment’s legal viability is not keyed to the particular grounds for personal jurisdiction set out in the complaint. The important question is whether the district court ultimately had actual jurisdiction over the parties. Once it received notice of suit in 2007, the choice was Cipla’s whether the jurisdictional question should be settled then or at some point postjudgment. With the benefit of hindsight, Cipla would understandably prefer to turn back the litigation clock to reconsider that choice, but the district court’s default judgment was premised on a valid exercise of personal jurisdiction under Rule 4(k)(2), and we therefore decline to upset its decision on that basis.
II
Appellants next dispute the district court’s decision to deny its request for a stay of the contempt proceedings pending resolution of the parallel Delaware action. The district court held that the “first-to-file” rule would not support a stay and,
The “first-to-file” rule is a doctrine of federal comity, intended to avoid conflicting decisions and promote judicial efficiency, that generally favors pursuing only the first-filed action when multiple lawsuits involving the same claims are filed in different jurisdictions. See generally Genentech, Inc. v. Eli Lilly & Co.,
As an initial matter, we disagree with Appellants’ contention that the Delaware action antedates the matter now before us on appeal. Velcera filed its declaratory judgment complaint in Delaware on February 11, 2011, approximately six weeks before Merial moved on March 28, 2011, to hold Cipla in contempt. But the date of Merial’s contempt motion is irrelevant in determining which action was filed first — what matters is the initiation of suit. Here, the contempt proceedings elaborated a preexisting case that originated with Merial’s initial infringement complaint against Cipla, filed in November 2007. The district court thus correctly viewed the contempt proceedings as first filed. Furthermore, even if the Delaware action could be considered the first suit filed, the district court was well within its considerable discretion in concluding that principles of comity would not support a stay because the precise issues at stake differed between the proceedings, and a key party (Cipla) was absent from the Delaware action. See Contempt Order,
Ill
Appellants next urge reversal on grounds that the district court’s analysis of PetArmor Plus failed to apply the correct standard for determining contempt based on a newly accused product. On review, and as described more fully below, we uphold the district court’s judgment.
We have recently applied a modified analysis to contempt determinations in the context of alleged continuing infringement in violation of an injunction. Under TiVo, contempt requires proof that (1) the newly accused product is no more than colorably different from the previously adjudged infringing product, and (2) the newly accused product actually infringes the asserted patent.
Appellants next argue that the district court could not competently evaluate whether colorable differences exist between PetArmor Plus and Protektor Plus because the default judgment allegedly offered no guidance on which specific features of Protektor Plus were focused on to establish infringement. In support of its position, Appellants rely on our statement in TiVo that “one should focus on those elements of the adjudged infringing products that the patentee previously contended, and proved, satisfy specific limitations of the asserted claims.”
We conclude that the district court applied the correct standards and committed no clear error in finding no more than colorable differences between PetArmor Plus and Protektor Plus. In contempt proceedings following a contested infringement action, as in TiVo, it will often be that the underlying infringement litigation focused detailed attention on a few heavily disputed claim limitations and certain corresponding elements of an infringing product, and the colorable differences analysis in such cases will benefit from that precision. But when, as here, infringement has been established through default, the judgment is no less binding or authoritative simply because comprehensive and painstaking factual analyses regarding every claim limitation may have been unnecessary or impractical at the time of the initial decision. As such, whether or not the default order here included an exhaustive infringement analysis, it necessarily and conclusively established that Protektor Plus met each limitation recited in the asserted claims of the '329 patent. For example, claim 1 of the '329 patent requires a spot-on pest control composition comprising (1) a synergistic effective amount of fipronil, (2) a synergistic effective amount of an IGR, and (3) at least one customary spot-on formulation adjuvant. '329 patent col.10 11.11-15. The evidence showed that Protektor Plus contained 9.7% fipronil, 11.8% methoprene, and at least one customary spot-on adjuvant — all of which Cipla admitted by default in 2008. Contempt Order,
Appellants also fault the district court’s conclusion that PetArmor Plus infringes the '329 patent. Appellants argue that the district court relied on inadequate evidence and erroneously compared PetArmor Plus to Merial’s Frontline Plus rather than the '329 patent claims themselves.
It is undisputed that Merial’s Frontline Plus product is covered by the '329 patent’s claims, and, contrary to the Appellants’ contentions, “[o]ur case law does not contain a blanket prohibition against comparing the accused product to a commercial embodiment” in an infringement analysis. Adams Respiratory Therapeutics, Inc. v. Perrigo Co.,
THE COURT: Mr. Steadman, let me just make sure I understand one thing you testified to. I understand that you made the conscious decision that PetAr-mor Plus you did not feel violated the '329 patent because you believed the '329 patent was invalid. Correct?
THE WITNESS: That’s correct.
THE COURT: If — and I know you don’t agree with this. But if the '329 patent were valid, then you would acknowledge that PetArmor Plus would infringe on that patent, if it were valid. THE WITNESS: If it were valid, that combination, I — yeah, I believe would.
THE COURT: You’re betting the store on the invalidity of the '329 patent.
THE WITNESS: You betcha.
J.A. 4903-06. One would be hard-pressed to conceive of more compelling testimonial evidence on infringement, particularly when those statements come from the defendant’s chief executive regarding his own product. In assessing whether PetArmor Plus infringes the '329 patent, the district court thus had before it considerable evidence indicating infringement, and we discern no error in its affirmative conclusion on the basis of that evidence. In view of the foregoing, the district court appropriately considered both prongs of the contempt analysis as required under TiVo, and its conclusions were not clearly erroneous.
The Appellants’ next argument raises territoriality concerns with the district court’s contempt judgment, emphasizing that Cipla restricted its involvement in the PetArmor Plus venture to activities in India. After analyzing Cipla’s role in the development, manufacture, and distribution of PetArmor Plus, the district court nonetheless concluded that Cipla had contemptuously “caused an infringing product to be sold in the United States, in direct violation of the Court’s March 6, 2008 order.” Contempt Order,
Appellants first advance the blanket proposition that domestic patent law does not, and was not intended to, reach past the territorial limits of the United States. According to Appellants, “decades of precedent” hold that extraterritorial conduct cannot constitute patent infringement under 35 U.S.C. § 271. Br. Def.-Appellant Velcera at 26-27 (citing Deepsouth Packing Co. v. Laitram Corp.,
Although we recognize the fundamental territoriality of U.S. patent law, see Microsoft Corp. v. AT & T Corp.,
In short, where a foreign party, with the requisite knowledge and intent, employs extraterritorial means to actively induce acts of direct infringement that occur within the United States, such conduct is not categorically exempt from redress
Appellants next argue that, even if foreign activities can give rise to liability in some circumstances, our decision in International Rectifier Corp. v. Samsung Electronics Co.,
Appellants’ reliance on International Rectifier is misplaced. In International Rectifier, the district court had enjoined a foreign manufacturer from “making, using, offering for sale or selling in or importing into the United States” a patented computer component.
Finally, Cipla contends that the district court’s contempt order lacks any findings on or meaningful discussion of indirect infringement and argues that the district court applied an inadequate inducement analysis. According to Cipla, the district court’s conclusion that Cipla “caused” Velcera’s infringement cannot be sustained as a basis for contempt because it falls short of sufficient factual findings and misstates the correct legal standard on inducement. We disagree.
Regardless of the precise language used to frame the issue, the substance of the district court’s analysis is clear — Cipla violated the injunction because, at a minimum, its involvement in the PetArmor Plus venture induced infringement of the '329 patent. To support a finding of inducement under § 271(b),
Nor can we say that those findings are inadequate to support a finding of inducement or that the district court erred in its ultimate conclusion that Cipla “caused an infringing product to be sold in the United States” in direct violation of the injunction. Contempt Order,
V
Velcera next contends that even if Ci-pla’s conduct violated the 2008 injunction, the district court committed independent error by also finding Velcera — a non-party to the 2008 default judgment — in eontempt for working in “active concert or participation” with Cipla to violate the 2008 injunction. We disagree.
It is well recognized that courts may not enter injunctions against persons or entities that were not party to the litigation before them. A soundly issued injunction can, however, affect such non-parties in at least two important respects — those who are legally identified with an enjoined party may be bound as if they themselves were named in the injunction, and those who act in concert with an enjoined party to assist in violating the injunction may also be held in contempt. Fed.R.Civ.P. 65(d); Additive Controls & Measurement Sys., Inc. v. Flowdata, Inc.,
Velcera posits that the district court erred by failing to separately analyze its individual actions under the aiding and abetting standard, calling repeated attention to what it calls the “bona fide legal and business relationships” that separated Velcera from Cipla in the development, production, and sale of PetArmor Plus. Under a proper analysis, according to Velcera, its “arms-length” business relationship and lack of a direct contractual relationship with Cipla evince independent activity undertaken for purposes other than assisting Cipla in efforts to violate the injunction.
In determining that Velcera acted in concert with Cipla, the district court relied in part on Velcera’s admissions that by the time of its infringing acts it was aware of the '329 patent, knew PetArmor Plus would infringe the '329 patent (apart from its subjective belief that the '329 patent was invalid), and had notice of the 2008 injunction against Cipla. There is thus little room to dispute that, as it cooperated with and relied on Cipla in its efforts to bring PetArmor Plus to market, Velcera was aware of the existing injunction and understood that acting in concert with Ci-pla to market an infringing product (like PetArmor Plus) would violate the injunction. As to whether Velcera in fact worked in active concert with Cipla with the common aim of evading the injunction, Velcera attempts to couch its complaints in terms of legal error — that the district court ignored its independent, arms-length arrangements with Cipla — but its argument in reality boils down to disagreement with the factual conclusions the district court drew from those relationships. The district court clearly contemplated the structure of Velcera’s interactions with Ci-pla — it heard extensive testimony from Velcera’s CEO detailing the relationships, roles, and specific contractual agreements among the various players in the PetAr-mor Plus venture, and the court recounted those arrangements in the contempt order. The district court thus appreciated and accepted Velcera’s account regarding the formal legal and business relationships behind PetArmor Plus; its view simply diverged from Velcera’s narrative as to the true nature of those relationships: “Clever lawyers cannot shield the true substance of the contumacious conduct, no matter how many different entities attempt to launder Cipla’s fingerprints off the product.” Contempt Order,
Our task on appeal is not to determine whether that factual conclusion was correct, but rather whether it was clearly erroneous. Additive Controls II,
VI
Finally, Appellants argue that even if they violated the district court’s
On the balance of hardships, Velcera contends that the district court ignored its small size relative to Merial, which, if properly considered, would tip the balance of hardships in its favor. While an injunction would have a crippling effect on its business, Velcera suggests that continued infringing sales of PetArmor Plus “would not seriously threaten Merial’s future.” The district court, however, expressly considered and ultimately discounted that argument,
CONCLUSION
In sum, we conclude that (1) the 2008 default judgment against Cipla rested on a valid exercise of personal jurisdiction; (2) the district court did not abuse its discretion by declining to stay the contempt proceedings in view of the then-pending Delaware action; (3) the district court did not clearly err in determining that PetAr-mor Plus infringes the '329 patent and is not more than colorably different from Ci-pla’s previously enjoined Protektor Plus product; (4) Cipla’s extraterritorial role in the development, production, and ultimate U.S. sale of PetArmor Plus violated the district court’s injunction against induced infringement of the '329 patent; (5) Velc-era’s actions bringing PetArmor Plus to market in concert with Cipla qualified as contemptuous conduct despite its status as a non-party to the 2008 default judgment; and (6) the district court did not abuse its discretion in prohibiting further sales of PetArmor Plus. We have considered each of the remaining arguments advanced by the Appellants and find them to be without merit. Because we find no reversible error in our review of the contempt proceedings, we affirm the judgment of the district court.
AFFIRMED.
Notes
. QEDetal LZE is a corporate entity established in the United Arab Emirates and owned, like QEDetal, by the director of Om-nipharm. J.A. 2227.
. The '940 patent, covering fipronil-only pest control compositions, had expired by the time Merial initiated ihe contempt proceedings in March 2011.
. Velcera's declaratory judgment complaint also included claims of noninfringement and invalidity directed at Merial's U.S. Patents 6,620,943 and 6,881,848. Those patents are not at issue in this appeal.
. Soon after the district court entered the Contempt Order, Velcera's declaratory judgment claims relating to the '329 patent in the Delaware action were dismissed for lack of subject matter jurisdiction: “Given the current injunction [in the Georgia contempt proceedings] and the fact that Velcera does not have a new, non-enjoined product containing fipronil and methoprene, there is no actual controversy between the parties.” Velcera Inc. v. Merial Ltd., No. 11-CV-134 (GMS) (D.Del. Aug. 3, 2011), ECF No. 38, slip. op. at 4 n.4.
. In its analysis, the district court nonetheless treated three of those shipments as having occurred "during the time frame surrounding the filing of the Complaint.” Contempt Order,
. See, e.g., Br. Def.-Appellant Cipla at 20 ("As Cipla knew when it received the complaint ... Merial's allegations of jurisdiction under the Georgia Long Arm statute were defective factually and as a matter of law....”).
. By its terms, the 2008 injunction proscribed both direct infringement and inducement, banning Cipla from "committing any act that infringes or causes or induces infringement of any claim of the '940 or '329 patents.” Contempt Order,
. See Contempt Order,
Dissenting Opinion
dissenting.
Because I believe that the United States District Court for the Middle District of Georgia erred in not allowing Cipla Limited (“Cipla”) to designate the Northern District of Illinois as a substitute forum for suit against it, I respectfully dissent from the decision of the majority affirming the district court’s exercise of personal jurisdiction over Cipla. I would reverse the decision of the court and would vacate the contempt order and underlying default judgment against Cipla. I also would vacate the injunction against Cipla, Velcera, Inc. (“Velcera”), and Fidopharm, Inc. (“Fi-dopharm”). Finally, I would remand to the district court with the instruction that it transfer the case to the United States District Court for the Northern District of Illinois.
I.
In the district court, Cipla responded to Merial Limited’s and Merial SAS’s (collectively, “Merial”) motion for contempt by moving to vacate the 2008 default judgment against it. In its motion, Cipla argued that the judgment was void because, when it was entered, Cipla was not subject to the personal jurisdiction of the court. In response to the motion, Merial alleged, for the first time, Rule 4(k)(2) as an alternate basis for jurisdiction. In ruling on Cipla’s motion, although the district court determined that, in 2008, Cipla had not been subject to personal jurisdiction under Georgia’s long-arm statute, it determined that Cipla had been subject to personal jurisdiction under Rule 4(k)(2). Contempt Order,
The district court first noted that, when Cipla was sued in 2007, it did not designate a substitute forum in which the action could be brought, and that it was not until Cipla filed its reply in response to Merial’s opposition to its motion to vacate the default judgment that it designated Illinois as a substitute forum. Id. at *8. Under these circumstances, the court stated, it was not enough that Cipla now consented to personal jurisdiction in Illinois. Rather, it was necessary to determine whether suit could have been brought in Illinois in 2007:
The Court finds that Cipla’s “after the fact” willingness to consent to jurisdiction in Illinois so that it may vacate a previously entered default judgment is not sufficient to support a finding that it could have been sued in another state and thus avoid Rule 4(k)(2) jurisdiction. Instead the Court finds that Rule 4(k)(2) requires a determination of whether an Illinois court could have exercised personal jurisdiction over Cipla at the time the Complaint in this action was filed absent consent to jurisdiction by Cipla.
Id. at *9. See also id. (“The Court finds that the proper inquiry in a case where a defendant seeks to avoid a default judgment due to lack of personal jurisdiction by designating a forum where it is subject to jurisdiction pursuant to Rule 4(k)(2) is to determine whether the defaulted action could have been brought in that designated forum in the first place under that forum’s long-arm jurisdiction.”). Examining what it understood to be the state of Cipla’s contacts with Illinois in 2007, the court concluded that Merial had carried its burden “of demonstrating that Cipla would not have been subject to personal jurisdiction in ... 2007 in Illinois under Illinois law.” Id. Accordingly, the court found that Cipla “was not subject to any state’s courts of general jurisdiction under Rule 4(k)(2).”
II.
In affirming the decision of the district court, the majority observes that it “need not decide ... the general requirements for a defendant to prevent the application of Rule 4(k)(2) by consenting to suit in
[rjegardless of the specific allegations in the 2007 complaint, Cipla should have apprehended that a Rule 4(k)(2) inquiry might arise, particularly as a foreign company believing itself to be outside the reach of the forum state’s long-arm statute. Furthermore, even though Ci-pla’s initial belief that the complaint recited an incorrect basis for jurisdiction was ultimately vindicated, that issue remained an open question at the time, and Cipla had the option of filing a pre-answer motion under Rule 12(b)(2) to settle all issues of personal jurisdiction up front. Cipla instead chose to do nothing, and it must bear the consequences of that decision.
Maj. op. at 1297.
III.
I am dissenting because, in my view, the majority affirms a decision of the district court which rests upon two fundamental errors. As I explain below, I believe that the district court erred in holding that Cipla could not designate Illinois as a substitute forum because it had failed to do so in 2007. I also believe that the district court erred in requiring a determination that the 2007 action could have been brought in Illinois in the first place under the Illinois long-arm statute.
A.
Turning to the first point, I begin with the principle, which the majority recognizes, that “[a] defendant is always free to ignore the judicial proceedings, risk a default judgment, and then challenge that judgment on jurisdictional grounds in a collateral proceeding.” Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee,
In my view, for the following reasons, this principle applies with particular force in this case: (1) Merial at all times had the burden of making out a prima facie case of personal jurisdiction over Cipla. See Touchcom, Inc. v. Bereskin & Parr,
The district court criticized Cipla — and the majority joins in that criticism — for not having sought to consent to jurisdiction in the Northern District of Illinois when it was sued in 2007. Thus, the district court looked askance at what it characterized as “Cipla’s ‘after the fact’ willingness to consent to jurisdiction in Illinois so that it may vacate a previously entered default judgment.” Contempt Order,
The difficulty I have with both the district court’s and the majority’s position is that, I believe, both positions ignore what was said in Ins. Corp. of Ireland, Ltd.: “A defendant is always free to ignore the judicial proceedings, risk a default judgment, and then challenge that judgment on jurisdictional grounds in a collateral proceeding.”
I also do not agree with the majority’s view that “Cipla should have apprehended that Rule 4(k)(2) might arise,” which, I think, ignores the allegations in the 2007 complaint. In that complaint, Merial alleged that the defendants had contacts with Georgia sufficient to support personal jurisdiction under Rule 4(k)(l) by virtue of their sales to the state of Georgia.
At the same time, I am not persuaded by the majority’s reliance on Rule 12(b)(2) and its citation to Touchcom. It is true that Rule 12(b)(2) states that a party “may assert” by motion the defense of lack of personal jurisdiction. The critical words are “may assert,” however. The rule is not mandatory. As discussed, Cipla had the option, which it pursued, of ignoring the 2007 suit in Georgia and later challenging any default judgment in a collateral proceeding. As far as Touchcom is concerned, I have no quarrel with the majority’s reading of the case insofar as it indicates that Rule 4(k)(2) may apply whether or not it is raised by the parties. But that is not the issue here. I see no error in the district court having allowed Merial to assert Rule 4(k)(2) for the first time in the contempt proceeding. The error I see was not allowing Cipla, in the face of that assertion, to designate a substitute forum.
B.
As noted above, the district court stated that “Rule 4(k)(2) requires a determination of whether an Illinois court could have exercised personal jurisdiction over Cipla at the time the Complaint in this action was filed absent consent to jurisdiction by Cipla.” Contempt Order,
Contrary to Cipla’s contentions, a defendant cannot defeat Rule 4(k)(2) by simply naming another state; the defendant’s burden under the negation requirement entails identifying a forum where the plaintiff could have brought suit — a forum where jurisdiction would have been proper at the time of filing, regardless of consent. Consistent with that obligation, a defendant does not identify “a more appropriate state” by suggesting an alternative form with no basis for personal jurisdiction but its consent.
Maj. op. at 1294-95. Thus, both the district court and the majority take the position that, Cipla’s consent to jurisdiction in Illinois notwithstanding, it was necessary to determine that suit could have been brought in Illinois in the first place under its long-arm statute. I do not believe that the law supports this requirement.
In Touchcom, we stated that “a court is entitled to use Rule 4(k)(2) to determine whether it possesses personal jurisdiction over the defendant unless the defendant names a state in which the suit can proceed.”
A defendant who wants to preclude the use of Rule 4(k)(2) has only to name some other state in which the suit could proceed. Naming a more appropriate state would amount to a consent to personal jurisdiction there (personal jurisdiction unlike federal subject-matter jurisdiction is waivable). If, however, the defendant contends that he cannot be sued in the forum state and refuses to identify any other where suit is possible, then the federal court is entitled to use Rule 4(k)(2).
The reason I disagree with the district court and the majority is that I am unable to identify any support for imposing the requirement that, before a party in Cipla’s situation may consent to personal jurisdiction in a substitute forum, it must be demonstrated that suit could have been brought in that forum in the first place absent the party’s consent. That such support is lacking is not, I think, surprising. In Ins. Corp. of Ireland, Ltd., the Supreme Court discussed the difference between subject-matter jurisdiction and personal jurisdiction. After noting that subject-matter jurisdiction is an Article III requirement and “functions as a restriction on federal power and contributes to the characterization of the sovereign[,]” the Court stated that “no action of the parties can confer subject-matter jurisdiction upon a federal court. Thus, the consent of the parties is irrelevant.”
I believe the Seventh Circuit’s opinion in ISI International is instructive. There, neither party had raised the issue of Rule 4(k)(2) before the district court. ISI, Int’l,
ISI International did not rely on Rule 4(k)(2), but S & A’s appellate lawyer was ready for the questions asked during the oral argument. When the court inquired whether S & A would be subject to personal jurisdiction in any other state (California, for example), counsel was noncommittal. More discovery would be needed, counsel suggested. But S & A does not need discovery to learn its own acts. Nor is it apparent how more facts could contribute to resolution of the question. S & A had it within its power to knock out Rule 4(k)(2) by agreeing that it is subject to personal jurisdiction in some other state. It proved unwilling to do so. We therefore conclude that under Rule 4(k)(2) jurisdiction is proper in the United States District Court for the Northern District of Illinois.
Id. at 552. Thus, consent to jurisdiction by defendant’s counsel would have been sufficient to defeat Rule 4(k)(2) jurisdiction.
It appears that the majority arrives at its holding based upon the appearance of the words “could proceed” and “appropriate” in ISI International, see
The majority also expresses the concern that allowing a party in Cipla’s situation to designate another forum would allow the party to undo an adverse final judgment and obtain “the chance to litigate from a clean slate.” Maj. op. at 1294-95. The majority’s desire to see litigation brought to a conclusion is understandable. However, this concern is present in every case where a default judgment is challenged for lack of personal jurisdiction. I do not believe this legitimate concern can trump the requirement that a court have personal jurisdiction over a defendant and the consequences that result when a judgment is entered against that defendant in the absence of such jurisdiction.
Moreover, allowing Cipla to designate an alternative forum would aid in bringing this litigation to a conclusion. If this case were transferred to the Northern District of Illinois, Cipla would have two options, either respond to the allegations and fully litigate the dispute or suffer the consequences of a default judgment. Importantly, Cipla would no longer be able to challenge a default judgment for lack of personal jurisdiction, and Merial would have the opportunity to fully press its case.
IV.
For the foregoing reasons, I believe that the district court erred in not allowing Cipla to designate the Northern District of Illinois as a substitute forum for suit against it. I therefore would reverse the decision of the court and would hold that the court lacked personal jurisdiction over Cipla under Rule 4(k)(2). Consequently, I (1) would vacate the contempt order and underlying default judgment against Cipla; (2) would vacate the injunction against Ci-pla, Velcera, and Fidopharm; and (3) would remand with the instruction that the court transfer the case to the Northern District of Illinois. Accordingly, I respectfully dissent.
. Notably, in 2007, Merial elected not to plead the application of Rule 4(k)(2) in the alternative, as specifically contemplated by this Court in Touchcom.
. The quoted passage also, I believe, contradicts the assertion of the district court in this case that consent must occur at the time the complaint is filed. In ISI International, the question of consent necessarily arose at a time after the complaint was filed as neither party raised the issue of Rule 4(k)(2) before the district court. Thus, the Seventh Circuit implicitly acknowledges that defendants could defeat Rule 4(k)(2) by consenting to jurisdiction elsewhere at some time after the complaint was filed.