What Happens in the U.S. Stays in the U.S.: IP Dispute Against Canadian Company Will Not be Moved to Canadian Forum
Although motions to dismiss or transfer a case based on a forum non conveniens theory typically focus on the relative merits of two U.S. jurisdictions, this theory may also be applied when a party claims that a case brought in a U.S. court should instead be decided by a court in another country. Where a claim is based on U.S. law, the keys to having a case moved to a non-U.S. jurisdiction are providing the U.S. court with sufficient evidence that the claimant will be able to obtain relief that is comparable to the relief available in the U.S., as well as evidence that the defendant would be subject to the jurisdiction of the foreign court.
In a recent decision in Halo Creative & Design Limited v. Comptoir des Indes Inc., the Court of Appeals for the Federal Circuit reversed a district court decision dismissing on forum non conveniens grounds claims against a Canadian defendant based on U.S. intellectual property rights alleged to have been infringed in the United States.
Halo, the plaintiff, is a Hong Kong company that designs high-end furniture, which it sells in the U.S. It alleged that 25 of its furniture designs that were sold in the U.S. were covered by two U.S. design patents, thirteen U.S. copyrights and one common law trademark. The defendant, Comptoir, is a Canadian corporation that also designs and sells high-end furniture. Comptoir’s products are manufactured in China, Vietnam and India and imported into the U.S., where they are sold throughout the country, including in the Northern District of Illinois, where this case was brought. The complaint alleged claims of design patent, trademark and copyright infringement. Comptoir moved to dismiss the complaint on forum non conveniens grounds, claiming that Canada was a “far superior” forum in which to resolve this dispute because a remedy for copyright infringement is available in the Federal Court of Canada. The only evidence to support Comptoir’s contention was a printout from the Canadian court’s website explaining that the Court had jurisdiction to adjudicate intellectual property rights, including copyrights, industrial designs, patents and trademarks. There was no expert testimony regarding the adequacy of the Federal Court of Canada as an alternate forum or any evidence that the Canadian court could provide a remedy for U.S. infringement.
The district court found that Canada would be an adequate forum for this dispute because Halo could seek relief under Canadian law. The district court also reasoned that, despite the fact that there was no evidence a Canadian court would apply U.S. law, because U.S. courts have “recognized the potential of applying the copyright laws of other nations . . . perhaps Canada could do likewise.”
A forum non conveniens inquiry involving a foreign jurisdiction must begin with whether an alternative forum is both adequate and available. The moving party bears the burden of persuasion on this issue. An alternative forum is available if the defendant is amenable to process there, and it is adequate if it offers a satisfactory remedy and permits the litigation of the subject matter of the dispute. If no alternative forum exists, dismissal is not permitted. If there is an alternative forum, the court then must balance the public and private interest factors, such as the relative ease of access to proof, availability of compulsory process to compel the attendance of witnesses, congestion of the courts, the burden of jury duty and the local interest in having local disputes decided at home, and the potential for conflict of laws.
In this case, the Court of Appeals found that the Federal Court of Canada was an available forum because Comptoir, as a Canadian company, is amenable to process there, and Halo would be subject to the court’s jurisdiction if it filed its lawsuit there.
The district court also concluded that the Canadian court could provide a satisfactory remedy because, as a signatory to the Berne Convention, Halo was entitled to all of the protections offered by Canadian copyright law. The Court of Appeals disagreed that this was sufficient, however, because “national treatment” under the Berne Convention means only that authors should receive in other countries the same protection for their works as those countries provide for their own authors. “National treatment” does not require member countries to provide remedies for extraterritorial infringing activity.
Halo sought a remedy for infringement of its U.S. intellectual property rights. Territoriality is always a factor in intellectual property disputes, and it cannot be assumed that a foreign court would adjudicate an intellectual property dispute where the infringement occurred elsewhere and the dispute has little or no connection to the chosen forum. There was no evidence that a Canadian court would provide a remedy for acts of infringement committed in the United States. To the contrary, a leading Canadian copyright treatise stated that a Canadian court would not have jurisdiction to hear a dispute brought by the author of a work infringed outside Canada, even if the defendant was located within Canada. The only evidence Comptoir submitted in support of its motion was a printout from the website of the Federal Court of Canada stating that the court had jurisdiction to adjudicate intellectual property rights. This evidence showed only that the court had jurisdiction over Canadian intellectual property. There was no evidence, however, that any act of infringement in this dispute occurred in Canada. Nor was there any evidence the Canadian court would apply U.S. law.
Because there was no evidence that any act forming part of Halo’s claim took place in Canada, and no authority that Canada would provide a remedy for U.S. infringement or apply U.S. law to this case, the Court concluded that the Federal Court of Canada could not provide an adequate remedy, and that the district court consequently abused its discretion in dismissing the case. The court emphasized that it is particularly important for a movant to demonstrate the adequacy of an alternative forum in a dispute involving intellectual property rights because the policies underlying U.S. patent, trademark and copyright laws would be defeated if a litigant were denied a domestic forum to enforce its rights without a sufficient showing that an alternative foreign jurisdiction could provide an adequate remedy.
This decision demonstrates the importance of supporting a motion to transfer a U.S. case to a foreign jurisdiction with evidence concerning the law and available remedies in the proposed new venue. Evidence explaining non-U.S. law and remedies may be provided through any relevant material or source, the most common of which are English-language sources describing the relevant foreign law and expert witnesses who can testify about the foreign law.