Court orders limited discovery on stream of commerce theory of jurisdiction
Stark, M.J. Motion to dismiss based on lack of personal jurisdiction is denied and limited discovery on stream of commerce theory of jurisdiction is ordered.
Defendants moved to dismiss the action based on lack of personal jurisdiction and filed a declaratory judgment action in the North District of California. Plaintiff is a Delaware corporation and maker of power supply chips incorporated into electronic devices such as cellular telephone chargers for which they hold several patents. Defendants are based in California and China and also manufacture power supply chips which plaintiff claims infringe on the patents-in-suit. Defendants have no offices, employees, or property in Delaware. Nor is there evidence in the record that they have ever directly transacted business or sold products here. Plaintiff argues that the Court has jurisdiction over defendants under a “stream of commerce” theory. This argument is based on the fact that defendants’ accused chips are readily available for sale in Delaware by virtue of their presence as components in cell phone chargers sold here by Samsung. Thus, plaintiff argues that defendants have an established distribution channel into Delaware for the accused chips which it claims demonstrates defendants’ intent to serve the Delaware market. Recognizing that the stream of commerce theory does not naturally fit within the specific and general categories of jurisdiction under the Delaware Long Arm Statute, the Court considers those cases wherein the Delaware Supreme Court has considered dual jurisdiction. Reading the Delaware Supreme Court’s affirmance of the Superior Court’s decision in Boone v. Oy Partek as an adoption and application of the concept of dual jurisdiction, the Court notes that jurisdiction may lie where plaintiff can show defendants’ intent and purpose to serve the Delaware Market. As for the Due Process analysis, the Supreme Court has not yet decided the appropriate test for determining when minimum contacts are present in a stream of commerce case in light of a recent 4-4 split in Asahi Metal Industry v. Superior Court of California. However the analysis of dual jurisdiction pursuant to the Delaware Long Arm Statute is functionally equivalent to Justice O’Connor’s test outlined in Asahi. Because the record is incomplete on the issue of intent and purpose, the Court orders limited discovery on the issue.
A full copy of the opinion is available here.
