IP Infringement Claim Against Canadian Company Stays in U.S.

Where should a lawsuit be heard? Canada? The US? In other posts we discuss the idea of a “choice of law” and “forum selection” clauses in contracts. In those cases, the parties agree to a particular forum in advance.

What if there is no contractual relationship? There’s just an intellectual property infringement claim. What is the proper forum for that dispute to be heard?

In Halo Creative v. Comptoir Des Indes Inc., David Ouaknine, Case No. 15-1375 (Fed. Cir., Mar. 14, 2016), a recent decision out of the US Federal Circuit Court of Appeals, this issue was reviewed.

Halo Creative, a Hong Kong based furniture maker, launched an IP infringement lawsuit against Comptoir Des Indes, Inc., a Canadian company, and its CEO, claiming infringement of Halo’s U.S. design patents, U.S. copyrights, and one U.S. common law trademark. The lawsuit was filed in the Northern District of Illinois. The Canadian company moved to dismiss the lawsuit based on a “forum non conveniens” argument – essentially an argument that the Federal Court of Canada would be a better place to litigate the claims. The Illinois district court agreed with the Canadians and dismissed the case. Halo appealed.  At the appeal level, the court looked at the adequacy of the Canadian court to litigate this issue.

The Federal Court of Canada was certainly an available forum but there was no evidence that Halo could seek a satisfactory remedy there, since the infringing activity took place in the U.S., and the infringed rights were all based on U.S. registrations or U.S. based trademark rights. IP rights are fundamentally territorial.  The U.S. court even quoted a Canadian textbook: “a Canadian court would not have jurisdiction to entertain in an action brought by an author of a work in respect of acts being committed outside Canada, even if the defendant was within Canada.” (Emphasis added)  Here, there was no evidence that any infringement occurred in Canada.

The motion was dismissed and the lawsuit will proceed in the U.S.