Halo Creative & Design Ltd. v. Comptoir Des Indes Inc. ( 2016 )

United States Court of Appeals
for the Federal Circuit
______________________
HALO CREATIVE & DESIGN LIMITED, HALO
TRADEMARKS LIMITED, HALO AMERICAS
LIMITED,
Plaintiffs-Appellants
v.
COMPTOIR DES INDES INC., DAVID OUAKNINE,
Defendants-Appellees
______________________
2015-1375
______________________
Appeal from the United States District Court for the
Northern District of Illinois in No. 1:14-cv-08196, Senior
Judge Harry D. Leinenweber.
______________________
Decided: March 14, 2016
______________________
BARRY HORWITZ, Greenberg Traurig LLP, Chicago, IL,
argued for plaintiffs-appellants. Also represented by
RICHARD DANIEL HARRIS.
MARK RAY BAGLEY, Tolpin & Partners, PC, Chicago,
IL, argued for defendants-appellees.
______________________
2 HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC.
Before DYK, MAYER, and HUGHES, Circuit Judges.
DYK, Circuit Judge.
Halo Creative & Design Ltd., Halo Trademarks Ltd.,
and Halo Americas Ltd. (collectively, “Halo”), own two
U.S. design patents, thirteen U.S. copyrights, and one
U.S. common law trademark relating to twenty-five of
their furniture designs. Halo is located in Hong Kong.
Halo sued Comptoir Des Indes, Inc. (“Comptoir”), a Cana-
dian company, and its CEO, David Ouaknine (collectively,
“appellees”), a Canadian resident, in the Northern Dis-
trict of Illinois. Halo asserted that appellees infringed
their intellectual property and violated Illinois consumer
fraud and deceptive business practices statutes.
Appellees moved to dismiss on forum non conveniens
grounds, contending that the Federal Court of Canada
would be a superior forum. The district court granted the
motion and dismissed the case. Halo Creative & Design
Ltd. v. Comptoir Des Indes, Inc., No. 14C8196, 2015 WL
426277, at *3 (N.D. Ill. Jan. 29, 2015) (“Halo”). Halo
appeals. We reverse and remand for further proceedings.
BACKGROUND
Halo is a Hong Kong private company that designs
and sells high-end modern furniture. It is the exclusive
owner of U.S. Design Patent Nos. D655,526 S and
D655,100 S, thirteen U.S. copyrights, 1 and one U.S.
1 Halo has pending copyright applications, not reg-
istered copyrights, but the Seventh Circuit follows the
prevailing “application approach” rather than the “regis-
tration approach,” see Chi. Bd. of Educ. v. Substance, Inc.,
354 F.3d 624, 631 (7th Cir. 2003); 2 Melville B. Nimmer &
David Nimmer, Nimmer on Copyright § 7.16[B][3][b][ii]
HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC. 3
common law trademark, all relating to twenty-five of its
furniture designs. Halo’s common law trademark,
ODEON, is used in association with at least four of its
designs. Halo sells its furniture in the United States,
including through its own Timothy Oulton retail stores.
Appellee Comptoir, a Canadian corporation, also designs
and markets high-end furniture. Comptoir’s furniture
products are produced by manufacturers in China, Vi-
etnam, and India. Comptoir’s furniture products are
imported into the United States, where Comptoir offers
its products for sale to consumers directly at various
furniture shows and also through several distributors
across the country, including in the Northern District of
Illinois.
On October 20, 2014, Halo brought suit against appel-
lees in the Northern District of Illinois, alleging infringe-
ment of its U.S. design patents, copyrights, and
trademark. Halo also alleged that appellees had violated
Illinois consumer fraud and deceptive business practices
statutes. Halo accused twenty-five of appellees’ products
of infringement. Twenty-three of those twenty-five were
the subject of Halo’s copyright infringement allegations.
With respect to two products, Halo alleged infringement
only of its design patents. Four of appellees’ products
were also alleged to infringe Halo’s trademark.
Appellees moved to dismiss on forum non conveniens
grounds, contending that Canada, where appellees reside,
“is a far superior forum in which to resolve this dispute.”
A. 229. 2 Appellees’ theory was that a copyright remedy
(2015), and therefore Halo’s copyright applications suffice
to bring suit for infringement pursuant to 17 U.S.C.
§ 411(a). For convenience we refer to the applications as
“copyrights.”
2 Pages in Halo’s appendix are referred to as A __.
4 HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC.
would be available in the Federal Court of Canada.
Appellees’ only evidence concerning the remedies availa-
ble in the Federal Court of Canada was a printout of a
webpage from the site of the Federal Court of Canada.
The webpage explained that the Federal Court of Canada
has jurisdiction to adjudicate “intellectual property rights,
including copyright, industrial design . . . patents . . . and
trade-marks.” A. 249. Appellees did not adduce any
expert testimony regarding the adequacy of the Federal
Court of Canada as an alternative forum. Nor did appel-
lees submit any evidence that the Canadian courts could
provide a remedy for United States infringement. Halo
opposed the motion, arguing both that Canada would not
be an adequate forum to resolve its United States intellec-
tual property dispute and that private and public inter-
ests militated against dismissal.
The district court concluded that Canada would be an
adequate forum. It explained that Halo could seek relief
for its copyright claims under Canadian law, because
Canada, Hong Kong, and the United States are all signa-
tories of the Berne Convention. Further, even though
there was no evidence that the Canadian courts would
apply United States law, the court reasoned that “the
United States has recognized the potential of applying the
copyright laws of other nations and perhaps Canada could
do likewise.” Halo, 2015 WL 426277, at *2. The court did
not address Halo’s design patent, trademark, or state law
allegations.
The district court then balanced the private and pub-
lic interests. As for private interests, the district court
found that access to proof and the cost of obtaining at-
tendance of willing witnesses weighed in favor of appel-
lees. As for public interests, the district court found that
the existence of a local interest in having localized contro-
versies decided at home was neutral, while familiarity
with governing law pointed perhaps slightly in Halo’s
HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC. 5
favor. Balancing all of the interests, the district court
concluded that they weighed in appellees’ favor. Accord-
ingly, the district court dismissed the complaint.
Halo appeals. We have jurisdiction pursuant to 28
U.S.C. § 1295(a)(1). Under Seventh Circuit law, we
review a district court’s grant of a motion to dismiss on
forum non conveniens grounds for abuse of discretion.
Fischer v. Magyar Allamvasutak Zrt., 777 F.3d 847, 866
(7th Cir. 2015); see also Piper Aircraft Co. v. Reyno, 454
U.S. 235, 257 (1981).
DISCUSSION
The doctrine of forum non conveniens has a long
history. Although transfer between federal courts was
codified in 28 U.S.C. § 1404(a), forum non conveniens
concerning foreign and state venues has always been a
common-law doctrine. Piper Aircraft, 454 U.S. at 253;
14D Charles Alan Wright et al., Federal Practice and
Procedure § 3828 (4th ed.). In 1947, the Supreme Court
recognized that the doctrine applies to suits in federal
district court in Gulf Oil Corp. v. Gilbert, 330 U.S. 501,
507 (1947), and Koster v. (American) Lumbermens Mutual
Casualty Co., 330 U.S. 518, 526 (1947). Forum non con-
veniens, the Court explained, allows a federal district
court to dismiss a suit over which it would normally have
jurisdiction if trial in a foreign forum would “best serve
the convenience of the parties and the ends of justice.”
Koster, 330 U.S. at 527. Whether dismissal would pro-
mote convenience and justice should be determined by
weighing various private and public interest factors. See
Gilbert, 330 U.S. at 508. Such private interest factors
include: “the relative ease of access to sources of proof;
availability of compulsory process for attendance of un-
willing, and the cost of obtaining the attendance of unwill-
ing, witnesses; [and the] possibility of view of the
premises.” Id. Public interest factors include: “con-
6 HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC.
gest[ion]” of the courts; the burden of jury duty imposed
upon a “community which has no relation to the litiga-
tion”; “a local interest in having localized controversies
decided at home”; and the potential for a “conflict of laws.”
Id. at 508–09.
The Supreme Court returned to the doctrine of forum
non conveniens in Piper Aircraft. There the Court con-
fronted a wrongful death action arising out of a plane
crash in Scotland. 454 U.S. at 238–39. All of the dece-
dents were Scottish residents, and their administrator
brought suit against the American plane and propeller
manufacturers in United States district court, asserting,
inter alia, strict tort liability theories. Id. at 239–40. The
district court dismissed on forum non conveniens grounds,
but the Third Circuit reversed, reasoning that strict tort
liability theories were unavailable in Scotland, and thus
dismissal would “work a change in the applicable law”
such that forum non conveniens dismissal was precluded.
Id. at 246.
The Supreme Court disagreed. Every forum non con-
veniens inquiry, the Court explained, must begin with a
determination of whether there exists an alternative
forum that is both adequate and available to hear the
case. Id. at 254 n.22. An alternative forum is available if
“the defendant is ‘amenable to process’ in the other juris-
diction.” Id. An alternative forum is adequate unless “the
remedy offered by the other forum is clearly unsatisfacto-
ry,” as when “the alternative forum does not permit
litigation of the subject matter of the dispute.” Id. Con-
trary to the holding of the Third Circuit, “[t]he possibility
of a change in substantive law” does not automatically
render an alternative forum inadequate. Id. at 247.
Rather, an alternative forum is inadequate only if the
remedy it would provide is “so clearly inadequate or
unsatisfactory that it is no remedy at all.” Id. at 254. If
no available and adequate alternative forum exists, forum
HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC. 7
non conveniens dismissal is not permitted. Id. at 254
n.22. If such an alternative forum does exist, district
courts must proceed to balance the private and public
interest factors described in Gilbert to determine whether
dismissal is warranted. See id. at 257.
It is clear after Piper Aircraft that an alternative fo-
rum is not adequate unless it “permit[s] litigation of the
subject matter of the dispute.” Id. at 254 n.22; see also
Kamel v. Hill-Rom Co., Inc, 108 F.3d 799, 803 (7th Cir.
1997) (“An alternative forum is adequate when the parties
will not be deprived of all remedies or treated unfairly.”).
In other words, adequacy is determined by whether the
foreign forum will provide “some potential avenue for
redress for the subject matter of the dispute.” Stroitelstvo
Bulg. Ltd. v. Bulgarian-Am. Enter. Fund, 589 F.3d 417,
421 (7th Cir. 2009). Thus while “it is not enough to say
that the transfer will ‘lead to a change in applicable law
unfavorable to the plaintiff,’” Fischer, 777 F.3d at 867
(quoting In re Factor VIII or IX Concentrate Blood Prods.
Litig., 484 F.3d 951, 956 (7th Cir. 2007)), a change in law
cannot be such that the plaintiff would be left without any
“potential avenue for redress for the subject matter of the
dispute.” Stroitelstvo, 589 F.3d at 421. 3
The moving party bears the burden of persuasion as
to the adequacy of the alternative forum. In re Ford
Motor Co., Bridgestone/Firestone North Am. Tire, LLC,
344 F.3d 648, 652 (7th Cir. 2002). Appellees fail to meet
that burden here.
3 See also Lockman Found. v. Evangelical All. Mis-
sion, 930 F.2d 764, 768 (9th Cir. 1991); Cheng v. Boeing
Co., 708 F.2d 1406, 1411 (9th Cir. 1983); Figueiredo
Ferraz E Engenharia de Projeto Ltda. v. Republic of Peru,
665 F.3d 384, 390 (2d Cir. 2011).
8 HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC.
The first requirement for an alternative forum is
availability, i.e., that “all parties are amenable to process
and are within the forum’s jurisdiction.” Fischer, 777
F.3d at 867 (quoting Kamel, 108 F.3d at 803). Appellees,
a Canadian corporation, would be amenable to process in
Canada. Halo does not dispute that it too would be sub-
ject to the Federal Court of Canada’s jurisdiction if it filed
suit there. Thus, the Federal Court of Canada is an
available alternative forum. But Halo vigorously contests
that the Federal Court of Canada would be an adequate
forum.
The district court based its adequacy analysis exclu-
sively on Halo’s copyright claims, and, on appeal, appel-
lees continue to focus solely on copyright in defending the
adequacy of the Federal Court of Canada. The district
court offered two reasons in support of its conclusion that
the Federal Court of Canada is an adequate forum. First,
the district court posited that because Canada, Hong
Kong, and the United States are all signatories to the
Berne Convention, Halo is “entitled to all of the protec-
tions offered by Canadian [copyright] law to Canadian
citizens.” Halo, 2015 WL 426277, at *1. True enough, but
this alone is no answer to the ultimate question of wheth-
er the Federal Court of Canada could provide “some
potential avenue for redress for the subject matter of the
dispute.” Stroitelstvo, 589 F.3d at 421. The Berne Con-
vention requires “national treatment,” which means that
“authors should enjoy in other countries the same protec-
tion for their works as those countries accord their own
authors.” 5 Nimmer on Copyright § 17.01[B][1][a] (altera-
tions omitted). The Berne Convention does not require
that member countries provide remedies for extraterrito-
rial infringing activity. Nor does the Berne Convention
require that Canada apply its laws extraterritorially. The
district court improperly conflated “national treatment”
with extraterritorial enforcement. While the district
HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC. 9
court was correct that, under the Berne Convention, Halo
would be entitled to all of the protections available to
Canadian citizens under Canadian law, there is no indica-
tion that Canadian citizens could successfully sue in
Canada with respect to exclusively extraterritorial in-
fringement.
Halo’s complaint seeks redress for alleged infringe-
ment of its United States intellectual property rights that
occurred in the United States. Territoriality is always of
concern in intellectual property disputes. It cannot be
assumed that a foreign court would adjudicate an intellec-
tual property dispute where the alleged infringement
occurred elsewhere, and the case otherwise has little or no
connection to the chosen forum. The copyright and patent
laws of the United States certainly reflect such territorial-
ity. United States copyright law, for example, generally
admits of no remedy for extraterritorial infringement
unless a predicate act of infringement was first committed
within the United States. Nimmer on Copyright § 17.02;
Tire Eng’g & Distrib., LLC v. Shandong Linglong Rubber
Co., 682 F.3d 292, 307 (4th Cir. 2012). 4 Appellee has
provided no evidence that Canadian copyright law oper-
ates any differently. To the contrary, a leading Canadian
Copyright treatise notes that “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 out-
side Canada, even if the defendant was within Canada.”
John S. McKeown, Canadian Law of Copyright and
4 Patent law is also territorial. E.g., Microsoft Corp.
v. AT&T Corp., 550 U.S. 437, 455 (2007) (“The traditional
understanding that our patent law operates only domesti-
cally and does not extend to foreign activities is embedded
in the Patent Act itself.” (alterations, citations, and inter-
nal quotation marks omitted)).
10 HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC.
Industrial Designs 591 (3d ed. 2000). 5 While the Seventh
Circuit has approved the use of expert testimony to estab-
lish the adequacy of an alternative forum, e.g., Fischer,
777 F.3d at 867; In re Factor VIII, 484 F.3d at 956–57,
appellees have adduced no such evidence.
The only evidence appellees submitted to the district
court was a printout of a webpage from the site of the
Federal Court of Canada, simply showing that the Feder-
al Court of Canada has jurisdiction to adjudicate “intellec-
tual property rights, including copyright, industrial
design . . . patents . . . and trade-marks.” A. 249. But this
evidence demonstrates nothing more than the unremark-
able proposition that the Federal Court of Canada has
jurisdiction over Canadian intellectual property disputes.
For the first time on appeal, appellees also cite certain
5 Because “protection given under the [Canadian
Copyright] Act is territorial,” “extra territorial proceed-
ings” have been precluded “on the basis that a territorial
right cannot be violated by an extraterritorial act.” Id. at
523, 591. “[T]he jurisdiction of Canadian courts is con-
fined to matters where a real and substantial connection
with the forum jurisdiction exists.” Tolofson v. Jensen
(sub nom. Lucas (Litig. Guardian of) v. Gagnon), [1994] 3
S.C. 1022, 1026. Another treatise confirms that “Cana-
dian rights do not extend to reproductions that occur
abroad,” David Vaver, Intellectual Property Law 152 (2nd
ed. 2011), as does a 2010 case from the Canadian Federal
Court of Appeal, Sirius Canada Inc. v. CMRRA/SODRAC
Inc., 2010 FCA 348, [2012] 3 F.C.R. 717 (“[T]he act of
authorizing [an infringing act] in Canada is not actionable
under the Copyright Act where the primary infringement
occurs outside Canada,” given the “well established and
well understood territorial limitation of the Copyright
Act.”).
HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC. 11
provisions of the Canadian Copyright Act. Section 64 of
the Act covers “useful articles,” which are defined as any
“article that has a utilitarian function,” i.e., “a function
other than merely serving as a substrate or carrier for
artistic or literary matter,” and provides certain situa-
tions in which infringement of such “useful articles” may
occur. Copyright Act, R.S.C. 1985, c. C-42, § 64, available
at http://laws.justice.gc.ca/eng/acts/c-42/page-27.html.
But neither this provision nor any other in the Canadian
Copyright Act provides a remedy for extraterritorial
infringement.
There is no evidence in the record that any act of al-
leged infringement occurred in Canada. 6 There is no
evidence that appellees’ furniture is designed in Canada,
or that the allegedly infringing furniture was shipped
through Canada to the United States after manufacture
in Asia. It is undisputed that the only evidence of any
connection to Canada in the record is that appellees have
their principal place of business there. But this fact alone
cannot suffice. The question is whether the Federal Court
of Canada could provide “some potential avenue for
6 The sole material before the district court consist-
ed of the parties’ briefs, which made no mention of in-
fringing activity in Canada. When asked at oral
argument whether the record reflects that Comptoir’s
furniture was designed in Canada, counsel for appellees
stated, “the record does not show that. I would agree with
that.” Oral Arg. at 16:13–16:17. When asked whether the
record shows if any infringing act occurred in Canada,
counsel stated, “I will admit that the record did not get
that specific. . . . The presumption was if you have a
Canadian company, the courts of Canada are going to
have jurisdiction over it, and that’s as far as the analysis
went.” Id. at 19:49–19:53, 22:33–22:44.
12 HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC.
redress for the subject matter” of Halo’s dispute.
Stroitelstvo, 589 F.3d at 421. There is no evidence of any
predicate act of infringement that occurred in Canada—
let alone evidence that such a predicate act, if found,
would enable the Federal Court of Canada under Canadi-
an law to redress subsequent infringing acts in the United
States.
Second, the district court explained that “the United
States has recognized the potential of applying the copy-
right laws of other nations and perhaps Canada could do
likewise.” Halo, 2015 WL 426277, at *2. But this is mere
speculation as to what the Canadian courts would do.
The district court cited no support for the proposition that
a Canadian court could or would apply United States
copyright law, or, for that matter, patent or trademark
law. Nor have appellees adduced any such evidence. On
appeal, appellees do not even argue that the Federal
Court of Canada would apply United States law. To the
contrary, it appears that the only intellectual property
law the Federal Court of Canada would apply is its own.
See, e.g., Lesley Ellen Harris, Canadian Copyright Law 66
(4th ed. 2014). To be sure, there is isolated support in the
United States cases, whatever the relevance of United
States case authority may be, that United States courts
can sometimes redress infringement occurring abroad by
applying foreign law, see, e.g., Boosey & Hawkes Music
Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481, 492 (2d
Cir. 1998), or that foreign courts could redress United
States infringement by applying United States law, see
Creative Tech., Ltd. v. Aztech Sys. Pte., Ltd., 61 F.3d 696,
702 (9th Cir. 1995). But these are cases in which at least
a predicate infringing act occurred in the forum jurisdic-
tion.
In Boosey & Hawkes, a film was produced in the Unit-
ed States, and alleged infringement occurred abroad
where the film was distributed. 145 F.3d at 484–85. The
HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC. 13
Second Circuit suggested that the United States district
court might give redress for the foreign infringement. Id.
at 491. In Creative Technology, the initial acts of alleged
infringement occurred in Singapore, and the court deter-
mined that the High Court of Singapore would not be
precluded from redressing damages stemming from the
subsequent distribution of those products in the United
States. 61 F.3d at 702.
The continued vitality of Boosey & Hawkes is open to
doubt. See 5 Nimmer on Copyright § 17.03[A]. Even in
cases where predicate infringing acts occurred in the
United States, the application of foreign copyright law has
remained an “anomaly in the jurisprudence,” and the
“specter” of “opening the floodgates to resolution in U.S.
courts of cases alleging violation of other nations’ copy-
right laws . . . remains unrealized in practice, with rare
exception.” Id. at § 17.03[A]. In any event, there is no
evidence that any predicate act occurred in Canada, and
no authority that Canada would provide a remedy for
United States infringement or apply United States law
under such circumstances.
Thus, based on the evidence in the record, the Fed-
eral Court of Canada would fail to provide any “potential
avenue for redress for the subject matter” of Halo’s dis-
pute, Stroitelstvo, 589 F.3d at 421, even with regard to
Halo’s claims of copyright infringement. The district
court abused its discretion in concluding otherwise.
It is particularly important that a forum non conven-
iens movant demonstrate the adequacy of an alternative
forum when the dispute implicates the enforcement of
intellectual property rights. The policies underlying
United States copyright, patent, and trademark laws
would be defeated if a domestic forum to adjudicate the
rights they convey was denied without a sufficient show-
ing of the adequacy of the alternative foreign jurisdiction.
14 HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC.
It is largely for this reason that district courts have
routinely denied motions to dismiss on forum non conven-
iens grounds when United States intellectual property
rights form the crux of the dispute. See, e.g., Potothera,
Inc. v. Oron, No. 07-CV-490-MMA(AJB), 2009 WL 734282,
at *4 (S.D. Cal. Mar. 19, 2009) (“Israel does not provide an
adequate alternative forum because Plaintiff’s claims
could not be resolved fully there and an Israeli decision
regarding U.S. patent rights would be unenforceable in
this country.”); Greenlight Capital, Inc. v. GreenLight
(Switzerland) S.A., No. 04 Civ. 3136(HB), 2005 WL 13682
(S.D.N.Y. Jan. 3, 2005) (“[T]here is no evidence that
Greenlight Capital will be able to fully litigate its U.S.
trademark rights in Switzerland because trademark
rights are largely territorial.”) (citations, internal quota-
tion marks, and alterations omitted); Jose Armando
Bermudez & Co. v. Bermudez Int’l, No. 99 Civ. 9346(AGS),
2000 WL 1225792 (S.D.N.Y. Aug. 29, 2000) (“[T]he Do-
minican courts are unlikely to be able to grant an ade-
quate remedy to plaintiff, because plaintiff’s claims are
primarily governed by U.S. trademark and copyright law
and are based on infringing acts in the United States.”).
Because we hold that the district court abused its dis-
cretion and therefore that dismissal on forum non conven-
iens grounds was improper, we need not address Halo’s
remaining arguments regarding whether the district
court abused its discretion by focusing solely on Halo’s
copyright claims when two of the accused products were
allegedly covered only by design patents, whether Cana-
dian copyright law would even protect the furniture
designs at issue, or whether the district court erred in
allocating the burden of proof or balancing the private
and public interest factors.
REVERSED AND REMANDED
HALO CREATIVE & DESIGN v. COMPTOIR DES INDES INC. 15
COSTS
Costs to appellees.