PKWare, Inc. v. Meade
79 F. Supp. 2d 1007 (2000)
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Rule of Law:
A nonresident defendant who purposefully creates a continuous and systematic business relationship with a forum state resident, involving ongoing communications, a contractual choice-of-law clause favoring the forum, and at least one physical visit, has sufficient minimum contacts to be subject to specific personal jurisdiction in that forum for claims arising from the relationship.
Facts:
- PKWare, Inc. is a Wisconsin-based software development company.
- Timothy L. Meade is an Ohio resident in the business of reselling software, initially as a sole proprietor named 'Ascent Solutions.'
- In September 1992, PKWare and Meade entered into a contract for Meade to convert ('port') and resell PKWare's software in exchange for royalties.
- The agreement was negotiated through extensive telephone, e-mail, and written communications between Meade in Ohio and PKWare in Wisconsin.
- The contract contained a choice-of-law provision stating it would be governed by Wisconsin law.
- In 1993, Meade incorporated his business in Ohio as Ascent Solutions, Inc. (ASI), which then assumed performance of the contract.
- Over a six-year period, Meade and ASI maintained the business relationship through numerous communications with PKWare in Wisconsin and sent royalty payments and sales reports to Wisconsin.
- Meade once visited Milwaukee, Wisconsin to attempt to hire a PKWare employee, during which the ongoing business relationship between the parties was discussed.
Procedural Posture:
- PKWare, Inc. sued Timothy L. Meade and Ascent Solutions, Inc. in the United States District Court for the Eastern District of Wisconsin, a federal trial court.
- The complaint alleged claims for breach of contract, copyright infringement, patent infringement, and trademark infringement.
- Defendants filed a motion to dismiss the case for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) and for improper venue under Rule 12(b)(3).
- In the alternative, defendants filed a motion to transfer the case to the Southern District of Ohio under 28 U.S.C. § 1404(a).
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Issue:
Does a federal court in Wisconsin have personal jurisdiction over an out-of-state individual and his corporation whose contacts with Wisconsin consist of negotiating and maintaining a six-year software licensing agreement with a Wisconsin company, including numerous communications, one personal visit, and a choice-of-law clause designating Wisconsin law?
Opinions:
Majority - Adelman, District Judge
Yes, the court has personal jurisdiction over both defendants. A nonresident defendant is subject to personal jurisdiction in the forum state when they have purposefully established minimum contacts such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Here, the defendants' negotiation and six-year performance of a contract with a Wisconsin resident created 'continuing obligations' and a substantial connection with the forum. The court applied Wisconsin's long-arm statute, finding the defendants engaged in 'substantial and not isolated activities' by creating and nurturing a long-term business relationship. The numerous communications, royalty payments sent to Wisconsin, Meade's physical visit, and the contractual choice-of-law provision all demonstrate that the defendants purposefully availed themselves of the privilege of conducting business in Wisconsin, making it reasonably foreseeable that they could be haled into court there. The exercise of jurisdiction is consistent with due process because the lawsuit arises directly from these contacts (specific jurisdiction), and it is not unreasonable or unfair to require them to litigate in Wisconsin.
Analysis:
This case illustrates the application of specific personal jurisdiction principles to a modern, long-term business relationship conducted primarily through remote communications. It reinforces that a defendant does not need a consistent physical presence to establish minimum contacts. The decision emphasizes the significant weight courts give to a choice-of-law clause in a contract, viewing it as strong evidence of 'purposeful availment.' This case serves as a key example for understanding how a combination of ongoing contractual obligations, frequent communication, and a deliberate legal connection to a state can create the basis for jurisdiction, even with minimal physical entry into the forum.
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