This blog post was written by HeplerBroom Summer Associate Chioma Chukwu-Smith. A supervising partner also contributed to the post.
In J.S.T. Corp. v. Foxconn Interconnect Tech. Ltd., 965 F.3d 571 (7th Cir. 2020), Plaintiff J.S.T. Corporation (“J.S.T.”) sued Defendants TE Connectivity Corporation (“TEC”) and Foxconn Interconnect (“Foxconn”) for misappropriation of trade secrets and unjust enrichment arising out of Defendants' alleged acquisition of Plaintiff’s 183-pin connector designs from a third-party. The district court dismissed Plaintiffs’ claims for lack of personal jurisdiction, and Plaintiffs appealed. Ultimately, the Seventh Circuit found that since there was no causal relationship between the Defendants’ dealings in Illinois and the claims that Plaintiff J.S.T. asserted against them, the judgement of the district court should be upheld.
Case Summary
In 2005, General Motors retained engineering company, Bosch, to build a body control module for some of its cars. To build the module, Bosch needed a 183-pin connector – an electrical adapter that can connect 183 electrical circuits. Bosch turned to Illinois company J.S.T. for the task. J.S.T. accepted the contract and designed and built a 183-pin connector for Bosch. For years, Bosch retained J.S.T. as its sole supplier of the product. Then, according to J.S.T., Bosch tricked J.S.T. into revealing its 183-pin connector design specifications and drawings. J.S.T. further alleged that Bosch gave the designs to J.S.T.’s competitors, and the competitors accepted the wrongfully acquired designs with full knowledge of their source. The competitors proceeded to use the designs to produce their own knockoff 183-pin connector and eventually replaced J.S.T. as Bosch’s supplier. J.S.T. filed suit against several of the competitors in the United States District Court for the Northern District of Illinois – specifically TEC and a group of related companies under the umbrella of Foxconn. J.S.T.’s complaint alleged misappropriation of trade secrets under the Illinois Trade Secrets Act, 765 ILCS 1065/1, and unjust enrichment.
Defendants TEC and Foxconn moved to dismiss for lack of personal jurisdiction, emphasizing that the court did not have general jurisdiction over Defendants because neither Defendant was headquartered in Illinois nor had its primary place of business there. Only two Foxconn companies had offices in Illinois, and neither was involved in producing the connector at issue. Furthermore, both Defendants sold the connectors to Bosch in Texas and China, and neither Defendant manufactured the connectors in Illinois. The only relevant connection to Illinois was that the connectors were used in body control modules that General Motors then incorporated into cars or sold as spare auto parts. General Motors then sold those cars and parts to authorized dealers for distribution nationwide, including in Illinois. Defendants argued that this connection to Illinois was too attenuated to support the court’s exercise of specific jurisdiction over the claims asserted against them, and the district court agreed. J.S.T. appealed.
J.S.T. argued that Defendants were subject to specific jurisdiction in Illinois because cars and parts containing Defendants’ knockoff connectors were sold to consumers in Illinois. J.S.T. relied on the “stream of commerce” theory first articulated in Supreme Court case World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297–98 (1980). First, J.S.T. argued that a contact – downstream sales in this case – is relevant to the underlying claim if it tracks one of the “elements” of the claim that establishes liability. See Young v. Colgate-Palmolive Co., 790 F.2d 567, 570 (7th Cir. 1986). Second, J.S.T. argued that the downstream consumer sales in Illinois damaged its bottom line, satisfying the third element of trade secret misappropriation: that the owner of the trade secret was damaged by the misappropriation. J.S.T. argued that a state in which an element of a tort is satisfied has a close relationship to litigation concerning that tort.
In considering Plaintiff’s arguments, the Court first noted that “it is the defendant’s conduct, not the plaintiff’s injury, that must form the necessary connection with the forum State” for specific jurisdiction. J.S.T. Corp, 965 F.3d at 577. Thus, the fact that damages was an element of the alleged tort does not necessarily mean that personal jurisdiction exists in any state where that element is found. Id. at 578. Under Illinois law, trade secret misappropriation is the unauthorized acquisition, disclosure, or use of a trade secret by a person who knows or has reason to know that the secret was improperly acquired. Id. at 576 (citing 765 ILCS 1065/2(b)). Defendants did not receive the stolen designs and drawings from Bosch or manufacture the knockoffs in Illinois. Id. at 574-75. Rather, Defendants sold their connectors to Bosch, then Bosch sold to General Motors, who sold cars and parts to consumers nationwide, including in Illinois. Id. at 574. When Defendants allegedly used J.S.T.’s designs to turn a profit and displaced J.S.T. as Bosch’s supplier, both harms flowed from Defendants’ sales to Bosch. Id. at 578. These sales were the source of Defendants’ ill-gotten gains and J.S.T.’s lost opportunity. Id. Illinois consumers had nothing to do with Defendants’ interactions with Bosch, which was the foundation of J.S.T.’s trade secret claim. Id. Therefore, the Court held that the link between sales in Illinois and Defendants’ misappropriation of J.S.T.’s trade secrets was too attenuated and did not entitle Illinois courts to adjudicate Plaintiff’s trade secret claim against Defendants. Id. at 577.
Regarding Plaintiff’s unjust enrichment claim, the Court held that the sales to consumers in Illinois were not sufficient to establish specific personal jurisdiction. Id. at 578. The Court may have been able to conclude that J.S.T.’s unjust enrichment claim arose from downstream sales if Defendants had made money in Illinois from J.S.T.’s drawings, but Defendants were enriched by sales to Bosch that took place in China and Texas. Id. The connection between J.S.T.’s unjust enrichment claim and General Motors’ downstream sales in Illinois was too attenuated to support personal jurisdiction over Defendants. Id. Thus, the Court affirmed the district court’s dismissal for lack of personal jurisdiction because neither of J.S.T.’s claims arose out of Defendants’ contacts in Illinois. Id.
