Chicago, Illinois 60604 Argued September 16, 2014 Decided September 18, 2014 Before… v. Instep Beijing Software Co., Ltd

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued September 16, 2014
Decided September 18, 2014
Before
WILLIAM J. BAUER, Circuit Judge
RICHARD A. POSNER, Circuit Judge
FRANK H. EASTERBROOK, Circuit Judge
No. 13-­‐‑3713
INSTEP SOFTWARE LLC,
Plaintiff-­‐‑Appellee,
v.
INSTEP (BEIJING) SOFTWARE CO., LTD.,
Defendant-­‐‑Appellant.
Appeal from the United
States District Court for the
Northern District of Illinois,
Eastern Division.
No. 11 C 3947
John W. Darrah, Judge.
Order
InStep Software asked the district court to declare that Instep (Beijing) Software is no
longer authorized to sell or license InStep’s products. The district court entered judg-­‐‑
ment in InStep’s favor, and Instep (Beijing) has appealed.
As the names suggest, the two parties are related: InStep is among the equity inves-­‐‑
tors in Instep (Beijing). This means that the requirements of subject-­‐‑matter jurisdiction
under 28 U.S.C. §1332(a)(2) are satisfied only if Instep (Beijing) is treated as having its
own citizenship, independent of the citizenships of its investors. If the citizenships of
InStep’s members (for InStep is itself not a corporation) are imputed to Instep (Beijing),
complete diversity is missing.

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No. 13-­‐‑3713 Page 2
In the district court, InStep argued, and the judge found, that Instep (Beijing) is a cit-­‐‑
izen of China (and only China) because Chinese law treats it as a “juridical person.”
Our decision in Fellowes, Inc. v. Changzhou Xinrui Fellowes Office Equipment Co., No. 12-­‐‑
3124 (7th Cir. July 22, 2014), shows that this approach is untenable.
That leaves the question whether Instep (Beijing) has attributes sufficiently similar to
those of a corporation organized in the United States. See, e.g., BouMatic, LLC v. Idento
Operations, BV, No. 13-­‐‑2300 (7th Cir. July 22, 2014). At oral argument counsel disagreed
about just what attributes Instep (Beijing) possesses—could not agree, indeed, on what
kind of entity it is as a matter of Chinese law. Instep (Beijing) calls itself a “common law
joint venture.” InStep calls it both a “limited liability company” and a “Chinese – for-­‐‑
eign equity joint venture.”
Instead of attempting to resolve factual disputes in this court, we think it prudent to
remand so that the district court may determine, in the first instance, (a) what kind of
business form Instep (Beijing) has; (b) what attributes such a form possesses under Chi-­‐‑
nese law (for example, does it have alienable shares, and what role does the govern-­‐‑
ment of China play in determining the venture’s duration and ownership?); and (c)
whether a business organization of this kind should be treated as a corporation for the
purpose of §1332, given the analysis in Fellowes and BouMatic.
If the district court finds that Instep (Beijing) is not a corporation, the case must be
dismissed for lack of subject-­‐‑matter jurisdiction. If Instep (Beijing) is a corporation, the
judgment on the merits should be reentered. Any appeal from the new decision will re-­‐‑
turn to this panel.
VACATED AND REMANDED

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