Assertions of infringment at trade show sufficient to confer personal jurisdiction in DJ action

September 24, 2008
Post by Blog Staff

In a recent decision, the Federal Circuit reversed a district court's order dismissing a case for lack of personal jurisdiction. The plaintiff brought a declaratory judgment action against the defendant patent holder in Washington. After sending a letter accusing the plaintiff of infringing two patents, the patent holder attempted to get the plaintiff's display removed from a trade show in Seattle and told potential customers the plaintiff had copied their patent. The district court held that this was insufficient to support jurisdiction, finding the exercise of jurisdiction would "offend traditional notions of fair play and substantial justice."The Federal Circuit reversed, and held there was a sufficient basis for the district court to exercise specific jurisdiction over the defendants. As stated by the court:

Of critical importance to the issue of personal jurisdiction, [defendant's] attempts at "extra-judicial patent enforcement" were targeted at [the plaintiff's] business activities in Washington and can fairly be characterized as attempts to limit competition from [plaintiff] at the Seattle convention.
These activities specifically directed at Washington rendered exercise of jurisdiction fair, and the court accordingly reversed the district court's dismissal.More detail of Campbell Pet Co. v. Miale after the jump.Ty-Lift is the licensee two patents relating to mobile stretchers used in transporting injured animals, and produces a product embodying the patents, the Ty-Lift I stretcher. The patents are owned by one of Ty-Lift's owners, a second defendant, Theresa Miale.During the relevant time period of 1999-2006, defendants sold 12 units to Washington state residents. In 2007, Miale attended a three-day convention in Seattle, Washington where she demonstrated her products and offered them for sale. Plaintiff Campbell Pet Company was also at the convention, and had a display featuring its products. During the convention, Miale accused Campbell of infringing the two patents, told convention goers Campbell's products copied her patents, and asked the convention manager to remove the Campbell display because it infringed the patents. Ty-Lift later sent a letter to Campbell alleging infringement of the patents. Campbell thereafter filed suit against Ty-Lift and Miale in the Western District of Washington, seeking a declaration of noninfringment and invalidity. In response, Ty-Lift and Miale filed a motion to dismiss for lack of personal jurisdiction.The district court granted the motion to dismiss. The district court easily held there was no general personal jurisdiction, noting the defendants had made only 12 sales to Washington residents over seven years. The court then assessed whether specific personal jurisdiction existed. In order for a court to have specific personal jurisdiction over a defendant under the due process clause, three criteria must be met:
  1. the non-resident defendant purposely do some act or consummate some transaction in the forum state,
  2. the cause of action arise from or be connected with that transaction, and
  3. the assumption of jurisdiction by the forum state not offend traditional notions of fair play and substantial justice.
The district court initially held that only the first requirement was met, but on reconsideration held the first two were met. However, the court held assuming jurisdiction would "offend traditional notions of fair play and substantial justice," because fair play and substantial justice permits a patentee latitude to inform others of their rights without being subject to jurisdiction in the forum for doing so. Campbell appealed.The Federal Circuit initially noted that the district court was "clearly correct" in holding that there was no general jurisdiction over the defendants. The district court correctly noted that "a forum does not have general jurisdiction over a defendant business entity unless the defendant has contacts with the forum state that qualify as 'continuous and systematic general business contacts.'" The Federal Circuit stated that the low volume of sales in the made to Washington customers "falls far short of enough to reflect the substantial and continuous presence in the state necessary to support general jurisdiction" and that "[t]he instant case is a classic case of sporadic and insubstantial contacts with the forum state, which are not sufficient to establish general jurisdiction over the defendants in the forum." The defendants' sales had totaled less than $14,000 in gross revenue, amounting to less than 2% of total sales and in four of the relevant years no sales were made at all. The Federal Circuit next turned to the specific jurisdiction analysis. The court noted instances where otherwise constitutional cases of personal jurisdiction are defeated because of "fair play and substantial justice" concerns should be rare and "are limited to the rare situation in which the plaintiff's interest and the state's interest in adjudicating the dispute in the forum are so attenuated that they are clearly outweighed by the burden of subjecting the defendant to litigation within the forum." The Federal Circuit has outlined some of the factors to be considered, including (1) burden on the defendant, (2) interests of the forum state; (3) plaintiff's interest in obtaining relief; (4) considerations of efficient resolutions of controversies for the interstate judicial system; and (5) states' interest in furthering fundamental substantive social policies.The Federal Circuit reiterated the rule it had established that, in regards to the reasonableness inquiry, "without more, a patentee's act of sending letters to another state claiming infringement and threatening litigation is not sufficient to confer personal jurisdiction in that state". In the present case, however, Miale's actions went beyond mere attempts at informing the Plaintiff of suspect infringement, and instead "can fairly be characterized as attempts to limit competition from Campbell at the Seattle convention." As stated by the court:
Of critical importance to the issue of personal jurisdiction, Ms. Miale's attempts at "extra-judicial patent enforcement" were targeted at Campbell's business activities in Washington and can fairly be characterized as attempts to limit competition from Campbell at the Seattle convention.
The court analogized a recent Tenth Circuit case where the defendant's conduct was not simply sending cease and desist letters, but included interfering with the DJ plaintiff's eBay auctions. In that case, the Tenth Circuit held personal jurisdiction was proper based on this conduct directed against the DJ plaintiff. Similarly, because Miale's activities were specifically targeted at Campbell's business activities in Washington, exercise of personal jurisdiction was proper in Washington.To read the full decision in Campbell Pet Co. v. Miale, click here.

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