Patentee/plaintiff Dustcap appeals to the Federal Circuit from the order of Judge Ann Montgomery dismissing its action for lack of personal jurisdiction.  J&S is incorporated and located in Pennsylvania, the case brought in Minnesota.  The case involved 6,874,541, generally directed to a slip cover for protecting HVAC components during installation and construction.

Dustcap conceded there was not general jurisdiction–J&S did not have any continuous or systematic contacts with Minnesota.  Rather, it argued specific jurisdiction.  Specific jurisdiction exists if (1) the exercise of jurisdiction is permitted by the forum state’s long-arm statute; and (2) the exercise of jurisdiction by the courts of the forum state comports with the Due Process Clause of the United States Constitution. See Genetic Implant Sys., Inc. v. Core-Vent Corp., 123 F.3d 1455, 1458 (Fed. Cir. 1997) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-76 (1985)).

Minnesota interprets its long-arm statute commensurate with the Due Process Clause.  The combined inquiry thus asks (1) whether the defendant “purposefully directed” its activities at residents of the forum; (2) whether the claim “arises out of or relates to the defendant’s activities with the forum;” and (3) whether the assertion of personal jurisdiction is “reasonable and fair.”  Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360
(Fed Cir. 2001).

The Court summarized the alleged contacts here as follows:

Plaintiff alleges J&S purposefully directed activities at residents of Minnesota by: (1) mailing advertisements to several [6] Minnesota businesses;1 (2) placing an advertisement in a nationally circulated magazine; and (3) operating a website that allows prospective customers to purchase the Smith Slip over the internet.

Order, p. 5.  The Court further noted that J&S had no offices or employees in Minnesota, and had never sold any of the allegedly infringing product in Minnesota, including via the website.  Id.

Judge Montgomery found these allegations insufficient to establish personal jurisdiction.  The mailing of circulars received particular attention because Dustcap contended that the mailings were “offers to sell” and therefore infringing acts.  This would not only satisfy the first prong of the test, but also the second–that the infringement claim “arises out of or relates to the defendant’s activities with the forum.”

However, the Court found that the mailings were not offers for sale, using the Federal Circuit’s decisions in Rotec and Group One.  The Court wrote:

Plaintiff relies on 3D Systems, Inc. v. Aarotech Laboratories., Inc., 160 F.3d 1373 (Fed. Cir. 1998) to support his assertion that an offer to sell is any communication by the defendant to prospective buyers that includes a description and price. However, in Rotec Industries, Inc., v. Mitsubishi Corp., 215 F.3d 1246, 1255 (Fed. Cir. 2000), the Federal Circuit revisited its interpretation of “offer to sell” in 3D Systems and concluded that the phrase must be read according to the norms of traditional contract law. Id. at 1254-55. Under contract law, an offer is a communication “which the other party could make into a binding contract by simple acceptance.” Group One, Ltd. v. Hallmark Cards, Inc., 254 F.3d 1041, 1048 (Fed. Cir. 2001). Based on this principle, courts often conclude that advertisements and promotional materials do not constitute offers. Moldflow Corp. v. Simcon, Inc., 296 F. Supp. 2d 34 (D. Mass. 2003). Here, J&S’s advertisement listed a variety of options available to prospective buyers, but lacked the definite terms that would create a binding contract between J&S and the recipient if the recipient simply accepted. Additional, material terms, including price, quantity, and terms of delivery, needed to be negotiated. J&S’s advertisements were merely invitations to bargain, not offers to sell.

Order, p. 6.  The Court then quickly dispensed with the national advertising (via a national publication) and the website arguments.  Opinion, p. 7

2010-1158 Order

2010-1107 Juniper Networks v. SSL Service
ND/CA 08-cv-5758
Judge Saundra Brown Armstrong

Juniper appeals the dismissal of its declaratory judgment complaint by Judge Saundra Brown Armstrong based on a lack of personal jurisdiction over SSL.

Juniper filed a DJ action in the Northern District of California seeking a determination of non-infringement regarding 9 patents owned by SSL Services.  SSL is a Maryland LLC and does not have any offices of facilities in California.  SLL moved to dismiss for lack of personal jurisdiction.

Prior to the filing of the suit, SSL's managing director had met with a Juniper representative in New York to discuss possible licensing, and the parties subsequently exchanged calls and emails.  Juniper also claims that SSL gave it a copy of a ED/TX complaint it had filed against Citrix based on the same patents.  The parties never met in California, and there was no evidence that SSL transacted business in California either.

Juniper's jurisdictional argument was apparently that SSL had purposefully directed patent enforcement efforts against Citrix, an entity with a California place of business.

The court readily rejected this argument and found jurisdiction lacking:

Here, the enforcement activity involving the Citrix entities transpired in Texas, not California. Tellingly, Juniper cites no authority to support its novel argument that the act of filing a lawsuit against an alleged California resident—in a Texas district court—is sufficient to make a prima facie showing that it has purposefully availed “itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Avocent, 552 F.3d at 1329 (internal quotation and citation omitted). Nor does such an argument make any logical sense. Under Juniper’s theory of personal jurisdiction, a defendant would automatically be subject to personal jurisdiction in a forum where it previously sued an entity that happened to conduct business in that particular state, even where the lawsuit was filed in an entirely different state.  [Opinion, p. 5.]

The court concluded:

At bottom, the Court finds that Juniper has failed to carry its burden of showing that SSL purposefully directed its activities at residents of the forum or that the claim at issue in this action arises out of or relates to those activities. At most, the record demonstrates that the parties had an initial discussion in New York regarding the patents-in-suit, followed by unsuccessful efforts via email and telephone to schedule a follow up conversation or meeting to discuss the matter further.  No further meeting took place in California or anywhere else. Juniper also has failed to show any “other activities” within California that would otherwise be sufficient to demonstrate personal jurisdiction over SSL. [Opinion, p. 7.]

2010-1107 Order Re Jurisdiction

2010-1100 Nuance v. Abbyy Software

Patentee Nuance appeals from the order and judgment dismissing defendants Abbyy Production (a Russian entity) and Abbyy Software (a Cypriot entity) for failure to properly serve and for lack of personal jurisdiction.  The case continues against other Abbyy entities.

Service: Nuance conceded that it did not follow the Hague Convention on service through diplomatic channels, but claimed (pointing the the State Department website) that Russia had ceased cooperating with the US on service.  [Oddly, the Court found that Nuance's statement about the lack of Russian cooperation was "without authority," although I checked the State Department website today and it DID confirm Nuance's position.]  Nuance did serve the Russian entity by personal service (in Moscow) and on the US subsidiary–although the Court did not expressly address why these methods were improper, it apparently concluded that service via Russia's Central Authority was the only proper method.

Jurisdiction:  Nuance pointed to a number of public statements by the foreign Abbyy entities about opening offices in California and entering the US market etc., and that Abbyy (in the collective) had sold software in and through California.  The Court does not appear to have considered agency or "stream of commerce" jurisdictional theories, but instead focused on a lack of evidence on which to pierce the corporate veil.  Essentially concluding that the use of US-based subsidiaries insulated the foreign entities, the Court found that Nuance had failed to set forth even a prima facie basis for personal jurisdiction.

Because the Court's opinion doesn't provide much factual detail on the dispute, I have also included Nuance's opposition brief.

2010-1100 Order on Motion to Dismiss

2010-1100 Opp to Motion

2008-1580 Arquest v. Kimberly-Clark Wordwide

Arquest appeals from the order of Judge Colleen McMahon finding that Kimberly-Clark Wordwide (KCWW) is not subject to personal jurisdiction in New York, and dismissing Arquests’s DJ action.  KCWW is pursuing a later-filed infringement action again Arquest in the Northern District of Texas.  The case involves diapers and training pants–Kimberly-Clark makes Huggies® and Pull-Ups®, while Arquest manufactures  private-label diaper and trainers.

KCWW sent Arquest a general notice that Arquest might be infringing certain unspecified patents.  KCWW refused to provide any specifics or details unless and until the parties entered into a Stand-Still Agreement, which provided that neither would file any lawsuit against the other for 10-days, and thereafter KCWW would have a 3 day window in which it could initiate an action in forum of its choice.

The parties entered into a series of these Stand-Still Agreements, but ultimately stopped doing so.  KCWW did not file suit during its 3-days, so Arquest filed an action in SD/NY.  KCWW and a sister company, Kimbery-Clark Global Sales (KCGS) then filed an action in the ND/TX.

Kimberly-Clark apparently owns nearly all of its corporate IP through its subsidiary KCWW, a Delaware corporation with administrative offices in Texas, Georgia and Wisconsin.  KCWW also has manufacturing facilities in California, Washington and Utah.  KCWW is essentially a toll manufacturer for KCGS and other entities in the Kimberly-Clark family.  KCGS acquires the raw materials; KCWW manufacturers the products; and KCGS buys the finished goods and sells them.  KCWW does not have any other "customers" and has no sales force, etc.  KCWW is not licensed to do business in New York.

The court granted KCWW’s motion to dismiss (converted to a summary judgment).  Although the judge was a little put-off by KCWW’s briefing–which "was less than forthcoming" about the exact nature of KCWW’s activities and corporate relations–the court found no basis for general or specific jurisdiction under New York’s long-arm statute.

First, the court found that KCWW does not itself do business directly in New York:

KCWW does not solicit business in New York. It does not own property in New York. It does not have employees or operations in New York. Additionally, KCWW is not licensed or registered to do business in New York. In short, KCWW does nothing that the Second Circuit has identified as relevant in determining whether a party is doing business in New York.

Also, the court rejected Arquest’s argument that jurisdiction should attach because KCWW’s IP is being used in New York: 

KCWW does indeed benefit from the activities ofKCGS in New York. But a defendant will not be found to be doing business in New York simply "because an entity or person conducts activities in New York that ultimately inure to the defendant’s benefit." 2-3 Weinstein Korn & Miller, New York Civil Practice: CPLR P § 301.16. If the law were otherwise, KCWW would be subject to general jurisdiction everywhere products bearing its intellectual property are sold.

The court also reject arguments that KCWW acts in New York through an "agent," KCGS, noting that KCGS does not bind or otherwise act on behalf of KCWW in New York, analogizing it to Delagi v. Volkswagenwerk, 29 N.Y.2d 426 (1972).

The court also rejected the "mere departmental" theory, in which one corporation is a "mere department" of its parent.  Noting first that KCGS and KCWW are sister corporations rather than parent-subsidiaries, the court still found that Arquest failed to establish the necessary four factors:

1) common ownership 2) financial dependency 3) the degree to which the parent corporation interferes with the selection and assignment of the subsidiary’s executive personnel and fails to observe corporate formalities and 4) the degree of control over the marketing and operational policies of the subsidiary exercised by the parent.

At most, only the first factor is met since Kimberly-Clark owns both corporations.

Specific jurisdiction was also rejected–the only basis was "KCWW’s counsel purposefully projected itself into this district by reaching out to Arquest’s New York counsel to threaten a patent infringement lawsuit."  The court found that simply contacting a New York entity (or a New York attorney) to notify it of infringement was not enough to meet New York law on jurisdiction.

More reading:

Order

Synthes appeals from Judge James Lorenz order dismissing the case for lack of personal jurisdiction.  Synthes sued GMReis, a Brazilian company, on 7,127,744, related to locking bone plates for surgical and skeletal fixation.  Synthes argued jurisdiction existed due to (1) various commercial contacts (apparently not related to the accused device) in the U.S., and (2) GMReis appearance at various medical trade shows at which the accused device was shown.

The court disagreed, finding the contacts did not rise to a level of contacts to support either general or specific jurisdiction.  The unrelated commercial contacts were readily dismissed.  As for the trade shows, the unrebutted evidence showed that the devices were clearly not offered for sale in the U.S., and not offered for sale to U.S. purchasers (the trade shows are global in scope and are attended by many non-U.S. people).  Moreover, the devices are not FDA approved and could not be medically used in the U.S.

Synthes tried to argue that Fed. R. Civ. P. 4(k)(2) created jurisdiction because GMReis was not amenable to a federal claim (patent infringement) in any state.  This provision states:

(2) Federal Claim Outside State-Court Jurisdiction.

For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if:

(A) the defendant is not subject to jurisdiction in any state’s courts of general jurisdiction; and

(B) exercising jurisdiction is consistent with the United States Constitution and laws.

Judge Lorenz noted, however, that 4(k)(2)(d) requires an analysis identical to the normal due process analysis except, instead of considering contacts with a particular forum state, contacts are considered with the nation as a whole.  See Holland Am. Line.  The court reaffirmed that the contacts previously identified were not sufficient to meet minimum due process requirements.

The court declined, however, to rule that having the device at the trade shows was not an act of infringement.  However, it seems like this would have to be implied by the court’s ruling: otherwise, the court would be ruling that one could come into the U.S. and infringe but those acts of infringement would not constitute specific jurisdiction.

Autogenomics appeals Judge Mariana Pfaelzer’s order dismissing its declaratory judgment action for lack of personal jurisdiction.  Oxford Gene Tech is a British company that owns 6,057,270 related to analyzing polynucleotide sequences.  OGT sent a cease and desist to Autogenomics and, after licensing discussions collapsed, Autogenomics filed a declaratory judgment action.  In support of personal jurisdiction, Autogenomics showed that OGT:

• Had entered into a “joint venture” with another California company;
• Made one sale of arrays into California for $7,600;
• Attended three conference or trade shows in California since 2003;
• Advertised on the internet, with Univ. of California one of the top institutional viewers;
• Entered into at least 10 licenses with California companies, generating tens of millions of dollars;
• Sent the cease and desist and negotiated with Autogenomics.

The court found that these facts or allegations did not support either general or specific jurisdiction.  For the former, these contacts were not considered “continuous and systematic”—the court described them as a series of unconnected activities that happened to involve a number of interested California companies.  Business with California, not in California.

The court also found no specific jurisdiction.  The licensing with California companies appears to have been on a non-exclusive basis (at least vis-à-vis the asserted patent), and thus could not support specific jurisdiction (citing Akro v. Luker and various district court decisions).  Likewise, sending the cease and desist and discussing licensing cannot support specific jurisdiction under Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc.  Finally, the cause of action did not “arise out of or relate to” defendant’s other “isolated and sporadic” contacts. 

The court also rejected Autogenomics plea for jurisdiction based on “fairness and reasonableness,” because OGT was a foreign patentee and had allegedly “evaded” California jurisdiction before.  The court declined, noting that 35 U.S.C. § 293 guaranteed at least one appropriate U.S. venue for Autogenomics.