The U.S. Court of Appeals for the Federal Circuit recently reiterated its rule that only activities directed to patent enforcement can give rise to specific (personal) jurisdiction in a declaratory judgment action. Radio Sys. Corp. v. Accession, Inc., Case No. 10-1390 (Fed. Cir., Apr. 25, 2011) (Bryson, J.).
Between November 2006 and February 2009, Accession (a New Jersey company) contacted Radio Systems (a Tennessee company) about a possible relationship for marketing a pet door invention (the Wedgit). During this time, the U.S. Patent and Trademark Office (USPTO) granted Accession a patent. Accession’s representative traveled to Tennessee in April 2009 to demonstrate the Wedgit and signed a nondisclosure agreement (NDA) with Radio Systems. The NDA included a forum selection clause, specifying U.S. District Court for the Eastern District of Tennessee for any dispute that might arise from the subject matter of the NDA.
Through its New Jersey counsel, in August 2009, Accession first contacted Radio Systems about enforcing its patent. Accession’s counsel also contacted the USPTO about Radio Systems’ application covering its pet door (the SmartDoor). In November 2009, Radio Systems filed a complaint in the Eastern District of Tennessee seeking declaratory judgment of non-infringement and invalidity of the Accession patent. Accession moved for dismissal for lack of personal jurisdiction. The lower court granted Accession’s motion, and Accession then filed its own complaint alleging patent infringement in the District of New Jersey. Radio Systems appealed the dismissal of its earlier failed DJ case, and the NJ court stayed its case pending the appeal.
Judge Bryson penned the Court’s unanimous decision rejecting all of Radio Systems’ arguments. First, the Court emphasized patent law policy of providing a patentee with wide latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum. This wide latitude includes the ability to send enforcement letters that include warnings, threaten infringement suits, or offers to license the patent. Based on this policy, the Court, citing its 2008 decision in Avocent Huntsville v. Allen Ins’t (see IP Update, Vol. 12, No. 1) reiterated that only those activities of the patentee that relate to the enforcement or defense of the patent can give rise to specific (personal) jurisdiction in a declaratory judgment action. Accession’s contacts prior to August 2009, including the April 2009 meeting, were not related to the enforcement of the patent and were inapposite to the issue of personal jurisdiction, especially as Radio System pled specific jurisdiction (based on related event) rather than general jurisdiction. Only those contacts after August 2009 fell squarely in the bounds of patent law DJ policy.
Second, Judge Bryson held that extra-judicial enforcement efforts (i.e., Accession’s counsel contacting the USPTO to alert the examiner of a pending Radio Systems patent application about Accession’s issued prior art patent) must stand on their own to be sufficient for specific jurisdiction. Here, those efforts were directed to the USPTO in Virginia. Third, the Court rejected Radio Systems’ assertion that the forum selection clause of the NDA was dispositive. Judge Bryson held that the subject matter of the NDA was “confidential information.” Since Accession’s patent had issued and the SmartDoor was necessarily already in the possession of Radio Systems as of April 2009, the later enforcement activities of Accession were not captured by the forum selection clause.
Practice Note: Only enforcement or defense activities by a patentee directed to the forum state can give rise to specific (personal) jurisdiction in a declaratory judgment action. Without more, mere communications providing information about the patent—even if warnings, threats of litigation or offers for licensing are included—are insufficient to give rise to personal jurisdiction over a patentee in a foreign forum.