Venmill Industries, Inc. v. ELM, Inc., No. 14-cv-40064 (D. Mass. Apr. 22, 2015) [click for opinion]

Plaintiff brought a claim for a declaration that it was not infringing Defendant’s patent, as Defendant had claimed in a cease-and-desist letter its counsel sent to Plaintiff. Plaintiff further alleged that Defendant had licensed the patent to a U.S. subsidiary and had taken other actions related to the patent in the U.S.Defendant denied, through a declaration of its CEO, all alleged jurisdictional facts, other than owning the patent and sending the cease-and-desist letter. It argued that these facts were not sufficient to sustain either general or specific personal jurisdiction over it. The court agreed and dismissed the complaint.

The court first noted that jurisdictional issues in declaratory actions for non-infringement are governed by Federal Circuit law, and so applied that law to the case. It then set forth Plaintiff’s jurisdictional allegations, namely that Defendant owned the patent at issue, sent a cease-and-desist letter to Plaintiff alleging infringement of the same, had licensed the patent to a U.S. subsidiary, had purchased or contracted for services in connection with the patent, had directed money into the U.S. related to its enforcement of the patent, and communicated with persons in the U.S. related to the patent.

However, because a declaration of Defendant’s CEO refuted all of the allegations of Plaintiff, save that Defendant owned the patent and had sent the cease-and desist letter, and Plaintiff had not provided evidence to contradict this declaration, the court refused to credit the refuted allegations and continued with its analysis assuming only the uncontested jurisdictional facts.

Based on Federal Circuit precedent, the court found that sending the cease-and-desist letter—the only remaining allegation regarding activity directed to Massachusetts—was not sufficient for either a finding of general jurisdiction or specific jurisdiction in Massachusetts. It further found that the letter and ownership of the patent were insufficient to allow for use of Fed. R. Civ. P. 4(k)(2), the “federal long-arm statute.”  Specifically, it found that exercising jurisdiction based on those facts alone would not comport with the principles of “fair play and substantial justice” and thus would be not be consistent with the U.S. Constitution’s guarantee of due process.

Therefore, the court dismissed the complaint for Plaintiff’s failure to make a prima facie showing that Defendant was subject to personal jurisdiction. However, it noted that this did not leave Plaintiff without a means of seeking a declaratory action; pursuant to 35 U.S.C. § 293, a patent holder is subject to personal jurisdiction in the Eastern District of Virginia for any actions affecting its patent, unless it designates an alternative agent of service of process.  Therefore, Plaintiff could have proceeded with an action in that District, rather than in the District of Massachusetts.

Derek Soller of the New York office contributed to this summary.