Clarifying what type of patent enforcement action might create personal jurisdiction, the US Court of Appeals for the Federal Circuit found that where a patent owner visits a forum to negotiate licensing, that activity supports sufficient minimum contacts to make personal jurisdiction fair and reasonable. Xilinx, Inc. v. Papst Licensing GmbH & Co. KG, Case No. 15-1919 (Fed. Cir., Feb. 15, 2017) (Dyk, J).
Papst Licensing, a German non-practicing entity, sent two patent infringement notice letters to Xilinx, a California company, and traveled to California to negotiate a license to its patents.
Eventually, Xilinx filed for a declaratory judgment in California seeking a declaration of non-infringement and invalidity of Papst’s patents. The district court dismissed the case for lack of personal jurisdiction over Papst. The district court concluded that under Federal Circuit precedent, Papst’s efforts to license its patents to Xilinx were “enforcement activities” that were irrelevant to jurisdiction and therefore insufficient to create personal jurisdiction. Xilinx appealed.
The Federal Circuit reversed, noting that the California Long Arm Statute is coextensive with the Due Process Clause and therefore only a due process analysis was required. After confirming its analysis, the Court found that the district court in California had specific (as opposed to general) personal jurisdiction over Papst.
The Federal Circuit noted that Papst had purposefully directed its activities to California by sending notice letters threatening an infringement suit and traveling to California to meet with Xilinx. Xilinx’s declaratory judgment related to these relevant contacts. The Court explained that, except in rare cases, minimum contacts make jurisdiction presumptively reasonable unless the defendant can provide a compelling case that jurisdiction is unreasonable based on, e.g., the burden on the defendant, the forum state’s interest in adjudicating the dispute, the plaintiff’s interest in obtaining convenient and effective relief, the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, or the shared interest of several states in furthering fundamental substantive social policies. The Federal Circuit noted that the state of California had a vested interest in protecting its residents from unwarranted infringement claims and that Xilinx had an interest in using a forum near its home. Xilinx’s declaratory judgment action was an efficient method of resolving the dispute, and there was no conflict with other states.
Papst argued that a California forum presented a burden. The Federal Circuit had previously found (in its 1998 Red Wing Shoe and its 2008 Avocent Huntsville v. Aten International decisions) that enforcement activity undertaken within a jurisdiction was by itself insufficient to meet the reasonableness requirement for personal jurisdiction. The Federal Circuit disagreed, noting that here, unlike the prior cases, Papst had not stopped at cease-and-desist letters, but had traveled to California to meet with Xilinx. By traveling to California, Papst created a “territorial presence” that “reinforce[d] the reasonable foreseeability of suit there.” The Court reasoned that the lack of burden on Papst was further supported by its foreign non-practicing entity status, which deprives it of a home forum and requires it to litigate far from home regardless, and the fact that it had litigated in California previously.