In a split panel decision, the U.S. Court of Appeals for the Federal Circuit examined the requirements for personal jurisdiction in a declaratory judgment action in the case of Avocent Huntsville Corp. et al. v. Aten Int’l Co., Ltd., Case No. 07-1353 (Fed. Cir., Dec. 16, 2008) (Linn, J.; Newman, J., dissenting).
Avocent and Aten are competitors in the keyboard-video-mouse switch market. In 2007, Avocent filed a declaratory judgment action against Aten in the U.S. District Court for the Northern District of Alabama, its home district. As the basis of personal jurisdiction, Avocent pled that Aten had sent a letter to Avocent in Alabama, a letter to Avocent’s counsel in Virginia and a letter to Amazon.com in Washington, alleging that Avocent’s products infringed Aten’s patents. Avocent also pled that Aten had placed its products in the “stream of commerce” intending for those products to reach the Northern District of Alabama, and therefore jurisdiction was proper under World-Wide Volkswagen.
First, the Court found that the “stream of commerce” theory was insufficient to establish general personal jurisdiction. With respect to specific personal jurisdiction, the Court found that, for a declaratory judgment action, the claim arises out of the patentee’s accusations of infringement, not the making, using or selling of the product. Accordingly, in order to demonstrate jurisdiction there must be sufficient contact with the forum relating to the accusations for jurisdiction to be proper. Further, because of “principles of fair play and substantial justice afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum,” there must be an additional act other than sending letters to the declaratory judgment plaintiff, for example, communication with a licensee in the forum. Based on the facts in this case, the Court found that jurisdiction was not proper. Although the court expressed concerns that its ruling would permit foreign patentees to shield themselves from U.S. patent law by making it difficult to obtain jurisdiction, the court noted that 35 U.S.C. § 293 confers personal jurisdiction over patentees on the U.S. District Court for the District of Columbia.
Judge Newman dissented from the decision, finding that Aten’s contacts with the Northern District of Alabama from regular sales of its products, as well as from the infringement accusations sent to Avocent in the forum, were sufficient to grant personal jurisdiction. In addition to the concerns about foreign patentees discussed by the majority, Judge Newman also raised the concern that the majority’s decision would keep pendent state law claims from being raised in a declaratory judgment action, as the District of Columbia court could find that pendent jurisdiction did not cover those claims.