Personal Jurisdiction in DJ Action Is Established by Patent Enforcement Efforts, Not Commercialization Efforts
April 25, 2011
Last Month at the Federal Circuit - May 2011
Judges: Bryson (author), Linn, Dyk
[Appealed from: E.D. Tenn., Judge Varlan]
In Radio Systems Corp. v. Accession, Inc., No. 10-1390 (Fed. Cir. Apr. 25, 2011), the Federal Circuit affirmed the dismissal of Radio Systems Corporation’s (“Radio Systems”) DJ action for lack of personal jurisdiction.
Radio Systems, a Delaware corporation with its principal place of business in Tennessee, manufactures and sells pet-related products including its patented pet access door (the “SmartDoor”). Accession, Inc. (“Accession”) is a New Jersey corporation with its principal place of business in New Jersey. Accession is the owner of U.S. Patent No. 7,207,141 (“the ’141 patent”), directed to a portable pet access door (the “Wedgit”) that can be inserted into sliding glass doors. Although the parties communicated regarding business opportunities, and Accession demonstrated the Wedgit to Radio Systems in Tennessee subject to a confidentiality agreement, the parties never agreed to a licensing arrangement.
Accession communicated with the PTO regarding its ’141 patent, and the PTO withdrew its notice of allowance for Radio Systems’ patent application on its SmartDoor invention. Accession sent cease-and-desist letters to Radio Systems, asserting that the SmartDoor infringed the ’141 patent and suggesting that the dispute be settled through licensing. Radio Systems filed a complaint against Accession in the U.S. District Court for the Eastern District of Tennessee, seeking a DJ of noninfringement and invalidity of the ’141 patent. On Accession’s motion, the district court dismissed Radio Systems’ complaint for lack of personal jurisdiction.
The Federal Circuit affirmed the dismissal, holding that the district court did not have specific personal jurisdiction over Accession. First, the Court held that Accession’s early communications with Radio Systems were focused on marketing rather than patent enforcement, and therefore did not establish personal jurisdiction. The Court reasoned that “only enforcement or defense efforts related to the patent rather than the patentee’s own commercialization efforts are to be considered for establishing specific personal jurisdiction in a declaratory judgment action against the patentee.” Slip op. at 8.
Second, the Federal Circuit held that personal jurisdiction was not established by the cease-and-desist letters from Accession to Radio Systems or by the interactions between Accession and the PTO. Regarding the latter, the Court reasoned that the PTO contacts were directed at Virginia (the site of the PTO) rather than Tennessee, and that “enforcement activities taking place outside the forum state do not give rise to personal jurisdiction in the forum . . . .” Slip op. at 12.
Finally, the Federal Circuit held that Accession had not consented to personal jurisdiction in the confidentiality agreement with Radio Systems. The Court reasoned that even though Accession agreed to personal jurisdiction in Tennessee for actions arising under the agreement or out of subject matter relating to the agreement, the DJ action did not arise under the agreement. Additionally, the DJ action did not arise out of subject matter relating to the agreement, because the agreement did not pertain to the ’141 patent or the potentially infringing SmartDoor. The Federal Circuit thus sustained the district court’s determination that the contacts between Accession and Tennessee were insufficient to give rise to personal jurisdiction over Accession.
Summary authored by John "Jack" A. Kelly, Esq.