Infringement Enforcement Letters Can Subject Sender to DJ Jurisdiction and Venue

In Jack Henry & Associates, Inc., et al. v. Plano Encryption Technologies LLC, 2016-2700 (Fed. Cir. Dec. 7, 2018), the Court reversed and remanded the district court and held that infringement enforcement letters sufficed to establish personal jurisdiction, and therefore venue, in a declaratory judgment (DJ) action. Plano Encryption Technologies (PET) describes its “sole business is to enforce its intellectual property.” To that end, PET sent infringement enforcement letters to eleven Texas banks in the Northern District of Texas. PET’s registered address was in the Eastern District of Texas. After the banks’ indemnitor brought a DJ action in the Northern District, PET moved for—and was granted—dismissal for lack of venue. The district court reasoned that under 28 U.S.C. § 1391(d), which governs the residency of corporations in states with multiple districts like Texas, PET was not subject to venue in the Northern District because it was not subject to personal jurisdiction there.  

On appeal, the Court reversed and remanded, finding that personal jurisdiction, and therefore venue, would be reasonable and fair in the Northern District. The Court rejected PET’s argument that Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998) or Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324, 1333 (Fed. Cir. 2008) created a “special rule” against infringement enforcement letters establishing jurisdiction in a DJ action. Instead, the Court found that PET had purposefully directed its activities to Northern District businesses and failed to make a “compelling case” that the exercise of jurisdiction would be unreasonable and unfair.

Judge Stoll, joined by Judge Wallach, additionally wrote that the court should more directly address Red Wing Shoe and its progeny as contrary to Supreme Court precedent for suggesting that a comprehensive analysis of fairness factors is not required in cases involving infringement enforcement letters.