Personal Jurisdiction: Is it Still Federal Circuit Law?

Apple Inc. v. Zipit Wireless, Inc., 30 F.4th 1368 (Fed. Cir. 2022).

This is a personal jurisdiction case. Apple filed a declaratory judgment action in N.D. Cal. against the patentee Zipit.  The district court dismissed the case — finding that Zipit had insufficient contacts with the state of California.  On appeal, however, the Federal Circuit reversed.  The court instead concluded that Zipit had sufficient “minimum contacts” with the state and that the exercise of jurisdiction is not unreasonable.  The crux of the decision is as follows:

[T]he district court read our precedent as applying a bright-line rule that patent infringement notice letters and related communications can never form the basis for personal jurisdiction. … [T]he district court erred in this regard.

Id.  Personal jurisdiction doctrine has strong Federalism components.  Even though patent cases are filed in Federal Court run by our National Government, those courts are limited in power by the particular State where they are located.  For example, a Federal Court located in California only has power over parties with sufficient ‘minimum contacts’ with the state such that its exercise of jurisdiction would be reasonable and fair.

The Federal Circuit has repeatedly stated that exercise of personal jurisdiction over a patentee is improper when the company’s only related “contacts were for the purpose of warning against infringement or negotiating license agreements.”  Breckenridge Pharm., Inc. v. Metabolite Laboratories, Inc., 444 F.3d 1356, 1364 (Fed. Cir. 2006); Hildebrand v. Steck Mfg. Co., Inc., 279 F.3d 1351, 1353 (Fed. Cir. 2002); Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998) (three warning letters were insufficient).  As the court explained in Red Wing, “[f]airness and reasonableness demand that a patentee be free to inform a party who happens to be located in a particular forum of suspected infringement without the risk of being subjected to a law suit in that forum.”

Zipit had been in repeated contact with Apple, but only in the context of informing Apple of its infringement and seeking to license the patent. The Zipit district court applied these cases to the facts at hand and concluded that, “all of Zipit’s contacts in California, including its in-person meetings, ‘were for the purpose of warning against infringement'” and Zipit had no binding contractual relationship in the form. “Accordingly, the Court lacks jurisdiction over Zipit.” Apple Inc. v. Zipit Wireless, Inc., 5:20-CV-04448-EJD (N.D. Cal. Feb. 12, 2021).   The district court had particularly concluded that jurisdiction was reasonable under Burger King, but was barred by the Federal Circuit’s particular case law regarding warning letters and negotiations.

While Zipit was on appeal, the Federal Circuit decided Trimble Inc. v. PerDiemCo LLC, 997 F.3d 1147 (Fed. Cir. 2021).  Trimble is important because of its approach of cabining-in the Red Wing Shoe line of cases. In truth, it effectively overruled Red Wing Shoe despite being decided by a three judge panel led by Judge Dyk.  In particular, Trimble distinguished between the limited contacts in Red Wing Shoe that were simply “informing” as opposed to the more “extensive” contacts by the patentee in Trimble.  Thus, under Trimble, the new rule of law is that “amplified” or “extensive” contacts with the forum can be sufficient, even if all the contacts are tied to informing a party of accused infringement and/or seeking a license.

In Zipit then, the appellate court followed Trimble‘s lead stating that “there is no general rule that demand letters can never create specific personal jurisdiction.” Zipit (quoting Trimble).  The court further explains that the limitations in Red Wing Shoe should be seen as a factor in a court’s analysis of reasonableness under Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985).

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Personal Jurisdiction as Not Patent Law Specific

The Federal Circuit has for many years applied its own law to personal jurisdiction questions even though the doctrine is procedural in nature. Unlike questions of inconvenient venue, the court has found that jurisdiction is “intimately involved with the substance of the patent laws.” On the other hand, for convenient venue questions the court applies the law of the regional circuit court of appeals.

In Trimble and now in Zipit, the court explains that since that time the Supreme Court has now made it clear that constitutional personal jurisdiction questions cannot be determined by appeal to “special patent policies.” In Particular, in its 2017 SCA Hygiene decision, the Supreme Court stated that “[p]atent law is governed by the same … procedural rules as other areas of civil litigation.”

In these pair of cases, the Federal Circuit has largely brought its doctrine back in line with that of other circuits with a holding that personal jurisdiction is not patent law specific.  In Trimble though, the court continued to hoe the line that personal jurisdiction is a question of “Federal Circuit law” because the issue is “intimately involved with the substance of the patent laws.” Quoting Avocent (Fed. Cir. 2008).  The Zipit court left that statement from its opinion.

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7 thoughts on “Personal Jurisdiction: Is it Still Federal Circuit Law?

  1. 3

    Hi Dennis– Thank you for this nice article. I am one of those two inventors. My partner and I built the prototype in my in-law’s basement. It seemed to produce astonishing results, removing even intentional contamination (crayon scribbling!) to an undetectable level, even under bright lights using microscopic examination. Of course we could not afford sophisticated laser-scattering metrology tools. Texas Instruments bought our first machine (god love them) to do essentially the impossible, which they knew. (For years they had searched for a way to remove submicron particles.). Long story short, eventually we discovered a new alcohol drying process (Direct Displacement) that ushered in a whole new generation of microchips. CFM Technologies eventually went public, and made many people, both inside and outside the company, very happy. It was a wonderful journey for which I am forever grateful.

  2. 2

    The Federal Circuit has for many years applied its own law to [everything] even though the doctrine is procedural in nature.
    Fixed it for you. The Federal Circuit seems unencumbered by precedent.

  3. 1

    Thanks Dennis, and I’m curious if you think that “cease and desist” letters are more likely to provide personal jurisdiction in a district than a letter with “enclosed is a patent No. XXXXXX available for licensing for your product xxxxx.”

    1. 1.1

      Also Dennis, if the Fed. Cir. did consistently apply a general personal jurisdiction sufficiently test for DJ suits against other alleged torts, rather than its own test for patent DJ suits, what would that case law now look like?

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