The Long Arm of APEX: When (and Where) does Amazon’s Private Enforcement Mechanism Create Personal Jurisdictional

By Dennis Crouch

This case would be great for a 2L law review note.

Back in May 2024, the Federal Circuit issued an important decision holding that a patentee’s use of Amazon’s patent enforcement process (APEX) to target an alleged infringer’s listings can subject the patent owner to specific personal jurisdiction in the alleged infringer’s home state – despite no direct contacts with that state.  SnapRays, LLC v. Lighting Defense Group, LLC, No. 2023-1184 (Fed. Cir. 2024). The patentee has now petitioned for en banc rehearing, arguing that the opinion conflicts with prior Federal Circuit precedent and makes a holding that the Supreme Court at least implicitly rejected in Walden.  The case is important as APEX and other similar private sales-channel enforcement processes become increasingly popular. SnapRays En Banc Petition.

My view: The Federal Circuit erred here. While initiating the APEX action would certainly open the patentee up to a declaratory judgment lawsuit, that lawsuit must be filed in a jurisdiction where the patentee has sufficient minimum contacts, not simply wherever the accused infringer happens to be located, even if (as here) the patentee knew of the accused infringer’s location.

In the underlying case, SnapRays, a Utah company, sued LDG, a Delaware company based in Arizona, in Utah federal court seeking a declaratory judgment of non-infringement after LDG initiated an APEX action against SnapRays’ Amazon listings.  The patent at issue is U.S. Patent No. 8,668,347, claiming an electrical outlet faceplate arrangement that allows for USB charging ports.

The district court dismissed for lack of personal jurisdiction over LDG, but the Federal Circuit reversed. It held that LDG purposefully directed extra-judicial patent enforcement activities at SnapPower in Utah, subjecting it to specific jurisdiction there.

If you recall 1L civil procedure, the issue here whether the out-of-state patentee’s enforcement actions were sufficiently directed toward the state of Utah such that due process and  the notion of “fair play” would permit a Federal Court sitting in Utah to exert power over the patentee.

According to LDG, the Federal Circuit opinion improperly relied on Calder v. Jones, 465 U.S. 783 (1984) and “[t]wo cases that Walden [2014] had implicitly rejected.” —Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063 (10th Cir. 2008) and Bancroft & Masters, Inc. v. Augusta Nat’l, Inc., 223 F.3d 1082 (9th Cir. 2000). LDG argues that “Walden, by itself, disposes of this case” because it requires minimum contacts between the defendant and the forum state, not just contacts with the plaintiff in that state.  Bancroft, for instance, is no longer considered good law by at least one district court in the 9th Circuit. Bluestar Genomics v. Song, 2023 WL 4843994, at *21 (N.D. Cal. 2023) (“Bancroft is no longer good law.”).  As noted in the petition, my prior discussion of the case also highlighted the tension with Walden.

In Walden v. Fiore, the Supreme Court held that a defendant’s suit-related conduct must create a substantial connection with the forum State itself, not just “persons who reside there.” 571 U.S. 277 (2014). The Court explained that while “physical presence in the forum is not a prerequisite to jurisdiction, . . . physical entry into the State—either by the defendant in person or through an agent, goods, mail, or some other means—is certainly a relevant contact.” Importantly, the Court emphasized that “mere injury to a forum resident is not a sufficient connection to the forum.”

LDG contends that under Walden‘s reasoning, its “complaint to Amazon in Washington did not create sufficient contacts with Utah” because “LDG directed nothing at Utah.” It argues the Federal Circuit opinion improperly focused on the plaintiff’s location and the effects on the plaintiff, rather than LDG’s own suit-related contacts (or lack thereof) with Utah.

The petition also argues the opinion conflicts with the Federal Circuit’s own post-Walden precedent applying these jurisdictional principles, including Maxchief Invs. Ltd. v. Wok & Pan, Ind., Inc., 909 F.3d 1134 (Fed. Cir. 2018), Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324 (Fed. Cir. 2008), and Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785 (Fed. Cir. 2011). LDG argues these cases held that “enforcement activities taking place outside the forum state do not give rise to personal jurisdiction in the forum,” even if they have “effects” there.  Quoting Radio Sys.

In Maxchief, the Federal Circuit held that a defendant’s patent infringement suit in California against a company selling the plaintiff’s allegedly infringing products “did not create sufficient contacts with Tennessee” (the plaintiff’s home state) “simply because [defendant] directed the lawsuit at an entity (Staples) that [defendant] knew had a Tennessee connection.” The court explained that jurisdiction “must be based on intentional conduct by the defendant directed at the forum State” itself.

LDG argues the opinion here improperly distinguished Maxchief and the other Federal Circuit cases through “constitutionally irrelevant distinctions” not focused on LDG’s own contacts with Utah. According to LDG, the opinion “creates irreconcilable conflicts within this Court’s precedents, warranting rehearing.”

Finally, LDG contends the opinion splits from other courts that have correctly applied Walden’s directive to focus on the defendant’s contacts with the forum, not just the plaintiff’s location or where effects are felt. The petition cites several examples of regional circuits and district courts interpreting Walden to require intentional conduct by the defendant aimed at the forum state. E.g., Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064 (9th Cir. 2017); C5 Med. Werks, LLC v. CeramTec GMBH, 937 F.3d 1319 (10th Cir. 2019).

The Federal Circuit panel in SnapRays had distinguished cases involving ordinary cease-and-desist letters, reasoning that “LDG did more than send a cease and desist letter” by initiating the APEX process that would automatically remove SnapRays’ listings absent action by SnapRays. But LDG argues this was error because the APEX request was directed at Amazon in Washington, and foreseeability of harm to the plaintiff in the forum is not enough under Walden and other binding precedent. “LDG’s conduct was directed at Amazon, whose listings are accessible worldwide. LDG’s conduct has no ‘connection with the forum State,’ Walden.

5 thoughts on “The Long Arm of APEX: When (and Where) does Amazon’s Private Enforcement Mechanism Create Personal Jurisdictional

  1. 2

    In other news newman is said to have lost suit.

  2. 1

    The two main arguments that LDG raises in this petition aren’t particularly compelling.

    First, LDG’s reliance on the Supreme Court’s decision in Walden disappointingly failed to address the Federal Circuit panel’s attempt to distinguished Walden.

    Walden was not a case involving injury to a business with operations in the forum state. It was a civil rights case involving in individual who claimed that a DEA agent submitted a false affidavit in order to seize $97,000 in cash that plaintiff was found carrying at an airport in Atlanta. The only connection between the Georgia-based DEA agent and Nevada was the plaintiff, and the injury the plaintiff suffered was entirely personal to him, i.e., the loss of his cash. There was no suggestion that the DEA agent’s conduct caused any downstream or ripple effects in Nevada. Walden, in other words, was a case in which the defendant’s only connection with Nevada was the plaintiff.

    But in the SnapRays case, the panel noted that LDG’s submission of the APEX complaint affected sales, marketing, and other activities in Utah. It’s not hard to see why that could be the case, as the APEX submission would have resulted in automatic takedown of the SnapRays products from Amazon, obviously impacting its Utah-based employees, contractors, and others. It is disappointing that the petition didn’t even attempt to address this aspect of the panel’s decision; there were certainly arguments LDG could have made on this point that may have made its petition stronger.

    Second, LDG’s petition seems to lean too heavily on the fact that the APEX complaint was submitted through Amazon (located in Washington) and was not sent directly to SnapRays in Utah. This feels like a “form over substance” argument, as LDG certainly knew that Amazon would immediately forward the APEX complaint to SnapRays, and that the APEX complaint would result in the automatic takedown of SnapRays’ products from the Amazon website. And according to the panel decision, LDG also knew that SnapRays was in Utah.

    Policy wise, I understand the arguments on both sides, but I doubt the panel’s decision (if it stands) will create the types of doom-and-gloom scenarios the petition predicts. It’s also possible that the decision may have an unintended benefit of making parties think more carefully about submitting take-down requests through web portal enforcement systems like APEX. There is actually quite a bit of abuse with these enforcement systems, with web portals often getting inundated with frivolous and anti-competitive complaints (often during heavy shopping times like Christmas), in order to remove a competitor’s products from the site. It’s possible that expansion of personal jurisdiction over parties that submit these APEX complaints may, on balance, have a chilling effect on some of the more questionable complaints that are submitted.

    1. 1.1

      “ frivolous and anti-competitive complaints (often during heavy shopping times like Christmas)”

      Who is old enough to remember Amazon v Barnes & Noble? Ah, the good old days.

    2. 1.2

      Nice comments LR.

Leave a Reply

Your email address will not be published. Required fields are marked *

You can click here to Subscribe without commenting

Add a picture