By Dennis Crouch
The Supreme Court will soon consider whether to review what I see as an important Federal Circuit decision finding personal jurisdiction based solely on a patentee’s use of Amazon’s private patent enforcement system. In Lighting Def. Grp. LLC v. SnapRays LLC, No. 24-524 (petition filed Nov. 5, 2024), Arizona-based LDG submitted a patent infringement complaint against Utah-based SnapPower through Amazon’s Washington-based Patent Evaluation Express (APEX) program. To be clear: this is a private arbitration system that relates to selling on Amazon – it is not a federal court case. Under APEX, Amazon notifies accused sellers who have three weeks to either participate in Amazon’s evaluation process, settle with the patent owner, or file a declaratory judgment action – otherwise their listings are removed.
SnapPower sued in Utah federal court seeking a declaratory judgment of non-infringement and invalidity. However, the district court dismissed for lack of personal jurisdiction since LDG (an AZ company) had no contacts with Utah. On appeal, the Federal Circuit reversed, holding that LDG’s use of the APEX system knowing it would affect SnapPower’s Utah operations was sufficient to create jurisdiction there. The cert petition argues this conflicts with Supreme Court precedent requiring contacts with “the forum State itself, not the defendant’s contacts with persons who reside there.” Walden v. Fiore, 571 U.S. 277 (2014).
The Question Presented:
Whether a defendant subjects itself to personal jurisdiction anywhere a plaintiff operates simply because the defendant knows its out-of-forum conduct “would necessarily affect marketing, sales, and other activities” within the forum—even though the defendant has no contacts with the plaintiff or the forum whatsoever.
Writing for a unanimous panel, Chief Judge Moore explained that LDG “purposefully directed” its activities at Utah when it submitted the APEX Agreement targeting SnapPower’s listings. The court emphasized that LDG knew Amazon would notify SnapPower of the complaint and that, absent action by SnapPower, its listings would be automatically removed, “necessarily affecting sales and activities in Utah.” The Federal Circuit distinguished earlier cases finding cease-and-desist letters insufficient for jurisdiction, explaining that the APEX process “goes beyond a cease and desist letter because, absent action by SnapPower in response to the APEX Agreement, SnapPower’s listings would have been removed from Amazon.com.”
The Federal Circuit also rejected LDG’s reliance on Walden v. Fiore by reasoning that LDG’s actions through APEX would affect not just SnapPower but also “marketing, sales, and other activities within Utah.” According to the appellate panel, LDG’s situation aligned more closely with Calder v. Jones, where jurisdiction was proper because the effects of the defendant’s conduct connected it to the forum state itself.
The cert petition argues this decision conflicts with Supreme Court precedent, particularly Walden. In Walden, the Court held that personal jurisdiction must be based on defendant’s contacts with “the forum State itself, not the defendant’s contacts with persons who reside there.” The petition contends that by focusing on the “effects” in Utah rather than actual forum contacts, the Federal Circuit’s holding revives an expansive reading of Calder v. Jones, 465 U.S. 783 (1984), that Walden expressly rejected.
In my view, the Federal Circuit erred here. While initiating APEX review 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. The Supreme Court’s intervention could helpfully clarify when virtual enforcement activities create real-world jurisdictional consequences.
The Court is set to consider the petition at its January 10, 2025 conference. SnapPower has waived its right to respond, though the Court may still call for a response before acting on the petition.
Research note: The cert petition also cites several circuit court cases showing a post-Walden split, including Ariel Invs. v. Ariel Capital Partners LLC, 881 F.3d 520 (7th Cir. 2018) (rejecting effects-based jurisdiction) and Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063 (10th Cir. 2008) (embracing broader “bank shot” theory of jurisdiction). For additional academic discussion, see Allison Marie Isaak, Picking Fights in Missouri: Baldwin’s Non-Rule Embraces the Minority Approach to Internet Libel Jurisdiction, 76 Mo. L. Rev. 1265 (2011) (analyzing varying interpretations of Calder‘s effects test).