Federal Circuit Again Finds Communications Attempting To Resolve A Patent Dispute Can Be A Basis For Personal Jurisdiction In Declaratory Judgment Action
On April 18, 2022, the United States Court of Appeals for the Federal Circuit (CAFC) reversed the dismissal of a declaratory judgment action for lack of personal jurisdiction by the United States District Court for the Norther District of California (NDCA). Apple, Inc. v. Zipit Wireless, Inc., No. 2021-1760 (Fed. Cir. Apr. 18, 2022). The CAFC found that the NDCA erred in applying a bright-line rule that patent infringement notice letters can never form the basis for personal jurisdiction.
Between 2013 and 2016, Zipit Wireless, Inc. (Appellee) — based in South Carolina — engaged in several rounds of written correspondence and six calls with Apple, Inc. (Appellant) and two in-person meetings at Appellant’s Cupertino, California headquarters in the NDCA related to Appellee’s assertion that Appellant infringed two patents directed to a wireless instant messaging device. During the parties’ discussions, Appellee kept Appellant apprised of the status of pending IPRs and escalated its allegations of infringement, including accusing Appellant of willful infringement.
In June 2020, Appellee filed suit alleging infringement of the same two patents in the United States District Court for the Northern District of Georgia but dismissed it two weeks later. Shortly thereafter, Appellant filed a declaratory judgment action in the NDCA, and Appellee moved to dismiss for lack of specific personal jurisdiction. The NDCA granted the motion to dismiss. Although it found that Appellant had established minimum contacts, and Appellee did not establish that the exercise of jurisdiction in NDCA would be unreasonable, it nevertheless declined to exercise jurisdiction because it would be unconstitutional when all of the contacts “were for the purpose of warning against infringement or negotiating a license agreement” and Appellee “lacked a binding obligation” in the NDCA, citing Federal Circuit precedent.
On appeal, the Federal Circuit reversed. The Federal Circuit found that the NDCA correctly found that Appellee had minimum contacts but erred in reading Federal Circuit precedent as creating a bright-line rule that communications directed to an attempted resolution of a patent dispute trumps all other reasonableness and fairness considerations. Citing its recent Trimble opinion, the Federal Circuit held that there is no general rule that demand letters can never create specific personal jurisdiction. The Federal Circuit further stated that, although there is a strong public policy favoring settlement, that policy cannot control the jurisdiction inquiry — it must be considered with the other Burger King factors.