Yesterday the Federal Circuit heard oral argument in Trimble Inc. v. PerDiemCo LLC, a patent case we have been following because it attracted an amicus brief. In this case, Trimble, the plaintiff-appellant, asks the Federal Circuit to reverse a district court’s dismissal of its declaratory judgment action. Trimble argues that the district court wrongly determined that it lacked personal jurisdiction over the defendant-patent owner, PerDiemCo. This is our argument recap.
Dan L. Bagatell argued for Trimble. He began by first asserting that this is a personal jurisdiction case that “boils down to a due process clause issue.” Judge Dyk, however, immediately interrupted him to ask if it was Trimble’s contention that the Federal Circuit case of “Red Wing Shoe [is] distinguishable” because here there “was a threat of suit and that the threat of suit did not exist in Red Wing Shoe.” Bagatell responded that the “contacts here are more than in Red Wing Shoe: there were twenty-two contacts over three and a half months.” Moreover, Bagatell emphasized, here “there is more than a patent owner saying wouldn’t you like to license my patent.” Instead, he explained, PerDiemCo “deliberately threatened two different related companies and specifically accused them of infringement and to take them to court.” Bagatell contended the “facts here are more similar to Jack Henry” because there were “repeated, specific threats to sue.”
Responding to a question posed by Judge Dyk on whether “the number of communications or threats to sue make a difference,” Bagatell argued that this is not a dispute over minimum contacts, this is about the reasonableness prong and under the reasonableness prong there is not a bright line rule as Red Wing Shoe might be read to suggest. In addition, Bagatell reiterated that this case is more similar to another Federal Circuit case, Jack Henry, in contrast to the simple case of Red Wing Shoe.
Judge Newman then posed her own line of questions to Bagatell. Judge Newman began by agreeing with Bagatell that “Red Wing Shoe and Jack Henry say the facts need to be considered.” Furthermore, she stated that it is “not a matter of bright lines but reasonableness.” In response, Bagatell agreed with Judge Newman and stated that “[PerDiemCo is] arguing essentially that they can only be sued in the Eastern District of Texas, but they operate only out of DC.” Judge Newman then highlighted that PerDiemCo is incorporated in Texas. Bagatell responded by agreeing, but argued that “no one ever goes there.” Furthermore, Bagatell contended, “all contacts directed to plaintiffs [were] out of Washington, DC.”
Bagatell concluded his argument by saying that “the district court erred by dismissing the case under a single consideration, the supposed privilege to threaten an infringement suit without subjecting yourself to jurisdiction where your target resides.” Bagatell emphasized that this privilege “is contrary to [the Supreme Court’s decision in] Burger King” because “once you have minimum contacts established you weigh those factors against minimum contacts.” Therefore, he argued, since “we are dealing with reasonableness, we have to look at all [of the relevant] factors.”
Larry Sandell argued for PerDiemCo. After an extended back-and-forth with Judge Dyk over whether PerDiemCo had conceded the issue of minimum contacts, Sandell finally agreed that PerDiemCo had conceded the issue in its briefs. Judge Dyk then posed a question: “Why should we not as an en banc court overrule Red Wing Shoe—How is Red Wing consistent with Supreme Court law on the reasonableness prong?” In response, Sandell argued that the “Supreme Court mandates a flexible inquiry into whether personal jurisdiction would offend traditional notions of fair play and substantial justice and the precedence and policy of Red Wing Shoe can guide this court in its assessment of constitutional reasonableness.” Moreover, according to Sandell, “Red Wing affords sufficient latitude for a patentee to inform an accuser of his injury . . . without being haled into a far flung jurisdiction.” Sandell asserted that Red Wing Shoe‘s “policy fits squarely with the [Supreme Court’s] fourth fairness factor.”
Judge Newman stepped in to reiterate her view that “you have to look to the facts and determine what is reasonable.” Sandell responded by noting the facts here show PerDiemCo’s contacts with Northern District of California were limited. He asserted that “the record does not support th[e] contention that Trimble was hassled at all.” Furthermore, Sandell alleged, “all of the contacts were . . . reciprocal negotiations about a disputed patent claim.”
Sandell then attempted to distinguish an argument made in the amicus brief filed in this case. He claimed the amici’s argument, which “talked about sending claims to thousands of people,” is not a good faith accusation. Furthermore, he contended, whether a patentee acted in good faith is not the sole factor. Rather, he asserted, good faith “must be considered under the reasonableness factors.” Sandell attempted to distinguish the present case from Jack Henry because in that case, he said, the patentee “went after eleven targets in a single district,” “in lying to eleven banks in the same district” it acted in bad faith, and that “exceeds the . . . latitude” given to patent owners. In contrast, Sandell argued, here “there is no credible allegation of bad faith” and, in particular, a “threat of litigation. . . is not bad faith.”
Judge Dyk concluded PerDiemCo’s argument with a direct question: “why is the burden on the defendant here greater to litigate in the Northern District of California rather than in Iowa or Texas?” In response, Sandell stated that “it is because it is a farther jurisdiction.” Judge Dyk responded by asking if the answer “relates only to distance.” Sandell maintained that “distance is the main reason.”
In rebuttal, Bagatell emphasized three points. First, he pointed out what he believed to be a key error in PerDiemCo’s and the district court’s reasoning. While PerDiemCo “repeatedly discussed flexibility,” he argued, “in reality, this court has referred to Red Wing as an inflexible patent-specific rule, that is inconsistent with Supreme Court jurisdiction.” Second, Bagatell rebutted PerDiemCo’s position that Trimble did not identify any cases where personal jurisdiction was found with similar facts by reiterating that “we identified Jack Henry.” Finally, Bagatell concluded that, at “the end of the day, the burden was on PerDiemCo to make a compelling case that it was unreasonable to adjudicate in the Northern District of California.” According to Bagatell, “PerDiemCo’s position is that they want to sue where they want to be sued,” and, he said, “there is no constitutional right to sue in your favorite forum.”
We will keep track of this case and report on its disposition.