Earlier this month, the Federal Circuit decided Trimble Inc. v. PerDiemCo LLC, a patent case we have been following because it attracted an amicus brief. The amicus brief argued that Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., “which held that patent licensing demand letters can never suffice to create personal jurisdiction over asserters of those patents, is inconsistent with controlling Supreme Court precedent.” Judge Dyk authored a unanimous panel decision reversing and remanding the district court’s decision not to assert personal jurisdiction over PerDiemCo. In the court’s view, its “more recent cases have concluded that, in the context of patent litigation, communications threatening suit or proposing settlement or patent licenses can be sufficient to establish personal jurisdiction.” This is our opinion summary.
In this case, PerDiemCo maintained that the district court did not have specific personal jurisdiction over it and that Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc. controls the outcome of this case.
Judge Dyk summarized the relevant background:
Trimble and ISE filed a complaint in the Northern District of California, where Trimble is headquartered, seeking a declaratory judgment that neither Trimble nor ISE infringed any of the patents that PerDiemCo asserted. Trimble and ISE did not claim that PerDiemCo was subject to the jurisdiction of the Northern District of California under general personal jurisdiction . . . but argued that PerDiemCo was subject to the court’s jurisdiction under a specific jurisdiction theory. PerDiemCo moved to dismiss on the ground that the district court lacked personal jurisdiction under Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc. . . . which stated that “[a] patentee should not subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement” because “[g]rounding personal jurisdiction on such contacts alone would not comport with principles of fairness.” . . . The district court held that it lacked specific personal jurisdiction over PerDiemCo . . . but concluded that Trimble had established the requisite minimum contacts because “PerDiemCo’s cease-and-desist letters and subsequent communications were purposefully directed at Trimble, a California resident,” . . . and Trimble’s declaratory judgment claim “‘arises out of or relates to’ PerDiemCo’s activities.”
The Federal Circuit first set out the two questions that determine whether a court has jurisdiction over an out-of-state defendant: “whether a forum state’s long-arm statute permits service of process and whether assertion of personal jurisdiction violates due process.” The court explained that because California’s long-arm statute extends to the reach of the Due Process Clause, the latter inquiry is key.
The panel then noted that Supreme Court precedent after Red Wing clarified its scope. For example, the Supreme Court has held that patent cases are subject to the same procedural rules as other civil cases, Judge Dyk explained. Furthermore, he continued, communications sent to another state may be sufficient to establish specific personal jurisdiction, dependent on the communications’ nature and scope. Lastly, he explained, Supreme Court precedent states “a broad set of defendant’s contacts” within a forum state is “relevant to the minimum contacts analysis.” Given these principles, the Federal Circuit concluded that there is no bright-line rule stating that demand letters cannot establish specific personal jurisdiction.
Turning to the facts of the case, the Federal Circuit found that PerDiemCo’s contacts–twenty-two communications in three months–were far greater than those in Red Wing, thus satisfying the minimum contacts test. These communications resembled an arms-length deal, the court explained, allowing the district court to exercise jurisdiction.
The Federal Circuit also determined that exercising jurisdiction in this case is not unreasonable under the notions of fair play and substantial justice. PerDiemCo, the court explained, does not incur an undue burden through litigation in the Northern District of California, and the district court also has a significant interest in hearing this case. Furthermore, the court held that Trimble, as a resident of California, has an interest in obtaining relief in a court in its home state. Additionally, the court indicated that the district court’s jurisdiction over these claims provides an efficient resolution to the dispute. Lastly, Judge Dyk explained that federal patent law governs the case regardless of the state in which it is heard, and so California’s interests in furthering fundamental substantive social policies do not conflict with that of another state’s interests.
Finding sufficient minimum contacts to establish personal jurisdiction and that the assertion of such jurisdiction is reasonable, the Federal Circuit reversed and remanded the district court’s judgment.