Avocent Huntsville Corp. v. Aten Int'l (Fed. Cir. 2008)
Avocent (of Huntsville, Alabama) sued Aten (of Taiwan) for a declaratory judgment of non-infringement and invalidity. In a split appellate decision, the majority (Judges Schall and Linn) found that the district court lacked personal jurisdiction over Aten. The dissent (Judge Newman) would have allowed the Northern District of Alabama court to proceed with the declaratory judgment action.
Patent litigation follows the Supreme Court's well trod standards for determining whether a court has personal jurisdiction over the parties. Courts speak in the language of minimum contacts, purposeful availment, and traditional notions of fair play. At base, the facts of each case is individually assessed to determine whether those notions have been satisfied. For specific jurisdiction in the declaratory judgment setting, the courts must also determine whether the DJ claim "arises out of or relates to" the DJ defendant's contacts with the state.
The contacts here include (1) an infringement threat letter from Aten to Avocent mailed to Alabama and to Amazon.com; (2) distribution and sale of Aten products in Alabama through a subsidiary corporation; (3) Aten's previous patent enforcement litigation in Texas and the ITC.
The Federal Circuit has repeatedly held that a threat letter alone is insufficient to create personal jurisdiction. Rather, for specific personal jurisdiction, the threat letter must accompany other activities related to the DJ action. In that vein, the majority also held that Aten's "mere acts" of importing and selling products in the Alabama forum do not count as other activities because those sales do not "relate in any material way to the patent right that is at the center of any declaratory judgment claim." Finally, personal jurisdiction is examined on a state-by-state bases. Thus, the Aten's prior lawsuits in Texas and the ITC do not impact the issue of personal jurisdiction in Alabama. Open and shut.
In dissent, Judge Newman noted, inter alia, the lack of an alternative forum for the complaint and the existence of Alabama state law claims.