Declaratory Judgment: Personal Jurisdiction over Foreign Patent Holder

Autogenomics v. Oxford Gene Tech (Fed. Cir. 2009) 08-1217.pdf

The opposing viewpoints of Judges Newman and Moore continues to be seen in Federal Circuit decisions. This appeal arrived at the Federal Circuit after the Central District of California district court dismissed the case for lack of personal jurisdiction over the declaratory judgment defendant (and patent holder) Oxford Gene Technology.Writing for the majority, Judge Moore (joined by N.D. Ill. Judge Gettleman sitting by designation) affirmed the judgment. Judge Newman wrote in dissent.

Even in patent cases, a federal court's personal jurisdiction over parties is based on state boundaries. Here, the case was filed in a federal court sitting in California. When a defendant challenges personal jurisdiction, the court must consider two general factors: (1) whether the forum state’s long-arm statute permits service of process and (2) whether assertion of personal jurisdiction would violate due process." Most states have extended their long-arm statutes to the bounds of due process. Thus, the question collapses to a consideration of the US Constitutional as applied at the geographic state boundaries.

The Constitutional limits of due process can be met by either showing general personal jurisdiction (based on continuous and systematic contacts with the state) or specific personal jurisdiction (based on a defendant's activities in the state that relate to the cause of action.)

Focusing on specific personal jurisdiction, this case is in some ways a repeat of the court's 2008 Avocent holding that a patentee's efforts at commercialization are irrelevant to the specific jurisdiction question. Rather, the minimum contacts for specific jurisdiction must relate to "only enforcement or defense efforts related to the patent." Thus, although Oxford has licensed its patents to several California companies, those licenses do not work toward a finding of specific personal jurisdiction over the foreign company.

DJ Jurisdiction over a Non-US Company: Both the majority and dissent expressed concern that foreign patent holders may often fly under the radar in such a way that no US court would have personal jurisdiction. Of course, the patent statute deals with that potential eventuality. For a non-US patent holder, the District of Columbia Federal Court has jurisdiction "to take any action respecting the patent or rights thereunder" to the same extent "that it would have if the patentee were personally within the jurisdiction of the court." 35 USC 293.

Section 293 makes an exception for non-US patent holders who designate a US person to receive process. The statute does not indicate that such designation serves as consent to personal jurisdiction in the person's home location. However, cases have held that designating a US process agent under Section 293 operates as consent to personal jurisdiction. See In re Papst Licensing, 590 F. Supp. 2d 94 (D.D.C. 2008).

Section 293 reads as follows.

Every patentee not residing in the United States may file in the Patent and Trademark Office a written designation stating the name and address of a person residing within the United States on whom may be served process or notice of proceedings affecting the patent or rights thereunder. If the person designated cannot be found at the address given in the last designation, or if no person has been designated, the United States District Court for the District of Columbia shall have jurisdiction and summons shall be served by publication or otherwise as the court directs. The court shall have the same jurisdiction to take any action respecting the patent or rights thereunder that it would have if the patentee were personally within the jurisdiction of the court.

In the past year, about 11 patent infringement cases were filed in DC District Court.

Comments

[Paul F. Morgan]

As helpfully noted, 35 U.S.C. § 293 provides a way to sue foreign company owners of U.S. patents [in the D.C.D.C.].
But what about a way to sue foreign company INFRINGERS with similarly slim contacts with any U.S. forum? [Other than perhaps some importers at the ITC?]

[The Big Lebowski]

Paul, I don't follow your question. If the foreign company is not making, using or selling an infringing product in the USA (i.e. if there's no importation), what's there to sue them for? There's no infringement. Ditto for practicing a process covered by a US patent: until the product made by the process is imported into the US, there's no infringement. And if they DO engage in one of those activities, it must occur in one of the states, so bingo - infringement and jurisdiction in the local DC, or in the case of importation, before the ITC if the patentee wants. It sounds from your question as if you'd like to sue a foreign company in the USA for activites that take place outside the USA. If that's the case, you should probably sue it in its home country for infringement of the corresponding patent in that country.

But then I know you're familiar with the case law and know that the Fed Cir has circumscribed the ability to sue in the USA for acts that take place outside the USA. So you're probably asking an intelligent question, I just don't understand what it is.

[6]

I think he is asking about how to sue the foreign corporations who have very little presence in the US but who are importing products. I think that the answer is the ITC, but he's asking if there are any other places. Maybe the local DC where the importation occurred? idk.

[6]

I was just reading www.1201tuesday.com and I got to thinking. When the big boys get hit by a troll, why do they not simply threaten the troll with reexams of all of the trolls patents? I mean, for them to dig up some prior art for 10 patents it would probably cost less than settling even the smallest license fee. I have to wonder why they play softball with trolls. For example, we have ol' Gary going after MS and he has several patents. Why not put them all through reexam after reexam right straight up front?

[Oversees Overseas]

35 U.S.C. 271(a) specifies that importation is an infringing act:

(a) Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.

So if they're importing, find the place where they're importing, and sue them in district court there (you can get cowboy and serve 'em with your complaint on the docks!), or go to the ITC.

If you want to sue them for activities that *would* be infringement if they were performed in the U.S., but the activities are entirely outside of the U.S., you're *generally* out of luck. U.S. patents are territorial to the U.S. Other countries have their own patent systems. Get a patent in that other country, if you can.

(As an aside, there's also the interesting circumstances covered by 271(f), where they're sending stuff from inside the U.S. and assembling the "infringing" products overseas. But that still requires the initial sending to take place in the U.S.)

[Paul F. Morgan]

6, that may be a good question for some attorneys who do not present objective reeexamination vs. litigation costs and jury-invalidity-odds-statistics comparisons to their clients until way too late. But the main problem for everyone is that the PTO is taking way too long to process reexaminations [contrary to their statutory requirement of "special dispatch"]. Far to long to be of great help in most litigation or licensing situations unless the reexam was filed some years before. Plus, of course, many invalidity issues, like "on sale" or "public use" bars, 101-Bilski, inequitable conduct, etc., etc., cannot be raised in a reexamination.
But, on point here, that is certainly another way to attack a foriegn-owned U.S. patent, in rem, without any jurisdiction problem.

[Paul F. Morgan]

Thanks "Lebowski" so let me try to clarify my question with an extreme example. Do you think that one act of infingement in a U.S. forum by a foreign company merely mailing one infringing product to a single purchasing customer there would provide jurisdiction there? [I have only a vague recollection of a strange CAFC decision involving fake ice cubes that light up that might be relevant?]

[6]

I realize that Paul, but the threat of near certain invalidation of their entire portfolio might be enough cause a troll to bypass an otherwise tasty looking target it seems to me.

I realize it might cost a bundle to invalidate some of their portfolio, but they are MS etc. they can likely afford it.

It would basically be doing to the troll what they would do to a competitor who threatened nuclear patent war. Both sides go down so small settlement is probably best for both sides. The troll threatens suit, you threaten his entire portfolio. He files, you file. And put forth good enough art to show them you mean business in a few of his patents at first, then threaten the ones he holds most dear. If he still won't back down, you file on them. One at a time. And you promise to catch any future patents he will ever file for at issue and throw them immediately into a reexam with more art cited. Also, he files some patents without a nonpub request? Poor man's opposition till there is no more art in the relevant art. One at a time.

Idk, if I had big money I'd be a lot more cutthroat than these guys are, should someone push me to it. They want to make it personal about my company "stealin'" on their IP? We'll make it personal. The big guys need to think outside the box of litigation. Perhaps the patentee uses Microsoft products, such as windows. No more free updates for you, your key is on the blacklist.

[Just Visiting]

Looks like a reexam of the '270 patent was recently concluded.

[Keith]

6, while Paul has a point, the real reason is that IP litigators are scared of being outside of a courtroom. They feel out of control in the PTO. It is really that simple in many cases. Also, there is less money to be billed in re-exams than in litigation, although in-house counsel would see that as a positive.

Returning to Paul's point, at least one DC has moved forward with litigation while a re-exam was pending, but the re-exam was filed after litigation had been pending for some time. If the re-exam is filed before the litigation, or about the same time, I think a stay is more likely. And, the delay actually works to the accused infringer's advantage. Since it is very likely that the claims will be amended during the re-exam the patent is effectively unenforceable during the delay. There is some uncertainty here, but once the patentee does amend the claims during re-exam that uncertainty clears up. And the re-exam may drag on far past the point of initial amendment.

[notharmedyet]

Could of used this post earlier this year. My client was sued personally in a state court over 'trade secret' disclosure on a US patent by the foreign company patent owner. Then when sued by my client in Federal Court, they said there was nowhere in the US where they could be sued due to jurisdiction. The judge decided to dismiss without prejudice because my client had not been harmed - yet. She chose not to discuss the jurisdiction issue. In state court the foreign company has requested a worldwide injunction on my client from doing any business that even remotely involves their patent. The injunction includes everyone my client has ever spoken to in the last 10 years! I kid you not!

[Paul F. Morgan]

Keith gives good additional reasons why reexaminations are not used more often that I was being too polite to mention. Corporate counsel or other managerial decision-avoidance if not compelled by litigation is another.
However, as to litigation stays, there are many D.C.'s [like E.D. TX] that will not normally stay litigation for reexaminations, not even for inter partes reexams, which have a statutory basis for it, because of the known PTO delays. Also note that even if the PTO and the Board actually did act with the requisite special dispatch, the patent owner could still delay reexam finality further by a CAFC appeal.
Yes, threatening to file a reexam, if you have good art, can be a useful licensing/settlement tactic, since it threatens further income from that patent from everyone.

[PatentLawNewbie]

Designating a US process agent under Section 293 seems to me to be pretty similar to the issue where a foreign corporation registers to do business and appoints a resident agent in a state. There is a split on whether this consents to personal jurisdiction (based on old research, so can't guarantee how up-to-date this is now).

Consenting:
Holloway v. Wright & Morrissey, Inc., 739 F.2d 695, 696–97 (1st Cir. 1984); Bane v. Netlink, Inc., 925 F.2d 637, 641 (3d Cir. 1991); Knowlton v. Allied Van Lines, Inc., 900 F.2d 1196, 1199 (8th Cir. 1990)

Not Consenting:
Consolidated Development Corp. v. Sherritt, Inc., 216 F.3d 1286, 1292–93 (11th Cir. 2000); Wenche Siemer v. Learjet Acquisition Corp., 966 F.2d 179, 183 (5th Cir. 1992); Ratliff v. Cooper Laboratories, Inc., 444 F.2d 745, 748 (4th Cir. 1971).