Cease and Desist Notices Not Sufficient to Establish Personal Jurisdiction
Radio Systems v. Accession (decided 4/25/11)By: James J. Foster
_____________________________________________________________
What This Means to You
- Ordinary cease-and-desist notices sent to a particular state are not sufficient to subject the patent owner to specific jurisdiction in that state.
- Attempts to sell a product or license a patent in a state do not give rise to personal jurisdiction for judgments for noninfringement or invalidity.
_____________________________________________________________
Overview
The US Court of Appeals for the Federal Circuit (Federal Circuit) recently clarified some of its various rules with respect to when an accused infringer can bring suit in its own state against a patent owner.
Case Background
In Radio Systems Corporation v. Accession, Inc., the plaintiff, Radio Systems Corporation (RSC), headquartered in Tennessee, received licensing correspondence from the defendant Accession, a small New Jersey company, in 2006-07 with respect to a patent that Accession was acquiring. In August 2007, RSC filed its own patent application, unbeknownst to Accession.
In April 2009, Accession's president made a sales call on RSC in Tennessee. The relationship between the parties turned hostile when, in June 2009, Accession learned of the RSC patent filing. At that point, an attorney for Accession called the PTO to provoke an interference and contacted counsel for RSC with infringement allegations.
RSC then sued in Tennessee for a declaratory judgment of noninfringement, alleging specific jurisdiction over Accession based upon the above facts. The District Court dismissed for personal jurisdiction and the Federal Circuit affirmed.
Under current law (refined after the Supreme Court’s 1945 decision in International Shoe Co. v. Washington), a state court may only exert personal jurisdiction over an individual or entity when that individual or entity has sufficient “minimal contacts" with the forum state. What constitutes sufficient "minimum contacts" varies with the nature and quality of the defendant's actions, but the defendant must, minimally, conduct activities within the forum state..
Decision Analysis
The Federal Circuit reiterated its standing rule that ordinary cease-and-desist notices sent to a particular state are not sufficient to subject the patent owner to specific jurisdiction in that state. Thus, the communications from the attorney for Accession sent to Tennessee did not give jurisdiction.
As for the activities before June 2009, the court held that attempts to sell a product or license the patent in a state do not give rise to personal jurisdiction in the territory for judgments for noninfringement or invalidity. Only enforcement activities count.
As for the contacts with the PTO, since those occurred in Virginia, they did not give rise to jurisdiction in Tennessee.
Finally, the court refused to enforce the jurisdiction clause in a nondisclosure agreement between the parties because the claim did not arise out of that agreement.
