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Trimble Inc. v. PerDiemCo LLC, Appeal No. 2019-2164 (Fed. Cir. May 12, 2021)

In this week’s Case of the Week, the Federal Circuit revisited its decision in Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998), often cited for the proposition that a patentee does not subject itself to personal jurisdiction in a forum merely by sending correspondence asserting patent infringement by a resident of the forum. On the facts presented, the Court found that a patentee’s negotiations with a California-headquartered corporation supported jurisdiction in the Northern District of California for the corporation’s declaratory judgment action, reversing the district court’s dismissal for lack of personal jurisdiction. Trimble presents several considerations of note for non-practicing entities (NPEs) engaged in nationwide licensing campaigns, and provides guidance on when a patentee may be haled into an accused infringer’s home forum on the basis of pre-litigation communications.

In this case, declaratory judgment defendant/appellee PerDiemCo was an NPE whose sole owner, officer, and employee resided in Washington, D.C., and which rented office space in Marshall, Texas, although it had no employees there. PerDiemCo had engaged extensively with appellants Trimble, headquartered in Sunnyvale, California, and Innovative Software Engineering, its Iowa subsidiary, concerning asserted infringement of PerDiemCo’s geolocation and logging patents for commercial vehicles. In the course of at least 22 communications over a span of three months, PerDiemCo had sought to enter into nonexclusive licenses with Trimble and ISE, identifying other entities that had licensed the patents; had incrementally asserted additional patents against additional Trimble/ISE products; had threatened to sue appellants in both the Northern District of Iowa and the Eastern District of Texas; and had sought to enter into binding mediation with the appellants to reach settlement.

When Trimble and ISE sought declaratory judgment in the Northern District of California that PerDiemCo’s patents were not infringed, the district court found that PerDiemCo’s communications established minimum contacts for purposes of specific personal jurisdiction, but relied on Red Wing Shoe to find that exercising personal jurisdiction would be constitutionally unreasonable. In reversing the district court’s decision, the Federal Circuit took note of recent Supreme Court precedent clarifying that personal jurisdiction analyses cannot rest on special patent policies, and that personal jurisdiction could be supported by a defendant’s contacts “related to” a forum such as sales of products similar to those at issue in a products liability action, which the Court analogized to PerDiemCo’s other licenses for the patents at issue. The Court also collected cases from the Supreme Court, the Federal Circuit, and other appellate courts finding that communications from outside of a forum could give rise to personal jurisdiction in that forum.

The Federal Circuit concluded that on the facts of this case, PerDiemCo’s communications were “more akin to an arms-length negotiation in anticipation of a long-term continuing business relationship” than a simple offer for settlement of a disputed claim, and fell well outside the latitude provided in Red Wing Shoe for a patentee to inform others of its rights without subjecting itself to personal jurisdiction. The Federal Circuit agreed with the district court that purposeful availment and minimum contacts for specific jurisdiction were therefore present, including PerDiemCo’s nonexclusive licenses for the patents at issue with several large firms operating nationwide.

Applying the Supreme Court’s “fair play and substantial justice” factors from Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985), the Court also found that PerDiemCo had not carried its burden to present a compelling case that jurisdiction was otherwise unreasonable. The Court found PerDiemCo’s arguments concerning the burden of litigating in California to be particularly unpersuasive, noting the district court’s observation that PerDiemCo’s presence in Texas was “pretextual.” (For example, PerDiemCo’s owner and sole employee had never visited its office space in Marshall, despite filing multiple lawsuits in the Eastern District of Texas.) As such, the Court found PerDiemCo’s burden of litigating in California to be on par with the burden of litigating in its apparently preferred fora in Iowa or Texas. The Court also credited Trimble’s California headquarters as weighing in favor of forum state interest and the plaintiff’s interest in obtaining convenient relief, distinguishing cases in which a declaratory judgment plaintiff is engaged in forum-shopping. Because the dispute could be just as efficiently resolved in California as elsewhere under the same body of federal patent law, the Court found the factors considering the interests of the interstate judicial system and the shared interest of the several states to be neutral.

Because purposeful availment and minimum contacts supported specific personal jurisdiction, and PerDiemCo had not demonstrated that the exercise of jurisdiction would otherwise be unreasonable, the Federal Circuit reversed the district court’s dismissal for lack of personal jurisdiction and remanded the case for further proceedings.

A copy of the opinion can be found here.

By Jason Wrubleski

ALSO THIS WEEK

New Vision Gaming & Development, Inc. v. SG Gaming, Inc., Appeal Nos. 2020-1399, -1400 (Fed. Cir. May 13, 2021)

In an appeal from final written decisions from covered business method reviews, the Federal Circuit remanded the cases in light of Arthrex, Inc. v. Smith & Nephew, Inc., 941 F.3d 1320 (Fed. Cir. 2019). Arthrex was decided before the opening brief was due, and the Arthrex challenge was thus timely. Judge Newman concurred in part and dissented in part. She agreed that Arthrex controlled. But the parties had agreed in a patent license agreement that any disputes would be resolved in Nevada. Judge Newman believed the Court should consider whether the forum selection clause should have been enforced, barring review by the PTAB. She believed such a review would be appealable under exceptions to the “No Appeal” bar of Section 324(e), and that the Court should have done so before remanding to the PTAB.

A copy of the opinion can be found here.

By Nika Aldrich

Uniloc 2017 LLC v. Apple Inc., Appeal Nos. 2020-1403, -1404 (Fed. Cir. May 12, 2021)

The Federal Circuit affirmed the Patent Trial Appeal Board in these two consolidated appeals. Apple initiated an inter partes review of Uniloc’s patent directed to a system and method of policing the use of VoIP features on the basis of obviousness. The Board held that claims 1–17 and 23–25 of the patent in suit were invalid for obviousness, but Apple had failed to meet its burden with respect to claims 18-22. Uniloc and Apple appealed. The Court affirmed the Board’s claim construction and related holding of obviousness of claims 1–17 and 23–25. The Court also affirmed the Board’s holding that Apple failed to demonstrate that claims 18–22 are unpatentable.

A copy of the opinion can be found here. 

By Bazsi Takacs

Free Stream Media Corp. v. Alphonso Inc., Appeal Nos. 2019-1506, -2133 (Fed. Cir. May 11, 2021)

In this case, the Federal Circuit reversed-in-part and affirmed-in-part two district court rulings addressing issues of patent ineligibility and claim construction. At issue was Samba’s appeal of a California district court’s grant of summary judgment of noninfringement and a Texas district court’s claim construction order, as well as Alphonso’s cross-appeal of the California district court’s denial of its motion to dismiss under 35 U.S.C. § 101.

The Court reversed the order denying Alphonso’s motion to dismiss under 35 U.S.C. § 101‎, finding that the disputed claims of the ’‘356 patent were in fact patent ineligible. In reaching this conclusion, the Court applied the “two-step process established by the Supreme Court in Alice.” First, the Court considered whether the patent was directed to a patent-ineligible concept. The Court found in the affirmative, explaining that the asserted claims were “not directed to an improvement of a technology or a creation of a new computer functionality,” but rather “merely improve[d] the abstract idea of targeted advertising.” Second, the Court considered whether the patent held an inventive concept taking it into the realm of patent eligibility. The Court explained that “an abstract idea is not patentable if it does not provide an inventive solution to a problem in implementing the idea.” Finding that the asserted claims “simply recite[d] that the abstract idea [would] be implemented using conventional components and functions generic to the technology,” the Court concluded that the patent held no inventive concept taking it into the realm of patent eligibility. ‎Accordingly, the Court held that the asserted claims of the ’356 patent were patent ineligible and reversed the California district court’s denial of Alphonso’s motion to dismiss. The Court affirmed the Texas district court’s claim construction order of the asserted claims of the ’668 patent, explaining that in the context of the specification, “a person of ordinary skill in the art would have understood ‘communication session’ as requiring bidirectional communication.” As a result, the Court did not address the California district court’s grant of summary judgment based on the same disputed claim construction.

A copy of the opinion can be found here.

By Annie White

Pacific Biosciences of California, Inc. v. Oxford Nanopore Technologies, Inc., Appeal Nos. 2020-2155, -2156 (Fed. Cir. May 11, 2021)

In an appeal from the United States District Court for the District of Delaware, the Court addressed PacBio’s call for a new trial or a judgment as a matter of law based on two arguments. First, PacBio argued that the jury’s verdict finding the patents lacked enabling disclosure was unsupported by the evidence. Second, PacBio argued that Oxford’s improper remarks to the jury regarding the connection between the trial and COVID-19 were prejudicial and reasonably probable to influence the jury. The Court rejected both arguments, holding that there was ample evidence supporting non-enablement, and that there was no basis for overturning the district court’s assessment that there was an insufficient likelihood that Oxford’s improper remarks had an adverse impact on the verdict.

A copy of the opinion can be found here.

By Mario Delegato

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