Monday, April 25, 2011

Hamilton, NJ-patentee prevails at CAFC in Radio Systems v. Accession

The case related to jurisdiction in a declaratory judgment action,
and the outcome was that the Hamilton, NJ-based patentee (one Thomas Sullivan )
was NOT hauled into a Tennessee court:

This is another in a series of cases presenting us with
the question whether a patentee’s activities directed at
the forum state were sufficient to give the forum court
personal jurisdiction over the patentee in a declaratory
judgment action. The district court in this case held that
the defendant’s activities were not sufficient to give it
personal jurisdiction over the defendant, and we agree.

The case is about something Sullivan (Accession) named a Wedgit, a portable rf-activated pet access door.
The history of communication between Sullivan and his potential patent licensee
Radio Systems went back to 2006:

In November 2006, Mr. Sullivan sent an unsolicited
letter to Radio Systems designed to interest the company
in licensing the Wedgit.

Sullivan obtained US 7,207,141 (“the ’141 patent”), which issued on April
24, 2007.

For relevance to discussion further below, the reader should note the
existence of US 20100218427 to Radio Systems [titled "Selective Access Electronics Pet Door "], with the following
claim of priority:

This application is a continuation of U.S. application Ser. No. 11/971,553,
filed Jan. 9, 2008, which claims the benefit of U.S. Provisional Application No. 60/888,526, filed Feb. 6, 2007.

In resolving the jurisdiction dispute, the CAFC relied on the Avocent case:

The district court’s exercise of jurisdiction over
an out-of-state defendant must be consistent with both
the forum state’s long-arm statute and the requirements
of due process. See Avocent Huntsville Corp. v. Aten Int’l
Co., 552 F.3d 1324, 1329 (Fed. Cir. 2008).


In Avocent Huntsville
Corp., we explained that an action for a declaratory
judgment “arises out of or relates to the activities of the
defendant patentee in enforcing the patent or patents in
suit,” and that the relevant inquiry for specific jurisdic-
tion is “to what extent . . . the defendant patentee pur-
posefully directed such enforcement activities at residents
of the forum and the extent to which the declaratory
judgment claim arises out of or relates to those activities.”
552 F.3d at 1332 (internal quotation marks and citations
omitted). Thus, only those activities of the patentee that
relate to the enforcement or defense of the patent can give
rise to specific personal jurisdiction for such an action.
Id. at 1336; accord Autogenomics, 566 F.3d at 1020.


While the facts of this case differ from those in Avo-
cent, the principles of Avocent govern this case. We have
characterized the rule in Avocent as follows: that “only
enforcement or defense efforts related to the patent rather
than the patentee’s own commercialization efforts are to
be considered for establishing specific personal jurisdic-
tion in a declaratory judgment action against the pat-
entee.” Autogenomics, 566 F.3d at 1020, citing Avocent,
552 F.3d at 1336. Mr. Sullivan’s attempts to interest
Radio Systems in a business transaction relating to his
product were not “enforcement or defense efforts.” In-
stead, Mr. Sullivan’s correspondence with Radio Systems
was focused on generating a market for the Wedgit, not
on enforcing or defending the ’141 patent. Moreover,
Avocent did not distinguish between commercialization
efforts directed generally at residents of the forum state
and efforts directed specifically at the plaintiff. See also
Hildebrand v. Steck Mfg. Co., 279 F.3d 1351, 1356 (Fed.
Cir. 2006) (dismissing declaratory judgment action for
lack of personal jurisdiction despite patentee’s efforts to
license products to plaintiffs). The fact that Mr. Sullivan
focused on Radio Systems in his effort to commercialize
his invention therefore does not render his activities in
Tennessee sufficient for the exercise of specific personal

** HOWEVER, there is a message in this case for small inventors that
is not directly related to the legal issues decided by the CAFC in April 2011. It relates
to contacting potential licensees and to the effectiveness of confidentiality agreements
provided by the potential licensees.

From the case:

In June 2009, the PTO issued a notice of allowance for
Radio Systems’ patent on the SmartDoor device. Mean-
while, Accession retained legal counsel in New Jersey.
On August 20, 2009, Accession’s counsel left a voice
message with the PTO examiner for the SmartDoor
application, alerting the examiner to the existence of
Accession’s ’141 patent
. On the same day, Accession’s
counsel telephoned Radio Systems’ counsel and stated his
position that the SmartDoor infringed the ’141 patent and
that interference proceedings would be warranted be-
tween the ’141 patent and the SmartDoor application.
Later that day, Accession’s counsel left a voice message
with Radio Systems’ counsel indicating that Mr. Sullivan
should be named as a co-inventor on the SmartDoor
On August 25, 2009, Accession’s counsel sent
an e-mail to Radio Systems’ counsel asking whether Radio
Systems had brought the ’141 patent to the attention of
the PTO. The next day, the PTO examiner returned the
phone call of Accession’s counsel. As a result of that
conversation, the PTO withdrew the notice of allowance
previously issued for the SmartDoor application.

On November 5, 2009, Radio Systems filed a com-
plaint in the United States District Court for the Eastern
District of Tennessee seeking a declaratory judgment of
noninfringement and invalidity with respect to the ’141

The presence of a confidentiality agreement was invoked in
the jurisdiction battle:

Finally, Radio Systems argues that Accession con-
sented to jurisdiction in Tennessee by entering into the
nondisclosure agreement in connection with the April
2009 meeting in Tennessee.


The stated purpose of the agreement was to facilitate
“discussions for the purpose of evaluating the interest of
Radio Systems to engage in a transaction or enter into a
relationship with [Accession] pertaining to the Confiden-
tial Information and, if desired, to pursue such relation-
ship or transaction.” The entire agreement addressed
confidential information that may be furnished by Acces-
sion to Radio Systems.


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