Tuesday, April 19, 2022

CAFC does personal jurisdiction in a reprise of "The Good, the Bad. and the Ugly, with Apple as Tuco and Zipit as the one armed man

In the Good, the Bad and Ugly:

One Armed Man: I've been looking for you for 8 months. Whenever I should have had a gun in my right hand, I thought of you. Now I find you in exactly the position that suits me. I had lots of time to learn to shoot with my left. [Tuco, in s bath tub with lots of bubbles, kills him with the gun he has hidden in the foam.]

Tuco: When you have to shoot, shoot, don't talk.

In the background of this CAFC case. Zipit talked and talked with Apple, but it was Apple who "shot" Zipit with a declaratory judgment action. The case:

Apple Inc. appeals from a judgment of the U.S. District Court for the Northern District of California dismissing its complaint for declaratory judgment of noninfringement against Zipit Wireless, Inc. for lack of personal jurisdiction. The district court held that it would be unreasonable to exercise personal jurisdiction over Zipit based on the nature of Zipit’s communications with Apple in the Northern District. Specifically, the district court read our precedent as applying a bright-line rule that patent infringement notice letters and related communications can never form the basis for personal jurisdiction. We agree with Apple that the district court erred in this regard. Guided by the Supreme Court and our own precedent, we conclude, as the district court likely would have absent its erroneous interpretation of our precedent, that Zipit is subject to specific personal jurisdiction in the Northern District of California for purposes of Apple’s declaratory judgment action. We therefore reverse the judgment dismissing Apple’s declaratory judgment complaint and remand for further proceedings. Background Zipit is a Delaware corporation with a principal place of business in Greenville, South Carolina, and with each of its fourteen employees located in South Carolina. Zipit is the assignee of U.S. Patent Nos. 7,292,870 and 7,894,837 (collectively, the “patents-in-suit”), which are generally directed to wireless instant messaging devices that use Wi-Fi to send and receive instant messages. (...) Zipit moved to dismiss Apple’s complaint for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). On February 12, 2021, the district court granted Zipit’s motion, holding that it lacked specific personal jurisdiction over Zipit (general jurisdiction was not asserted). Apple Inc. v. Zipit Wireless, Inc., Case No. 5:20- cv-04448-EJD, 2021 WL 533754 (N.D. Cal. Feb. 12, 2021) (Judgment Op.). The court concluded that Apple had established the requisite minimum contacts, highlighting that Zipit sent “multiple letters and claim charts accusing Apple of patent infringement” and in fact had “travel[ed] to Apple’s offices in California to discuss these accusations.” Id. at *3. This, the court determined, made the exercise of specific personal jurisdiction over Zipit “presumptively reasonable.” Id. (quoting Xilinx, Inc. v. Papst Licensing GmbH & Co., 848 F.3d 1346, 1356 (Fed. Cir. 2017)). The court then analyzed whether Zipit had established a “compelling case” that the exercise of jurisdiction would be unreasonable. After analyzing each of the factors set forth in Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475–77 (1985), the court concluded that Zipit had not done so. Judgment Op., 2021 WL 533754, at *3–4. Specifically, the court found that “the majority of [the] reasonableness factors weigh in favor of adjudicating in California or, at the least, do not weigh significantly in favor of either party,” and therefore jurisdiction over Zipit would not be unreasonable. Id. at *4. The court went on to explain, however, that the Federal Circuit has held that “the exercise of personal jurisdiction . . . would be unconstitutional when ‘[a]ll of the contacts were for the purpose of warning against infringement or negotiating license agreements, and [the defendant] lacked a binding obligation in the forum.’” Id. (alterations in original) (quoting Levita Magnetics Int’l Corp. v. Attractive Surgical, LLC, Case No. 19-cv-04065-JSW, 2020 WL 4580504, at *6 (N.D. Cal. Apr. 1, 2020), which in turn quotes Breckenridge Pharm., Inc. v. Metabolite Lab’ys, Inc., 444 F.3d 1356, 1364 (Fed. Cir. 2006)). The court thus determined that the exercise of jurisdiction over Zipit would be unreasonable because of “Zipit’s lack of binding obligations tying it to California and because Zipit’s contacts with California all related to the attempted resolution of the status of” the patents-in-suit, i.e., “for the purpose of warning against infringement.” Id. at *4. Accordingly, despite determining that Apple had established that minimum contacts existed with the Northern District of California and that Zipit had not shown the exercise of jurisdiction would be unreasonable under Supreme Court precedent, the district court dismissed Apple’s declaratory judgment action for lack of jurisdiction. Apple appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1). The sole issue in this case is whether the district court erred in dismissing Apple’s declaratory judgment action for lack of specific personal jurisdiction over Zipit. “Personal jurisdiction is a question of law that we review de novo.” Xilinx, 848 F.3d at 1352 (quoting Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1016 (Fed. Cir. 2009)). In reviewing a Rule 12(b)(2) dismissal for lack of personal jurisdiction, we “accept the uncontroverted allegations in [Apple’s] complaint as true and resolve any factual conflicts in the affidavits in [Apple’s] favor.” Id. (quoting Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324, 1329 (Fed. Cir. 2008)); see also Marvix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1223 (9th Cir. 2011). “[F]oreseeability . . . is critical to due process analysis,” and the Supreme Court has made clear that the focus is on whether a given defendant’s “conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” Burger King, 471 U.S. at 474 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). The Supreme Court has outlined three factors relevant to specific personal jurisdiction. In ascertaining whether the exercise of specific personal jurisdiction is appropriate in a given case, we consider: (1) whether the defendant “purposefully directed” its activities at residents of the forum; and (2) whether the claim “arise[s] out of or relate[s] to” the defendant’s activities within the forum. Id. at 472–73 (first quoting Keeton v. Hustler Mag., Inc., 465 U.S. 770, 774 (1984); and then quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)); see also Jack Henry & Assocs., Inc. v. Plano Encryption Techs. LLC, 910 F.3d 1199, 1204 (Fed. Cir. 2018). We also consider (3) whether assertion of personal jurisdiction is reasonable and fair. World-Wide Volkswagen, 444 U.S. at 291–92; see also Burger King, 471 U.S. at 476–78; Jack Henry, 910 F.3d at 1204. (...) Having determined that Zipit purposefully directed its activities at California, we now consider whether Zipit has “present[ed] a compelling case that the presence of some other considerations would render jurisdiction unreasonable.” Burger King, 471 U.S. at 477. For the reasons below, we conclude that Zipit has not done so. We begin by addressing an error in the district court’s determination that the exercise of jurisdiction would be unreasonable. After analyzing and weighing each of the Burger King factors, the court initially determined that Zipit had not shown that the exercise of jurisdiction would be unreasonable. It went on, however, to conclude that it would be unreasonable to exercise jurisdiction over Zipit under our court’s precedent solely because “Zipit’s contacts with California all related to the attempted resolution of the status of” the patents-in-suit, i.e., “for the purpose of warning against infringement.” Judgment Op., 2021 WL 533754, at *4. This was error. As we explained most recently in Trimble, “there is no general rule that demand letters can never create specific personal jurisdiction.” 997 F.3d at 1156. (...) In this case, the district court, not having the benefit of our recent decision in Trimble, erred by not considering the settlement-promoting policy underlying Red Wing Shoe as but one of many considerations in its overall analysis of the Burger King factors. See Trimble, 997 F.3d at 1157–59 (considering this policy alongside the other Burger King factors). Specifically, the district court erred in reading our precedent as creating a bright-line rule that communications directed to “the attempted resolution” of the parties’ dispute regarding the patents-in-suit trumps all other considerations of fairness and reasonableness. Although some of our earlier precedent relying on Red Wing Shoe suggests that there is such a bright-line rule, see, e.g., Avocent, 552 F.3d at 1340; Breckenridge, 444 F.3d at 1362; Silent Drive, 326 F.3d at 1206, Supreme Court precedent (both pre- and post-Red Wing Shoe) has made clear that jurisdictional inquiries cannot rest on such bright-line rules— there are no “talismanic jurisdictional formulas.” Burger King, 471 U.S. at 485. Rather, “‘the facts of each case must [always] be weighed’ in determining whether personal jurisdiction would comport with ‘fair play and substantial justice.’” Id. at 485–86 (alteration in original) (quoting Kulko v. Superior Ct. of Cal., 436 U.S. 84, 92 (1978)); Bristol-Myers Squibb, 137 S. Ct. at 1780 (“In determining whether personal jurisdiction is present, a court must consider a variety of interests.”). (...) Finally, Zipit suggests in its appeal brief that it could not have foreseen being haled into court in California because four years lapsed between its last contact with Apple in California (2016) and Apple’s filing of its declaratory judgment action (2020). See Appellee’s Br. 2–3, 25–26. But Zipit’s argument skips over an important point—it is Zipit who reignited the parties’ contacts by filing suit for patent infringement in Georgia in 2020. After moving to dismiss its action in Georgia without prejudice, Zipit cannot credibly assert that it could not have reasonably foreseen that Apple would respond in kind by filing a declaratory judgment claim, and that it would do so in its home state of California given Zipit’s earlier contacts with the forum state. However stale Zipit’s contacts might have become absent intervening action by Zipit, they were ripe when Apple filed its declaratory judgment action. Turning to the second factor—California’s interest in adjudicating the underlying patent infringement dispute— we have previously recognized that California has “definite and well-defined interests in commerce and scientific development,” and that it has “a substantial interest in protecting its residents from unwarranted claims of patent infringement.” Xilinx, 848 F.3d at 1356 (first quoting Viam Corp. v. Iowa Exp.-Imp. Trading Co., 84 F.3d 424, 430 (Fed. Cir. 1996); and then quoting Elecs. for Imaging, 340 F.3d at 1352)); accord Trimble, 997 F.3d at 1158; see McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223 (1957) (explaining that states have “a manifest interest in providing effective means of redress for [their] residents”). Zipit does not dispute that California has such an interest. See Appellee’s Br. 34.


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