Our Case of the Week deals with an issue the Court has not addressed recently: the question of declaratory judgment jurisdiction. Specifically, the Court considered whether a patent owner that employs Amazon.com’s Amazon Patent Evaluation Express (APEX) program confers personal jurisdiction in the state where the defendant is based. This case may reshape the landscape on personal jurisdiction in patent disputes going forward.
Lighting Defense Group (LDG) is a Delaware LLC and has its principal place of business in Arizona. It owns a patent directed to electrical equipment. SnapRays (aka SnapPower) is based in Utah, and it designs, markets, and sells products out of Utah. SnapPower sells its products on Amazon.com.
Amazon offers the APEX program as a low-cost procedure for resolving claims that third-party product listings on Amazon’s platform infringe utility patents. Under the APEX program, a patent owner submits an APEX agreement that identifies one claim and up to 20 allegedly infringing listings. Amazon sends the agreement to all identified sellers. Each seller has three options to avoid automatic removal of the listing: opt into the APEX program and have the issue resolved by a third party, settle with the patent owner, or file a claim in federal court.
LDG submitted an APEX agreement to Amazon which identified SnapPower as an alleged infringer. SnapPower filed a declaratory judgment action in Utah. LDG moved to dismiss for lack of personal jurisdiction, and the district court granted the motion.
The Federal Circuit reversed, finding LDG was subject to declaratory judgment jurisdiction in Utah, having submitted the APEX agreement identifying SnapPower as engaged in allegedly infringing activity in Utah.
The test for specific personal jurisdiction is based on whether the plaintiff purposefully directed its activities at residents of the forum. In assessing that question, the Court began its analysis by relying on decisions from sister courts that have held that “extra-judicial enforcement activities, even when routed through a third-party, satisfy purposeful direction.” The Court distinguished its prior precedents by holding that the mere sending of cease-and-desist letters into a forum does not confer personal jurisdiction in that forum. The Court noted that merely sending letters does not have an automatic effect, while sending an APEX agreement does: without further action, Amazon removes products from its website, which hurts a recipient’s business in its home forum. Thus, the activity that gives rise to jurisdiction (sending the APEX agreement) is purposefully directed at the recipient’s home forum.
Having found that sending the APEX agreement constituted purposeful direction, the Court had no difficulty finding the other factors for personal jurisdiction had been satisfied—LDG’s lawsuit arose from SnapPower’s activities within the forum, and exercise of personal jurisdiction in Utah is was fair and reasonable.
The opinion can be found here.
By Nika Aldrich
ALSO THIS WEEK
IOENGINE, LLC v. Ingenico Inc., Appeal Nos. 2021-1227, -1331, and -1332 (Fed. Cir. May 3, 2024)
In a precedential decision, the Federal Circuit reversed-in-part and affirmed-in-part a series of related inter partes review decisions from the Patent Trial and Appeals Board. The IPRs were related to U.S. Patent Nos. 8,539,047, 9,059,969, and 9,774,703. The patents generally relate to a Tunneling Client Access Point (TCAP), which is described as a portable device configured to plug into another computing device (e.g., a desktop or laptop computer). The primary issues discussed in the opinion related to the Board’s obviousness and anticipation determinations, waiver of a claim construction argument, and the printed matter doctrine.
The printed matter doctrine issue related to, inter alia, claims 4 and 7 of the ’969 patent. These claims relate to “transmission of encrypted communications” and “download of program code,” respectively. The doctrine generally provides that “printed matter” falls outside the scope of patentable subject matter, and “printed matter” was described as “information claimed for its communicative content, regardless of medium.” In applying the doctrine, the Federal Circuit utilizes a two-step test in which it is first determined whether the limitation in question is directed toward printed matter (Step 1), then whether the printed matter should nevertheless be given patentable weight (Step 2). In the current case, the Federal Circuit held that the “encrypted communications” and the “program code” limitations were not printed matter because they were not being claimed for the particular content that may be in the encrypted communications or the program code. As such, the limitations were not directed toward printed matter (Step 1), thereby ending the inquiry and indicating that the terms “encrypted communications” and “program code” are to be given patentable weight.
The obviousness and anticipation issues were disposed of in a relatively straightforward manner. The claim construction discussion related to presentation by IOENGINE of a proposed claim construction that was, in the Federal Circuit’s view, materially different from that presented to the Board. The Federal Circuit noted that, because IOENGINE had not presented the revised claim construction to the Board during the IPRs, IOENGINE had therefore waived the elements of revised claim construction that were newly presented to the Federal Circuit.
The opinion can be found here.
By Mike Moore
Packet Intelligence LLC v. NetScout Systems, Inc. et al., Appeal No. 2022-2064 (Fed. Cir. May 2, 2024)
Also this week, the Federal Circuit wiped out a pending $3.35 million damages award for infringement of NetScout’s computer networking patents after the claims were affirmed to be invalid in third-party inter partes reviews. The decision reinforced a bright-line rule that in order for a judgment to be sufficiently “final” and thereby immunized from the collateral effects of intervening validity determinations, “the litigation must be entirely concluded so that the cause of action against the infringer was merged into a final judgment [that] leaves nothing for the court to do but execute the judgment.”
Here, in a previous appeal, the Federal Circuit had already affirmed the district court’s determination that NetScout’s claims were not invalid and infringed, but found the district court had improperly awarded damages for pre-suit infringements, and remanded for modification of the damages award. As the parties were litigating on remand, final written decisions issued in the co-pending IPRs which found that all asserted claims were invalid. The district court denied Packet Intelligence’s motion to stay proceedings pending appeal of the IPRs and entered an amended judgment for NetScout. The IPR decisions were then affirmed in a non-precedential decision entered contemporaneously with the instant opinion.
In vacating the district court’s amended judgment against Packet Intelligence, the Court relied heavily on its precedent in Fresenius USA, Inc. v. Baxter Int’l, Inc., 721 F.3d 1330 (Fed. Cir. 2013), emphasizing that “even if the court of appeals already decided the validity issue the other way,” the pending issues on remand of the case as a whole still amounted to more than “nothing . . . but execut[ing] the judgment.” Accordingly, the Court found that the affirmance of the IPR decisions rendered NetScout’s infringement claims moot, and remanded to the district court with instructions to dismiss the case.
The opinion can be found here.
By Jason A. Wrubleski
Intellectual Tech LLC v. Zebra Technologies Corporation, Appeal No. 2022-2207 (Fed. Cir. May 1, 2024)
In addition to the foregoing decisions, the Federal Circuit reversed the Western District of Texas, holding that a patent owner still had standing to enforce its patent even when a secured party had an option to exercise rights under the same patent.
In 2017, Intellectual Tech LLC was joined to a loan agreement between Intellectual Tech’s parent company and lender Main Street Capital Corporation, and entered into a security agreement with Main Street, which granted Main Street a security interest in Intellectual Tech’s U.S. Patent No. 7,233,247. Under the security agreement, if Intellectual Tech defaulted, Main Street could license, sell, assign, transfer, pledge, and enforce the ’247 patent. In 2018, Intellectual Tech defaulted. In 2019, Intellectual Tech asserted the ’247 patent against Zebra Technologies Corporation. Zebra moved, and the district court granted, to dismiss Intellectual Tech’s claims for lack of constitutional standing. There was no evidence that Main Street had exercised any of its rights with respect to the ’247 patent after the 2018 default, but according to the district court, Main Street’s mere option to exercise rights with respect to the patent had deprived Intellectual Tech of all its exclusionary rights under the patent, which meant that Intellectual Tech could not satisfy the injury-in-fact standing requirement.
The Federal Circuit disagreed. First, nothing in the security agreement suggested that, just because Main Street had an option to exercise rights in the ’247 patent, Intellectual Tech was automatically deprived of its rights under the patent on default. Second, even if Main Street exercised its option, Main Street and Intellectual Tech’s then-shared ability to exercise rights with respect to the patent would not divest Intellectual Tech of all exclusionary rights, such that Intellectual Tech would still have the rights necessary to satisfy the injury-in-fact standing requirement. So the Federal Circuit reversed and remanded back to the district court.
The full text of the opinion can be found here.
By Tyler Hall
