Patent dispute remanded by federal appeals court

By Tabitha Fleming | Mar 10, 2017

SAN FRANCISCO — A federal court of appeals has sent a patent-dispute case back to the U.S. District Court of the Northern District of California after reversing a ruling that the court lacked personal jurisdiction.

The case involves Xilinx Inc., a Delaware corporation with its headquarters in California that develops, designs and markets programmable-logic devices for use in electronics systems, and Papst Licensing GmbH & Co. KG, a Germany-based company that’s primary business is to monetize intellectual-property rights.

Initially, Papst identified two patents, U.S. Patent 6,574,759 and U.S. Patent 6,704,891, as possibly being used by Xilinx and, as such, sent letters to the California-based company alleging the use of the patents, and offering Xilinx a licensing option. When Papst received no response, according to court documents, the company again sent letters to Xilinx offering to reach an agreement on the use of the patents, or to “cease and desist.” When that failed, Papst sent representatives from the company along with legal counsel to meet with Xilinx to discuss the infringement allegations and attempt to negotiate a licensing agreement. When those negotiations failed, both parties went to court.

Xilinx filed in district court for a declaratory judgment in November 2014, essentially asking that court to hold that any patent claims brought by Papst were invalid. The same day, Papst filed a patent-infringement suit for the two patents it claimed Xilinx was infringing upon in a Delaware district court.

The district court in California, using previous tests of jurisdiction set forth in case law, determined that Papst was not subject to personal jurisdiction in the state.

Peter Lee, a professor at the UC Davis School of Law who specializes in patent litigation, summarized the rulings.

“The federal circuit ruled that Papst was subject to personal jurisdiction,” Lee told the Northern California Record. “The district court first ruled that it lacked jurisdiction because Papst was neither incorporated in California nor had its principal place of business there.”

Xilinx appealed the decision, noting that Papst had previously brought litigation in the state, and by sending not only letters, but also representatives to the state to meet with Xilinx, the court did indeed have jurisdiction.

Papst, whose patent-infringement suit has been moved to California, argued that the issue was moot, and that Xilinx could file for a declaratory judgment in the patent-infringement suit it was defending itself in. But the court found the issue was still relevant, regardless of whether or not Xilinx could move for a declaratory judgment in the infringement case.

Papst also argued that sending letters and offering to license its patents to Xilinx was not enough to satisfy the personal-jurisdiction requirements of due process in a declaratory judgment action. That’s not what the federal circuit found, however, when it reviewed the fact that representatives from Papst had traveled to California. What’s more, Papst was unable to prove to try a case there would place an undue burden on the entity after it has brought patent-infringement suits in California at least seven times in the past.

“The federal circuit reversed,” Lee said, “ruling that Papst had satisfied minimum contacts with the Northern District of California and that it would be reasonable to recognize jurisdiction.”

This remanding of the case from the federal circuit makes clear that in most cases, the sending of letters, or attempts at licensing, is enough to satisfy jurisdictional requirements, and that only in special circumstances are those contacts within a state insufficient to do so. While this ruling isn’t expected to have sweeping consequences for patent cases, it may affect the number of courts where declaratory judgment actions are heard.

“More courts may have jurisdiction to hear declaratory judgment actions given the federal circuit’s relatively broad interpretation of jurisdiction,” Lee said.

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