Up the Wrong Tree

Radio Systems Corp. v. Accession, Inc.

Looking for a declaratory judgment action that can hunt? The latest trail from the Federal Circuit shows us that to sniff out the necessary jurisdiction, you'll need more than a patentee trying to sell or license his patent in the proposed forum state. In Radio Systems Corp. v. Accession, Inc., the Federal Circuit confirmed that a patentee's contacts must specifically relate to attempts to enforce or defend a patent to establish specific personal jurisdiction over that patentee in a declaratory judgment action. Indeed, even though the patentee in Radio Systems had traveled to the forum state to meet with the plaintiff and market its patent, the Federal Circuit  made no bones about dismissing the case for lack of such contacts.

Radio Systems concerns a patent held by Accession, a one-person company formed by the inventor to market and sell his "Wedgit" invention (a portable dog-door for use with sliding glass doors.) Radio Systems manufactures and sells pet-related products in Tennessee. The Wedgit's inventor contacted Radio Systems and, after several email exchanges, travelled to Tennessee to try and persuade Radio Systems to help him generate a market for or buy or license the Wedgit's technology. But no agreement was reached.

A few months after this meeting, Radio Systems received its own allowance from the PTO for a dog-door system. Accession's lawyer found out about this allowance and provided the PTO information about the Wedgit patent, causing the PTO to withdraw its previous allowance to Radio Systems. Accession's lawyer called and emailed Radio Systems' counsel to tell them about his PTO filing and to try to resolve Radio Systems' alleged infringement of the Wedgit patent. But again, no agreement was reached.

Instead, Radio Systems filed a complaint against Accession in Tennessee-the situs for the meeting with the Wedgit inventor-seeking a declaratory judgment of non-infringement and patent invalidity. On Accession's motion, the district court dismissed Radio Systems' complaint for lack of personal jurisdiction, finding Accession's activities were not sufficient to create the specific personal jurisdiction needed for a non-infringement declaratory judgment. (General personal jurisdiction didn't exist because Accession had no continuous and systematic business in Tennessee.)

On appeal, the Federal Circuit affirmed. Citing its decision in Avocent Huntsville Corp. v. Aten Int'l Co., the Federal Circuit reminds us that, because an action for declaratory judgment "arises out of or relates to" the patentee's patent enforcement efforts, specific personal jurisdiction must arise from the patentee's enforcement activities in that state. Only enforcement related-contacts count. Without more, attempts to sell or license a patent will not give rise to the necessary jurisdiction. And enforcement activities taking place outside that forum can't be used to bootstrap jurisdiction within the forum.

Using this reasoning, Accession's actions simply didn't rise to the requisite contacts needed to establish jurisdiction. The contacts in Tennessee were not seen as enforcement efforts of the patent but rather business attempts to help grow a market for the technology. The lawyer's demands through correspondence and calls to Radio Systems were seen as insufficient and any activity directed at the PTO was outside of Tennessee. The court also rejected Radio Systems' claims that a forum selection clause in a non-disclosure agreement signed by the parties during their Tennessee meeting created personal jurisdiction. The court found that the agreement, which only covered confidential information, did not apply to the patent-at-issue because, as an existing patent, it was already a part of the public domain. 

Radio Systems marks the trail for both sides of the patent bar. To assure you've got a dog in that fight, a putative plaintiff in a declaratory judgment action needs to specifically sniff for the patentee's enforcement and defense-related contacts. Patentees can use Radio Systems to mark their territory and keep from being stuck up the wrong tree.

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