Patent Holders Beware: Enforcement Efforts May Lead to Personal Jurisdiction

June 9, 2022

By: David Rabinowitz, Stephanie M. Smith, and J.T. Parker Murray

Transmitting cease and desist letters or notices of infringement can be a routine activity for those who own intellectual property rights.  The same can be said for following up on those letters in attempts to resolve infringement disputes without court intervention.  And many rights holders may be operating under the assumption that such efforts insulate them from being called into court in foreign jurisdictions where the infringers reside. 

That assumption may no longer be true according to the Federal Circuit Court of Appeals in a recent decision, Apple Inc. v. Zipit Wireless, Inc., 30 F.4th 1368 (Fed. Cir. 2022).  These types of enforcement efforts may, depending on the specific activities involved, subject one to personal jurisdiction of the courts sitting in the infringer’s state.

In that case, Zipit, a corporation based in South Carolina, initiated communications with Apple regarding Apple’s use of Zipit’s patents.  The correspondence continued for about three years.  In that time, Zipit travelled to Apple's headquarters located in California on two occasions, sent multiple letters to Apple, and participated in at least four phone calls with Apple representatives.  The parties initially discussed entering into licensing or sales agreements for Zipit’s patents, however, the communications soured and ended with Zipit alleging willful infringement of its patents and filing suit against Apple in Georgia.  After Zipit voluntarily dismissed its lawsuit, Apple, less than two weeks later, filed an action on its home turf, the Northern District of California, seeking a declaratory judgment of noninfringement of the patents.

The district court dismissed Apple’s case for lack of personal jurisdiction over Zipit despite finding that Zipit had established sufficient contacts with California and that Apple’s suit arose from those contacts. The district court held that, under binding Federal Circuit precedent, the exercise of personal jurisdiction would be unreasonable because Zipit’s contacts were for the purpose of warning against infringement or negotiating license agreements, and it lacked a binding obligation tying it to California. 

On appeal, the Federal Circuit reversed.  The court acknowledged that, under its precedent, the policy of encouraging settling disputes “afford[s] a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum.”  However, it explained that the district court erred by allowing that policy to control the inquiry because it is only one of multiple factors that a court must consider in assessing whether the exercise of personal jurisdiction is reasonable. 

When considering all the necessary factors, the Federal Circuit held personal jurisdiction over Zipit would not be unreasonable because Zipit’s efforts “went beyond attempting to resolve its dispute with Apple outside of court” including in-person meetings, years of communications, and filing suit against a California entity.

What does this mean for patent holders?  While sending a single letter across state lines will most likely not lead to being subject to that state’s jurisdiction, continued correspondence and in-person meetings may tip the scales.  Patent holders should keep this in mind when initiating contact with potential infringers or licensees in foreign jurisdictions.