Federal Circuit bars declaratory judgment action against against non-U.S. patentee

Do non-U.S. patent holders have an advantage in U.S. courts?  Last week the U.S. Court of Appeals for the Federal Circuit issued a decision that describes one possible advantage:  immunity from declaratory judgment actions. 

In Avocent Huntsville Corp. v. Aten International Co., Ltd., the Federal Circuit considered whether a U.S. district court could exercise personal jurisdiction over a Taiwanese owner of two U.S. patents.  The Taiwanese company sent several letters to U.S. companies asserting that the U.S. companies infringed the patents.  The Taiwanese company had a U.S. subsidiary, but the subsidiary apparently was not involved in enforcement or licensing of the patents.  In addition, the Taiwanese company had no other significant activity in the U.S.

Avocent, an Alabama-based company who received a notice letter from Aten, filed a declaratory judgment action against Aten in Alabama district court.  The district court dismissed the case for lack of personal jurisdiction against Aten, and the Federal Circuit affirmed.  Quoting a previous Federal Circuit decision, the Court stated:

A patentee should not subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement.

and

letters threatening suit for patent infringement sent to the alleged infringer by themselves ‘do not suffice to create personal jursidiction.’

The court noted that, while not present in the case at hand, some enforcement activities can give rise to personal jurisdiction, including:  (i) entering into an exclusive license with a licensee based in the forum; and (ii) enlisting a third party to remove products from a trade show located in the forum. 

The court also noted that sales by the patentee – even in the forum where the declaratory judgment action is filed – may not be enough to establish personal jurisdiction in all situations.  In this situation, the fact that Aten’s products could be purchased in Alabama did not establish sufficient activity to confer personal jurisdiction on the Alabama district court.

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