Apple Inc. v. Zipit Wireless, Inc., Appeal No. 2021-1760 (Fed. Cir. Apr. 18, 2022)

In its only precedential patent case this week, the Federal Circuit addressed the extent to which a party exposes itself to personal jurisdiction for a declaratory judgment action when it accuses a party of patent infringement in that forum.  In reversing the Northern District of California’s dismissal of Apple’s declaratory judgment lawsuit against Zipit, the Federal Circuit clarified its prior precedent on the issue, and how its prior decisions fit within the larger framework of a personal jurisdiction analysis.

In 2013, Zipit contacted Apple about two of its patents.  Over three years, there were multiple rounds of correspondence about the possibility of Apple buying or licensing the patents.  Some of those communications took place in person in California.  Zipit asserted that Apple willfully infringed the patents, and Apple continuously stated its view that the patents were invalid and not infringed.  Over four years later, in June 2020, Zipit sued Apple in the Northern District of Georgia, accusing it of infringing the two patents.  Zipit voluntarily dismissed the case without prejudice two weeks later.  Nine days later, Apple filed a declaratory judgment action in California, seeking a declaration of noninfringement.

Zipit moved to dismiss for lack of personal jurisdiction.  The district court concluded that Zipit had the requisite minimum contacts, given the multiple letters and trips to California.  The district court also evaluated whether Zipit had established a “compelling case” that the exercise of jurisdiction in California would be unreasonable, based on the test laid out in Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985), and concluded that Zipit had not done so.  However, the district court dismissed the case based on its understanding of Federal Circuit precedent holding that “the exercise of personal jurisdiction . . . would be unconstitutional when all of the contacts were for the purpose of warning against infringement or negotiating license agreements.”  The district court cited the Federal Circuit’s opinion in Breckenridge Pharm., Inc. v. Metabolite Lab’ys, Inc., 444 F.3d 1356, 1364 (Fed. Cir. 2006), on that point.

Apple appealed, and the Federal Circuit reversed.  The Court first provided a background into the personal jurisdiction analysis.  Because California’s long-arm statute is coextensive with the limits of due process, the analysis collapses into a due process analysis.

The Supreme Court has outlined three factors relevant to specific personal jurisdiction: (1) whether the defendant purposefully directed its activities at residents of the forum; (2) whether the claim arises out of or relates to the defendant’s activities within the forum; and (3) whether assertion of personal jurisdiction is reasonable and fair.  The first two factors comprise the “minimum contacts” portion of the analysis, and the third factor concerns reasonableness and fairness.  Here, the Federal Circuit reiterated that “[w]here minimum contacts are satisfied, the exercise of jurisdiction is ‘presumptively reasonable.’”

The Court first considered whether the first two factors were satisfied, and concluded they were.  Zipit not only made numerous contacts with Apple in California, but traveled to California on two separate occasions to meet with Apple in relation to the patents in suit.  Zipit argued for a bright-line rule that communications concerning cease-and-desist letters and related communications cannot support minimum contacts, citing the Federal Circuit decision in Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1016 (Fed. Cir. 2009).  The Federal Circuit disagreed, distinguishing the facts of Autogenomics, and noting that cases both prior to and after Autogenomics had found minimum contacts based on cease-and-desist letters.

With respect to the third factor, the Court held that the district court erred in its analysis.  Specifically, rather than creating a bright-line rule that jurisdiction based on cease-and-desist letters could never satisfy the third prong of the personal jurisdiction analysis, the Court held that it was but one factor that should be considered.  Specifically, as the Court said in Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1360-61 (Fed. Cir. 1998), while “[p]rinciples of fair play and substantial justice afford a patentee sufficient latitude to inform others of its patent rights without subjecting itself to jurisdiction in a foreign forum.” And here, “this policy cannot control the inquiry—it must be considered together with the other Burger King factors, consistent with the Supreme Court’s directive to consider a variety of interests in assessing whether jurisdiction would be fair.”  The Court held that the district court “erred by not considering the settlement-promoting policy underlying Red Wing Shoe as but one of many considerations in its overall analysis of the Burger King factors.”  The Court explained:

Specifically, the district court erred in reading our precedent as creating a bright-line rule that communications directed to the attempted resolution of the parties’ dispute regarding the patents-in-suit trumps all other considerations of fairness and reasonableness. Although some of our earlier precedent relying on Red Wing Shoe suggests that there is such a bright-line rule, Supreme Court precedent (both pre- and post-Red Wing Shoe) has made clear that jurisdictional inquiries cannot rest on such bright-line rules—there are no talismanic jurisdictional formulas. Rather, the facts of each case must always be weighed in determining whether personal jurisdiction would comport with fair play and substantial justice. (Edited for clarity.)

Considering all of the factors, the Court held that jurisdiction in California was fair and reasonable.  While Zipit argued that jurisdiction in California would put a burden on its witnesses, who were all based on the East Coast, the Court noted that Zipit had previously traveled to California (twice) to meet with Apple.  The Court suggested that such inconvenience might be relevant to a venue analysis, but did not tip the scales on a personal jurisdiction analysis.

The opinion can be found here.