Kalen Lumsden is a JD Candidate at Osgoode Hall Law School.
Radio Systems Corp. v. Accession, Inc., No. 10-1390 (Fed. Cir. Apr. 25, 2011) overrules a 2003 decision that sending a cease-and-desist letter to an infringing party in another state was sufficient to grant the addressee’s state jurisdiction over the owner in future patent enforcement.
The dispute was over a patent for a pet access door that unlocks in response to a transmitter on a pet’s collar granted to Accession, Inc. in New Jersey. Radio Systems manufactured pet related products, including an automatic pet door called SmartDoor, and was based in Tennessee. Accession unsuccessfully tried to interest Radio Systems in commercializing the design through phone calls, emails and a product demonstration in Tennessee which included a nondisclosure agreement. Meanwhile, Radio Systems applied to patent their product. After the US Patent and Trademark Office (USPTO) had granted Radio Systems notice of allowance for their patent, counsel for Accession contacted the USPTO and informed it of Accession’s patent. As a result, the USPTO withdrew the notice of allowance for Radio Systems’ patent. Accession’s counsel then sent letters to Radio Systems outlining infringement allegations and suggested the dispute be settled through a licensing agreement.
On 5 November 2009, Radio Systems filed a complaint in Tennessee seeking a declaratory judgment of noninfringement and invalidity with respect to Accession’s patent. Accession moved to dismiss the action for lack of personal jurisdiction or transfer the case to New Jersey. The Tennessee District Court granted Accession’s motion to dismiss. On 25 April 2011, the United States Court of Appeals for the Federal Circuit upheld the motion to dismiss.
The decision hinged on whether the actions of Accession in attempting to commercialize its product were sufficient to establish personal jurisdiction over it in Tennessee (Radio Systems' home forum). The court held that:
ordinary cease-and-desist notices sent by a patentee to an alleged infringing party in a different state are not sufficient to subject the patentee to specific jurisdiction in that state. As a matter of patent law policy… “[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.”
Factors that would support the establishment of personal jurisdiction are:
- The extent to which the defendant patentee purposefully directed enforcement activities at residents of the forum beyond a cease-and-desist letter. All the activities of Accession prior to the letter were attempts to facilitate commercialization of their patent and were neither adversarial nor directed at enforcement.
- Retaining agents or attorneys to act as agents in the forum to assist in enforcing patent rights, especially if the forum state attorneys threaten the defendant with litigation in that state.
Factors that do not conclusively establish personal jurisdiction are:
- A single cease-and-desist letter.
- Contact between the plaintiff’s counsel and the USPTO.
- Entering into a nondisclosure agreement in the forum state. In this case there was a clause in the agreement stating that any litigation that arose regarding the agreement itself would occur in Tennessee. This was not applicable to the patent dispute.
Jurisdiction is crucial to patent enforcement and marketing because every party wants the home-field advantage. Decisions that clarify where, on the spectrum of possible business activities, jurisdiction is ceded are useful because these interactions rarely occur entirely within a single state or province.