SanDisk Corporation (“SanDisk”) brought a declaratory relief action seeking a declaration that its products do not infringe certain patents held by Round Rock Research and that the patents were invalid. Round Rock moved to dismiss for lack of personal jurisdiction, contending that its conduct in sending letters to SanDisk in California demanding licensing negotiations were insufficient for the assertion of personal jurisdiction.
According to the district court, Round Rock is a technology research and licensing company that holds thousands of patents and pending patent applications. Round Rock does not manufacture or market products utilizing its patented inventions but instead seeks licensing agreements from parties who do make and sell such products, or pursues litigation against them when it deems it necessary to do so.
In August 2011, Round Rock sent a letter to SanDisk in California, in which it claimed that various SanDisk products utilizing Flash Memory infringe certain Round Rock patents. The letter requested a meeting to discuss the patents and potential licensing terms. The letter also stated that Round Rock had appointed IPValue Management, Inc. as its agent to commercialize Round Rock’s patents. IPValue maintains an office in Mountain View, California. The parties ultimately agreed to meet at SanDisk’s facilities in Milpitas, California and in preparation for that meeting, two IPValue employees based in the Mountain View office prepared claim charts regarding the alleged infringement. The complaint was filed approximately one hour before the meeting took place, so the meeting could not be considered a contact for jurisdictional purposes.
As the district court put it, Round Rock’s “motion is premised on the well-settled Federal Circuit rule that a patent holder does not ‘subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement.’ Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998).” The district court also stated that “[w]hile Federal Circuit precedent is clear that sending infringement letters alone will not suffice, the contours of the ‘more’ that will support jurisdiction are less well delineated.”
The district court then noted that Round Rock had not merely sent letters to California, but rather it had also embarked on a course of conduct designed with the goal of ultimately persuading SanDisk to enter into licensing agreements and had “hired a company based in California to perform the necessary analyses and to carry out the negotiations.” Based on this fact, the district court found that Round Rock would be subject to jurisdiction in California.
“Round Rock is in a substantially different position from that of a patentee who has merely sent letters of the sort considered in Red Wing. Round Rock’s sole business lies in licensing its exclusive technology portfolio. It hired an intermediary based in California with the undisputed intent that negotiations between that intermediary and SanDisk would take place in this state. Even assuming that Round Rock did not particularly care where IPValue performed the necessary preparatory work for those negotiations, it certainly could have foreseen that some substantial part of it might take place in California, as it undisputedly did. Under all these circumstances, there is nothing unfair about subjecting Round Rock to specific jurisdiction in this forum.”
Accordingly, Round Rock’s motion to dismiss for lack of personal jurisdiction was denied.
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It appears that Round Rock could have easily avoided the problem it found itself in by hiring another company located in its home state or by at least avoiding hiring a company in California. The decision to hire a company in California means that Round Rock will have to litigate this case in the venue of SanDisk’s choice.
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.