The Software IP Report

No Personal Jurisdiction Based on “Location” of Patent

A patent owner’s residence in Washington state did not confer personal jurisdiction over defendants in a dispute over the defendants’ rights to license and sub-license the patent.  VSIM Patent Co., LLC v. Benson, No. C12-102RSL (W.D. Wash. 2012).  The action that the patent owner brought did, however, end up conferring a right to fees and costs on the defendants under a Washington fee shifting statute.

The plaintiff patent owner sought a declaratory judgment that “licenses and sub-licenses granted or received by one or more of the Defendants before Plaintiff took ownership of the patent” were either invalid or owned by the plaintiff.  The defendants moved to dismiss, arguing that the plaintiff had not met its burden of establishing personal jurisdiction.  This was a diversity case, and Washington’s long-arm statute authorized jurisdiction to the extent of the limits of the U.S. Constitution.

The plaintiff made the argument that the court had personal jurisdiction over the defendants because it had in rem jurisdiction over the patent.  However, “it is black letter law that an in rem action allows ‘the court jurisdiction only over the res, and not over the defendant personally.'”  (Citation omitted.)  Further, “the situs of intangible property does not automatically equate to the domicile of its owner.”  The plaintiff could hale the defendants into court only by establishing in personam jurisdiction over them.

Under the well-known “minimum contacts” test, the plaintiff could not establish specific jurisdiction in Washington.  Allegations that the patent was located in Washington were irrelevant, because the patent was in Washington only because of the plaintiff’s unilateral activity.  The presence of property in a state does not give rise to an inference of minimum contacts where the property is chattel.

The plaintiff also argued that the defendants had purposefully availed themselves of Washington “by deliberately placing licenses to the 547 Patent in the stream of commerce and by soliciting licenses through the Internet.”  However, only one defendant, who was not a party to the motion to dismiss, had introduced any products in Washington.  The plaintiff argued that the moving defendants had acted in concert with this non-moving defendant, but the mere fact that a moving defendant had granted a license to the non-moving defendants, and the non-moving defendants had subsequently introduced products in Washington, was not enough to establish personal jurisdiction over the moving defendant.  Further, a nationally available YouTube page listing the moving defendant’s licensees did not establish personal jurisdiction.  In short, the plaintiff could not show the affirmative acts on the part of the moving defendants that would have been necessary to establish personal jurisdiction.

Unfortunately for the plaintiff, a Washington statute provided that “[i]n the event the defendant is personally served outside the state on causes of action enumerated in this section, and prevails in the action, there may be taxed and allowed to the defendant as part of the costs of defending the action a reasonable amount to be fixed by the court as attorneys’ fees.”  Accordingly, the court ordered the defendants to submit a declaration detailing their reasonable costs and fees.