Plaintiffs considering bringing suit in the District of Connecticut take heed: "Plaintiffs cannot vest a Connecticut court with personal jurisdiction over a person simply by hurling an accusation of patent infringement across the country at that person and then receiving responses in Connecticut," according to a recent order from Judge Shea. To provide some background, Protegrity sued TokenEx in the District of Connecticut, accusing TokenEx of infringing two patents related to data security. TokenEx, an LLC in Oklahoma, moved to dismiss for lack of personal jurisdiction.
Judge Shea allowed limited discovery on personal jurisdiction. The Court initially denied TokenEx's motion because the parties addressed the wrong statute–Conn. Gen. Stat. § 33-929 (Connecticut's corporation-specific long-arm statute). TokenEx subsequently renewed its motion to dismiss, and the parties briefed the issue under Conn. Gen. Stat. § 52-59b (Connecticut's general long-arm statute), which brings us to the Court's current order.
Judge Shea, applying the law of the Federal Circuit, evaluated the Court's jurisdiction over non-resident TokenEx using the traditional two-step inquiry: 1) whether Connecticut's long-arm statute permits service of process, and 2) whether the assertion of jurisdiction would be inconsistent with due process.
Turning to the first inquiry, Judge Shea found that for personal jurisdiction to be proper TokenEx must have transacted business in Connecticut and the cause of action must have arisen from TokenEx's business activity in Connecticut. See Conn. Gen. Stat. § 52-59b(a)(1). The Court noted that a single purposeful business transaction in Connecticut could constitute transacting business in Connecticut.
It was undisputed that TokenEx had no property, employees, customers, or sales in Connecticut, so Protegrity argued that TokenEx's contact with Protegrity's Connecticut-based subsidiary counted as transacting business in Connecticut. Protegrity also argued that TokenEx's advertising and website amounted to transacting business in Connecticut. Judge Shea rejected each of these arguments.
First, the Court rejected Protegrity's argument that TokenEx's responses to Protegrity's emails and calls indicated TokenEx's willingness to create business relationships with Connecticut entities. According to the Court, the evidence showed all of the emails and calls were unilaterally initiated by Protegrity and appeared to be related to Protegrity's infringement allegations and warnings about filing this lawsuit. Accordingly, the communications did not amount to a single purposeful business transaction.
With respect to Protegrity's other arguments, the Court found TokenEx's alleged advertising activities were insufficient. According to the Court, TokenEx's only yellow page listing is in Oklahoma and it never advertised on radio, television, or in a newspaper. The Court also found TokenEx's websites required users to search for TokenEx's content or be a subscriber to its sites to view advertisements. The Court concluded that such "nationwide advertising, without any additional showing that [TokenEx] specifically targeted Connecticut consumers is insufficient to demonstrate that TokenEx 'transacts any business'" in Connecticut.
Additionally, the Court determined TokenEx's website is insufficiently interactive to be the basis of personal jurisdiction. According to the Court, the website does not provide pricing information for TokenEx's products or allow for purchases. The Court concluded "the website requires any prospective customers first to contact TokenEx before obtaining its services" and that there was no showing that any sales from the website were to Connecticut customers or that the website specifically targeted Connecticut customers.
Closing the door on Protegrity's arguments, Judge Shea also concluded that even if any of the things Protegrity identified did amount to transacting business in Connecticut, Protegrity failed to show that the cause of action arose out of TokenEx's business activity in Connecticut. Finding that the requirements of Connecticut's long-arm statute were not met, the Court did not address the second inquiry for personal jurisdiction (whether personal jurisdiction would comport with due process) and dismissed the case.
The case is Protegrity Corporation v. TokenEx, LLC, Civil Action No. 3:13-cv-1719-MPS, in the District of Connecticut. A copy of the Court's decision can be found here.
Pre-Litigation Correspondence Does Not Secure Personal Jurisdiction
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