The U.S. Court of Appeals for Federal Circuit held that a patent owner cannot avoid a declaratory judgment action for lack of personal jurisdiction in a forum where it attended a convention and made disparaging comments to a competitor's customers and demanded the removal of the allegedly infringing products at an industry convention. The Campbell Pet Co. v. Miale, Case No. 08-1109 (Fed. Cir., Sept. 18, 2008) (Bryson J.).
The Washington-based plaintiff Campbell Pet Co. manufactures and sells pet accessories and products. The California-based defendant Ty-Lift Enterprises, which is wholly owned by co-defendant Theresa Miale and her mother, sells mobile stretchers for transporting injured animals. At a June 2007 veterinarian convention in Seattle, both Campbell and Ty-Lift displayed and marketed their competing animal stretchers. Miale, who owns two patents related to such animal stretchers, confronted Campbell employees at the convention and accused them of patent infringement. Along with allegedly threatening Campbell with expensive litigation and "bad mouthing" the company to Campbell's customers at the convention, Miale also unsuccessfully asked convention organizers to remove the Campbell display that featured the competing stretchers.
In the next month, Ty-Lift sent Campbell a letter claiming Campbell's mobile folding stretchers infringed the Miale patents. Shortly afterwards, Campbell filed a declaratory non-infringement and invalidity action in the U.S. District Court for the Western District of Washington. Ty-Lift moved to dismiss for lack of personal jurisdiction. The district court granted the motion after finding an insufficient basis to establish general or specific jurisdiction.
On appeal, the Federal Circuit agreed with the district court's ruling that Ty-Lift's 12 sales in Washington over an eight-year period and the existence of a Web site accessible by Washington residents failed to satisfy the "continuous and systematic general business contacts" with the forum state required under Helicopteros Nacionales de Colombia, S.A.
However, given that Washington's long-arm statute reaches to the fullest extent that due process allows, the Federal Circuit ruled that the district court should have exercised specific jurisdiction, which requires a two-prong analysis: first, whether the defendant "has purposefully directed his activities at residents of the forum; second, whether "the litigation results from alleged injuries that arise out of or relate to those activities." If those two conditions are met, then the third factor of "whether the assertion of personal jurisdiction would comport with fair play and substantial justice" must be assessed.
The district court found, and the Federal Circuit agreed, that the first two conditions had been met because the defendants had purposely engaged in transactions at the Washington convention and the cause of action for a declaratory judgment was connected to those transactions.
On the third factor, the Federal Circuit disagreed with the district court. The Federal Circuit agreed that its previous Red Wing Shoe precedent remains intact and requires activities beyond the sending of an infringement letter in order to be "reasonable and fair." Nevertheless, given the facts of this case, the Court noted that the actions went well beyond merely informing Campbell of patent rights and stating an intention to enforce those rights with litigation. Instead, Miale's "extra-judicial patent enforcement" efforts, even if not successful, targeted Campbell's business activities in Washington and thus satisfy the reasonableness element of the due process analysis.
Furthermore, the Federal Circuit rejected the argument that litigating in Washington offends "traditional notions of fair play and substantial justice" given the small size of the Miale's business and the expensive travel burden for the California defendants. The Court countered by noting that Campbell, itself a small business, would be similarly burdened if the defendants had brought an infringement action in their home state of California.
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