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finding that "that patent litigation commenced outside the forum is not probative of purposeful availment."
Summary of this case from Elecs. for Imaging, Inc. v. RAH Color Techs. LLCOpinion
Case No: C 11-00420 SBA.
June 3, 2011
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION Dkt. 22
Autonomy, Inc. ("Autonomy") filed the instant declaratory judgment action in this Court against Adiscov, LLC, and its sole member, Albert B. Krachman (collectively "Adiscov" unless otherwise noted), seeking a declaration of invalidity, unenforceability and non-infringement of United States Patent No. 6,738,760 ("'760 patent"). The parties are presently before the Court on Adiscov's motion to dismiss for lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2), or alternatively, to transfer venue under 28 U.S.C. § 1404(b). Dkt. 22. Having read and considered the papers filed in connection with this matter and being fully informed, the Court hereby GRANTS the motion to dismiss and DENIES the alternative motion to transfer as moot. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed.R.Civ.P. 78(b); N.D. Cal. Civ. L.R. 7-1(b).
I. BACKGROUND
A. THE PARTIES
Plaintiff Autonomy is a corporation organized under the laws of New Jersey and has California as its principal place of business. Am. Compl. ¶ 2, Dkt. 16. Defendant Adiscov, LLC, is a Virginia limited liability company which holds the rights to the `760 patent, entitled Method and System for Providing Electronic Discovery on Computer Databases and Archives Using Artificial Intelligence to Recover Legally Relevant Data. Id. ¶¶ 1, 3; see also Compl. Ex. A, Dkt. 1. Mr. Krachman resides in Virginia, and is alleged to be the owner and alter ego of Adiscov, LLC. Am. Compl. ¶¶ 4-5.
B. LEGAL PROCEEDINGS
On May 17, 2010, Adiscov commenced a patent infringement lawsuit against Autonomy and two other entities, FTI Consulting, Inc. ("FTI") and Recommind, Inc. ("Recommind"), in the Eastern District of Virginia, Alexandria Division. See Adiscov, LLC v. Autonomy Corp., No. C 10-00218 RBS (E.D. Vir.); Def.'s Mot. Ex. A, Dkt. 12-1. In its amended complaint filed on May 21, 2010, Adiscov alleged that Autonomy, FTI and Recommind manufactured, used and sold products that infringe the `760 patent.See C 10-00218 RBS, Dkt. 3 ¶¶ 15-17. On December 21, 2010, Autonomyq, later joined by the other defendants, filed a Rule 12(b)(6) motion to dismiss. The Virginia district court granted the motion on January 27, 2011, and dismissed the action. Id., Dkt. 68. The court did not grant Adiscov leave to amend, but dismissed the claims without prejudice. Id.
The Court may properly take judicial notice of the proceedings in the Eastern District of Virginia. See Bennett v. Medtronic, Inc., 285 F.3d 801, 803 n. 2 (9th Cir. 2002) (noting that a district court "`may take notice of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to matters at issue.'").
On January 28, 2011, the day after the Adiscov's Virginia action was dismissed, Autonomy commenced the instant action in this Court against Adiscov seeking a declaration of invalidity, unenforceability and non-infringement as to the `760 patent. Dkt. 1. Autonomy filed an amended complaint on February 10, 2011. Dkt. 16.
In the meantime, on February 2, 2011, Adiscov filed a second lawsuit in the Eastern District of Virginia, Alexandria Division, against Autonomy, FTI and Recommind. See Adiscov, LLC v. Autonomy Corp., No. C 11-00116 GBL (E.D. Va.), Dkt. 1. On March 22, 2011, Autonomy filed a Rule 12(b)(6) motion to dismiss. Id., Dkt. 12, 13. Instead of ruling on the motion, on April 7, 2011, the district court transferred the action under 28 U.S.C. § 1404(a) to the Norfolk Division of the Eastern District of Virginia. Id., Dkt. 21.
C. MOTION BEFORE THE COURT
Now before this Court is Adiscov's motion to dismiss for lack of personal jurisdiction. Dkt. 22. In its motion, Adiscov claims that Autonomy lacks the substantial, continuous and systematic contacts necessary for general jurisdiction, and the requisite minimum contacts for specific jurisdiction. Dkt. 28, 30. Adiscov alternatively contends that the instant action should be dismissed under the first-to-file rule, which permits a court in a later-filed action to dismiss, transfer or stay the action in the interests of judicial efficiency. To the extent the Court declines to dismiss the action, Adiscov seeks to have the action transferred to the Eastern District of Virginia for the convenience of the parties and witnesses, pursuant to 28 U.S.C. § 1404(a).
Autonomy does not contend that the Court has general jurisdiction over Adiscov, but instead, argues that specific jurisdiction is present based Adiscov allegedly having "systematically targeting Autonomy and other companies in the legal software industry, seeking to license the `760 patent." Pl.'s Opp'n at 1, 6-7, Dkt. 34. As to the first-to-file rule, Autonomy points out that there was no action pending in the Eastern District of Virginia when it commenced the instant declaratory judgment action in this Court. Finally, Automony argues that the relevant convenience factors germane to § 1404(a) transfer analysis weigh in favor of maintaining the action in this forum. As will be set forth below, the Court finds that Autonomy has failed to carry its burden of demonstrating a prima facie case of specific jurisdiction over Adiscov. As such, the Court does not reach Adiscov's alternative arguments for dismissal or transfer.
Autonomy also contends that the Court should deny Adiscov's motion based on the failure of its counsel to meet and confer prior to filing the instant motion, as required by the Standing Orders of this Court. See Dkt. 15. The Court does not countenance Adiscov's counsel's failure to comply with the Court's meet and confer requirement. Nonetheless, the Court will proceed with the adjudication of the motion to avoid delay, and since the motion has been fully briefed and the issues are ripe for adjudication. Separately, the Court notes that Adiscov filed a surreply, without first seeking and obtaining leave of Court to do so, in violation of Local Rule 7-1(d). The Court will not consider Adiscov's improper surreply, which is otherwise inapposite to the issues now presented.
II. LEGAL STANDARD
III. DISCUSSION
12Nuance Commc'ns, Inc. v. Abbyy Software House626 F.3d 12221231Id. Id. Id. Inamed Corp. v. Kuzmak249 F.3d 13561359Id.410.10Int'l Shoe Co. v. Washington326 U.S. 310316 World-Wide Volkswagen Corp. v. Woodson444 U.S. 286297
"Depending on their nature and number, a defendant's contacts with a forum can provide a court with general jurisdiction or specific jurisdiction." Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip. Medico, 563 F.3d 1285, 1297 (Fed. Cir. 2009). General jurisdiction exists when a defendant maintains "continuous and systematic" contacts with the forum state even if the cause of action has no relation to those contacts.Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984). Where a defendant is not subject to general jurisdiction in the forum state, a district court may nonetheless exercise specific jurisdiction over the defendant if the cause of action "arises out of" or "relates to" the defendant's in-state activity. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985). "In order to satisfy due process requirements for establishing specific jurisdiction over a defendant, the plaintiff must show that the defendant purposely directed its activities at residents of the forum and that the plaintiff's claim arises from or relates to those activities. In addition, the plaintiff must satisfy the court that the assertion of personal jurisdiction under the circumstances is reasonable and fair." Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785, 789 (Fed. Cir. 2011).
"Because declaratory judgment actions raise non-infringement, invalidity, and/or unenforceability issues central to enforcement of the patents in question, [the Federal Circuit has] looked beyond the `arises out of' inquiry and have found jurisdiction where such `other activities' in some identifiable way `relate to' enforcement of those patents in the forum." Avocent Huntsville Corp. v. Aten Int'l Co., Ltd. 552 F.3d 1324, 1333 (Fed. Cir. 2008). Under this standard, the act of threatening a party with an infringement lawsuit is, standing alone, insufficient to establish personal jurisdiction. Id. Rather, the plaintiff must show that the patentee engaged in "`other activities' that relate to the enforcement or the defense of the validity of the relevant patents[.]" Id. The "other activities" identified in Avocent include "initiating judicial or extra-judicial patent enforcement within the forum, or entering into an exclusive license agreement or other undertaking which imposes enforcement obligations with a party residing or regularly doing business in the forum." Id. (emphasis added).
Though Autonomy does not allege that the Court has general jurisdiction over Adiscov, it avers that the Court has specific jurisdiction based on Adiscov's conduct in directing its patent enforcement activities at Autonomy in California, as well as other companies which are based in or that do business in California. However, the actions cited by Automony are far too attenuated to support a showing of personal jurisdiction. The only specific activity relating to the `760 patent and Automony supported by the record is a meeting held at the office of Autonomy's counsel in Palo Alto, California, on November 3, 2010, to discuss the potential settlement of Adiscov's infringement claims, and Adiscov's subsequent lawsuit against Autonomy in Virginia. See Am. Compl. ¶ 9; Pl.'s Opp'n at 7. Federal Circuit precedent is clear, however, that discrete acts of threatening legal action are insufficient to show specific jurisdiction. See Avocent, 552 F.3d at 1333 (noting that for "policy considerations unique to the patent context . . . letters threatening suit for patent infringement sent to the alleged infringer by themselves do not suffice to create personal jurisdiction.") (internal citations omitted); Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1361 (Fed. Cir. 1998) ("A patentee should not subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement.").
Automony contends that Adiscov's contacts with the forum extend beyond its meeting in Palo Alto, and that the Court also should take into account Adiscov's efforts to enforce the `760 patent against companies with headquarters in San Francisco, such as Autonomy and Recommind. Pl.'s Opp'n at 6-7. Though not entirely clear from its papers, Automony appears to be referring to the lawsuit originally brought by Adiscov against Autonomy and others in the Eastern District of Virginia. Though acknowledged by neither party, this Court has previously found that patent litigation commenced outside the forum is not probative of purposeful availment. In Juniper Networks, Inc. v. SSL Servs., LLC, No. C 08-5758 SBA, 2009 WL 3837266 (N.D. Cal. Nov. 16, 2009), aff'd, 2010 WL 5140471 (Fed. Cir. Dec. 13, 2010) (unpublished), the Court rejected plaintiff's contention the patentee's patent infringement lawsuit against filed in a Texas federal court constituted enforcement activity within the forum. The Court explained:
Here, the enforcement activity involving the Citrix entities transpired in Texas, not California. Tellingly, Juniper cites no authority to support its novel argument that the act of filing a lawsuit against an alleged California resident — in a Texas district court — is sufficient to make a prima facie showing that it has purposefully availed "itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Avocent, 552 F.3d at 1329 (internal quotation and citation omitted). Nor does such an argument make any logical sense. Under Juniper's theory of personal jurisdiction, a defendant would automatically be subject to personal jurisdiction in a forum where it previously sued an entity that happened to conduct business in that particular state, even where the lawsuit was filed in an entirely different state.Id. at *4. Thus, for the same reasons expressed in Juniper Networks, the Court finds that the fact that Adiscov sued Autonomy and Recommind in Virginia does not show enforcement activity within this forum.
As an ancillary matter, Autonomy also contends that Adiscov's "purposeful contacts" are shown by "foreclosing competition through the assertion of sham patent litigation" based on the `760 patent, allegedly to the detriment of California consumers. Pl.'s Opp'n at 7. Though again not entirely clear from its papers, Autonomy again appears to be making reference to the lawsuit initiated by Adiscov against Autonomy, Recommind and Stolz in the Eastern District of Virginia. However, as discussed above, the patentee's filing a lawsuit against a resident of the forum in another state is insufficient to establish personal jurisdiction over patentee.
Next, Autonomy attempts to make much of the fact that Adiscov issued a patent license to Kroll Ontrack, Inc., ("Kroll"), "a competitor of Autonomy . . . that competes with Autonomy for business in California from its offices in California." Pl.'s Opp'n at 6-8. However, such allegations, even if true, are of marginal relevance to the issue of personal jurisdiction. As noted, the salient question is presented is whether Adiscov purposefully directed its activities at "residents of the forum."Inamed, 249 F.3d at 1359. Kroll is not a resident of California; rather, it is incorporated and headquartered in Minnesota. Reply Ex. A, Dkt. 39. Moreover, Autonomy cites no authority for the proposition that issuing a non-exclusive license to any competitor of the plaintiff constitutes enforcement activity in the forum. If that were the case, a patentee would be subject to personal jurisdiction in any state where that licensee has a physical presence. See Red Wing Shoe, 148 F.3d at 1361 (holding that the fact that the patentee conducted business with a licensee that conducted business in the forum state was "insufficient to submit [the patentee] to personal jurisdiction in the state," and that to conclude otherwise would "subject a defendant to nationwide personal jurisdiction if it decides to do business with a company that does business nationwide.").
Finally, Autonomy's attempt to analogize this action to Akro Corp. v. Luker, 45 F.3d 1541 (Fed. Cir. 1995) is misplaced. In that case, plaintiff Akro Corporation ("Akro") brought a declaratory judgment action in an Ohio federal district court seeking a declaration of non-infringement, invalidity and unenforceability against the patentee of a floor mat design. Akro was an Ohio corporation based in Ohio, while the patentee resided in California. On appeal, the Federal Circuit reversed the district court's dismissal of the action for lack of personal jurisdiction. In finding that the patentee had purposefully directed his activities at Ohio, the court specifically focused on the fact that the patentee had initiated contact with Akro in Ohio, initially by sending a warning letter and later by engaging in by three years of negotiations, which included five additional letters threatening litigation. Id. at 1542, 1546. In addition, the court emphasized that the patentee had entered into an exclusive licensing agreement with another Ohio corporation regarding the same patent, which created "continuing obligations" between the patentee and the Ohiobased competitor, and eliminated any possibility of a licensing agreement with Akro. Id. This, the court concluded, was sufficient to show that the patentee "directed activities at residents of Ohio within the meaning of the due process inquiry mandated by Burger King and International Shoe." Id.
This case is readily distinguishable from Akro. In Akro, the patentee's purposeful direction was established by the fact the lawsuit was preceded by several years of negotiations and six letters sent by the patentee threatening litigation, as well as the patentee's execution of an exclusive patent license agreement with another corporation based in the forum. Here, there was a single meeting between Autonomy and Adiscov, and no subsequent negotiations, letters or threats of litigation. In addition, Kroll is not incorporated or based in California nor was the licensing agreement Adiscov entered into with Kroll exclusive. Thus, the factors which theAkro court found compelling in terms of the patentee's continuing obligations with the forum simply are absent from this case.
IV. CONCLUSION
For the reasons set forth above,
IT IS HEREBY ORDERED THAT Adiscov's motion to dismiss for lack of personal jurisdiction is GRANTED. Adiscov's alternative motion to transfer is DENIED as moot. The Clerk shall close the file and terminate any pending matters.
IT IS SO ORDERED.
Dated: June 2, 2011