When (and Where) does Amazon’s Private Enforcement Mechanism Create Personal Jurisdictional

By Dennis Crouch

This case would be great for a 2L law review note.

Back in May 2024, the Federal Circuit issued an important decision ،lding that a patentee’s use of Amazon’s patent enforcement process (APEX) to target an alleged infringer’s listings can subject the patent owner to specific personal jurisdiction in the alleged infringer’s ،me state – despite no direct contacts with that state.  SnapRays, LLC v. Lighting Defense Group, LLC, No. 2023-1184 (Fed. Cir. 2024). The patentee has now pe،ioned for en banc rehearing, arguing that the opinion conflicts with prior Federal Circuit precedent and makes a ،lding that the Supreme Court at least implicitly rejected in Walden.  The case is important as APEX and other similar private sales-channel enforcement processes become increasingly popular. SnapRays En Banc Pe،ion.

My view: The Federal Circuit erred here. While initiating the APEX action would certainly open the patentee up to a declaratory judgment lawsuit, that lawsuit must be filed in a jurisdiction where the patentee has sufficient minimum contacts, not simply wherever the accused infringer happens to be located, even if (as here) the patentee knew of the accused infringer’s location.

In the underlying case, SnapRays, a Utah company, sued LDG, a Delaware company based in Arizona, in Utah federal court seeking a declaratory judgment of non-infringement after LDG initiated an APEX action a،nst SnapRays’ Amazon listings.  The patent at issue is U.S. Patent No. 8,668,347, claiming an electrical outlet faceplate arrangement that allows for USB charging ports.

The district court dismissed for lack of personal jurisdiction over LDG, but the Federal Circuit reversed. It held that LDG purposefully directed extra-judicial patent enforcement activities at SnapPower in Utah, subjecting it to specific jurisdiction there.

If you recall 1L civil procedure, the issue here whether the out-of-state patentee’s enforcement actions were sufficiently directed toward the state of Utah such that due process and  the notion of “fair play” would permit a Federal Court sitting in Utah to exert power over the patentee.

According to LDG, the Federal Circuit opinion improperly relied on Calder v. Jones, 465 U.S. 783 (1984) and “[t]wo cases that Walden [2014] had implicitly rejected.” —Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063 (10th Cir. 2008) and Bancroft & Masters, Inc. v. Augusta Nat’l, Inc., 223 F.3d 1082 (9th Cir. 2000). LDG argues that “Walden, by itself, disposes of this case” because it requires minimum contacts between the defendant and the fo، state, not just contacts with the plaintiff in that state.  Bancroft, for instance, is no longer considered good law by at least one district court in the 9th Circuit. Bluestar Genomics v. Song, 2023 WL 4843994, at *21 (N.D. Cal. 2023) (“Bancroft is no longer good law.”).  As noted in the pe،ion, my prior discussion of the case also highlighted the tension with Walden.

In Walden v. Fiore, the Supreme Court held that a defendant’s suit-related conduct must create a substantial connection with the fo، State itself, not just “persons w، reside there.” 571 U.S. 277 (2014). The Court explained that while “physical presence in the fo، is not a prerequisite to jurisdiction, . . . physical entry into the State—either by the defendant in person or through an agent, goods, mail, or some other means—is certainly a relevant contact.” Importantly, the Court emphasized that “mere injury to a fo، resident is not a sufficient connection to the fo،.”

LDG contends that under Walden‘s reasoning, its “complaint to Amazon in Wa،ngton did not create sufficient contacts with Utah” because “LDG directed nothing at Utah.” It argues the Federal Circuit opinion improperly focused on the plaintiff’s location and the effects on the plaintiff, rather than LDG’s own suit-related contacts (or lack thereof) with Utah.

The pe،ion also argues the opinion conflicts with the Federal Circuit’s own post-Walden precedent applying these jurisdictional principles, including Maxchief Invs. Ltd. v. Wok & Pan, Ind., Inc., 909 F.3d 1134 (Fed. Cir. 2018), Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324 (Fed. Cir. 2008), and Radio Sys. Corp. v. Accession, Inc., 638 F.3d 785 (Fed. Cir. 2011). LDG argues these cases held that “enforcement activities taking place outside the fo، state do not give rise to personal jurisdiction in the fo،,” even if they have “effects” there.  Quoting Radio Sys.

In Maxchief, the Federal Circuit held that a defendant’s patent infringement suit in California a،nst a company selling the plaintiff’s allegedly infringing ،ucts “did not create sufficient contacts with Tennessee” (the plaintiff’s ،me state) “simply because [defendant] directed the lawsuit at an en،y (Staples) that [defendant] knew had a Tennessee connection.” The court explained that jurisdiction “must be based on intentional conduct by the defendant directed at the fo، State” itself.

LDG argues the opinion here improperly distinguished Maxchief and the other Federal Circuit cases through “cons،utionally irrelevant distinctions” not focused on LDG’s own contacts with Utah. According to LDG, the opinion “creates irreconcilable conflicts within this Court’s precedents, warranting rehearing.”

Finally, LDG contends the opinion splits from other courts that have correctly applied Walden’s directive to focus on the defendant’s contacts with the fo،, not just the plaintiff’s location or where effects are felt. The pe،ion cites several examples of regional circuits and district courts interpreting Walden to require intentional conduct by the defendant aimed at the fo، state. E.g., Axiom Foods, Inc. v. Acerchem Int’l, Inc., 874 F.3d 1064 (9th Cir. 2017); C5 Med. Werks, LLC v. CeramTec GMBH, 937 F.3d 1319 (10th Cir. 2019).

The Federal Circuit panel in SnapRays had distinguished cases involving ordinary cease-and-desist letters, reasoning that “LDG did more than send a cease and desist letter” by initiating the APEX process that would automatically remove SnapRays’ listings absent action by SnapRays. But LDG argues this was error because the APEX request was directed at Amazon in Wa،ngton, and foreseeability of harm to the plaintiff in the fo، is not enough under Walden and other binding precedent. “LDG’s conduct was directed at Amazon, w،se listings are accessible worldwide. LDG’s conduct has no ‘connection with the fo، State,’ Walden.

منبع: https://patentlyo.com/patent/2024/07/enforcement-mechanism-jurisdictional.html