Prior Litigation Subjects Foreign Non-Practicing Entity to Personal Jurisdiction: Federal Circuit | Practical Law

Prior Litigation Subjects Foreign Non-Practicing Entity to Personal Jurisdiction: Federal Circuit | Practical Law

In Xilinx, Inc. v. Papst Licensing GmbH & Co., the US Court of Appeals for the Federal Circuit held that a foreign non-practicing entity's history of patent litigation in California can be considered to satisfy the fair play and substantial justice prong for specific personal jurisdiction.

Prior Litigation Subjects Foreign Non-Practicing Entity to Personal Jurisdiction: Federal Circuit

by Practical Law Intellectual Property & Technology
Published on 17 Feb 2017 • USA (National/Federal)
In Xilinx, Inc. v. Papst Licensing GmbH & Co., the US Court of Appeals for the Federal Circuit held that a foreign non-practicing entity's history of patent litigation in California can be considered to satisfy the fair play and substantial justice prong for specific personal jurisdiction.
On February 15, 2017, in Xilinx, Inc. v. Papst Licensing GmbH & Co., the US Court of Appeals for the Federal Circuit reversed the US District Court for the Northern District of California, holding that a district court could exercise specific personal jurisdiction over a foreign non-practicing entity based on the entity's prior US patent enforcement and licensing efforts ( (Fed. Cir. Feb. 15, 2017)).
Xilinx, Inc. is a Delaware corporation that has its headquarters in California. Xilinx designs, develops, and markets programmable logic devices for use in electronic systems. Papst Licensing GmbH & Co. KG is a German non-practicing entity whose sole business is monetizing and licensing intellectual property rights. Papst's business model is to:
  • Acquire patent rights.
  • Identify infringers.
  • Attempt to either:
    • establish a licensing agreement with the infringers; or
    • sue infringers if the parties do not reach an agreement.
Papst is the assignee of US Patent Nos. 6,574,759 and 6,704,891, which are directed to methods for generating and verifying memory tests in electronics. Papst claimed Xilinx infringed its patents and sent:
  • Xilinx two notice letters concerning the alleged infringement.
  • Three Papst representatives to California to negotiate a licensing agreement with Xilinx.
After the parties failed to reach an agreement, Xilinx filed a declaratory judgment action in the Northern District of California, seeking a determination that its products do not infringe Papst's patents and that the patents are invalid. Xilinx argued that specific personal jurisdiction existed because Papst:
  • Attempted to license and enforce the patents against Xilinx in California.
  • Previously filed at least seven other patent infringement suits in California federal courts.
Papst moved to dismiss the action for lack of personal jurisdiction. The district court determined that the court lacked specific personal jurisdiction and granted the motion.
The Federal Circuit reversed and held that personal jurisdiction over Papst is proper. The Federal Circuit explained that a court can exercise specific personal jurisdiction over a defendant when both:
  • The defendant has minimum contacts within the forum state through:
    • activities purposefully directed at residents of the state; and
    • a claim arising out of or relating to the defendant's activities.
  • The assertion of personal jurisdiction is reasonable and fair.
The Federal Circuit determined that the minimum contacts prong was satisfied when Papst sent multiple notice letters to Xilinx and traveled to California to discuss Xilinx's alleged patent infringement and potential licensing arrangements.
Papst argued that the assertion of personal jurisdiction is unreasonable because it is based solely on the act of it sending cease and desist letters. The Federal Circuit disagreed, explaining that Papst:
  • Must present a compelling reason why jurisdiction would be unreasonable because Papst has the required minimum contacts.
  • Would not suffer undue burden from personal jurisdiction in California because:
    • it had already come to California;
    • its main business model was to litigate patents in the US;
    • its previous patent infringement suits suggested no burden to litigate in California; and
    • it had not presented evidence to overcome the presumption of reasonableness created by its minimum contacts with California.
Accordingly, the Federal Circuit held that personal jurisdiction over Papst was proper and it reversed the district court's dismissal and remanded for further proceedings.