340 F.3d 1344 (Fed. Cir. 2003), 02-1536, Electronics For Imaging, Inc. v. Coyle

Docket Nº:02-1536
Citation:340 F.3d 1344
Party Name:Electronics For Imaging, Inc. v. Coyle
Case Date:August 18, 2003
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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340 F.3d 1344 (Fed. Cir. 2003)

67 U.S.P.Q.2d 1940

ELECTRONICS FOR IMAGING, INC., Plaintiff-Appellant,

v.

Jan R. COYLE and Kolbet Labs, Defendants-Appellees.

No. 02-1536.

United States Court of Appeals, Federal Circuit

August 18, 2003

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[Copyrighted Material Omitted]

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William C. Rooklidge, Howrey Simon Arnold & White, LLP, of Irvine, CA, argued for plaintiff-appellant. With him on the brief was Russell B. Hill.

Steven A. Gibson, Santoro, Driggs, Walch, Kearney, Johnson & Thompson, of Las Vegas, NV, argued for defendants-appellees. With him on the brief was F. Christopher Austin.

Before RADER, BRYSON, and GAJARSA, Circuit Judges.

GAJARSA, Circuit Judge.

Electronics for Imaging, Inc. ("EFI") appeals from the judgment issued by the United States District for the Northern District of California ("district court") granting the motion of Jan R. Coyle ("Coyle") and Kolbet Labs (collectively "defendants") to dismiss for lack of personal jurisdiction EFI's first amended complaint for declaratory and injunctive relief. Elecs. for Imaging, Inc. v. Coyle, No. 01-CV-4853 (N.D.Cal. Mar. 26, 2002). EFI's complaint for declaratory and injunctive relief alleged that Coyle's United States Patent No. 6,337,746 ("the '746 patent") was invalid and that EFI had not misappropriated defendants' alleged trade secrets or breached any contract entered into with defendants. We conclude that the district court may exercise personal jurisdiction over defendants and such jurisdiction comports with due process. We therefore reverse and remand.

I. BACKGROUND

Plaintiff-appellant EFI, a Delaware corporation with its principal place of business

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in Foster City, California, is a world leader in the area of software and hardware imaging solutions for network printing. EFI develops, manufactures, and sells print controllers, which are devices that control printers and copiers. Defendant-appellee Kolbet Labs is a Nevada corporation. EFI believes that defendant-appellee Coyle, a Nevada resident, does business as Kolbet Labs. Both Coyle and Kolbet Labs engage in the research and development of computer software and hardware technology that can be used to more efficiently control digital printers and copiers.

Coyle filed United States Patent Application No. 08/987/212 ("the '212 application") on December 9, 1997, which eventually issued as the '746 patent on January 8, 2002. The subject matter of the '212 application concerned an interface card for coupling a computer to an external device. Coyle hired two different California firms to prosecute the '212 application.

In late 1999 or early 2000, Coyle solicited EFI and proposed that EFI purchase defendants' technology related to an interface card for controlling printers and copiers. Thereafter, on or about January 28, 2000, EFI and Kolbet Labs entered into a mutual nondisclosure agreement ("NDA"), which Coyle signed as "owner" of Kolbet Labs. The agreement addressed the treatment of certain confidential information disclosed during the course of discussing a "business possibility of mutual interest relating to digital image processing." In the NDA, the parties agreed to restrict use of the confidential information to reviewing and discussing such information in order to determine "whether to enter into a business relationship with the other party." The NDA was to terminate after a year, but the obligations of confidentiality as set forth would be binding on the parties for four years after the termination of the NDA. Finally, the NDA was "governed by and construed under the laws of the State of California, without reference to conflicts of laws principles."

After the signing of the NDA, defendants solicited EFI in California repeatedly, providing information regarding defendants' technology to EFI. At several different times around May and June 2000, Coyle's attorney in California, Newton Lee, sent EFI various documents relating to the progress of the '212 application, including copies of selected parts of the '212 application. In December 2000, Coyle contacted EFI in California again to solicit EFI's purchase of his technology. On December 13, 2000, two of defendants' representatives visited EFI's facility in California to demonstrate Coyle's interface card. After the visit, EFI informed Coyle that it was not interested in purchasing the technology.

In September 2001, Coyle informed EFI by telephone that the claims of the '212 application had been allowed by the U.S. Patent and Trademark Office, alleged that the allowed patent claims covered EFI's print controllers, and continued to report further new developments in his technology. Coyle later that month continued to solicit EFI by sending documents identifying the claims that had been allowed and additional information on defendants' technology.

Around the week of November 26, 2001, Coyle made telephone calls to EFI in California several times, alleging that EFI's print controllers infringed the claims of the '212 application. In these phone calls, Coyle also alleged that EFI's print controllers contained trade secret information belonging to Coyle and/or Kolbet Labs,

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and threatened to sue EFI for misappropriation of trade secrets and breach of the NDA. Coyle thereafter repeatedly threatened litigation throughout the next two weeks.

On December 11, 2001, before the '746 patent issued, EFI filed a complaint for declaratory and injunctive relief against defendants in the district court. EFI's complaint alleged that (1) EFI did not misappropriate any trade secret information belonging to defendants by sales of its print controllers or otherwise, and (2) EFI did not breach any NDA with defendants. After the '746 patent issued on January 8, 2002, EFI amended its complaint to allege that the claims of the '746 patent were invalid. Subject matter jurisdiction over these three claims was alleged to exist pursuant to 28 U.S.C. §§ 1331, 1332, and 1338. Defendants moved to dismiss the amended complaint for lack of personal jurisdiction.

On March 26, 2002, the district court granted defendants' motion pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure ("Rule 12(b)(2)"). Applying Ninth Circuit law, the court held that EFI failed to show that defendants had purposefully directed its activities at California, thereby failing to establish that defendants had the "minimum contacts" in California necessary to justify the exercise of jurisdiction over defendants. EFI timely appealed, and we have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1).

II. DISCUSSION

A. Choice of Law and Standard of Review

We begin with the choice-of-law question: whether the personal jurisdiction analysis in this case is pursuant to Federal Circuit or regional circuit law. The district court applied Ninth Circuit law of personal jurisdiction to all three claims in the complaint. The parties concur that the district court erred in doing so, asserting that Federal Circuit law should apply to all three claims. We disagree with both the district court and the parties in this regard because Federal Circuit law applies to the patent claim and Ninth Circuit law applies to the state law claims.

Our prior decisions make clear that where the personal jurisdictional inquiry is "intimately involved with the substance of the patent laws," we apply Federal Circuit law. Akro Corp. v. Luker, 45 F.3d 1541, 1543 (Fed.Cir. 1995). We thus apply Federal Circuit law to the patent invalidity claim presented, even in the context presented here, where defendants in the declaratory judgment are the patentees. See id....

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