603 F.3d 1364 (Fed. Cir. 2010), 2009-1391, Patent Rights Protection Group, LLC v. Video Gaming Technologies, Inc.

Docket Nº:2009-1391.
Citation:603 F.3d 1364
Opinion Judge:LINN, Circuit Judge.
Party Name:PATENT RIGHTS PROTECTION GROUP, LLC, Plaintiff-Appellant, v. VIDEO GAMING TECHNOLOGIES, INC., Defendant-Appellee, and Spec International, Inc., Defendant-Appellee.
Attorney:Mark Borghese, Weide & Miller, Ltd., of Las Vegas, NV, argued for plaintiff-appellant. With him on the brief was R. Scott Weide. James D. Boyle, Santoro, Driggs, Walch, Kearney, Holley & Thompson, of Las Vegas, NV, argued for defendant-appellee Video Gaming Technologies, Inc. Steven L. Underwood,...
Judge Panel:Before RADER, ARCHER, and LINN, Circuit Judges.
Case Date:May 10, 2010
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1364

603 F.3d 1364 (Fed. Cir. 2010)

PATENT RIGHTS PROTECTION GROUP, LLC, Plaintiff-Appellant,

v.

VIDEO GAMING TECHNOLOGIES, INC., Defendant-Appellee,

and

Spec International, Inc., Defendant-Appellee.

No. 2009-1391.

United States Court of Appeals, Federal Circuit.

May 10, 2010

Page 1365

[Copyrighted Material Omitted]

Page 1366

Mark Borghese, Weide & Miller, Ltd., of Las Vegas, NV, argued for plaintiff-appellant. With him on the brief was R. Scott Weide.

James D. Boyle, Santoro, Driggs, Walch, Kearney, Holley & Thompson, of Las Vegas, NV, argued for defendant-appellee Video Gaming Technologies, Inc.

Steven L. Underwood, Price, Heneveld, Cooper, DeWitt & Litton, LLP, of Grand Rapids, MI, argued for defendant-appellee Spec International, Inc. With him on the brief was Jason L. Budd.

Before RADER, ARCHER, and LINN, Circuit Judges.

LINN, Circuit Judge.

Patent Rights Protection Group, LLC (" Patent Rights" ) appeals an order of the United States District Court for the District of Nevada granting SPEC International, Inc.'s (" SPEC" ) and Video Gaming Technologies, Inc.'s (" VGT" ) motions to dismiss for lack of personal jurisdiction and denying Patent Rights' request for jurisdictional discovery. Because the district court erred in concluding that exercising personal jurisdiction over SPEC and VGT would be unreasonable and abused its discretion in denying jurisdictional discovery on this basis, we vacate and remand.

I. Background

Patent Rights is a Nevada intellectual property holding company and the owner of U.S. Patents No. 6,475,087 and No. 6,860,814 (" the Gaming Patents" ), which relate to various types of casino-style gaming machines. Patent Rights initiated separate lawsuits in the District of Nevada against out-of-state gaming companies Nova Gaming, LLC; Cadillac Jack, Inc.; and VGT, a Tennessee corporation. Patent Rights asserted in each suit that the respective company had infringed the Gaming Patents by displaying, using, and offering for sale gaming machines at trade shows in Nevada. See Complaint at 2, Patent Rights Prot. Group, LLC v. Nova Gaming LLC (" Nova Gaming " ), No. 2:08-

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cv-00663-PMP-LRL (D.Nev. Dec. 30, 2008); Complaint at 2, Patent Rights Prot. Group, LLC v. Video Gaming Techs., Inc. (" Video Gaming Techs. " ), No. 2:08-cv-00662-JCMLRL (D. Nev. April 29, 2009); Complaint at 2, Patent Rights Prot. Group, LLC v. Cadillac Jack, Inc. (" Cadillac Jack " ), No. 2:08-cv-00660-KJD-RJJ, 2009 WL 2242674 (D.Nev. July 27, 2009). Each suit was assigned to a different judge in the District of Nevada. Patent Rights later added SPEC, a Michigan company, to each suit, asserting that SPEC had also infringed the Gaming Patents by displaying, using, and offering for sale cabinets that house gaming machines at trade shows in Nevada. See Amended Complaint at 2, Nova Gaming; Amended Complaint at 2, Video Gaming Techs.; Amended Complaint at 2, Cadillac Jack .

SPEC and VGT separately moved to dismiss the lawsuit underlying this appeal. Despite SPEC admitting that it had attended trade shows in Nevada " in the late 1990's" and both companies conceding that they had attended trade shows in Nevada in the " early 2000's, and more recently in 2007 and 2008," each company argued that its contacts with Nevada were insufficient for the court to exercise personal jurisdiction. SPEC and VGT each stated that it was not registered to do business in Nevada and did not have sales agents, employees, manufacturing facilities, bank accounts, or telephone listings in Nevada. Each company further asserted that it did not manufacture any products in Nevada and that its respective website was not specifically targeted to residents of Nevada. VGT stated that it did not direct marketing efforts at Nevada nor generate any revenue from Nevada, while SPEC alleged that it had mailed brochures to eight potential customers in Nevada and had generated only de minimis sales in the state. SPEC also alleged that nearly all of its officers, employees, and records associated with the accused products were located in Michigan.

SPEC and VGT also argued that the venue selected by Patent Rights was improper, alleging that the District of Nevada does not satisfy the requirements of 28 U.S.C. § 1400(b). Alternatively, both companies asked the district court to either transfer the suit or stay it pending the outcome of a related declaratory judgment action filed by SPEC against Patent Rights in Michigan. Patent Rights submitted an opposition contesting the motions to dismiss and requesting jurisdictional discovery.

Before the district court decided the parties' respective motions, the district judge handling the Nova Gaming case dismissed that action, finding that Patent Rights had failed to establish that the court had personal jurisdiction over SPEC or Nova Gaming, LLC and that venue was improper. Nova Gaming, No. 2:08-cv-00663-PMP-LRL, slip op. at 2-3 (D.Nev. Dec. 30, 2008). SPEC informed the district court of the decision in Nova Gaming and the court ordered the parties to submit supplemental briefing on the preclusive effect of the decision.

After hearing oral argument regarding the parties' submissions, the district court dismissed the action without prejudice. The court concluded that exercising personal jurisdiction over SPEC or VGT would be unreasonable under Ninth Circuit precedent, finding that the relevant factors either weighed in favor of a finding of unreasonableness or were neutral. The court denied Patent Rights' request for jurisdictional discovery because, in the court's view, jurisdictional discovery would not affect the court's reasonableness analysis. The court determined that the alternative grounds for...

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