Touchcom, Inc. v. Bereskin & Parr

• Decision Date: 03 August 2009
• Docket Number: No. 2008-1229.,2008-1229.
• Parties: TOUCHCOM, INC. and Touchcom Technologies, Inc., Plaintiffs-Appellants, v. BERESKIN & PARR and H. Samuel Frost, Defendants-Appellees.
• Court: U.S. Court of Appeals — Federal Circuit

574 F.3d 1403

TOUCHCOM, INC. and Touchcom Technologies, Inc., Plaintiffs-Appellants, v. BERESKIN & PARR and H. Samuel Frost, Defendants-Appellees.

No. 2008-1229.

United States Court of Appeals, Federal Circuit.

August 3, 2009.

Sheron Korpus, Kasowitz, Benson, Torres & Friedman, LLP, of New York, NY, argued for plaintiffs-appellants. With him on the brief was Michael S. Shuster.

G. Luke Ashley, Thompson & Knight L.L.P., of Dallas, TX, argued for defendants-appellees. With him on the brief were John H. Martin, J. Michael Heinlen; and Peter E. Strand, Shook, Hardy & Bacon L.L.P., of Washington, DC.

Before LOURIE, GAJARSA, and PROST, Circuit Judges.

Opinion for the court filed by Circuit Judge LOURIE. Dissenting opinion filed by Circuit Judge PROST.

LOURIE, Circuit Judge.

Touchcom, Inc. and Touchcom Technologies, Inc. (collectively "Touchcom") appeal from the final judgment of the United States District Court for the Eastern District of Virginia dismissing Touchcom's malpractice suit against the law firm of Bereskin & Parr ("B & P") and attorney H. Samuel Frost. Touchcom, Inc. v. Bereskin & Parr, No. 07-CV-114, slip op. at 1 (E.D.Va. Feb. 4, 2008). The district court dismissed Touchcom's suit for lack of personal jurisdiction. Because the court erred in determining that it did not have personal jurisdiction over B & P and Frost, we reverse.

BACKGROUND

Peter Hollidge, one of the principals of Touchcom, Inc., invented aspects of a pump system that was designed to allow a user to control the system via a central processing unit. In 1987, he retained B & P, a Canadian intellectual property law firm, and specifically H. Samuel Frost, a partner in B & P's Mississauga office, to file and prosecute the necessary patent applications. Hollidge sought patent protection for his invention in Canada, the United States, and various European countries. B & P and Frost entered into an oral agreement with Hollidge regarding the patent prosecution.

Frost prepared a Canadian patent application on Hollidge's invention that was filed on August 6, 1987.¹ The Canadian application, which ultimately issued as Canadian Patent 1,301,929, contained the complete source code for Hollidge's invention.² Can. Patent No. 1,301,929 (filed Aug. 6, 1987) (issued May 26, 1992). That source code, particularly its omission from a subsequent patent application in the United States, is at the heart of Touchcom's present action against B & P and Frost (collectively, "appellees").

To obtain patent protection on Touchcom's invention outside of Canada, Frost opted to file under the Patent Cooperation Treaty ("PCT"). The PCT provides a unified procedure for filing a single patent application in multiple countries. Under the PCT process, an applicant first files a patent application in one participating country. The International Bureau of the World Intellectual Property Organization ("WIPO"), on request, then transmits copies of the application to domestic national patent offices selected by the patentee. Those filings are referred to as "national phase entries."

On August 5, 1988, Frost filed a PCT application in the United Kingdom covering Touchcom's invention. That PCT application, unlike the Canadian application, did not contain the complete computer source code for the invention; a portion of the source code was unintentionally omitted. On December 29, 1989, WIPO transmitted and filed a national phase application in the United States Patent and Trademark Office ("USPTO"), which is located in Alexandria, Virginia. The U.S. application was identical to the British application; it also lacked the omitted portion of the computer source code.

In order to perfect the U.S. application, Frost transmitted various documents to the USPTO, including a transmittal letter, a cover letter that outlined applicable fees, and a declaration of inventorship executed by Hollidge. Additionally, Frost submitted a preliminary amendment (not related to the source code), a petition to make special, and small entity declarations signed by Hollidge and Touchcom. It is not alleged that Frost, or any other member of B & P, physically entered Virginia to prosecute the Touchcom patent. On June 25, 1991, U.S. Patent 5,027,282 (filed Dec. 28, 1988), claiming the interactive pump system, issued to Touchcom.

Several years after obtaining its U.S. patent, Touchcom filed two patent infringement actions in the U.S. District Court for the Eastern District of Texas. In one of those actions, the district court held that Touchcom's patent was invalid for indefiniteness. Touchcom, Inc. v. Dresser, Inc., 427 F.Supp.2d 730, 737 (E.D.Tex.2005). The court premised much of its finding of indefiniteness on the absence of portions of the source code from Touchcom's patent. Id.

On August 25, 2006, Touchcom filed a malpractice action against appellees in the Superior Court for the District of Columbia. Appellees subsequently removed the case to the U.S. District Court for the District of Columbia. On October 3, 2006, Touchcom voluntarily dismissed the D.C. action and, on the following day, re-filed the case in the circuit court of Arlington County, Virginia.

On January 30, 2007, appellees removed the Arlington County action to the U.S. District Court for the Eastern District of Virginia. Shortly thereafter, appellees moved to dismiss the complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). Touchcom moved to remand the case to state court for lack of subject matter jurisdiction. The district court then stayed the proceedings pending our decision in Air Measurement Technologies, Inc. v. Akin Gump Strauss Hauer & Feld, 504 F.3d 1262 (Fed.Cir.2007). That decision was entered on October 15, 2007, and the district court lifted its stay one month later.

On February 4, 2008, the district court ruled on all pending motions, including appellees' motion to dismiss under Fed. R.Civ.P. 12(b)(2) for lack of personal jurisdiction. Touchcom, Inc. v. Bereskin & Parr, No. 07-CV-114, slip op. at 31 (E.D.Va. Feb. 4, 2008). As a preliminary matter, the court, relying on our decisions in Air Measurement and Immunocept, LLC v. Fulbright & Jaworski, LLP, 504 F.3d 1281 (Fed.Cir.2007), found that it possessed subject matter jurisdiction over Touchcom's claim. Touchcom, No. 07-CV-114, slip op. at 8-18. Thus, the court denied B & P and Frost's motion to remand the case to state court. Id. at 17-18. The court then granted Touchcom's 12(b)(2) motion and dismissed the case for lack of personal jurisdiction. Id. at 18-30. In doing so, the court focused its analysis on the particular requirements of the Virginia long-arm statute and concluded that Touchcom had failed to plead facts sufficient to satisfy those requirements. Id. at 30 ("[T]he Court does not possess specific jurisdiction over Defendants within the meaning of Virginia's long-arm statute.").

Touchcom timely appealed the district court's judgment. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

DISCUSSION

Touchcom argues that the district court erred when it found that it lacked personal jurisdiction over appellees. Touchcom contends that, contrary to the court's finding, appellees' contacts with the Commonwealth of Virginia were sufficient to satisfy the Virginia long-arm statute and establish specific jurisdiction over appellees. In support of that claim, Touchcom alleges that appellees transacted business in Virginia, contracted to supply services or things in Virginia, and caused tortious injury in Virginia by an act or omission outside of Virginia. Furthermore, Touchcom claims that appellees possess the required "minimum contacts" with Virginia such that exercise of personal jurisdiction over appellees would not be inconsistent with notions of fair play and substantial justice.

In response, appellees urge us to affirm the district court's finding that it lacked specific jurisdiction over appellees. Appellees claim that Virginia's long-arm statute does not confer jurisdiction over Frost or B & P because the alleged malpractice does not arise out of business transacted in Virginia or from the transmission of documents to the USPTO. Appellees further argue that the Virginia long-arm statute does not establish jurisdiction because the alleged malpractice was not a tortious act committed in Virginia. Even if the Virginia long-arm statute conferred jurisdiction in this case, and appellees claim it does not, appellees argue that finding personal jurisdiction in this case would violate due process.

The question presented in this case is one of first impression, viz., whether the act of filing an application for a U.S. patent at the USPTO is sufficient to subject the filing attorney to personal jurisdiction in a malpractice claim that is based upon that filing and is brought in federal court. For the reasons discussed below, we conclude that it is.

A. Standard of Review

We review whether the district court had personal jurisdiction over appellees under a de novo standard. 3D Sys., Inc. v. Aarotech Labs., Inc., 160 F.3d 1373, 1376 (Fed.Cir.1998). "While we defer to the interpretation of a state's long-arm statute given by that state's highest court, particularly whether or not the statute is intended to reach the limit of federal due process, when analyzing personal jurisdiction for purposes of compliance with federal due process, Federal Circuit law, rather than regional circuit law, applies." Id. at 1377 (citations omitted).

Because the district court decided appellees' pretrial personal jurisdiction motion without conducting a hearing, Touchcom must make only a prima facie showing that the district court had personal jurisdiction over appellees in order to succeed on appeal. Elecs. for Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed.Cir. 2003). In evaluating whether Touchcom has met its burden, we accept the uncontroverted allegations in Touchcom's complaint as true and resolve any factual conflicts in...