Trimble Inc. v. PerDiemCo LLC

• Decision Date: 12 May 2021
• Docket Number: 2019-2164
• Citation: 997 F.3d 1147
• Parties: TRIMBLE INC., Innovative Software Engineering, LLC, Plaintiffs-Appellants v. PERDIEMCO LLC, Defendant-Appellee
• Court: U.S. Court of Appeals — Federal Circuit

997 F.3d 1147

TRIMBLE INC., Innovative Software Engineering, LLC, Plaintiffs-Appellants

v.PERDIEMCO LLC, Defendant-Appellee

2019-2164

United States Court of Appeals, Federal Circuit.

Decided: May 12, 2021

Dan L. Bagatell, Perkins Coie LLP, Hanover, NH, argued for plaintiffs-appellants. Also represented by Daniel Tyler Keese, Portland, OR; Amanda Tessar, Denver, CO.

Laurence M. Sandell, Mei & Mark LLP, Washington, DC, argued for defendant-appellee. Also represented by Lei Mei, Edward Naidich ; Patrick Joseph Coyne, Finnegan, Henderson, Farabow, Garrett & Dunner LLP, Washington, DC; Jency J. Mathew, Reston, VA; Robert F. McCauley, Palo Alto, CA.

Charles Duan, R Street Institute, Washington, DC, for amici curiae Electronic Frontier Foundation, Engine Advocacy, Innovation Defense Foundation, Public Knowledge, R Street Institute.

Before Newman, Dyk, and Hughes, Circuit Judges.

Dyk, Circuit Judge.

Trimble Inc. and Innovative Software Engineering, LLC ("ISE") appeal a judgment dismissing their declaratory judgment noninfringement action against PerDiemCo LLC for lack of personal jurisdiction. PerDiemCo is the owner of eleven patents that it accused Trimble and ISE of infringing in letters and other communications sent to Trimble, a California resident. Relying on this court's decision in Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc. , 148 F.3d 1355 (Fed. Cir. 1998), the United States District Court for the Northern District of California held that it would be unreasonable to assert personal jurisdiction over PerDiemCo based on its communications to Trimble in California.

We conclude that Red Wing does not preclude personal jurisdiction on the facts of this case and that the district court had personal jurisdiction over PerDiemCo.

BACKGROUND

Defendant PerDiemCo is a Texas limited liability company. PerDiemCo is the assignee of the eleven patents at issue in this lawsuit. All the patents have a common specification and relate to electronic logging devices and/or geofencing.¹ Electronic logging devices log the hours and activities of truck and other commercial vehicle drivers to help their employers comply with federal and state safety regulations. Geofencing involves monitoring whether a vehicle enters or leaves a preset area. PerDiemCo's current sole owner, officer, and employee is Robert Babayi. He lives and works in Washington, D.C. PerDiemCo rents office space in Marshall, Texas. Mr. Babayi has never visited the rented space, and PerDiemCo has no employees in Marshall.

Plaintiffs Trimble and ISE, Trimble's wholly owned subsidiary, manufacture and sell positioning and navigation products and services that rely on the Global Positioning System. As part of their offerings, Trimble and ISE supply electronic logging devices and related services. Trimble also sells geofencing products. Trimble is incorporated in Delaware and is headquartered in Sunnyvale, California, which is located in the Northern District of California. ISE is an Iowa limited liability company with its headquarters and principal place of business in Coralville, Iowa.

In October 2018, Mr. Babayi, on behalf of PerDiemCo, sent a letter to ISE in Iowa accusing ISE's products and services of using technology covered by at least PerDiemCo's electronic-logging-device patents. The letter also explained that PerDiemCo "actively licenc[es]" its patents and listed at least ten companies that had entered into nonexclusive licenses after the companies had "collectively spent tens of millions of dollars in litigation expenses." J.A. 1273–74. Attached to PerDiemCo's letter was an unfiled complaint for the Northern District of Iowa, which asserted nine of PerDiemCo's patents against ISE's products and services, and a claim chart that provided further detail regarding the alleged infringement. The letter also offered ISE a nonexclusive license to PerDiemCo's patents, proposed that the parties engage in negotiations, and attached a draft nondisclosure agreement to facilitate the parties’ discussions.

ISE forwarded the letter to Trimble's Chief IP Counsel, Aaron Brodsky, in Westminster, Colorado. In his response to PerDiemCo, Mr. Brodsky explained that Trimble would be PerDiemCo's point of contact for resolution of the matter. Mr. Babayi replied, explaining that PerDiemCo also believed that Trimble's products, in addition to ISE's products, infringed its patents and attached a claim chart purporting to substantiate the infringement allegations. After the parties communicated by telephone, PerDiemCo emailed Trimble, confirming PerDiemCo's offers to enter binding mediation to attempt to reach a settlement.

Mr. Brodsky responded by noting that Trimble was willing to negotiate as long as the talks continued to be productive. In later communications, PerDiemCo asserted new allegations against Trimble's products, explaining that the products infringed a recently issued patent and a patent that was due to issue soon, both of which relate to electronic logging devices, bringing the total number of asserted patents to eleven. Later, PerDiemCo alleged that Trimble's geofencing products infringe claims of six of the eleven already asserted patents that, according to PerDiemCo, also relate to geofencing.

The parties continued to negotiate through December 2018. Throughout these negotiations, PerDiemCo communicated with Trimble via letter, email, or telephone at least twenty-two times. In correspondence and telephone calls, PerDiemCo threatened to sue Trimble for patent infringement in the Eastern District of Texas and identified counsel that it had retained for this purpose.

On January 29, 2019, Trimble and ISE filed a complaint in the Northern District of California, where Trimble is headquartered, seeking a declaratory judgment that neither Trimble nor ISE infringed any of the patents that PerDiemCo asserted. Trimble and ISE did not claim that PerDiemCo was subject to the jurisdiction of the Northern District of California under general personal jurisdiction. Instead, they argued that PerDiemCo was subject to the court's jurisdiction under a specific jurisdiction theory. PerDiemCo moved to dismiss on the ground that the district court lacked personal jurisdiction under Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc. , 148 F.3d 1355 (Fed. Cir. 1998), which stated that "[a] patentee should not subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement" because "[g]rounding personal jurisdiction on such contacts alone would not comport with principles of fairness," id. at 1361.

The district court held that it lacked specific personal jurisdiction over PerDiemCo. The court concluded that Trimble had established the requisite minimum contacts because "PerDiemCo's cease-and-desist letters and subsequent communications were purposefully directed at Trimble, a California resident,"² and Trimble's declaratory judgment claim " ‘arises out of or relates to’ PerDiemCo's activities." J.A. 9–10. But applying Red Wing , the court held that "exercising specific personal jurisdiction over PerDiemCo would be constitutionally unreasonable." Id. at 10.

Trimble and ISE appeal. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

DISCUSSION

The sole issue in this case is whether the district court erred in holding that there is not specific personal jurisdiction over PerDiemCo in the Northern District of California. "[W]e apply Federal Circuit law because the jurisdictional issue is ‘intimately involved with the substance of the patent laws.’ " Autogenomics, Inc. v. Oxford Gene Tech. Ltd. , 566 F.3d 1012, 1016 (Fed. Cir. 2009) (quoting Avocent Huntsville Corp. v. Aten Int'l Co. , 552 F.3d 1324, 1328 (Fed. Cir. 2008) ). Because the parties do not dispute the jurisdictional facts, we review the question of personal jurisdiction de novo. See Xilinx, Inc. v. Papst Licensing GmbH & Co. KG , 848 F.3d 1346, 1352 (Fed. Cir. 2017).

I

"Determining whether jurisdiction exists over an out-of-state defendant involves two inquires: whether a forum state's long-arm statute permits service of process and whether assertion of personal jurisdiction violates due process." Autogenomics , 566 F.3d at 1017 (quoting Genetic Implant Sys. Inc. v. Core-Vent Corp. , 123 F.3d 1455, 1458 (Fed. Cir. 1997) ). California, where Trimble filed suit, permits service of process to the limits of the Due Process Clauses of the U.S. Constitution. Xilinx , 848 F.3d at 1353 ; see also Cal. Civ. Proc. Code § 410.10 (West 2020). Thus, the two inquiries fold into one: whether the exercise of jurisdiction over PerDiemCo would be consistent with due process. In evaluating the exercise of jurisdiction, the Supreme Court "has long focused on the nature and extent of ‘the defendant's relationship to the forum State.’ " Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct. , ––– U.S. ––––, 141 S. Ct. 1017, 1024, 209 L.Ed.2d 225 (2021) (quoting Bristol-Myers Squibb Co. v. Superior Ct. of Cal. , ––– U.S. ––––, 137 S. Ct. 1773, 1779, 198 L.Ed.2d 395 (2017) ).

"[A] tribunal's authority [to exercise personal jurisdiction over a defendant] depends on the defendant's having such ‘contacts’ with the forum State that ‘the maintenance of the suit’ is ‘reasonable, in the context of our federal system of government,’ and ‘does not offend traditional notions of fair play and substantial justice.’ " Id. (quoting Int'l Shoe Co. v. Washington , 326 U.S. 310, 316–17, 66 S.Ct. 154, 90 L.Ed. 95 (1945) ). "The contacts needed for [specific] jurisdiction often go by the name ‘purposeful availment.’ " Id. For specific jurisdiction, "[t]he defendant ... must take ‘some act by which [it] purposefully avails itself of the privilege of conducting activities within the forum State.’ " Id. (quoting Hanson v. Denckla , 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958) ). The contacts "must show that the defendant deliberately ‘reached out beyond’ its home." Id. at 1025. The exercise of specific personal...