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Choosing Venue in an Intellectual Property Case |
June 16, 2005
Previously published by Harris Beach PLLC on June 2005
Although the world is getting smaller, venue is still an important factor in litigation. Litigating in a familiar forum and not having to travel are important benefits in choosing the venue, especially in a patent infringement case. There are essentially two main considerations when choosing a venue: (1) avoiding a venue where you don't want to be; and (2) ensuring that the litigation will remain in your chosen forum. Would-be plaintiffs often have problems with these issues because: (1) alleged infringers often "jump the gun" and file anticipatory declaratory judgment actions; and (2) jurisdiction and venue are often lacking in the chosen forum.
The patent infringement plaintiff can avoid a declaratory judgment action by not creating a "reasonable apprehension" of a lawsuit on the part of the alleged infringer. If no such "apprehension" is created, the District Court will lack jurisdiction over a declaratory suit brought by the alleged infringer, resulting in its dismissal. Glaxo, Inc. v. Novopharm, Ltd., 110 F.3d 1562, 1569 (Fed. Cir. 1997).
In order to avoid creating a reasonable apprehension of a lawsuit, any cease and desist letter sent by the plaintiff prior to filing a lawsuit should stop short of threatening litigation. In addition to refraining from explicit threats, the plaintiff should avoid taking actions "sufficient to create an objectively reasonable apprehension that an infringement suit will be brought." Phillips Plastic Corp. v. Kato Hatsujjou Kabushiki Kaisha, 57 F.3d 1051 (Fed. Cir. 1995).
What does that mean? Unfortunately, the courts tend to evaluate the facts on a case-by-case basis. Over time, however, certain principles have emerged. The offer of a patent license does not create an actual controversy between the parties, and thus, when license negotiations are proposed or ongoing, a "reasonable apprehension" will not arise unless such negotiations break down.
For example, in Shell Oil v. Amico, 970 F.2d 885, 889 (Fed. Cir. 1992), the Federal Circuit held that the patent-holder's statement that it intended to "enforce" the patent did not create a reasonable apprehension of suit even though the patent-holder stated that the alleged infringer's activities "fell within" and were "covered by" the patent. In other words, a cease and desist letter can state that the plaintiff believes that the infringer is violating the patent and can offer a license but should not threaten litigation. The letter should be drafted in a manner that indicates that negotiations will be, or are, ongoing.
If a situation calls for a more "direct" cease and desist letter, it is prudent to draft and file a complaint in your chosen forum but delay in serving it (depending on the local and federal rules for the service deadline). Taking these steps ensures that your case will be the first filed. With electronic filing, however, you run the risk that the potential licensee will discover that you have filed suit.
Ensuring that personal jurisdiction exists and that the venue is proper will reduce the likelihood of the case being dismissed or transferred from the plaintiff's chosen forum. In patent infringement actions, jurisdiction and venue are generally proper where an act of infringement -- a sale or offer for sale -- occurs, although jurisdiction can also be based on the defendant's maintenance of continuous and systematic contact with the forum. It is not permissible to manufacture jurisdiction by having the client or the attorney order a product and having it shipped into the jurisdiction, however. What constitutes a "sale" is fairly clear, but what constitutes "an offer to sell" can be fact-specific. This issue often arises in the context of a company's product website. In general, the mere existence of a website outside New York, even one that offers a product for sale, cannot confer jurisdiction over the defendant. Likewise, simply advertising the infringing product from a website, which is made accessible in New York, allowing potential customers to obtain information on product availability, and providing contact information via the website are not sufficient to confer jurisdiction. On the other hand, a highly interactive website over which a defendant actually transacts and engages in business may justify the exercise of personal jurisdiction over the defendant where the cause of action arises from the products sold. Before commencing the actions, the nature of the potential infringer's contacts with the forum should be investigated, and the appropriate jurisdictional allegations should then be included in your complaint (upon information and belief, if necessary). If jurisdiction is uncertain based upon the known facts, asking for limited discovery from the court regarding jurisdiction to prevent a motion to dismiss is an acceptable course of action.
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The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance. |
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