NexLearn v. Allen Interactions, Inc. , Nos. 2016-2170, 2016-2221, (Fed. Cir. June 19, 2017) (Before Moore, Schall, and Hughes, J.) (Opinion for the court, Moore, J.)
NexLearn appealed the dismissal of its complaint for lack of personal jurisdiction.
NexLearn sued Allen in district court, alleging patent infringement and breach of contract, based on a nondisclosure agreement (NDA) that allowed Allen to use a trial version of NexLearn’s software product. The NDA stated that Kansas law governed the agreement. NexLearn alleged that Allen developed its own software based upon NexLearn’s product. NexLearn asserted patent infringement and breach of the NDA.
Allen moved to dismiss NexLearn’s complaint for lack of personal jurisdiction in Kansas, due to its limited contacts with the State, and because the breach of contract claim was supplemental to the patent infringement claim. NexLearn introduced evidence that Allen sent six emails regarding Allen’s product to NexLearn in Kansas, before and after the patent-in-suit was granted. The district court held that NexLearn failed to allege that Allen had sufficient contacts with Kansas to avail itself of the forum and trigger an exercise of specific personal jurisdiction. NexLearn appealed.
The Federal Circuit reviews personal jurisdiction de novo. Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1016 (Fed. Cir. 2009). The Court applies a three-part test to determine whether specific jurisdiction exists: (1) the defendant purposefully directed its activities to the forum State; (2) the claims arise out of or relate to those activities (collectively, the minimum contacts prong); and (3) the assertion of jurisdiction is reasonable and fair. Avocent Huntsville Corp. v. Aten Int’l Co., 552 F.3d 1324, 1329 (Fed. Cir. 2008).
First, the Court held that “Allen’s pre-issuance emails, presentations, and advertisements are not relevant to NexLearn’s claim that Allen infringes [the patent-in-suit].” They occurred before there was a patent to infringe.
Second, the NDA choice-of-law provision did not subject Allen to specific personal jurisdiction in Kansas under Burger King Corp. v. Rudzewicz, 471 U.S. 462, 482 (1985) (stating that a NDA’s choice-of-law provision “standing alone would be insufficient to confer jurisdiction.”) Further, a provision in an expired NDA did not show a “reasonable foreseeability” of litigation in Kansas over NexLearn’s later claim of patent infringement.
Next, the Court turned to Allen’s contacts with Kansas that postdated the patent-in-suit’s issuance – Allen’s interactive website, a single post issuance e-mail, and a single offer of a free trial. The ability to select “Kansas” from a dropdown menu in the billing-address section of the website was insufficient to trigger specific personal jurisdiction in Kansas. The website failed to demonstrate that Allen purposefully availed itself of Kansas and that NexLearn’s patent claim arose out of or relates to contacts with Kansas. NexLearn failed to allege a single sale in Kansas, and the website was evidenced only that a sale could take place. While the sufficiency of contacts varies case to case, it cannot be “that the mere existence of an interactive website, like the existence of an out-of-state store, is “suit-related conduct … creat[ing] a substantial connection with the forum State.” Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014).
Finally, the Court found that, “[r]egardless of whether Allen’s single e-mail could qualify as an offer for sale under § 271(a), it is insufficient to establish minimum contacts with Kansas in this case.” Similarly, Allen’s single offer of a free trial was too attenuated and insignificant to establish minimum contacts and justify compelling Allen to defend itself in Kansas.
In affirming the district court’s dismissal of NexLearn’s patent infringement claim for lack of personal jurisdiction, the Court held that Allen’s contacts created only an “attenuated affliation” with Kansas, as opposed to the “substantial connection” with the forum state that is needed for specific jurisdiction. The Court also affirmed the district court’s dismissal of NexLearn’s supplemental claim for breach of contract.
An interactive website that invites a sale into a forum, when no such sale has occurred, is not evidence of “minimum contacts” to demonstrate the defendant purposefully availed itself of the forum state. A “substantial connection” with a forum, not an “attenuated affiliation,” is required for specific personal jurisdiction.