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Posts Tagged: "notice letters"

Sending Infringement Notice Letters May Create Personal Jurisdiction

The United States Court of Appeals for the Federal Circuit recently reversed a district court’s grant of motion to dismiss a declaratory judge action against Plano Encryption Technologies LLC (PET). The district court, which is situated in the Northern District of Texas, held that PET’s contacts with the Northern district did not subject it to personal jurisdiction and venue was thus improper. On appeal, the Federal Circuit reversed and remanded for further proceedings… While personal jurisdiction and venue are fact-dependent inquiries, sending patent enforcement letters to a recipient located and doing business in a forum can be enough to establish personal jurisdiction over the sending party in the forum such that venue is proper in the forum. Such a finding may be particularly true when the sending party’s “sole business is to enforce its intellectual property.”

Personal Jurisdiction is Not Established by Prior Lawsuit or Sending Infringement Notice Letters

The Federal Circuit recently affirmed the District Court for the Eastern District of Tennessee’s dismissal of a declaratory judgment action based on a finding of lack of personal jurisdiction over the defendant. The Federal Circuit held that a defendant’s request for an injunction in a different forum, which may extend into the present forum if granted, does not satisfy the “minimum contacts” prong of the test for personal jurisdiction. The Federal Circuit also made a distinction between (1) merely sending infringement notice letters into a forum and (2) sending a letter andtravelingto the forum state to discuss the alleged infringement. The Court held that letters alone do not satisfy the “minimum contacts” prong of the test.

A patent owner defending property rights is NOT a bully

Would you consider a business owner who prevented someone from breaking into their store and stealing a tangible product to be a bully? Of course not! They would be taking reasonable steps to protect themselves, and their property, from the thug who was stealing. But if that is the case, why then would you consider a patent owner who protects and defends their rights to be a bully? The truth is you could only consider a patent owner to be a bully if you do not believe patents are a property right. While everyone is entitled to hope and dream, we do have a definitively correct answer. The Patent Act unambiguously says: “patents shall have the attributes of personal property.” See 35 U.S.C. 261. Thus, if a shop owner defending a tangible item against a thief is not bullying then neither is a patent owner defending rights against an infringer.

Demand Letter Legislation Must be Narrowly Tailored

An effort to address bad actors may unnecessarily create significant hurdles for innovators seeking to enforce or license the rights to their own innovations. The fear of unintended consequences requires targeted reform that will specifically address only the abusive behaviors relied upon by the bad actors, namely misleading and fraudulent demand letters. The trick will be to tackle these abusive behaviors that serve no legitimate purpose while not making legitimate business communications impossible. Luckily, it is not difficult to spot fraudulent demand letters and distinguish them from legitimate business inquiries. But will Congress be able to strike the appropriate legislative solution?

Notice letters and licensing communications are an important part of the U.S. patent system

Notice letters play an important role in the patent system. Indeed, as the Supreme Court has explained, ”[p]atents would be of little value if infringers of them could not be notified of the consequences of infringement.” Virtue v. Creamery Package Mfg., Co., 227 U.S. 8, 37-38 (1913). Patent law encourages patent holders to take reasonable steps to notify others of existing or pending patent rights and their possible infringement. In some instances, federal patent law requires patent holders to send notice letters to accused infringers to preserve their patent enforcement rights and ability to collect damages. Notice letters and licensing communications can also serve the interests of accused infringers. Once a patent holder has made its rights known, the accused infringer can determine whether to cease the allegedly infringing activities, negotiate a license, or decide to continue its activities based on an assessment of non-infringement or invalidity.

Ethical Licensing vs. Bad Practices Damaging the Industry

Acknowledging that many of the problems facing the licensing industry was brought about due to bad actors dominating the discussion, Shaer explained that the absence of legitimate patent owners who license real technologies from the debate has also contributed. Rather than self regulating the industry, legitimate patent owners and licensing entities have stayed in the background, which continues to contribute to the negative public perception of the patent system. “We are the first licensing company, to our knowledge, to publicly campaign against patent troll demand letters that we believe are undermining public confidence in the patent system,” Shaer explained.