Federal Circuit revives Trimble patent claims in jurisdiction ruling

The United States Court of Appeals for the Federal Circuit in Washington, D.C. REUTERS/Andrew Kelly
  • Patent owner negotiated for licenses, threatened to sue
  • Communications more significant than just a few demand letters
  • Lawsuit threats, settlement offers can justify jurisdiction

(Reuters) - A California court had jurisdiction over a Washington, D.C.-based patent owner in a lawsuit filed by a location-based technology company to clear itself from his infringement allegations, the U.S. Court of Appeals for the Federal Circuit ruled Wednesday.

Reversing an Oakland federal court's decision to dismiss the case, Judge Timothy Dyk wrote for a three-judge panel that PerDiemCo LLC's communications with Trimble Inc amounted to more significant contacts with the Northern District of California than the patent demand letters that the Federal Circuit has previously held don't justify exercising personal jurisdiction.

"We're disappointed with the ruling, but we do intend to vigorously prosecute the case," said PerDiemCo attorney Patrick Coyne of Finnegan, Henderson, Farabow, Garrett & Dunner.

Coyne also said the ruling creates an incentive for patent owners to sue first instead of trying to resolve disputes outside of court.

Trimble attorney Dan Bagatell of Perkins Coie said in an email that the company was "pleased with today's decision and welcomes the court's clarification of the law."

Sunnyvale, California-based Trimble makes GPS navigation products that include electronic logging devices for truck drivers. PerDiemCo, which makes a location-tracking app, sent letters accusing Trimble of infringing 11 patents related to electronic logging and offering a license.

PerDiemCo is incorporated in Texas, but its sole owner lives in Washington, D.C.

When talks broke down, PerDiemCo threatened to sue Trimble for patent infringement in Texas, and identified the counsel it had retained to file acomplaint.

Trimble then sued PerDiemCo in 2019 in the U.S. District Court for the Northern District of California, seeking a declaratory judgment that it didn't infringe PerDiemCo's patents.

U.S. District Judge Jeffrey White dismissed the case for a lack of jurisdiction later that year based on the Federal Circuit's 1998 ruling in Red Wing Shoe Co v. Hockerson-Halberstadt Inc, which said that exercising personal jurisdiction over a patent owner solely for "informing a party who happens to be located there of suspected infringement" would "not comport with principles of fairness."

But Dyk, joined by Circuit Judges Pauline Newman and Todd Hughes, noted that later cases clarified Red Wing to explain that in the patent context, lawsuit threats, settlement proposals, and licensing proposals can establish personal jurisdiction.

Dyk said PerDiemCo's contacts with California were "far more extensive" than the three letters sent in Red Wing, and fell "well outside the sufficient latitude we sought to grant patentees to inform others of their patent rights without subjecting themselves to jurisdiction in a foreign forum."

The parties communicated at least 22 times during three months of negotiations.

PerDiemCo's attempts to get a license from Trimble were "much more akin to an arms-length negotiation in anticipation of a long-term continuing business relationship, over which a district court may exercise jurisdiction," Dyk said.

Exercising jurisdiction over PerDiemCo would also be reasonable, Dyk said, finding among other things that litigating in California wouldn't impose an undue burden on the company and that the state has a significant interest in "protecting its residents from unwarranted claims of patent infringement."

The case is Trimble Inc v. PerDiemCo LLC, U.S. Court of Appeals for the Federal Circuit, No. 19-2164.

For Trimble: Dan Bagatell of Perkins Coie

For PerDiemCo: Larry Sandell of Mei & Mark; Patrick Coyne of Finnegan, Henderson, Farabow, Garrett & Dunner

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Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com