Activision TV, Inc. ("Activision") filed a patent infringement action against Pinnacle Bancorp, Inc. ("Pinnacle"). Counsel for Activision, Farney Daniels, had previously sent letters to companies throughout the United States that Activision believed were infringing its patents. Five of these companies were in Nebraska. The letters requested information to determine if three was infringement of the patents.
As a result of these letters, the Attorney General's office for the State of Nebraska opened an inquiry. After the action was filed against Pinnacle, the Nebraska Attorney General filed a cease and desist letter against the law firm of Farney Daniels. The cease and desist letter prohibited Farney Daniels from initiation new patent infringement enforcement efforts in the State of Nebraska. Because of the cease and desist order, Farney Daniels asserted it would be unable to represent Activision in this case and in other federal court cases.
Activision then moved for a preliminary injunction to permit Farney Daniels to represent it in the currently pending patent infringement case. The district court conducted a hearing at which it questioned representatives from the Nebraska Attorney General's office.
As explained by the district court, "During the hearing, the Court questioned counsel for the Nebraska Attorney General. Counsel conceded that this court has complete and exclusive jurisdiction over patent cases. He further conceded that the cease and desist order is not intended to keep Farney Daniels from representing Activision in this case or a case in any other jurisdiction. He also agreed that counsel for Activision can pursue any of the prospective infringers that have already been identified and can file suit against any newly identified potential infringers. Counsel for the Nebraska Attorney General stated that the cease and desist order only prohibits Farney Daniels law firm from sending out letters to potential new infringers."
Based on these representations, the district court granted the motion for preliminary injunction. "With these concessions, the Court will rule that Farney Daniels can file an appearance in this case or any other federal cases without running the risk of violating the State of Nebraska Attorney General's cease and desist order. Further, Farney Daniels and its attorneys may proceed to prosecute their cases, including all discovery, as it would in any other lawsuit."
The district court then issued the following order:
THEREFORE, IT IS ORDERED THAT:
1. Activision's motion for a preliminary injunction, Filing No. 8, is granted to the extent set forth herein.
2. The law firm of Farney Daniels and the attorneys in that law firm may file their application pro hac vice in this case.
3. The law firm of Farney Daniels and the attorneys therein are free to represent their client Activision in this case and any other federal patent case directly or indirectly associated with this case and the Nebraska Attorney General's cease and desist order is not applicable to those cases.
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This is a decision that highlights the tension between exclusive Federal jurisdiction of patent cases and the recent efforts of several states Attorney General's offices that are attempting to address letters and patent enforcement actions that occur within their states. We should expect additional decisions on this issue as Attorney General offices continue to issue cease and desist order that regulate conduct surrounding the enforcement of patents.
Activision TV, Inc. v. Pinnacle Bancorp, Inc., Case No. 8:13-CV-215 (D. Neb. Sept. 19, 2013)