We recently found that an out-of-state competitor is infringing one of our patents. I know we need to put a stop to it, but I’m worried about the cease-and-desist letter. I heard that there was a recent case, Trimble v. Perdiemco, where a patent owner sent a cease-and-desist letter and ended up being sued by the infringer before he ever got his own complaint filed. Is that really possible, and how do you avoid it?[i]
The Trimble case has some extreme facts that are easy to avoid, but first let’s frame the issue more clearly. You believe your out-of-state competitor is infringing your patent, but you are concerned that sending it a cease-and-desist letter might be enough for it to file in its home court for a declaration of non-infringement or invalidity. Naturally, you do not want your attempt at enforcement to turn into an argument in a remote location over whether your patent is valid; you want to control the issue and where it’s litigated.
The immediate issue for you is whether your letter creates “personal jurisdiction” over you in the infringer’s home state. A district court has personal jurisdiction over a non-consenting out-of-state defendant if the defendant has “minimum contacts” with the forum state. The Red Wing case tells us that a patent owner is not subject to personal jurisdiction merely for sending a cease-and-desist letter.[ii] In fact, the court in Red Wing found no minimum contacts even where the patent owner sent not one but three letters accusing Red Wing of patent infringement and attempting to sell Red Wing a license. In contrast, in the Trimble case, the patent owner engaged an out-of-state accused infringer in extended correspondence and licensing negotiations that went on for months, totaling twenty-two letters, emails, and phone calls. The take-home message is that you can send your cease-and-desist letter, but if you don’t reach an agreement right away you should consider filing a complaint before continuing to negotiate. Once you file, any attempt by the infringer to ask for a declaratory judgment of non-infringement or invalidity must be made in the court where you already filed your infringement suit.
As a side note, you should also consider whether your letter gives the accused infringer standing to seek a declaratory judgement.[iii] Personal jurisdiction can protect you in this instance, but things would be very different if the infringer was located in your state. Personal jurisdiction would not be an obstacle; whether the infringer could bring suit preemptively would turn on whether it has standing. In the next edition of Dear Patenticity we will discuss how you can control this as well.
[i] Trimble Inc. v. PerDiemCo LLC, 997 F.3d 1147 (Fed.Circ.2021).
[ii] Red Wing Shoe Co., Inc. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (1998).
[iii] See MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007).