Paul Gugliuzza Coauthors Amicus Brief to Counter Federal Circuit’s Rule on Personal Jurisdiction in Patent Cases

Gugliuzza drafted a brief in Altera Corp v. Papst Licensing, submitted to the US Court of Appeals for the Federal Circuit.

Paul Gugliuzza, associate professor of law at Boston University School of Law, recently submitted an amicus brief to the US Court of Appeals for the Federal Circuit in support of the appellants in Altera Corp v. Papst Licensing. Coauthors included Jorge Contreras from the University of Utah College of Law and Megan La Belle from the Catholic University of America Columbus School of Law. Thirty-one other law professors whose expertise relates to civil procedure and patent law also joined the brief, which several lawyers from Simpson Thatcher and Bartlett assisted in preparing and filing.

The case arose when Papst Licensing, a German corporation whose sole business is acquiring and enforcing patents, sent cease and desist letters to Altera Corp in the state of California, alleging that Altera infringed Papst’s patents on methods of testing computer memory devices. Altera filed suit in a California federal district court seeking a declaratory judgment that Papst’s patents were invalid and that Altera did not infringe them. The district court dismissed the case based on the Federal Circuit’s 1998 decision in Red Wing Shoe Co. v. Hockerson-Halberstadt Inc. in which the court held that cease and desist letters and unsuccessful licensing negotiations, on their own, can never establish the “minimum contacts” required for courts to exercise personal jurisdiction over a patent holder. The rationale offered by the Federal Circuit in Red Wing Shoe was that demand letters and licensing negotiations facilitate out-of-court dispute resolution and that subjecting a patent holder to jurisdiction based on those letters or negotiations would inhibit the settlement process.

The brief written by Gugliuzza and his coauthors supports Altera’s appeal of the decision to dismiss the case and argues that the Federal Circuit should revisit its blanket rule restricting jurisdiction in patent cases. “The assumption made by the Federal Circuit, that cease and desist letters are always aimed at avoiding litigation, is not true,” Gugliuzza says, noting that some patent holders use cease and desist letters simply to extract quick licensing payments, not as a precursor to litigation. “There should not be a bright line rule governing jurisdiction, it should be a case by case analysis.”

Under the relevant US Supreme Court case law, the brief argues, enforcement activities such as cease and desist letters and licensing negotiations can provide the minimum contacts required to establish personal jurisdiction. Further, the Supreme Court has emphasized that the analysis of personal jurisdiction is a case by case, contact-specific analysis. “The Federal Circuit’s decision in Red Wing Shoe has always struck me as wrong as a matter of legal doctrine,” Gugliuzza says. “It’s also troubling from a policy perspective, because there’s a huge disparity in the amount of choice over where a patent lawsuit can be filed. Because of Red Wing Shoe, alleged infringers have very few options for where they can file declaratory judgment suits.” On the other hand, another line of Federal Circuit case law (not at issue in the Altera case) allows patent holders to file infringement suits practically anywhere the alleged infringer is selling its products.

Two other amicus briefs, submitted to the court by consumer advocates and by corporations that frequently receive licensing demands, take up the same issue as Gugliuzza and his coauthors, pointing to widespread agreement about the need for the Federal Circuit to revisit its jurisdictional law. To overturn its prior precedent, the court would likely have to hear the Altera case en banc, rather than in front of the three-judge panel that is currently considering it. But, Gugliuzza says, “this case presents an ideal opportunity for the Federal Circuit convene en banc, overturn its previous decisions, and adopt the case by case analysis we suggest.”

Professor Gugliuzza’s scholarship has long focused on the intersection of patent law and civil procedure. The amicus brief is an example of such a collision with real-world implications. In February 2015, he was called to testify before a Congressional subcommittee regarding the widespread use of demand letters by patent trolls. His recent essay, “Patent Litigation Reform: The Courts, Congress, and the Federal Rules of Civil Procedure,” was published in Boston University Law Review.