Xilinx, Inc. v. Papst Licensing GmbH & Co. KG
848 F.3d 1346 (Fed. Cir. 2017)
Authored by Julia Kopcienski
Statement of Facts: Xilinx, Inc. (“Xilinx”) is a California-based company, incorporated in Delaware, which “designs, develops, and markets programmable logic devices for use in electronics systems.” Xilinx, Inc. v. Papst Licensing GmbH & Co. KG, 848 F.3d 1346, 1349–50 (Fed. Cir. 2017). Papst Licensing GmbH & Co. KG (“Papst”) is a German-based company that monetizes and licenses intellectual property patent rights. Papst’s primary business activity is that of securing patents, locating potential infringement of those patents, and then engaging in attempted licensing negotiations or, if necessary, infringement actions with companies alleged to be infringing on those patents.
Papst is the assignee of U.S. Patent Nos. 6,574,759 and 6,704,891, and in 2012, it performed due diligence investigations as to potential infringement of these two patents. From these investigations, Papst identified Xilinx as a potential infringer of the patents-in-suit. In response, Papst contacted Xilinx regarding the alleged infringement—first, sending two successive letters inviting Xilinx to negotiate, and then, when the letters failed to produce a response, dispatching several Papst representatives to Xilinx’s headquarters in California to discuss a licensing arrangement. The meeting produced no such arrangement, and separately, each party commenced litigation.
Procedural History: In response to Papst’s allegations of infringement, Xilinx brought a declaratory judgment action against Papst in the U.S. District Court for the Northern District of California, seeking a declaration that there was no infringement and that the patents were invalid. On the same day, Papst filed an infringement action regarding the patents-in-suit in the District of Delaware. Papst responded to Xilinx’s California suit by moving for dismissal for lack of personal jurisdiction, and in the alternative, for transfer of the suit to Delaware. Agreeing with Papst’s arguments, the California court dismissed Xilinx’s action for lack of personal jurisdiction, and Xilinx appealed.
Question Presented: Under California’s long-arm statute and the due process clause of the U.S. Constitution, can the U.S. District Court for the Northern District of California properly exercise personal jurisdiction over Papst, a foreign company alleging patent infringement against a U.S. company?
Holding: Yes. Because Papst had sufficient minimum contacts with California, and because litigating the case in California would not unduly burden Papst, the court held that exercising personal jurisdiction over Papst in California was indeed reasonable and proper. Thus, the case was reversed and remanded for further proceedings.
Reasoning: Because California’s long-arm statute does not restrict the due process clause of the U.S. Constitution, the essential question before the court was whether the exercise of personal jurisdiction over Papst would conform with the due process clause of the U.S. Constitution. To determine whether due process was protected, the court invoked the Supreme Court’s three-factor test as to due process in the exercise of personal jurisdiction: “(1) whether the defendant ‘purposefully directed’ its activities at residents of the forum; (2) whether the claim ‘arises out of or relates to’ the defendant’s activities with the forum; and (3) whether assertion of personal jurisdiction is ‘reasonable and fair.’” Xilinx, 848 F.3d at 1353 (citing Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed. Cir. 2001)). The court quickly dispensed of the first two prongs of the personal jurisdiction analysis, which together constituted a minimum contacts analysis. The court found that Papst’s contacts with California satisfied the minimum contacts test because the case clearly arose out of Papst’s activities in the forum state, and because Papst purposefully directed those activities at a resident of the forum when it sent letters to Xilinx and then sent representatives to negotiate with Xilinx in person.
Turning to the third prong, the court used a five-factor test to analyze the reasonableness of exercising personal jurisdiction over the defendant. In its analysis of the last four of the five factors, the court evaluated both California’s and Xilinx’s interests in litigating the issue in the forum state in a quick, efficient, and predictable manner that would conform with federal patent law. The bulk of the court’s discussion focused on the first factor—whether litigation in California would cause undue burden on the defendant. Papst argued that its relatively minor contacts with California were not sufficient to justify the burden of asking a German company to litigate in California. According to Papst, simply sending cease-and-desist letters should not allow the accused infringer to require litigation in the state where the letters were received. The court responded by noting that the letters were not simply cease-and-desist orders, but instead were invitations to negotiate. Moreover, Papst did not merely send letters, but sent three representatives to meet with Xilinx and attempt to negotiate in its home state of California. In assessing the burden on Papst of requiring litigation in California, the court noted the fact that Papst had previously initiated at least seven patent infringement lawsuits in California. Thus, because Papst directed substantial contact at Xilinx, a California resident, and because the burden on Papst was not so high as to prevent it from commencing prior litigation in the state, the Federal Circuit found that there was no undue burden on Papst. Therefore, California could properly exercise personal jurisdiction over Papst.