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Adobe Systems Incorporated v. Tejas Research, LLC

United States District Court, N.D. California

September 17, 2014

ADOBE SYSTEMS INCORPORATED, Plaintiff,
v.
TEJAS RESEARCH, LLC., Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

EDWARD M. CHEN, District Judge.

I. INTRODUCTION

Plaintiff Adobe Systems Incorporated ("Adobe") has filed the instant action seeking a declaration of non-infringement of a patent owned by Defendant Tejas Research, LLC ("Tejas"). Tejas has moved to dismiss this action for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2). Adobe asserts that this Court has personal jurisdiction over Tejas because (1) Tejas has initiated numerous patent enforcement actions against California entities in the Eastern District of Texas, and (2) Tejas has entered into non-exclusive licenses with a handful of California entities. The Court finds this matter suitable for disposition without a hearing and therefore VACATES the hearing scheduled for September 18, 2014. Neither Tejas' out-of-state enforcement actions nor its non-exclusive licenses, alone or in combination, establish that Tejas has sufficient minimum contacts with California to support the exercise of personal jurisdiction. Accordingly, Tejas' motion to dismiss for lack of personal jurisdiction is GRANTED.

II. FACTUAL & PROCEDURAL BACKGROUND

Plaintiff Adobe Systems Incorporated ("Adobe") has filed the instant declaratory judgment action seeking a declaration of non-infringement of United States Patent No. 6, 006, 231 ("231 patent"). Compl. ¶ 1. Defendant Tejas Research, LLC ("Tejas") is the owner by assignment of the 231 patent. Id. The 231 patent is entitled "File format for an image including multiple versions of an image, and related system and method, " and generally relates to the "efficient transmission and downloading of images over a network." Id. ¶ 13. One of Adobe's products is Scene7 - an "on-demand rich media software that provides document hosting and interactive publishing services such as online catalogs, targeted email, video, and image management." Id. ¶ 2.

Tejas has filed over twenty patent infringement actions based on the 231 patent. Id. ¶ 13. "Among the myriad companies ensnared in Tejas' patent dragnet are Adobe customers that use Adobe's Scnee7 product as part of their respective websites...." Id. ¶ 16. These actions have been filed in the United States District Court for the Eastern District of Texas. Id. ¶ 17. Adobe contends that it is its Scene7 product, used by the patent infringement defendants, that is the basis of Tejas' infringement allegations. Id. ¶ 21. Adobe contends that Tejas' actions "have created an apprehension that Adobe will imminently and inevitably be sued for infringement of the 231 patent" and have harmed the Scene7 products and disrupted its relationship with its current and potential customers of the Scene7 product. Id. ¶¶ 21-23. Adobe seeks a declaration that its Scene7 product does not infringe the 231 patent.

Tejas has moved to dismiss Adobe's action for lack of personal jurisdiction. Docket No. 21. In its complaint, Adobe asserts that this Court's exercise of personal jurisdiction over Tejas is appropriate because Tejas has purposefully directed conduct at California and California residents. Compl. ¶ 7. Specifically, Adobe contends that Tejas has (1) initiated patent litigation against various California entities including Vivid Entertainment and Playboy Enterprises entities; (2) negotiated with and entered into settlement/licensing agreements with California entities (including Vivid Entertainment and Playboy Enterprises); and (3) "creat[ed] apprehension within Adobe that it will imminently and inevitably be sued for infringement of the 231 patent. Id.

By contrast, Guy Fielder - Tejas' creator and sole employee - has declared that Tejas "has no offices outside of the state of Texas and neither I nor Tejas owns any property or paid any taxes in any other state besides Texas." Declaration of Guy L. Fielder ("Fielder Decl.") ¶ 6 (Docket No. 21-1). He further asserts that "Tejas is registered to do business in Texas and in no other state and thus has no registered agent outside of Texas" and Tejas does not "produce or distribute any type of product." Id. ¶¶ 2, 3. Finally, regarding its licensing agreements that Adobe cites in its complaint as a basis for personal jurisdiction, Mr. Fielder contends that during the negotiations neither he nor his attorneys "traveled to any state to engage in negotiations and at all times during negotiations I and my attorneys have stayed in Texas and engaged in negotiations over the telephone or via e-mail." Id. ¶ 13.

This Court held an initial hearing on Tejas' motion on August 14, 2014. At this hearing, the Court ordered Tejas to provide Adobe with copies of its licensing agreements with California entities. It then ordered the parties to provide supplemental briefing as to the effect of these licensing agreements on the personal jurisdiction inquiry. Docket No. 42.

III. DISCUSSION

A. Legal Standard

The law of the Federal Circuit, rather than the law of the various regional circuits, applies to determine whether the exercise of personal jurisdiction over an out-of-state defendant in patent cases is proper. See Nuance Commc'ns, Inc. v. Abbyy Software House, 626 F.3d 1222, 1230 (Fed. Cir. 2010); see also Breckenridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d 1356, 1361 (Fed. Cir. 2006) ("The issue of personal jurisdiction in a declaratory action for non-infringement is intimately related to patent law' and thus governed by Federal Circuit law regarding due process."). However, the Federal Circuit applies the familiar two-step personal jurisdiction analysis applicable in all cases: "whether a forum state's long-arm statute permits service of process and whether assertion of personal jurisdiction violates due process." Genetic Implant Systems, Inc. v. Core-Vent Corp., 123 F.3d 1455, 1458 (Fed. Cir. 1997). For cases arising in California, this analysis collapses into a single due process inquiry. See Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed. Cir. 2001) ("[B]ecause California's long-arm statute is coextensive with the limits of due process, the two inquiries collapse into a single inquiry: whether jurisdiction comports with due process.").

Under the due process clause, a state may only exercise personal jurisdiction over an out-of-state defendant where that defendant has "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Akro Corp. v. Luker, 45 F.3d 1541, 1545 (Fed. Cir. 1995) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Whether a defendant has sufficient "minimum contacts" with the forum state to justify the exercise of jurisdiction depends on whether the plaintiff asks this Court to exercise general, as opposed to specific, jurisdiction over the defendant. General jurisdiction exists where the defendant's contacts with the forum state "are so constant and pervasive as to render it essentially at home, " such that personal jurisdiction exists even when the causes of action asserted against it have no relationship to those contacts. See DaimlerAG v. Bauman, 134 S.Ct. 746, 751 (2014). Specific jurisdiction, by contrast, is narrower - it is based on activities that "arise out of or relate to the cause of action" and can exist "even if the defendant's contacts are not continuous and systematic." Id. Indeed, specific personal jurisdiction can be based on a single act. Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip. Medico, 563 F.3d 1285, 1297 (Fed. Cir. 2009).

Adobe does not contend that general jurisdiction over Tejas is appropriate. Rather, it contends that the exercise of specific jurisdiction is proper given Tejas' connection with California. In determining whether specific jurisdiction is appropriate, courts apply a three-part analysis: (1) Whether the defendant purposefully directed activities at the forum's residents (by purposefully availing itself of the forum, see Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1020 (Fed. Cir. 2009)); (2) whether the claim arises out of (or relates to) those activities; and (3) whether assertion of personal jurisdiction is "reasonable and fair." AFTG-TG, LLC v. Nuvoton Tech. Corp., 689 F.3d 1358, 1361 (Fed. Cir. 2012). Adobe, as the declaratory judgment plaintiff, has the burden of establishing the first two elements. If it establishes a prima facie case for the exercise of jurisdiction under these two prongs, the burden then shifts to Tejas to demonstrate that the exercise of jurisdiction would not be ...


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