IP Law Daily, PATENT—Fed. Cir.: Allegation of infringement under Amazon.com’s APEX program created specific personal jurisdiction where the alleged infringer does business, (May 2, 2024)

By Kevin M. Finson

District court erred in dismissing declaratory judgment action for lack of specific personal jurisdiction because the patent holder had directed enforcement activities against the plaintiff in the forum state through Amazon.com’s third-party patent evaluation program.

A patent holder who submitted notice of a competitor’s infringement through Amazon.com’s APEX program was subject to specific personal jurisdiction in the forum where the competitor did business, the U.S. Court of Appeals for the Federal Circuit has held. The de-listing of a product from Amazon.com was a harm directed at the state where the alleged infringer conducted its business. A Utah federal district court’s dismissal of the competitor’s declaratory judgment action for lack of personal jurisdiction was reversed and the case remanded (SnapRays v. Lighting Defense Group, May 2, 2024, Moore, K.).

Lighting Defense Group (LDG) was a Delaware company and the owner of U.S. Patent No. 8,668,347 (the ’347 patent), which claimed “a cover for an electrical receptacle including a faceplate and a transmission tab configured to be electrically connected to the receptacle.” SnapRays, d/b/a SnapPower (SnapPower) was a Utah company engaged in the design, marketing, and sale of electrical outlet covers with integrated guide lights, safety lights, motion sensor, lights, and USB charging technology, which were sold through Amazon.com.

LDG asserted to Amazon through the Amazon Patent Evaluation Process (APEX)—a third-party evaluation process that determined whether Amazon would de-list certain products—that SnapPower infringed the ’347 patent. Under the terms of the APEX program, SnapPower could opt-in to a third-party determination of infringement, resolve the claim directly with LDG, or file a lawsuit for declaratory judgment of non-infringement. If no action was taken, Amazon would de-list the allegedly infringing products. After inconclusive negotiations with DLG, SnapPower brought suit for declaratory judgment of non-infringement in the District of Utah. The declaratory judgment action was dismissed for lack of specific personal jurisdiction over LDG. SnapPower appealed.

Because Utah’s long-arm statute was co-extensive with Constitutional due process, the issue was whether jurisdiction comports with due process. The court considered the traditional three factor test applicable in the Federal Circuit for whether specific personal jurisdiction comports with due process: (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.”

Purposeful direction. SnapPower argued that LDG purposefully directed its enforcement activities at Utah when it initiated the APEX program. The court found that LDG knew that upon notifying Amazon of the alleged infringement Amazon would notify SnapPower in Utah and that if no action were taken Amazon would de-list SnapPower’s products, which would necessarily effect sales and activities in Utah. This satisfied the first factor.

Arising or relating to. LDG argued that the claim could not arise out of or relate to its activities in Utah because it sent the APEX notice to an Amazon office in Washington. The court held that this was still relating to Utah because LDG knew that Amazon’s action upon receiving the notice in Utah would be to send it to SnapPower in Utah and was intended to affect marketing, sales, and other activities in Utah.

Reasonable and fair. Under the final factor LDG argued that ruling in SnapPower’s favor would “open the floodgate” of litigation against any APEX participant anywhere in the country. The court was unpersuaded that this would be a problem. Personal jurisdiction would exist only where a patentee had targeted a forum state by identifying listings for removal that would affect the marketing, sales, or other activities in that state. Prior case law that had held that the sending of a cease and desist letter to an alleged infringer did not create personal jurisdiction was not relevant: the delisting of a parties products under the APEX program would affect sales within Utah in a way that the mere sending of a letter would not.

The court reversed the trial court’s dismissal for lack of specific personal jurisdiction and remanded for further proceedings.

The Case is No. 23-1184.

Attorneys: Elliott J. Williams (Stoel Rives LLP) for SnapRays. Jeffrey A. Andrews (Yetter Coleman, LLP) for Lighting Defense Group.

Companies: Lighting Defense Group

Cases: Patent FedCirNews UtahNews