IP Law Daily, PATENT—N.D. Cal.: Utah patent assertion entity is subject to personal jurisdiction in Coinbase declaratory judgment action, (Jan 7, 2022)

By Kevin M. Finson, J.D.

The patent owner’s cease-and-desist letter and enforcement activities involving the same patent established sufficient contacts with the form.

Personal jurisdiction existed for a declaratory judgment case over patent infringement when the patentee sent a cease-and-desist letter to the forum state in addition to having an employee there and pursuing other patent enforcement activity. Utah-based patent assertion entity Modern Font Applications had sufficient contacts with the Northern District of California to be subject to specific personal jurisdiction in a declaratory judgment action \ filed by cryptocurrency marketplace operator Coinbase, the federal district court in San Francisco has determined. The Utah company had sent a cease-and-desist letter to Coinbase, albeit via Coinbase’s agent in Texas, had hired several California attorneys to prosecute and enforce the asserted patents, including a full-time in-house counsel located in the district, and had sued other companies in the district (Coinbase, Inc. v. Modern Font Applications LLC, January 6, 2022, Beeler, L.).

Coinbase, Inc. sought declaratory judgment of non-infringement with regard to three patents owned by patent assertion entity Modern Font Applications, LLC (Modern Font). Modern Font, a Utah corporation, had sent a cease-and-desist letter to Coinbase’s corporate agent for service of process in Dallas, Texas, asserting that Coinbase infringed U.S. Patent Nos. 8,522,127, 9,886,421, and 9,892,093, and offering the opportunity to license the patents. Modern Font moved to dismiss the declaratory judgment action for lack of personal jurisdiction.

Personal jurisdiction. Modern Font argued that it was a Utah corporation with a principal place of business in Utah, and had done nothing but send a letter to Texas, which should not subject it to personal jurisdiction in the Northern District of California. However, the court noted that the Texas business registration for Coinbase identified a San Francisco mailing address for Coinbase itself (though the company describes itself as decentralized with no headquarters). Allowing Modern Font to avoid personal jurisdiction by directing its letter to an accused infringer in San Francisco through an agent in Texas would ignore basic principles of agency law. Accordingly, the letter was directed at the forum for jurisdictional purposes.

Noting that a letter alone is not enough to support specific personal jurisdiction, the court also found that Modern Font’s in-house contract attorney responsible for patent enforcement and licensing activities worked in the Northern District of California. Although he was a work-from-home employee and did not have an office provided by Modern Font, he carried on work for Modern Font within the forum on a full-time basis. Finally, Modern Font had used several additional California attorneys to prosecute and enforce its asserted patents. There were at least four actions concerning the same patents pending before the courts of the forum state. In-forum activities of the patentee related to the patents in suit are relevant to the minimum-contacts inquiry, even if they do not necessarily relate to the particular controversy.

Because it found that sufficient contacts related to the subject matter of the suit existed to support specific personal jurisdiction, the Court did not address general personal jurisdiction and denied the motion to dismiss.

The case is No. 3:21-cv-05305-LB.

Attorneys: Giancarlo Luca Scaccia (Greenberg Traurig, LLP) for Coinbase, Inc. Perry S. Clegg (Johnson & Martin, P.A.) and John E. Lord (One LLP) for Modern Font Applications LLC.

Companies: Coinbase, Inc.; Modern Font Applications LLC

Cases: Patent CaliforniaNews GCNNews