The Federal Circuit ruled to make it harder for patentees to settle patent infringement disputes out-of-court by restricting the ability of patentees to escape from a forum chosen by the accused infringer.
A patentee can sue for patent infringement only in a judicial district where the accused infringer resides, or where the accused infringer has committed acts of infringement and has a regular and established place of business. An accused infringer suing a patentee for declaratory judgment of noninfringement is not so restricted—it can sue the patentee in any district where it can show personal jurisdiction over the patentee.
Accused infringers would generally prefer to bring a declaratory judgment suit in their home forum. Patentees who hope to reach an out-of-court settlement with accused infringers often address notice letters to the accused infringers in the infringer’s home forum and may even conduct out-of-court negotiations in that forum.
The Federal Circuit has spoken to the burden on patentees to avoid the home forum of an accused infringer. In a case where Apple was the accused infringer and the patentee initiated settlement discussions in California, the Federal Circuit found that the out-of-court settlement discussions were sufficient contacts for personal jurisdiction purposes and concluded that the patentee had not made a “compelling case that the presence of some other considerations would render jurisdiction unreasonable.”
The Federal Circuit did not feel that California and Apple’s “interest in litigating this patent dispute in California” paled in comparison to the interest of the judicial system and society at large (that is to promote settlement) and the burden on the patentee to be sued in California, given the nature and extent of the patentee’s contacts with Apple in California. In the Federal Circuit’s view, the patentee “went beyond attempting to resolve its dispute with Apple outside of court” by amplifying its allegations of infringement after Apple stated it did not need a patent license, and suing Apple for patent infringement in another forum. Thus, a patentee will have to make a strong showing of unreasonableness to avoid being sued in the home forum of accused infringer after initiating settlement discussions.