Licensing Activities in Washington State Held Sufficient to Support Allegations of Personal Jurisdiction in a Patent Case

Tien Hsin Indus. v. Cane Creek Cycling Components, Co7-1272Z, (W.D. Wash. 2007).


Plaintiff Tien Hsin Industries, a Taiwanese maker of cycling components sold in the US under the brand Full Speed Ahead sued Cane Creek Cycling Components and inventor Homer John Rader III for inter alia a declaratory judgment of non infringement and invalidity of U.S. Patent No. 5,095,770, entitled "steering bearing assembly for wheeled vehicle." Defendants moved to dismiss inventor Rader, claiming he had no contacts with the state of Washington sufficient to support specific personal jurisdiction. At first glance, Defendant Rader's motion has some legs. Rader doesn't live in Washington, he has no offices or other presence here, he owns no property here, he never sent threats of infringement here, he has no web-presence or other contacts with Washington, nor did he ever contact plaintiffs in connection with the patent-in-suit. On the surface, Defendant Rader has fewer contacts than some other defendants recently dismissed on personal jurisdiction grounds from W.D. of Washington patent cases. See here and here for my posts on those cases. Why then were plaintiffs successful in defeating a motion to dismiss Rader for lack of personal jurisdiction? The answer comes from looking closely at his licensing activities. Under Federal Circuit law (remember, in patent cases, especially DJ cases, the law of the Federal Circuit applies to determinations of personal jurisdiction because "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," see Silent Drive, Inc. v. Strong Indus., Inc., 326 F.3d 1194, 1201 (Fed. Cir. 2003)), licensing activities by a non-resident defendant may give rise to personal jurisdiction where the defendants' exclusive licensee conducts business in the forum state and where the defendant exercises some modicum of control over that activity beyond the mere collection of royalty income. Breckenridge Pharm. v. Metabolite, 444 F.3d 1356, 1366 (Fed. Cir. 2006). In this case, Defendant Rader licensed Cane Creek, who admittedly conducts business in Washington. Further, Defendant Rader was obligated under his license to Cane Creek to supply consulting services and he had control over sub licenses and rights in the products sold. He also had control over trademark usage and quality. While Judge Zilly's order does not specifically reference these factors, it does cite the Federal Circuit's opinion in Breckenridge in denying the motion.

Here are links to the order, the complaint, the patent-in-suit, the motion to dismiss, and the response.
CaneCreekcomplaint.pdf
canecreekorder.pdf
canecreekmotion.pdf
canecreekresponse.pdf