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Genetic Veterinary Sciences, Inc. v. Laboklin Gmbh & Co. Kg

United States Court of Appeals, Federal Circuit

August 9, 2019


          Sealed Opinion Issued: July 29, 2019

          Appeal from the United States District Court for the Eastern District of Virginia in No. 2:17-cv-00108-HCM-DEM, Senior Judge Henry C. Morgan, Jr.

          Mark P. Walters, Lowe Graham Jones PLLC, Seattle, WA, argued for plaintiff-appellee.

          Johanna Wilbert, Quarles & Brady, LLP, Milwaukee, WI, argued for defendants-appellants. Also represented by Michael Piery; Nikia L. Gray, Washington, DC.

          Before Wallach, Hughes, and Stoll, Circuit Judges.


         Appellee Genetic Veterinary Sciences, Inc., d/b/a Paw Prints Genetics ("PPG") sued Appellants LABOKLIN GmbH & Co. KG ("LABOKLIN") and the University of Bern ("the University") (together, "Appellants") in the U.S. District Court for the Eastern District of Virginia ("District Court"), seeking a declaratory judgment that claims 1-3 ("Asserted Claims") of the University's U.S. Patent No. 9, 157, 114 ("the '114 patent") are patent-ineligible under 35 U.S.C. § 101 (2012).[1] J.A. 50-57 (Complaint). Appellants filed a motion to dismiss the Complaint for, inter alia, lack of subject-matter jurisdiction and lack of personal jurisdiction, see J.A. 58-60, which the District Court denied, see J.A. 302-16 (Order). Following the close of the parties' evidence during a jury trial but before submitting the case to the jury, the District Court granted PPG's motion for judgment as a matter of law ("JMOL") and held the Asserted Claims patent-ineligible under § 101. See Genetic Veterinary Scis., Inc. v. LABOKLIN GmbH & Co., KG, 314 F.Supp.3d 727, 728 (E.D. Va. 2018), appeal dismissed, No. 18-1625, 2018 WL 6334978 (4th Cir. June 5, 2018); see also J.A. 1 (Final Judgment).

         Appellants appeal the District Court's conclusions as to jurisdiction and patent-ineligibility. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1) (2012). We affirm.


         The University is the owner of the '114 patent and an agent or instrumentality of the Swiss Confederation, "having a place of business in Bern, Switzerland." J.A. 1090. In 2013, the University granted an exclusive license of its '114 patent to the German company LABOKLIN, J.A. 1091, whose "principal place of business is in Bad Kissingen, Germany," J.A. 1090; see J.A. 173-218 (Confidential License Agreement). Among many conditions of the License Agreement, LABOKLIN was required to commercialize the invention in North America "within [a specific time period] of the Effective date." J.A. 214-15. Subsequently, and at the time of the filing of Appellants' Motion to Dismiss, LABOKLIN had entered into two sublicenses in the United States. See J.A. 309, 349-51 (referencing California and Michigan sublicensees). The License Agreement required both LABOKLIN and the University to obtain the other's consent prior to sending any cease-and-desist letter to a potential infringer. J.A. 217. The License Agreement further stated that if the infringing activity "d[oes] not abate within [a specific time period]" and the University gives LABOKLIN written notice of its election not to bring suit, LABOKLIN has a right to sue for infringement. J.A. 218.

         PPG is a corporation headquartered in the State of Washington . J.A . 302 . It offer s laboratory services for testing for genetic variations and mutations known to cause certain diseases in dogs, including a test for "detect[ing] the presence of a mutation in the SUV39H2 gene." J.A. 302. Relevant to the facts of this case, PPG would accept a customer's request to test sample DNA received "from all over the world" and once the DNA test was concluded, would send the results back to the customer. See J.A. 101-02, 68.

         In January 2017, after obtaining the University's consent to send PPG a cease-and-desist letter, see J.A. 312, 349, 353, counsel for LABOKLIN sent a cease-and-desist letter to PPG at its business location in Spokane, Washington, see J.A. 99-104. The cease-and-desist letter explained that "[LABOKLIN] is the exclusive license holder of [the '114 patent]," J.A. 100, as well as the exclusive licensee of the related European and German patents, see J.A. 99, all of which were attached as enclosures, and the letter stated that given "[PPG] make[s] use of the patent as defined in above-mentioned patent claim 1[, ] . . . you [PPG] have committed an act of patent infringement," J.A. 102. After receiving the cease-and-desist letter, PPG brought suit against both LABOKLIN and the University, requesting declaratory judgment that the Asserted Claims of the '114 patent are ineligible under § 101 for failing to claim patent-eligible subject matter, and ultimately asserting that PPG therefore cannot be liable for infringing the Asserted Claims. See J.A. 50-57.[2]

         LABOKLIN and the University moved to dismiss the Complaint under, inter alia, Federal Rules of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction and 12(b)(2) for lack of personal jurisdiction. J.A. 35. Following an evidentiary hearing, the District Court issued its Order finding jurisdiction established over both LABOKLIN and the University. See J.A. 302-16. First, applying Federal Rule of Civil Procedure 4(k)(2), and considering the cease-and-desist letter and LABOKLIN's licensing activities in the United States, the District Court held that it may exercise personal jurisdiction over LABOKLIN because LABOKLIN had sufficient minimum contacts with the United States to comport with due process. J.A. 310; see Fed. R. Civ. P. 4(k)(2) (explaining how personal jurisdiction is established for a federal claim outside state-court jurisdiction). Second, the District Court held that jurisdiction was established over the University as a foreign sovereign in the United States because, inter alia, the University had engaged in "commercial activity" sufficient to trigger an exception to jurisdictional immunity under 28 U.S.C. § 1605(a)(2) by "obtain[ing] a patent and then threaten[ing] PPG by proxy with litigation." J.A. 314.

         Appellants subsequently asserted counterclaims for infringement of the '114 patent, J.A. 317-28; however, PPG stipulated to infringement of the Asserted Claims, and the only issue that proceeded to trial was PPG's invalidity defense, J.A. 1088, 1089-116 (containing, in a draft final pretrial order, the stipulated facts of both parties). Following the close of both parties' evidence at trial but before submitting the case to the jury, the District Court granted PPG's Motion for JMOL and held the Asserted Claims patent-ineligible under § 101. See Genetic Veterinary, 314 F.Supp.3d at 728. This appeal followed.


         Appellants aver that the District Court: (1) "lacks personal jurisdiction over LABOKLIN" because LABOKLIN lacks sufficient contacts with the forum; and (2) "lacks personal and subject[-]matter jurisdiction over the University because the University enjoys sovereign immunity." Appellants' Br. 16. We address each issue in turn.

         I. Personal Jurisdiction Over LABOKLIN

         A. Standard of Review and Legal Standards

         "Personal jurisdiction is a question of law that we review de novo." Autogenomics, Inc. v. Oxford Gene Tech. Ltd., 566 F.3d 1012, 1016 (Fed. Cir. 2009) (citation omitted). We apply Federal Circuit law to questions of personal jurisdiction because the issue "is intimately involved with the substance of the patent laws." Grober v. Mako Prods., Inc., 686 F.3d 1335, 1345 (Fed. Cir. 2012) (internal quotation marks and citation omitted); see Hildebrand v. Steck Mfg. Co., 279 F.3d 1351, 1354 (Fed. Cir. 2002) (applying Federal Circuit law to determinations of personal jurisdiction over out-of-state defendant-patentees in patent infringement cases and declaratory judgment cases). Where the district court's disposition as to personal jurisdiction is based on affidavits and other written materials in the absence of an evidentiary hearing, a plaintiff need only make a prima facie showing that defendants are subject to personal jurisdiction. See Elecs. For Imaging, Inc. v. Coyle, 340 F.3d 1344, 1349 (Fed. Cir. 2003). Where discovery is conducted, however, the plaintiff bears the burden of proving by a preponderance of the evidence the facts necessary to establish personal jurisdiction over the defendant. Pieczenik v. Dyax Corp., 265 F.3d 1329, 1334 (Fed. Cir. 2001). We review any underlying factual findings for clear error. Grober, 686 F.3d at 1345. A factual finding is "clearly erroneous" only when the entire record leaves the reviewing court "with the definite and firm conviction that a mistake has been committed." Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985).

         Federal Rule of Civil Procedure 4(k)(2) states, in relevant part: "For a claim that arises under federal law, serving a summons . . . establishes personal jurisdiction over a defendant if: (A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws." Fed.R.Civ.P. 4(k)(2). In applying and interpreting Rule 4(k)(2), we therefore allow a court to exercise personal jurisdiction over a nonresident if: "(1) the plaintiff's claim arises under federal law, (2) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction, and (3) the exercise of jurisdiction comports with due process." Synthes (U.S.A.) v. G.M. Dos Reis Jr. Ind. Com de Equip. Medico, 563 F.3d 1285, 1293-94 (Fed. Cir. 2009).

         For the assertion of jurisdiction to comport with due process, a nonresident defendant must have "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotation marks and citation omitted). Relevant here, "if Rule 4(k)(2) supplies the due process analysis, then the forum is the United States," "as opposed to the state in which the district court sits [i.e. Virginia]." Synthes (U.S.A.), 563 F.3d at 1291, 1295.

         We have summarized the Supreme Court's due process jurisprudence for specific personal jurisdiction[3] as a three-part test: "(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." Inamed Corp. v. Kuzmak, 249 F.3d 1356, 1360 (Fed. Cir. 2001) (internal quotation marks and citation omitted). "The first two factors correspond with the 'minimum contacts' prong of the [International Shoe] analysis, and the third factor corresponds with the 'fair play and substantial justice' prong of the analysis." Id. "We have consistently rejected attempts to satisfy the defendant-focused 'minimum contacts' inquiry by demonstrating contacts between the plaintiff (or third parties) and the forum State." Walden, 571 U.S. at 284.

         Related to the third factor regarding whether assertion of personal jurisdiction is "reasonable and fair," "[w]here a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985) (emphasis added). In Burger King, the Supreme Court identified five considerations relevant to the reasonableness inquiry:

[C]ourts in "appropriate case[s]" may evaluate [1] "the burden on the defendant," [2] "the forum State's interest in adjudicating the dispute," [3] "the plaintiff's interest in obtaining convenient and effective relief," [4] "the interstate judicial system's interest in obtaining the most efficient resolution of controversies," and [5] the "shared interest of the several States in furthering fundamental substantive social policies."

Id. at 477 (second alteration in original) (quoting WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)).

         B. The District Court Had ...

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