NEXLEARN, LLC, v. ALLEN INTERACTIONS, INC.: June 19, 2017.  Before Moore, Schall, and Hughes

Takeaway:

• A defendant’s contacts with a forum state that occurred prior to the issuance of a patent are not sufficient to confer specific personal jurisdiction for a patent infringement case after the patent issues.

• Absent any other evidence, a website alone is insufficient to show minimum contacts to confer personal jurisdiction with a forum state.

• Mass-email advertisements are not sufficiently targeted to support purposeful availment in the forum state.

Procedural Posture:

NexLearn appealed from a district court decision dismissing a case for lack of personal jurisdiction over the defendant.  The CAFC affirmed the district court’s decision.

Synopsis:

• Personal jurisdiction: The CAFC affirmed a district court’s decision dismissing a case for lack of personal jurisdiction over the defendant. According to the CAFC, a district court can exercise personal jurisdiction over an out-of-state defendant based on either general or specific jurisdiction.  NexLearn did not argue that Kansas had general jurisdiction over Allen, and as such  the CAFC only considered whether Kansas had specific jurisdiction over Allen.  To  determine whether specific jurisdiction existed, the CAFC applied a three-part test:  whether (1) the defendant purposefully directed its activities into the forum state; (2) the claims arose out of, or relate to, those activities (collectively, the minimum contacts prong); and (3) the assertion of jurisdiction was reasonable and fair. See NexLearn, No. 2016-2170 at 6.  According to the CAFC, Allen’s prior contacts with the forum state, which included emails, presentations, and advertisements, were not related to Allen’s allegedly infringing activity, because they occurred before the patent issued.  Examples of the pre-patent issuance contacts included a nondisclosure agreement (“NDA”) that Allen and NexLearn entered into to allow Allen to learn about NexLearn’s software, and an End-User License Agreement (“EULA”) that specified that any dispute arising out the EULA must be brought exclusively in a court sitting in Wichita, Kansas.  Regarding Allen’s contacts post-issuance, the CAFC confirmed the district court’s finding that Allen’s website alone, even considering Allen’s two contacts with NexLearn employees, was insufficient to confer specific personal jurisdiction over Allen.  The CAFC added that Allen’s inclusion of Kansas in a drop down menu on its website was also not enough to subject Allen to personal jurisdiction in Kansas.

• Subject Matter Jurisdiction: The CAFC analyzed whether the dismissal of the patent infringement claim for lack of personal jurisdiction left any remaining claim over which the district court could exercise original subject matter jurisdiction. Plaintiff NexLearn also asserted a breach of contract claim based on Allen allegedly developing a simulation software in violation of the NDA.  The CAFC ruled that the district court could not exercise supplemental subject matter jurisdiction over the claim for breach of contract because original subject matter jurisdiction no longer existed due to the dismissal of the patent infringement claim.