United States Court of Appeals
for the Federal Circuit
______________________
JACK HENRY & ASSOCIATES, INC., COMMUNITY
BANK OF TEXAS NA, AMERICAN NATIONAL
BANK OF TEXAS NA, GREEN BANCORP, INC.,
GREEN BANK NA, MOODY NATIONAL BANK NA,
FIRST SONORA BANCSHARES INC, FIRST
NATIONAL BANK OF SONORA, EXTRACO BANKS
NA, CITIZENS STATE BANK, TEXAS GULF BANK
NA, JEFFERSON BANK,
Plaintiffs-Appellants
v.
PLANO ENCRYPTION TECHNOLOGIES LLC,
Defendant-Appellee
______________________
2016-2700
______________________
Appeal from the United States District Court for the
Northern District of Texas in No. 3:15-cv-03745-N, Judge
David C. Godbey.
______________________
Decided: December 7, 2018
______________________
JAY E. HEIDRICK, Polsinelli PC, Kansas City, MO,
argued for plaintiffs-appellants. Also represented by
RUSSELL S. JONES, JR.; MICHAEL DAVID PEGUES, Dallas,
TX.
2 JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION
TECHNOLOGIES
JEREMY SETH PITCOCK, The Pitcock Law Group, New
York, NY, argued for defendant-appellee.
______________________
Before NEWMAN, WALLACH, and STOLL, Circuit Judges.
Opinion for the court filed by Circuit Judge NEWMAN, in
which WALLACH and STOLL, Circuit Judges, joins.
Additional views filed by Circuit Judge STOLL, in which
Circuit Judge WALLACH joins.
NEWMAN, Circuit Judge.
Jack Henry & Associates, Inc. (“Jack Henry”) and
eleven Texas banks (“the Banks”), collectively “Appel-
lants,” appeal the ruling of the United States District
Court for the Northern District of Texas, dismissing this
declaratory judgment action against Plano Encryption
Technologies LLC (“PET”). The district court held, citing
Federal Circuit rulings, that PET’s contacts with the
Northern District did not subject it to personal jurisdic-
tion, and therefore that venue was improper. 1
Applying the venue statute and guided by precedent,
we conclude that PET is subject to personal jurisdiction in
the Northern District. We reverse the dismissal and
remand for further proceedings.
I
Venue in the Northern District
PET is a Limited Liability Company established in
the State of Texas, and is registered to do business
1 Jack Henry & Assocs. Inc. v. Plano Encryption
Techs., LLC, No. 3:15-CV-3745-N, 2016 WL 9282411
(N.D. Tex. Aug. 26, 2016) (“Dist. Ct. Op.”).
JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION 3
TECHNOLOGIES
throughout Texas, with its registered address in Plano,
Texas. Plano is in the Eastern District of Texas. The
Banks all have their principal offices or branches or
customers in the Northern District of Texas.
PET declares that its “sole business is to enforce its
intellectual property.” J.A. 543 (Declaration of Bradley
Liddle, Chief Executive Officer). Mr. Liddle wrote to each
of the Banks, identifying PET’s patents, stating that the
Banks are believed to be infringing the patents, and
inviting non-exclusive licenses. The letters to all the
Banks are similar, see, e.g., the following letter addressed
to Robert Hulsey (President and CEO) and Steve Booker
(EVP) of American National Bank of Texas, at its address
in Terrell, Texas. Terrell is in the Northern District:
PET has reviewed the technology of American Na-
tional Bank of Texas (“ANBTX”) and believes that
ANBTX is infringing several claims of its patents,
including without limitation U.S. Patent Nos.
5,974,550; 5,991,399; and 6,587,858. Our review
of your mobile apps indicates that your company
infringes at least claims 1, 9, 29 and 37 of U.S.
Patent No. 5,991,399 (the ’399 patent), as illus-
trated by the claims charts attached as Exhibit
A. . . . that ANBTX infringes at least claims 14–17
of U.S. Patent No. 5,974,550 (the ’550 patent), as
illustrated by the claims charts attached as Ex-
hibit B. . . . at least claim 6 of U.S. Patent No.
6,587,858 (the ’858 patent) is infringed in connec-
tion with at least your online banking features, as
set forth in the claims charts attached as Exhibit
C.
J.A. 137 (footnote omitted). Exhibit A is entitled “Draft
Settlement Claims Chart—U.S. Patent No. 5,991,399 vs.
ANBTX,” and consists of 22 pages of “infringement”
analysis for claims 1, 9, 29, and 37 of Patent No.
5,991,399, claim clause by claim clause. J.A. 139–60.
4 JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION
TECHNOLOGIES
Exhibit B is 16 pages of infringement analysis of claims
14–17 of Patent No. 5,974,550, JA 161–76; and Exhibit C
is 4 pages of infringement analysis of claim 11 of Patent
No. 6,587,858. JA 177–80. The letter further states:
PET actively licenses and enforces its patent
rights and has recently filed a lawsuit against Cit-
izens National Bank for infringement of the tech-
nology covered by these patents. Plano
Encryption Technologies, LLC v. Citizens National
Bank, Civ. No. 2:15-cv-1168 (E.D. Tex.). We write
to invite you to take a license to our patent portfo-
lio.
J.A. 137.
Similar letters and attachments were sent to each of
the Banks, i.e., to Bob Malone (President and CEO) and
Patrick Holt (EVP and COO) of Sonora Bank at its ad-
dress in Sonora, in the Northern District of Texas, J.A.
326; to Cory Newsom (President and CEO) and Dwight
Overton (EVP) of City Bank at its address in Lubbock, in
the Northern District of Texas, J.A. 573; to F. Scott
Dueser (President and CEO) and Gary Webb (EVP) of
First Financial Bank at its address in Abilene, in the
Northern District of Texas, J.A. 575; to Eddie Schulz
(President and CEO) and Kyle McNeese (SVP) of Lubbock
National Bank at its address in Lubbock, in the Northern
District of Texas, J.A. 577; and to J. Pat Hickman (CEO)
and David Jones (General Counsel) of Happy State Bank,
at its address in Amarillo, in the Northern District of
Texas, J.A. 621. These banks have their principal offices
in the Northern District, and the other banks have
branches or customers in the Northern District. It is not
disputed that all the Banks conduct banking business in
the Northern District of Texas. All the letters from PET
state that “review indicates” PET patents are infringed
and refer to PET’s pending lawsuit against Citizens
National Bank in the Eastern District.
JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION 5
TECHNOLOGIES
Jack Henry provides software systems for the Banks’
mobile apps, and states that it is indemnifying the Banks
for any liability for infringement. Jack Henry’s counsel
wrote to PET, giving reasons why the PET patents are not
infringed, questioning patent validity, and requesting
PET and its counsel to meet and discuss the issues. J.A.
132–35.
PET did not respond to Jack Henry. PET’s counsel at
Chaudhari Law, PLLC wrote to each of the Banks, stating
that “only your bank is accused of infringement.” These
letters disputed Jack Henry’s views of non-infringement
and invalidity, and further stated:
We have a successful history of enforcing the in-
tellectual property rights of our clients against in-
fringers. In addition to obtaining numerous
licenses, we have also won jury verdicts against
infringers, including one last September in Mar-
shall, TX, which was one of the top ten verdicts for
intellectual property cases that year.
J.A. 370 (Letter from Chaudhari Law to Bob Malone,
President, and Patrick Hold, EVP &COO, First Sonora
Bancshares, in Sonora, in the Northern District of Texas).
Jack Henry and the Banks then filed this declaratory
action in the Northern District of Texas. PET moved for
dismissal, stating that venue is improper in the Northern
District.
Venue in a multidistrict state is a subject of 28 U.S.C.
§ 1391:
(d). Residency of corporations in States with mul-
tiple districts.—
For purposes of venue under this chapter, in a
State which has more than one judicial district
and in which a defendant that is a corporation is
subject to personal jurisdiction at the time an ac-
6 JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION
TECHNOLOGIES
tion is commenced, such corporation shall be
deemed to reside in any district in that State
within which its contacts would be sufficient to
subject it to personal jurisdiction if that district
were a separate State, and, if there is no such dis-
trict, the corporation shall be deemed to reside in
the district within which it has the most signifi-
cant contacts.
The district court granted PET’s motion for dismissal,
stating that PET’s actions do not subject it to personal
jurisdiction in the Northern District of Texas. The district
court stated that the Federal Circuit has established
“unique” rules for patent cases, and explained:
While such letters might be expected to support
an assertion of specific jurisdiction over the pa-
tentee because the letters are purposefully di-
rected at the forum and the declaratory judgment
action arises out of the letters, [the Federal Cir-
cuit has] held that, based on policy considerations
unique to the patent context, letters threatening
suit for patent infringement sent to the alleged in-
fringer by themselves do not suffice to create per-
sonal jurisdiction.
Dist. Ct. Op. at *3. The district court cited the Federal
Circuit’s decision in Avocent Huntsville Corp. v. Aten Int’l
Co., 552 F.3d 1324, 1333 (Fed. Cir. 2008). However, our
decision in Avocent did not establish the generalization
that letter charging infringement can never provide
specific jurisdiction, and did not depart from due process
precedent on this aspect of venue.
Determination of venue is dominated by due process
considerations. In Avocent the patentee was a resident of
Taiwan and the declaratory action was filed in Alabama;
the parties were already engaged in patent litigation in
district court in the state of Washington. The Avocent
court stated: “[d]etermining whether personal jurisdiction
JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION 7
TECHNOLOGIES
exists over an out-of-state defendant involves two inquir-
ies: whether a forum state’s long-arm statute permits
service of process, and whether the assertion of personal
jurisdiction would violate due process.” Avocent, 552 F.3d
at 1329 (quoting Inamed Corp. v. Kuzmak, 249 F.3d 1356,
1359 (Fed. Cir. 2001) (citing Burger King Corp. v. Rudze-
wicz, 471 U.S. 462, 471–76 (1985)). In holding that the
Alabama venue violated due process as to the defendant,
the court did not establish a general rule applicable to all
circumstances and all forms of contact and all locales.
With respect to the forum’s long-arm statute, the
Fifth Circuit has stated that “[b]ecause Texas’s long-arm
statute extends to the limits of federal constitutional due
process, only [the due process] inquiry is required.”
Companion Prop. & Cas. Ins. Co. v. Palermo, 723 F.3d
557, 559 (5th Cir. 2013). Acts of soliciting business in
Texas have been deemed subject to the Texas Long-Arm
Statute. See, e.g., Siskind v. Villa Found. for Educ., Inc.,
642 S.W.2d 434 (Tex. 1982).
Applying due process to determination of specific ju-
risdiction and venue, precedent describes three relevant
factors:
The three factors are: (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 within the fo-
rum; and (3) whether assertion of personal juris-
diction is “reasonable and fair.”
Inamed Corp., 249 F.3d at 1360 (citing Akro Corp. v.
Luker, 45 F.3d 1541, 1545 (Fed.Cir.1995)). As the Court
stated in Burger King:
Where a forum seeks to assert specific jurisdiction
over an out-of-state defendant who has not con-
sented to suit there, th[e] fair warning require-
ment is satisfied if the defendant has purposefully
8 JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION
TECHNOLOGIES
directed his activities at residents of the forum,
and the litigation results from alleged injuries
that arise out of or relate to those activities. . . .
Nevertheless, minimum requirements inherent in
the concept of fair play and substantial justice
may defeat the reasonableness of jurisdiction even
if the defendant has purposefully engaged in fo-
rum activity.
471 U.S. at 472–78 (internal quotations and citations
omitted). The first two factors comprise the “minimum
contacts” portion of the jurisdictional framework, and in
New World International, Inc. v. Ford Global Technolo-
gies, LLC we held that the sending of a letter that forms
the basis for the claim may be sufficient to establish
minimum contacts. 859 F.3d 1032, 1037–38 (Fed. Cir.
2017).
On this appeal PET agreed, following New World, that
the minimum contacts factors are met. See
Oral Argument at 18:08–35, http://oralarguments.cafc.
uscourts.gov/default.aspx?fl=2016-2700.mp3:
COURT: What distinguishes the proper analysis
of those first two requirements from New
World . . . ? Tell me about what distinguishes it
from the New World analysis.
PET COUNSEL: I would concede that . . . the
Court has always found that the first two ele-
ments would be met by the mere sending of a let-
ter into a forum.
It is not disputed that PET “purposefully directed” its
charges of infringement to at least eleven banks conduct-
ing banking business in the Northern District of Texas.
These charges “arise out of or relate to” PET’s patent
licensing activities in the Northern District, pursued in
letters from PET and its counsel. Burger King, 471 U.S.
at 472–73.
JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION 9
TECHNOLOGIES
The due process factor concerns whether the exercise
of personal jurisdiction is reasonable and fair. “First, a
court is to determine whether the connection between the
forum and the episode-in-suit could justify the exercise of
specific jurisdiction. Then, in a second step, the court is to
consider several additional factors to assess the reasona-
bleness of entertaining the case.” Xilinx, Inc. v. Papst
Licensing GmbH & Co. KG, 848 F.3d 1346, 1354–55 (Fed.
Cir. 2017) (quoting Daimler AG v. Bauman, 571 U.S. 117,
139 n.20 (2014)). PET has not asserted that jurisdiction
in the Northern District is inconvenient or unreasonable
or unfair. It may be noted that PET is subject to general
jurisdiction in the state of Texas and is registered to do
business throughout the state.
The Federal Circuit has recognized the divergent cir-
cumstances that affect due process. We stated in Akro
Corp.:
[W]here a defendant who purposefully has di-
rected his activities at forum residents seeks to
defeat jurisdiction, he must present a compelling
case that the presence of some other considera-
tions would render jurisdiction unreasonable.
Most such considerations usually may be accom-
modated through means short of finding jurisdic-
tion unconstitutional. For example, . . . a
defendant claiming substantial inconvenience
may seek a change of venue.
45 F.3d at 1546 (quoting Burger King, 471 U.S. at 476–
77). We again applied due process considerations in
Breckenridge Pharmaceutical, Inc. v. Metabolite Laborato-
ries, Inc., holding that personal jurisdiction was met by
the sending of license letters to possible infringers in the
forum, where an exclusive licensee residing outside the
forum conducted business in the forum, and the patentee
“ha[d] not presented a compelling case that the exercise of
10 JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION
TECHNOLOGIES
personal jurisdiction would be unreasonable or unfair.”
444 F.3d 1356, 1369 (Fed. Cir. 2006).
Precedent illustrates the dominance of concerns for
due process and fairness. In Red Wing Shoe Co. v. Hock-
erson-Halberstadt, Inc., the court cited a “policy favoring
settlement” and “the interstate judicial system’s interest
in obtaining the most efficient resolution of controversies.”
148 F.3d 1355, 1361 (Fed. Cir. 1998) (quoting World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)),
and held that the letter contacts in that case did not
support jurisdiction in the recipient’s forum. Id.
The diversity of facts in consideration of due process
comports with the Court’s guidance that personal jurisdic-
tion “is not susceptible of mechanical application.” Kulko
v. Superior Court of Cal., 436 U.S. 84, 92 (1978). The
standard is “fair play and substantial justice.” E.g.,
International Shoe Co. v. Washington, 326 U.S. 310, 316
(1945). For example, in Inamed this court found personal
jurisdiction based only on letters and phone calls initiated
from out-of-state:
Based on the clear principles set out in Supreme
Court jurisprudence, we conclude that Dr. Kuz-
mak’s negotiation efforts, although accomplished
through telephone and mail from New Jersey, can
still be considered as activities “purposefully di-
rected” at residents of California.
Inamed, 249 F.3d at 1362. The court held that personal
jurisdiction in California was “reasonable and fair” on the
facts of that case.
Here, PET has undertaken a licensing program, with
threats of litigation, directed to the Banks conducting
banking activity in the Northern District. The Appellants
stress the breadth and detail of PET’s accusations of
infringement, and the obligation of the forum to resolve
disputes involving its residents and businesses. The
JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION 11
TECHNOLOGIES
Appellants point out that PET’s contacts with banks in
the Northern District are in conduct of PET’s only busi-
ness, that of licensing and litigating its patents.
The burden befalls PET, as the source of the mini-
mum contacts, to make a “compelling case” that the
exercise of jurisdiction in the Northern District would be
unreasonable and unfair. In World-Wide Volkswagen, the
Court identified factors including “the burden on the
defendant, . . . the forum State’s interest in adjudicating
the dispute, the plaintiff’s interest in obtaining conven-
ient and effective relief, . . . [and] the interstate judicial
system’s interest in obtaining the most efficient resolution
of controversies; . . .” 444 U.S. at 292 (internal citations
omitted). The Court also looks to “the shared interest of
the several States in furthering fundamental substantive
social policies.” Id.
PET cites Red Wing Shoe and Avocent for the proposi-
tion that patent enforcement letters can never provide the
basis for jurisdiction in a declaratory judgment action.
Red Wing Shoe and Avocent did not create such a rule,
and doing so would contradict the Court’s directive to
“consider a variety of interests” in assessing whether
jurisdiction would be fair. Bristol-Myers Squibb Co. v.
Superior Court of Cal., 137 S.Ct. 1773, 1780 (2017). In
Bristol-Myers, the Court made clear that for personal
jurisdiction “the ‘primary concern’ is ‘the burden on the
defendant.’” Id. (quoting World-Wide Volkswagen, 444
U.S. at 292). This concern is even more potent when it
relates to a challenge to venue, for venue “is primarily a
matter of choosing a convenient forum.” Leroy v. Great
Western United Corp., 443 U.S. 173, 180 (1979). PET does
not argue that litigating in the Northern District would be
unduly burdensome, or that any of the other factors
supports a finding that jurisdiction would be unfair.
Here, the Northern District has a substantial interest,
for PET has charged infringement and threatened litiga-
12 JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION
TECHNOLOGIES
tion against numerous banks residing and conducting
business in the Northern District. See Deprenyl Animal
Health, Inc. v. Univ. of Toronto Innovations Found., 297
F.3d 1343, 1356 (Fed. Cir. 2002) (“Just as a state has a
substantial interest in preventing patent infringement
within its borders, it also has a substantial interest in
protecting its residents from claims of patent infringe-
ment that may be unwarranted . . . .”).
In the circumstances herein, PET has met the mini-
mum contacts requirement without offense to due process.
We conclude that PET is subject to personal jurisdiction
in the Northern District of Texas, and that venue is
proper in the Northern District.
II
Jack Henry’s Standing
PET repeats its challenge to the standing of Jack
Henry. PET states that it did not accuse Jack Henry of
infringement, and that there is no adversity between
them.
Jack Henry states that it has agreed to indemnify the
Banks for any liability for patent infringement. An
indemnitor has standing to participate in an action that
could determine its liability. See Microsoft Corp. v.
DataTern, Inc., 755 F.3d 899, 904 (Fed. Cir. 2014) (“If
Appellees ha[ve] an obligation to indemnify their custom-
ers, they would [] have standing to bring suit.”); Arris
Grp., Inc. v. British Telecomms. PLC, 639 F.3d 1368, 1375
(Fed. Cir. 2011) (“We have recognized that, where a
patent holder accuses customers of direct infringement
based on the sale or use of a supplier’s equipment, the
supplier has standing to commence a declaratory judg-
ment action if (a) the supplier is obligated to indemnify its
customers from infringement liability . . . .”); ABB Inc. v.
Cooper Indus., LLC, 635 F.3d 1345, 1349 (Fed. Cir. 2011)
(“ABB had an interest in determining whether it would
JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION 13
TECHNOLOGIES
incur liability for induced infringement, and it had an
interest in determining whether it would be liable for
indemnification, which turned on whether Dow would be
liable for infringement”).
Jack Henry, as supplier of the accused systems and as
indemnitor of the Banks, has standing to participate in
this action.
CONCLUSION
The dismissal for improper venue is reversed. We
remand for further proceedings.
REVERSED AND REMANDED
United States Court of Appeals
for the Federal Circuit
______________________
JACK HENRY & ASSOCIATES, INC., COMMUNITY
BANK OF TEXAS NA, AMERICAN NATIONAL
BANK OF TEXAS NA, GREEN BANCORP, INC.,
GREEN BANK NA, MOODY NATIONAL BANK NA,
FIRST SONORA BANCSHARES INC., FIRST
NATIONAL BANK OF SONORA, EXTRACO BANKS
NA, CITIZENS STATE BANK, TEXAS GULF BANK
NA, JEFFERSON BANK,
Plaintiffs-Appellants
v.
PLANO ENCRYPTION TECHNOLOGIES LLC,
Defendant-Appellee
______________________
2016-2700
______________________
Appeal from the United States District Court for the
Northern District of Texas in No. 3:15-cv-03745-N, Judge
David C. Godbey.
______________________
STOLL, Circuit Judge, joined by Circuit Judge WALLACH,
additional views.
While I agree with the judgment of the court, I write
separately to address the statement in Red Wing Shoe Co.
v. Hockerson-Halberstadt that “principles of fair play and
substantial justice afford a patentee sufficient latitude to
inform others of its patent rights without subjecting itself
2 JACK HENRY & ASSOCIATES, INC. v. PLANO ENCRYPTION
TECHNOLOGIES
to jurisdiction in a foreign forum.” 148 F.3d 1355, 1360–
61 (Fed. Cir. 1998). This statement has since been inter-
preted to mean that “the sending of infringement letters
would satisfy the minimum contacts requirement of due
process except for policy considerations unique to the
patent context.” Silent Drive, Inc. v. Strong Indus., Inc.,
326 F.3d 1194, 1206 (Fed. Cir. 2003); see also Brecken-
ridge Pharm., Inc. v. Metabolite Labs., Inc., 444 F.3d
1356, 1362 (Fed. Cir. 2006) (“[T]he Federal Circuit pro-
vides that a patent owner may, without more, send cease
and desist letters to a suspected infringer, or its custom-
ers, without being subjected to personal jurisdiction in the
suspected infringer’s home state . . . .”). It is time for this
Court to revisit Red Wing and its progeny.
Aside from the Supreme Court’s repeated warnings
against creating special rules for patent cases, these cases
indicate that, where enforcement letters are concerned, a
comprehensive analysis of the fairness factors outlined in
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985), and
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286
(1980), is not required. Yet, the Supreme Court has made
it clear that “[o]nce it has been decided that a defendant
purposefully established minimum contacts within the
forum State, these contacts may be considered in light of
other factors to determine whether the assertion of per-
sonal jurisdiction would comport with ‘fair play and
substantial justice.’” Burger King, 471 U.S. at 476 (em-
phasis added) (quoting Int’l Shoe Co. v. Wash., 326 U.S.
310, 320 (1945)). As the majority notes above, the factor
that is “of primary concern” is “the burden on the defend-
ant.” Bristol-Myers Squibb Co. v. Superior Court of Cal.,
San Francisco Cty., 137 S. Ct. 1773, 1780 (2017) (quoting
World-Wide Volkswagen, 444 U.S. at 292). To the extent
that Red Wing or its progeny fail to adequately assess
these factors, I suggest that they be reconsidered as
directly contrary to established Supreme Court precedent.